Annual Report of the Federal Reserve Board, 1942

TWENTY-NINTH ANNUAL REPORT of the BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM COVERING OPERATIONS FOR THE YEAR 1942 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM [December 31, 1941] MARRINER S. ECCLES, Chairman RONALD RANSOM, Vice Chairman M. S. SZYMCZAK ERNEST G. DRAPER JOHN K. MCKEE R. M. EVANS LAWRENCE CLAYTON, Assistant to the Chairman ELLIOTT THURSTON, Special Assistant to the Chairman OFFICE OF THE SECRETARY CHESTER MORRILL, Secretary LISTON P. BETHEA, Assistant Secretary S. R. CARPENTER, Assistant Secretary FRED A. NELSON, Assistant Secretary LEGAL DIVISION WALTER WYATT, General Counsel J. P. DREIBELBIS, General Attorney GEORGE B. VEST, Assistant General Attorney B. MAGRUDER WING HELD, Assistant General Attorney DIVISION OF RESEARCH AND STATISTICS E. A. GOLDENWEISER, Director WOODLIEF THOMAS, Assistant Director WALTER R. STARK, Assistant Director DIVISION OF EXAMINATIONS LEO H. PAULGER, Chief C. E. CAGLE, Assistant Chief WILLIAM B. POLLARD, Assistant Chief DIVISION OF BANK OPERATIONS EDWARD L. SMEAD, Chief J. R. VAN FOSSEN, Assistant Chief J. E. HORBETT, Assistant Chief DIVISION OF SECURITY LOANS CARL E. PARRY, Chief DIVISION OF PERSONNEL ADMINISTRATION ROBERT F. LEONARD, Director OFFICE OF ADMINISTRATOR FOR WAR LOANS COMMITTEE EDWARD L. SMEAD, Acting Administrator GARDNER L. BOOTHS, II, Assistant Administrator FISCAL AGENT O. E. FOULK, Fiscal Agent JOSEPHINE E. LALLY, Deputy Fiscal Agent 11 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CONTENTS TEXT OF REPORT PAGE Summary i Transition to War Economy 3 Cost of the War 7 War Finance and Federal Reserve Policies 9 The War Financing Program 9 Federal Reserve Purchases of United States Government Securities. . 11 Reduction in Reserve Requirements at Central Reserve City Banks. . 17 Reduction in Discount Rates 2.0 Supervisory Policy Regarding Government Securities 21 Bank Lending in War Time 21 Further Restrictions on Consumer Credit 23 Role of Credit Authorities in Preventing Inflation 2.6 Federal Reserve Banks as Fiscal Agents under War Program 31 Enlarged Responsibilities of Federal Reserve Bank Branches 38 The Banking Structure and Bank Supervision 39 Research and Advisory Services 44 Reserve Bank Personnel 47 Reserve Bank Operations 49 Board of Governors—Staff and Expenditures 53 Federal Reserve Meetings 54 Amendments to the Federal Reserve Act and Reports to Congress 55 Changes in Regulations of the Board of Governors 57 TABLES No. 1. Statement of Condition of the Federal Reserve Banks (in detail) December 31, 1942. 60-61 No. 2.. Statement of Condition of Each Federal Reserve Bank at End of 1941 and 1942 61-65 No. 3. Holdings of United States Government Securities by Federal Reserve Banks at End of December 1941 and 1941 66 No. 4. Volume of Operations in Principal Departments of Federal Reserve Banks, 1938-1942. 67 No. 5. Earnings and Expenses of Federal Reserve Banks during 1941 68-69 No. 6. Current Earnings, Current Expenses, and Net Earnings of Federal Reserve Banks and Disposition of Net Earnings, 1914-1941 70-71 No. 7. Number and Salaries of Officers and Employees of Federal Reserve Banks, December 31, 1941 71 in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

No. 8. Receipts and Disbursements of the Board of Governors of the Federal Reserve System for the Year 1942. 77-~71> No. 9. Minimum Down Payments and Maximum Maturities on Consumer Credit Subject to Regulation W 73 No. 10. Federal Reserve Bank Discount, Interest, and Commitment Rates, and Buying Rates on Bills, December 31, 1942... . 74 No. 11. Maximum Rates on Time Deposits 75 No. n. Member Bank Reserve Requirements 75 No. 13. Margin Requirements 75 No. 14. All Member Banks—Assets and Liabilities on December 31, 1941, by Classes of Banks 76-77 No. 15. All Member Banks—Classification of Loans and United States Direct Obligations on December 31, 1942. 78 No. 16. Member Bank Reserve Balances, Reserve Bank Credit, and Related Items—End of Year 1918-1941 and End of Month I942- 79 No. 17. Number of Banking Offices in United States, 1933-1941. . . 80 No. 18. Analysis of Changes in Number of Banking Offices During 1941 81 No. 19. Number of Banks on Par List and Not on Par List, by Federal Reserve Districts and States, on December 31, 1941 and 1941 81 No. 2.0. Money Rates, Bond Yields, and Stock Prices 83 No. 2.1. Business Indexes 84 APPENDIX Record of Policy Actions—Board of Governors 86-102. Record of Policy Actions—Federal Open Market Committee 103-111 Joint Announcement of the Federal Bank Supervisory Agencies Regarding Amortization of Debt for Nonproductive Purposes.. 112. Use of Credit for Accumulation of Inventories of Consumer Goods. . 113-114 Board of Governors of the Federal Reserve System 115 Federal Open Market Committee 115 Federal Advisory Council 116 Senior Officers and Directors of Federal Reserve Banks 117-115 State Bank and Trust Company Members 116-137 Description of Federal Reserve Districts 138-143 Federal Reserve Branch Territories 144-145 Map of Federal Reserve Districts 146 Index 147-159 IV Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LETTER OF TRANSMITTAL BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Washington, March 31, 1943. THE SPEAKER OF THE HOUSE OF REPRESENTATIVES. Pursuant to the requirements of section 10 of the Federal Reserve Act, as amended, I have the honor to submit the Twenty-ninth Annual Report, prepared by direction of the Board of Governors of the Federal Reserve System, covering operations during the calendar year 1941. Yours respectfully, M. S. ECCLES, Chairman. v Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM The report of the Board of Governors for 194Z covers the year which began immediately after the attack on Pearl Harbor. The United States, with a fiscal and economic system geared to the defense effort of a country at peace, was abruptly confronted by unprecedented expenditures for total war. Taxation and measures for diverting the people's savings into the war effort were wholly inadequate for a war economy. Under these circumstances the Federal Reserve authorities, in carrying out their responsibilities, were faced with the problem of making available to the banks of the country sufficient reserves to enable them at all times to meet such demands as might be made by the Treasury. The rapid growth of income in the hands of civilians and the accompanying decline in the volume of goods produced for civilian consumption resulted in constant upward pressure on prices. The Federal Reserve authorities endeavored, within the limits imposed by the exigencies of war finance, to do whatever was possible to minimize this inflationary pressure. Throughout the year Federal Reserve and Treasury authorities had con tinuous conferences on plans for financing the war, organizing machinery for marketing United States Government securities, and developing and putting into effect credit policies that would be in harmony with the nation's war requirements. There was agreement that it was essential to raise as much of the funds as possible from current income and to hold to a minimum the creation of new money by borrowing from banks. Every effort was made to offer securities that would fit the needs of all classes of investors, from small savers to large corporations with temporarily idle funds. To help in the distribution of Government securities, Victory Fund committees were organized in the twelve Federal Reserve districts. At the beginning of 194:1 the banking system had ample reserves for meet ing all immediate demands upon it, notwithstanding the fact that during the preceding autumn the Board, for the purpose of discouraging expansion of bank credit for nonessential purposes, had raised reserve requirements by about one-seventh to the maximum authorized by law. During 1942., how ever, excess reserves were subjected to a severe drain as the result of the rising volume of deposits and the constant growth in the demand for currency. The growth in deposits reflected purchases of United States Government obligations by the banks and the increase in money in circulation was due principally to the enlarged dollar volume of payrolls and retail trade, In view of the consequent absorption of excess reserves and the greatly increased Treasury requirements necessitated by war, Federal Reserve authorities found it necessary in the course of the year to take a series of actions in order to assure the banks adequate reserves to serve as a basis for the purchase Digitized for FRASER 1 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 ANNUAL REPORT OF BOARD OF GOVERNORS of such Government securities as it was necessary for them to buy. The Federal Reserve Banks increased their holdings of Government securities by 3.9 billion dollars, the Board reduced reserve requirements hy 1.2. billion, and there were minor additions to bank reserves from other sources. Neverthe less, excess reserves declined by a billion dollars during the year. Federal Reserve purchases during the year included United States Govern ment obligations of a wide range of maturities, including Treasury bills acquired under an arrangement by which the Reserve Banks stood ready to buy all, bills offered by the market at a rate of ZA per cent per annum. A further arrangement was made later in the year by which the Reserve Banks, when desired by the seller, would give an option to repurchase the bills at the same rate. The general discount rate at all of the Federal Reserve Banks was reduced to one per cent and a preferential rate of % per cent was established on advances to member banks secured by short-term Government obligations. In the second half of the year the Board of Governors in three steps reduced from 2.6 to zo per cent the reserve requirements on demand deposits for central reserve city banks, which were subject throughout the year to a heavy drain of reserves. These actions were made possible by an amendment to the Federal Reserve Act, adopted at the request of the Federal Reserve authori ties, which authorized the Board to change reserve requirements for banks in central reserve cities without changing requirements for any other group of banks. To assure the banks that examiners' comments and criticisms and other supervisory action would not be out of harmony with the Federal Reserve policy of supporting Treasury financing, the Board, in cooperation with other supervisory bodies, both State and Federal, made a statement of its exam ination and supervisory policy with reference to investments in Government securities and loans on such securities. This statement appears on page n of this report. For the purpose of being able to meet any development that might arise in connection with Treasury financing, the Federal Reserve authorities re quested from Congress and obtained, within limits, restoration of the power to purchase Government securities directly from the Treasury. On several occasions during the year this power was used to purchase one-day certificates pending Treasury receipts from taxes or the sale of new issues. These purchases helped to maintain stability in the money market. Another important field of Federal Reserve action in support of the war effort was initiated under a Presidential order calling for the development within the Federal Reserve Banks of regional machinery for channeling bank credit directly into war production. This was accomplished through a working arrangement with the War and Navy Departments and the Maritime Commission, which guaranteed credit extended by financing institutions to potential producers of war supplies who were unable to obtain the necessary financing without such guarantees. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 3 While supporting by all means at their disposal the Government's program for financing the war, the Federal Reserve authorities throughout the year attempted as far as possible to counteract the inflationary effects of military expenditures by exercising vigorous restraint in the use of credit for purposes not connected with the war. Thus the Board tightened its regulation pertaining to consumer credit and broadened the field to which it applied; it also discouraged the use of credit for nonessential purposes by statements sent to banks and by instructions to examiners to caution the banks against such loans. It has been estimated that, while bank loans to finance war activities increased by 1.7 billion dollars, bank loans for other purposes diminished by about 4 billion during the year. Credit to consumers by lenders other than banks also contracted considerably. By thus restraining the use of credit for nonessential purposes the Federal Reserve authorities endeavored to do their part to combat inflation. They were aware of the fact, however, that success in attaining this objective could be achieved only through concerted action by all agencies of the Government supported by the effective cooperation of the public. TRANSITION TO WAR ECONOMY Increase in production of war goods. Under the stimulus of expanding war demands, industrial production in 1942. was 16 per cent larger than in 1941. At the end of 1942. the rate of output was nearly double the 1935- 1939 average, and, as shown in the chart on the next page, 60 per cent of the output at factories and mines was being used for war purposes, including exports for aid to our Allies. Agricultural production in i94x was 12. per cent larger than in 1941, with military and lend-lease requirements taking about all of the increase. To an increasing extent continued growth of output in agriculture and industry was pressing against limitations in the supply of materials, man power, and plant and equipment facilities, including transportation. War needs were being met more and more by reduction in civilian goods. Esti mates shown on the chart indicate that production of durable manufactures for civilian use had been curtailed by December 1941 to about half of the 1935-1939 average, while civilian nondurable manufactures, after consider able reduction from the 1941 maximum, were still at about the pre-war average. Also, owing to shipping shortages, imports of civilian goods were greatly reduced. During 1941 the armed forces were built up from about 2. million men to a total of about 7 million, and millions of additional workers were drawn into the production of war goods. Manpower became a serious problem and by the year-end programs designed to obtain maximum utilization of man power were being formulated and placed in operation. Manufacturing capacity was sharply expanded for munitions and such materials as aluminum and aviation gasoline, which were most essential for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4 ANNUAL REPORT OF BOARD OF GOVERNORS war purposes. Important additions to capacity were also made in other essential industries such as steel and copper mining. Merchant shipbuilding was increased from an annual rate of one million deadweight tons of com pleted deliveries in December 1941 to 14 million in December 1941, in an effort not only to offset shipping losses but to provide additional cargo space. While private construction was sharply curtailed, total construction ex penditures in 1941 were 2.2 per cent larger than in 1941, the previous record year. In May warfare on coastal shipping brought gasoline rationing on the East Coast. Automobile and tire sales were restricted throughout the year and rationing of petroleum products was made nation wide in December to conserve rubber supplies for military and future civilian transport facilities. INDUSTRIAL PRODUCTION FOR WAR AND FOR CIVILIAN PURPOSES POINTS IN TOTAL INDEX AOJUSTEO FOR SEASONAL VARIATION POINTS IN TOTAL INDEX 250 .1 WAR I CIVILIAN DURABLE I CIVILIAN NONDURABLE 150 I • I I I I 1935-39 JUNE DEC. JUNE DEC. AVERAGE 1941 1941 1942 1942 NOTE: Production data for manufactures and minerals are in comparable physical units. The figures for war production are approximations of the amount of industrial production destined for the use of the armed forces and for lend-lease; they comprise mostly durable products. Metal mining for civilian purposes is included in civilian durable products and mining of fuels is included in nondurable products. Demands on the railroads for passenger accommodation were nearly double those of 1941, with most of the increase representing military travel. Move ment of commodities by rail increased about one-third. In view of limita tions on the expansion of rail equipment, the increased traffic required co operative efforts by shippers, carriers, and Federal regulatory agencies. Lesser gains in passenger and freight traffic were reported by other forms of common carrier. Imposition of price and wage controls. In the early part of the year distributors and consumers bought heavily, partly in anticipation of possible scarcities. This was reflected in a rapid rise of prices of most com modities in both wholesale and retail markets. Effective in May, under authority of the Emergency Price Control Act passed at the end of January, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 5 wholesale and retail prices of most goods were restricted to the highest levels reached in March. As part of the effort to stabilize the cost of living, maximum rent ceilings were also set up for an increased number of localities. Prices of farm products and foods, however, continued to rise sharply dur ing the summer and there were also further increases in wage rates. Early in October legislation was enacted providing for the stabilization of the cost of living, wage rates, salary levels, and profits, and a Director of Economic Stabilization was appointed to formulate and direct policies in these and related matters. As a result of this legislation levels were lowered at which maximum prices could be established for agricultural commodities, and at the same time minimum price guarantees were increased for these commodities; prices received by farmers advanced 2.9 per cent during the year. Actions taken in October resulted in the extension of retail price controls to commodities WHOLESALE PRICES PER CENT MONTHLY FIGURES, 1926MOO PE 120 120 / y no 110 100 i 100 A J 90 ri 90 0 THER COMMODITY— / 80 ^f~ \ / / 80 V / 70 V V-Vv- 70 PRODUCTS 60 60 50 * OTHER THAN FAR* PRODUCTS AND F00 >s. 40 1938 1939 1940 SOURCE: Bureau of Labor Statistics. comprising 90 per cent of the food budget. For the year as a whole retail food prices rose by 17 per cent; other items, however, advanced less and the average increase in the cost of living was between 10 and 15 per cent. An important factor limiting increases in prices of most civilian goods, except foods, during the latter part of the year, was the large volume of stocks accumulated by distributors and consumers in 1941 and the early part of 1942.. Average wage rates continued to advance in 1942.. During the year, however, steps were taken limiting further general increases. In July, the War Labor Board adopted the "Little Steel formula" as a means of bringing to a halt the race which had developed between wages and prices. Under this formula, only workers whose rates had risen less than the 15 per cent advance in living costs between January 1941 and May 1942. were entitled to further increases unless inequalities or substandard conditions justified special consideration. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

6 ANNUAL REPORT OF BOARD OF GOVERNORS As the manpower situation tightened, wage advances were increasingly granted voluntarily by employers seeking to hold or to attract workers. To meet this situation, the War Labor Board was given the additional authority to control voluntary wage increases. After early October, general wage-rate increases above the 15 per cent allowed by the "Little Steel formula" were prohibited except where special circumstances were involved, such as inequalities, gross inequities, substandard conditions, and ineffective prose cution of the war. Individual rate increases for merit, length of service, etc., were still permitted under specified conditions. Wages of hired farm workers rose about one-third during the year but they were still considered substandard and limitations on further increases were lifted. Growth of incomes. Total payments of wages to labor increased con siderably during 1942., as the result of rate advances, an expansion in the number of employees, longer hours and more overtime work at premium rates, and upgrading and shifting workers into better paying jobs. Net income of farmers showed an exceptionally large increase. The general level of corporate profits after taxes appears to have been about the same in 1942. as in 1941; it was considerably higher than in 1939. There were wide differences in net earnings between groups of companies and lines of ac tivity, as there were between particular groups of wage-earners and other individuals. Dividend payments to individuals declined about 10 per cent. Investor receipts in the form of interest increased, however, reflecting the ex pansion of outstanding public debt. Total income payments expanded 2.5 per cent during the year and in De cember were at an annual rate of 1x5 billion dollars. A smaller proportion of this income was used for the purchase of consumer goods in i94i than in 1941, and in physical volume also sales of such commodities were smaller. In 1941 consumers had used some of their income to make substantial pur chases of durable and semi-durable goods in anticipation of future needs; in 1942. much more of the expanding consumer income went into various forms of liquid savings. Supply of civilian goods. Supplies of most consumer goods, except metal and rubber products, were generally available during 1942., although scarcities, including those of some important foods, were increasingly apparent. A number of rationing programs had been developed to further the equitable distribution of scarce essential commodities and more were under consideration. At the end of the year stocks of goods in distributors' hands were still available to meet part of the demand in 1943; new supplies, however, were expected to become more limited as a result of the widespread conversion of industry that was taking place. To an increasing extent declines in output of consumer goods will be reflected in reduction in goods available to civilians. It is evident, therefore, that problems of adjustment throughout the civilian economy will become increasingly urgent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 7 COST OF THE WAR War expenditures continued to increase rapidly in 1941. Monthly expen ditures rose from 2. billion dollars at the beginning of the year to 6 billion at the end. War expenditures increased from 1.7 billion dollars in the fiscal year 1940, which was the last fiscal year before the inauguration of the na tional defense program, to 6 billion in 1941 and 26 billion in 1941. The President's Budget Message in January 1943 estimated a further increase to 74 billion dollars in the current fiscal year and to 97 billion in the fiscal year 1944. Despite a large increase in receipts resulting both from increased tax levies and rising national income, the budget deficit has increased and, according to budget estimates, will continue to increase. The mounting volume of Federal Government purchases in 1941 was re flected in increased incomes for individuals. Incomes also increased because of the higher prices of goods produced and services rendered. Because of rapid growth in income and lack of opportunity to buy durable goods, and the operation of other factors, an unusually high proportion of income was saved. Increases in savings and tax payments, however, were not a suffi cient offset and civilian expenditures increased substantially. Under war conditions, diversion of resources to military use made it impossible to ex pand the supply of goods for civilian use. It appears that the physical volume of goods and services sold to consumers, in part out of large inven tories, actually showed a slight decline. The difficulty of increasing sup plies in response to increasing demand—or even of maintaining supplies—led to considerable increases in prices of goods not subject to official controls. Shortages of an increasing number of items developed in the civilian econ omy and more and more goods were made subject to priorities and to ration ing as the field of price controls was extended. At the beginning of 1941, however, there was still a considerable amount of slack in the economy which made it possible to produce an expanded volume of military output while generally maintaining the standard of living of the civilian population. Ma lpower and industrial facilities that had been idle (or used for producers' equipment and private construction purposes) were drawn into war use; and resources that had been operating at low effi ciency were shifted into more efficient mass production. Retailers' stocks of most consumer goods were high. They had been increasing since the autumn of 1939 and continued to increase until about the middle of 1942.. While production of some items was discontinued or drastically curtailed in order to divert raw materials and facilities to military use, in most of these cases ample stocks were still available until late in the year. Thus a large part of the increase in military output did not immediately encroach upon the production of civilian goods, but was attained by fuller use of exist ing plant capacity and labor resources. In addition, the use of stocks of consumer goods accumulated in earlier years made it possible for the time being to maintain a high level of civilian consumption. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

8 ANNUAL REPORT OF BOARD OF GOVERNORS By the end of the year accumulated stocks and slack in the utilization of existing plant, which had cushioned the impact of war upon the civilian economy, had largely disappeared. Retail stocks as a whole began to de cline after the middle of the year and by the year-end some items difficult or impossible for retailers to replace had virtually disappeared from their usual channels of distribution. The increase in aggregate output, military and civilian, that can be obtained by putting additional people to work, length ening hours of work, and increasing efficiency is likely to be small in relation to the increase that has already occurred and to future increases in military requirements for manpower and production. Increased production of military items, therefore, will have to come out of a nearly equivalent de crease in the production of civilian items, and, as inventories are reduced, curtailed production of such items will be reflected more quickly in consumer markets. There will also be a continuing reduction of transportation, medical care, and other services available to civilians. The reduction of living standards in 1943 will be drastic and much more general than that experienced by consumers in 1942.. It is a fundamental fact, not always clearly understood, that payment of only a small part of the real cost of a war can be deferred to the future. Costs can be deferred by diverting resources from the maintenance, repair, and replacement of public and private capital. Considerable deterioration in the condition of residential property, productive equipment, and public works may have no immediate hampering effect on the war effort or on levels of real income. Physical costs may also be postponed by permitting stocks of civilian commodities to fall to a level below their usual relationship to sales. Both developments involve real costs to consumers at some future period when resources will have to be withheld from producing goods for consump tion in order to rehabilitate capital. But by far the greater portion of the real cost of the war must be on the present generation in the form of current goods and services diverted from civilian to war use. These current real costs of the war to the consuming public as a whole can not be reduced or shifted to the future by any fiscal or financial device. Dis tribution of the necessary reduction of current consumption as between ele ments of the population, however, and distribution of such costs as can be deferred may differ depending on the proportion of the war expenditures that is raised by taxation and by borrowing, as well as on the steps taken to restrict physical consumption. It will also be influenced by the incidence of taxes that are imposed and by the distribution of Government borrowing among the various economic groups. In view of the large volume of funds that must be borrowed, the future buying power of savings is a matter of vital concern to the country. That, in turn, depends on prevention of a rapid rise in prices. Success in preventing such a rise, as well as in solving the current problem of securing a satisfactory distribution of available goods, requires the use of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 9 effective methods to check consumer expenditures. Because of the decrease in availability of consumer goods and the increasing requirements for mili tary goods, the urgency of diverting consumer income into the war effort will be much greater in 1943 than it was in 1941. WAR FINANCE AND FEDERAL RESERVE POLICIES Federal Reserve policies and operations are necessarily closely related to those of the Treasury, and in the course of the year Treasury and Federal Reserve officials, through frequent consultation, endeavored to coordinate their respective policies and actions toward a common objective. This common objective was to derive the largest possible amount of war' funds from current income and from savings, and to depend as little as possi ble on the creation of additional bank credit. In view of the fact, however, that all the necessary funds could not be raised in time by taxation and borrowing from nonbanking investors, the Federal Reserve authorities endeavored to induce banks to make more complete use of their existing reserves and also supplied them with such reserve funds as they needed from time to time to purchase the Government securities offered to them. In addition, the Treasury made new issues with long maturities ineligible for purchase by banks. Another joint aim of the Treasury and the Federal Reserve was to maintain prices and yields on Government securities close to existing levels for the duration of the war. This assured the Treasury of a market for its securities at rates of interest known in advance and removed the incentive for investors to defer purchases of Government securities. THE WAR FINANCING PROGRAM The Treasury offered during the year a wide variety of securities designed to meet the needs of every type of investor. Changes in the outstanding amounts of the principal classes of securities are shown in the table. UNITED STATES GOVERNMENT INTEREST-BEARING DEBT Direct and Guaranteed [In billions of dollarsl Amount outstanding on Type of issue December 31 Change during 1942 1942 1941 Treasury bills 6.6 +4.6 Certificates of indebtedness 10.5 +10.5 Treasury notes 9.9 6.0 +3.9 Treasury bonds 49.3 33.4 +15.9 Guaranteed issues 4.3 6.3 -2.0 Total marketable issues1 80.8 +32.9 Savings bonds 15.0 6.1 +8.9 Tax notes 6.4 2.5 +3.9 Special issues 9.0 7.0 +2.0 Total direct and guaranteed interest-bearing debt 111.6 63.8 +47.8 1 Including Postal Savings and pre-war bonds not shown separately. 2 Including adjusted service and depositary bonds not shown separately. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

IO ANNUAL REPORT OP BOARD OF GOVERNORS Issues available to banks. About 15 billion dollars of new money Was obtained through the sale of various issues of medium- or short-term bonds and of Treasury notes in excess of maturities. A large proportion of such issues was purchased by commercial banks. With the exception of a ij4 Per cent 10-13 year bond offered in February, all of these issues bore coupon rates of 2. per cent or less and were dated to mature in less than ten years. In the latter part of the year, it was indicated by the Treasury that all new issues available for purchase by commercial banks would come within this ma turity limit. In order to provide banks and other investors with a medium for liquid investment, the Treasury offered a number of issues of certificates of indebt edness maturing within a year and increased the amounts of weekly offerings of three-month Treasury bills. Bill offerings were increased during the course of the year from 150 million to 600 million dollars a week. For the year as a whole the outstanding amount of Treasury certificates increased by 10 billion dollars and that of Treasury bills by 5 billion. Issues for nonbanking investors. Various means were adopted for raising funds from nonbanking investors. The War Savings Staff, estab lished by the Treasury prior to 1941 to sell Savings bonds, expanded its ac tivities. In addition, a Victory Fund Committee was established under Treasury and Federal Reserve auspices in each Federal Reserve district in May, in order to promote the sale of Government securities to investors having funds in excess of the amount that may be placed in Savings bonds. These committees were greatly expanded near the end of the year. The number of persons participating in payroll savings plans increased to 15 million and the average monthly amount deducted to 370 million dollars. At the end of the year sales of the popular War Savings bonds (Series E) amounted to about 700 million dollars a month compared with about 100 million prior to our entry into the war. Series E bonds are sold on a dis count basis to individuals in a maximum annual amount of $5,000 maturity value to each purchaser and yield z.9 per cent if held to maturity. Series F and G bonds are sold to investors other than commercial banks and yield z^5 per cent if held to maturity. Series F bonds are on a discount basis and Series G afford a current return. The maximum amount of Series F and G Savings bonds that may be purchased by any one investor in any one year was increased from $50,000 to $100,000. For the year as a whole outstanding amounts of Series E bonds increased by 6 billion dollars and those of Series F and G bonds by a total of 3 billion. The amount of Series A tax notes that can be presented for taxes by any one taxpayer in any one year was increased, and the maturity of the notes was extended. A new series of tax notes for larger investors was offered for the purpose of providing for the temporary or short-term investment of idle balances as well as for the accumulation of tax reserves. The yield on these notes increases with the length of time that they are held and averages 1.07 per cent if held for three years to maturity. They may be redeemed for Digitized focra sFhR AwSiEthRo ut loss of interest by investors other than commercial banks durhttp://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM II ing and after the sixth calendar month from the month of issue on 30 days* advance notice. Following these changes gross sales of tax notes increased from about 400 million dollars to nearly a billion dollars a month, and for the year as a whole the amount of such notes outstanding increased by 4 billion dollars. In May, August, and December the Treasury offered i}A per cent longterm bonds to nonbanking investors without limiting the issue to a stated amount. These bonds may not be purchased or held by commercial banks for their own account for a period of ten years after the date of issue. Sales of these bonds totaled 5 billion dollars. Victory Fund Drive. Toward the end of the year there was a largescale Victory Fund Drive aimed to raise during December at least 9 billion dollars from the sale of a variety of issues, including new issues of bonds and certificates of indebtedness as well as Savings bonds and tax notes and an in crease in regular weekly bill offerings. Subscriptions by commercial banks to the new issues were limited in amount to a total, including Treasury bills, aggregating about 5 billion dollars. For nonbanking investors all subscrip tions were allotted in full, and subscription books remained open for several weeks. Total sales of all types of securities during the month amounted to nearly 13 billion dollars. Distribution of United States Government securities. Commercial banks and the Federal Reserve Banks together absorbed slightly less than one-half of the 48 billion dollar increase during 1941 in the interest-bearing direct and guaranteed debt. Commercial bank holdings of Government securities are estimated to have increased by more than 19 billion dollars, and the portfolio of the Federal Reserve Banks increased by 4 billion. In 1941, when the interest-bearing debt increased by 13 billion dollars, commercial banks and the Reserve Banks absorbed 4 billion dollars or less than one-third. Practically all of the increase in commercial bank holdings in 1942. was in securities maturing in ten years or less. During the past year, as is shown by the following table, individuals, private trust funds, and corporations as a group increased their holdings of Savings bonds and tax savings notes by nearly 13 billion dollars and OWNERSHIP OE UNITED STATES GOVERNMENT SECURITIES [Estimated; in billions of dollars] Holdings on December 31 Type of owner Increase during 1942 1942 1941 Commercial banks 41.3 21.8 19.5 Federal Reserve Banks 6.2 2.3 3.9 Mutual savings banks 4.6 3.7 0.9 Insurance companies 11.0 8.0 3.0 Other investor group: Marketable issues 15.2 10.0 5.2 Nonmarketable issues 21.1 8.5 12.6 Federal agencies and trust funds: SpeciaHssues 9.0 7.0 2.0 Public issues 3.2 2.5 0.7 Total interest-bearing direct and guaranteed securities outstanding 111.6 63.8 47.8 Digitized for FRASER NOTE: Estimates of amounts held at the end of 1942 by commercial banks, mutual savings banks, in http://frasesru.sratnlocue icsofmedp.aonriegs/, and other investor group are preliminary. Federal Reserve Bank of St. Louis

12. ANNUAL REPORT OF BOARD OF GOVERNORS purchased 5 billion dollars of marketable issues. Net purchases by these investors were three times as large as in the previous year. Insurance companies added 3 billion dollars to their portfolios, mutual savings banks one billion, and Government agencies and trust funds 3 billion. FEDERAL RESERVE PURCHASES OF UNITED STATES GOVERNMENT SECURITIES Open-market operations by the Federal Reserve System were directed to ward the general objectives of providing banks with adequate reserves to serve as a basis for such purchases of Government securities as might be essential to the war finance program and of maintaining the structure of prices and yields of Government securities. Temporary needs of the Treasury were met by the Federal Reserve through direct purchases of special one-day certificates. Decline in bank reserves. Federal Reserve purchases of Government securities in the open market to provide bank reserves increased in amount during the course of the year as needs of the Treasury expanded and with drawals of currency from the banks increased. A sustained growth in bank reserves, which had resulted from heavy gold imports since early 1934, came to an end at the beginning of 1941. In 1941 and 1942. excess reserves of member banks declined primarily because of the rapid growth in bank de posits and in currency outside the banks—in other words, the supply of money owned by the public. The increase in the amount of currency in circulation, which banks had to provide by drawing upon their reserve balances, amounted to more than 4 billion dollars during 1942.. It was due chiefly to the expansion of wages and salaries, the rise in prices, and the removal of many persons from their usual residences and banking connections. The growth in deposits during the year amounted to about 16 billion dollars at all commercial banks and was due to purchases by banks of United States Government securities. This growth resulted in an increase in the amount of reserves that member banks were required to carry and thus reduced excess reserves. Required reserves increased by nearly 1.8 billion dollars at all member banks, notwith standing the reduction by the Board of Governors in the required ratio of reserves against demand deposits at central reserve city banks, the effect of which was to reduce requirements by 1.2. billion dollars. The effect of these factors in reducing excess reserves was offset to a con siderable extent by an increase in Reserve Bank holdings of Government securities amounting to 3.9 billion dollars, of which 1.6 billion was acquired in the last quarter. Some additional reserves were supplied also by increases in Treasury currency and changes in other factors. As a net result excess reserves showed a decline of 1.1 billion dollars in the year and on December 31, i94x amounted to 2. billion. Most of the increase in the Federal Reserve portfolio of Government se curities was in short-term obligations—a billion each in Treasury bills and certificates of indebtedness and another billion in Treasury notes and bonds Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM J3 maturing in five years or less—while medium- and long-term bonds increased by 900 million dollars. At the end of the year holdings totaled 6.x billion dollars, of which about a third mature within a year and nearly two-thirds within five years; at the end of 1941 only 40 per cent of the holdings had maturities of less than five years. Small operations in first quarter. At the beginning of 194X excess re serves of member banks exceeded 3 billion dollars. This amount was suffi cient, if fully utilized, to provide the basis for a large expansion in the volume of bank credit. In the early months of the year, as shown on the chart, there was some drain on member bank excess reserves owing to con tinued expansion of currency in circulation and growth of required reserves associated with the increase in bank deposits. MEMBER BANK RESERVES AND RELATED ITEMS 1 - GOLD STOCK 22 16 / / - J / /r MONEY IN / TION jT— - ; 10 10 - J - 1 - / - RESERVE BANK CRED .T ^J - - ~ 1940 1941 1942 1940 1941 1942 NOTE: Required and excess reserves are partly estimated. Open-market operations by the Federal Reserve in this period were rela tively small in amount. As in other recent years, they were primarily for the purpose of maintaining an orderly market for Government securities, and purchases and sales covered a variety of both long-term and short-term issues. Operations in second and third quarters. From April i until early October Federal Reserve open-market operations consisted principally of purchases of Treasury bills and certificates of indebtedness, and were pri marily for the purpose of supplying additional reserves to banks needing them. In this period the System portfolio of Government securities in creased by 1.3 billion dollars. An additional one and a quarter billion dol lars of reserves was made available to central reserve city member banks in New York and Chicago by reductions in reserve requirements, discussed on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

i4 ANNUAL REPORT OF BOARD OF GOVERNORS pages 17-10. Expansion in bank deposits, however, caused an offsetting rise in required reserves, and an increase of x.i billion dollars in money in cir culation exerted a steady drain on bank reserves. Excess reserves declined to below 1.5 billion in July and during the remainder of the year fluctuated generally around that level. Establishment of bill buying rate and repurchase option. At the end of April, in connection with Treasury announcement of the May financing program, the Federal Open Market Committee directed the twelve Federal Reserve Banks to purchase all Treasury bills offered at a discount rate of ZA of one per cent per annum. Adoption of this policy was for the pur pose of stabilizing the bill market, effecting a broader distribution of bills, and facilitating prompt adjustment of bank reserves to changing conditions. Readiness of the System to buy bills at an established rate assured banks and other holders that, if at any time it was necessary to obtain reserves or cash, they could sell their bills at an established price. This offered an encourage ment to banks and others to utilize available liquid funds to purchase bills. In August the directive of the Federal Open Market Committee regarding the purchase of Treasury bills at a rate of Vs of one per cent was supplemented by directing the Federal Reserve Banks to give to the seller of bills, if he so desires, an option to repurchase at the same rate a like amount of bills of the same maturity. The same privilege extended to banks, both as to selling bills to the Reserve Banks and as to repurchase options, was accorded to dealers in securities, corporations, and other holders of liquid funds. The effect of this action was to make Treasury bills practically as liquid as excess reserves or idle bank balances and a desirable outlet for funds, just as call loans had been under different market conditions in the past. Following the establishment of a buying rate for Treasury bills by the Federal Reserve and accompanying a substantial increase in the amount of such bills outstanding, there was a wider distribution of bills among various groups of banks and other holders. The largest purchasers of bills, however, continued to be the large money-market banks, which held relatively small amounts of excess reserves. Purchases in connection with last quarter's financing. During Oc tober, in connection with Treasury financing operations which necessitated substantial subscriptions by banks to new offerings of notes and mediumterm bonds, the System purchased large amounts of notes and bonds. The purchases were for the double purpose of supporting the market and of sup plying banks with additional reserves during the period of financing. Fed eral Reserve holdings of certificates also increased in October and again in November, but in those months resales of bills under repurchase agreements and maturities exceeded additional purchases of bills. Total holdings of Government securities by the Reserve Banks increased by more than a billion dollars in October. In the latter part of November and early in December, prior to and during the Victory Fund Drive, the Federal Reserve again made large purchases of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM *5 securities. From November 18 to December 9, total holdings of Govern ment securities by the Reserve Banks increased by 850 million dollars. These RESERVE BANK HOLDINGS OF U. S. GOVERNMENT SECURITIES BILLIONS OF DOLLARS t FIGURES BILLIONS OF DOLLARS 6 6 5 5 TOTAL / 4 4 3 3 2 BONDS /"- —y r ' / t / / / / / / CE. RTIFICATE s/ NOTES —"\ y r^ BILLS y A SPECIAL / \ CERTIFICATES 0 ; \ 1 , 0 NOTE: U. S. Government security holdings include both direct and guaranteed issues. Special one-day Treasury certificate of indebtedness shown only for September 16; there were 15 such certifi cates of varying amounts during the year on dates other than Wednesdays, as shown in accompanying table in text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

i6 ANNUAL REPORT OF BOARD OF GOVERNORS operations supplied banks with reserve funds to meet both the heavy cur rency withdrawals and the increased requirements resulting from large addi tions to United States Government deposits in payment for bank purchases of securities. During the period of the financing excess reserves were gen erally maintained at i..^ billion dollars or more. In the latter part of December purchases for System account were small, except that in the last week large amounts of bills were sold under repurchase agreement to the Reserve Banks in order to obtain reserves needed to meet heavy currency demands, payments for a new issue of Treasury certificates, and other end-of-year needs. Many of these bills were repurchased by the sellers after the turn of the year. It is in such situations particularly that the established buying rate and the repurchase option provide a ready means for adjustment of cash positions by banks and others. Direct advances to the Treasury. The Second War Powers Act, 1942., approved March 2.7, authorized the Federal Reserve Banks to purchase Government securities directly from the Treasury, provided that the aggre gate amount of securities so purchased and held at any one time does not exceed 5 billion dollars. In accordance with this change in the law, the Open Market Committee authorized purchases of securities for the purpose of granting temporary accommodation to the Treasury. Acting under this authority, at various times during the year the Reserve Banks purchased from the Treasury one-day certificates of indebtedness in order to supply funds to the Treasury pending receipts from taxes or new issues of securities. The amounts of such certificates outstanding during the year were as follows (in millions of dollars): Date Amount Date Amount June 16 58 Nov. 27 139 June 19 70 Nov. 28 329 June 20 47 Nov. 30 422 June 22 34 Dec. 1 98 June 23 94 Dec. 10 16 Sept. 15 324 Sept. 16 189 Dec. 15 145 Sept. 17 286 Sept. 18 76 Sept. 19 53 Maintenance of market stability. Largely as a result of the influence of Federal Reserve open-market operations, and notwithstanding exceptional demands placed on the market, yields on Government securities showed little change in the course of 1942.. Yields on short-term securities, which were low at the beginning of the year, rose somewhat early in the year, but stabilized after establishment of the bill-buying rate by the Federal Reserve Banks in April. The Reserve Banks made purchases and resales of bills at the buying rate promptly in accordance with the wishes of the holders. Arrangements were made in September whereby securities bought under repurchase options were not transferred to the System account but were held in the accounts of indi vidual Reserve Banks in order to expedite repurchase if desired by the origi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM *7 nal seller. The System also followed the practice of purchasing promptly securities offered for the purpose of obtaining reserve funds, as well as of baying freely for the purpose of maintaining stability in the Government security market. When offerings appeared to be for the purpose of taking profits or of speculating in the market, however, the Reserve authorities avoided purchasing the securities if possible. In pursuing these objectives the Federal Reserve authorities received a large measure of cooperation from banks and other holders of securities and from dealers. REDUCTION IN RESERVE REQUIREMENTS AT CENTRAL RESERVE CITY BANKS Banks in the money market centers of New York and Chicago were sub ject to heavier drains of funds in 1942 than banks elsewhere in the country. These large city banks lost reserves while reserves held by other groups of banks increased. Special action was consequently taken by the Board of Governors to supply New York and Chicago banks with additional reserves by reducing the percentage of demand deposits that central reserve city banks were required to hold as reserves with Federal Reserve Banks. These reduc tions were made in three equal steps, effective August 2.0, September 14, and October 3, and brought reserve requirements at central reserve city banks down from 26 to 20 per cent of net demand deposits. New legislation. Under the earlier provisions of the Federal Reserve Act, the Board of Governors could not change the reserve requirements of member banks in central reserve cities without making the same change with respect to member banks in reserve cities. In anticipation of an uneven dis tribution of reserves that might hinder the financing of the war, the Board requested Congress to dissociate the reserve requirements for the two classes of banks so that each could be regulated without reference to the other. This was done on July 7, 1942., by amending Section 19 of the Federal Reserve Act so as to permit the Board to change reserve requirements of member banks in central reserve cities without also changing requirements in reserve cities. As a result the reserves of the two classes of banks, when influenced by different factors, may be subjected to different regulatory actions. Under the amended Act the Board may make changes in requirements for (1) member banks in central reserve cities or (2) member banks in reserve cities or (3) member banks not in reserve or central reserve cities or (4) all member banks. Separate action for each class of banks is permitted within the limits of change provided by the law, i. e., to not less than the amount prescribed by statute or to more than twice that amount. Shifts of reserves from New York. Excess reserves of all member banks declined sharply in 1941 and the first half of 1942.—from 6.8 billion dollars in January 1941 to 2.2 billion in July 1942. As shown on the chart, most of this decline was at banks in New York City and Chicago, which at the peak had owned half of the excess reserves of all banks. By July 1942 they held only one-seventh of the total. In July 1942 excess reserves of banks in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

i8 ANNUAL REPORT OF BOARD OF GOVERNORS New York City and Chicago amounted to less than 7 per cent of their re quired reserves, compared with 35 per cent for reserve city banks, as a group, and 50 per cent for country banks. EXCESS RESERVES OF MEMBER BANKS BILLIONS OF DOLLARS WEONESOAY FIGURES BILLIONS OF OOLLARS NOTE: Figures for all member banks and for "other" member banks outside New York and Chicago are partly estimated. The decline of excess reserves occurred in New York City and Chicago, notwithstanding the fact that the growth in currency and in bank deposits was relatively less in those cities than elsewhere. The reason was that New NEW YORK CITY BANKS FACTORS OF GAINS AND LOSSES OF RESERVE FUNDS BILLIONS OF CUMULATIVE NET CHANGE FROM END OF 1940 BY WEEKS BILLIONS OF DOLLARS " t 4.0 4.0 /1 J 3.0 /' 3.0 2.0 RESERVE BANK J 2.0 • CREDIT / 1.0 1.0 /C^s.*" 0 ^SB/O^^ N ^.^^JNTERBANK . 0 -1.0 \/v CIRCULATION NET TREASURY ^*->. K , , l i , , TRANSACTIONS' , 7'V NOTE: Wednesday figures. Factors of gains and losses shown on chart do not include residual item covering largely commercial and security transactions and disbursements from foreign accounts with the Federal Reserve Bank of New York. York City and, to some extent, Chicago banks had lost reserves to the rest of the country, particularly after April 1942-. These shifts were largely due to the fact that a substantial portion of the proceeds of tax receipts and of Government security purchases by banks and other investors in those centers Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM *9 were expended elsewhere by the Treasury. The major factors accounting for movements of funds in and out of the New York money market are shown in the chart. In the last three quarters of the year losses of reserves resulting from purchases of new Treasury issues and tax payments in the New York district exceeded net gains from other Treasury transactions by nearly 3 bil lion dollars. There was also a loss of funds owing to the reduction of out-oftown bankers' balances and to other factors. To some extent total losses were offset by Reserve System purchases of securities in the New York market. As a result of the drain of funds out of New York and of continued large purchases of Government securities by banks throughout the country, there was a rapid growth in deposits at banks outside New York City, while deposits in New York banks showed little growth.during most of the year. BANKING DEVELOPMENTS IN NEW YORK AND OTHER CITIES BILLIONS OF DOLLARS WEDNESDAY FIGURES BILLIONS OF DOLLARS 1941 1942 1941 1942 1941 1942 NOTE: Figures are for weekly reporting member banks in leading cities. U. S. Government obligations include both direct and fully guaranteed issues. Demand deposits adjusted exclude United States Government and interbank deposits and items in process of collection. Changes in the position of weekly reporting member banks in New York, in Chicago, and in 99 other cities during 1941 and 19^ are shown on the accompanying chart. New York City banks showed some decline in de posits at the end of 1941 and a small increase during the latter part of 1942.; at the same time they continued to increase their investments and lost reserves. Chicago banks gained deposits but increased their loans and investments more rapidly and their reserves declined. At banks in leading cities outside New York and Chicago both deposits and investments increased rapidly in 1941 and 1942. while reserves showed little change. Available data for other banks, not shown on the charts, indicate a continued growth in deposits and investments and also a small increase in reserves. Deposits at country member banks in fact showed larger percentage increases during the year than did those at jcity banks. Although large volumes of new deposits were created by bank security purchases all Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

lO ANNUAL REPORT OF BOARD OF GOVERNORS over the country, the redistribution of deposits accompanying Government and civilian spending increased deposits more rapidly in southern and western than in northeastern districts and generally in smaller than in larger centers. As long as New York City banks are heavy purchasers of Government securities, funds are likely to flow from that center to the rest of the country, and the extent to which banks in New York City and in Chicago will be expected to purchase Government securities will depend largely on the growth of participation in Government financing by banks outside of these cities, and particularly by nonbank investors. Under conditions prevailing in 19^ the smooth functioning of the money market and the success of the war finance program required the participation of central reserve city banks, and it was therefore necessary to supply these banks with the reserves required for such participation. Banks elsewhere, on the other hand, had large amounts of unused reserves and were con stantly gaining funds. For these reasons the reductions in reserve require ments were made applicable solely to central reserve city banks. REDUCTION IN DISCOUNT RATES During February, March, and April 1941 discount rates on collateral notes of member banks secured by United States Government securities and on other eligible paper were lowered at a number of Federal Reserve Banks to one per cent, thus establishing a uniform rate at all the Reserve Banks. Rates on advances to nonmember banks secured by direct obligations of the United States were similarly lowered to a uniform one per cent. From September 1939 to February 19^ the Federal Reserve Banks of Atlanta, Chicago, St. Louis, Kansas City, and Dallas had in effect a rate of one per cent on advances to member banks secured by Government obligations and a rate of 1V2 per cent on other eligible paper. At the Federal Reserve Banks of Philadelphia, Cleveland, Richmond, Minneapolis, and San Francisco, a rate of iM per cent had been in effect on both types of paper, while the Federal Reserve Banks of Boston and New York had had a one per cent rate on both types. During October all Federal Reserve Banks established discount rates of Vz of one per cent on advances to member banks secured by United States Govern ment obligations maturing or callable in one year or less. Rates on advances to member banks secured by other United States Government obligations and rates on eligible paper continued at one per cent. Discount rates on advances to member banks secured by types of acceptable assets other than eligible paper (made under Section 10(b) of the Act) wete lowered during the year to \XA per cent by all the Federal Reserve Banks. Rates on advances to individuals, partnerships, and corporations other than banks secured by direct obligations of the United States and rates on in dustrial advances and commitments under Section 13b were also reduced during 1941. Discount rates in effect on December 31, 1942. at each Federal Reserve Bank are shown in Table 10 on page 74. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 2.1 The volume of discounts by Federal Reserve Banks has continued small, because most member banks have had reserves in excess of requirements and nearly all have been in a position to meet temporary reserve shortages by selling Treasury bills or other Government securities to Federal Reserve Banks. The reductions in discount rates, however, provide an alternative means for member banks to obtain reserve funds, when they may need them, by borrowing from the Reserve Banks at a low rate. This action was an additional step to encourage member banks to make fuller use of their available excess reserves in helping to finance the war, and to bring about a wider distribution of short-term Government securities among banks outside of financial centers. As already pointed out, during 19^ the Treasury in creased the outstanding amount of certificates of indebtedness and of bills maturing within a year by 15 billion dollars, and a substantial portion of these were purchased by banks. SUPERVISORY POLICY REGARDING GOVERNMENT SECURITIES Another measure designed to encourage wider distribution of Government securities among banks was the adoption on November zx, 1942., by the bank supervisory agencies, of a joint statement of examination and supervisory policy with special reference to investments in and loans upon United States Government securities. This statement was as follows: "The Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Executive Committee of the National Association of Super visors of State Banks make the following statement of their examination and supervisory policy with special reference to investments in and loans upon Government securities. "1. There will be no deterrents in examination or supervisory policy to investments by banks in Government securities of all types, except those securities made specifically ineligible for bank investment by the terms of their issue. "2.. In connection with Government financing, individual subscribers relying upon anticipated income may wish to augment their sub scriptions by temporary borrowings from banks. Such loans will not be subject to criticism but should be on a short-term or amortization basis fully repayable within periods not exceeding six months. "3. Banks will not be criticized for utilizing their idle funds as far as possible in making such investments and loans and availing them selves of the privilege of temporarily borrowing from or selling Treasury bills to the Federal Reserve Banks when necessary to restore their required reserve positions." BANK LENDING IN WAR TIME Bank loans in 1941 were affected by two diverse factors—the demand for credit by businesses engaged in war activities and the repayment of indebted ness, both business and personal, by other borrowers. During the year Federal Reserve and other authorities took action to facilitate the financing of war contracts, and also adopted measures to restrict extensions of credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

12 ANNUAL REPORT OF BOARD OF GOVERNORS for other purposes and to encourage repayment of loans. Increases in borrowing at this time, especially for purposes of building up inventories of goods, for purchasing houses or land, or for buying consumer goods, add to the pressure of inflationary forces, while reductions in outstanding loans, which divert income from spending, are anti-inflationary. Reduction in debt also places debtors in albetter position to withstand the effects of possi ble future declines in income. Total loans outstanding at banks declined during 1942.. It is estimated that the decline at all commercial banks exceeded 2. billion dollars. Loans by banks to finance war contracts, however, increased during the year by an amount that may be estimated at 1.7 billion dollars. This would in dicate a decrease of nearly 4 billion dollars in loans for other than war purposes. This decline is equivalent to the increase in such loans by commercial banks during the two and a half years preceding 1942.. At member banks in 101 leading cities, for which detailed figures are avail able, most of th*e decline in dollar amounts was in commercial and industrial loans, including paper purchased in the open market, notwithstanding the fact that the expanded war loans are in this group. The largest percentage decline was in consumer instalment credits, which for all commercial banks showed an estimated decrease of 800 million dollars, or 50 per cent. This was part of a general decline in consumer credit discussed elsewhere in this report. Real-estate loans, which had been increasing steadily for several years, showed a slight decline in 1941. Loans to brokers and dealers in securities fluctuated sharply around Treasury financing dates, particularly in December in connection with the Victory Fund Drive; they ended the year about 300 million dollars above their average level but declined in January 1943. Lending for war production. Banks of the country have participated actively in providing credits needed to finance performance on war contracts. Quarterly reports received by the American Bankers Association from about 400 of the largest banks showed that amounts outstanding on war loans had increased to a total of 1.1 billion dollars by the end of 1941 and to 1.5 billion by December 31,1941. It appears likely that by the end of 1941 outstanding war loans at all commercial banks in the country amounted to about 3 billion dollars. This is close to 40 per cent of all commercial and industrial loans of banks, compared with less than 2.0 per cent at the beginning of the year. Commercial banks and other financing institutions made extensive use of the facilities for Federal guarantee of war loans and commitments provided for by the President's Executive Order of March 16, 1941, under which the Federal Reserve Banks act as fiscal agents for the War Department, the Navy Department, and the Maritime Commission. A more detailed account of these facilities is given on pages 32.-35 of this report. Restrictions on nonessential credit. While facilitating and encouraging the financing of war contracts, the Federal Reserve authorities took steps during 1941 to curb the extension of credit for nonessential purposes. The Digitized fomr aFjRoAr SsEteRp , which is discussed more fully in the next section of this report, http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 2-3 was the amending of Regulation W to augment restrictions on consumer credit. In addition, banks and bank examiners were asked by the Federal Reserve authorities, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation to encourage curtailment of the existing volume of single-payment loans to individuals for nonproductive purposes and of loans for the accumulation of inventories of civilian consumer goods. Responsible authorities also pointed out the dangers inherent in expansion of credit for purchase of real estate at rising prices and the advantages of reducing in debtedness at this time. On June 17, 1942., following a meeting of Government officials concerned with the possible consequences of use of creditfor accumulation of inventories, the Board of Governors addressed a letter to all banks and other financing institutions urging the voluntary curtailment of credits for the accumulation of inventories of civilian goods. This did not apply to special situations such as the accumulation of fuel stocks and stocks of goods held because of freezing or rationing orders. The Federal bank supervisory agencies re quested that their examiners inquire especially during the course of each examination as to the consideration given by banks to the letter of June 17. The letter sent to the banks and the one for the guidance of examiners for the Federal Reserve Banks are published on pages 113-14 as an appendix to this report. In the field of agricultural credit also steps were taken to discourage unnecessary credit expansion. It was recognized that an increased amount of borrowing by farmers might be needed in connection with the growth of agricultural output which is part of the war program. Special efforts were made, however, by authorities responsible for formulating agricultural policies, as well as by farm borrowers and by lenders, to achieve war expan sion of farm output without stimulating a speculative rise in farm values or involving producers in heavy indebtedness which would become increasingly burdensome in a period of declining farm income. Credit problems confronting farmers under war-time conditions have been under constant consideration by a National Agricultural Credit Committee, organized under the auspices of the Farm Credit Administration and com posed of representatives of farm organizations, banks, life insurance com panies, and Government agencies, including the Federal Reserve. Reports to this Committee indicate that farmers are reducing their mortgage indebted ness at an unprecedented rate, largely as a result of the favorable prices for farm products prevailing during the past few years. Current mortgage instalments are being met promptly and many farmers are anticipating scheduled payments or have repaid their mortgage debt in full. Lenders on farm real estate have been following the policy of encouraging larger down payments and of basing loan values on the long-term outlook for farm prices rather than on current prices. FURTHER RESTRICTIONS ON CONSUMER CREDIT During 1942. the Board extended and increased the restriction of consumer Digitized for FRASER http://frasecr.rsetldoiut iswfehd.iocrhg / it had begun to apply in 1941 through Regulation W. From Federal Reserve Bank of St. Louis

2-4 ANNUAL REPORT OF BOARD OF GOVERNORS September i, 1941, until the spring of 1942., Regulation W had applied only to instalment sales and to loans repayable in instalments, but effective May 6, 1942., the scope of the regulation was extended to include sales made on charge accounts and loans repayable in single payments. This was in compliance with point 7 of the President's anti-inflation message of April xrj to Congress, which said in part that in order to keep the cost of living from spiraling upward we must "discourage credit and instalment buying and encourage the paying off of debts. . . ." Prior to this time the Board had already taken action, effective March X3, to reduce the permissible length of most instalment contracts from 18 months to 15, to increase the size of the down payment required on articles already subject to the regulation, and to extend the list of such articles. The action, effective May 6, reduced the maximum maturity still further, from 15 months to ix (with certain exceptions), expanded the list of articles covered to include almost all kinds of consumer durable and semi-durable goods, and increased the required down payments on many articles so that for most articles the down payment required by the regulation became 33Yz per cent. The rule laid down for charge accounts prohibits the sale of any listed article on credit to any customer whose charge account is in default, and sets the tenth day of the second calendar month after a charge sale as the date on which the account goes into default unless payment (or specified arrange ment to pay) has been made. The principal changes in the regulation are summarized in Table 9 on page 73. The restriction of single-payment loans contained in the amendment of May 6 did not apply to credits already outstanding, but other steps were taken to encourage their amortization. On May 7 the three Federal bank supervisory agencies joined in a statement urging banks to adopt even more generally the principle of amortization for their loans, particularly for those single-payment loans to individuals for nonproductive purposes that were already outstanding. The examiners for the several agencies were instructed to pay particular attention to this type of debt and to comment in their reports on the extent to which banks cooperated in this program. This statement is published in the appendix on page 112.. As required by the Executive Order all of these changes in Regulation W were made after consultation with the Secretary of the Treasury, the Secretary of Commerce, and the Administrator of the Office of Price Administration. The Price Administrator issued a statement to the press on May 7 affirming the constructive bearing of the Board's action in supporting measures that were being taken by the Office of Price Administration for keeping down the cost of living. In a few respects, Regulation W was relaxed during the year, generally for the purpose of improving its practical workings or of supporting some phase of the war program sponsored by other branches of the Government. An example of the latter was an amendment which relieved from restriction extensions of consumer credit for converting oil-burnine furnaces to coal and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 2-5 for insulating homes, measures which were of concern primarily to the War Production Board, the Office of Defense Transportation, and the Petroleum Administration for War. At a time like the year under review, when powerful inflationary forces were at work, the use of current income to reduce consumer debt rather than to buy consumer goods exerted an important anti-inflationary influence. This influence has been at work in the United States since the autumn of 1941, when the volume of consumer debt, then at a peak level of about 9.7 billion dollars, began to go down. By the end of 1941, it had gone down by about 3.6 billion dollars, or about 37 per cent, as is brought out by the chart, which shows the course of short-term consumer debt during the past 14 years. TOTAL CONSUMER DEBT BILLI ON OF DOLLARS ESTIMATED FIGURES; E ND OF MONTH BILLIONS OF 301 10 8 6 ^ 4 " 2 0 1934 1936 NOTE: Monthly estimates of total consumer debt are based on data prepared by the Bureau of Foreign and Domestic Commerce, United States Department of Commerce, and more recently by the Board of Governors of the Federal Reserve System. These estimates of short-term debt consist of instalment and charge-account sale debt, instalment loans (including repair and modernization loans), single-payment loans, and service debt. In addition to Regulation W, other factors have had an important part in bringing about this reduction. Prominent among these were shortages in the available supplies of goods such as are commonly bought on the instal ment plan, particularly automobiles and household appliances. Another important factor was that, as wages and farm income increased, many more consumers were in a position to buy for cash instead of on credit, or to pay promptly for goods and services purchased on credit. The influence of Regulation W was supplementary to these factors; it operated by limiting the amount of credit that could be extended on each instalment sale of any listed article, by shortening the length of instalment sale contracts, by re ducing the customary period for paying charge accounts, and by restricting extensions of consumer credit in the form of instalment loans and singlepayment loans. Regulation of consumer credit was a substantial factor contributing to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

i6 ANNUAL REPORT OF BOARD OF GOVERNORS large reduction in the outstanding volume of this type of credit. It has had, therefore, a not insignificant influence in combating inflationary forces. This seems to have been due in large part to the specific provisions of Regula tion W, but also in large part to the fact that the admonitions of the President and the publicizing of the Government's policy of war-time restraint on consumer credit struck a responsive chord. The acceptability of this policy was manifested in a widespread public disposition to cooperate and an almost universal disposition in the trade to observe the spirit as well as the letter of Regulation W. The educational work carried on by the twelve Federal Reserve Banks and their twenty-four branches, with the cooperation of num erous trade associations and the press, and quiet but persistent and country wide measures of enforcement, have contributed much to making the regula tion effective. ROLE OF CREDIT AUTHORITIES IN PREVENTING INFLATION The principal weapons against inflation in a war economy are taxation, increased savings, and controls over goods, prices, and wages. For this reason the role of credit authorities in financing a war without inflation is necessarily subordinate to that of other Government agencies. With a national income at an annual rate of 12.5 billion dollars and goods available for civilian consumption of 80 billion dollars, and with the prospect for a widening differential in 1943, the principal reliance in preventing inflationary pressure, outside of direct price and commodity controls, has to be on meas ures for channeling back into the war effort the excess income created by military expenditures. Federal Reserve authorities have no direct responsibility for taxation, but in view of the importance of taxes in the monetary picture they feel free to give such suggestions and advice to the Treasury as seem appropriate. The Board's interest in taxation and other aspects of anti-inflation policy is recognized by the fact that the Board is represented on the Economic Stabili zation Board created by Executive Order on October 3, 1941. In channeling savings into the war effort Federal Reserve authorities have cooperated with the Treasury in developing machinery for distributing securities and in help ing to determine types of issues that would encourage holders of investment funds as well as temporarily idle cash to purchase Government securities. As a further means to reduce the impact of the income stream on consumer goods, the Board took measures to regulate consumer credit, to encourage the reduction of debt, and to discourage the use of credit for non-war purposes. Previous reference has been made to these activities. It was apparent in 1942., however, that, notwithstanding existing measures for meeting Treasury needs with as little recourse to the banking system as possible, a substantial volume of Government securities was being taken by the banks. In war time the Federal Reserve authorities must provide the banks with adequate reserves to serve as a basis for purchasing such Govern ment securities as thev are expected to purchase. This responsibility gives Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 2-7 rise to the further duty of choosing methods to be used in providing these reserves. Bank lending versus nonbank lending. There is in practice a great difference in the effects on the economy as between purchases of Government securities by commercial banks and purchases by nonbanking investors. The former results in the creation of new deposits and new buying power, while the latter diverts into the war effort existing funds which would otherwise be available for spending and thus for exerting an upward pressure on prices of civilian goods. It is true that, if securities are sold to holders of invest ment funds which have been held idle for some time, the result is that these funds are made active. This process, to be sure, adds as much to the income stream and to civilian purchasing power as would the creation of money through purchases of securities by the banks. But this is not the whole story. The fact is that the person who has invested his funds in Government securities has reduced the likelihood of his using them to bid up prices. Consequently, the possibilities of inflationary pressure are less when existing funds are used than when new funds are created. Furthermore, the subse quent problem of controlling the supply of money is not aggravated when existing funds are used as it is when additional deposits are created through the sale of securities to the banks. In order to illustrate the difference, a series of assumptions and hypotheses may be helpful. Assume that commercial banks and Federal Reserve Banks together purchase 50 per cent of the Government securities currently offered, as they have in the recent past; assume also that Government expenditures will be in accordance with estimates that have been made and that taxes and United States bond purchases out of savings will not increase. In that case, bank holdings of Government securities will increase by about 30-35 billion dollars in both 1943 and 1944. Commercial bank deposits plus money in circulation will increase by the same amount. The chart on page 2.8 projects these assumptions into the future. On the chart the total of deposits and currency rises to nearly 160 billion dollars by the end of 1944. If the ratio of bank deposits and currency to national income remains the same as at present, then the national income will be 12.5 billion, not the 150 billion which represents the estimated maximum to which income can expand by that time on the basis of our physical resources without a general rise in prices. It is recognized that there is no reason why the ratio of deposits and currency to income should remain at its present level; it could be higher or lower. But as an illustrative hypothesis the assumption is not unreasonable. The story the chart tells is that money income might go up to about 150 per cent of the limits set by the nation's capacity to produce. The extra 75 billion dollars would represent inflation. These figures are neither esti mates nor forecasts. They are hypotheses indicating in broad terms what the country might have to deal with if certain eventualities occur. This particular set of figures is not likely to materialize in exactly the magnitudes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

z8 ANNUAL REPORT OF BOARD OF GOVERNORS indicated. If prices began to go up at the rate implied in the hypotheses, a cycle would start that would upset all calculations: Government expendi tures would have to go up more because of the increase in the price of goods; consequently, national income would go up more; consequently, the amount that the banks would have to take if they took 50 per cent of the increase in public debt would be more. All the figures would be changed. Neverthe less, the spread between the lines for bank deposits and currency and for national income indicates the danger of an increase in deposits and currency at the rate shown. It is apparent that everything possible must be done to prevent such a development. NATIONAL INCOME AND BANK CREDIT (HYPOTHETICAL PROJECTION) s • • "V* 150 ,/. A ^ JA TIONAL INCOME B, fe — 1 " ——==" BANK DEPOSITS AND CUKKtNCT FOR EXPLANATION OF PROJECTIONS SEE SUBSCRIPT. 1939 1940 1941 1942 1943 NOTE : Projected curves in 1943 and 1944 show hypothetical trends of national income and the total of bank deposits and currency: Ai—Volume of bank deposits and currency, if banks purchase half of the currently expected in crease in the public debt; A2—National income corresponding to Ai, if the present ratio of bank deposits and currency to national income is maintained; Bi—Volume of bank deposits and currency, if nonbank purchasers invest all surplus funds in Government securities. The increase would be limited to the amount necessary to provide a volume of bank deposits and currency sufficient for a national income based on no rise in prices (Curve B2), and continuation of the present ratio of bank deposits and currency to national income. B2—Estimated maximum national income likely to be achieved at present prices. There is also presented on the chart an indication of an alternative course of events in which all of the income created by Government expenditures and not required for current living is used to buy Government bonds. This is arrived at by assuming that additional deposits will be created only in an amount sufficient for the functioning of a 150 billion dollar income if the ratio of deposits and currency to national income remains at its present level. The required amount of bank deposits and currency would be about 108 billion, not the 160 billion that would result from bank purchases of one-half Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 29 of the public debt. To provide that amount, the banking system would have to absorb only about 14 billion dollars of Government securities in 1943 and 4 billion in 1944; nonbank holdings of Government securities, on the other hand, would increase by 53 billion in 1943 and 66 billion in 1944. To put it in another way, since an income of 150 billion dollars could be handled with a volume of bank deposits and currency no larger than 108 billion, there is no need, from the point of view of service to the public, of selling to the banks more Government securities than the amount mentioned above. Theoretically, the rest of the securities could be sold to nonbank investors, who would be buying them at the rate of about 60 billions a year. If this were done, there would be no inflationary pressure from additional credit expansion in the next two years. In fact, if everything that this implies were done in the fiscal field and in absorption of current incomes into savings, it is reasonable to assume that there would be no serious inflationary threat. The situation would certainly be sounder and more conducive to orderly post-war readjustment than would be the case under the first alternative. Alternative Federal Reserve policies. As has been indicated, commer cial banks are certain to be called upon to take a share of the public debt in the next two years, and the Federal Reserve authorities will have to provide the necessary reserves. This could be done by having the banks borrow from the Federal Reserve Banks. To facilitate this, discount rates have been reduced, particularly for advances to banks on short-term Government securities. This should encourage the banks to feel free to make full use of their existing reserves with the assurance that in case they should run short they could get accommodation from the Reserve Banks at preferential rates. They could also obtain these funds by selling Treasury bills at the standing % per cent rate. A considerable amount of reserves will have to be pro vided, however, by other Federal Reserve purchases of Government securi ties, by reductions of reserve requirements, or by a combination of the two. In order to bring out the consequences that would follow the adoption of one or the other of the policies, or a combination of the two, two charts are introduced. These charts are based on the assumption that banks will purchase additional Government securities amounting to 50 per cent of the increase in the public debt, or about the same proportion they absorbed in the last six months of 1942.. The amount so purchased will determine the growth in bank deposits and, therefore, the amount of additional reserves that the banks will need. It is also assumed that currency will continue to expand at a rate of about 6 billion dollars a year. If it should expand more, the pressure for reserves would be greater than indicated; if it should expand less, the reserve situation would be correspondingly easier to handle. The first chart shows what the portfolio of the Federal Reserve Banks would be at the end of 1943 and 1944 in case the banks' entire increase in needed reserves resulting from currency withdrawals and deposit expansion were met by reducing reserve requirements, what it would be if currency Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

3° ANNUAL REPORT OF BOARD OF GOVERNORS drains were met through open-market operations and reserves were reduced only to the extent necessary to meet the increase in required reserves arising from deposit growth, and what would happen if the entire increase in the FEDERAL RESERVE PORTFOLIO OF GOVERNMENT OBLIGATIONS UNDER THREE KINDS OF CREDIT ACTION DEC. 31,1942 END OF 1943 END OF 1944 ( ACTUAL ) ( HYPOTHETICAL ) banks' reserve needs were met through purchases of securities. If the last mentioned course were pursued, the total amount of securities held by the Reserve Banks at the end of 1944 would be about 2.6 billion dollars. RESERVE REQUIREMENTS OF MEMBER BANKS UNDER THREE KINDS OF FEDERAL RESERVE CREDIT ACTION PERCENTAGE OF REQUIRED RESERVES TO TOTAL DEPOSITS IF CURRENCY INCREASES ARE MET BY OPEN MARKET PURCHASES AND RESERVE NEEDS DUE TO DEPOSIT GROWTH BY REDUCTION IN RESERVE REQUIREMENTS. END OF 1942 END OF 1943 END OF 1944 ( HYPOTHETICAL ) ( HYPOTHETICAL ) The second chart shows how the three outlined courses of action would be reflected in the reserve requirements of member banks. We still assume that banks take 50 per cent of the growth in the public debt and that currency Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 31 flows out at the rate of 6 billion dollars a year. The chart shows that if all of the banks' needs for reserves were met by reduction in requirements, reserve requirements would have to be almost eliminated by the end of 1944. The situation would be one where there were practically no reserve requirements —and practically no bank reserves. A currency drain of the assumed magni tude would have absorbed practically all of them. It is estimated that, in this sequence, the Board would have exhausted its authority to reduce reserve requirements by the middle of 1943. It would then have to obtain further and unlimited authority and by the end of 1944 requirements would be almost down to zero. This would not be conducive to the maintenance of sound banking conditions, particularly at a time when bank deposits might have increased to the high level of 130 billion dollars. To sum up: the Federal Reserve authorities, in meeting the necessary re quirements of member banks for additional reserves in the next two years, will have to determine to what extent they will depend on reductions in reserve requirements and to what extent on purchases of United States Government securities. The figures underlying the charts are based on many assumptions. They are not forecasts; they represent mere hypotheses. They indicate, however, the nature and general magnitude of the problems with which the Federal Reserve authorities will have to deal in the imme diate future. FEDERAL RESERVE BANKS AS FISCAL AGENTS UNDER WAR PROGRAM As in 1941, when preparation for threatened war led to a great increase in the volume and variety of services performed [by the Reserve Banks for various branches of the Government, throughout 1941 there was a great expansion in the scope and volume of work performed for the Government by the Reserve Banks in connection with the prosecution of the war. Issuance and servicing of Government obligations. As fiscal agents of the United States, the Federal Reserve Banks handle all Treasury opera tions outside of Washington incident to the issue, redemption, and exchange of public debt obligations, including the qualification of all issuing agents for the sale of War Savings bonds except the Postal Service. The number of pieces handled increased more than 700 per cent during 1942., chiefly as the result of the increase in the number of War Savings bonds. In May, repre sentatives of all Federal Reserve Banks and of the Board of Governors at tended a fiscal agency conference held by the Treasury, and in October representatives of the Federal Reserve Banks and of the Board attended a meeting in Kansas City called by the Treasury for the purpose of discussing the War Savings Bond Program. On the basis of the number of employees assigned, the handling of War Savings bonds during 1942. was one of the largest single operations performed by the Federal Reserve Banks since the establishment of the System. During the last half of 1941, an average of 4,000 officers and employees were assigned to the War Savings Bond unit, or somewhat more than were assigned to the entire check collection function, the next largest activity. Before the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

31 ANNUAL REPORT OF BOARD OF GOVERNORS year ended, Savings bond operations had grown so large that several Reserve Banks and branches found it necessary to lease space outside their own build ings. Operations performed in connection with Savings bonds are quite complicated owing to the fact that the bonds are registered and also to the fact that they are redeemed by check rather than by cash. The exceedingly large number of Series E bonds handled during 194Z is due in part to the small denominations in which they may be purchased—about two-thirds of the total number of bonds handled, for example, were in the $2.5 de nomination. In addition to cooperating with the State organizations of the Treasury's War Savings Staff and with national and State banking authorities and others in obtaining the qualification of banks as issuing agents, the Federal Reserve Banks during 1942. cooperated in obtaining the qualification of corporations, credit unions, building and loan, and savings and loan associations, etc., as issuing agents for War Savings bonds. The Federal Reserve Banks supply all issuing agents except post offices with their stocks of bonds and handle all remittances and accounting in connection therewith. In May, the Federal Reserve authorities cooperated with the Secretary of the Treasury in setting up a Victory Fund organization to aid in the sale of Government obligations. A Victory Fund committee was established in each Federal Reserve district under the chairmanship of the President of the Federal Reserve Bank. The personnel of each district committee, although chosen primarily from the financial community, included other persons whose position or ability made their appointment appropriate and desirable. All appointments, most of which provided for no compensation, were made subject to approval by the Secretary of the Treasury. Regional committees were also appointed within the Federal Reserve districts. The twelve district Victory Fund committees are tied together nationally by a committee of the Federal Reserve Bank presidents of which the Secretary of the Treasury is Chairman. The Chairman of the Board of Governors provides the liaison between the Reserve Banks and the Treasury. Several meetings were held during the year for the purpose of formulating plans and procedure. In December the activities of the Victory Fund committees reached their peak for the year in connection with the new issues sold by the Treasury at that time. Financing war production. Important new responsibilities were con ferred upon the Federal Reserve by the President's Executive Order No. 9112., issued on March 2.6, 1942., which provided for a Government guarantee of loans made for war production purposes. The basic purpose of the order was to facilitate war production by providing adequate financing for sub contractors and prime contractors whose need for working capital had been increased by war orders beyond their borrowing ability so that private financing institutions could not properly extend the credits required without some form of Government protection. The order was designed particularly to assist subcontractors to whom financing was not available either through Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 33 the Assignment of Claims Act of 1940 or through advance payments by the procurement agencies of the Government, except to a limited extent through the medium of prime contractors. It was of especial aid to business con cerns, including small businesses, whose credit standing was not sufficiently high to justify bank loans of the size necessary for their greatly expanded volume of production. The War and Navy Departments and the United States Maritime Commis sion were authorized to guarantee, and to make, loans for the purpose of financing contractors, subcontractors, or others engaged in any business or operation deemed by those agencies to be necessary, appropriate, or con venient for the prosecution of the war, including the obtaining or conversion of facilities. The Federal Reserve Banks were authorized to act as agents for the principals in carrying out the provisions of the Order, subject to their specific instructions and the general supervision of the Board of Governors. Any funds appropriated for the use of the principals were made available for disbursement under the Order through the agency of the Reserve Banks. A press statement released by the White House stated that guarantees under the Order would not be made under peace-time credit rules, but would be made whenever additional financing is essential for increased production. On April 1, representatives of the Federal Reserve Banks met with the Board of Governors in Washington for discussion of the procedure necessary to give effect to the program with the least possible delay. Somewhat later the Board of Governors designated three of its members as a War Loans Com mittee to assist in handling the supervisory activities entrusted to the Board by the Executive Order. To implement the work of the committee, the Office of Administrator for War Loans Committee was created on April 6. After consultation with officials of the War and Navy Departments, the Maritime Commission, and the War Production Board, the Board of Gover nors issued its Regulation V, effective April 6. The new Regulation pre scribes general rules and policies for the guidance of the Reserve Banks in handling guarantees of loans which the armed forces and the Maritime Com mission deem essential to the prosecution of the war. The functions of the Reserve Banks with respect to negotiation of these loans include analysis of the financial integrity of the applicant, determination of the type of financ ing best suited to meet different situations, and preparation of the necessary documents. The servicing of guaranteed loans after they have been made is done principally by the banks and other financing institutions. The War and Navy Departments and the Maritime Commission have the responsibility of certifying as to the technical qualification of the applicant and the impor tance of the work to be financed. The way in which Regulation V has facilitated war production may be illustrated by reference to one of the earliest loans arranged under this financing mechanism. To meet certain ordnance requirements, it appeared necessary to build new facilities requiring investment of an estimated $16,000,000 by the Government, but entailing a delay of from six months to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

34 ANNUAL REPORT OF BOARD OF GOVERNORS a year to reach full production. A certain manufacturer, however, proposed to take subcontracts from several important companies having prime con tracts with the Ordnance Department, and, in turn, to farm out the bulk of the work with more than xo of its peace-time competitors located at various points in the eastern half of the country. This plan made use of valuable facilities at scattered points which might otherwise have remained idle since they had been devoted to supplying parts for civilian automobiles. Financing was a real problem. The manufacturer, not having a prime con tract, could not avail himself of advance payments except to a limited extent and the sub-subcontractors did not have access to any financial aid except such as they could obtain through their own banking connections. Regulation V furnished the answer to the financial problem. Not only the orders of the subcontractor from the prime contractors, but likewise the orders of the sub-subcontractors constituted "war production contracts" entitled to financing under Regulation V. The loan was arranged within a few weeks after the Regulation was promulgated and the resulting production for the Ordnance Department's program has been an outstanding success. The flexibility of Regulation V financing was also illustrated by this case. Initially, the subcontractor borrowed a sufficient amount to finance the operations of his sub-subcontractors, most of whom, as the program pro ceeded, arranged their financing with their own commercial banks under Regulation V. Under the President's Order and the Board's Regulation V, by the end of the year about 1,700 applications for guarantees of loans, aggregating i..y billion dollars in amount, had been authorized through the Federal Reserve Banks. Of the total number of guarantees authorized, iq per cent were for amounts up to $15,000 and 59 per cent for amounts up to $100,000. It is apparent, therefore, that a large proportion of these loans was made in relatively small amounts and presumably to small concerns. In dollar amount, however, the bulk of the guarantees was covered by a relatively small number of large loans. On December 31 about 803 million dollars of advances on such loans were outstanding. Varying percentages of the loans are guaranteed; of the loans outstanding on December 31 the portions guaran teed aggregated 631 million dollars. In addition, about 1.4 billion dollars were available to borrowers under guarantee agreements outstanding. Most of these loans and agreements to make loans were made by commer cial banks, but other financing institutions have also participated. Very large loans have been handled through participations entered into by a num ber of institutions. In a few cases the Federal Reserve Banks have agreed to make advances under guarantees and the Reconstruction Finance Corporation has made a number of such commitments. Utilization of the twelve Federal Reserve Banks and their twenty-four branches has made it possible to decentralize the financing of war production to a considerable extent, thus facilitating the procedure for the Government as well as for loan applicants. As indicated on page 2.1. of this report, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 35 the banks of the United States, both members and nonmembers of the Federal Reserve System, have given full cooperation. Depositary, custodianship, and other functions. As depositaries of Government funds, the Reserve Banks handled and charged against the Treasurer's account a total of 150 million Government checks drawn by disbursing officers throughout the country for war and other Government expenditures. They also handled and credited to the Treasurer's general account millions of checks and other items received by Federal officers in payment of taxes, customs, etc. During the last half of 1942., an average of about 8,000 officers and employees of the Federal Reserve Banks, or more than 40 per cent of their entire personnel, were engaged in serving various United States Government departments and agencies. This was a substantial increase over normal years and arose for the most part from war activities. The Reserve Banks, acting as fiscal agents, custodians, and depositaries for the Reconstruction Finance Corporation, actively participated during the year in the administrative aspects of the various war-time programs of the Corporation, its various subsidiaries, and the Commodity Credit Corporation. Such activities included the construction and expansion of production facili ties for the manufacture of war material, the procurement and stock-piling of strategic and critical materials, the operation of the Government's War Damage Insurance program, and other projects directly related to the war effort. The Reserve Banks disburse, by checks drawn on the Treasurer of the United States, the amounts of loans and other payments made by the Re construction Finance Corporation, the Commodity Credit Corporation, and their various subsidiaries, and receive, examine, and hold the notes of the borrowers and other collateral. Payments of principal, interest, and com mitment fees made in connection with such loans are received and applied by the Reserve Banks. Among the important disbursements effected by the Reserve Banks during the year in the above-mentioned capacities were those made for account of the Defense Plant Corporation, a subsidiary of the Reconstruction Finance Corporation, incident to the purchase of land, the building, expansion, and equipment of plants, and the purchase of materials. The Reserve Banks received, examined, and held documents in connection with such activities and collected and applied payments received on behalf of the Corporation. For the Defense Supplies Corporation, the Rubber Reserve Company, and the Metals Reserve Company, the Reserve Banks received, examined, and held documents incident to transactions and effected and received many payments in substantial amounts. These agencies, all of which are sub sidiaries of the Reconstruction Finance Corporation, are primarily engaged in purchasing, holding, and selling strategic and critical materials and supplies which include a multitude of individual items. Similar services were performed by the Reserve Banks during the year for the account of the Commodity Credit Corporation, which acquires domestic and foreign agri- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

36 ANNUAL REPORT OF BOARD OF GOVERNORS cultural commodities required by the United States and the Allied nations. Certain commodities so accumulated were transferred under lend-lease projects. In connection with the activities of the War Damage Corporation, a sub sidiary of the Reconstruction Finance Corporation, the Reserve Banks re ceived from the fire insurance and casualty companies handling such insurance statements regarding the insurance written by them and the premiums received therefor, less certain commissions and service fees. The Reserve Banks verified the computations, collected the remittances received from the insurance companies, and reported with respect thereto to the War Damage Corporation. Since July 19^ the War Damage Corporation has insured real and personal property against loss or damage resulting from enemy attack or action of our own armed forces in resisting enemy attack. Beginning in October the Reserve Banks effected payments for the Defense Supplies Corporation in connection with its program involving the acquisi tion of new and used tires and tubes from consumers. Payments were made by check or by War Savings bonds or stamps to owners who did not make gifts of such tires and tubes. The Reserve Banks delivered large amounts of currency over-the-counter to authorized finance officers of the Army and Navy and made large currency shipments for payroll purposes direct to Army and Navy posts and also to banks in the vicinity of posts and military and naval construction projects. Foreign funds control and intergovernmental problems. As in 1941, the "freezing" of foreign assets and the control of foreign transactions was an important war activity in 1941. The Federal Reserve Banks, as agents for the Foreign Funds Control in the Treasury, receive license applica tions relating to transactions affecting the interests of "nationals" of blocked countries. Under general authorizations from the Treasury, the Reserve Banks act independently on most of these applications and refer only a small number to the Treasury Department with recommendations. Early in 1941 the Foreign Funds Control regulations were amended to require that all currency imported or otherwise brought into the United States (except from certain British countries and except for small exempted amounts carried by travellers) should be deposited with a Federal Reserve Bank and released only upon authorization by the Treasury. This measure was designed to prevent the liquidation in this country of dollar currency looted by the Axis in occupied areas, and to destroy so far as possible the markets for such currency abroad. Many foreign countries, in particular the Latin American republics, have lent their aid to this program by restricting or prohibiting transactions in dollar currency within their borders. The Federal Reserve Banks hold the gold reserves and most of the official funds maintained by foreign countries in the United States. Gold under earmark for foreign account at the Reserve Banks increased by 45 8 million dollars to 2.9674 million during 1942., while the deposits of foreign central banks and governments in the Reserve Banks were increased by xo million Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 37 to 792 million at the end of the year. A large proportion of these foreign assets were in "frozen" accounts which, though relatively inactive, required much attention from the Reserve Banks and the Board. It was necessary to obtain not only licenses for transactions in such accounts but also certification of the authority to operate many of the accounts pursuant to Section X5(b) of the Federal Reserve Act. On the other hand, some of the accounts which were not "frozen" were exceptionally active. The Reserve Banks rendered important service to Allied belligerent governments and their official missions in this country by handling their dollar disbursements for war supplies. They were also active in arranging for official remittances from the United States to foreign countries, particularly in connection with the maintenance abroad of American armed forces. The Reserve Banks continued their activities as agents of the Treasury in gold and silver transactions with foreigners. Silver imported in 1942., how ever, was sold almost entirely to industrial consumers in the market rather than to the Treasury. The Federal Reserve Bank of New York carries out the operations of the Stabilization Fund in accordance with instructions from the Treasury. The Reserve Banks have also collected reports and main tained the records of international capital movements and foreign exchange transactions compiled since 1934 in accordance with executive orders and Treasury regulations. Publication of these statistics was discontinued at the end of 1941, except for data showing the total capital movement dis tributed by various types. Beginning in May the Federal Reserve Bank of New York, with the approval of the Board of Governors and in accordance with established prac tice, made a series of small loans on gold to a foreign central bank. The highest amount outstanding during the year was 5 million dollars. The loans maturing in 1941 were repaid in full on their respective due dates; at the end of the year two loans amounting to 2.. 5 million dollars remained outstanding, maturing early in 1943. An innovation in the operations of the Federal Reserve Banks was the handling by the Federal Reserve Bank of San Francisco of the complicated property problems created by the large-scale war-time evacuation of all Japanese and persons of Japanese ancestry from military areas in the Twelfth Federal Reserve District. Pursuant to Executive Order No. 9066 issued by the President on February 19, and under the direction of the local military authorities, over 100,000 persons were evacuated. After conferring with the Board of Governors, the Secretary of the Treasury asked the Federal Reserve Bank of San Francisco, in its capacity as Fiscal Agent of the United States, to administer the property of evacuated persons, when the persons so desired, with the exception of agricultural property and equipment, which were placed under the jurisdiction of the Farm Security Administration. Early in March representatives of the Board, the Treasury Department, and the War Department met in San Francisco to confer with officials of the Reserve Bank, representatives of other civilian Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

3» ANNUAL REPORT OF BOARD OF GOVERNORS agencies of the Government, and the military authorities to prepare for the task at hand. The San Francisco Reserve Bank offered the evacuees protection against fraud, forced sales, and unscrupulous creditors, and assisted them in arrang ing for the administration or orderly liquidation of their business and other property interests. In order to provide ready accessibility, four principal offices outside Reserve Bank buildings were established in San Francisco, Los Angeles, Portland, and Seattle, and forty-nine field offices were estab lished throughout the district. The offices were staffed with a group of men whose experience had been wide and varied, and in May 1941, at the peak of operations, 184 persons were engaged directly in the performance of duties of the Evacuee Property Department! ENLARGED RESPONSIBILITIES OF FEDERAL RESERVE BANK BRANCHES In order that the Federal Reserve might be in a better position to fulfill its war-time responsibilities, the Board of Governors initiated a movement to increase the services rendered by branches of the Federal Reserve Banks. The Board seeks to adjust the services of each branch to the increasing re quirements of the territory it serves rather than to develop a uniform pattern of expansion for all branches. Although special attention is being given to increasing the war-time services of the branches, consideration is also being given to ways in which the public interest would be served by a decentraliza tion of peace-time functions. The subject was discussed at the joint meeting of the Board and the Presidents of the Reserve Banks in March and the President of each Reserve Bank having one or more branches later came to Washington for consultation on plans for decentralizing activities within his district. Among the first steps taken in the general program was the expansion, with the approval of the Treasury Department, of the branch fiscal agency activi ties, particularly those incident to the handling of War Savings bonds. While all of the Federal Reserve Bank branches had previously issued War Savings bonds, in many cases their operations in this connection had been limited to over-the-counter sales. These activities were expanded to include (1) the issuance of savings bonds for firms throughout the branch territories which are operating payroll savings plans without having qualified as issuing agents, and (2.) the maintenance and servicing of the consignment accounts of banks and others who have qualified as issuing agents. The branches are also handling Series F and G bonds and Tax Savings notes, and consideration is being given to an expansion of their activities in connection with market issues. There was also an expansion of branch activities in connection with war production loans, consumer credit control, and economic research. Wher ever possible these services, as well as others of peculiar value to indi vidual branch territories, were adapted to conditions prevailing in the localities where thev were offered. It is contemplated that the duties and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 39 responsibilities of the Board of Directors of each branch will increase as the services of the branch expand. The program for increasing the responsibilities of branches also provides for strengthening their personnel. With the approval of the Board of Governors, for example, one Federal Reserve Bank which has greatly ex panded the facilities of its branch has made the following changes with respect to personnel: It has appointed one of its vice presidents to serve as resident head of the branch. This officer will no longer serve as a member of the branch board, which has been reduced from seven to five members. The resident staff of the branch will be expanded to include a senior bank examiner, an attorney, and a research economist. Other Banks are con sidering similar additions to personnel and changes in title of the heads of branches. The Board and the Federal Reserve Banks are planning for further de velopment of branch activities in 1943. THE BANKING STRUCTURE AND BANK SUPERVISION In addition to handling an increasing volume of banking business, when the turnover of bank personnel was extremely high, the banks of the country in 1942. served war agencies, war plants, and military posts. They also sold a large volume of Government bonds and War Savings stamps. At the close of the year the banks were prepared to undertake the handling on a nation wide basis of the ration banking plan which was being developed by the Office of Price Administration with the cooperation of banks and bank supervisory agencies. In view of the heavy demands that banks have been called upon to meet in connection with financing the war, many banks have taken steps to place their institutions in the best possible position to meet whatever conditions may develop during and after the war. They have endeavored to strengthen their position by restricting credit to productive purposes, by collecting nonessential loans and placing loans on an amor tization basis where practicable, by confining new investments to higher grade securities, by disposing of less desirable assets as opportunities were afforded, and by curtailing dividends in order to build up strong capital structures. As a means of obtaining the benefits afforded by the Federal Reserve System, a number of State-chartered banks became members of the Federal Reserve System during the year. Bank supervisory agencies have cooperated with other agencies to further the control of inflation through the reduction of individual credit for non productive purposes and credit for the accumulation of inventories of con sumer goods and, wherever consistent with sound banking principles, to implement the financing of the war program, both private and governmental. These activities have been described in earlier sections of this report. Member and nonmember banks. The number of banking offices in the United States declined from 18,52.4 at the end of 1941 to 18,419 on Decem ber 31, 1942.. This decline of 105 followed the trend of recent years, but was Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4o ANNUAL REPORT OF BOARD OF GOVERNORS somewhat larger than in the previous year. The number of banks decreased by 145 to 14,680, while the number of branches and additional offices in creased by 40 to 3,739. As in past years, the net decrease in the number of banks was due princi pally to consolidations and voluntary liquidations. There were nine banks suspended during the year, none of which was a member bank. Newly organized banks—12. in number—were fewer than in any other year of record. The net increase of 40 in the number of branches and additional offices was largely accounted for by the opening during 1941 of 33 new offices at various military reservations. A few of these offices were regularly authorized branches, but the majority were "banking facilities" established through arrangements made by the Treasury Department with banks designated as depositaries and financial agents of the Government. Apart from the offices at military reservations, there were 58 branches established during 1941 and 51 discontinued, compared with 70 established and 37 discontinued in 1941. Approximately two-thirds of these 58 new branches were located outside the head-office city; 19 were de novo and 19 were conversions of existing banks into branches. Membership in the Federal Reserve System continued to increase in 1941— showing a net gain of 60 banks—despite the net decrease of 145 in the total number of banks. National banks—required by law to be members of the Federal Reserve System—declined by a net of 36, but State member banks showed a net increase of 96, including two newly organized State banks. This increase in the number of State member banks in 1942. was, however, somewhat below the increases of 1940 and 1941. The 6,679 member banks that were in operation on December 31, 1942-, accounted for 47 per cent of the number and about 88 per cent of the deposits of all commercial banks in the United States. Total deposits of the 104 previously operating State banks admitted to membership in 1941 (as shown by their first call reports filed as members) amounted to 865 million dollars, of which 614 million was accounted for by one bank in the New York district. Deposits of the remaining 103 banks ranged from $179,000 to $31,477,000. Admissions were distributed through out the.twelve Federal Reserve districts, over two-thirds having been in four districts—Chicago, Cleveland, St. Louis, and Richmond. Par and nonpar banks. The Federal Reserve Act provides that no ex change charges for the collection or payment of checks shall be made against the Federal Reserve Banks; consequently only checks on which no exchange is charged are collectible through the Reserve Banks. To facilitate collec tions, there is maintained a "Federal Reserve Par List," comprising all member banks—which are required to remit at par for checks presented to them by the Reserve Banks—and nonmember banks that have agreed to pay without deduction of exchange charges such checks drawn upon them as are forwarded for payment by the Reserve Banks. At the end of 1941 there were 11,4x1 banks on the Federal Reserve par Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 41 list. This figure included the 6,679 member banks and 4,743 nonmember banks. The number of nonmember banks (other than mutual savings banks and banks on which no checks are drawn) not on the par list was i,7io. The number of banks on the par list declined by 12.1 during the year, as a result of mergers, voluntary liquidations, suspensions, and withdrawals from the list. There was also a net decrease of ±1 in the number of nonpar banks; but, as in other years, more of the banks that continued in existence through out the year withdrew from the par list than were added to it. There were 34 withdrawals as against 17 additions. Forty-eight nonpar banks went out of existence, but this decrease was partially offset by the organization of ten new nonpar banks. For several years the number of nonpar banks going out of existence has exceeded the number newly organized. At the end of the year nonpar banks were distributed by States as follows: Minnesota 411, Georgia z6o, Mississippi 171, Tennessee 167, Nebraska 159, Wisconsin 159, Alabama 1x9, Arkansas 12.9, North Carolina 117, South Carolina 116, North Dakota 113, Iowa 111, Missouri in, Louisiana 103, South Dakota 96, Texas 95, Florida 89, and twelve other States 154. Examination of Federal Reserve Banks. The Federal Reserve Banks and their twenty-four branches were examined during the year, by the Board's Division of Examinations, as required by law. Examination of State member banks. State member banks are subject to examination at the direction of the Board of Governors or at the direction of the Federal Reserve Banks by examiners selected or approved by the Board of Governors. The policy was continued in 1941 of making at least one regular examination of each State member bank, including its trust depart ment, during each calendar year by examiners for the Reserve Bank of the district in which the State member bank is situated, with additional exam inations in special cases. As in previous years, in order to avoid duplication and to minimize inconvenience to the banks examined, wherever practicable joint examinations in cooperation with the State banking authorities or, by agreement with the State authorities alternate examinations, were made. In accordance with the practice of holding periodic conferences with repre sentatives of the bank examination departments of the Reserve Banks, mem bers of the Board of Governors and its staff met at the Federal Reserve Bank of Philadelphia for several days in September to confer with representatives of the bank examination departments of the twelve Federal Reserve Banks. The general theme of the conference was bank examination and other super visory responsibilities under war-time conditions. Particular consideration was given to the effect of current and prospective post-war credit, monetary, and price factors on loan and investment policies. In line with the policy of having the bank examination and supervisory activities of the Federal Reserve Banks closely coordinated under general policies of the Board, representatives of the Board's Division of Examinations participated in several conferences of examiners at various Federal Reserve Banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4i ANNUAL REPORT OF BOARD OF GOVERNORS During the year the Board, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation, adopted a uniform inscription on their reports of examinations of banks for the purpose of further insuring the confidentiality of such reports. Bank holding companies. Bank holding companies, technically defined as "holding company affiliates," are required by law to obtain voting per mits from the Board of Governors of the Federal Reserve System before stock of subsidiary member banks which the holding companies own or control may be voted. This requirement does not apply to the voting of stock of subsidiary banks which are not members of the Federal Reserve System, whether or not they are insured banks. In acting upon an application for a voting permit the Board is required by law to consider, among other things, the financial condition of the applicant and the general character of its management. The Board may, in its discretion, grant or withhold a voting permit, as the public interest may require. Regulation of bank hold ing companies by the Board is effected through the specific statutory powers to grant, withhold, or revoke voting permits, and through agreements predi cated upon the general statutory powers and responsibilities of the Board and required to be executed by the holding companies before obtaining vot ing permits from the Board. The purpose of these statutes and agreements is that the holding companies and their subsidiaries, including member banks and nonmember banks, whether insured or uninsured, shall maintain sound financial condition and proper management policies and operating practices, including those involving inter-company transactions and relationships. Appropriate action was taken during the year in a number of cases with respect to various important matters in the regulation of bank holding com panies. During the year the Board authorized the issuance of two general voting permits, i.e., permits unlimited as to time or matters which may be voted upon, and two limited voting permits, i.e., permits for limited periods of time and limited also as to subjects which could be voted upon. Under the authority of Section 301 of the Banking Act of 1935 the Board determined that six organizations were not engaged directly or indirectly as a business in holding the stock of, or managing or controlling, banks, bank ing associations, savings banks or trust companies, and that, therefore, they were not holding company affiliates except for the purpose of Section 2.3 A of the Federal Reserve Act, which contains limitations on loans to affiliates and investments in or loans on their obligations by member banks. Trust powers of national banks. Under the provisions of Section n(k) of the Federal Reserve Act, the Board granted to eight national banks au thority to exercise one or more trust powers. This number includes grants of one or more additional powers to two banks which previously had been granted certain trust powers. Trust powers of twelve national banks were terminated, eleven by voluntary liquidation and one by voluntary surrender. At the end of 1942., there were 1^2. national banks holding permits to exer cise trust powers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 43 Increased acceptance powers. The Board approved during the year the application of a national bank made pursuant to the provisions of Section 13 of the Federal Reserve Act for permission to accept drafts and bills of ex change up to an amount not exceeding at any one time, in the aggregate, 100 per cent of its paid-up and unimpaired capital stock and surplus. Foreign branches and banking corporations. Foreign branch opera tions of member banks were further restricted during the year by the expan sion of Japanese military activities in the Far East, where five branches and offices suspended operations or were discontinued as a result of enemy occupa tion or war developments. The German seizure of unoccupied France brought one branch of a member bank under enemy control. One foreign branch was established during the year under permission granted by the Board to a member bank pursuant to the provisions of Section 2.5 of the Federal Reserve Act, the branch being opened for business shortly after per mission was granted. At the end of 1942., seven member banks were operating a total of 65 branches or offices in 14 foreign countries or dependencies or possessions of the United States, exclusive of branches or offices in enemy or enemy occu pied territory. Of the 65 branches and offices, four national banks were operating 60 and three State member banks were operating 5. The foreign branches were distributed geographically as follows: Latin America 42. I England. Argentina 10 U. S. Insular Possessions and Brazil 4 Dependencies Chile x Colombia 3 Canal Zone 4 Cuba 16 Puerto Rico 7 Mexico 1 Panama 3 Peru 1 Total. 65 Uruguay 1 Venezuela 1 Far East India 1 The head office of the one banking corporation in active operation, or ganized under the provisions of Section 15(a) of the Federal Reserve Act and chartered by the Board to engage in international or foreign banking, was examined during the year by the Board's Division of Examinations. The institution's three branches in the Far East and its two French offices are in enemy occupied territory. There was no change during the year in the list of the four corporations organized under State law and operating under agreements with the Board pursuant to the provisions of Section 15 of the Federal Reserve Act relating Digitized fotro F tRhAeS iEnRv estment by member banks in stocks of corporations engaged prinhttp://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

44 ANNUAL REPORT OF BOARD OF GOVERNORS cipally in international or foreign banking. One corporation operates a branch in England and one has an English fiduciary affiliate. The other two corporations have no foreign offices. RESEARCH AND ADVISORY SERVICES The Board continued its usual reporting services, modifying them to meet current changes in the economy and special problems growing out of the war. Work on several long-run research projects was advanced, and infor mation and advice were contributed to many inter-departmental conferences and committees. As indicated in other parts of this report, there were fre quent conferences between representatives of the Board and representatives of other Government agencies with respect to questions of public policy and procedure in war time. Early in 194Z the Board and the Federal Reserve Banks began the collec tion and compilation of commercial bank figures on consumer instalment credit. The registration statements filed pursuant to the Board's Regulation W and the condition reports of member banks submitted regularly to the Board provide data of use in collating and standardizing the collection and presentation of other figures for consumer credit. For this reason and be cause of the responsibility of the Board of Governors for the regulation of consumer credit, the collection of statistics in this field was centralized so far as practicable in the Reserve System. As part of the program the monthly series of consumer instalment loans held by commercial banks, previously compiled by the Consumer Credit Division of the American Bankers Association, was taken over by the Federal Reserve. Likewise the consumer credit statistics for personal finance com panies, industrial banks, credit unions, and certain retail lines, formerly collected by the Bureau of Foreign and Domestic Commerce, were transferred to the Federal Reserve. The collection of credit data from department stores was extended and the collection of retail furniture statistics centralized in the System. In addition, at the request of the Board, the Bureau of the Cen sus expanded the scope of the statistics it collects from sales finance com panies. In October for the first time the Board released to the public two monthly series of commercial bank figures on consumer instalment credit. They show, by type of loan, the estimated amount of such loans outstanding each month and the volume made within the month. A description of the new series was published in the Federal Reserve Bulletin for October 1941. In order to obtain information on the nature of current bank lending and the extent to which banks are participating in financing war production, the Board of Governors and the Reserve Banks conducted a special survey of commercial and industrial loans made by member banks over the period April 16 to May 15, 1942., inclusive. The Board also undertook the compila tion of a new index measuring monthly output of finished consumer goods in physical terms. The index will show the amount of output destined for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 45 civilians and exclude that destined for the Government, including our military forces and Allies. At the request of the War Production Board some of the data prepared were made available to it in December before the pro ject was complete. At various times during the year special studies of the Board's industrial production index were made in order to obtain a break down between war and civilian activity and the results of these studies were published in the Federal Reserve Bulletin. At the request of the Statistical Division of the War Department, studies were made of the tonnage of manu factured goods produced in 1941 and 1942.. Special analyses of department store sales and inventories were also made for war agencies. Some of the results of these studies have been published in the Federal Reserve Bulletin and others have been made available to Government agencies for their confidential use. In the course of the year the Board made substantial revisions in some of the reports required of banks. The year-end report of condition was reduced to half its former length, the report of earnings and dividends was revised and simplified, and the "bank debits" reports were changed from a weekly to a monthly basis. Besides reducing the number of reports, this last change improved the usefulness of the data by providing a series that eliminated wide weekly variations. The revisions in bank reporting reflect in part the changing emphasis brought about by the war, and in part further progress toward simplification and standardization of bank report forms by cooperative action of the three Federal supervisory agencies and the State banking authorities. The primary result is an improvement in currently available information regarding banking developments. An incidental result is an appreciable lightening of the clerical burden of the reporting banks and the Federal Reserve Banks. This has been of considerable importance, particularly since service in the armed forces has drawn off personnel while financing and other phases of the war program have greatly increased the volume of bank operations. The Board continued its study of post-war problems. Among the domes tic problems being studied are: monetary and fiscal policies; investment po tentialities of various fields, both public and private; overall surveys of public investment programs; and Federal-State-local taxation and fiscal relations. Close contact is maintained with other agencies working on related pro grams, particularly with the Bureau of the Budget, the Treasury, the National Resources Planning Board, the Bureau of Labor Statistics, the National Housing Agency, the Department of Agriculture, and the Depart ment of Commerce. During the latter part of 1941 an expanded program of research on regional economic problems was undertaken by the Federal Reserve System. Re search departments have always been maintained at the twelve Federal Re serve Banks in order to interpret local economic developments for the officials of the Banks and to provide the Board of Governors with information con cerning developments in the various regions of the country. The work of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4 6 ANNUAL REPORT OF BOARD OF GOVERNORS these departments has now been expanded, in cooperation with the Board's Division of Research and Statistics, to include more intensive study of the impact of war upon various strategic localities. The location of the Federal Reserve Banks and branches in important areas throughout the country and the inclusion on their directorates of local representatives of industry, trade, and agriculture, as well as finance, provide an unusually good opportunity for regional studies which may be used as the basis for the consideration of national economic problems. The projects undertaken include an analysis of the current situation in each important region and an appraisal of likely developments in the post war period in order that these matters may be given proper consideration in the development of Federal Reserve policy. It is hoped that the results of this work will be of use also to Federal, State, and local government agencies and to private organizations and individuals concerned with the localities studied. In the conduct of these studies, the Board of Governors and the Federal Reserve Banks are cooperating to the fullest possible extent with other agencies doing similar work in order that duplication of effort may be avoided. International post-war studies are directed broadly to the problems of monetary and financial rehabilitation in reoccupied areas, exchange stabiliza tion, international developmental loans, and the financing of world commod ity surpluses in the post-war period. Other Government agencies with which the Board has been in contact in this field are the State Department, the Treasury Department, the Board of Economic Warfare, and the War Department. Shortly after the end of the year a special assignment of work by the military authorities necessitated an expansion of the Board's staff engaged in international studies. Special attention is being devoted to Canadian-United States economic relations, and members of the Board's staff are continuing to serve as Chair man and Secretary of the United States Committee of the Joint Economic Committees of Canada and the United States. These committees study and report to their respective governments on the possibilities for more efficient use of the combined resources of the two countries in the production of war requirements and on ways of reducing the impact of post-war economic dislocations. In the latter part of 1942. joint work was started on a major planning project on the North Pacific area. War-time collaboration is rapidly expanding means of communication in the region embracing northern British Columbia, the Yukon Territory, and Alaska, and the development of this area will bring many problems calling for joint action by Canada and the United States. The American Technical Mission to Cuba, on which two members of the Board's staff serve with representatives of the Treasury Department and the Farm Credit Administration, submitted a report to the Cuban Government in April 1941, relating to a Cuban Central Bank and Stabilization Fund. The Cuban Government has drafted legislation to give effect to most of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 47 major recommendations of the report, and is seeking the approval of the Cuban Congress. The Mission has submitted reports dealing with the pro posed legislation and has also been giying consideration to the problem of agricultural credit in Cuba. Services of the Board's library were greatly influenced by conditions brought about by the war. Reference questions increased in variety and complexity, some of them requiring intensive searching, and the field of study covered by those whom the library served widened considerably. Accessions to the library included literature on Latin American affairs, post war planning and economic conditions of countries in the theatre of war, and with the addition of 1,971 cataloged items (books, pamphlets, and bound periodicals) the library collection reached a total of 36,643 volumes at the end of 1942.. Continuing suspension of publication and breakdown of facilities for delivery of foreign periodical literature created difficulties and gaps in files, and many arrangements for exchange of publications had to be temporarily cancelled. During 1942 distribution to the general public of the Board's publications and releases was substantially curtailed as a war-time economy measure and in cooperation with the policy of the Office of War Information. Distribu tion was continued to Government departments and agencies which make use of the factual information developed by the Board. RESERVE BANK PERSONNEL Directorates. Directors of a Federal Reserve Bank are elected or ap pointed for terms of three years. The Board of Directors of each Federal Reserve Bank consists of nine directors, three of whom are designated as Class A directors, three as Class B directors, and three as Class C directors. The six Class A and Class B directors are elected by the member banks of the district, while the three Class C directors are appointed by the Board of Governors of the Federal Reserve System. The Class A directors are chosen as representatives of the member banks and, as a matter of practice, are active officers of member banks. The Class B directors may not, under the law, be officers, directors, or employees of banks. At the time of their election they must be actively engaged in their district in commerce, agriculture, or some other industrial pursuit. The Class C directors may not, under the law, be officers, directors, em ployees, or stockholders of banks. They are appointed by the Board of Governors as representatives not of any particular group or interest, but of the public interest as a whole. Federal Reserve Bank branches have either five or seven directors, of whom a majority are appointed by the Board of Directors of the parent Federal Reserve Bank and the others are appointed by the Board of Governors. In making selections of directors, the Board has endeavored to stress the public interest and bring to the boards men who can make an effective con tribution to the public service. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

48 ANNUAL REPORT OF BOARD OF GOVERNORS A list of the directors of the Federal Reserve Banks and branches as of the close of the year is shown on pages 119-115. Appointments of directors. During the year the Board made the follow ing appointments of directors to fill vacancies: On January 9, Albert M. Creighton, manufacturer, of Boston, was ap pointed a Class C director of the Federal Reserve Bank of Boston and designated as Chairman and Federal Reserve Agent. On August 7, A. Z. Baker, President, Cleveland Union Stock Yards Com pany, Cleveland, Ohio, was appointed a Class C director of the Federal Reserve Bank of Cleveland. On October 27, Harry R. Wellman, a member of the faculty of the Uni versity of California where he is director of the Giannini Foundation of Agricultural Economics, was appointed a class C director of the Federal Reserve Bank of San Francisco. On November 14, Paul G. Hoffman, President of the Studebaker Cor poration of South Bend, Indiana, was appointed a Class C director of the Federal Reserve Bank of Chicago. Frank J. Lewis resigned as Class C director and Chairman of the Federal Reserve Bank of Chicago as of July 1. On October 9, he was succeeded as Chairman by Simeon E. Leland, Chairman of the Department of Economics and Professor of Government Finance at the University of Chicago, who had previously served as Deputy Chairman. On the same date W. W. Waymack, Vice President and Editor of the editorial pages of the Des Moines Register-Tribune, Des Moines, Iowa, was appointed Deputy Chairman. On January 28, Jay Taylor of the Rafter O Cattle Company, Amarillo, Texas, who had previously served as Deputy Chairman, was appointed Chairman of the Federal Reserve Bank of Dallas. At the same time J. B. Cozzo of Womack and Cozzo (General Contractors), Dallas, Texas, was appointed Deputy Chairman, and Dolph C. Briscoe, stockraiser, Uvalde, Texas, who had been serving as a director of the San Antonio Branch, was appointed a Class C director of the Federal Reserve Bank of Dallas. On October Z7, R. B. Richardson, President of the Western Life Insurance Company of Helena, Montana, was appointed a director of the Helena Branch of the Federal Reserve Bank of Minneapolis. On November 5, Holman Cartwright, Twin Oaks Ranch, Dinero, Texas, was appointed a director of the San Antonio branch of the Federal Reserve Bank of Dallas. On November 19, Y. Frank Freeman, Vice President, Paramount Pictures Inc., Hollywood, California, was appointed a director of the Los Angeles Branch of the Federal Reserve Bank of San Francisco. On October 29, William H. Steen, stockman and farmer of Milton, Oregon, was appointed a director of the, Portland branch of the Federal Reserve Bank of San Francisco. Changes in Presidents and First Vice Presidents. Effective as of March 31, 1941, R. A. Young resigned as President of the Federal Reserve Bank of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 49 Boston and was succeeded on April i, i^\z by W. W. Paddock, who, in turn, was succeeded as First Vice President by William Willett, formerly Cashier of the Bank. The appointments of Messrs. Paddock and Willett were for the unexpired portion of the terms ending February 2.8, 1946. Expansion in staff. During the year the great increase in activities of the Reserve Banks, particularly in connection with activities as fiscal agent for the Government, necessitated an increase in personnel. At the end of the year the total number of officers and employees was 19,971, as compared with 14,083 at the close of the previous year. Practically the entire increase consisted of women. During the year, 1,472. employees of the Reserve Banks left to enter the military service. RESERVE BANK OPERATIONS The greatest expansion in operations of the Federal Reserve Banks during 1941 was in their Government services, as already indicated. The volume of currency and checks handled also increased substantially. Discounts for member banks increased somewhat over the low level of 1941, while indus trial advances showed more substantial increases, reflecting war production loan activities to some extent. Figures for volume of operations in principal departments of the Reserve Banks are shown in Table 4 on page 6j. Distribution of net earnings. Current earnings, current expenses, and distribution of net earnings of the Federal Reserve Banks in 1942., compared with 1941, are shown in the accompanying table. Net earnings amounted to $11,470,000 in 1941, which was $3,333,000 more than in 1941. This increase resulted primarily from an increase in current earnings owing to larger holdings of Government securities. Other than increased expenses in fiscal agency operations, which are largely reimbursable, the expenses of the Federal Reserve Banks increased principally in the check collection depart ment and in the currency function. EARNINGS, EXPENSES, AND DISTRIBUTION OF NET EARNINGS OF FEDERAL RESERVE BANKS IN 1942 AND 1941 [In thousands of dollars] Item 1942 Current earnings 52,663 41,380 Current expenses 38,624 32,963 Current net earnings 14,039 8,417 1,569 *720 Net deductions from current net earnings 12,470 9,137 Net earnings 198 141 Paid U. S. Treasury (Section 13b) 8,669 8,430 Dividends paid 49 -4 Transferred to surplus (Section 13b) 3,554 570 Transferred to surplus (Section 7) Total 12,470 9,137 Transferred from surplus (Section 7) to reserve for contingencies 647 * Net additions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

50 ANNUAL REPORT OF BOARD OF GOVERNORS Net earnings were distributed as follows: Dividends to member banks, paid in accordance with the provisions of the Federal Reserve Act, $8,669,000; payments to the Secretary of the Treasury under provisions of Section 13b of the Federal Reserve Act relating to industrial advances, $198,000; and net additions to surplus accounts, $3,603,000. Of this total $647,000 was trans ferred to reserves for contingencies. Detailed statements of earnings, expenses, and distribution of net earnings for the System and for each Federal Reserve Bank are given in Table 5 on pages 68-69. Average daily holdings of bills and securities by Federal Reserve Banks during the last four years and average rates of earnings thereon are shown in the accompanying table. EARNINGS ON BILLS AND SECURITIES [Amounts in thousands of dollars] U. S. Govt, Item and year Total disc B o i u ll n s ted in B o i p ll e s n b m ou a g rk h e t t d s i e r c e u c r t i a ti n e d s I a n d d v u a s n tr c i e a s l guaranteed Daily average holdings: 1939 2,602,590 5,103 440 2,584,268 12,779 1940 2,429,984 4,046 2,416,761 9,177 1941 2,200,491 4,681 2,187,030 8,780 1942 3,209,649 6,610 3,191,259 11,780 Earnings: 1939 37,581 61 2 36,903 615 1940 42,677 51 42,174 452 1941 40,607 56 40,152 399 1942 51,943 65 51,404 474 Average rate of earnings (per cent): 1939 1.44 1.20 .53 1.43 4.81 1940 1.76 1.26 1.75 4.93 1941 1.85 1.20 1.84 4.54 1942 1.62 0.98 1.61 4.03 Federal Reserve Bank notes. As a part of the program of the Govern ment to conserve both labor and materials during the war period, the Board of Governors, after consultation with the Treasury Department, authorized the Federal Reserve Banks to utilize the existing stock of currency printed in the early thirties known as "Federal Reserve Bank notes." The stock of these notes, which is in $5, $10, $2.0, $50, and $100 denominations, amounted to approximately 660 million dollars. By making this stock of unissued paper currency available for use, as needed, it is estimated that more than $300,000 will be saved in the cost of printing new currency. In terms of labor and materials, there would be a saving of 1x5,000 man hours in printing alone, and of 45 tons of paper in addition to a substantial saving of nylon and ink. No Federal Reserve Bank notes have been printed since 1933 and the Board of Governors has no plans for the printing of additional stocks of such notes. Federal Reserve Bank notes may not be issued after the Presi dent declares that the emergency recognized by his Proclamation of March 6, 1933, no longer exists. Federal Reserve note clearing. Section 16 of the Federal Reserve Act Digitized foprr oFvRiAdSeEs Rt hat, whenever Federal Reserve notes issued through one Federal http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 51 Reserve Bank are received by another Frederal Reserve Bank, they shall promptly be returned to the issuing Bank or, if unfit for further circulation, forwarded to Washington for retirement. In accordance with this provision of the law, frequent shipments of Federal Preserve notes are made to the is suing Federal Reserve Banks and to Washington. Balances between the Federal Reserve Banks arising from these shipments of notes are settled daily through the Interdistrict Settlement Fund. Since February i9xx the Board of Governors has conducted a separate Federal Reserve note clearing on an immediate credit basis, necessitating a daily exchange of wires between each Federal Reserve Bank and the Board. During 1942. a plan was worked out whereby the separate Federal Reserve note clearing would be discontinued, and effective March 15, 1943, the new plan was put into effect. Under the new arrangement amounts due to other Federal Reserve Banks, arising from these shipments, are included with credits for checks and other collection items settled daily through the Interdistrict Settlement Fund. It was estimated that the new procedure would eliminate about n,ooo telegrams annually. Ration banking plan. During the last half of 194Z the Board of Governors and the Federal Reserve Banks participated, together with the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, State bank supervisory authorities, and the American Bankers Association, in working out details of the ration banking plan developed by the Office of Price Administration. The plan was tried out on an experi mental basis in the latter part of 1942. in 33 banking offices in the Albany- Troy-Schenectady area of New York. Beginning January zy J943> it was 9 put into operation on a nation-wide basis, utilizing the facilities of the Federal Reserve Banks and branches for clearing out-of-town ration checks received by banks participating in the plan. The ration banking records of banking institutions are subject to inspection by the Federal or State banking agencies having supervision over the par ticipating banks. After numerous conferences, members of the examining divisions of the Board of Governors, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have developed a procedure to be followed in checking ration banking records during the course of regular examinations of banks under their respective supervision. Foreign accounts in Reserve Banks. The Board's Annual Report for 1941 refers to legislation recommended by the State Department, the Treasury Department, and the Board of Governors, which made it clear that Federal Reserve Banks might open and maintain banking accounts for foreign banks or bankers or for foreign governments without having to establish accounts with such foreign banks, bankers or governments, or to appoint them as correspondents or agents of the Reserve Banks, and which also provided a procedure whereby the Reserve Banks and insured banks might safely make payments from the accounts of foreign governments or foreign central banks Digitized fionr FcRaAseSsE wR here there may be differences of opinion as to who is entitled to http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

52- ANNUAL REPORT OF BOARD OF GOVERNORS order such payments. Beginning September z, 194Z, the Board changed the form of the published weekly statement to indicate the participation of the several Reserve Banks in such accounts. In line with its duty of exer cising special supervision over Reserve Bank foreign relationships and transactions and at the request of the Presidents Conference of the several Reserve Banks, the Board is in the process of clarifying the rights and duties of Reserve Banks participating in such accounts by appropriate revision of its regulations. Adoption of self-insurance plan. For a number of years representatives of the Board of Governors and the Federal Reserve Banks have had under consideration the possibility of substituting self-insurance for purchased insurance on certain risks of the Federal Reserve Banks. During the year 194Z a plan of limited self-insurance was adopted, which became effective March 1, 1943. Under the agreement adopted by all the Reserve Banks, self-insurance is provided on losses in excess of coverage provided by pur chased insurance and on losses of the kinds not covered by purchased in surance, because of war risk and other exclusion clauses of the policies. An insurance committee, consisting of a representative from each Federal Reserve Bank, will administer the plan and continue to study the problems involved in the extension of the self-insurance features. Retirement System. Near the end of 1941 a special committee was ap pointed by the Conference of Presidents of the Federal Reserve Banks to re view the operation of the Retirement System of the Federal Reserve Banks with a view to determining what changes, if any, should be made, par ticularly as regards the benefits provided. This committee continued its study of the Retirement System throughout the year 194Z and shortly after the close of the year submitted proposals designed to increase the retirement allowances provided by the Retirement System for the lower paid employees. In the meantime the amendment of January 2.4, 194Z, to the Civil Service Retirement Act, providing more liberal retirement allowances and extending the coverage of the Civil Service Retirement Act, made it necessary to re consider retirement benefits for the employees of the Board of Governors. A study is now being made of this subject. Another respect in which a revision of the Retirement System became necessary was the basic interest rate underlying the payments and benefits. In view of the low level of interest rates which has prevailed since the inauguration of the system the rate on which the calculations were based had to be revised downward. Building operations. The new banking quarters of the Charlotte Branch of the Federal Reserve Bank of Richmond were completed and oc cupied in January 1941. The building was started early in 1941, and although most necessary materials were contracted for before the Defense Program was fully developed, many substitute materials were finally used in the construction, and the installation of air-conditioning equipment was in definitely postponed. In March 1941 the Federal Reserve Bank of Atlanta Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 53 purchased a lot adjoining the Jacksonville Branch Building, for possible future expansion. All Federal Reserve Banks and their branches, except the Cincinnati, Portland, and Seattle Branches are now housed in buildings owned by the Banks. As noted elsewhere, several of the Federal Reserve Banks and branches found it necessary to rent outside space to accommodate the in creasing volume of operations, particularly in connection with fiscal agency functions. BOARD OF GOVERNORS—STAFF AND EXPENDITURES Reappointment of Board members. On January 15, the reappointment by President Roosevelt of Ronald Ransom as a member of the Board of Governors was confirmed by the Senate. Mr. Ransom has served as a mem ber of the Board since February 3, 1936, and his new appointment is for a term of fourteen years from February 1, 1941. Governor Ransom continues to serve as Vice Chairman of the Board under a designation by the President which will expire on August 5, 1944. On February 17, President Roosevelt nominated R. M. Evans as a member of the Board of Governors for the unexpired portion of a term of fourteen years from February 1, 1940, to fill the vacancy made by the resignation of Chester Davis on April 15, 1941. The nomination was approved by the Senate on March 9, 1941, and Mr. Evans assumed his duties on March 14. Creation of War Loans Committee. On March 2.6, 1941, the Board of Governors designated three of its members to serve as a War Loans Commit tee for the purpose of assisting in the supervision of the activities of the Federal Reserve Banks under the President's Executive Order No. 91 iz. To assist the Committee in its work, the Office of Administrator for War Loans Committee was created on April 6 and Kenton R. Cravens, on leave of absence from the Cleveland Trust Company, was appointed as Administrator. Upon Mr. Cravens' return to the Cleveland Trust Company in October, Mr. Smead, Chief of the Board's Division of Bank Operations, was made Acting Administrator. Effective June 16, Gardner L. Boothe, II, was designated Assistant Administrator. Changes in Board staff. Effective July 1 the Board created in its staff a Division of Personnel Administration, in which is centralized the personnel work of the Board pertaining both to its own organization and to such personnel matters at the Federal Reserve Banks as come before the Board. Robert F. Leonard, formerly Assistant Chief of the Division of Examinations, was appointed Director of the new division. The Board and the Federal Reserve Banks have been keenly interested in the development of able leadership and efficient management in the Federal Reserve System. As one phase of the activity in that direction, in 1941 the Conference of the Chairmen of the Federal Reserve Banks proposed that a committee consisting of a member of the Board of Governors, a chairman of a Federal Reserve Bank, and a president of a Federal Reserve Bank, be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

54 ANNUAL REPORT OF BOARD OF GOVERNORS appointed to make a study of the whole question. Such a committee was appointed and results of a survey made under the direction of the committee were reported to the Conferences of Chairmen and of Presidents at meetings held in 1942.. The Conference of Presidents also established a Standing Committee on Executive Development. One of the important functions of the Board's Division of Personnel Administration is to assist in furthering the purposes of the program. William B. Pollard, formerly an examiner in the Board's Division of Exam inations, was appointed Assistant Chief of the Division effective July 1. On August 10, J. P. Dreibelbis, formerly Assistant General Counsel, was designated General Attorney, and George B. Vest and B. Magruder Wingfield, formerly Assistant General Counsels, were designated Assistant General Attorneys. On February 16, Walter R. Stark became an Assistant Director of the Board's Division of Research and Statistics. Since October 19 Mr. Stark has been assigned to James F. Byrnes, Director of the Office of Economic Stabili zation, to assist him in the handling of economic problems. During the year there was a net reduction of 33 in the number of employees on the Board's staff. On December 31, 1942., the Board's employees, ex clusive of those on military leave or on leave without pay, numbered 411, of whom 117 were men and 105 were women. At the end of the year 49 of the Board's permanent employees were on military leave. In addition, 13 of the employees who had received temporary appointments had resigned to enter military service. The voluntary payroll deduction plan for purchase of War Savings bonds at the Board of Governors showed great progress in 194Z both in number of employees participating and in percentage of total salaries authorized to be deducted. Beginning in October, the Board's personnel, which had been participating 100 per cent in the payroll savings plan since June, exceeded the 10 per cent goal established by the Secretary of the Treasury. The ratio of deductions to salaries in the Board's plan at the end of the year had increased to 11.3 per cent. Board expenditures. The total cost of conducting the work of the Board during the year 1941 was $1,708,893.81. Details are shown in Table 8 on pages 71-73. For the general expenses of the Board two assessments were levied against the Federal Reserve Banks aggregating $1,746,32.6.00, or about one-half of one per cent of their average paid-in capital and surplus for the year. Under an arrangement with the Federal Reserve Bank of Philadelphia, the accounts of the Board for the year 1941 were audited by the Auditor of the Federal Reserve Bank of Philadelphia, who certified them to be correct. FEDERAL RESERVE MEETINGS The Federal Open Market Committee, which under the law is charged with the responsibility for the determination of the System's open-mar*ket Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 55 policies, met in Washington on February z8-March z, May 8, June zz, August 3, September Z8-Z9, and December 14, 1942., and the executive committee of the full Committee met from time to time during the year. A record of actions taken by the Committee on questions of policy relating to open-market operations is published on pages 103-111 of this report. The Chairmen of the Federal Reserve Banks met with the Board of Gover nors on January 2.6 and October 5, 1941. In addition, the executive com mittee of the Chairmen's Conference met from time to time to discuss matters of interest to the Conference and to prepare for its meetings. The Conference of Presidents of the Federal Reserve Banks held meetings on February 2.-3, February 2.8-March 2., May 8, June 2.2.-2.3, anc^ September Z5-27, 1942.. Meetings of the Federal Advisory Council were held on February 15-16, May 17-18, September 13-14, and November 15-16, 1942.. The Executive Committee of the Council met on March iz, April 9, June 3, July 1, August 5, and October 7, 194Z. The Board of Governors met with the Council or its executive committee on each of these occasions. The Council is required by law to meet in Washington at least four times each year and is authorized by the Federal Reserve Act to consult with and advise the Board on all matters within the jurisdiction of the Board. AMENDMENTS TO THE FEDERAL RESERVE ACT AND REPORTS TO CONGRESS The Federal Reserve Act was amended in several respects during i94z- Some of the changes were primarily designed to facilitate action by the Fed eral Reserve System in aiding the financing of the war. Purchases of Government obligations by Reserve Banks directly from United States. Title IV of the "Second War Powers Act, 194Z" approved March 27, amended Section 14(b) of the Federal Reserve Act so as to authorize the purchase or sale by the Federal Reserve Banks either in the open market or directly from or to the United States, of bonds, notes, or other obligations which are direct obligations of the United States, or which are fully guaran teed as to principal and interest. However, the aggregate acquired directly from the United States and held at any one time by the twelve Reserve Banks is limited to an amount not exceeding 5 billion dollars and the period during which the amendment shall remain in effect will expire on December 31, 1944, or such earlier date as the President or Congress by concurrent resolu tion may designate. Taxation of dividends on Federal Reserve Bank stock. The third para graph of Section 7 of the Federal Reserve Act, which exempts from Federal taxation income derived from Federal Reserve Bank stock, was in effect amended by Section 6 of an Act of Congress, approved March z8, 194Z, so as to remove such exemption from shares issued on or after that date. Nonmember banks as depositaries of United States. The second para graph of Section 15 of the Federal Reserve Act, which provides that Govern ment funds shall not be deposited in any bank not belonging to the Federal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

56 ANNUAL REPORT OF BOARD OF GOVERNORS Reserve System, was in effect amended by Section 10 of an Act of Congress, approved June n, 1942., authorizing the Secretary of the Treasury to desig nate any insured bank as a depositary of public money and repealing all acts in conflict therewith. Membership of Federal Open Market Committee. By an Act of Con gress, approved July 7, 1942., subsection (a) of Section 12.A of the Federal Reserve Act was amended to provide for a regrouping of the Federal Reserve Banks for the purpose of electing representative members of the Federal Open Market Committee (which is composed of the members of the Board of Governors and five representatives of the Federal Reserve Banks). Under the law as amended one member of the Committee is elected annually by the directors of the Reserve Banks in each of the following groups: (1) New York, (2.) Boston, Philadelphia, and Richmond, (3) Cleveland and Chicago, (4) Atlanta, Dallas, and St. Louis, and (5) Minneapolis, Kansas City, and San Francisco. This arrangement makes provision for continuous representa tion of the Federal Reserve Bank of New York on the Federal Open Market Committee. This is for the reason that the New York Bank is in the prin cipal capital market and acts as the agent for the Federal Open Market Com mittee in the operation of the System open-market account. The amendment also made it clear that no one except a president or first vice president of a Federal Reserve Bank can represent a Federal Reserve Bank on the Com mittee. Reserves required of member banks. The Act of Congress approved July 7, 1942., amended the sixth paragraph of Section 19 of the Federal Re serve Act so as to authorize the Board of Governors to change the reserve requirements of member banks in central reserve cities, within the limita tions of the present law, without necessarily making a change in reserve requirements of member banks in reserve cities. Loans or dividends while reserves deficient. The Act of Congress approved July 7, 1942., amended the ninth paragraph of Section 19 of the Federal Reserve Act by repealing the provision which prohibits member banks from making new loans or paying dividends while their reserves are deficient. Reports to Congress. At the request of Committees of Congress, the Board submitted reports on proposed legislation affecting the application of the Securities Act to banks and holding company affiliates of banks, enlarging the field of the Home Loan Bank System, authorizing national banks to re imburse directors, officers, and employees for certain litigation expenses, requiring the publication of reports of insured banks at the location of their branches, reallocating representation on the Federal Open Market Commit tee, liberalizing the Board's powers with respect to reserve requirements, and amending the prohibition upon making loans or paying dividends while reserves are deficient. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 57 CHANGES IN REGULATIONS OF THE: BOARD OF GOVERNORS Most of the changes in the Board's regulations during the year 1941 were directly related to the credit and monetary problems arising out of the prosecution of the war. In addition to the issuance of Regulation V and the amendments to Regulation W described in other sections of this report, the following changes were made: Regulation A, relating to discounts for and advances to member banks by Federal Reserve Banks, was amended by removing the requirement of ne gotiability with respect to any note, draft, or bill of exchange evidencing a loan which is in whole or in part the subject of a guarantee or commitment by the War or Navy Department or the Maritime Commission pursuant to Executive Order No. 9111. Regulation A was also amended to clarify the authorization in Section 13 of the Federal Reserve Act to Federal Reserve Banks to make advances to their member banks for periods not exceeding 90 days on their promissory notes secured by direct obligations of the United States. The Board likewise made several clarifying and technical changes in its Regulation S, relating to loans by Federal Reserve Banks to industry and business, in order further to facilitate the participation by the Reserve Banks in the program of war financing. The Board's Regulation D relating to reserves of member banks was amended in a number of respects during the year. Additional funds were re leased to member banks in central reserve cities by three successive amend ments to the Supplement which reduced the amount of reserves required against demand deposits by member banks in those cities in three steps from 2.6 per cent to zo per cent. By another amendment member banks in central reserve and reserve cities were required to compute reserves on a weekly basis instead of semi-weekly as previously. In conformity with the amendments to Section 19 of the Federal Reserve Act, the Regulation was also amended by removing the prohibition against member banks' making loans while re serves are deficient and removing directors' liability for losses on loans made and dividends paid under those circumstances. A provision was also in serted in the Regulation, similar to a provision already appearing in Regula tion J, to the effect that a Federal Reserve Bank in its discretion may refuse to permit the withdrawal or other use of credit given for any item for which it has not yet received payment in finally collected funds. The effective dates of the amendments made in 1942. were as follows: Regulation A March zo, September 18 Regulation D February z8, July 14, August 10, September 14, October 3 Regulation S April 30 Regulation V Issued effective April 6 Regulation W March Z3, May 6, July z, July 2.7, August iz, October 2.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

TABLES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

6o ANNUAL REPORT OF BOARD OF GOVERNORS NO. 1-STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) DECEMBER 31, 1942* ASSETS [Amounts in boldface type are those shown in the Board's weekly statement. In thousands of dollars Gold certificates with Federal Reserve Agent 12,467,000 Interdistrict settlement fund with Board of Governors 6,545,837 Gold certificates on hand 1,510,444 Gold certificates on hand and due from U. S. Treasury 20,523,281 Redemption fund—Federal Reserve notes 30,449 Total gold reserves 20,553,730 Other cash: United States notes 27,250 Silver certificates 221,857 Standard silver dollars 2,505 National and Federal Reserve Bank notes 87,001 Subsidiary silver, nickels, and cents 15,471 Total other cash 354,084 Total reserves 20,907,814 Bills discounted: Secured by U. S. Government obligations, direct and guaranteed: Discounted for member banks 3,030 For others Total secured by U. S. Govt, obligations, direct and guaranteed 3,030 Other bills discounted: For member banks 41 For others 2,500 Total other bills discounted 2,541 Total bills discounted 5,571 Industrial advances 13,649 U. S. Government securities/direct and guaranteed: Bonds 2,792,581 Notes 1,345,059 Certificates 1,041,000 Bills 1,009,995 Total U.S. Government securities, direct and guaranteed 6,188,635 Total bills and securities 6,207,855 Due from foreign banks 47 Federal Reserve notes of other Reserve Banks 57,053 Uncollected items: Transit items 1,501,862 Exchanges for clearing house 167,201 Other cash items 48,742 Total uncollected items 1,717,805 Bank premises (net) 39,977 Other assets: Industrial advances past due 479 Miscellaneous assets acquired account industrial advances 1,803 Claims account closed banks (2) Miscellaneous assets acquired account closed banks 385 Total 2,667 Less valuation allowances 1,603 Net " 1,064 Federal Deposit Insurance Corporation stock8 Fiscal agency and other expenses, reimbursable 9,526 Interest accrued 17,052 Premium on securities 58,147 Deferred charges 898 Sundry items receivable 249 Real estate acquired for banking-house purposes 1,076 Suspense account 493 All other 368 Total other assets 88,873 Total assets 29,019,424 1 Before closing books at end of year. 2 Less than $500. 3 Charged off. See footnote 4, Table 6. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 6l No. 1—FEDERAL RESERVE BANKS (IN DETAIL)-Continued LIABILITIES [Amounts in boldface type are those shown in the Board's weekly statement. In thousands of dollars] Federal Reserve notes outstanding (issued to Federal Reserve Banks) 12,672,151 Less: Held by issuing Federal Reserve Banks 464,238 Forwarded for redemption 14,927 479,165 Federal Reserve notes in actual circulation (including notes held by Treasury and by Federal Reserve Banks other than issuing Bank) 12,192,986 Deposits: Member bank—reserve account 13,115,921 U. S. Treasurer—general account 799,291 Foreign 792,790 Other deposits: Nonmember bank—clearing accounts 139,120 Officers' and certified checks 84,023 Federal Reserve exchange drafts 743 All other 260,473 Total other deposits 484,359 Total deposits 15,192,361 Deferred availability items 1,247,053 Other liabilities: Accrued dividends unpaid 887 Unearned discount 4 Discount on securities 624 Sundry items payable _ ._ ._ 463 Deferred earnings on commitments to make industrial advances * Suspense account 1,126 All other liabilities 1,088 Total other liabilities 4,192 Total liabilities 28,636,592 CAPITAL ACCOUNTS Capital paid in 146,026 Surplus (sec. 7) 157,502 Surplus (sec. 13b) 26,781 Other capital accounts: Reserve for contingencies 47,032 Earnings and expenses: Current earnings 52,663 Current expenses 38,624 Current net earnings 14,039 Add—profit and loss 121 Deduct—dividends accrued since January 1 8,669 Net earnings available for charge-offs, reserves, and surplus 5,491 Total other capital accounts 52,523 Total liabilities and capital accounts 29,019,424 * Less than $500. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ON NO 2-STATEMENT OF CONDITION OF EACH FEDERAL RESERVE BANK AT END OF 1941 AND 1942 [In thousands of dollars] Total Boston New York Philadelphia Cleveland Richmond 1942 1941 1941 1942 ASSETS Gold) certificates on hand and due from U. S. Treasury.. 20,523,281 20,490,015 1,172,613 1,162,307 6,855,451 8,164,207 1,147,114 1,224,286 1,714,833 1,627,213 950,761 Redemption fund—Federal Reserve notes 30,449 13,668 1,152 4,143] 1,364] 1,047 5,665 892] 1,140] 919 5,559 354,0841 260,678 39,891 25,5891 73,223 46,842 21,191 19,345 43,5801 23,521 19,535 Other cash 20,907,814 20,764,361 1,213,656 1,192,039 6,930,038 1,173,970 1,244,523 1,759,553 1,651,653 975,855 Total reserves Bills discounted: Secured by U. S. Government obligations, direct 3,030] 1,768 260 235 615] 2,140 624 190] 100 25 and guaranteed 2,541 1,187 1,063 75 240 50 271 87 110 Other bills discounted Total bills discounted 5,571 2,955 320 260 1,298 690 2,380 674 461 187 135 Industrial advances 13,6491 9,504 475 1,883] 611 1,098 4,710 3,468i 820 i 233; 677 U. S. Government securities, direct and guaranteed: Bonds 2,792,581 1,466,805 212,493 113,230 713,272 385,294 212,929] 115,799 248,255] 145,193 182,445 Notes 1,345,059] 777,300 102,346 60,005 343,553 204,178] 102,557 61,364 119,572] 76,943 87,873| Certificates 1,041,000 79,212 265,8891 79,374 92,543] 68,011 Bills 1,009,995' 52,852 800 372,606 2,724 45,3081 819 49,083! 1,026 40,412] Total U. S. Government securities, direct and guaranteed 6,188,635] 2,254,475 446,903 174,035 1,695,320 592,196 440,168 177,982] 509,453 223,162 378,741 Total bills and securities 6,207,855 2,266,934 447,698 176,178 1,697,229 593,984 447,258] 182,124 510,734 223,582 379,553 Due from foreign banks 47 47 3 3 118 iis| 5 51 4! 4 2 Federal Reserve notes of other Federal Reserve Banks. 57,053 36,287 923 7,019 4,493 2,541 2,700 2,869 2,087 Uncollected items 1,717,800] 1,200,724 167,471 774 382,789 316,326] 114,046] 84,370 200,909 149,177 10,794 Bank premises 39,285 40,767 2,722 116,237 9,823 10,507 4,755 4,866 4,326 4,4391 141,3751 Other assets 43,724 6,229 2,778 21,947 11,148 6,926] 4,061 8,479 4,613 3,046 3,177 6,0481 Total assets 29,018,642i 24,352,844 1,838,702) 1,491,186 9,048,863 9,148,572 1,749,501 2,486,874 2,035,555 1,516,673 1,042,943 1 After deducting $29,000 participations of other Federal Reserve Banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes in actual circulation1., 12,192,986 8,192,169 881,534 671,656 2,110,650 848,682 575,036 778,072 786,787 431,489 Deposits: Member bank—reserve account 13,116,809 12,450,333 678,306 568,846 5,029,391 5,639,629! 651,566 661,703 918,240 919,517 525,661 451,776 U. S. Treasurer—general account. 799,449 867,493 97,848 80,782 144,933, 220,654! 52,643! 73,578 132,279, 72,247 35,397 23,729 Foreign bank 792,790 774,062 23,103] 29,543! 2367,578 2306,991 67,100 74,057 64,304 70,240 30,754! 32,829 Other deposits 485,147 586,170 6,301 9,527 303,762 475,283 4,673 12,391 77,688 16,902 8,633 6,106 Total deposits 15,194,195 14,678,058 805,558 688,698 5,845,664 6.642,557 775,982 821,729 1,192,511 1,078,906 600,445 514,440 Deferred availability items 1,247,053 1,106,929 124,925 104,811 271,518 266,815 89,503 90,557 125,478 143,848 112,605 80,625 Other liabilities including accrued dividends.. 3,568 2,195 614 347 342 143 524 840 162 173 4031 246 Total liabilities 28,637,802 23,979,351 1,812,631 8,917,259 9,020,165 1,714,691 1,488,162 2,451,658 1,500,240 1,026,800 CAPITAL ACCOUNTS Capital paid in. 146,026 142,180 9.489 9,403 53,653 51,806! 11,747 11,923' 14,878 14,640| 5,885 5,709 Surplus (sec. 7). 160,411 157,501 11,160 10,949 58,001 56.651 15,670 15,171 14,767 14,345 5,2361 5,236 Surplus (sec. 13b) 26.829J 26,780 2,874 2,874 7,070| 7,070 4,393 4,393 1,007 1,007 3,244 3,244 Other capital accounts.. 47,574 47,032 2,548 2,448 12,1 12,880 3,000 3,000| 4,564 4,564 2,068 1,954 Total liabilities and capital accounts., 29,018,642 24,352,844 1,838,702 1,491,186 9,048,863 9,148,572 1,749,501 1,522,649 2,486,874 2,035,555 1,516,673 1,042,943 Commitments to make industrial advances.. 10,661 14,597 119 139 261 1,346 2,617 387 1,008 857 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve agent 12,672,151 ;,611,926 909,636 700,116 2,904,543 2,210,118 873,297 602,134 ,175,580 811,693 824,238 461,916 Held by Federal Reserve Bank 479,165 419,757 28,102 28,460 104,808 99,468 24,615 27,098] 42,073 33,621 37,451 30,427 In actual circulation1.. 12,192,986j 8,192,169 881,534 671,656 2,799,735 2,110,650 848,682 575,036 1,133,507 778,072 786,787 431,489 Collateral held by agent for notes issued to banks: Gold certificates on hand and due from U. S. Treasury 12,467,000 1,724,000 898,000 720,000 2,915,000 2,220,000 795,000 615,000 1,180,000 727,000 475,000 Eligible paper 2,830 2,567 320 260 235 690 2,140 624 25 U. S. securities 355,000 20,000 100,0001 125,0001 Total collateral held. 12,824,830 8,726,567 918,320 720,260 2,915,235 2,220,690 897,140 615,624 1,180,000 815,000 852,025 475,000 1 Includes Federal Reserve notes held by the U. S. Treasury or by a Federal Reserve Bank other than the issuing bank. 2 After deducting $424,034,000 participations of other Federal Reserve Banks on December 31, 1942 and $464,634,000 on December 31, 1941. ON Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ON No. 2—STATEMENT OF CONDITION—Continued (In thousands of dollars] Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco 1942 1941 1941 1942 1941 1942 1941 1942 1941 1942 1941 1942 1941 ASSETS Gold certificates on hand and due from U. S. Treasury. 763,536 551,394 [3,570,031 3,423,782 721,665' 632,041 477,051 394,665 662,054 557,610 520,889 414,284, lt967,283| 1,547,779 Redemption fund—Federal Reserve notes 1,844 451 1,475! 1,122 4,192 643! 2021 401 352 754 371 566 7,133 1.293 Other cash 23,880 17,035 40,018 38,858 19,246 17,602 8,353 5,418 11,997 11,759] 17,1751 13,784 35,995 26,532 Total reserves.. 789,260 568.880 3,611,524 3,463,762' 745,103 650,286 485,606 400,484 674,403 570,123 538,435 428,634 2,010,411 1,575,604 Bills discounted: Secured by U. S. Government obligations, direet and guaranteed 10 Other bills discounted 87 305 73 109! 190 Total bills discounted. 871 14 305 18 120| 551 50 137 953 109 200 Industrial advances 504 477 HOl 3061 61 366 5141 1,250 92 244 4,034 U. S. Government securities, direct and guaranteed: Bonds 131,7181 62,241 342,801 198,906 133,223 73,695 75,729 43,272 137,180 62,593 113,568 51,197 288,968 125,770 Notes 63,444 32,983 165,1091 105,406 64,1701 39,053! 36,474 22,931 66,074 33,1681 54,702] 27,131 139,185 66,650 Certificates 49,101 127,787 49,662' 28,230 51,137 42,335 107,719 Bills 23,763 440, 241.198 1,406 40,764j 521 13,746 34,617 17,040] 362 78,606 889 Total U. S. Government securities, direct and guaranteed 268,026 95,664 876,895 305,718 287,819 113,269 66,509 289,008 96,204 227,645 78,690 614,478 193,309 Due fr T om o ta f l o r b e i i l g ls n a b n a d n k s s e curities 268,617 2i 96,155 2 i 877,310 6 306,042 6 288,000 1 113,569 1 | 154,600* 67,073 * 290,395 lj 97,249 lj 227,749 1 79,043 1 ] 618,712 4 | 193,433 4 Federal Reserve notes of other Federal Reserve Banks. 4 827 4,110 6,415 3,449 4,162] 2,4301 2,108 5,449 2,071 2,695 1,367 7,251 3,395 Uncollected items 82.976 42,290 244,938 180,907 75,178 49,586I 34,291 651 64,897 47,535 53,4761 37,094 155,454| 66,962 Bank premises 1,726] 1,948| 2,917 2,971 2,110 2,155 1,309 26,571 2,808 2,880 1,052 1,137 2.691 2,766 Other assets <r,022 1,797] 10,859 5,466) • 4,158 2,027 2,513 1,3381 4,4101 1,783 3,590 1,509] 9,6071 4,083 1,309 Total assets. 1,151.430, 715,182 4,753,969 3,962,603 1,118,712 820,054 680,427 497,426 ,042,363 721,642 826,998 548,785 2,804.130 1.846.247 * Less than $500. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes in actual circulation1. 546,908 1,719,536 513,737 322,068 302,727 428,631 263,578 251,765 1,279,380 699,739 Deposits: Member bank—reserve account... 476,535 322,452 1,925,896 1,762,132| 446,424 363,642 276,826 178.535 487,364 344,996 468,388 306,697 1,232,212 930,408 U. S. Treasurer—general account. 23,5621 28,685 71,445 156,906 56,544 39,646; 35,354 52,4601 36,209 35,850 27,947 36,989| 85,288] 45,967 Foreign bank 24,464 26,722 85,273 91,617 20,969 22,904] 15,377 16,796| 20,270 22,141 20,270 22,141 53,328| 58,081 Other deposits 5,085 5,123 4,3101 3,496 12,257 12,594 12,465 10,815 4,903 1,929| 3,456 1,312 41,614 30,692 Total deposits 529,646 382,982 2,086,924 2,014,151 536,194 438,7861 340,022 258,606 548,746 404,916 520,061 367,139 1,412,442 1,065,148 D O e th fe er r re li d a b a i v li a t i i l e a s b i i n li c t l y u d it i e ng m s a ccrued div ; i dends. 60,8 1 8 0 4 6 39,9 4 1 4 2 197, 3 7 3 7 4 6 180,3 1 4 6 0 5 56,58 8 1 3 47,31 3 2 2 ] 27,6 2 3 2 6 9 22,5 8 5 4 4 1 52, 5 8 7 5 3 0 41,7 4 3 4 4 43,3 1 1 2 2 1 34,80 7 6 2 1 83,98 7 5 7 53,61 5 5 Total liabilities., 4,704,627 3,914,192: 1,106,595 670,614 487,754 1,030,800 710,272 815,259 537,288 2,775,884 1,818,507 W O w CAPITAL ACCOUNTS Capital paid in 5,188 4,880 16,306 15,613 4,549 4,417 3,075 3,003 4,7251 4.600| 4,450 4,359 12,081 11,827 Surplus (sec. 7) 5,725| 5,725 22,925 22,925 4,966| 4,966! 3,221 3,152 3,613 3,613 4,083 3,976 11,044 10,792 > Surplus (sec. 13b) 717 713 1,429| 1,429] 530| 529] 1,000 1.000 1,137] 1,137 1,307 1,263 2,121 2,121 Other capital accounts 2,2561 2,362 8,682 8,444 2,072 1,944 2,517 2,517 2,088 2,020) 1,899 1,899 3,000 3,000 w Total liabilities and capital accounts.. 1,151,430' 715,182 4,753,969 3,962,603 1,118,712 820,054] 680,427 1,042,363 721,642 548,785 2,804,130 1,846,247 CWO Commitments to make industrial advances 1,767 1,874 1,687 1,226 28 1,500 23 3,892 3,063 < 7i FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve agent 582,534 303,618 2,469,905] 1,763,428 541,608 341,354 308,147 213,129 440,629 274,221 277,211 149,933 1,364,823 780,266 Held by Federal Reserve Bank 35,6261 25,054 50,312 43,892 27,871 19,2861 5,420 6,619 11,998 10,643 25,446 14,662 85,443 80,527 In actual circulation1.. 546,908 513,737 322,068 302,727 206,510 428,631 263,578 251,765 135,271 1,279,380 699,739 Collateral held by agent for notes issued to banks: Gold certificates on hand and due from U. S. Treasury 555,000 310,000 2,500,0001 1,780,000 480,000 310,000 214,000 440,000 275,000 283,000 156,000 1,384,000] 794,000 Eligible paper 45 50 65 943 U. S. securities 30,000 75,000 5,000] Total collateral held. 585,000 2,500,000 1,780,000 555,045 350,000 310,000 214,050 445,065 275,943 283,000 156,000 1,384,000 1 Includes Federal Reserve notes held by the U. S .Treasury or by a Federal Reserve Bank other than the issuing bank. Os Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

66 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 3—HOLDINGS OF UNITED STATES GOVERNMENT SECURITIES BY FEDERAL RESERVE BANKS AT END OF DECEMBERH1941 AND 1942 [In thousands of dollars] Rate of (P in er t er c e e s n t t) Dec 1 e 9 m 41 b er Dec 1 e 9 m 42 b er du C ri h n a g n g 1 e 9 42 Treasury bonds: 1943-47 3H 30,400 91,107 +60,707 1943-45 34 46,500 129,886 +83,386 1944-46 3M 53,000 126,000 +73,000 194V54 4 35,000 45.530 +10,530 1945-47 2H 62,300 122,199 +59,899 1945 27,200 55,602 +28,402 1946-56 24 24,500 35,135 +10,635 1946-48 3% 72,800 101,222 +28,422 1946-49 34 23,600 48,852 +25,252 1 19 9 4 4 7 7 -52 44 2 1 6 0 , , 5 6 0 0 0 0 1 1 7 1 , , 1 2 5 5 9 0 -1 + 5 6 , , 2 5 5 5 0 9 1948-50* 22 64,800 125,528 +60,728 1948-51 90,800 104,529 +13,729 1948 2H 21,400 23,750 +2,350 1948-50 22V 2 4,594 +4,594 1949-51* June 15 130,427 +130,427 1949-51* Sept. 15 2 2 62,240 +62,240 1949-51* Dec. 15 2 141,018 +141,018 1949-52 34 29,500 35,889 +6,389 1949-53 24 90,300 129,125 +38,825 1950-52* 177,475 +177,475 1950-52 2 80,750 120,383 +39,633 1951-54 24 99,050 123,393 +24,343 1951-55 2% 45,800 40,194 -5,606 1951-53 3 77,900 79,882 +1,982 1951-55* 24 12,790 53,291 +40,501 1952-54* 2 23,100 48,509 +25,409 1952-55* 24 87,019 +87,019 1953-55 31,400 37,050 +5,650 1954-56 2% 3,500 5,068 +1,568 1955-60 2 69,800 89,312 +19,512 1956-58* 24 56,750 71,861 +15,111 1956-59 2% 50,400 57,731 +7,331 1958-63 24 52,050 64,037 +11,987 1960-65 2% 47,800 75,352 +27,552 1967-72* 2% 101,915 105,460 +3,545 2H 1,462,205 2,777,059 +1,314,854 Treasury notes: 24 Mar. 15, 1942 84,800 -84,800 Sept. 15, 1942 2 66.200 -66,200 Dec. 15, 1942 30,800 -30,800 Mar. 15, 1943* % 39,300 39,300 June 15, 1943 14 102,400 95,400 -7,000 Sept. 15, 1943 l 35,700 31,700 -4,000 Dec. 15, 1943 14 69,800 54,000 -15,800 Mar. 15, 1944 l | 109,900 107,400 -2,500 June 15, 1944 H 76,400 71,900 -4,500 Sept. 15, 1944 l 60,600 59,100 -1,500 Sept. 15, 1944* H 6,000 -6,000 Mar. 15, 1945 % 95,400 85,600 -9,800 Mar. 15, 1945* 14 236,845 +236,845 Dec. 15, 1945* % 829 +829 Mar. 15, 1946* l 16,725 +16,725 Dec. 15, 1946* 14 525,000 +525,000 777,300 1,323,799 +546,499 Certificates of indebtedness: Feb. 1, 1943* Vs 371,000 +371,000 May 1, 1943* .65 150,000 +150,000 Aug. 1, 1943* 4 209,000 +209,000 Nov. 1, 1943* 4 311,000 +311,000 Total certificates of indebtedness 1,041,000 +1,041,000 Treasury bills: 578,118 +578,118 Other* 10,370 431,877 +421,507 Total Treasury bills 10,370 1,009,995 +999,625 Guaranteed securities: CCC, May 1, 1943 H 475 +475 CCC, Feb. 15, 1945* 14 8,610 +8,610 RFC, July 15, 1943* 14 9,000 +9,000 RFC, Apr. 15, 1944* l 3,175 +3,175 HOLC, 1942-44. 24 2,000 —2,000 HOLC, 1944-52 3 1,000 7,i45 +6,145 HOLC, 1945-47 14 1,271 +1,271 FFMC, 1942-47 1,000 -1,000 FFMC, 1944-64 3 2,000 +2,000 FFMC, 1944-49 34 600 5,106 1 +4,506 Total guaranteed securities 3 4,600 36,782 +32,182 Digitized for FRASER 2,254,475 6,188,635 1 +3,934,160 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 67 NO. 4-VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS OF FEDERAL RESERVE BANKS, 1938-1942 [Number in thousands; amounts in thousands of dollars] 1938 1939 1940 1941 1942 NUMBER OF PIECES HANDLED1 Bills discounted: Applications 6 2 2 2 1 Notes discounted 6 4 3 3 .2 Advances made 6 2 1 1 1 Industrial advances: Advances made .4 .2 .2 .6 1 Commitments to make industrial ad vances .2 .1 .2 .2 .2 Bills purchased in open market for own ac- .2 .1 Currency received and counted 2,089,987 2,134,908 2,248,290 2,529,703 2,678,80i Coin received and counted 2,676,248 2,644,418 2,705,344 3,216,761 3,761,445 Checks handled 1,098,115 1,157,140 1,184,356 rl,265,593 1,335,543 Collection items handled: U. S. Government coupons paid2 17,802 17,145 15,444 15,047 14,990 All other 6,389 6,177 6,094 6,392 5,833 Issues, redemptions, and exchanges by fiscal agency department: U. S. Government direct obligations — 3,456 3,528 3,752 13,479 117,425 All other 575 1,162 485 411 473 Transfer of funds 853 814 780 840 842 AMOUNTS HANDLED Bills discounted: Notes discounted 10,472 11,285 8,384 9,222 8,581 Advances made 75,690 61,500 115,956 184,697 Industrial advances: 226,687 Advances made 6,500 3,805 2,860 15,695 68,032 Commitments to make industrial ad vances 11,217 4,621 4,374 19,530 22,207 Bills purchased in open market for own ac- 2,781 2,133 Currency received and counted 8,883,728 9,285,921 9,538,629 11,283,817 13,010,185 Coin received and counted 271,128 276,589 288,140 327,555 355,581 Checks handled 231,820,217 255,937,980 280,436,092 r362,069,226 477,108,268 Collection items handled: U. S. Government coupons paid2 854,273 890,620 902,288 926,960 1,082,321 All other 5,321,443 5,442,645 5,068,674 6,003,082 6,167,564 Issues, redemptions, and exchanges by fiscal agency department: U. S. Government direct obligations 24,450,791 24,462,659 20,189,983 33,278,154 90,338,225 All other 2,581,611 4,537,228 1,687,194 3,262,012 3,260,660 Transfer of funds 82,219,749 88,080,756 92,103,910 118,423,057 140,444,452 r Revised. *Two or more checks, coupons, etc., handled as a single item are counted as one ' 2 Includes coupons from obligations guaranteed by the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 5—EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS DURING 1942 System Boston Y N o ew rk - d P e h lp il h a i a C l l a e n v d e m Ri o c n h d Atlanta Chicago L S ou t. i s M ap i o n l n is e K C an it s y a s Dallas Fra S n a c n i sco CURRENT EARNINGS Discounted bills $64,521 $3,502 $35,927 $7,448 $3,074 $946 $1,645 $1,748 $1,838 $1,119 $2,775 $3,171 $1,328 U. S. Government securities 51,404,012 3,809,976 13,877,200 3,947,483 4,872,024 3,187,860 2,264,110 6,407,272 2,518,157 1,447,985 2,314,984 2,009,841 4,747,120 Industrial advances 474,370 39,403 40,461 200,491 19,800 39,623 33,110 12,609 982 21,276 19,085 7,939 39,591 Commitments to make industrial advances 101,050 2,510 1,943 883 6,279 14,961 7,520 10,300 9,177 48 1,601 6 45,822 All other 618,751 15,734 122,268 17,997 73.855 9.574 7,742 158,579 22,203 7,893 157,774 11,477 13,655 Total current earnings 52,662,704 3,871,125 14,077,799 4,174,302 4,975,032 3,252,964 2,314,127 6,590,508 2,552,357(1,478,321,2,496,219 2,032,434 4,847,516 CURRENT EXPENSES Operating expenses: Salaries: Officers 2,333,523 107,820 512,847 125,622 193,097 154,328 144,328 257,955 172,087 132,246 151.795 140,576 240,822 Employees 28,576,521 1,643,148 7,012,576 1,926,399] 2,643,9121 1,643,675 1,261,585 3,980,240 1,497,5861 965,089 1,583,882] 1,380,754 3,037,675 Retirement System contributions for cur rent service 1,585,4421 83,043 386,439 102,066 132,085 90,161 80,735 224,507 89,027 58,090] 93,260 81,041 164,988 Legal fees 75,487 18,977 895 8,572 30.874 237 15 593 9,461 3,861 1 2,001 Directors' fees and expenses 126,976 8,971 11,475 9,490 8,502] 7,931 13,400 8,184 11,784 9,3941 15,145 9,617 13,083 Federal Advisory Council, fees and ex penses 1,150| 1,1281 1,141 1,118 1,968 1,350 1,374 1,444] 850 3,350 Traveling expenses (other than of directors] and members of Federal Advisory Council) 432,806 19,167 54,174 26,588 44,542 33,269 28,062 66,021 28,649 24,637 24,225 24,283 59,189 Postage and expressage 9,203,992 825,834 1,514,070 817,068 1,037,200 586,165 434,979 1,494,156 387,661 296,7031 512,492 353,646 944,018 Telephone and telegraph 631,834 28,340 105,787 39,570 62,304 37,774 51,653 50,796 45,7161 29,040] 52,665 43,938 84,251 Printing, stationery, and supplies 2,420,462 236,624 526,366 177,373 239,704 131,789] 115,687 322,662 121,930] 83,442 107,775 125,026! 232,084 Insurance on currency and security ship ments 283,148 43,933 47,088| 20,286! 23,789 28,535 20,084 29,088 8,044 6,915 11,219 ll,052j 33,115 Other insurance 209,197 12,720| 44,682 17,594 18,264 12,7001 13,941 18,073 12,519 10,849 14,945 13,168 19,742 Taxes on bank premises. 1,508,451 131,200 481,869! 91,436 136,317 73,516 62,255 189,457 52,936] 66,0991 93,858 34,504 95.004 Depreciation on bank building 1,075,325[ 55,832 219,960] 126,532i 112,476 86,161 42,548 102,097 44,391 28,847 89,0861 90,764] 76,631 Light, heat, power, and water 477,589 36,525 98,472 31,095 50,896 35,544 33,155 56,133 30,339 21,910 20,869 32,913 29,738 Repairs and alterations to bank building .. 312,726| 12,543 36,798 31,878 29,208 17,544] 34,366 35,415 19,532 17,386 37,270 6,004 34,782 Rent..., 288,251 1,372 97,0401 1,580 70,126 1,428 43 15,949 3,020 322 693 2401 96,438 Furniture and equipment 961,2331 44,442 123,716 107,527 103,192 90,5281 64,606 115,022 84,634 37,581 52,949 34,676 102,360 All other 1,306,496 132,251 211,3841 122,254 98,748 58,172 79,293 215,142 69,794 42,715 70,000 67,468 139,275 Total operating expenses 51,825,966 3,443,891 11,486,766] 3,783,925 5,036,377 3,090,096] 2,481,853 7,183,458 2,680,999 1,842,100 2,937,433 2,450,521 5,408,547 Less reimbursements for certain fiscal agency and other expenses 19,774,740 1,020,6541 4,108,481 1,328,860 1,976,732 933,027 994,664 2,997,002 931,618 830,067 1,147,071 1,061,234 2,445,330 Net operating expenses 32,051,226 2,423,237 7,378,285 2,455,065 3,059,645 2,157,069 1,487,189 4,186,456 1,749,381 1,012,033 1,790,362 1,389,287 2,963,217 Assessment for expenses of Board of Governors 1,746,326 123,861 619,754 167,491 160,2741 75,896 60,543 213,773 52,994 38,277 50,007] 51,341 132,115 Federal Reserve currency: Original cost 4,575,869 371,379 836,422 315,597 364,5991 391,816 293,578 748,318 239,155 110,947 175,825 124.634 603,599 Cost of redemption 250,623 14,419 45,5691 18,072 22,446] 28,985 23,0881 28,856 16,771 5,090 11,988 13,2521 22.087 Total current expenses , 38,624,044 2,932,896 8,880,030 2,956,225 3,606,964 2,653,766 1,864,398| 5,177,403| 2,058,301 1,166,347 2,028,182 1,578,514 3,721,018 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PROFIT AND LOSS Current earnings (above) 52,662,704 3,871,125 14,077,799 4,174,302) 4,975,0321 3,252,964 2,314,127 6,590,508 2,552.357 1,478,321 2,496,219 2,032,434 4,847,516 38,624,044 2,932,896] 8,880,030! 2,956,225! 3,606,964 2,653,766 1.864,398 5,177,403 2.058,301 1,166,347 2,028,182 1.578,514 3,721,018 Current expenses (above) 14,038,660 938,229 5,197,769 1,218,077 1,368,068 449,729 1,413,105 494,056 311,974 468,037 453,920 1,126,498 Current net earnings Additions to current net earnings: Profits on sales of U. S. Government 3,348,705 244,396 967,507 276,774 333,826 178,234 141,591 378,311 153,088 102,716 161,654; 128,841 281,767 securities 353,632 18,873 3,917 158,451 2,303 14,609 137,242! 8,587 1,539 2,285 3,328 15 All other Total additions 3,702,337 263,269 971,424 435,225 336,129 192,843 278,833 386,898 154,627 105,001 164,982 131,324 281,782 Deductions from current net earnings: Losses and allowances for losses on indus trial advances (net) 112,933 27,836 ^.sss] 100,000 Jl,242 Hi All H^si 10,000 165,294J 52,800 Charge-offs and special depreciation on bank premises 693,700 481,923 210,000] 1,777 Retirement System (interest base adjust ment) 4,416,845 279,461 ,122,130 312,542 381,490j 259,717 197,830 592,793 248,913 151,741 276,464 208,523 385,241 All other 47,068 4,6021 372 2,106 7,481 29,117| 53 49 136| 1,668] 40 164 1,280 Total deductions 5,270,546 311,899 414,648 387,729 271,412 406,202 250,826 165,233 276,504 143,393 439,321 Net deductions 1,568,209 48,630 +20,577 51,6001 96,199 60,232 111,522 12,069 157,539 Net earnings 12,470,451) 889,5991 1,238,654! 1,316,468 322,360 1,197,161 251,7421 356,515! 441,851 968,959 Paid U. S. Treasury (sec. 13b) 197,672 12,982 34,277 32,098 6,848 58,959] 15,139 4,021 3l 8,309 25,036 Dividends paid 8,669,076 566,010 184,2401 707,874 888,550 348,441 302,750 955,508 269,312 183,336 280,355 265,769 716,931 Transferred to surplus (sec. 13b) 49,602 4,471 616 44,515 Transferred to surplus (sec. 7) 3,554,101 310,607 498,682 421,070 113,229 237,632 127,929' 67,851 106,531 252,028 Surplus (sec. 7), January 1 157,502,880 1,949,332 651,401 15,171,403 ,345,615 ,235,966 1,924,752 ,966,321 ,152,420 1,612,681 ,976,0631 1,792,298 Addition, as above 3,554,101 310,6071 350,1391 498,682 421,070 113,229 237,6321 127,9291 68,403 67,851 106,531 252,028 Transferred to reserves for contingencies -646,6411 -100,000 -113,2291 -237,632 -127,929 -67,851 Surplus (sec. 7), December 31 , 160,410,340 11,159,939 15,670,085 14,766,685 5,235,966 5,724,628) 22,924,752 4,966,321 3,220,823 3,612,6814,082,594 11,044,326 1 Net recoveries. ON Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

3 NO. 6-CURRENT EARNINGS, CURRENT EXPENSES, AND NET EARNINGS OF FEDERAL RESERVE BANKS AND DISPOSITION OF NET EARNINGS, 1914-1942 Earnings and expenses Disposition of net earnings Direct charges e C a u rn rr in en g t s e C x u p r e r n e s n e t s ear N ni e n t gs1 Div p i a d i e d nds F p r T a a i r n d e c a t h o s i u s U e r . y 2 t S a . x Pa ( T S id r e e c t a . o s 1 u U 3 r . b y ) S . T t r ( o a S n e s s c u . f r e 1 p r 3 l r u b e s ) d T t r o a ( S n s e s u f c r e . p r 7 l r ) u e s d to ( S s e u c. r p 7 l ) u s All Federal Reserve Banks by years: 1914-15 $2,173,252 $2,320,586 $-141,459 $217,463 1916... 5,217,998 2,273,999 2,750,998 1,742,774 1917 16,128,339 5,159,727 9,582,067 6,804,186 $1,134,234 $1,134,234 1918 67,584,417 10,959,533 52,716,310 5,540,684 48,334,341 1919 102,380,583 19,339.633 78,367,504 5,011,832 2,703,894 70,651,778 1920 181,296,711 28,258,030 149,294,774 5,654,018 60,724,742 82,916,014 1921 122,865,866 34,463,845 82,087,225 6,119,673 59,974,466 15,993,086 1922 50,498,699 29,559,049 16,497,736 6,307,035 10,850,605 -659,904 1923 50,708,566 29,764,173 12,711,286 6,552,717 3,613,056 2,545,513 1924 38,340,449 28,431,126 3,718,180 6,682,496 113,646 -3,077,962 1925 41,800,706 27,528,163 9,449,066 6,915,958 59,300 2,473,808 1926 47,599,595 27,350,182 16,611,745 7,329,169 818,150 8,464,426 1927 43,024,484 27,518,443 13,048,249 7,754,539 249,591 5,044,119 $500,000 1928 64,052,860 26,904,810 32,122,021 8,458,463 2,584,659 21,078,899 1929 70,955,496 29,691,113 36,402,741 9,583,913 4,283,231 22,535,597 1930 36,424,044 28,342,726 7,988,182 10,268,598 17,308 -2,297,724 1931 29,701,279 27,040,664 2,972,066 10,029,760 -7,057,694 1932 50,018,817 26,291,381 22,314,244 9,282,244 2,011,418 11,020,582 1933 49,487,318 29,222,837 7,957,407 8,874,262 -916,855 1934 48,902,813 29,241,396 15,231,409 8,781,661 $-60,323 6,510,071 139,299,557 1935 42,751,959 31,577,443 r9,437,758 8,504,974 $297,667 r27,695 607,422 1936 37,900,639 29,874,023 8,512,433 7,829,581 227,448 102,880 352,524 1937 41,233,135 28,800,614 10,801,247 7,940,966 176,625 67,304 2,616,352 731,313 1938 36,261,428 28,911,608 9,581,954 8,019,137 119,524 -419,140 1,862,433 448,835 1939 38,500,665 28,646,855 12,243,365 8,110,462 24,579 -425,653 4,533,977 1,964,919 1940 43,537,805 29,165,477 25,860,025 8,214,971 82,152 -54,456 17,617,358 12,272,706 1941 41,380,095 32,963,150 9,137,581 8,429,936 141,465 -4,333 570,513 132,696 1942 52,662,704 38,624,044 12,470,451 8,669,076 197,672 49,602 3,554,101 646,641 Total—1914-1942 1,453,390,722 718,224,630 669,726,565 203,630,548 149,138,300 1,267,132 3-716,424 316,407,009 4155,996,667 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Aggregate for each Federal Reserve Bank 1914-1942: Boston $98,551,149 $52,173,087 $44,465,990 $14,757,883 $7,111,395 $107,882 $-1,345 $22,490,175 $11,330,237 New York 425,838,133 174,355,467 241,610,640 68,968,668 68,006,262 117,264 -682,388 105,200,834 47,199,295 Philadelphia 114,067,333 55,240,623 56,807,438 19,299,135 5,558,901 463,443 194,990 31,290,969 15,620,883 Cleveland 130,830,677 66,831,489 56,089,228 20,585,069 4,842,447 74,282 -8,446 30,595,876 15,829,192 Richmond 70,588,643 40,042,354 26,509,390 8.632,167 6,200,189 139,481 -176,443 11,713,996 6,478,029 Atlanta 67,322,592 33,167,663 27,944,994 7,239,207 8,950,561 39,015 -39,833 11,756,044 6,031,416 Chicago 199,048,989 93,567,304 93.797,366 23,648,788 25,313,526 142,339 11,681 44,681,032 21,756,280 St. Louis 63,051,858 36,671,975 21,023,878 7,246,975 2,755,629 5,948 -18,237 11,033,563 6,067,240 Minneapolis 46,663,318 25,920,666 18,331,153 5,055,196 5,202,900 34,812 -7,447 8,045,692 4,824,^68 Kansas City 69,815,331 43,495,098 22,834,579 6,882,408 6,939,100 43,513 -8,388 8,977,946 5,365,264 Dallas 52,041,389 32,089,688 15,821,056 6,537,780 560,049 99,153 55,336 8,568,738 4,486,145 San Francisco 115,571,310 64,669,216 44,490,853 14,777,272 7,697,341 -35,904 22,052,144 11,007,818 r Revised. 1 Current earnings less current expenses, plus other additions and less other deductions. 2 The Banking Act of 1933 eliminated the provision in the Federal Reserve Act requiring payment of a franchise tax. 3 On December 31, 1942, surplus (Sec. 13b)—relating to funds received from the Secretary of the Treasury under Section 13b of the Federal Reserve Act for the purpose of making loans to industry—amounted to $26,829,887 ($27,546,311 received from the Secretary of the Treasury minus the $716,424 net debits shown here). 4 On December 31, 1942, surplus (Sec. 7)—accumulated pursuant to Section 7 of the Federal Reserve Act—amounted to $160,410,342 ($316,407,009 retained net earnings, shown in preceding column, less $155,996,667 direct charges shown here). Direct charges represent amounts transferred to reserves for contingencies except as follows: 1927, charge-off on bank premises; 1934, charge-off cost of Federal Deposit Insurance Corporation stock. H > NO. 7-NUMBER AND SALARIES OF OFFICERS AND EMPLOYEES OF FEDERAL RESERVE BANKS [December 31, 1942] Federal Reserve Bank President Other officers E w m ho p s l b e o u y s r e a s e l e a s d , r i e t e o s x c a b e r a p e n t k r t e h i o m s e E a m re p l r o e y im ee b s u w rs h e o d s e t o sa b l a a n r k ie s fotal < (including branches) Annual salary Number s A a n la n r u ie a s l Number s A a n la n r u ie a s l Number s A a n la n r u i a e l s Number s A a n la n r u i a e l s W $25,000 9 $78,220 815 $1,198,410 432 $531,851 1,257 $1,833,481 New York 45,000 44 465,700 2,261 4,412,880 1,565 2,866,500 3,871 7,790,080 22,000 10 97,680 808 1,324,486 433 670,767 1,252 2,114,933 25,000 21 165,650 1,058 1,763,619 822 1,124,867 1,902 3,079,136 21,000 18 134,180 697 1,042,590 461 633,485 1,177 1,831,255 17,500 20 122,800 526 719,252 630 764,490 1,177 1,624,042 30,000 28 243,350 1,541 2,577,293 1,393 2,147,962 2,963 4,998,605 25,000 19 140,440 645 1,000,354 471 684,842 1,136 1,850,636 " 25,000 17 119,250 354 526,653 508 638,797 880 1,309,700 20,000 18 130,036 516 826,068 644 928,215 1,179 1,904,319 20,000 17 121,744 512 789,426 597 844,678 1,127 1,775,848 25,000 29 222,900 1,199 1,835,167 822 1,557,751 2,051 3,640,818 Total $300,500 250* $2,041,950* 10,932 $18,016,198 8,778 $13,394,205 19,972 $33,752,853 * Includes $480,890 reimbursed to the banks for salaries of 70 officers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72. ANNUAL REPORT OF BOARD OF GOVERNORS NO. 8-RECEIPTS AND DISBURSEMENTS OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM FOR THE YEAR 1942 General fund account: Balance January 1, 1942: For general expenses of the Board $241,089.10 For expenses chargeable to Federal Reserve Banks 62,302.95 For purchase of War Savings bonds for employees under Board's Volun- • tary Pay Roll Savings Plan 4,625.18 $308,017.23 RECEIPTS For general expenses of the Board: Assessments on Federal Reserve Banks for estimated general expenses of the Board $1,746,326.00 Subscriptions to the Federal Reserve Bulletin 5,239.87 Other publications, sales 2,720.86 Reimbursements for leased wire service 61,610.67 Miscellaneous receipts, refunds, and reimbursements 16,116.23 1,832,013.63 For expenses chargeable to Federal Reserve Banks: Assessments on Federal Reserve Banks for: Cost of printing Federal Reserve notes 3,501,626.59 Expenses of leased wire system (telegraph) 50,105.82 Expenses of leased telephone lines 12,918.00 Expenses of Federal Reserve Issue and Redemption Divi sion (Office of Comptroller of the Currency) 48,560.06 Miscellaneous expenses 4,702.44 3,617,912.91 Employee's pay roll allotments for purchase of War Savings bonds 94,356.90 Total receipts 5,544,283.44 Total available for disbursement 5,852,300.67 DISBURSEMENTS For expenses of the Board: General expenses of 1942 (per detailed statement). $1,708,893.82 Less accounts unpaid December 31, 1942 35,607.70 1,673,286.12 Expenses of 1941 paid in 1942 41,004.14 Expenses of leased wire service, reimbursable 65,049.54 Retirement System (interest base adjustment) 177,188.00 Miscellaneous refunds and items reimbursable 4,836.48 1,961,364.28 For expenses chargeable to Federal Reserve Banks: Cost of printing Federal Reserve notes 3,232,952.54 Expenses of leased wire system (telegraph) 51,442.84 Expenses of leased telephone lines ... 12,918.00 Expenses of Federal Reserve Issue and Redemption Division (Office of Comptroller of the Currency) 48,560.06 Miscellaneous expenses 2,786.70 3,348,660.14 Purchase of War Savings bonds and refunds under Board's pay roll plan 90,622.48 Total disbursements 5,400,646.90 Balance in general fund account December 31, 1942: For general expenses of the Board 111,738.45 For expenses chargeable to Federal Reserve Banks 331,555.72 For purchase of War Savings bonds for employees under Board's Voluntary Pay Roll Savings Plan 8,359.60 $451,653.77 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 73 NO. 8-RECEIPTS AND DISBURSEMENTS-Continued GENERAL EXPENSES OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, 1942 PERSONAL SERVICES*. Salaries $1,364,610.69 Retirement contributions '. 72,559.98 Total Personal Services $1,437,170.67 NON-PERSONAL SERVICES: Traveling Expenses : 76,766.23 Postage and Expressage 1,297.37 Telephone and Telegraph 60,232.16 Printing and Binding 56,859.32 Stationery and Supplies 17,761.66 Furniture and Equipment : 6,041.61 Books and Subscriptions 6,583.18 Heat, Light, and Power 25,514.53 Repairs and Alterations (Building and Grounds) 2,469.26 Repairs and Maintenance (Furniture and Equipment) 2,981.18 Medical Service and Supplies 1,151.62 Insurance 4,210.06 Miscellaneous 9,854.97 Total Non-personal Services 271,723.15 GRAND TOTAL $1,708,893.82 NO. 9-MINIMUM DOWN PAYMENTS AND MAXIMUM MATURITIES ON CONSUMER CREDIT SUBJECT TO REGULATION W Prescribed by Board of Governors of the Federal Reserve System in accordance with Executive Order No. 8843 dated August 9, 1941 Sept. 1, 1941-March March 23, 1942-May Effective May 6, 22, 1942 5. 1942 1942 Down Maximum Down Maximum Down Maximum payment maturity payment maturity payment maturity (%)1 (months) (%)X (months) (%)1 (months) Instalment sales:2 Automobiles # 33M 3SH Mechanical refrigerators, washing machines, radios, vacuum cleaners. 20 18 MH 15 12 F S u to r v n e a s c , e s ra , n o g i e l s b urners, plumbing and 20 18 20 15 12 sanitary fixtures 15 18 20 18 33M 12 F Fl u o r o n r i t c u o re v erings 10 18 2 1 0 0 1 1 5 5 20 1 1 2 2 Watches, clocks 20 15 33H 12 Jewelry 33M 12 Clothing, furs 33M 12 Materials (not elsewhere listed) for 33M repair or improvement of residen tial structures 18 18 12 Instalment loans: To purchase listed articles. (3) (3) (3) (3) To pay charge account arising from sale of listed article, or to pay sin gle-payment loan 18 15 6 Other 18 15 12 Consolidations of instalment sale or loan with previously outstanding instal ment credit (3) (3) 12 Single-payment loans (3) 3 Charge sales of listed articles 10th day of 2nd month after sale NOTE.—The above limitations have been subject to various exceptions; for exceptions in detail, and for addtional provisions not reflected in this table, the regulation should be consulted. Where no figure is shown, there was no limitation imposed by Regulation W. 1 Down payments determined after deduction of any trade-in, except in case of automobiles. 2 Terms shown for selected articles. For terms on other listed articles, see regulation. 3 Where credit is to purchase listed articles, requirements same as on instalment sales of the respective articles. 4 Prior to December 1, 1941, maximum maturity was 18 months. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

74 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 10-FEDERAL RESERVE BANK DISCOUNT, INTEREST, AND COMMITMENT RATES, AND BUYING RATES ON BILLS [Per cent per annum] In effect December 31, 1942 B to o n s Y N o ew rk P a p d h h e i ia l l C l l a e n v d e m Ri o c n h d la A n t t a c C a h g i o L S o t u .. i s n M o e l a i i n p s K C s a i a t s n y D la a s l F c S i r s a a c n n o Rediscounts for and ad vances to member banks under Sees. 13 and 13a of the Federal Reserve Act: Advances secured > by Government securities maturing or callable within one year H V2 H H y y H y y y y y All other l 1 l l i2 i2 1 2i 2i 12 12 12 Advances to member banks under Sec. 10(b) of the Adva F n e c d e e s r al t R o ese i r n v d e i v A id c u t als, m m m 1H iy2 \y 2 1H IK IK 2 m m m partnerships, or corpora tions secured by direct obligations of the United States (last paragraph of Sec. 13 of the Federal Re serve Act) : To nonmember banks.... i i i l i i l i 1 1 1 1 Adva T n o c e o s t he t r o s industrial or 2 iy2 2 2 2y2 2 2 2 iy2 2 2 2M commercial businesses under Sec. 13b of the Fed eral Reserve Act, direct or in participation with Di f s in c a o n u c n in ts g fo in r s a ti n t d u t p io u n rc s hases 2K-5 2H-5 2VT-5 2H-5 2M-5 2y2-s 2M-5 2y2-s 2H-5 2^-5 2H-5 2^-5 from financing institutions under Sec. 13b of the Fed eral Reserve Act: On portion for which in On s t r i e tu m t a io in n in is g o p b o l r ig ti a o t n e d... 0 (3 ) 0 (3 ) ( 2 3 2 ) ( 0 3 ) ( <1 3) > 0 (3 ) 2 2 M ^- - 5 5 \-\y ( 23 ) < (3) D ( 0 3 ) # (3 ) ( 0 3 ) Commitments to make ad vances under Sec. 13b of the Federal Reserve Act: To industrial or com To m f e i r n c a i n a c l i n b g u s i i n n s e t s i s t e u s t ions. y M -\ - i M VT - - i V M A H 34 - - 1 1 M M 4 H K -1 - M M w -V m i * y y2 2 - - \x y lA 2 - - V ix A X y 2 -i - H vA y y 2 2 - - i i A A y y2 2 - - m vA * y y2 2 - - \x 4 K K -i - X 1K Minimum buying rates on prime bankers' ac ceptances payable in dollars (5) (5) (6) (5) (5) (5) (5) (5) (5) (5) (6) 1-90 days 91-120 days 121-180 days l Buying rate on Treasury bills® Vs H % H H H y H H H « % 8 1 Rate charged borrower by financing institution less commitment rate. 2 May charge same rate as charged borrower by financing institution, if less. 3 Rate charged borrower. 4 Financing institution is charged A per cent on undisbursed portion of loan. 5 The same minimum rates in effect at the Federal Reserve Bank of New York apply to any purchases made by other Federal Reserve Banks. 6 Established rate at which Federal Reserve Banks stand ready to buy all Treasury bills offered. NOTE.—Maximum maturities for discounts and advances to member banks are: 15 days for advances secured by obligations of the Federal Farm Mortgage Corporation or the Home Owners Loan Corporation guaranteed as the principal and interest by the United States, or by obligations of Federal Intermediate Credit Banks ma turing within 6 months; 90 days for other advances and discounts made under Sections 13 and 13a of the Federal Reserve Act (except that discounts of certain bankers' acceptances and of agricultural paper may have maturi ties not exceeding 6 months and 9 months respectively): and 4 months for advances under Section 10(b). The maximum maturity for advances to individuals, partnerships, or corporations made under the last paragraph of Section 13 is 90 days. Industrial advances and commitments made under Section 13b of the Federal Reserve Act may have maturities not exceeding 5 years. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 75 NO. U-MAXIMUM RATES ON TIME DEPOSITS Maximum rates that may be paid by member banks as established by the Board of Governors under provisions of Regulation Q [Per cent per annuml Nov 1, 1933, In effect to beginning Jan. 31, 1935 Jan 1, 1936 Savings deposits 3 2H O Po th st e a r l t S im av e in d g e s p o d s e i p ts o s p i a ts y able in 3 2V2 6 months or more 3 2K 90 days to 6 months 3 2 Less than 90 days 3 1 NOTE.—Maximum rates that may be paid by insured nonmember banks as established by the Federal Deposit Insurance Corporation, effective February 1, 1936, are the same as those in effect for member banks. Under Regulation Q the rate payable by a member bank may not in any event exceed the maximum rate payable by State banks or trust companies on like deposits under the laws of the State in which the member bank is located. NO. 12-MEMBER BANK RESERVE REQUIREMENTS [Per cent of deposits] Net demand deposits1 Time deposits (all res C e b e r a v n n e t k r s a c l ity ci R ty e s b er a v n e k s C b o a u n n k t s ry m b e a m nk b s e ) r June 21, 1917-Aug. 15, 1936 13 10 7 Aug. 16, 1936-Feb. 28, 1937 19M 15 10H Mar. 1, 1937-Apr. 30, 1937 22% 17M 12% 5% May 1, 1937-Apr. 15, 1938 26 20 14 6 Apr. 16, 1938-Oct. 31, 1941 22% 17K 12 5 Nov. 1, 1941-Aug. 19, 1942 26 20 14 6 A E Se f u f p g e t . c . ti 2 1 v 0 4 e , , 1 1 O 9 9 c 4 4 t 2 2 . - - 3 O S , e c p 1 t. 9 t . 4 2 1 2 3 , , 1 1 9 9 4 4 2 2 2 2 2 2 4 0 2 2 2 0 0 0 1 1 1 4 4 4 6 6 6 1 Gross demand deposits minus demand balances with domestic banks (except private banks and American branches of foreign banks) and cash items in process of collection. NO. 13-MARGIN REQUIREMENTS i Prescribed by Board of Governors of the Federal Reserve System in accordance with Securities Exchange Act of 1934 [Per cent of market value] Apr. 1, 1936- Nov. 1, 1937 Oct. 31, 1937 and after For extensions of credit by brokers and dealers on listed securities, under Regulation T _ 5„5 40 For short sales, under Regulation T 50 For loans by banks on stocks, under Regulation U 355 40 1 Regulations T and U limit the amount of credit that may be extended on a security by prescribing a maximum loan value, which is a specified percentage of its market value at the time of the extension; the "margin requirements" shown in this table are the difference between the market value (100%) and the maxi mum loan value. 2 Requirement under Regulation T was the margin "customarily required" by the broker. 3 Regulation U became elective May 1, 1936. NOTE.—Regulations T and U also provide special margin requirements on "omnibus" accounts and loans to brokers and dealers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 14—ALL MEMBER BANKS-ASSETS AND LIABILITIES ON DECEMBER 31. 1942 BY CLASSES OF BANKS ON [Amounts in thousands of dollars] Central reserve city member banks1 Reserve city Country All member All national All State Item m b e a m nk b s e 1 r m b e a m n b k e s1 r banks m b e a m nk b s e r member New York Chicago banks ASSETS Loans (including overdrafts) , 4,115,544 832,250 6,102,034 5,038,496 16,088,324 10,183,351 5,904,973 United States Government direct obligations 11,475,702 2,705,788 12,226,637 8,598,309 35,006,436 22,195,181 12,811,255 Obligations guaranteed by United States Government , 1,070,979 83,463 811,223 574,088 2,539,753 1,548,901 990,852 2 Obligations of States and political subdivisions 592,894 166,131 954,088 1,252,066 2,965,179 2,017,376 947,803 Other bonds, notes, and debentures 556,174 165,222 691,111 874,186 2,286,693 1,437,294 849,399 a Corporate stocks (including Federal Reserve Bank stock) 145,283 20,554 129,622 81,487 376,946 193,757 183,189 Total loans and investments 17,956,576 3,973,408 20,914,715 16,418,632 59,263,331 37,575,860 21,687,471 I Reserve with Federal Reserve Banks 4,388,001 902,216 4,940,388 2,841,753 13,072,358 8,204,834 4,867,524 D Ca e s m h a n in d v b a a u la lt n ces with banks in United States (except pri .t v ate banks and Ameri 72,480 39,087 365,419 541,626 1,018,612 721,246 297,366 o can branches of foreign banks)2 80,849 162,417 2,178,762 3,662,118 6,084,146 4,644,976 1,439,170 s Other balances with banks in United States 1,250 1,464 22,838 36,819 62,371 49,467 12,904 Balances with banks in foreign countries 8,365 389 2,679 1,520 12,953 9,605 3,348 Due from own foreign branches 362 362 362 o Cash items in process of collection 1,313,275 246,622 1,915,566 554,392 4,029,855 2,553,839 1,476,016 w Bank premises owned and furniture and fixtures 198,825 18,267 319,341 367,697 904,130 578,656 325,474 o Other real estate owned 17,819 1,228 53,007 62,792 134,846 61,039 73,807 > Investments and other assets indirectly representing bank premises or other real 10,414 617 61,580 20,324 92,935 51,340 41,595 d Customers' liability on acceptances... 22,330 1,356 13,818 3,003 40,507 23,285 17,222 Income accrued but not yet collected. 44,148 11,126 48,617 22,396 126,287 74,604 51,683 Other assets 12,748 5,741 31,672 23,726 73,887 42,188 31,699 o Total assets.. 24,127,442 5,363,938 30,868,402 24,556,798 84,916,580 54,590,939 30,325,641 o < LIABILITIES Demand deposits—Total2 21,340,195 4,585,096 23,640,987 15,869,419 65,435,697 41,841,026 23,594,671 Individuals, partnerships, and corporations 12,501,442 2,587,969 15,060,803 11,989,022 42,139,236 26,669,426 15,469,810 o United States Government. 4,186,231 664,671 1,982,419 1,090,108 7,923,429 4,745,829 3,177,600 States and political subdivisions 262,619 177,637 1,319,254 1,558,479 3,317,989 2,414,381 903,608 Banks in United States2 3,208,852 1,105,295 4,830,532 956,627 10,101,306 6,943,223 3,158,083 Banks in foreign countries 732,836 11,862 63,182 3,559 811,439 398,873 412,566 Certified and officers' checks, cash letters of credit and travelers' checks, etc.. 448,215 37,662 384,797 271,624 1,142,298 669,294 473,004 Time deposits—Total 737,844 455,278 5,058,710 6,589,142 12,840,974 8,627,436 4,213,538 Individuals, partnerships, and corporations 711,239 452,878 4,804,933 6,396,873 12,365,923 8,259,153 4,106,770 United States Government 2,250 20,270 25,155 47,675 35,565 12,110 P S o ta s t t e a s l a s n av d i n p g o s l itical subdivisi # o ns 23,134 150 16 1 8 , , 4 6 4 0 7 5 14 7 0 , , 1 0 1 4 9 4 33 8 1 , , 5 93 6 3 6 26 7 7 , , 2 9 4 3 7 5 6 1 3 , ,9 31 9 9 8 Banks in United States 160 61,955 19,951 82,066 53,486 28,580 Banks in foreign countries 3,311 1,500 4,811 4,050 761 Total deposits2 22,078,039 5,040,374 28,699,697 22,458,561 78,276,671 50,468,462 27,808,209 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Due to own foreign branches . 215,398 1,554 216,952 189,596 27,356 Bills payable, rediscounts, and other liabilities for borrowed money. 2,007 2,800 4,807 3,516 1,291 Acceptances outstanding 26,050 1,568 15,557 3,000 46,175 25,999 20,176 Dividends declared but not yet payable 16,957 982 12,036 7,511 37,486 22,776 14,710 Income collected but not yet earned 7,472 1,825 23,459 13,758 46,514 30,114 16,400 Expenses accrued and unpaid 28,662 12,491 53,265 22,332 116,750 75,036 41,714 Other liabilities 27,445 3,029 32,746 7,152 70,372 46,082 24,290 Total liabilities. 22,400,023 28,840,321 22,515,114 78,815,727 50,861,581 27,954,146 CAPITAL ACCOUNTS Capital 567,834 101,300 783,148 926,392 2,378,674 1,499,882 878,792 Surplus 865,987 126,590 803,513 702,981 2,499,071 1,435,949 1,063,122 Undivided pro6ts 240,625 36,735 278,562 290,871 846,793 540,071 306,722 Reserves for contingencies and other capital accounts. 52,973 39,044 162,858 121,440 376,315 253,456 122,859 Total capital accounts 1,727,419 303,669 2,028,081 2,041,684 6,100,853 3,729.358 2,371,495 Total liabilities and capital accounts.... 24,127,442 5,363,938 30,868,402 24,556,798 84,916,580 54,590,939 30,325,641 MEMORANDA > Par or face value of capital—Total 567,834 101,300 783,148 928,027 2,380,309 1,501,041 879,268 Capital notes and debentures.. 197 21,417 14,507 36,121 36,121 H First preferred stock 8,718 1,300 76,139 110,781 196,938 133,795 63,143 M Second preferred stock 2,150 14,681 16,831 12,137 4,694 Common stock 558,919 ' 166,066' 683,442 788,058 2,130,419 1,355,109 775,310 < W Retirable value of capital: First preferred stock 21,617 1,300 106,402 155,808 285,127 177,888 107,239 a Second preferred stock., 2,150 20,556 22,706 14,085 8,621 Net demand deposits subject to reserve 19,946,071 4,176,458 19,547,715 11,655,409 55,325,653 34,643,268 20,682,385 I Demand deposits—adjusted3 11,899,001 2,556,646 14,849,288 13,264,733 42,569,668 27,199,262 15,370,406 Reciprocal bank balances 43,415 32,550 376,872 60,334 513,171 348,964 164,207 Number of banks 37 13 354 6,275 6,679 5,081 1,598 For footnotes see next table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 15-ALL MEMBER BANKS-CLASSIFICATION OF LOANS AND UNITED STATES GOVERNMENT DIRECT OBLIGATIONS ON DECEMBER 31, 1942 BY CLASSES OF BANKS 00 [In thousands of dollars] Item New C e m Y nt e o r m r a k l b r e e r se b r a v n C e k h s c i 1 c i t a y g o m R b e e a c s m n i e t k y b r s v e 1 e r C m b o e a u m n n k b t s e r 1 y r m b e a A m n ll b k s e r n m b a e t a A m i n o l k l b n s e a r l A m b l e l a m S n b k ta e s r te Loans—Total 4,115,544 832,250 6,102,034| 5,038,496 16,088,324 5,904,973 > Commercial and industrial loans, including open market paper 2,546,454| 657,765 2,957,136 1,225,530 7,386,885 4,742,709i 2,644,176 Loans on agricultural commodities covered by purchase agreements of Commodity Credit Corporation 20,649 3,971 162,487 338,745 525,852 443,072! 82,780 Other agricultural loans 90 2,523| 127,5241 432,782 562,919 466,702 .96,217 Loans to brokers and dealers in securities 787,374 33,634 96,585 16,860 934,453 302,878 631,575 Other loans for purchasing or carrying securities 192,519 31,615 153,0861 160,933 538,153 295,031 243,122 Real estate loans: On farm land 60 284| 66,060 199,166 265,570 196,9351 68,635 W O O n n o re th si e d r en p t r i o a p l e p rt r i o e p s erty 6 5 5 1 , , 4 7 6 9 0 4 1 1 7 4 , , 4 8 9 4 2 1 1,1 3 1 0 6 3 , , 7 0 7 69 9 1, 3 2 3 6 7 0 , , 5 5 5 9 8 9 2,4 6 5 9 7 9 , , 6 9 7 1 9 3 1,5 4 7 1 0 1 , , 7 0 8 06 8 2 8 8 8 8 6 , , 9 8 0 9 7 1 O Loans to banks 21,133 2 3,546 1,703 26,384| 10,0951 16,289 Consumer loans to individuals: Retail automobile instalment paper 7,872 5,197 108,555 89,801 211,425 159,922 51,503 O Other retail instalment paper and repair and modernization instal ment loans 45,5481 14,435 126,335 91,367 277,685 197,924 79,761 W Personal instalment cash loans 37,166 9,098 93,315 145,297 284,876 193,954 90,922 >O Single payment loans to individuals 212,740 33,659 479,581 347,206 1,073,186 560,339 512,847 All other loans (including overdrafts) 126,685 17,734 307,9761 390,949 843,344 631,996 211,348 United States Government direct obligations—Total 11,475,702 2,705,788 12,226,637 8,598,309 35,006,436 22,195,181, 12,811,255 o T T T r r r e e e a a a s s s u u u r r r y y y n b c i o e l r t l t e s i s f icates of indebtedness 2 2 1 , , , 1 0 8 4 5 5 4 6 4 , , , 0 4 9 0 5 8 6 3 3 3 6 3 3 9 9 6 0 6 , , , 9 5 5 3 9 4 8 2 7 1 ] 2 1 1 , , , 2 4 7 5 4 2 3 0 2 , , , 1 8 5 4 2 5 7 5 5 1 1 , , 2 2 6 5 4 7 1 0 0 , , , 2 2 95 3 2 4 3 1 4 6 5 , , , 3 2 4 6 8 0 3 5 9 , , , 3 3 8 2 0 2 9 4 1 | 4 3 2 , , , 3 0 8 8 5 2 7 0 6 , , , 0 7 0 4 1 2 7 5 0 1 2 2 1 , , , 0 2 5 2 3 3 2 4 7 , , , 7 6 2 7 0 8 4 9 9 < o o United States savings bonds 267 865 8,510 142,222 151,8641 115,624 36,240 Other bonds maturing in 5 years or less 1,229,603 86,941 823,0601 531,954 2,671,558 1,433,708 1,237,850 Other bonds maturing in 5 to 10 years 2,635,678 530,7091 3,251,624 2,660,757 9,078,768 5,710,632) 3,368,136 Bonds maturing in 10 to 20 years 1,454,531! 483,326 2,349,266 1,640,807 5,927,930 3,863,267! 2,064,663 o Bonds maturing after 20 years 100,1811 179,870 377,650 460,161 1,117,862 808,168 309,694 1 Banks are classed according to the reserves which they are required to carry (see table 11). Some banks classed as "country banks" are in outlying sections of reserve cities or central reserve cities, and some banks classed as "reserve city banks" are in outlying sections of central reserve cities. Figures for each class of banks include assets and liabilities of their domestic branches, whether located within or outside the cities in which the parent banks are located. 2 Excludes reciprocal bank balances, shown as a memorandum item. Before June 30, 1942, such balances were reported gross. 3 Demand deposits other than interbank and United States Government, less cash items reported as in process of collection. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 79 NO. 16-MEMBER BANK RESERVE BALANCES, RESERVE BANK CREDIT, AND RELATED ITEMS-END OF YEAR 1918-1941 AND END OF MONTH 1942 [In millions of dollars] ^. 3i2 Reserve Bank credit outstanding ^j 1 T d 3 M "3 CO 5 s £ <u oa E o n r d m of o n y t e h a r T a 2 d ^! < B a u < C u ' ri z > ) r ,£ C C a ! O J - o a d L ^ £ n T3 o 3 O'-M a> CJ >» >>1$ T c 3 o x o > O . ' C 3 & u M C c3 2 d C d O 3 C OT < 3 u « m 0 . to o O H u to H > -, H Vl K 1918 1,766 287 239 206 2,498 2,873 1,795] 4,951 288 51 1919 2,215 574 300 203 3,292 2,707 1,707 5,091 385 31 1920 2,687 260 287 120 3,355 2,639 1,709] 5,325 218 57 1921 1,144 145 234 40 1,563 3,373 1,842 4,403 214 96 1922 618 272 436 79 1,405 3,642 1,958 4,530 225 11 1923 723 355 134 27 1,238 3,957 2,009 4,757 213 38 1924 320 387 540 54 1,302 4,212 2,025 4,760 211 51 1925 643 374 375 67 1,459 4,112 1,977 4,817 203 16 1926 637 381 315 49 1,381 4,205 1,991 4, 201 17 1927 582 392 617 64 1,655 4,092 2,006] 4,716 208 18 1928 1,056 489 228 35 1, 3,854 2,012 4, 202 23 1929 632 392 511 48 1,583 3,997 2,022 4,578 216 29 1930 251 364 729 29 1,373 4,306| 2,027 4,603 211 19 1931 638 339 817 59 1,853 4,173 2,035 5,360] 222 54 1932 235 33 1,855 22 2,145 4,226 2,204 5, 272 8 1933 98 133 2,437 20 2, 4,036| 2,303 5,519 284 3 1934 7 6 2,430 20 2,463 8,238 2,511 5,536 3,029 121 1935 2,431 45 2, 10,125 2,476 5,882 2,566 544 1936 2,430 64 2,500 11,258 2,532 6,543 2,376 244 1937 2,564 38 2,612 12,7601 2,637 6,550] 3,619 142 1938 2,564 33 2,601 14,512 2,798 6,856] 2,706 923 1939 2,484 102 2,593 17,644 2,963 7,598 2,409 634 1940 2,184 87 2,274| 21,995 3,087 8,732 2,213 368 1941 2,254 104 2,361 22,737 3,247] 11,160] 2,215 867 1942—Jan.. 2,243 123 22,747 3,259 11,175 2,196 361 Feb.. 2,262 144 22,705 3,268 11,485 2,172 567 Mar. 2,244 102 22,687 3,277! 11,566] 2,190 289 Apr.. 2,357 105 22,691 3,289 11,767 2,182 201 May. 2,489 138 22,714 3,305 12,074 2,192 261 June 2,645 126 22,737 3,313 12,383 2,187 290 July. 3,153 188 22,744 3,326 12,739 2,223 266 Aug. 3,426 131 22,7561 3,340 13,200 2,217 246 Sept. 3,567 199 22,754 3,353 13,703 2,222 661 Oct.. 4,667 282 22,740| 3.368 14,210 2,261 252 Nov. 5,399 308 22,743 3,381 14,805 2,236 6 Dec. 6,189 484 22,726] 3,648 15,410 2,193 799 rebmemnoN Member > bank reserve CD balances CD ,8" <u d h 3 n P - ^ 3 r n t « o j C X D o H W 121 118 1,636 51 101 208 1,890 68 23 298 1,781 27 285 1,753 99 29 276 1,934 23 275 1,898 14 39 258 2,220 59 29 272 2,212 -44 65 293 2,194 -56 26 301 2,487 63 27 348 2,389 -41 30 393 2,355 -73 28 375 2,471 96 110 354 1,961 -33 43 355 2,509 576 132 360 2,729 859 189 241 4,096 1,814 255 253 5,587 2,844 259 261 6,606 1,984 407 263 7,027 1,212 441 260 8,724 3,205 653 251 11,653 5,209 1,732 284 14,026 6,615 1,360 291 12,450 3,085 1,428 289 12,927 3,347 1,255 287 12,619 2,969 1,405 296 12,575 3,073 1,345 295 12,658 2,791 1,429 293 12,405 2,486 1,362 297 12,305 2,362 1,401 294 12,492 2,130 1,368 292 12,338 2,143 1,407 296 11,592 1.69C 1,326 283 12,735 2,644 1,320 263 13,208 2,909 1,278 256 13,117 1,988 1 Includes Government overdrafts in 1918, 1919, and 1920; includes industrial advances outstanding since July 1934. 2 By proclamation of the President, dated January 31, 1934, the weight of the gold dollar was reduced from 25 8/10 grains to 15 5/21 grains, nine-tenths fine. Between January 31, 1934, and February 1, 1934, the gold stock increased $2,985,000,000, of which $2,806,000,000 was the increment resulting from the reduction in the weight of the gold dollar and the remainder was gold which had been purchased by the Treasury previously but not added to the gold stock. The increment was covered into the Treasury as a miscellaneous receipt, and appeared together with the new gold as a General Fund asset. These transactions were also reflected in an in crease in the item "Treasury cash." The increment arising from United States gold coin turned in by the public after January 31, 1934, was also added to both gold stock and Treasury cash at the time of receipt. The incre ment from this source amounted to about $7,000,000, from February 1 to December 31, 1934, to about $1,000,000 in 1935, to $1,800,000 in 1936, to $1,200,000 in 1937, to $500,000 in 1938, to $350,000 in 1939, to $450,000 in 1940, to $305,000 in 1941, and to $280,000 in 1942. 3 Comprises outstanding United States notes, national bank notes, silver bullion, Treasury notes of 1890, standard silver dollars, subsidiary silver and minor coin, and the Federal Reserve Bank notes for the retirement of which lawful money has been deposited with the Treasurer of the United States, including the currency of these kinds that is held in the Treasury and the Federal Reserve Banks as well as that in circulation. 4 Cash (including gold bullion) held in the Treasury excepting (a) gold and silver held against gold and silver certificates and (b) amounts held for the Federal Reserve Banks. 5 Item includes all deposits in Federal Reserve Banks except Government deposits and member bank reserve balances. 6 This item is derived from the condition statement of the Federal Reserve Banks by adding capital, surplus, other capital accounts, and "other liabilities, including accrued dividends," and subtracting the sum of bank premises and "other assets." 7 Represents excess of total reserve balances over reserves required to be held by member banks against their deposits. Figures not available prior to 1929 except on call dates, and since April 1933 are for licensed member Digitized fobra FnkRs AonSlyE. RF or required reserves and changes in the percentages of requirements see table It. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

8o ANNUAL REPORT OF BOARD OF GOVERNORS NO. 17-NUMBER OF BANKING OFFICES IN UNITED STATES, 1933-1942 Member banks Nonmember banks Branches Other than End of year figures mutual savings Total In Outside National State and private banks M sa u vi t n u g a s l Private2 [ o h f e fi a c d e - h of e f a ic d e - Insured1 in N su o r n e - d1 cities cities Number of banking offices 1933 6,275 1,817 9,041 704 103 17,940 1934 6,705 1,961 39,579 705 246 19,196 1935 6,715 1,953 8,556 1,088 698 143 19,153 1936 6,723 2,032 8,436 1,043 693 139 19,066 1937 6,745 2,075 8,340 997 691 79 18,927 1938 6,723 2,106 8,224 958 690 73 18,774 1939 6,705 2,177 8,098 931 683 69 18,663 1940 6,683 2,344 7,891 895 686 62 18,561 1941 6,682 2,517 7,741 846 680 58 18,524 1942 6,673 2,621 7,601 787 4680 657 j 18,419 Number of banks (Head offices) 1933 5,154 857 8, 341 579 98 15,029 1934 5,462 980 7,693 1,108 579 241 16,063 1935 5,386 1,001 7,728 1,046 570 138 15,869 1936 5,325 1,051 7,588 1,004 565 134 15,667 1 1937 5,260 1,081 7,449 960 563 74 15,387 1938 5,224 1,114 7,316 917 555 68 15,194 1939 5,187 1,175 7,171 887 551 63 15,034 1940 5,144 1,342 6,951 851 551 56 14,895 1941 5,117 61,502 6,809 800 545 52 14,825 i 1942 r. .. 5,081 61,598 6,666 741 543 51 14,680 Number of branches and additional offices7 1933 1,121 960 70 0 125 5 2,911 1,784 1,127 1934 1,243 981 778 126 5 3,133 1,776 1,357 1935 1,329 952 828 i 42 128 5 3,284 1,754 1,530 1936 1,398 981 848 39 128 5 3,399 1,749 1,650 1937 1,485 994 891 37 128 5 3,540 1,757 1,783 1938 1,499 992 908 41 135 5 3,580 1,743 1,837 1939 1,518 1,002 927 44 132 6 3,629 1,738 1,891 1940 1,539 1,002 940 44 135 6 3,666 1,716 1,950 1941 1,565 1,015 932 46 135 6 3,699 1,726 1,973 1942 1,592 1,023 935 46 137 6 3,739 1,720 2,019 1 Federal deposit insurance did not become operative until January 1, 1934. 2 The figures for December 1934 include 140 private banks which reported to the Comptroller of the Currency under the provisions of Section 21(a) of the Banking Act of 1933. Under the provisions of the Banking Act of 1935, private banks no longer report to the Comptroller of the Currency and, accordingly, only such private banks as report to State banking departments are in the figures shown for subsequent years. 3 Separate figures not available for branches of insured and noninsured banks. \ Comprises 53 insured banks with 35 branches and 490 noninsured banks with 102 branches. The figures beginning with 1939 exclude one bank with 4 branches which theretofore was classified as an insured mutual savings bank but is now included with "Nonmember banks other than mutual savings and private banks." 6 Comprises 1 insured bank with no branches and 50 noninsured banks with 6 branches. 6 Includes 3 mutual savings banks. 7 Figures for 1942 include "banking facilities" provided through arrangements made by the Treasury De partment with banks designated as depositaries and financial agents of the Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM NO. 18-ANALYSIS OF CHANGES IN NUMBER OF BANKING OFFICES DURING 1942 Member banks Nonmember banks Other than mutual savings Total and private Na State banks Mutual Private tional savings Insured in N s o u n re - d ANALYSIS OF BANK CHANGES 14,825 5,117 1,502 6,809 800 545 52 Increases in number of banks: Primary organizations (new banks)1 +22 +2 +12 +8 +1 +1 Unclassified +2 +2 Decreases in number of banks: Suspensions -9 -6 -3 Consolidations and absorptions -91 -28 -5 -44 -12 -2 Voluntary liquidations2 -69 -7 -1 -28 -33 Unclassified -1 -1 Inter-class bank changes: Conversions- National into State -6 +6 State into National +5 -2 -3 +1 -1 Federal Reserve membership—3 Admissions of State banks +104 -97 -7 Withdrawals of State banks -2 +2 Federal deposit insurance—4 Admissions of State banks +12 -12 Withdrawals of State banks Net increase or decrease in number of banks -145 -36 +96 -143 -59 -2 — 1 Number of banks on December 31,1942 14,680 5,081 51,598 6.666 741 543 51 ANALYSIS OF BRANCH CHANGES6 Number of branches and additional offices on December 31, 1941 3,699 1,565 1,015 932 46 135 6 Increases in number of branches: De novo branches +29 +11 +3 +14 +1 Banks converted into branches +29 +9 +2 +16 +2 Decreases in number of branches: Branches discontinued -51 -16 -16 -18 -1 Inter-class branch changes: Nonmember into State member +15 -15 Branches and additional offices established at military reservations +33 +23 +4 +6 Net increase or decrease in number of branches and additional offices.. +40 +27 +8 +3 +2 Number of branches and additional offices on December 31,1942 3,739 1,592 1,023 935 46 137 6 1 Exclusive of new banks organized to succeed operating banks. 2 Exclusive of liquidations incident to the succession, conversion, and absorption of banks. 3 Exclusive of conversions of national banks into State bank members, or vice versa, as such conversions do not affect Federal Reserve membership. 4 Exclusive of conversions of member banks into insured nonmember banks, or vice versa, as such conver sions do not affect Federal Deposit Insurance Corporation membership. 5 Includes 3 mutual savings banks. 6 This analysis covers all branches and other additional offices at which deposits are received, checks paid, or money lent. Offices established at military reservations (shown separately) include "banking facilities" provided through arrangements made by the Treasury Department with banks designated as depositaries and financial agents of the Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82. ANNUAL REPORT OF BOARD OF GOVERNORS NO. 19-NUMBER OF BANKS ON PAR LIST AND NOT ON PAR LIST,1 BY FEDERAL RESERVE DISTRICTS AND STATES, ON DECEMBER 31, 1941 AND 1942 Nonmember banks, other than Federal Reserve Member banks mutual savings banks district or State On par list 1 Not on par list Dec. 31, 1 Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, DISTRICT 1942 1941 1942 1941 1942 1941 Boston 348 1 347 160 162 New York 799 797 188 195 Philadelphia 652 659 221 224 Cleveland 685 673 510 538 2 2 Richmond 460 447 262 275 288 289 Atlanta 318 317 87 82 693 704 Chicago 925 899 1,301 1,338 215 220 St. Louis 450 437 585 621 446 443 Minneapolis 454 452 103 115 718 716 Kansas City 744 741 864 905 173 176 Dallas 570 573 239 241 149 152 San Francisco 274 277 223 228 26 29 Total | 6,679 6,619 4,743 4,924 2,710 2,731 STATE New England: Maine 40 40 26 26 New Hampshire 53 53 12 12 Vermont 40 40 32 32 Massachusetts 154 153 39 41 Rhode Island 14 14 9 9 Connecticut 60 60 57 57 Middle Atlantic: New York 584 580 126 133 New Jersey 289 291 61 61 Pennsylvania 771 778 278 288 East North Central: Ohio 391 379 293 312 Indiana 215 201 280 296 3 3 Illinois 447 434 347 364 32 32 Michigan 1 225 224 222 230 1 1 Wisconsin j 147 145 255 260 159 161 West North Central: Minnesota 1 209 207 42 48 421 420 M Io i w ss a o . u . r .; i 1 1 5 6 8 4 1 1 5 6 4 0 3 3 8 2 5 6 3 3 9 4 0 4 1 1 1 1 1 1 1 1 1 0 4 7 North Dakota 43 45 3 4 113 112 South Dakota 60 60 6 6 96 96 Nebraska 147 147 100 107 159 164 Kansas 211 209 426 447 2 South Atlantic: Delaware 18 18 24 23 Maryland 1 79 74 96 100 District of Columbia 1 17 17 5 5 Virginia... 190 184 86 91 39 39 West Virginia 103 101 71 74 6 6 North Carolina 55 55 15 17 127 125 South Carolina 28 27 3 4 116 119 Georgia 68 69 18 19 260 261 Florida 58 58 16 15 89 89 East South Central: Kentucky 112 113 273 275 10 10 Tennessee 76 77 52 47 167 173 Alabama 83 82 5 4 129 132 Mississippi 26 26 5 6 171 175 West South Central: Arkansas 63 59 36 44 129 127 Louisiana 38 37 3 4 103 105 Oklahoma 217 218 159 160 12 12 Texas 527 530 225 227 95 96 Mountain: Montana 67 66 21 24 22 22 Idaho 26 28 20 22 Wyoming 36 35 19 22 1 1 Colorado 93 93 47 51 New Mexico 27 27 14 15 Arizona 7 7 5 5 Utah 34 34 25 26 Nevada 8 8 4 4 Pacific: Washington 57 57 51 51 23 26 Oregon. 31 32 36 36 3 3 California 113 113 84 86 l Includes all member banks, and all nonmember banks on which checks are drawn (except mutual savings banks, on a few of which some checks are drawn). Banks "not on par list" comprise non-member banks which have not agreed to pay without deduction such checks drawn upon them as may be forwarded for payment through the Federal Reserve Banks. Checks on such banks are not collectible through the Federal Reserve Banks. The difference of 5 between the number of nonmember banks on December 31, 1942 shown in this table and in table Digitized fo1r7 F isR dAueS tEo Rth e fact that this table excludes 135 banks (principally 59 industrial banks and 58 non-deposit trust companies) on which no checks are drawn, and includes 130 banks (principally 110 private banks and 15 coopera http://frasert.isvet lobaunisksf)e don. owrhgi/c h checks are drawn but which (1) are not reporting to State banking departments, or (2) are Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 83 NO. 20—MONEY RATES, BOND YIELDS, AND STOCK PRICES 1 Open-m N a ew rk e Y t o m rk o n C e i y t y r 2 a tes in (per B ce o n n t d p y er i el a d n s n 3 um) Com (1 m 9 o 3 n 5 -3 s 9 to c = k 1 p 0 r 0 i ) c es4 (per cent per annum) U. S. Government U. S. Govern Corporate securities ment Year and month Prime com- j 9-to m m pa o e 4 p r n - c 6 e t i h r a , s l m b o i 3 l n - l t s h 5 m f o c ic f e o 1 a r 2 n t i t e - n t i s h 3- t y a b t e o x l a e a r 5 - P a t a e a l x r l x t y - i T b a l x e a Aaa Baa Total In tr d i u al s R ro a a i d l P ut u i b li l t i y c debt notes empt edness Number of issues 1-3 2-6 354 1919. 5.37 4.73 5.49 7.25 74.6 65.6 186.5 70.5 1920., 7.50 5.32 6.12 8.20 67.8 59.8 169.6 63.6 1921., r6.62 5.09 5.97 8.35 58.3 46.7 163.8 67.5 1922., 4.52 4.30 5.10 7.08 71.5 58.4 192.7 82.8 1923., 5.07 4.36 5.12 7.24 72.9 60.1 190.6 86.2 1924. r3.98 4.06 5.00 6.83 76.9 62.9 203.5 92.1 1925. r4.02 3.86 4.88 6.27 94.8 79.9 237.5 110.9 1926. 4.34 3.68 4.73 5.87 105.6 90.3 265.1 116.9 1927. 4.11 3.34 4.57 5.48 124.9 107.0 315.8 135.5 1928. r4.85 3.33 4.55 5.48 158.3 139.4 340.9 173.9 1929. 5.85 3.60 4.73 5.90 200.9 171.1 390.7 274.1 1930. 3.59 3.29 4.55 5.90 158.2 127.0 331.3 250.7 1931. r2.64 1.402 3.34 4.58 7.62 99.5 78.5 191.3 172.8 1932. 2.73 .879 3.68 5.01 9.30 51.2 41.8 69.5 92.1 1933. r1.73 .515 3.31 4.49 7.76 67.0 59.9 100.8 91.4 1934. 1.02 .256 3 4.00 6.32 76.6 73.4 110.1 80.5 1935. .76 .137 2 3.60 5.75 82.9 82.2 90.2 83.9 1936. .75 .143 2 3.24 4.77 117.5 115.2 136.5 122.1 1937.. r.94 .447 2 3.26 5.03 117.5 118.1 129.8 110.4 1938. .81 .053 2.56 3.19 5.80 88.2 90.1 69.5 85.6 1939. .59 .023 2.36 3.01 4.96 94.2 94.8 74.7 98.6 1940. .56 .014 2.21 2.84 4.75 88.1 87.9 71.1 95.8 1941. .54 .103 .76 1.95 2.77 4.33 80.0 80.4 70.6 81.0 1942. .66 .326 1.13 2.04 2.35 2.83 4.28 69.4 71.3 66.1 61.3 1941 January — .56 (6) .76 1.99 2.75 4.38 85.0 84.7 73.4 91.1 February.. .56 .034 .81 2.10 2.78 4.42 80.1 79.4 70.0 87.1 March .56 .089 .84 2.01 2.80 4.38 80.3 79.6 70.6 87.1 April .56 .092 .81 1.96 2.82 4.33 77.9 77.3 71.2 83.1 May .56 .082 .72 1 92 2.81 4.32 77.1 77.3 70.7 78.9 June .56 .089 .68 1 91 2.77 4.31 79.5 79.7 70.9 81.6 July .50 .097 .67 1.90 2.74 4.28 83.2 84.2 73.8 81.8 August — .50 .108 .62 1.94 4.27 83.2 84.3 74.4 81.0 September. .50 .055 .62 1.94 4.30 83.6 84.8 72.6 81.3 October .50 .049 .72 1.88 4.28 80.4 81.6 70.3 78.5 November. .50 .242 .90 1.85 2.22 4.28 77.4 78.6 68.4 74.5 December. , .56 .298 1.02 1.96 2.37 2.80 4.38 71.8 73.8 61.0 66.2 1942 January .56 .214 .96 2.01 2.37 2.83 4.29 72.6 74.3 69.0 66.1 February.. .63 .250 .93 2.09 2.39 2.85 4.29 69.9 71.0 68.4 64.5 March .63 .212 .93 2.00 2.35 2.86 4.30 66.0 67.2 65.0 60.5 April .63 .299 .98 1.98 2.34 2.83 4.26 63.3 64.8 61.1 56.5 May .63 .364 1.03 1.97 2.35 2.85 4.27 63.2 64.7 60.3 57.2 June .69 .363 1.15 1.97 2.33 2.85 4.33 66.1 68.2 59.0 58.8 July .69 .368 1.20 2.00 2.34 2.83 4.30 68.2 70.6 62.9 58.4 August .69 .370 .80 1.25 2.02 2.34 2.81 4.28 68.3 70.5 65.4 58.8 September.. .69 .370 .76 1.27 2.03 2.34 2.80 4.26 69.4 71.6 66.7 59.5 October .69 .372 .75 1.28 2.05 2.33 2.80 4.24 74 2 76.5 72.7 63.7 November.. .69 .371 .80 1.28 2.06 2.34 2.79 4.25 75.2 77.2 73.0 66.2 December. . .69 .363 .80 1.34 2.09 2.36 2.81 4.28 75.9 78.5 69.3 65.2 1 Annual data are averages of monthly figures. r Revised. 2 For commercial paper, monthly data are averages of weekly prevailing rates; for Treasury bills, the average rates on new issues within period; for certificates of indebtedness, the averages of daily figures for 9- to 12month issues; and for Treasury notes, the averages of daily figures for 3- to 5-year issues. 3 Monthly data are averages of daily figures. U. S. Treasury bond yields are averages of all outstanding partially tax-exempt bonds due or callable in more than eight years from 1919 to 1925 and in more than twelve years beginning in 1926. Corporate average yields are as published by Moody's Investors Service; until 1928 each rating group included 15 bonds; since the early part of 1934 there have been less than 30 bonds in the Aaa group owing to the limited number of suitable issues in the industrial and railroad groups. 4 Standard and Poor's Corporation. Monthly data are averages of Wednesday figures. 5 Tax-exempt bills prior to March 1941; taxable bills thereafter. Digitized for 6F NReAgaStiEveR rate. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

8 4 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 21-BUSINESS INDEXES* [Adjusted for seasonal variation] Construction con Industrial production tracts awarded Employ (p 1 h 9 y 3 s 5 i c 3 a 9 l = v ol 1 u 0 m 0 e) (value)2 (nu m m e b nt e r) 1923-25 = 100 w || O) „> 3 28 3* cti rtvS w c3 a 1 £ H 2 B «J . 2 4> 3 * H o * 3 tA S C fl f O i O rr N N i o ®* f d e " ""1 62 71 63 44 106. 106.2| 124.5 75 93 60 83 63 30 90 107.2| 127.1 143.21 94 58 53 57 66 56 44 65 82.1 82.0] 127.7 87 73 81 67 71 79 68 88 90 88.0| 119.7 88 88 103 72 98 84 81 86 103.9| 111.6 121.9 98 82 95 69 89 94 95 94 96.5J 104.1 122.2] 99 90 107 76 92 122 124 120 99.9 109.7 125.4 103 96 114 79 100 129 121 1 135 101.8 113.1 126.4] 106 95 107 83 100 129 117 139 99.6 111.01 124.0 107 99 117 85 99 135 1 126 1 142 99.7 112.3 122.6 108 110 132 93 107 117 87 1 142 106.01 106.1 119.8 122.5 111 91 98 84 93 92 50 i 125 98.1 92.5 96.9 119.4 102 75 67 79 80 63 37 84 88.31 78.2| 73.5 108.7 92 58 41 70 67 28 13 40 77.6 66.4 50.7 97.6 69 69 54 79 76 25 11 37 78.6| 73.5 54.4 92.4 67 75 65 81 80 32 12 48 86.3 85.8 70.0 95.7 75 87 83 90 86 37 21 50 90.1 91.4 80.4 98.1 79 103 108 100 99 55 37 70 96.8] 99.1 93.0 99.1 88 113 122 106 112 59 41 74 102.7 108.7 111.2 102.7] 92 89 78 95 97 64 45 80 95.1 91.0 85.1 100.8] 85 108 109 108 106 72 60 81 100.01 100.0| 100.0| 99.4 90 123 138 113 117 81 72 89 104.2 107.5 114.5 100.2 94 156 193 135 125 122 89 149 115.6 132.1 167.5 105.2 110 181 250 141 129 166 82 235 124.2 152.3 242.31 116.5 124 140 170 123 120 103 84 117 110.3 118.9| 132.6 100.81 101 143 175 126 119 99 76 118 111.5 121.3 140.3 100.8 103 147 179 128 126 94 74 109 111.7 123.3 145.9 101.2 103 144 180 131 96 103 80 121 111.8 126.3 150.2 102.2 104 154 191 135 121 101 88 111 113.6 129.5 161.3 102.9 105 159 196 139 127 117 101 129 115.3 133.0| 170.5 104.6 104 160 200 138 126 139 115 158 117.1 136.1 172.0 105.3 115 160 200 139 128 152 112 184 118.4 137.8| 178.8 106.2 134 161 202 138 132 161 105 206 118.9 138.7 184.8 108.1 116 164 208 139 1 134 145 87 192 119.2 139.7 190.2 109.3 105 167 209 143 133 138 74 189 119.8 139.91 188.6| 110.2 116 167 213 141 134 123 69 167 120.3] 141.0 195.1 110.5 111 171 221 143 134 118 82 147 120.4 142.2 200.7 112.0 138 172 225 142 133 128 100 151 120.8 143.7 208.2 112.9 126 171 230 139 126 125 95 149 121.0 145.3 215.1 114.3 124 173 234 139 125 128 82 165 121.2 147.1 221.4| 115.1 117 174 239 138 126 158 76 226 121.9 149.1 228.7 116.01 108 176 244 136 127 193 76 288 122.5 150.9] 234.5 116.4 104 178 249 138 125 206 74 313 124.5 153.4 242.7 117.0 121 183 258 140 130 182 65 278 125.8 155.1 254.8 117.5 130 187 264 142 131 179 70 268 126.5 156.9 261.8 117.8 123 191 274 144 129 185 83 269 127,6 158,9 270.9] 119.0 128 194 279 147 130 198 90 286 128.8| 160.9 280.4 119.8] 138 197 285 148 127 175 91 243 130.5 164.4 287.9] 120.4 125 * Without seasonal adjustment. 1 Indexes compiled by the Board of Governors of the! Federal Reserve System, except for indexes of wholesale commodity prices, cost of living, and factory pay rolls, compiled by the United States Bureau of Labor Statis tics, and the index of income payments, compiled by the United States Department of Commerce. Descriptions and back figures for the Board's indexes may be obtained from the Division of Research and Statistics. 2 Three-month moving average, centered at second month, based on F. W. Dodge Corporation data for 37 Eastern States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APPENDIX Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

RECORD OF POLICY ACTIONS BOARD OF GOVERNORS MEETING ON FEBRUARY 2.1, 1942. Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Draper. Amendment to Regulation D, Reserves of Member Banks. By unanimous vote, Regulation D was amended, effective with the reserve computation period beginning February z8, 1942., to provide that deficiencies in reserve balances of member banks in all central reserve and reserve cities shall be computed on the basis of average daily net deposit balances covering weekly periods. Before this change was made, Regulation D required that deficiencies in reserves of member banks in cities in which Federal Reserve Banks and their branches were located and in a few other reserve cities be computed on the basis of average daily net balances covering semi-weekly periods, while member banks in other reserve cities were required to compute their reserves on a weekly basis. The amendment placed all banks in central reserve and reserve cities (except banks in outlying sections of such cities) on the same basis. Increased activity resulting from the war effort had resulted in wide fluctuations in member bank reserves in financial centers from day to day which caused many banks to maintain unnecessarily large excess reserves in order to avoid deficiencies because of the short period over which their reserves could be averaged. It was anticipated that this condition would be accentuated as war production increased, and the amendment was made for the purpose of providing for the banks affected greater flexibility in adjusting their reserve positions to meet the situation. No change was made in the requirement of the regulation that deficiencies in reserves of "country banks" (member banks outside of central reserve and reserve cities) be computed on a semi-monthly basis. MEETING ON FEBRUARY X4, 1942. Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Draper. Amendment No. 3 to Regulation W, Consumer Credit. By unanimous vote, Regulation W was amended effective March z.3, 1942., except that the amendment providing for the use of automobile appraisal guides in determining the maximum credit value of a used automobile was made effective April 1, 1941. The principal changes made by the amendment were: (1) The maximum maturity for credits subject to the regulation was reduced from 18 to 15 months, except the maturity of credits for residential repair and moderniza tion, plumbing and sanitary fixtures, furnaces, water heaters, water pumps, 86 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 87 and pianos and electric organs, which was left at 18 months. (V) The re quired down payment was increased from zo per cent to 333^ per cent on refrigerators, washing machines, ironers, vacuum cleaners, electric dish washers, room unit air conditioners, sewing machines, radios and phono graphs, and musical instruments; from 15 per cent to 333^ per cent on home air conditioning systems and attic ventilating fans; and from 15 per cent to zo per cent on furnaces, water heaters, water pumps, and plumbing and sanitary fixtures. (3) Bicycles, lawn mowers, silver ware, and photographic equipment were added to the list of articles covered by the regulation with a required down payment of 333^ per cent, and clocks, watches, and floor coverings were added with a down payment of 10 per cent. (4) Instead of basing the maximum credit value of a used automobile solely on the purchase price, the amended regulation required that after April 1, 194X5 such credit value be based either on the purchase price or on the average retail value as stated in automobile appraisal guides designated by the Board for the purpose, whichever was lower. These changes were made after consultation with the Committee provided for that purpose by the President's Executive Order. When Regulation W was adopted in August 1941, a statement of the reasons for the regulation was released to the press (see page 58 of the Annual Report of the Board of Governors for the year 1941). One of the purposes of the original regulation was to help dampen the demand for goods the civilian supply of which had already been reduced and would have to be reduced further because of defense needs. It was desirable that in the beginning the regulation be in such form as to apply moderate restrictions in a manner consistent, where possible, with prevailing trade standards and thereby lay a basis for such subsequent changes in coverage and adjustment of terms as experience and economic developments might indicate to be necessary with out imposing unnecessary burdens on consumers, dealers, or credit institu tions. Some months after the adoption of the regulation the United States entered the war and the demands on its productive capacity expanded enor mously, with a resulting increased need for further curtailment of consumer demand for goods that might interfere with the war effort. It was expected that by applying the restrictions of the regulation to additional articles composed largely of materials or using skills required for the manufacture of war goods, reducing the maximum maturity of credits subject to the regula tion, and increasing the required down payment on instalment purchases of listed articles, the effectiveness of the regulation in reducing civilian de mands for goods using critical materials or manufacturing facilities would be materially increased. This in turn would help to release greater quantities of these materials and facilities for war needs, would relieve to some extent the pressure on prices, and would make existing stocks of manufactured goods last longer. The Board was advised that the adoption of the amendment would be of assistance to the War Production Board and the Office of Price Administration in meeting their responsibilities in connection with the war program. Before the adoption of Amendment No. 3, there was no satisfactory meas ure under the existing regulations by which the valuation of a used car could be determined for the purpose of applying the down payment requirement of the regulation. It was the opinion of the Board that the use of appraisal manuals of the kinds which had been in customary use by dealers and finance companies as guides would provide such a measure and that by this means the effectiveness of the regulation as it related to used cars would be increased. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 ANNUAL REPORT OF BOARD OF GOVERNORS MEETING ON FEBRUARY 17, 1942 Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Draper. Changes in Rates on Discounts and Advances under Sections 13 and 13a of the Federal Reserve Act. By unanimous vote, the Board approved for the Federal Reserve Bank of Chicago, effective February 28, 1942., a rate of 1 per cent on discounts for and advances to banks under sections 13 and 13a of the Federal Reserve Act. The Federal Reserve Banks of Boston and New York had previously es tablished a rate of 1 per cent on loans and advances to member banks under Sections 13 and 13a and, in accordance with the policy followed in taking the above-stated action as to Chicago, the Board, effective on the dates stated below, approved reductions to 1 per cent at the other Federal Reserve Banks: Rediscounts and Advances Federal Reserve Bank under Sections 13 and 13a Philadelphia March xi, 1942. Cleveland April 11, 1941 Richmond March 14, 1941 Atlanta March 21, 1942. Chicago February 28, 1941 St. Louis March 14, 1942. Minneapolis March 28, 1941 Kansas City April 11, 1941 Dallas March 21, 1941 San Francisco April 4, 1942. Because of the huge amount of funds required to finance the war, banks are purchasing substantial amounts of Government securities. While, in the aggregate, sufficient reserves for this purpose would be available, individual banks might at times be subjected to temporary deficiencies in their reserves. It would be better in such cases if banks would obtain the needed reserves by borrowing from the Reserve Banks, rather than by selling their Government securities in the market. Reductions in the discount rates of the Reserve Banks', therefore, might have some influence in causing member banks to make fuller use of their existing reserves for war financing, as they would have the assurance that, if necessary, they could replenish their reserves by borrowing from the Federal Reserve Banks at low rates. For these reasons, the Board, after approving the reduction above stated for Chicago, advised the Federal Reserve Banks that it would approve the same rate when sub mitted by the other Reserve Banks which had not previously taken such action. Rate on Advances to Nonmember Banks. Following the above-stated action, the Board also, by unanimous vote, approved reductions in rates at the Federal Reserve Banks of Philadelphia, Cleveland, Richmond, Minneapolis, and San Francisco on advances to nonmember banks secured by direct obligations of the United States to i per cent effective March 21, April n, March 14, March 28, and April 4, 1941, respectively. These reductions were in accordance with the announcement made by the Board on September 1,1939, that the Federal Reserve Banks were prepared to make advances to member and nonmember banks on Government Digitized foorb FlRigAaStiEoRn s at par at the rates prevailing for member banks. The other http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 8 9 seven Federal Reserve Banks had established a i per cent rate on such ad vances in 1939. (See page 64 of the Annual Report of the Boart for 1939.) Rates on Advances to Member Banks under Section 10(b). The rate on advances to member banks under section 10(b) of the Federal Reserve Act is required to be at least y per cent higher than the highest dis 2 count rate in effect on loans and advances under sections 13 and 13a of the Federal Reserve Act. In view of the underlying reasons for the approval of the basic discount rate of 1 per cent, the Board was of the opinion that there was no reason why the rate under section 10(b) should be more than y per 2 cent above the basic discount rate. Subsequently, by unanimous vote, the Board approved reductions to iy per cent at all the Federal Reserve Banks, 2 effective on the dates stated below: Advances under Federal Reserve Bank Section 10(b) Boston October 2.7, 1942. New York October 30, 1942. Philadelphia October 17, 1942. Cleveland September 12., 1941 Richmond October 2.8, 1^2. Atlanta October 15, ijqi. Chicago August 19, 1941 St. Louis March 14, 1942. Minneapolis October 30, 1941 Kansas City October 2.7, 1941 Dallas October 17, 1942. San Francisco October 2.8, 1941 MEETING ON MARCH 17, 1942. Members present: Mr. Eccles, Chairman; Mr. McKee, Mr. Draper, Mr. Evans. Amendment to Regulation A, Discounts for and Advances to Member Banks by Federal Reserve Banks. By unanimous vote, subsection (b) of section 2. of Regulation A was amended, effective March 2.0, 1942., to clarify the pro visions of the subsection relating to advances to member banks secured by direct obligations of the United States. The amendment made no change in the substance of the regulation, its sole purpose being to make it clear that under the law Federal Reserve Banks are authorized to make advances to their member banks for periods not ex ceeding 90 days on the promissory notes of such member banks secured by direct obligations of the United States. MEETING ON APRIL 6, 1941 Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. Draper, Mr. Evans. Adoption of Regulation V, War Financing. By unanimous vote, Regulation V, which establishes a pro cedure under which the Federal Reserve Banks are authorized to act as fiscal agents for the War Department, Navy Depart ment, and Maritime Commission in facilitating and expediting the financing of contractors, subcontractors, and others engaged in war production, was adopted to become effective immedi Digitized for FRASaEtRe ly. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

9o ANNUAL REPORT OF BOARD OF GOVERNORS The following paragraphs taken from a statement issued by the Board under date^of April 10, 1942., describe the procedure contemplated by the regulation and give the reasons for the Board's action: "The Board of Governors of the Federal Reserve System announced today adoption of Regulation V to carry out the President's Executive Order No. 9111 of March x6, 1942., for the purpose of facilitating and expediting the financing of war production. The regulation was adopted after consultation with the War Department, the Navy De partment, and the United States Maritime Commission following con ferences in which representatives of the War Production Board par ticipated. "The objective, as set forth in Regulation V, is to facilitate and expedite production for war purposes by arranging for the financing of contractors, subcontractors and others engaged in businesses or opera tions deemed by the armed services and the Maritime Commission to be necessary for the prosecution of the war. "The War Department has sent initial instructions to the Federal Reserve Banks covering the authority and procedure to be followed by them in acting for the War Department under the Board's regulation. The program embraces financial aid for contractors and subcontractors, both large and small, and contemplates the maximum participation of small business enterprises in war production. "Regulation V prescribes general rules and policies to govern the operations of the twelve Federal Reserve Banks, which will act as fiscal agents of the armed services and the Maritime Commission in carrying out the President's Executive Order. The utilization of the facilities of the twelve Federal Reserve Banks and their twenty-four branches throughout the United States makes it possible to decentralize the war financing program to a large extent. The program looks to the fullest possible participation by the banks of the United States, whether mem bers or nonmembers of the Federal Reserve System, in the financing con templated under the authority of the President's Executive Order. "Under the Executive Order the three military procurement agencies are authorized to guarantee commercial banks, Federal Reserve Banks, the Reconstruction Finance Corporation, or other financial institutions against loss on loans made to concerns to finance the performance of war orders. The primary aim is to expand and expedite war production. Accordingly, peace-time credit rules or standards, as the President stated at the time of signing the Executive Order, must not be permitted to hold up production of war supplies needed by the armed forces. "The Board's regulation authorizes the Federal Reserve Banks, acting in accordance with the provisions of the President's Executive Order and the instructions of the three military procurement agencies, to arrange loans and guarantees thereof wherever it is believed that they will contribute to the obtaining of maximum war production expedi tiously. "To assist in carrying out the provisions of the President's Executive Order and to aid in decentralizing operations under it as fully as possible, the War Department plans to have a liaison officer stationed at each Federal Reserve Bank. Generally speaking, the liaison officer will certify to the Reserve Bank that an applicant for financing is qualified from the technical or production standpoint to carry out a contract, subcontract or order for war supplies or equipment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 91 "It is expected that any applicant will first take up his credit needs with his commercial bank or other financing institution. When the necessary credit can not be arranged by the financing institution without the assistance of the War Department, the financing institution will apply to the Federal Reserve Bank for a guarantee of a part or all of the proposed financing. After certification by the liaison officer, it will be the Reserve Bank's function to analyze the financial aspects of the appli cation, including the integrity of the management, and determine the type of financing best suited to meet the situation. "Under the initial instructions of the War Department, and upon appointment of liaison officers, guarantees or loans up to a prescribed maximum to be determined by the War Department will be made at the Federal Reserve Bank without reference to Washington." Guarantee Charges and Rates on Loans under Regulation V. By unanimous vote, the Board prescribed a maximum interest rate of 5 per cent on loans guaranteed in whole or in part by the War Department, Navy Department, or Maritime Commission and the following schedule of fees for such guarantees: GUARANTEE CHARGES ON PORTION OF LOAN GUARANTEED Charges to be determined by- Percentage of loan guaranteed Reserve Bank within the following limits 91-100 30-40 per cent of Loan Rate 76- 90 20-25 per cent of Loan Rate Up to 75 (Inclusive) 10-20 per cent of Loan Rate No charge shall be less than Yq. per cent per annum on portion of loan guaranteed. Section 6 of Regulation V provides that rates of interest, fees, and other charges on loans made or guaranteed in whole or in part by the War Depart ment, Navy Department, or Maritime Commission through the agency of a Federal Reserve Bank shall be prescribed, either specifically or by maximum limits or otherwise, by the Board of Governors of the Federal Reserve System after consultation with the armed services or the Maritime Commission and with the Federal Reserve Banks. The rates were prescribed in flexible form with the thought that the Government guarantee would justify placing a limit on the interest rate that could be charged to the borrower by the financing institution and that the rate to be fixed within that limit would be influenced by the extent to which the loan was guaranteed, the credit standing of the borrower, the cost of servicing the loan, and other factors. It was also felt that the guarantee charges should depend upon the extent to which the loan was guaranteed, within the range from a minimum of y per cent per annum on the guaranteed 2 portion of the loan up to 40 per cent of the loan rate when the guarantee exceeds 90 per cent of the loan, and that guarantee charges arrived at in this manner would be reasonable for both the Government and the financing institution. MEETING ON APRIL 30, 1941 Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Evans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

S2- ANNUAL REPORT OF BOARD OF GOVERNORS Amendment No. 4 to Regulation W, Consumer Credit. By unanimous vote, Regulation W was amended in several important respects, effective May 6, 1942.. The principal changes made in the regulation by the amendment and the reasons therefor are set forth in the following paragraphs taken from a statement issued to the press under date of May 5, 1941.: "In conformity with the President's Special Message to Congress of April 27 and under authority of Executive Order No. 8843 of August 9, 1941, the Board of Governors of the Federal Reserve System has adopted, effective May 6, 1942-, Amendment No. 4 of Regulation W relating to consumer credit. "As amended, the regulation is extended to cover a comprehensive list of durable and semi-durable goods for civilian consumption, and con templates that the volume of outstanding consumer credit, already sub stantially diminished, will be further contracted in keeping with the Government's purpose to prevent the rapid bidding up of prices. The purpose of this revision is to help make effective the last point in the seven-point program which the President set forth in his Special Mes sage to Congress of April 27, 1942., as follows: 'To keep the cost of living from spiraling upward, we must discourage credit and instalment buying, and encourage the paying off of debts, mortgages, and other obligations; for this promotes savings, retards excessive buying and adds to the amount available to the creditors for the purchase of War Bonds.' * 'The principal changes made in the regulation are: "1. The list of consumers' goods to which the regulation applies has been broadened to include automobile batteries and accessories, tires and tubes; bedding; draperies; binoculars; household electric appliances not hitherto listed; used furniture; jewelry; luggage; athletic equip ment; table and kitchenware; pottery, glassware; yard goods; and non-military clothing and furs, including shoes, hats and other haber dashery.' "2. The maximum permissible maturity of instalment sales has been reduced to 11 months, and the required down payment for all listed articles has been increased to 333^ per cent. Exceptions to this rule include instalment sales of automobiles, for which the down payment of one-third and the maximum maturity of 15 months are retained, and furniture and pianos, for which the required down payment, formerly 10 per cent, becomes 2.0 per cent, the maximum maturity being 12 months. "3. The scope of the regulation has been broadened to make it cover, in addition to instalment sales and instalment loans, charge-account sales of listed articles and single-payment consumer loans. The regu lation provides with respect to charge accounts that unless payment is made by the tenth day of the second calendar month following the pur chase, no further credit may be extended to purchase any listed article until the items in default have been paid for in full or have been placed on an instalment basis for payment within 6 months. No down payments are required on purchases in charge accounts. "4. Single-payment loans of $1500 or less are limited to a maturity of 90 days, and where such a loan is to purchase a listed article costing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 93 $15.00 or more, a down payment is also required. If not paid in 90 days, the loan must be placed on an instalment basis. "5. The revised regulation provides that instalment payments shall not be less than $5.00 per month or $1.2.5 Per week. "The exemption from down-payment requirements of instalment sales maturing within 3 months has been repealed. "Provisions covering seasonal adjustments and so-called farmer plans are retained in the regulation, together with various additional ex ceptions, such as real-estate loans; security loans subject to Regulations T and U; educational, hospital, medical, dental, and funeral expenses; aircraft; defense housing; credit to dealers; fire and casualty insurance premiums; agricultural production loans; business loans; insurance policy loans; and extensions of credit to the Federal Government, to local governments, or to any hospital, school, college, or other edu cational or charitable institution." This action was taken after consultation with the Committee provided for the purpose by the President's Executive Order. Amendment to Regulation S, Industrial Loans by Federal Reserve Banks. By unanimous vote, Regulation S was amended, effective im mediately, so as to make it clear (1) that an application by an industrial or commercial business may be transmitted to the Federal Reserve Bank of any district in which there is an office or place of business of the applicant, and (2.) that an application by a financing institution for the discount or purchase of an ob ligation of an industrial or commercial business located in any Federal Reserve district may be made to the Reserve Bank of any district in which the financing institution is operating. Other changes of a minor technical character were also made by the amendment. In accordance with the foreword to the regulation, the amendment was for the purpose of liberalizing the procedure of financing working capital loans under section 13 b of the Federal Reserve Act for industrial and commercial enterprises, thereby facilitating the participation of Federal Reserve Banks in the program of war financing contemplated by the President's Executive Order No. 9112, of March 2.6, 1942.. MEETING ON MAY 8, 1941 Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Draper, Mr. Evans. Changes in Rates on Industrial Loans under Section 13b of the Federal Reserve Act. By unanimous vote, approval was given to the following schedule of rates on loans and commitments made by the Federal Reserve Bank of Cleveland under section 13 b of the Federal Reserve Act, effective May 8, 194x1 On advances direct to industrial or commercial organizations, including advances made in participation with other financing institutions— V/2 to 5 Per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 ANNUAL REPORT OF BOARD OF GOVERNORS On advances to financing institutions: i. Portion for which financing institution is obligated—rate charged borrower less commitment rate. 2.. Remaining portion—rate charged borrower. On commitments to make industrial advances: i. Direct to industrial or commercial organizations—10 to -L^ per cent of loan rate with minimum of y per cent, 2 z. To financing institutions (provided that no commitment shall be given on a loan on which borrower is charged more than 5 per cent): (a) Undisbursed portion of loan—34 per cent. (b) Disbursed portion of loan—10 to Z5 per cent of loan rate with minimum of y per cent. 2 On April 6, 1942., pursuant to the provisions of section 6 of Regulation V, War Financing, the Board prescribed a maximum rate of 5 per cent on loans made by financing institutions under that regulation and fixed guarantee charges on such loans between the limits of a minimum of y per cent per 2 annum, and a maximum of 40 per cent of the loan rate, on the portion of the loan guaranteed. Inasmuch as loans and commitments made by the Federal Reserve Banks in the future under the provisions of section 13b of the Federal Reserve Act presumably would be largely for the purpose of financing war production and in some cases would be guaranteed at least in part by the War Department, Navy Department, or Maritime Commission, it was felt that rates in effect at the Federal Reserve Banks on such loans and commitments should not exceed the limits established on rates for loans and guarantees under Regulation V. The approval by the Board of the rates established at the Federal Reserve Bank of Cleveland and subsequently at the other Federal Reserve Banks, as shown in the following schedule, was in accordance with this policy. To financing institutions To industrial or commercial businesses Discounts or purchases Federal Reserve Bank Effective date On portion On On commit On On commit for which ments advances1 ments institution portion is obligated Boston 2H-5 V2-I (2) (3) V2-1 May 29, 1942 New York 2^-5 Vi-VA (2) (3) V2-1A June 6, 1942 P C h le i v la e d la e n lp d h ia... 2 2 H ^- - 5 5 V V T r W Vi A ( ( 4 2) ) 2 ( ( 3 3 ) ) f(K5 y )H 2- - ^ 1 A K M Ma a y y 2 8 0 , , 1 1 9 9 4 4 2 2 Richmond 2^-5 VrVi (2) (3) ,^/2-VA May 23, 1942 Atlanta 2H-5 Vr\A (2) (3) wYr\M May 16, 1942 Chicago 2H-5 V2-m 2H-5 %5 iA-m May 29, 1942 St. Louis 2H-5 Vi-VA 1-1J4 (3) A-m May 16, 1942 Minneapolis... 2^-5 Vr-m (2) (3) YrVi May 16, 1942 Kansas City... 2M-5 H-ltf (2) (3) , .M June 6, 1942 Dallas 2H-5 H-lK (2) (3) J \Y2~\A May 16, 1942 San Francisco. 2^-5 H-lM (3) (5)M-1M May 23, 1942 w 1 Including loans made in participation with financing institutions. 2 Rate charged borrower less commitment rate. 3 Rate charged borrower. 4 May charge same rate as charged borrower by financing institution, if lower. 5 Financing institution is charged A per cent on undisbursed portion of loan under commitment. MEETING ON JULY Z, 1941 Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Evans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 95 Amendment No. 5 to Regulation W, Consumer Credit. By unanimous vote, section 12. of Regulation W was amended, effective July z, 1941, to provide that, when a registrant who on May 6, 1941, was using a system of "cycle billing" (a system of recording and billing charge accounts whereby such accounts are divided into several groups and a different monthly closing date and monthly billing period is used for each group) and had received notification from the Federal Reserve Bank of the dis trict stating that the Bank was satisfied that such billing system made it impracticable for the registrant to operate under section 5(c) of the regulation or to change his system to calendarmonth billing, the charge accounts maintained by such regis trant would be deemed to be in default when items purchased in such accounts had not been paid for on or before the fortieth day following the last day of the applicable monthly billing period during which such article was sold. Amendment No. 4 to Regulation W, which became effective on May 6, i94i, provided, among other things, that with certain stated exceptions a charge account would be deemed to be in default if any article purchased in such account had not been paid for on or before the tenth day of the second calendar month following the calendar month in which the article was purchased. It had been found by the Board that, with the exception of the very few stores that were using a cycle billing procedure, stores maintain ing charge accounts had been able to adjust their procedures so that they could operate satisfactorily under the regulation. However, the stores that had adopted cycle billing could not as a practical matter adapt the procedure so as to bill on a monthly basis, without additional trained personnel and new equipment which were no longer available, and the regulation was amended to provide relief in these isolated cases. MEETING ON JULY 14, 1942. Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. Evans. Amendment to Regulation D, Reserves of Member Banks. By unanimous vote, Regulation D was amended, effective July 14, 1942., (1) to conform the regulation to the amendments made by the Act of July 7, 1942., to section 19 of the Federal Reserve Act, and (2.) to add a proviso authorizing a Federal Reserve Bank, in its discretion, to refuse at any time to permit the withdrawal or other use of credit given in a member bank's reserve account for any item for which the Federal Reserve Bank had not received payment in actually and finally collected funds. Certain other changes in the regulation of a minor technical character were also made by the amendment. The Act of July 7, 1941, removed from section 19 of the Federal Reserve Act the provision that no member shall make any new loans or pay any dividends while its reserves are deficient. The Federal Reserve Act has al ways contained a provision permitting, subject to regulations and penalties prescribed by the Board of Governors, the reserves of member banks to be withdrawn for the purpose of meeting existing liabilities. The purpose of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

9 6 ANNUAL REPORT OF BOARD OF GOVERNORS this provision, however, was to some extent nullified by the prohibition against making new loans and paying dividends while reserves were deficient. Owing to a fear of personal liability on the part of bank directors for losses sustained on loans made while reserves were deficient, some banks, under the law as it existed prior to the Act of July 7, 1942., were hesitant about utilizing any portion of their required reserves even for a day unless they refrained from making any new loans. In view of the wide fluctuations that may occur from day to day in the reserves of an individual bank, some banks had followed the practice of maintaining at all times a larger volume of excess reserves than they actually needed to meet their average requirements. Under the law as now amended the banks are not restricted in making new loans or paying dividends even though their reserves are below the minimum requirements. The power of the Board of Governors to prescribe penalties for deficiencies in reserves remains unaffected by the change in the law, and the first amendment to Regulation D referred to above was for the purpose of eliminating from the regulation references to the making of loans and the payment of dividends during periods of deficient reserves and to the personal liability of directors for permitting violations of this kind. The second change in Regulation D was to conform the regulation to a similar provision in the Board's Regulation J, Check Clearing and Collection. MEETING ON JULY 2.7, 1941 Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Draper, Mr. Evans. Amendments Nos. 6 and 7 to Regulation W, Consumer Credit. Effective immediately, Regulation W was amended, by un animous vote, to remove the restrictions of the regulation from extensions of credit (1) to finance the conversion of heating equipment from one type of fuel to another and the installation of storm doors and windows, weather stripping, and insulation within existing structures, and (2.) to finance repairs or replace ments of real or personal property damaged or lost as a result of floods or other similar disasters which the Federal Reserve Bank of the district finds has created an emergency affecting a substantial number of the inhabitants of the stricken area. The first of these amendments (No. 6) was adopted as a means of cooperat ing with other Government agencies in an attempt to meet the contemplated shortage of fuel in various sections of the country during the coming winter, resulting from a lack of transportation facilities, by facilitating the adapta tion of heating equipment to the kind of fuel that might be available in such sections, and the insulation of existing structures to reduce the amount of fuel required for heating purposes. Amendment No. 7 was for the purpose of affording relief in cases where purchases or loans, which otherwise would be subject to the restrictions of the regulation, were made necessary because of losses resulting from disasters creating emergency conditions. MEETING ON AUGUST 6, i94x Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Draper, Mr. Evans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 97 Reduction in Reserve Requirements of Member Banks in Central Reserve Cities. By unanimous vote, the supplement to Regulation D, Re serves of Member Banks, was amended, effective as of the opening of business on August xo, 194X, to require that member banks in central reserve cities (except certain banks in outlying sections of such cities which were authorized by the Board to maintain lower reserves) maintain reserves of 14 per cent, instead of 16 per cent, of their net demand deposits. This action was taken under the authority granted to the Board by the Act of July 7, 1941, which permitted changes in reserve requirements of member banks in central reserve cities without changes in the requirements for member banks in other reserve cities. The action was taken in recogni tion of the continued loss of reserves, particularly since April of this year, that had been experienced by member banks in New York City and to some extent in Chicago. These shifts of reserves from central reserve cities to banks in other parts of the country were largely the result of the fact that a substantial portion of the proceeds of Government securities purchased by central reserve city banks and of tax receipts in these cities were being spent by the Government in other parts of the United States. Substantial pur chases of Government securities by the Federal Reserve Banks during this period, which had been made largely in New York City, supplied the New York banks with additional reserves, which enabled them to continue to buy Government securities to finance the war notwithstanding the loss of reserves to the rest of the country. The additions to excess reserves of approximately $350,000,000 in New York City banks and $75,000,000 in Chicago banks which were provided by the reduction in reserve requirements served the same purpose. MEETING ON AUGUST IX, 1941 Members present: Mr. Eccles, Chairman; Mr. Szymczak, Mr. Draper, Mr. Evans. Amendment No. 8 to Regulation W, Consumer Credit. Effective August ix, 194X9 certain provisions of Regulation W were amended, by unanimous vote, to (1) remove an obstacle to the making of certain loans to farmers, such as "wheat loans", by the Commodity Credit Corporation or by banks cooperating with the Corporation in its loan program, (2.) per mit certain railroad employees whose jobs require them to have a precision watch to purchase such a watch on instalments without having to make a down payment, (3) change the re quired down payment for reupholstering furniture from 331^ per cent to 2.0 per cent, the figure applicable to furniture, (4) extend to single-payment loans for educational, hospital, medical, dental, and funeral expenses the exemption that pre viously had been applied to instalment loans for these purposes, and (5) extend to credit sales of unlisted articles for resale the same exemption as previously had been applied to credit sales of listed articles for resale. These changes were made for the purpose of relaxing certain restrictions where practicable without impairing the effectiveness of the general Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 ANNUAL REPORT OF BOARD OF GOVERNORS objectives of the regulation, and of removing inconsistencies which had become apparent in the practical application of the regulation. MEETING ON SEPTEMBER II, 1942. Members present: Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Draper. Reduction in Reserve Requirements of Member Banks in Central Reserve Cities. By unanimous vote, the supplement to Regulation D, Re serves of Member Banks, was amended, effective as of the opening of business on September 14, 1941, to require that member banks in central reserve cities (except certain banks in outlying sections of such cities which were authorized by the Board to maintain lower reserves) maintain reserves of 2.2. per cent, instead of 2.4 per cent, of their net demand deposits. Since the action taken by the Board on August 6, 1942., to reduce reserve requirements of member banks in central reserve cities the drain on their reserves had continued, and the action of the Board as stated above was taken for substantially the same reasons as prompted the reduction in reserve requirements which became effective on August xo, 1942.. MEETING ON SEPTEMBER 18, 1942. Members present: Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Draper. Amendment to Regulation A, Discounts for and Advances to Member Banks by Federal Reserve Banks. Subsection (h) of section 1 of Regulation A was amended, effective immediately, to provide that the requirement of section 1 of the regulation that a note, draft, or bill of ex change be negotiable before it would be eligible for discount by a Federal Reserve Bank or as collateral for advances under section 13 of the Federal Reserve Act would not be ap plicable with respect to any note, draft, or bill of exchange evidencing a war production loan which was in whole or in part the subject of a guarantee or commitment by the War Department, Navy Department, or United States Maritime Commission pursuant to Executive Order No. 91 ix. On this action Messrs. Szymczak, McKee, and Draper voted "aye" and Mr. Ransom did not vote. The incorporation by reference in obligations evidencing such loans of the provisions of the guarantee agreement executed by the War or Navy De partment or the Maritime Commission relating to the suspension of maturity of the obligations rendered then nonnegotiable and under the provisions of Regulation A, as previously in effect, negotiability was one of the require ments for eligibility for discount by a Federal Reserve Bank or as collateral for advances under section 13 of the Federal Reserve Act. The requirement of negotiability was not a requirement of the Federal Reserve Act but had been placed in Regulation A as a means of protecting the Federal Reserve Banks against certain legal disadvantages or nonnegotiable paper. It was Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 99 represented to the Board that, if war production loan obligations were eligi ble for discount, they would be more readily accepted, and the Board was of the opinion that in the circumstances under which the notes were issued and in view of the participation of the Federal Reserve System in the proce dure involved in such transactions it could safely amend Regulation A so that negotiability of such paper would not be required as a condition of eligibility for discount by a Federal Reserve Bank or as collateral for ad vances under section 13 of the Federal Reserve Act. MEETING ON OCTOBER 1, 1942. Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Draper, Mr. Evans. Reduction in Reserve Requirements of Member Banks in Central Reserve Cities. Mr. Szymczak moved that required reserves on net demand deposits of member banks in central reserve cities (except cer tain banks in outlying sections of such cities which were au thorized by the Board to maintain lower reserves) be reduced from 2.2. per cent to 2.0 per cent, effective as of the opening of business on October 3, i94x. As a substitute for Mr. Szymczak's motion, Mr. McKee moved that, effective as of the opening of business on October 3, 1942., required reserves of member banks on net demand deposits be reduced to the follow ing percentages of such deposits: Central reserve city banks 2.0 Reserve city banks 18 "Country" banks 13 Mr. McKee's motion was put by the chair and lost, Messrs. McKee and Draper voting "aye" and Messrs. Eccles, Ransom, Szymczak, and Evans voting "no". Mr. Szymczak's original motion was put by the chair and carried, Messrs. Eccles, Ransom, Szymczak, McKee, and Evans voting "aye" and Mr. Draper voting "no". At the time these motions were considered by the Board estimated excess reserves of member banks outside of central reserve cities were more than $1,600,000,000. The substitute motion was offered by Mr. McKee in the belief that, al though as a whole the excess reserves of reserve city and "country" banks were large, there were individual banks that had utilized their reserves iqt the purchase of Government securities as fully as banks in central reserve cities had done and that the shortage of reserves in these instances was as acute as in the case of central reserve city banks. He was also of the opinion that a differential in the reserve requirements of banks in central reserve cities and reserve cities should be preserved because of the volume of bank deposits in central reserve city banks. The rejection of the substitute motion was on the grounds that as long as member banks in reserve cities and "country" banks held such a large volume of excess reserves there was at this time no need for a reduction in reserve requirements affecting these banks, notwithstanding anticipated further increases in currency in circulation and the possible immobilization of a portion of their excess reserves resulting from a desire on the part of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

IOO ANNUAL REPORT OF BOARD OF GOVERNORS banks for liquidity because of an abnormal growth in demand deposits. The reduction in required reserves from IX per cent to zo per cent of net de mand deposits for member banks in central reserve cities was made for substantially the same reasons as occasioned similar actions by the Board which became effective on August 2.0 and September 14, i94x. MEETING ON OCTOBER 14, 1942. Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Draper. Amendment No. 9 to Regulation W, Consumer Credit. By unanimous vote, Regulation W was amended, effective October z6, 1942., to provide (1) that listed articles may be delivered to a customer "on approval", "on trial", or as a "demonstrator" only on condition that his charge account is not in default, or, in case the sale is to be an instalment sale, that before making delivery the seller obtain a deposit equal to the required down payment; (2.) that when a listed article which is to be "charged and sent" does not cost over $5.00 the seller is not required to check the customer's account before the sale to see whether the account is in default, provided, however, that if the account is found to be in default a prompt request will be made of the customer to return the article or to pay for it immediately; and (3) that a charge account shall not be deemed to be in default for the purposes of the regula tion if the amount of the default is less than $2..00. The first change was made to close a loophole in the regulation of which increasing use was being made to avoid the down payment required by the regulation and, in line with the policy of the Office of Price Administration and the needs of the times, to discourage goods being sent out on approval. The second change was for the purpose of relieving stores of the necessity of having to hire additional personnel to authorize charge sales in peak periods at a time when the national manpower problem was acute and to avoid the necessity of employees working so much overtime in such periods. The third change was intended to eliminate a requirement that was frequently a cause of annoyance out of all proportion to its importance to the purposes of the regulation. MEETING ON OCTOBER 15, 194Z Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Draper, Mr. Evans. Establishment of (l) Preferential Rate on Advances to Member Banks Secured by Short-term Obligations of the United States and (2) Reduced Rate on Advances to Individuals, Partnerships, and Cor porations Other Than Banks. By unanimous vote, the Board approved for the Federal Re serve Bank of Atlanta, effective October 15, 1942., rates estab lished by the board of directors of the Bank of y per cent on 2 advances to member banks secured by direct or fully guaranteed obligations of the United States which had one year or less to run to call date or to maturity if no call date, and 2. per cent on advances to individuals, partnerships, and corporations (other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM IOI than banks) secured by direct obligations of the United States under the last paragraph of section 13 of the Federal Reserve Act. The Board of Governors had considered informally and had discussed with the Presidents of the Federal Reserve Banks the question of reduced discount rates at the Reserve Banks as a means of encouraging member banks to utilize their excess reserves for the purchase of Government securities. The Board reviewed the arguments that had been advanced against preferential rates of discount and felt that in ordinary circumstances such rates should not be established. It was recognized, however, that the war financing program would require substantial purchases of Government securities by the banks and it was the belief of the Board that if there were a preferential rate for advances secured by Government obligations that fact would encourage member banks, particularly outside the financial centers, to invest more of their excess reserves in short-term Government securities, and that the preferential rate could be eliminated with less misunderstanding when the need had passed than might arise if there were corresponding changes in the general discount rate. The reduction in the rate on advances to individuals, partnerships, and corporations (other than banks) under the last paragraph of section 13 of the Federal Reserve Act was approved for the reason that the System had strongly advocated a policy of selling as many Government securities outside the banking system as possible and it was felt that, although there was little or no occasion for such advances at the present time, it would be more con sistent with this policy if Federal Reserve Bank rates on loans to such bor rowers on the security of Government obligations were at a lower level. Following action by the Board on the rates established by the Federal Reserve Bank of Atlanta the other Federal Reserve Banks fixed a preferential rate of y per cent on advances to member banks secured by direct and fully 2 guaranteed obligations of the United States maturing or callable within one year. Seven of the Banks also established a rate of 2. per cent on advances to individuals, partnerships, and corporations (other than banks) secured by direct obligations of the United States under the last paragraph of section 13 of the Federal Reserve Act, and the Federal Reserve Banks of New York, Richmond, Minneapolis, and San Francisco established a rate of T.%, per cent on such advances. These rates were approved by the Board, effective as of the dates shown below, in accordance with the policy established by its action on the rates fixed by the board of directors of the Federal Reserve Bank of Atlanta: Federal Reserve Bank Boston October 2.7, 1941 New York October 30, 1941 Philadelphia October 17, 1941 Cleveland October Z7, 1942. Richmond October z8, 1942. Chicago October 17, 1941 St. Louis October 2.7, 1941 Minneapolis October 30, 1942. Kansas City October 2.7, 1941 Dallas October 17, 1941 San Francisco October 18, 1942. MEETING ON DECEMBER 2.9, 1942. Members present: Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Draper, Mr. Evans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

IOl ANNUAL REPORT OF BOARD OF GOVERNORS Guarantee Charges on Loans Under Regulation V, War Financing. The following revised schedule of guarantee fees on loans guaranteed in whole or in part by the War Department, Navy Department, or Maritime Commission under Executive Order No. 9111. was approved by unanimous vote, effective December 30, 1941, with the understanding that on guarantees au thorized but not executed prior to December 30, the guarantee fee might be either that specified in the authorization or the fee applicable under the new schedule, whichever was preferred by the financing institution, and that in any pending case which involved an amount making it unnecessary for the Reserve Bank to submit the matter to Washington before executing the guarantee agreement and in which there had been an under standing as to the guarantee fee to be charged, the fee might be either that agreed upon or the fee applicable under the new schedule, whichever was preferred by the financing institution: Percentage of loan guaranteed Guarantee fee (per cent of loan rate on portion of loan guaranteed) 60 or less 10 65 uy 70 15 2 75 17H 80 20 85 22H 90 (for loans of $150,000 or less) 25 90 (for loans over $150,000) 25-30 Over 90 30-50 The above rates supersede those approved by the Board on April 6, 1942.. The schedule of rates in effect prior to December 30, 1942., gave the Federal Reserve Banks and the War Department, Navy Department, and Maritime Commission the right to fix guarantee fees within certain limits, depending upon the percentage of the loan guaranteed, and provided for a minimum guarantee fee of one-half of one per cent on the portion of the loan guaran teed. In the new schedule no specific minimum rate has been provided. In the case of loans guaranteed less than 90 per cent, the guarantee fee to be charged will depend entirely on the rate of interest charged the borrower and the percentage of the loan that is guaranteed. Any financing institution can determine for itself what the guarantee fee will be on any guaranteed loan where the percentage of the guarantee is less than 90 per cent, and for 90 per cent guaranteed loans where the amount of the loan is not more than $150,000. The gradations in the guarantee fee from 10 per cent of the loan rate for loans guaranteed for 60 per cent or less, to a maximum of 50 per cent for loans guaranteed for more than 90 per cent, were primarily for the purpose of discouraging financing institutions from asking for larger per centage guarantees than the character of the loan would justify. No change was made by the Board in the maximum interest rate of 5 per cent prescribed at the meeting on April 6,1941, on loans guaranteed in whole or in part by the War Department, the Navy Department, or the Maritime Commission. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

RECORD OF POLICY ACTIONS FEDERAL OPEN MARKET COMMITTEE MEETING ON MARCH 2., 1942. Members present: Mr. Eccles, chairman; Mr. Sproul, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Ransom, Mr. Draper, Mr. Williams, Mr. Gilbert, Mr. Young, Mr. Leedy. 1. Authority to Effect Transactions in System Account. Upon motion duly made and seconded, the following direc tion to the executive committee of the Federal Open Market Committee was approved by unanimous vote: "That the executive committee be directed until otherwise directed by the Federal Open Market Committee to arrange for such trans actions for the System open market account (including purchases, sales, exchanges, replacement of maturing securities, and letting ma turities run off without replacement) as in its judgment from time to time may be advisable in the light of existing conditions; provided that the aggregate amount of securities held in the account at the close of this date shall not be increased or decreased by more than $500,000,000." Following the entry of the United States into the war in December, the expansion of the program of national defense increased very greatly the amount of funds required to finance the war effort. The Board of Gover nors, after consultation with the Presidents of the Federal Reserve Banks, had, on December 8, 1941, issued a statement that the Federal Reserve System was prepared to use its powers to assure that an ample supply of funds was available at all times for financing the war effort and to exert its influence toward maintaining conditions in the Government security market that were satisfactory from the standpoint of the Government's requirements. At this meeting of the Federal Open Market Committee there was a full discussion of open market policy in the light of suggestions that had been made in conferences with representatives of the Treasury with respect to the Treasury's program of war financing. It was agreed that the policy to be followed by the Federal Open Market Committee was so closely related to the financing policies of the Treasury that, pending a further determination by the Treasury of what its program would be, the Federal Open Market Committee should continue the open market policy then in effect under which the executive committee was authorized, within the limits established by the full Committee, to take such action in the market as in the judgment of the executive committee might be required by any conditions that might arise. The direction set forth above, which was in the same form as the direction issued at the meeting of the Federal Open Market Committee on December n, 1941, was approved for that purpose. MEETING ON MAY 8, 1942. Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Ransom, Mr. Draper, Mr. Evans, Mr. Williams, Mr. Gilbert, Mr. Young, Mr. Leedy. 103 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 ANNUAL REPORT OF BOARD OF GOVERNORS 1. Purchases by Federal Reserve Banks of Treasury Bills at Fixed Discount Rate. On April 30, 1942., in connection with the announcement of the May Treasury financing, which included an increase to $2.50,000,000 in the weekly offering of Treasury bills, all the members of the Federal Open Market Committee agreed upon a direction which was immediately issued to the twelve Federal Reserve Banks to purchase for the System open market account all United States Treasury bills that might be offered to such Banks on a discount basis at a rate of % per cent per annum. At this meeting, upon motion duly made and seconded, it was voted unanimously to approve, ratify, and confirm the direction and to continue it in effect until otherwise directed by the Federal Open Market Committee. After the meeting of the Federal Open Market Committee, which was held on March 2., 1942., members of the Committee continued to confer from time to time with representatives of the Treasury on the subject of the formulation of a Treasury financing program which would be designed to attract as many funds as possible from sources other than commercial banks and regarding the methods by which the Federal Reserve System would supply such reserves as were necessary to assure the successful financing of the war. In connection with the latter problem and in order to carry out the existing open market policy, the members of the executive committee of the Open Market Committee had agreed that the general market should be main tained on about the then existing curve of rates (but that this did not mean special support for issues which might be out of line or that any issue must be held at par or at any other fixed price), and that the Federal Open Market Committee should use its best judgment with respect to the market and with regard for the relation of the market to the general financing program. The direction to the Federal Reserve Banks to purchase Treasury bills on a fixed discount basis was agreed upon by the members of the Committee as a means of stabilizing the bill market, of effecting a broader distribution of bills, and of encouraging banks and others to utilize available liquid funds for the purchase of bills with the assurance that, if at any time it was necessary to sell bills to adjust their individual positions, the Federal Reserve Banks of their respective districts would purchase the bills at the announced rate. 2. Authority to Effect Transactions in System Account. Upon motion duly made and seconded, the following direc tion to the executive committee was approved by unanimous * vote: "That the executive committee be directed until otherwise directed by the Federal Open Market Committee to arrange for such transactions for the System open market account, either in the open market or di rectly with the Treasury (including purchases, sales, exchanges, re placement of maturing securities, and letting maturities run off without replacement), as may be necessary for the purpose of maintaining about the present general level of prices and yields of Government securities or for the purpose of maintaining an adequate supply of funds in the market; provided that the aggregate amount of securities held in the account at the close of this aate (other than Treasury bills purchased Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM I05 pursuant to the direction of the Federal Open Market Committee issued under date of April 30, 1941) shall not be increased or decreased by more than $500,000,000." The foregoing direction differed from the one approved at the previous meeting of the Committee in that it provided for purchases either in the open market or directly from the Treasury and for purchases either for the purpose of maintaining the general level of prices and yields of Govern ment securities or for the purpose of maintaining an adequate supply of funds in the market, and made it clear that Treasury bills purchased by Federal Reserve Banks pursuant to the direction issued April 30, 1942., were not restricted by the limit placed upon the authority of the executive com mittee by this direction. Open market operations in the previous months had been largely for the purpose of maintaining about the existing level of rates of Government securities in a period when the Treasury was offering a large volume of new securities, and for the purpose of furnishing funds to banks whose reserves were being reduced through the purchase of additional amounts of Govern ment obligations. There was agreement that operations in the open market during the period before another meeting of the Committee would continue to be largely for these purposes and that the terms of the direction to the executive committee should be changed to relate the authority of the execu tive committee specifically to these conditions. On March 17, 1942., the Second War Powers Act was approved, which authorized the Federal Reserve Banks, until December 31, 1944, or such earlier time as Congress or the President may designate, to purchase Govern ment securities directly from the Treasury, provided that the aggregate amount of such securities purchased and held at any one time does not exceed $5,000,000,000. In accordance with this change in the law, the authority of the executive committee was expanded to permit direct pur chases of securities from the Treasury in order to provide for temporary accommodations to the Treasury during periods of Treasury financing or other periods when it was desirable for a brief time to allow Treasury balances at the Reserve Banks to decline. MEETING ON JUNE 2.2., 1942. Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Ransom, Mr. Draper, Mr. Evans, Mr. Williams, Mr. Gilbert, Mr. Young, Mr. Leedy. 1. Authority to Effect Transactions in System Account. Upon motion duly made and seconded, the following direc tion to the executive committee was approved by unanimous vote: "That the executive committee be directed, until otherwise directed by the Federal Open Market Committee, to arrange for such trans^ actions for the System open market account, either in the open market or directly with the Treasury (including purchases, sales, exchanges, replacement of maturing securities, and letting maturities run off without replacement), as may be necessary in the practical administra tion of the account, or for the purpose of maintaining about the present general level of prices and yields of Government securities, or for the purpose of maintaining an adequate supply of funds in the market, or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

io6 ANNUAL REPORT OF BOARD OF GOVERNORS for the purpose of granting temporary accommodation to the Treasury; provided that the aggregate amount of securities held in the account at the close of this date (other than Treasury bills purchased pursuant to the direction of the Federal Open Market Committee issued under date of April 30, 1942.) shall not be increased or decreased by more than $500,000,000." At this" meeting the Federal Open Market Committee reviewed the im portant problems relating to the Treasury financing and Federal Reserve System monetary policies which had been considered by members of the Committee in discussions with representatives of the Treasury since the meeting of the Committee on May 8. The members of the Committee were unanimously of the opinion that during this period of further development by the Treasury of a program of war financing the directions to the executive committee should be in such form as would cover the continuance of the existing policy of arranging for such open market operations as may be necessary for the practical administration of the System account, to main tain the market for outstanding issues of Government securities at about the existing price level, to supply needed funds to the market in connection with Treasury financing operations, and to grant temporary accommoda tions to the Treasury. MEETING ON AUGUST 3, 1941 Members present: Mr. Eccles, Chairman; Mr. Szymczak, Mr. McKee, Mr. Ransom, Mr. Draper, Mr. Evans, Mr. Williams, Mr. Gilbert, Mr. Young, Mr. Leedy. 1. Authority to Increase the Amount of Securities in System Account. On July 6, 1942., at the request of the members of the executive com mittee, all the members of the Federal Open Market Committee approved an increase from $500,000,000 to $850,000,000 in the limitation on the authority of the executive committee to increase or decrease the amount of securities held in the System open market account. At this meeting of the full Committee, upon motion duly made and seconded, and by unanimous vote, this action of the members of the Committee was approved, ratified, and con firmed. Early in July it appeared that the amount of securities that would have to be purchased for the System account in order to continue the policy agreed upon at the previous meeting of the Federal Open Market Committee would exceed the limit which had been placed on the authority granted to the executive committee to increase the amount of securities held in the account. Accordingly, the members of the executive committee asked the remaining members of the full Committee to agree to an increase in the limitation on the authority of the executive committee and this request was approved unanimously. Between the meeting on June 12., I942-, and this meeting, the security holdings of the Federal Reserve Banks were increased by $611,000,000 to $3,159,963,000. 2. Purchase by Federal Reserve Banks of Treasury Bills under a Repurchase Option. Upon motion duly made and seconded, the following supple mentary direction to the Federal Reserve Banks was approved bv unanimous vote: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 107 "Supplementing the direction of April 30, 1942., issued by the Federal Open Market Committee to the Federal Reserve Banks to purchase all Treasury bills that may be offered to such Banks on a discount basis at the rate of y per cent per annum, any such purchases shall, if desired s by the seller, be upon the condition that the Federal Reserve Bank, upon the request of the seller before the maturity of the bills, will sell to him Treasury bills of like amount and maturity at the same rate of discount." This action had the effect of amending the direction as then in effect to give to the seller of bills to a Federal Reserve Bank, when desired, the right of repurchase. Treasury bills in the hands of banks thus became practically equivalent to excess reserves. In the event it became necessary tor a bank or other holder of bills temporarily to adjust his cash position, he could sell the bills to a Federal Reserve Bank under the repurchase option and reacquire them after the need for funds had passed, thus avoiding the necessity of selling the bills in the market to meet a temporary situation. It was believed that this arrangement would encourage fuller investment of idle short-term funds and thereby bring about a wider distribution of bills. 3. Authority to Effect Transactions in System Account. Upon motion duly made and seconded, the following direc tion to the executive committee was also approved by unani mous vote: "That the executive committee be directed, until otherwise directed by the Federal Open Market Committee, to arrange for such trans actions for the System open market account, either in the open market or directly with the Treasury (including purchases, sales, exchanges, replacement of maturing securities, and letting maturities run off with out replacement), as may be necessary in the practical administration of the account, or for the purpose of maintaining about the present general level of prices and yields of Government securities, or for the purpose oi maintaining an adequate supply of funds in the market, or for the purpose of granting temporary accommodation to the Treasury; provided that the aggregate amount of securities held in the account at the close of this date (other than Treasury bills purchased pursuant to the directions of the Federal Open Market Committee issued under dates of April 30 and August 3, 1941) shall not be increased or de creased by more than $1,000,000,000." This direction, which was in the same form as the direction to the execu tive committee approved at the meeting of the Federal Open Market Com mittee on June 2.2., I942-, except that the limitation on the direction was increased from $500,000,000 to $1,000,000,000, was adopted for substantially the same reasons as had attended the approval of the earlier direction. The increase in the limitation on the authority, which was approved in the light of further discussions with Treasury representatives of Government financing and Federal Reserve System policies, was based on the expectation that with the rapid growth of the Treasury's needs for funds to finance the war program substantial additional amounts of securities would have to be purchased to effectuate the policies adopted by the Committee, and, there fore, the members were in agreement that the executive committee, in carrying out the direction, should be in a position to meet any situation that could be foreseen over the next few weeks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 ANNUAL REPORT OF BOARD OF GOVERNORS MEETING ON SEPTEMBER X8, 1942. Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman; Mr. Szymczak, Mr. McKee, Mr. Ransom, Mr. Draper, Mr. Evans, Mr. Williams, Mr. Gilbert, Mr. Young, Mr. Leedy. 1. Amended Direction to the Federal Reserve Banks to Purchase Treasury Bills at the Posted Discount Rate. Upon motion duly made and seconded, the following amended direction to the Federal Reserve Banks was approved, Messrs. Eccles, Ransom, Draper, Evans, Williams, Gilbert, Young, and Leedy voting "aye" and Messrs. Sproul, Szymczak, and McKee voting "no": "Until otherwise directed by the Federal Open Market Committee, the twelve Federal Reserve Banks are directed to purchase all Treasury bills that may be offered to such Banks on a discount basis at the rate of y% per cent per annum, any such purchases, if desired by the seller, to be upon the condition that the Federal Reserve Bank, upon the request of the seller before the maturity of the bills, will sell to him Treasury bills of like amount and maturity at the same rate of dis count. All bills purchased outright are to be purchased for the System open market account. All bills purchased under option to repurchase are to be held by the purchasing Federal Reserve Bank in its own account and prompt reports of all such purchases are to be made to the manager of the System open market account. "The Federal Reserve Bank of New York, as agent for the System account, is directed to transfer to the respective Federal Reserve Banks as promptly as convenient all unmatured bills held in the System account which were purchased by such Banks for System account under an option retained by the seller to repurchase and such bills shall be received and held by such Federal Reserve Banks subject to the first paragraph of this direction." It had been the practice of the Federal Reserve Banks in purchasing bills at the posted discount rate of y% per cent to make such purchases for delivery the following full business day, the customary market practice, it being understood that in the case of an emergency, in order to provide funds immediately, the purchase would be made for immediate delivery. Re purchases by the original sellers of the bills had been on the same basis, i.e., for delivery the following full business day. Under this arrangement there was time for the bills purchased at individual Reserve Banks to be trans ferred to and held in the System open market account. Inasmuch as the purpose of the arrangement for the purchase of bills under the repurchase option was to broaden the market through a wider distribution of bills and to increase the use of bills as investments for idle funds, it was the opinion of the majority of the members present that the accomplishment of this purpose would be promoted if a further step were taken to make the bills the equivalent of cash such as would be the case if, in addition to the privilege of selling them to the Federal Reserve Banks for immediate credit, they were available at the Federal Reserve Banks for immediate delivery when repur chase was desired. The revised arrangement required that bills subject to the option be held by each Federal Reserve Bank in a special account separate from its participation in the System open market account. In published statements such bills are combined with bills held in the System account. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM IO9 2. Authority to Effect Transactions in System Account. Upon motion duly made and seconded, the following direc tion to the executive committee, which was in the same form as the direction approved at the meeting on August 3, 194Z, was approved unanimously: "That the executive committee be directed, until otherwise directed by the Federal Open Market Committee, to arrange for such trans actions for the System open market account, either in the open market or directly with the Treasury (including purchases, sales, exchanges, replacement of maturing securities, and letting maturities run off with out replacement), as may be necessary in the practical administration of the account, or for the purpose of maintaining about the present general level of prices and yields of Government securities, or for the purpose of maintaining an adequate supply of funds in the market, or for the purpose of granting temporary accommodation to the Treasury; provided that the aggregate amount of securities held in the account at the close of this date (other than Treasury bills purchased pursuant to the directions of the Federal Open Market Committee issued under dates of April 30, August 3, and September 2.8, 194Z) shall not be in creased or decreased by more than $1,000,000,000." Consideration of open market policy at this meeting took into account (1) the actions which had been taken by the Board of Governors to decrease required reserves of member banks in central reserve cities effective August 18, 1942., from 16 per cent to 14 per cent of net demand deposits and effective September 14, 1942., from 14 per cent to 2.2. per cent of such deposits; (2.) the discussions by members of the Federal Open Market Committee with representatives of the Treasury relating to the financing program and to Federal Reserve policy, and (3) the respective parts that open market opera tions, changes in reserve requirements and changes in discount rates at the Federal Reserve Banks might play in carrying out Federal Reserve policies. It was pointed out that, if reductions in reserve requirements alone were relied upon to furnish needed bank reserves, required reserves could be ex pected to decline almost to the vanishing point by the end of 1943, and there was unanimity of opinion that the System should not rely upon any single power to the exclusion of others in the field of credit control, but that it should use any or all of its powers as circumstances might arise. Specifically, it was the opinion of a majority of those present that, if a further reduction in resqrve requirements of member banks in central reserve cities from 2.x per cent to 2.0 per cent of net demand deposits were made by the Board of Governors, no further action should be taken by the Board in this field for the time being and that whatever additional funds were needed to finance the war should be supplied through open market operations as directed by the Federal Open Market Committee. It was agreed that, if this course were followed, substantially larger purchases of securities for the System open market account would be necessary but that, inasmuch as purchases of Treasury bills at the fixed discount rate were not to be limited in amount by the terms of the directions which had been approved by the Committee, the renewal of the existing directions of the full Com mittee to the executive committee should be sufficient to meet the situation for the time being, with the understanding that increased authority for additional purchases could be granted upon telephonic, telegraphic, or written approval of a majority of the members of the full Committee if such action were found to be desirable. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

no ANNUAL REPORT OF BOARD OF GOVERNORS MEETING ON DECEMBER 14, 1942. Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman; Mr. McKee, Mr. Ransom, Mr. Draper, Mr. Evans, Mr. Williams, Mr. Gilbert, Mr. Young, Mr. Leedy. 1. Authority to Increase the Amount of Securities in System Account. On October 9, 1941, all members of the Federal Open Market Committee, at the request of the members of the executive committee, approved an increase from $1,000,000,000 to $1,500,000,000 in the limitation on the authority of the executive committee to increase or decrease the amount of securities held in the System open market account. In view of the rapid increase in the volume of purchases that were being made for the purpose of supplying reserve funds to the banks of the country, a further increase in the limitation to $3,000,000,000 was approved by all the members of the full Committee on December 9, 1941. At this meeting of the full Committee, upon motion duly made and seconded, and by unanimous vote, these actions of the members of the Committee were approved, ratified, and confirmed. In connection with the October and December Treasury financing opera tions, it was agreed that the System should purchase increased amounts of securities for the purpose primarily of furnishing banks with funds in such amounts as would provide substantial support for the new financing in addition to maintaining the market at approximately existing levels. The actions of the members of the Committee were taken to accomplish these purposes. As of the close of business on December n, 1941, total securities held by the Federal Reserve Banks amounted to $5,601,118,000, an increase of over $1,100,000,000 since the meeting of the Committee on September 18, 1941. 2. Authority to Effect Transactions in System Account. Upon motion duly made and seconded, the following direc tion to the executive committee was approved by unanimous vote: "That the executive committee be directed, until otherwise directed by the Federal Open Market Committee, to arrange for such transac tions for the System open market account, either in the open market or directly with the Treasury (including purchases, sales, exchanges, re placement of maturing securities, and letting maturities run off without replacement), as may be necessary in the practical administration of the account, or for the purpose of maintaining about the present general level of prices and yields of Government securities, or for the purpose of maintaining an adequate supply of funds in the market; provided that the aggregate amount of securities held in the account at the close of this date (other than special short-term certificates of indebtedness purchased from time to time for the temporary accommodation of the Treasury and Treasury bills purchased pursuant to the directions of the Feaeral Open Market Committee issued under dates of April 30, August 3, and September 18, 1941) shall not be increased or decreased by more than $1,000,000,000. "That the executive committee be further directed, until otherwise directed by the Federal Open Market Committee, to arrange for the pur- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM III chase for the System open market account direct from the Treasury of such amounts of special short-term certificates of indebtedness as may be necessary from time to time for the temporary accommoda tion of the Treasury; provided that the amount of such certificates held in the account at any one time shall not exceed $1,000,000,000." This direction was the same as the direction issued at the meeting of the Federal Open Market Committee on September 2.8, 1942., except that the amount of the limitation specified in the direction to the executive com mittee to arrange for the purchase of special short-term certificates of in debtedness for the temporary accommodation of the Treasury was increased and this direction was placed in a separate paragraph. The action of the Committee in approving the direction was taken in the light of the program which had been adopted by the Treasury for the December financing campaign, which had been the subject of several dis cussions with representatives of the Treasury, and for substantially the same reasons as prompted the approval of the direction at the meeting on Septem ber 2.8, 1941. The separate direction relating to the purchase of special short-term certificates for the temporary accommodation of the Treasury was approved for the purpose of meeting any temporary needs of the Treasury over the year-end and in recognition of the procedure followed by the Treasury in drawing upon its balances with the Federal Reserve Banks before and during Treasury financing operations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JOINT ANNOUNCEMENT OF THE FEDERAL BANK SUPERVISORY AGENCIES REGARDING AMORTIZATION OF DEBT FOR NONPRODUCTIVE PURPOSES 9 ISSUED MAY 7 1942 9 In accordance with that part of the President's Special Message to Congress of April irj which urged the paying off of debts as a restraint upon rising liv ing costs, the Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System have issued the following joint statement with respect to the procedure to be followed by their respective organizations to encourage the reduction of individual debt through amortization of bank loans: ' 'One of the greatest advances in banking practices during recent years has been the wide acceptance of the principle of amortization of debts. This principle is incorporated in Regulation W, issued by the Board of Governors of the Federal Reserve System, which relates to consumer credit and applies to certain types of bank loans. "In the exercise of their supervisory responsibilities, the Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System urge that the principle of amortization be extended to other loans which are not subject to the provisions of Regulation W, particularly to the volume of single-payment loans to individuals for nonproductive purposes presently outstanding. "The examiners for the respective agencies are being instructed to pay particular attention in the course of their examinations to individual debt to determine whether it is being reduced and to the circumstances which may be preventing its reduction or preventing it being put on an amortization basis. The examiners are likewise being instructed to include in their reports of examination comments as to the extent to which the bank has cooperated in the program for reduction of personal indebtedness incurred for nonproductive purposes, and as to the results achieved. "In order to provide a measure of the volume of personal loans, banks will be asked from time to time to report information as to the amounts of singlepayment personal loans on their books in addition to information now being reported as to instalment paper." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

USE OF CREDIT FOR ACCUMULATION OF INVENTORIES OF CONSUMER GOODS Letter of the Board of Governors of the Federal Reserve System requesting cooperation of banks and other financing institutions in discouraging all unnecessary accumulation of inventories of consumer goods. June 17, 1941. To All Banks and Other Financing Institutions: Recently a meeting was held for the purpose of discussing the use of credit in connection with the accumulation of inventories of consumer goods. Among those present were the following: Mr. Morgenthau, the Secretary of the Treasury; Mr. Jones, the Secretary of Commerce; Mr. Nelson, the Chairman of the War Production Board; Mr. Henderson, the Administra tor of the Office of Price Administration; Mr. Purcell, the Chairman of the Securities and Exchange Commission; and myself. There was complete agreement that in the present situation, when all possible production must be diverted to military purposes, accumulation of inventories of civilian consumer goods should be discouraged. We are sure that it is clear to you why this is desirable from the standpoint of avoiding inflationary developments as well as of endeavoring to assure fair treatment of the needs of all dealers and all consumers. Various ways by which this purpose might be accomplished were can vassed. It was agreed that, whether or not other steps may be necessary under the authority of legislation or executive orders, it is of the utmost im portance to enlist your voluntary cooperation and that of your customers in helping to achieve this objective. To this end, it is hoped that you will use your influence in your community to discourage all unnecessary purchases of civilian goods and that you will scrutinize carefully every application which might enable a borrower to carry a greater supply of goods than his minimum requirements. This general credit policy would not apply in special situations such as the need for supplying fuel for heating purposes next winter, or accommodating manufacturers and dealers having stocks that must be held because of freezing or rationing orders. The Board of Governors of the Federal Reserve System is writing this letter to you at the request of the group mentioned at the beginning. You have already rendered and are rendering great service in connection with the financing of the war program, and this additional responsibility is one which it is believed you will be glad to undertake in the general public interest. We feel sure that we can rely upon your cooperation. Sincerely yours, MARRINER S. ECCLES, Chairman Digitized for FRASER http://fraser.stlouisfed.org/ "3 Federal Reserve Bank of St. Louis

II4 ANNUAL REPORT OF BOARD OF GOVERNORS The following letter was sent to the President of each Federal Reserve Bank on June Z5 for the guidance of examiners: June Z5, 1941. Dear Sir: Under date of June 17, 1942., the enclosed letter relating to the use of credit in connection with the accumulation of inventories of civilian consumer goods was sent by the Board of Governors to all banks and other financing institutions at the request of the group referred to in the first paragraph of the letter. The Comptroller of the Currency, the Federal Deposit Insurance Corpora tion, and the Board of Governors have agreed that the examiners for the three supervisory agencies should be instructed to ascertain during the course of their examinations of banks what is being done by the banks to comply with the request contained in the letter and, wherever necessary, to urge compliance. It is requested, therefore, that examiners make special inquiry during the course of each examination as to the consideration given by the bank to the Board's letter, the action taken by the bank in connection with it, and the bank's policy with respect to loans for the purpose of carrying civilian con sumer goods inventories. Whenever it appears that the bank does not under stand the reasons for the letter or the need for carrying out the suggestions contained therein, the examiner should discuss the matter with the appropri ate officer of the bank and urge full cooperation. The reports of examination should include in each case comments relating to the extent to which the bank is cooperating and the examiner's views as to the effectiveness of any actions taken in reducing credit extended by the bank for what would be regarded, in the light of the Board's letter, as unwarranted accumulations of inventories of civilian consumer goods. In order to carry out the understanding that copies of this letter and its en closure will be placed in the hands of all examiners for the three Federal bank supervisory agencies, it is requested that a copy be sent to each of your ex aminers. Extra copies are enclosed for that purptose. Very truly yours, M. S. ECCLES, Chairman Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM [December 31, 1941] Term expires MARRINER S. ECCLES, of Utah, Chairman. January 31, 1944 RONALD RANSOM, of Georgia, Vice Chairman January 31, 1956 M. S. SZYMCZAK, of Illinois January 31, 1948 JOHN K. MCKEE, of Ohio January 31, 1946 ERNEST G. DRAPER, of Connecticut January 31, 1950 R. M. EVANS, of Virginia January 31, 1954 LAWRENCE CLAYTON, Assistant to the Chairman ELLIOTT THURSTON, Special Assistant to the Chairman CHESTER MORRILL, Secretary LISTON P. BETHEA, Assistant Secretary S. R. CARPENTER, Assistant Secretary FRED A. NELSON, Assistant Secretary WALTER WYATT, General Counsel J. P. DREIBELBIS, General Attorney GEORGE B. VEST, Assistant General Attorney B. MAGRUDER WINGFIELD, Assistant General Attorney E. A. GOLDENWEISER, Director, Division of Research and Statistics WOODLIEF THOMAS, Assistant Director, Division of Research and Statistics WALTER R. STARK, Assistant Director, Division of Research and Statistics LEO H. PAULGER, Chief, Division of Examinations C. E. CAGLE, Assistant Chief, Division of Examinations WILLIAM B. POLLARD, Assistant Chief, Division of Examinations EDWARD L. SMEAD, Chief, Division of Bank Operations J. R. VAN FOSSEN, Assistant Chief, Division of Bank Operations J. E. HORBETT, Assistant Chief, Division of Bank Operations CARL E. PARRY, Chief, Division of Security Loans ROBERT F. LEONARD, Director, Division of Personnel Administration EDWARD L. SMEAD, Acting Administrator, Office of Administrator for War Loans Committee GARDNER L. BOOTHE, II, Assistant Administrator, Office of Administrator for War Loans Committee O.E. FOULK, Fiscal Agent JOSEPHINE E. LALLY, Deputy Fiscal Agent FEDERAL OPEN MARKET COMMITTEE [December 31, i94x] Members MARRINER S. ECCLES, Chairman (Board of Governors) ALLAN SPROUL, Vice Chairman (Elected by Federal Reserve Banks of Boston and New York) ERNEST G. DRAPER (Board of Governors) R. M. EVANS (Board of Governors) R. R. GILBERT (Elected by Federal Reserve Banks of Richmond, Atlanta, and Dallas) H. G. LEEDY (Elected by Federal Reserve Banks of Minneapolis, Kansas City, and San Francisco) JOHN K. MCKEE (Board of Governors) RONALD RANSOM (Board of Governors) M. S. SZYMCZAK (Board of Governors) ALFRED H. WILLIAMS (Elected by Federal Reserve Banks of Philadelphia and Cleveland) C. S. YOUNG (Elected by Federal Reserve Banks of Chicago and St. Louis) Officers CHESTER MORRILL, Secretary S. R. CARPENTER, Assistant Secretary E. A. GOLDENWEISER, Economist JOHN H. WILLIAMS, Associate Economist WALTER WYATT, General Counsel J. P. DREIBELBIS, Assistant General Counsel Agent FEDERAL RESERVE BANK OF NEW YORK R. G. ROUSE, Manager of System Open Market Account Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL ADVISORY COUNCIL [December 31, 1941] OFFICERS President, EDWARD E. BROWN Vice President, GEORGE L. HARRISON Secretary, WALTER LICHTENSTEIN EXECUTIVE COMMITTEE EDWARD E. BROWN, ex officio W. F. KURTZ R. V. FLEMING S. E. RAGLAND GEORGE L. HARRISON, ex officio B. G. HUNTINGTON MEMBERS District No. 1—CHARLES E. SPENCER, JR., President, The First National Bank of Boston, Boston, Massachusetts. District No. 2—GEORGE L. HARRISON, President, New York Life Insurance Company, New York, New York. District No. 3—WILLIAM F. KURTZ, President, The Pennsylvania Company for Insurances on Lives and Granting Annuities, Philadelphia, Pennsylvania. District No. 4—B. G. HUNTINGTON, President, The Huntington National Bank, Columbus, Ohio. District No. 5—ROBERT V. FLEMING, President, The Riggs National Bank of Washington, D. C, Washington, D. C. District No. 6—H. LANE YOUNG, President, The Citizens and Southern National Bank, Atlanta, Georgia. District No. 7—EDWARD E. BROWN, President, The First National Bank of Chicago, Chicago, Illinois. District No. 8—S. E. RAGLAND, President, The First National Bank of Memphis, Memphis, Tennessee. District No. 9—LYMAN E. WAKEFIELD, President, First National Bank and Trust Company of Minneapolis, Minneapolis, Minnesota. District No. 10—W. DALE CLARK, President, The Omaha National Bank, Omaha, Nebraska. District No. 11—NATHAN ADAMS, President, The First National Bank in Dallas, Dallas, Texas. District No. 12—GEORGE M. WALLACE, President, Security-First National Bank of Los Angeles, Los Angeles, California. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 117 SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS [December 31, 1941] CHAIRMEN AND DEPUTY CHAIRMEN Federal Reserve Bank of— Chairman Deputy Chairman Boston Albert M. Creighton* Henry S. Dcnnison New York Beardsley Ruml* Edmund E. Day Philadelphia Thomas B. McCabe* Warren F. Whittier Cleveland Geo. C. Brainard* R. E. Klages Richmond Robt. Lassiter W. G. Wysor Atlanta Frank H. Necly* J. F. Porter Chicago Simeon E. Leland W. W. Waymack St. Louis Wm. T. Nardin Oscar Johnston Minneapolis W. C. Coffey Roger B. Shepard Kansas City R. B. Caldwell Robert L. Mehornay Dallas Tav Taylor J. B. Cozzo San Francisco Henry F. Grady St. George Holden Each Federal Reserve Bank has nine directors divided equally into Classes A, B, and C. The term of office of a director is three years. The Class C directors are appointed by the Board of Governors of the Federal Reserve System, and can not be officers, directors, employees, or stock holders of any bank. The Class B directors, elected by member banks, must be actively engaged in some commercial, agricultural, or industrial pursuit and may not be officers, directors, or employees of any bank. The Class A directors are elected by the member banks as the banks' own representatives. For the purpose of electing Class A and Class B directors, the member banks in each Federal Reserve district are divided into three groups—large, small, and medium-sized banks. Each of the three groups elects one Class A and one Class B director. The Board of Governors of the Federal Reserve System designates one of the Class C directors as chairman and Federal Reserve agent, and another as deputy chairman. The board of directors of each Federal Reserve Bank appoints a president and first vice president, subject to the approval of the Board of Governors, to serve for terms of five years. The president is the chief executive officer of the bank and all other officers and employees are responsible to him. Federal Reserve Bank branches have either five or seven directors, of whom a majority, includ ing the managing director, are appointed by the board of directors of the parent Federal Reserve Bank and the others are appointed by the Board of Governors of the Federal Reserve System. * Served during the year on the Executive Committee of the Conference of Chairmen of the Federal Reserve Banks. During the first part of the year the Committee consisted of Mr. Ruml, chairman, and Messrs. Brainard and McCabe. The new Committee appointed at the conference on October 5, 1942., consisted of Mr. Brainard, chairman, and Messrs. Creighton and Neely. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

n8 ANNUAL REPORT OF BOARD OF GOVERNORS SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1942 -Cont. PRESIDENTS ANDJVICE PRESIDENTS Federal Reserve President First Vice President Vice Presidents Bank of— Boston W. W. Paddock William Willett K. K. Carrick E. G. Hult Carl B. Pitman1 New York Allan Sproul L. R. Rounds R. M. Gidney L. W. Knoke Walter S. Logan J. M. Rice Robert G. Rouse John H. Williams Philadelphia Alfred H. Williams.... Frank J. Drinnen W. J. Davis E. C. Hill C. A. Mcllhenny2 C. A. Sienkiewicz Cleveland M. J. Fleming F. J. Zurlinden C. W. Arnold Wm. H. Fletcher R. B. Hays K. H. MacKenzie W. F. Taylor2 Richmond Hugh Leach T. S. Waldcn, Tr J. G. Fry Geo. H. Kecsee1 R. W. Mercer Atlanta W. S. McLarin, Jr Malcolm H. Bryan L. M. Clark H. F. Conniff Chicago C. S. Young H. P. Preston Allan M. Black1 J. H. Dillard Charles B. Dunn A. J. Mulroney Alfred T. Sihler St. Louis Chester C. Davis F. Guy Hitt O. M. Attebery C. M. Stewart Minneapolis J. N. Peyton O. S. Powell A. W. Mills1 E. W. Swanson Arthur R. Upgren Harry I. Ziemer Kansas City H. G. Leedy Henry 0. Koppang J. W. Helm2 D. W. Woolley Dallas R. R. Gilbert E. B. Stroud R. B. Coleman W. J. Evans W. O. Ford1 San Francisco Wm. A. Day Ira Clerk C. E. Earhart H. N. Mangels1 W. M. Hale R. B. West 1 Cashier. 2 Also Cashier. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 119 SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1942-Cont. DIRECTORS OF FEDERAL RESERVE BANKS District No. 1—Boston Term Expires Dec. 31 Class A. Leon A. Dodge President, First National Bank, Damariscotta, Me 1942 Allen W. Holmes President, Middletown National Bank, Middletown, Conn. .. 1943 Allan Forbes President, State Street Trust Co., Boston, Mass 1944 Class B: Edward J. Frost President and Director, Wm. Filene's Sons Company, Boston, Mass 1942 Ralph E. Flanders President, Jones & Lamson Machine Co., Springfield, Vt 1943 Philip R. Allen Director, Bird & Son, inc., East Walpole, Mass 1944 Class C: Henry S. Dennison President, Dennison Manufacturing Co., Framingham, Mass.. 1942 Henry I. Harriman Director and Vice Chairman, New England Power Association, Boston, Mass 1943 Albert M. Creighton Director, Boston Woven Hose and Rubber Co., Boston, Mass.. 1944 District No. 2—New York Class A: Neil H. Dorrance President, First National Bank & Trust Co., Camden, N. Y... 1942 Leon Fraser President, First National Bank, New York, N. Y 1943 William J. Field President, Commercial Trust Company of New Jersey, Jersey City, N. J 1944 Class B: Carle C. Conway Chairman, Continental Can Co., Inc., New York, N. Y 1942 Donaldson Brown Vice Chairman and Vice President, General Motors Corpora tion, New York, N. Y 1943 Frederick E. Williamson President, New York Central Railroad, New York, N. Y 1944 Class C. Edmund E. Day President, Cornell University, Ithaca, N. Y 1942 Vacancy 1943 Beardsley Ruml Treasurer, R. H. Macy & Co., Inc., New York, N. Y 1944 Buffalo Branch Appointed by Federal Reserve Bank: R. B. Wiltse Managing Director, Buffalo, N. Y 1942 Vacancy 1942 Raymond N. Ball President, Lincoln-Alliance Bank & Trust Co., Rochester, N. Y 1943 Robert R. Dew President, Dunkirk Trust Co., Dunkirk, N. Y 1944 Appointed by Board of Governors: Gilbert A. Prole Genesee Farm Supply Co., Batavia, N. Y 1942 Howard Kellogg President, Spencer Kellogg & Sons, Inc., Buffalo, N. Y 1943 M. B. Folsom Treasurer, Eastman Kodak Co., Rochester, N. Y 1944 District No. 3—Philadelphia Class A. George W. Reily President, Harrisburg National Bank, Harrisburg, Pa 1942 John B. Henning President, Wyoming National Bank, Tunkhannock, Pa 1943 Howard A. Loeb Chairman, Tradesmens National Bank and Trust Company, Philadelphia, Pa 1944 Class B: W. D. Kerlin Secretary & Treasurer, Camden Forge Co., Camden, N. J 1942 C. Frederick C. Stout President, John R. Evans & Co., Camden, N.J 1943 Harry L. Cannon President, H. P. Cannon & Son, Inc., Bridgeville, Del 1944 Class C. Thomas B. McCabe President, Scott Paper Company, Chester, Pa 1942 Warren F. Whittier Farmer, dairyman and cattle breeder, Douglassville, Pa. . .. 1943 Vacancy 1944 District No. 4—Cleveland Class A. Ben R. Conner President, First National Bank, Ada, Ohio 1942 H. B. McDowell President, McDowell National Bank, Sharon, Pa 1943 F. F. Brooks President, First National Bank, Pittsburgh, Pa 1944 Class B: T. E. Milsop President, Weirton Steel Co., Weirton, W. Va 1942 R. P. Wright Secretary-Treasurer, Reed Manufacturing Co., Erie, Pa 1943 G. D. Crabbs Chairman, Philip Carey Manufacturing Co., Lockland, Ohio 1944 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

no ANNUAL REPORT OF BOARD OF GOVERNORS SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1942-Cont. /-, j. Term DIRECTORS-Cont. Expires Class C: Dec. 31 R. E. Klages President, Columbus Auto Parts Co., Columbus, Ohio 1942 Geo. C. Brainard President, General Fireproofing Co., Youngstown, Ohio 1943 A. Z. Baker President, Cleveland Union Stock Yards Co., Cleveland, Ohio 1944 Cincinnati Branch Appointed by Federal Reserve Bank: B. J. Lazar Managing Director, Cincinnati, Ohio 1942 John J. Rowe President, Fifth-Third Union Trust Co., Cincinnati, Ohio.... 1942 Buckner Woodford Vice President and Cashier, Bourbon-Agricultural Bank & Trust Co., Paris, Ky 1943 Appointed by Board of Governors: Frank A. Brown Farmer, Chillicothe, Ohio ; 1942 Francis H. Bird Professor of Commerce, College of Engineering and Commerce, University of Cincinnati, Cincinnati, Ohio 1943 Pittsburgh Branch Appointed by Federal Reserve Bank: P. A. Brown Managing Director, Pittsburgh, Pa 1942 E. B. Harshaw Vice President and Cashier, Grove City National Bank, Grove City, Pa 1942 Clarance Stanley President, Union Trust Co., Pittsburgh, Pa 1943 Appointed by Board of Governors: Geo. T. Ladd President, United Engineering & Foundry Co., Pittsburgh, Pa. 1942 Robert E. Doherty President, Carnegie Institute of Technology, Pittsburgh, Pa.. 1943 District No. 5—Richmond Class A: Charles E. Rieman President, Western National Bank, Baltimore, Md 1942 J. C. Braswell President, Planters National Bank & Trust Co., Rocky Mount, N. C 1943 J. A. Sydenstricker Cashier, First National Bank, Marlinton, W. Va 1944 Class B: Chas. C. Reed Vice President & General Manager, Williams & Reed, Inc., Richmond, Va 1942 John H. Hanna Chairman, Capital Transit Co., Washington, D. C 1943 Edwin Malloy President and Treasurer, Cheraw Cotton Mills, Inc., Cheraw, S. C 1944 Class C: W. G. Wysor General Manager, Southern States Cooperative, Inc., Rich mond, Va 1942 Robt. Lassiter Chairman, Mooresville Cotton Mills, Mooresville, N. C 1943 Charles P. McCormick President, McCormick & Co., Inc., Baltimore, Md 1944 Baltimore Branch Appointed by Federal Reserve Bank: W. R. Milford Managing Director, Baltimore, Md 1942 James C. Fenhagen Vice Chairman, Baltimore National Bank, Baltimore, Md 1942 James Dixon President, Easton National Bank of Maryland, Easton, Md... 1943 George W. Reed President, National Marine Bank, Baltimore, Md 1944 Appointed by Board of Governors: Jos. D. Baker, Jr Secretary and Treasurer, Standard Lime and Stone Co., Balti more, Md 1942 W. Frank Roberts President, Standard Gas Equipment Corp., Baltimore, Md 1943 W. Frank Thomas Construction Engineer and Real Estate Management, West minster, Md 1944 Charlotte Branch Appointed by Federal Reserve Bank: W. T. Clements Managing Director, Charlotte, N. C 1942 B. M. Edwards President, South Carolina National Bank, Charleston, S. C... 1942 T. E. Hemby Executive Vice President, American Trust Co., Charlotte, N. C 1943 J. Gerald Cowan Vice President, Wachovia Bank and Trust Co., Asheville, N. C. 1944 Appointed by Board of Governors: D. W. Watkins Director of Extension, Clemson College, Clemson, S. C 1942 Geo. M. Wright President, Republic Cotton Mills, Great Falls, S. C 1943 Chas. L. Creech, Sr Chairman, B. F. Huntley Furniture Co., Winston-Salem, N. C 1944 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 12.1 SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1942-Cont. District No. 6—Atlanta ~ L Term DiKECTORS-Cont, Expires Class A: Dec. 31 Thos. K. Glenn Chairman, Trust Company of Georgia, Atlanta, Ga 1942 W. D. Cook Executive Vice President, First National Bank, Meridian, Miss 1943 Geo. J. White President, First National Bank, Mount Dora, Fla 1944 Class B: J. A. McCrary Vice President and Treasurer, J. B. McCrary Co., Inc., At lanta, Ga 1942 Fitzgerald Hall President, Nashville, Chattanooga & St. Louis Railway, Nash ville, Tenn # 1943 Ernest T. George President and Chairman, Seaboard Refining Co., Ltd., New Orleans, La 1944 Class C: J. F. Porter President and General Manager, Tennessee Farm Bureau Fed eration, Columbia, Tenn 1942 Rufus C. Harris President, Tulane University, New Orleans, La 1943 Frank H. Neely Executive Vice President and Secretary, Rich's, Inc., Atlanta, Ga 1944 Birmingham Branch Appointed by Federal Reserve Bank: P. L. T. Beavers Managing Director, Birmingham, Ala 1942 John C. Persons President, First National Bank, Birmingham, Ala 1942 John S. Coleman President, Birmingham Trust and Savings Company, Bir mingham, Ala ; 1943 Gordon D. Palmer President, First National Bank, Tuscaloosa, Ala 1944 Appointed by Board of Governors: Howard Gray Farmer, New Market, Ala 1942 Ed. L. Norton Executive Vice President, Munger Realty Co., Birmingham, Ala 1943 Donald Comer Chairman, Avondale Mills, Birmingham, Ala 1944 Jacksonville Branch Appointed by Federal Reserve Bank: Geo. S. Vardeman, Jr Managing Director, Jacksonville, Fla 1942 B. C. Teed Executive First Vice President, First National Bank, Palm Beach, Fla 1942 J. C. McCrocklin Executive Vice President, First National Bank, Tarpon Springs, Fla . 1943 J. L. Dart Vice President and Cashier, Florida National Bank, Jackson ville, Fla 1944 Appointed by Board of Governors: Vacancy . 1942 F. D. Jackson President and General Manager, Jackson Grain Company, Tampa, Fla .._ 1943 Walter J. Matherly Dean, College of Business Administration, University of Florida, Gainesville, Fla 1944 Nashville Branch Appointed by Federal Reserve Bank: Joel B. Fort, Jr Managing Director, Nashville, Tenn 1942 F. M. Farris President, Third National Bank, Nashville, Tenn. 1942 Geo. Neal Bass Cashier, First National Bank of Franklin County, Decherd, Tenn 1943 B. L. Sadler President, First National Bank, Harriman, Tenn 1944 Appointed by Board of Governors: W. E. McEwen Director, County Farm Bureau, Williamsport, Tenn 1942 E. W. Palmer President, Kingsport Press, Inc., Kingsport, Tenn 1943 Clyde B. Austin President, The Austin Co., Inc., Greeneville, Tenn 1944 New^Orleans Branch Appointed by Federal Reserve Bank: E. P. Paris Managing Director, New Orleans, La 1942 E. E. Soulier President, First National Bank, Lafayette, La 1942 O. G. Lucas President, National Bank of Commerce, New Orleans, La 1943 J. F. McRae President, Merchants National Bank, Mobile, Ala 1944 Appointed by Board of Governors: H. G. Chalkley, Jr President and General Manager, Sweet Lake Land & Oil Co., Inc., Lake Charles, La 1942 E. F. Billington Vice President, Soule Steam Feed Works, Meridian, Miss 1943 Alexander Fitz-Hugh President, P.P. Williams Company, Vicksburg, Miss 1944 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 ANNUAL REPORT OF BOARD OF GOVERNORS SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1942-Cont. District No. 7—Chicago /-, * Term DIRECTORS—Cont. Expires Class A: Dec. 31 Walter J. Cummings Chairman, Continental Illinois National Bank and Trust Co.. Chicago, 111 1942 Edward R. Estberg Chairman, Waukesha National Bank, Waukesha, Wis. 1943 Frank D. Williams President, First Capital National Bank, Iowa City, Iowa 1944 Class B: MaxW. Babb Chairman, Allis-Chalmers Manufacturing Co., Milwaukee, Wis. 1942 Clarence W. Avery President and Chairman, Murray Corporation, Detroit, Mich.. 1943 Nicholas H. Noyes Vice President & Treasurer, Eli Lilly and Company, Indianap olis, Ind 1944 Class C: W. W. Waymack Vice President and Editor, Editorial Pages, Des Moines Regisister and Tribune, Des Moines, Iowa 1942 Paul G. Hoffman President, Studebaker Corporation, South Bend, Ind 1943 Simeon E. Leland Chairman, Department of Economics and Professor of Govern ment Finance, University of Chicago, Chicago, 111 1944 Detroit Branch Appointed by Federal Reserve Bank: H. J. Chalfont Managing Director, Detroit, Mich 1942 James E. Davidson President, Peoples Com. & Sav. Bank, Bay City, Mich 1942 Walter S. McLucas Chairman, The National Bank of Detroit, Detroit, Mich 1943 Joseph M. Dodge President, The Detroit Bank, Detroit, Mich 1944 Appointed by Board of Governors: H. L. Pierson President, Detroit Harvester Co., Detroit, Mich 1942 Vacancy 1943 L. Whitney Watkins Farmer, Manchester, Mich 1944 District No. 8—St. Louis Class A: Max B. Nahm Vice President, Citizens National Bank, Bowling Green, Ky.. 1942 G. R. Corlls Cashiet, Anna National Bank, Anna, 111 1943 Sidney Maestre President, Mississippi Valley Trust Co., St. Louis, Mo 1944 Class B: J. W. Harris Chairman, Harris-Langenberg Hat Co., St. Louis, Mo 1942 H. H. Tucker President, Fones Bros. Hardware Co., Little Rock, Ark 1943 John R. Stanley Secretary-Treasurer, Stanley Clothing Co., Evansville, Ind... 1944 Class C: Wm. T. Nardin Vice President and General Manager, Pet Milk Co., St. Louis, Mo 1942 Oscar G. Johnston President, Delta and Pine Land Co., Scott, Miss 1943 Douglas W. Brooks President, The Newburger Co., Memphis, Tenn 1944 Little Rock Branch Appointed by Federal Reserve Bank: A. F. Bailey Managing Director, Little Rock, Ark 1942 James H. Penick President, W. B. Worthen Co., Bankers, Little Rock, Ark 1942 Arthur E. McLean President, Commercial National Bank, Little Rock, Ark 1943 Paul R. McCoy Chairman, Peoples National Bank, Stuttgart, Ark 1944 Appointed by Board of Governors: R. E. Short Farmer, Brinkley, Ark 1942 I. N. Barnett, Jr Manager, Barnett Bros. Mercantile Co., Batesville, Ark 1943 S. M. Brooks President, Brooks Advertising Agency, Little Rock, Ark 1944 Louisville Branch Appointed by Federal Reserve Bank: C. A. Schacht Managing Director, Louisville, Ky 1942 J. O. Sanders President, First National Bank, Huntingburg, Ind 1942 Phil E. Chappell President, Planters Bank & Trust Co., Hopkinsville, Ky 1943 Ralph C. Gifford President, First National Bank, Louisville, Ky 1944 Appointed by Board of Governors: G. O. Boomer Vice President, The Girdler Corporation, Louisville, Ky 1942 Perry B. Gaines Farmer, Carrollton, Ky 1943 E. J. O'Brien, Jr President, E. J. O'Brien & Co., Louisville, Ky 1944 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 123 SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1942-Cont. Memphis Branch ~ L Term DIRECTORS-Cont. Expires Appointed by Federal Reserve Bank: Dec. 31 W. H. Glasgow Managing Director, Memphis, Tenn 1942 V. J. Alexander President, Union Planters National Bank & Trust Co., Mem phis, Tenn 1942 B. A. Lynch President, Farmers Bank & Trust Co., Blytheville, Ark 1943 Oliver Benton President, National Bank of Commerce, Jackson, Tenn 1944 Appointed by Board of Governors: J. P. Norfleet President, Sledge & Norfleet, Memphis, Tenn 1942 R. C. Branch Cotton planter and ginner, Pecan Point, Ark 1943 J. Holmes Sherard President, Jno. H. Sherard & Son, Sherard, Miss 1944 District No. 9—Minneapolis Class A: F. D. McCartney Vice President, First National Bank, Oakes, N. D 1942 S. S. Ford President, Northwestern National Bank & Trust Co., Minneap olis, Minn 1943 J. R. McKnight President, Pierre National Bank, Pierre, S. D 1944 Class B: Albert P. Funk President, LaCrosse Rubber Mills Co., LaCrosse, Wis 1942 Homer P. Clark Chairman, West Publishing Co., St. Paul, Minn 1943 J. E. O'Connell President, Eddy's Bakeries, Inc., Helena, Mont 1944 Class C: W. C. Coffey President, University of Minnesota, Minneapolis, Minn 1942 W. D. Cochran W. D. Cochran Freight Lines, Iron Mountain, Mich 1943 Roger B. Shepard President, Finch, Van Slyck & McConville, St. Paul, Minn,... 1944 Helena Branch Appointed by Federal Reserve Bank: R. E. Towle Managing Director, Helena, Mont 1942 P. B. McClintock Cashier, Farmers National Bank, Chinook, Mont 1942 Peter Pau4y President, Deer Lodge Bank & Trust Co., Deer Lodge, Mont.. 1943 Appointed by Board of Governors: R. B. Richardson President, Western Life Insurance Co., Helena, Mont 1942 H. D. Myrick. Farmer, Square Butte,Mont 1943 District No. 10—Kansas City Class A: Thomas A. Dines President, United States National Bank, Denver, Colo 1942 M. A. Limbocker- President and Chairman, Citizens National Bank, Emporia, Kan 1943 William L. Bun ten Vice President and Cashier, Goodland State Bank, Goodland, Kan 1944 Class B: Willard D. Hosford Vice President and General Manager, John Deere Plow Co., Omaha, Neb 1942 J. M. Bernardin Vice President, Burk Lumber Co., Dawson, N. M 1943 L. E. Phillips Phillips Petroleum Company, Bartlesville, Okla 1944 Class C: Vacancy. 1942 R. B. Caldwell McCune, Caldwell, Downing & Noble, Kansas City, Mo 1943 Robert L. Mehornay President, North-Mehornay Furniture Co., Kansas City, Mo.. 1944 Denver Branch Appointed by Federal Reserve Bank: Jos. E. Olson Managing Director, Denver, Colo 1942 Roblin H. Davis President, Denver National Bank, Denver, Colo 1942 W. C. Kurtz President and General Manager, Independent Lumber Co., Grand Junction, Colo 1943 Harold Kountze President, Colorado National Bank, Denver, Colo 1944 Appointed by Board of Governors: Wilson McCarthy President, Denver & Salt Lake Railway Co., Denver, Colo— 1942 M. E. Noonen Sheep rancher, Kremmling, Colo 1943 J. B. Grant Lewis and Grant, Denver, Colo 1944 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 ANNUAL REPORT OF BOARD OF GOVERNORS SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1942-Cont Oklahoma City Branch r> . Term DIRECTORS—Cont. Expires Appointed by Federal Reserve Bank: Dec. 31 G. H. Pipkin Managing Director, Oklahoma City, Okla 1942 A. E. Stephenson President, Central National Bank, Enid, Okla 1942 D. M. Tyler First Vice President, Dewey Portland Cement Co., Dewey, Okla 1943 Hugh L. Harrell Vice President, First National Bank & Trust Co., Oklahoma City, Okla 1944 Appointed by Board of Governors: Lloyd Noble President, Noble Drilling Corp., Tulsa, Okla 1942 Phil C. Ferguson Stockman, Woodward, Okla 1943 Neil R. Johnson Rancher and farmer, Norman, Okla 1944 Omaha Branch Appointed by Federal Reserve Bank: L. H. Earhart Managing Director, Omaha, Neb 1942 Thomas L. Davis President, First National Bank, Omaha, Neb 1942 Geo. A. Bible President, First National Bank, Rawlins, Wyo 1943 George W. Holmes President, First National Bank, Lincoln, Neb 1944 Appointed by Board of Governors: H. L. Dempster President, Dempster Mill Mfg. Co., Beatrice, Neb 1942 W. H. Schellberg Stockman, Omaha, Neb 1943 Leonard E. Hurtz President, Fairmont Creamery Company, Omaha, Neb 1944 District No. 11—Dallas Class A: Ed. H. Winton Executive Vice President, Continental National Bank, Fort Worth, Tex 1942 Frank Turner President, First National Bank, Decatur, Tex 1943 J. E. Woods Chairman of Board, Temple National Bank, Temple, Tex 1944 Class B: J. R. Milam President, Cooper Company, Inc., Waco, Tex 1942 Geo. A. Hill, Jr President, Houston Oil Company of Texas, Houston, Tex 1943 E. L. Kurth Vice President and General Manager, Angelina County Lum ber Co., Keltys, Tex 1944 Class C. Jay Taylor Ranching and stockyards, Amarillo, Tex 1942 J. B. Cozzo Builder and manufacturer, Dallas, Tex 1943 Dolph Briscoe Stock raiser, Uvalde, Tex 1944 El Paso Branch Appointed by Federal Reserve Bank: J. L. Hermann Managing Director, El Paso, Tex 1942 H. A. Jacobs Vice President, El Paso National Bank, El Paso, Tex 1942 R. W. McAfee Vice President, State National Bank, El Paso, Tex 1943 J. E. Moore Vice President, First National Bank, Roswell, N. M 1944 Appointed by Board of Governors: R. E. Sherman President, Leavell and Sherman, Inc., El Paso, Tex 1942 Jack B. Martin President, Arizona Ice and Cold Storage Co., Tucson, Ariz 1943 F. M. Hayner President, Las Cruces Lumber Co., Las Cruces, N. M. 1944 Houston Branch Appointed by Federal Reserve Bank: W. D. Gentry Managing Director, Houston, Tex 1942 P. B. Doty President, First National Bank, Beaumont, Tex 1942 W. N. Greer President, Citizens State Bank, Houston, Tex 1943 J. W. McCullough President, Hutchings-Sealy National Bank, Galveston, Tex... 1944 Appointed by Board of Governors: Sam Taub J. N. Taub & Sons, Houston, Tex 1942 George G. Chance Farmer, Bryan, Tex 1943 H. Renfert Cotton Merchant, Galveston, Tex 1944 San Antonio Branch Appointed by Federal Reserve Bank: E. B. Austin Managing Director, San Antonio, Tex 1942 E. J. Miller President, South Texas National Bank, San Antonio, Tex 1942 J. A. Walker Vice President, Del Rio National Bank, Del Rio, Tex 1943 T. C. Frost, Jr Vice President, Frost National Bank, San Antonio, Tex 1944 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM Il5 SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1942-Cont. _ . Term DIRECTORS—Cont. Expires Appointed by Board of Governors: Dec. 31 Edwin F. Flato President,Corpus Christi Hardware Co., Corpus Christi,Tex.. 1942 H. M. Cartwright Live stock and farming, Twin Oaks Ranch, Dinero, Tex 1943 J. M. Odom General Contractor, Austin, Tex 1944 District No. 12—San Francisco Class A. Carroll F. Byrd Chairman & Executive Vice President, First National Bank, Willows, Calif 1942 C. K. Mcintosh Chairman, Bank of California, N. A., San Francisco, Calif.... 1943 Reno Odlin President, Puget Sound National Bank, Tacoma, Wash 1944 Class B: Reese H. Taylor President, Union Oil Co., Los Angeles, Calif 1942 Elmer H. Cox President, Madera Sugar Pine Company, San Francisco, Calif.. 1943 Wm. G. Volkmann Partner, A. Schilling and Co., San Francisco, Calif 1944 Class C: Harry R. Wellman Director, Giannini Foundation of Agricultural Economics, University of California, Berkeley, Calif 1942 St. George Holden St. George Holden Realty Company, San Francisco, Calif 1943 Henry F. Grady President, American President Lines, Ltd., San Francisco, Calif 1944 Los Angeles Branch Appointed by Federal Reserve Bank: W. N. Ambrose Managing Director, Los Angeles, Calif 1942 H. D. Ivey President, Citizens National Trust & Savings Bank, Los Angeles, Calif 1942 F. E. Snedecor President, First National Bank, Corona, Calif 1943 Appointed by Board of Governors: W. S. Rosecrans Property management and investments, Los Angeles, Calif... 1942 Y. Frank Freeman Vice President, Paramount Pictures, Inc., Hollywood, Calif... 1943 Portland Branch Appointed by Federal Reserve Bank: D. L. Davis Managing Director, Portland, Ore 1942 N. A. Davis Vice President, Baker-Boyer National Bank, Walla Walla, Wash 1942 Paul S. Dick President, United States National Bank, Portland, Ore 1943 Appointed by Board of Governors: William H. Steen Livestock and farming, Milton, Oregon 1942 George T. Gerlinger President, Willamette Valley Lumber Co., Portland, Ore 1943 Salt Lake City Branch Appointed by Federal Reserve Bank: W. L. Partner Managing Director, Salt Lake City, Utah 1942 Orval W. Adams Executive Vice President, Utah State National Bank, Salt Lake City, Utah 1942 Frederick P. Champ President, Cache Valley Banking Co., Logan, Utah 1943 Appointed by Board of Governors: R. C. Rich Livestock and farming, Burley, Idaho 1942 Herbert S. Auerbach President and General Manager, Auerbach Co., Salt Lake City, Utah 1943 Seattle Branch Appointed by Federal Reserve Bank: C. R. Shaw Managing Director, Seattle, Wash 1942 Fred L. Stanton President, Washington Trust Company, Spokane, Wash 1942 Andrew Price President, National Bank of Commerce, Seattle, Wash 1943 Appointed by Board of Governors: Fred Nelsen Farmer and dairyman, Seattle, Wash 1942 Charles F. Larrabee Vice President, Pacific American Fisheries, Inc., Bellingham, Wash 1943 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

STATE BANK AND TRUST COMPANY MEMBERS Following is a list of the 1,598 State bank and trust company members of the Federal Reserve System on December 31, 1942.. DISTRICT NO. 1 (44 banks) DISTRICT NO. 2—Continued CONNECTICUT! (6 banks) NEW JERSEY—continued Hartford Phoenix State Bank & Trust Co. Dunellen Peoples Trust Co. Meriden Puritan Bank & Trust Co. East Orange Ampere Bank & Trust Co. New Haven Union & New Haven Trust Co. Savings Investment & Trust Co. Torrington Brooks Bank & Trust Co. Elizabeth Central Home Trust Co. Waterbury Colonial Trust Co. Elizabethport Banking Co. Waterbury Trust Co. Fair Lawn P air Lawn-Radburn Trust Co. Fort Lee Fort Lee Trust Co. MAINE (5 banks) Franklin Sussex County Trust Co. Glen Ridge... :• Glen Ridge Trust Co. Augusta Depositors Trust Co. Glen Rock Glen Rock Bank Bangor Merrill Trust Co. Hackensack Hackensack Trust Co. Bar Harbor Bar Harbor Banking & Trust Co. Peoples Trust Co. of Bergen Ellsworth Union Trust Co. County Sanford Sanford Trust Co. Jersey City Commercial Trust Co. of New Jersey MASSACHUSETTS (30 banks) Keyport Keyport Banking Co. Linden Linden Trust Co. Arlington Menotomy Trust Co. Long Branch Long Branch Trust Co. Boston New England Trust Co. Maplewood Maplewood Bank & Trust Co. Old Colony Trust Co. Montclair Bank of Montclair Pilgrim Trust Co. Montclair Trust Co. State Street Trust Co. Morris town Morristown Trust Co. United States Trust Co. Newark Clinton Trust Co. Bridgewater Bridgewater Trust Co. Columbus Trust Co. Brookline Norfolk County Trust Co. Federal Trust Co. Cambridge County Bank & Trust Co. Fidelity Union Trust Co. Harvard Trust Co. Franklin-Washington Trust Co. Fall River B.M.C. Durfee Trust Co. Merchants & Newark Trust Co. Fall River Trust Co. United States Trust Co. Gloucester Gloucester Safe Deposit & Trust West Side Trust Co. Co. Nutley Bank of Nutley Greenfield Franklin County Trust Co. Passaic Bank of Passaic & Trust Co. Holyoke Hadley Falls Trust Co. Peoples Bank & Trust Co. Hyannis Hyannis Trust Co. Perth Amboy First Bank & Trust Co. Lynn Security Trust Co. Phillipsburg Phillipsburg Trust Co. Milton Blue Hill Bank & Trust Co. Plainfield Mid-Citv Trust Co. Newton Newton Trust Co. Plainfield Trust Co. Norwood Norwood Trust Co. State Trust Co. Quincy Granite Trust Co. Red Bank Merchants Trust Co. Quincy Trust Co. Ridgefield Park Ridgefield Park Trust Co. Salem Naumkeag Trust Co. Ridgewood .North Jersey Trust Co. Somerville Somerville Trust Co. Rochelle Park Rochelle Park Bank Springfield Springfield Safe Deposit & Trust Rutherford Rutherford Trust Co. Co. South Orange South Orange Trust Co Union Trust Co. Summit Citizens Trust Co. Taunton Bristol County Trust Co. Summit Trust Co. Wellesley Hills Wellesley Trust Co. Tenafly Tenafly Trust Co. Winchester Winchester Trust Co. Washington Washington Trust Co. Worcester Worcester County Trust Co. Westfield Peoples Bank & Trust Co. Westfield Trust Co. NEW HAMPSHIRE (1 bank) Conway Carroll County Trust Co. NEW YORK (166 banks) RHODE ISLAND (2 banks) Adams Citizens & Farmers Trust Co. Albany First Trust Co. Providence Industrial Trust Co. State Bank of Albany Union Trust Co. Amityville Bank of Amityville Amsterdam Montgomery County Trust Co DISTRICT NO. 2 (225 banks) Arcade Citizens Bank Arlington Vassar Bank CONNECTICUT! (2 banks) Attica Bank of Attica Bridgeport West Side Bank Auburn Auburn Trust Co. Avoca Bank of Avoca Springdale Springdale Bank & Trust Co. Babylon Bank of Babylon NEW JERSEY* (57 banks) Baldwin Peoples State Bank Batavia Genesee Trust Co. Bayonne Bayonne Trust Co Bay Shore South Side Bank Bloomfield Bloomfield Bank & Trust Co. Belmont State Bank of Belmont Community Trust Co. Binghamton Marine Midland Trust Co Bogota Bank of Bogota Blasdell Bank of Blasdell Boonton Boon ton Trust Co. Brooklyn (see New York) Bound Brook Bound Brook Trust Co. Buffalo Liberty Bank Carteret Carteret Bank & Trust Co. Manufacturers & Traders Trust Cranford Cranford Trust Co. Co. Dover Dover Trust Co. Marine Trust Co. Digitized for F1 RExAcSluEsiRve of part of State located in another district. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM Il7 STATE BANK AND TRUST COMPANY MEMBERS—Continued DISTRICT NO. 2—Continued DISTRICT NO. 2—Continued NEW YORK—continued NEW YORK—continued Camillus Camillus Bank Merchants Bank Canandaigua Ontario County Trust Co. J. P. Morgan & Co. Inc. Canaseraga Canaseraga State Bank New York Trust Co. Canisteo First State Bank Pan American Trust Co. Cattaraugus Bank of Cattaraugus Pennsylvania Exchange Bank Center Moriches Center Moriches Bank Schroder Trust Co. Chatham State Bank of Chatham Trade Bank & Trust Co. Chestertown Chester-Schroon-Horicon Bank United States Trust Co. Cicero Cicero State Bank West New Brighton Bank Clyde Citizens Bank Niagara Falls. Power City Trust Co. Clymer Clymer State Bank North Collins Bank of North Collins Cohocton Cohocton State Bank Northville Northville Bank Cohoes Manufacturers Bank Norwood State Bank of Norwood De Ruyter De Ruyter State Bank Nyack Nyack Bank & Trust Co. Dundee Dundee State Bank Ogdensburg... Ogdensburg Trust Co. Dunkirk Dunkirk Trust Co. Olean Olean Trust Co. East Aurora Erie County Trust Co. Oneida Madison County Trust & Deposit East Syracuse Bank of East Syracuse Co. Ellenburg Depot. .. .State Bank of Ellenburg Ontario State Bank of Ontario Elmira Chemung Canal Trust Co. Orchard Park.. Bank of Orchard Park Elmira Bank & Trust Co. Oriskany Falls. First Trust & Deposit Co. Endicott Endicott Trust Co. Ossining Ossining Trust Co. Union Trust Co. Parish State Bank of Parish Evans Mills Peoples Bank _ Patchogue Patchogue Citizens Bank & Farmingdale Bank of Farmingdale Trust Co. Forest Hills (see New York) Pearl River.... State Bank of Pearl River Fredonia.. Citizens Trust Co. Perry Citizens Bank Garden City Garden City Bank & Trust Co. Port Chester... Washington Irving Trust Co. Geneva Geneva Trust Co. Port Jefferson.. Bank of Port Jefferson Glen Cove Glen Cove Trust Co. Poughkeepsie.. Poughkeepsie Trust Co. Gloversville Trust Co. of Fulton County Prattsburg — Prattsburgh State Bank Great Neck Bank of Great Neck Rensselaer Rensselaer County Bank & Hamburg .Peoples Bank Trust Co. Hammondsport Bank of Hammondsport Riverhead. Suffolk County Trust Co. Hicksville Bank of Hicksville Rochester.. Central Trust Co. Hudson Hudson River Trust Co. Lincoln-Alliance Bank & Trust Huntington Bank of Huntington & Trust Co. Co. Ithaca Tompkins County Trust Co. Rockville Centre... Bank of Rockville Centre Jamestown Bank of Jamestown Trust Co. Johnson City Workers Trust Co. Rome Rome Trust Co. Katonah Northern Westchester Bank Rye Rye Trust Co. Kenmore State Bank of Kenmore Sag Harbor Peconic Bank Kingston Kingston Trust Co. Salamanca Salamanca Trust Co. Lackawanna American Bank Saratoga Springs... Adirondack Trust Co. Lindenhurst Lindenhurst Bank Sayville Oystermen's Bank & Trust Co. Little Falls Herkimer County Trust Co. Schenectady Citizens Trust Co. Liverpool Liverpool Bank Schenectady Trust Co. Locke Citizens Bank Schoharie Schoharie County Bank Locust Valley Matinecock Bank Scotia Glenvi lie Bank Lowville Lewis County Trust Co. Sea Cliff State Bank of Sea Cliff Malone Peoples Trust Co. Smith town Branch. Bank of Smith town Massena Massena Banking & Trust Co. Solvay Solvay Bank Mayville State Bank of Mayville Southold Bank of Southold Middletown Orange County Trust Co. Spencer Farmers & Merchants Bank Millbrook Bank of Millbrook Spring Valley Ramapo Trust Co. Mineola Nassau County Trust Co. Stony Brook Bank of Suffolk County Monticello Sullivan County Trust Co. Syracuse First Trust & Deposit Co. Mount Vernon Fleetwood Bank Syracuse Trust Co. Mount Vernon Trust Co. Utica.... First Bank & Trust Co. Newburgh Columbus Trust Co. Warsaw. Wyoming County Bank & Trust New York Amalgamated Bank Co. Bankers Trust Co. Waterford Bank of Waterford Bank of the Manhattan Co. Watertown Northern New York Trust Co. Bank of New York Westbury Bank of Westbury Trust Co. Bank of Yorktown Westhampton Beach .Seaside Bank Boulevard Bank West New Brighton (see New York) Bronx County Trust Co. White Plains..." Citizens Bank Brooklyn Trust Co. County Trust Co. Central Hanover Bank & Trust Williamson. State Bank of Williamson Co. Worcester... Bank of Worcester Chemical Bank & Trust Co. Yonkers Bank of Westchester City Bank Farmers Trust Co. Clinton Trust Co. DISTRICT NO. 3 (80 banks) Colonial Trust Co. DELAWARE (4 banks) Continental Bank & Trust Co. Corn Exchange Bank Trust Co. Wilmington Equitable Trust Co. Federation Bank & Trust Co. Industrial Trust Co. Fifth Avenue Bank Security Trust Co. Fulton Trust Co. Wilmington Trust Co. Guaranty Trust Co. NEW JERSEY* (10 banks) Irving Trust Co. Lawyers Trust Co. Borden town Bordentown Banking Co. Manufacturers Trust Co. Burlington Burlington City Loan & Trust Marine Midland Trust Co. Co. Digitized for F1 REAxcSluEsiRve of part of State located in another district. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

12.8 ANNUAL REPORT OF BOARD OF GOVERNORS STATE BANK AND TRUST COMPANY MEMBERS—Continued DISTRICT NO. 3—Continued DISTRICT NO. 4 (190 banks) KENTUCKY^ (7 banks) NEW JERSEY-continued Catlettsburg Kentucky-Farmers Bank Camden Camden Trust Co. Covington Peoples-Liberty Bank & Trust Co. Egg Harbor City....Egg Harbor City Trust Co. Lexington Bank of Commerce Hightstown Hightstown Trust Co. Security Trust Co. Mount Holly Farmers Trust Co. Paris Bourbon-Agricultural Bank & Princeton Princeton Bank & Trust Co. Trust Co. Riverside Riverside Trust Co. Peoples Deposit Bank & Trust Swedesboro Swedesboro Trust Co. Co. Wildwood Union Bank Richmond State Bank & Trust Co. OHIO (150 banks) PENNSYLVANIA! (66 banks) Ada Liberty Bank Allen town Liberty Bank & Trust Co. Akron Firestone Park Trust & Savings Bloomsburg Bloomsburg Bank-Columbia Bank Trust Co. First-Central Trust Co. Carlisle Carlisle Trust Co. Alger Alger Savings Bank Chester Chester-Cambridge Bank & Alliance Mount Union Bank Trust Co. Antwerp Antwerp Exchange Bank Clearfield Clearfield Trust Co. Apple Creek Apple Creek Banking Co. Curwensville Curwensville State Bank Archbold Peoples State Bank Co. Danville Montour County Trust Co. Arlington Farmers & Merchants Bank Co. Du Bois Union Banking & Trust Co. Ashland Ashland Bank & Savings Co. Easton Easton Trust Co. Ashville Ashville Banking Co. East Petersburg East Petersburg State Bank Bellevue Union Bank & Savings Co. Egypt Farmers Bank Bellville Farmers Bank Glen Rock Peoples Bank Bolivar Bolivar State Bank Co. Harrisburg Central Trust Co. Bowling Green Bank of Wood County Co. Dauphin Deposit Trust Co. Brecksville Brecksville Bank Co. Hazleton Markle Banking & Trust Co. Bucyrus Farmers & Citizens Bank & Peoples Savings & Trust Co. Savings Co. Traders Bank & Trust Co. Canal Winchester.... Peoples Bank Co. Honesdale Wayne County Savings Bank Canton First Trust & Savings Bank Houtzdale .Houtzdale Bank Geo. D. Harter Bank Huntingdon Grange Trust Co. Peoples Bank Jenkintown Jenkintown Bank & Trust Co. Cardington Citizens Bank Jersey Shore Jersey Shore State Bank Castalia Castalia Banking Co. Kane Kane Bank & Trust Co. Celina Commercial Bank Co. Lancaster Farmers Bank & Trust Co. Christiansburg Farmers & Merchants Bank Co. Northern Bank & Trust Co. Cincinnati Central Trust Co. Lemoyne Lemoyne Trust Co. Fifth Third Union Trust Co. Lewis town Lewistown Trust Co. Peoples Bank & Savings Co. Littlestown Littlestown State Bank Provident Savings Bank & Trust Lock Haven Lock Haven Trust Co. Co. Lykens Miners Bank Southern Ohio Savings Bank & Middletown Citizens Bank & Trust Co. Trust Co. Farmers Trust Co. Western Bank & Trust Co. Mont Alto Mont Alto State Bank Cleveland Cleveland Trust Co. Mount Carmel Liberty State Bank & Trust Co. Lorain Street Bank Myers town Myerstown Trust Co. Union Bank of Commerce Co. Nanticoke Peoples Bank Columbiana Union Banking Co. New Oxford Farmers & Merchants Bank Columbus Fifth Avenue Savings Bank Co. Newtown Newtown Title & Trust Co. Conneaut Citizens Banking & Savings Co. Norristown Montgomery Trust Co. Conneaut Banking & Trust Co. Norristown-Penn Trust Co. Cortland Cortland Savings & Banking Co. Orrstown Orrstown Bank Crestline Farmers & Citizens State Bank Paoli Paoli Bank Croton Croton Bank Co. Paradise State Bank of Paradise Danville Commercial & Savings Bank Co. Philadelphia Fidelity-Philadelphia Trust Co. Delphos Commercial Bank First Trust Co. Peoples Bank Gimbel Bros. Bank & Trust Co. Delta Peoples Savings Bank Co. Girard Trust Co. East Liverpool Potters Bank & Trust Co. Ninth Bank & Trust Co. Elmore Bank of Elmore Co. Pennsylvania Co. for Insurances Elyria Elyria Savings & Trust Co. on Lives and Granting An Savings Deposit Bank & Trust nuities Co. Provident Trust Co. Englewood Farmers State Bank Security Bank & Trust Co. Findlay Ohio Bank & Savings Co. Prospect Park Interboro Bank & Trust Co. Fort Recovery Fort Recovery Banking Co. Quakertown Quakertown Trust Co. Freeport Freeport State Bank Reading City Bank & Trust Co. Fremont Colonial Savings Bank Reading Trust Co. Geneva Geneva Savings & Trust Co. Schnecksville Schnecksville State Bank Genoa Genoa Banking Co. Schuylkill Haven... .Schuylkill Haven Trust Co. Gibsonburg Home Banking Co. Steel ton Steel ton Bank & Trust Co. Gnadenhutten Gnadenhutten Bank Tamaqua Peoples Trust Co. Green Springs Commercial Bank Co. Temple Temple State Bank Hillsboro Hillsboro Bank & Savings Co. White Haven White Haven Savings Bank Hubbard Hubbard Banking Co. Wilkes-Barre Wilkes -Barre Deposit & Savings Killbuck Killbuck Savings Bank Co. Bank Kipton Kipton Bank Co. Williamsport West Branch Bank & Trust Co. Leesburg Citizens Bank & Savings Co. Wyomissing Peoples Trust Co. Lewisburg Peoples Banking Co. York Guardian Trust Co. Lodi Lodi State Bank York Trust Co. Logan Farmers & Merchants Bank Digitized for 1F ERxAclSusEivRe of part of State located in another district. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 1X9 STATE BANK AND TRUST COMPANY MEMBERS—Continued DISTRICT NO. 4—Continued DISTRICT NO. 4-Continued OHIO—continued OHIO—continued Lorain Central Bank Co. Wooster Commercial Banking & Trust Co. City Bank Co. Yellow Springs Miami Deposit Bank Co. Lorain Banking Co. Youngstown City Trust & Savings Bank Luckey Exchange Bank Dollar Savings & Trust Co. Lyons Farmers State Bank Madison Citizens Bank PENNSYLVANIA^ (29 banks) Mansfield Farmers Savings & Trust Co. Richland Trust Co. Aliquippa Woodlawn Trust Co. Marblehead Marblehead Bank Co. Ambridge Economy Bank Martins Ferry Peoples Savings Bank Co. Beaver Beaver Trust Co. Mason First-Mason Bank Dormont Dormont Savings & Trust Co. Massillon Ohio-Merchants Trust Co. Elizabeth Bank of Elizabeth Maumee State Savings Bank Co. Erie Security-Peoples Trust Co. McComb Peoples Banking Co. Homestead Monongahela Trust Co. Middle Point Middle Point Banking Co. Jeannette First Jeannette Bank & Trust Co. Middletown First American Bank & Trust Co. Linesville Farmers & Merchants Bank Millersburg Commercial & Savings Bank McKeesport Peoples City Bank Minerva Minerva Banking Co. Meadville Crawford County Trust Co. Minerva Savings & Bank Co. New Brighton Beaver County Trust Co. Minster Minster State Bank New Castle Lawrence Savings & Trust Co. Monroeville Farmers & Citizens Banking Co. Pittsburgh Allegheny Trust Co. Montpelier Farmers & Merchants State & Allegheny Valley Bank Savings Bank Bank of Ohio Valley Mount Blanchard.. .Citizens Bank Colonial Trust Co. Mount Eaton Bank of Mount Eaton Co. Commonwealth Trust Co. Mount Gilead Peoples Savings Bank Co. Home wood Bank Mount Sterling Sterling State Bank Iron & Glass Dollar Savings Mount Vernon Knox County Savings Bank Bank of Birmingham Napoleon Community Bank Peoples-Pittsburgh Trust Co. Newark Newark Trust Co. Potter Title & Trust Co. Union Licking Bank St. Clair Deposit Bank New Knoxville Peoples Savings Bank Union Trust Co. New Lexington Perry County Bank William Penn Bank of Commerce New Philadelphia.. .Ohio Savings & Trust Co. Somerset Somerset Trust Co. New Waterford New Waterford Savings & Bank Turtle Creek Turtle Creek Bank & Trust Co. ing Co. Warren Warren Bank & Trust Co. Niles Niles Bank Co. Windber Windber Trust Co. Northfield Macedonia-Northfield Banking Co. WEST VIRGINIA^ (4 banks) Norwalk Huron County Banking Co. Follansbee Citizens Bank Norwood Norwood-Hyde Park Bank & Sistersville First-Tyler Bank & Trust Co. Trust Co. Wheeling Security Trust Co. Oak Harbor Oak Harbor State Bank Co. Wheeling Dollar Savings & Oberlin Oberlin Savings Bank Co. Trust Co. Orrville Orrville Savings Bank • Pemberville Citizens Savings Bank Co. DISTRICT NO. 5 (123 banks) Perrysburg. Citizens Banking Co. Pickerington Pickerington Bank DISTRICT OF COLUMBIA (8 banks) Polk Polk State Bank Pomeroy Farmers Bank & Savings Co. Washington American Security & Trust Co. Ravenna First Savings Bank City Bank Reading Reading Bank McLachlen Banking Corp. Richwood Richwood Banking Co. Munsey Trust Co. Rittman Rittman Savings Bank National Savings & Trust Co. Russellville Bank of Russellville Security Savings & Commercial St. Bernard Citizens Bank Bank St. Henry St. Henry Bank Union Trust Co. St. Marys Home Banking Co. Washington Loan & Trust Co. Sandusky Citizens Banking Co. Western Security Bank MARYLAND (16 banks) Shelby Citizens Bank Baltimore Baltimore Commercial Bank Shiloh Shiloh Savings Bank Co. Calvert Bank Shreve Farmers Bank Fidelity Trust Co. Silverton Silver ton Bank Maryland Trust Co. Strasburg Citizens-State Bank Union Trust Co. of Maryland Sylvania Sylvania Savings Bank Co. Cambridge County Trust Co. of Maryland Tiro Farmers & Citizens Bank Ellicott City Commercial & Farmers Bank Toledo Commerce Guardian Bank Forest Hill Forest Hill State Bank Morris Plan Bank Hagerstown Hagerstown Trust Co. Ohio Citizens Trust Co. Havre de Grace Havre de Grace Banking & Toledo Trust Co. Trust Co. Utica Utica Savings Bank Co. Pikesville Peoples Bank Vandalia Vandalia State Bank Randallstown Randallstown Bank Van Wert Peoples Savings Bank St. Michaels St. Michaels Bank Wakeman Wakeman Bank Co. Salisbury Farmers & Merchants Bank Warren Union Savings & Trust Co. Westminster Westminster Savings Bank Waterville Waterville State Savings Bank Williamsport Savings Bank of Williamsport Co. Wellington First Wellington Bank NORTH CAROLINA (11 banks) West Alexandria Twin Valley Bank West Carrollton West Carrollton Bank Charlotte American Trust Co. West Manchester First State Bank Concord Citizens Bank & Trust Co. Whitehouse Whitehouse State Savings Bank Durham Fidelity Bank Woodville Woodville State Bank Eden ton Bank of Eden ton Digitized for F1 RExAcSluEsiRve of part of State located in another district. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 ANNUAL REPORT OF BOARD OF GOVERNORS STATE BANK AND TRUST COMPANY MEMBERS—Continued DISTRICT NO. 5—Continued DISTRICT NO. 5—Continued NORTH CAROLINA—continued WEST VIRGINIA^ (22 banks) Marshall Citizens Bank Belington Belington Bank Tryon Tryon Bank & Trust Co. Berwind Berwind Bank Wadesboro Bank of Wadesboro Bruceton Mills Bruceton Bank Washington Bank of Washington Buffalo Buffalo Bank Wilmington Peoples Savings Bank & Trust Charleston Kanawha Banking & Trust Co. Co. Kanawha Valley Bank Wilmington Savings & Trust Co. Greenville Bank of Greenville Winston-Salem Wachovia Bank & Trust Co. Hurricane Putnam County Bank Lewisburg Greenbrier Valley Bank SOUTH CAROLINA (6 banks) Martinsburg Peoples Trust Co. Parsons .Tucker County Bank Beaufort Peoples Bank Petersburg Potomac Valley Bank Bishopville Peoples Bank Quinwood Bank of Quinwood Camden Commercial Bank Rainelle Bank of Rainelle Charleston Carolina Savings Bank Romney Bank of Romney Chester Commercial Bank St. Albans Bank of St Albans Hartsville Bank of Hartsville St. Marys Pleasants County Bank Spencer Traders Trust & Banking Co. VIRGINIA (60 banks) Summersville Farmers & Merchants Bank Union. Bank of Monroe Abingdon Farmers Exchange Bank Wardensville Capon Valley Bank Alberta Bank of Alberta White Sulphur Amelia Union Bank & Trust Co. Springs Bank of White Sulphur Springs Amherst Farmers & Bank of Amherst Blacksburg Farmers & Merchants Bank DISTRICT NO. 6 (55 banks) Blackstone Citizens Bank & Trust Co. Bowling Green Union Bank & Trust Co. ALABAMA (17 banks) Bridgewater Planters Bank Aliceville Aliceville Bank & Trust Co. Chase City Peoples Bank & Trust Co. C C h h r a i t s h t a ia m n sburg B Pl a a n n k t e o rs f B C a h n r k is t & ia n T s r b u u s r t g Co. B A C i l u r a b m n u t i r o n n n g ham B B Pe i a r o n m p k l i e n o s g f h S A a a m v u i b n T u g r r s u n s B t a & nk S avings Co. Coeburn Farmers Exchange Bank Clayton Bank of Commerce Danville Danville Loan & Savings Ban Columbiana Columbiana Savings Bank Edinburg Farmers Bank Cullman Parker Bank & Trust Co. Elkton Bank of Elkton Dothan Dothan Bank & Trust Co. Farmville Planters Bank & Trust Co. Eutaw Merchants & Farmers Bank of Front Royal Bank of Warren Greene County Glade Spring Bank of Glade Spring Guin Marion County Banking Co. Halifax Bank of Halifax Marion Junction Marion Junction State Bank Hillsville Carroll County Bank Montgomery Union Bank & Trust Co. Hilton Village Bank of Warwick Oneonta Citizens Bank Kenbridge Bank of Lunenburg Pine Apple Bank of Pine Apple Lacrosse Bank of Lacrosse Selma Peoples Bank & Trust Co. Lawrenceville Farmers & Merchants Bank Thomaston Planters Bank & Trust Co. Lynchburg Lynchburg Trust & Savings York/. Bank of York Bank Mathews Farmers Bank FLORIDA (5 banks) McKenney Bank of Dinwiddie Montross Peoples Bank Bradenton Manatee River Bank & Trust Co. Mount Jackson Peoples Bank Fort Lauderdale Broward Bank & Trust Co. Norfolk Merchants & Planters Bank Miami American Bank & Trust Co. Odd Citizens Bank of Poquoson Ocala Commercial Bank & Trust Co. Petersburg Petersburg Savings & American St. Petersburg Union Trust Co. Trust Co. Phoebus Bank of Phoebus GEORGIA (18 banks) Portsmouth Merchants & Farmers Bank Adairsville Bank of Adairsville Powhatan Bank of Powhatan Atlanta Trust Co. of Georgia Pulaski Pulaski Trust Co. Augusta Georgia Railroad Bank & Trust Remington State Bank of Remington Co. Rich Creek Farmers & Merchants Bank Bainbridge Citizens Bank & Trust Co. Richmond Bank of Commerce & Trusts Blackshear Blackshear Bank Mechanics & Merchants Bank Brunswick Brunswick Bank & Trust Co. Southern Bank & Trust Co. Canton Bank of Canton State-Planters Bank & Trust Co. Columbus Columbus Bank & Trust Co. Rocky Mount Bankers Trust Co. Merchants & Mechanics Bank Rural Retreat Peoples Bank Commerce Northeastern Banking Co. Shawsville Bank of Shawsville Lawrenceville Brand Banking Co. Smithfield Bank of Smithfield Millen Bank of Millen Merchants & Farmers Bank Monroe Farmers Bank South Boston Citizens Bank Pelham Farmers Bank South Boston Bank &.Trust Co. Savannah Citizens Bank & Trust Co. South Hill Citizens Bank Savannah Bank & Trust Co. Stanardsville Bank of Greene Soperton Bank of Soperton Suffolk American Bank & Trust Co. Swainsboro Central Bank Farmers Bank of Nansemond Tazewell Farmers Bank of Clinch Valley LOUISIANA^ (6 banks) Vienna Vienna Trust Co. Waverly Bank of Waverly Alexandria Rapides Bank & Trust Co Waynesboro Citizens-Waynesboro Bank & Arabi St. Bernard Bank & Trust Co. Trust Co. Lake Charles Lake Charles Bank & Trust Co. Williamsburg Peninsula Bank & Trust Co. New Orleans American Bank & Trust Co. Winchester Union Bank Louisiana Savings Bank & Trust Woodstock Shenandoah County Bank & Co. Trust Co. Slidell Bank of Slidell Digitized for F1 ERxAclSusEivRe of part of State located in another district. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM I3I STATE BANK AND TRUST COMPANY MEMBERS-Continued DISTRICT NO. 6-Continued DISTRICT NO. 7-Continued MISSISSIPPI (2 banks) ILLINOIS—continued Forest Bank of Forest Rushville Rushville State Bank Jackson Deposit Guaranty Bank & St. Charles State Bank of St. Charles Trust Co. Shannon First State Bank Shelbyville Shelby County State Bank TENNESSEE (7 banks) Shelby Loan & Trust Co. Carthage Citizens Bank & Trust Co. Skokie Niles Center State Bank Chattanooga American Trust & Banking Co. Springfield Springfield Marine Bank Greeneville Greene County Bank Thomson Thomson State Bank Hartsville Bank of Hartsville Tinley Park Bremen State Bank Knoxville Commercial Bank & Trust Co. Tolono Citizens Bank Urbana Busey's State Bank Lewisburg Peoples & Union Bank Villa Grove Villa Grove State Bank Nashville Commerce Union Bank Walnut Citizens State Bank Washington Danforth Banking Co. DISTRICT NO. 7 (392 banks) Wenona First State Bank ILLINOIS^ (81 banks) Wheaton Gary-Wheaton Bank Wheaton Trust & Savings Bank Abingdon Abingdon Bank & Trust Co. Wilmette Wilmette State Bank Argenta Gerber State Bank Yorkville Farmers State Bank Arthur State Bank of Arthur Bloomington Corn Belt Bank INDIANAi (77 banks) Peoples Bank Blue Island State Bank of Blue Island Amboy State Bank of Amboy Blue Mound State Bank of Blue Mound Anderson Citizens Banking Co. Buffalo Farmers State Bank Andrews State Bank of Andrews Bushnell Farmers & Merchants State Bank Angola Steuben County State Bank Byron Rock River Community Bank Auburn Auburn State Bank Camp Grove Camp Grove State Bank Avilla Community State Bank Chadwick Farmers State Bank Battle Ground Battle Ground State Bank Chicago Amalgamated Trust & Savings Berne First Bank of Berne Bank Bippus Bippus State Bank Chicago City Bank & Trust Co. Boswell Farmers & Merchants Bank East Side Trust & Savings Bank Bourbon First State Bank Harris Trust & Savings Bank Brazil Brazil Trust Co. Kaspar-American State Bank Bremen Bremen State Bank Lake Shore Trust & Saving Brookville Peoples Trust Co. Bank Cambridge City Wayne Trust Co. Lake View Trust & Savings Carthage State Bank of Carthage Bank Chesterton Chesterton State Bank Main State Bank Columbia City Citizens State Bank Metropolitan State Bank Farmers Loan & Trust Co. Metropolitan Trust Co. Connersville Central State Bank Northern Trust Co. Fayette Bank & Trust Co. Sears-Community State Bank Crawfordsville Elston Bank & Trust Co. South Chicago Savings Bank Darlington Farmers & Merchants State Bank State Bank of Clearing Decatur First State Bank Chillicothe Truitt-Matthews Banking Co. Delphi Union Bank & Trust Co. Cowden. State Bank of Cowden De Motte De Motte State Bank East Moline State Bank of East Moline Elkhart First Old State Bank Elburn Kane County Bank & Trust Co. St. Joseph Valley Bank Eureka State Bank of Eureka Etna Green Etna Bank Evans ton Evanston Trust & Savings Bank Fairmount Fairmount State Bank State Bank & Trust Co. Fowler Fowler State Bank Freeport State Bank of Freeport Franklin Farmers Trust Co. Fulton Fulton State Bank Garrett Garrett State Bank Galesburg Farmers & Mechanics Bank Gary Gary State Bank Geneva State Bank of Geneva Gary Trust & Savings Bank Glasford Glasford State Bank Greencastle First-Citizens Bank & Trust Co. Hillsdale Old Farmers & Merchants State Greenfield Greenfield Banking Co. Bank Greensburg Union Trust Co. Illiopolis Farmers State Bank Hartford City Citizens State Bank Joy Joy State Bank Hebron Citizens Bank Kankakee First Trust & Savings Bank Hope Hope State Bank Lanark Exchange State Bank Howe State Bank of Lima LaSalle LaSalle State Bank Indianapolis Fletcher Trust Co. Lostant Farmers State Bank Jamestown Citizens State Bank McHenry West McHenry State Bank Kokomo Union Bank & Trust Co. Metamora Metamora State Bank Ladoga Ladoga State Bank Milford Citizens State Bank La Fayette La Fayette Savings Bank Millbrook Farmers State Bank Linden Linden State Bank Moline Moline State Trust & Savings Logansport Farmers & Merchants State Bank Bank Momence Parish Bank & Trust Co. Marshall Citizens State Bank Morrison Smith Trust & Savings Bank Milan State Bank of Milan Mt. Pulaski Farmers Bank Mohawk Mohawk State Bank Niantic State Bank of Niantic Monticello State & Savings Bank Oak Park Oak Park Trust & Savings Bank Montpelier Bank of Montpelier Petersburg Schirding State Bank Muncie Merchants Trust Co. Piper City State Bank of Piper City Nappanee State Bank of Nappanee Port Byron Port Byron State Bank Oldenburg Farmers & Merchants State Bank Riverdale First Trust & Savings Bank Parker Parker Banking Co. Rochester Rochester State Bank Pendleton Pendleton Banking Co. Rock Island Rock Island Bank & Trust Co. Peru Peru Trust Co. State Bank of Rock Island Poland Poland-State Bank Digitized for F1 RExAcSluEsiRve of part of State located in another district. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132. ANNUAL REPORT OF BOARD OF GOVERNORS STATE BANK AND TRUST COMPANY MEMBERS-Continued DISTRICT NO. 7—Continued DISTRICT NO. 7—Continued INDIANA—continued MICHIGAN—continued Porter First State Bank Albion Commercial & Savings Bank Reynolds Bank of Reynolds Algonac Algonac Savings Bank Rising Sun Rising Sun State Bank Allegan Allegan State Bank Roachdale Roachdale Bank & Trust Co. Alpena Alpena Savings Bank Saratoga Saratoga State Bank Alto Farmers State Bank South Bend First Bank & Trust Co. Ann Arbor Ann Arbor Bank Sweetser Farmers State Bank State Savings Bank Tipton Farmers Loan & Trust Co. Armada Armada State Bank Val iparaiso First State Bank Bay City Bay City Bank Van Buren Van Buren Bank Peoples Commercial & Savings Veedersburg Veedersburg State Bank Bank Warren Exchange Bank Belleville. Peoples State Bank Warsaw Lake City Bank Berrien Springs Berrien Springs State Bank Waterloo Citizens State Bank Big Rapids Big Rapids Savings Bank West College Corner Blanchard Blanchard State Bank (College Corner, Blissfield Blissfield State Bank Ohio, P.O.) Farmers State Bank Bronson Peoples State Bank Winamac First Union Bank & Trust Co. Brown City Brown City Savings Bank Byron Center Byron Center State Bank IOWA (56 banks) Caledonia State Bank of Caledonia Capac Capac State Savings Bank Algona Iowa State Bank Cass City Cass City State Bank Security State Bank Pinney State Bank Ames Ames Trust & Savings Bank Cassopolis Cass County State Bank Auburn Auburn Savings Bank Charlevoix Charlevoix County State Bank Aurelia First Trust & Savings Bank Charlotte Eaton County Savings Bank Blencoe Blencoe State Bank Chelsea Chelsea State Bank Cherokee Cherokee State Bank Chesaning Chesaning State Bank Churdan First State Bank Clare Citizens State Bank Clarinda Citizens State Bank Clarkston Clarkston State Bank Clear Lake Clear Lake Bank & Trust Co. Coloma State Bank of Coloma Corydon Corydon State Bank Coopersville Coopersville State Bank Davenport Davenport Bank & Trust Co. Corunna Old Corunna State Bank Des Moines Bankers Trust Co. Croswell State Bank of Croswell Dubuque American Trust & Savings Bank Davison Davison State Bank Early Early Savings Bank Decatur First State Bank Estherville Iowa Trust & Savings Bank Detroit Commonwealth Bank Fairfield Iowa State Bank & Trust Co. Detroit Bank Fontanelle State Savings Bank United Savings Bank Forest City Forest City Bank & Trust Co. Dexter Dexter Savings Bank Fort Dodge The State Bank Dundee Monroe County Bank Fort Madison Fort Madison Savings Bank Durand Shiawassee County Bank Gladbrook State Bank Ecorse Ecorse Savings Bank Glenwood Glenwood State Bank Farmington Farmington State Bank Goldfield Goldfield State Bank & Trust Co. Fennville Old State Bank Holstein Holstein State Bank Fen ton State Savings Bank Hull Iowa State Bank Flint Citizens Commercial & Savings Ida Grove Ida County State Bank Bank Jesup Farmers State Bank Genesee County Savings Bank Keota Security State Bank Merchants & Mechanics Bank Laurel Peoples Savings Bank Flushing Peoples State Bank Lineville Lineville State Bank Fountain Fountain State Bank Lohrville Commercial Savings Bank Frankenmuth Frankenmuth State Bank Maquoketa Jackson State Savings Bank Frankfort State Savings Bank Mason City United Home Bank & Trust Co. Fremont Fremont State Bank Mondamin Mondamin Savings Bank Old State Bank Monticello Monticello State Bank Gagetown State Savings Bank Moorhead Moorhead State Bank Gaylord Gay lord State Savings Bank Muscatine Central State Bank Grand Haven Grand Haven State Bank Muscatine Bank & Trust Co. Peoples Savings Bank New Hampton Security State Bank Grand Rapids Old Kent Bank Newton Jasper County Savings Bank Union Bank of Michigan Ogden City State Bank Grandville Community State Bank Osage Home Trust & Savings Bank Grant Grant State Bank Ottumwa Fidelity Savings Bank Greenville Commercial State Savings Bank Union Bank & Trust Co. First State Bank Riceville Riceville State Bank Grosse Pointe Grosse Pointe Bank Royal Home State Bank Hamtramck Liberty State Bank Sheldon Security State Bank Harbor Beach State Bank Shenandoah Security Trust & Savings Bank Harbor Springs Emmet County State Bank Storm Lake Commercial Trust & Savings Hillsdale Hillsdale State Savings Bank Bank Holland Holland State Bank Security Trust & Savings Bank Peoples State Bank Strawberry Point... .Union Bank & Trust Co. Holly First State & Savings Bank Templeton Temple ton Savings Bank Howell First State & Savings Bank Tipton Tipton State Bank lmlay City Imlay City State Bank Washington Washington State Bank Jackson Jackson City Bank & Trust Co. Williams Williams Savings Bank Jonesville Grosvenor Savings Bank Kalamazoo Industrial State Bank MICHIGANi (135 banks) Kingston Kingston State Bank Lakeyiew Bank of Lakeview Adrian Adrian State Savings Bank Lansing American State Savings Bank Commercial Savings Bank Bank of Lansing Lenawee County Savings Bank Lapeer Lapeer Savings Bank Digitized for F1R EAxcSluEsRive of part of State located in another district. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM *33 STATE BANK AND TRUST COMPANY MEMBERS—Continued DISTRICT NO. 7—Continued DISTRICT NO. 7—Continued MICHIGAN—continued WISCONSIN-continued Lawrence Home State Bank Oakfield Bank of Oakfield Lowell State Savings Bank Platteville State Bank of Platteville Ludington Ludington State Bank Sauk City Farmers & Citizens Bank Manchester Peoples Bank Sheboygan Bank of Sheboygan Union Savings Bank Citizens State Bank Manistee Manistee County Savings Bank South Milwaukee. . .Home State Bank Marcellus G. W. Jones Exchange Bank Sturgeon Bay Bank of Sturgeon Bay Mason Farmers Bank Viroqua State Bank of Viroqua Merrill „. .Farmers & Merchants State Bank Waupaca Farmers State Bank Midland Chemical State Savings Bank Waupun State Bank of Waupun Milan Peoples State Bank Wausau Citizens State Bank Montague Farmers State Bank West Allis Milwaukee County Bank Morrice Morrice State Bank Whitewater First Citizens State Bank Mount Clemens Mount Clemens Savings Bank Mount Pleasant Exchange Savings Bank DISTRICT NO. 8 (132 banks) Isabella County State Bank New Baltimore Citizens State Savings Bank ARKANSAS (12 banks) New Boston Peoples State Bank Arkadelphia Elk Horn Bank & Trust Co. New Haven New Haven Savings Bank Batesville Citizens Bank & Trust Co. Niles State Bank of Niles Blytheville Farmers Bank & Trust Co. North Branch Pioneer Bank Camden Merchants & Planters Bank Onsted Onsted State Bank El Dorado Exchange Bank & Trust Co. Oxford Oxford Savings Bank Fordyce Fordyce Bank & Trust Co. Petoskey First State Bank Hot Springs Arkansas Trust Co. Pigeon Pigeon State Bank Little Rock W. B. Worthen Co. Pinconning Pinconning State Bank Russellville Bank of Russellville Plymouth Plymouth United Savings Bank Peoples Exchange Bank Richmond Macomb County Saving Bank Sheridan Grant County Bank River Rouge River Rouge Savings Bank Waldron Bank of Waldron Romeo Romeo Savings Bank St. Clair Commercial & Savings Bank ILLINOIS^ (27 banks) St. Johns State Bank of St. Johns Saugatuck Fruit Growers State Bank Breese State Bank of Breese Sebewaing Farmers & Merchants State Bank Cairo First Bank & Trust Co. South Haven Citizens State Bank Clay City Clay City Banking Co. First State Bank Dongola First State Bank Sparta Sparta State Bank Dupo Dupo State Savings Bank Spring Lake Spring Lake State Bank DuQuoin DuQuoin State Bank Springport Springport State Savings Bank East St. Louis Union Trust Co. Traverse City First-Peoples State Bank Edwards ville Bank of Edwards ville Traverse City State Bank Effingham Effingham State Bank Trenton Trenton State Bank Eldorado C. P. Burnett & Sons, Bankers Vassar State Bank of Vassar Farina State Bank of Farina Wayne Wayne State Bank Hillsboro Montgomery County Bank West Branch State Savings Bank Hoyleton Hoyleton State & Savings Bank Whitehall State Bank of Whitehall Jacksonville Elliott State Bank Williamston Peoples State Bank Johnston City Johnston City State Bank Wyandotte Wyandotte Savings Bank Keyesport State Bank of Keyesport Yale Yale State Bank Litchfield Litchfield Bank & Trust Co. Zeeland Zeeland State Bank Mounds First State Bank Olmsted First State Bank Quincy State Street Bank & Trust Co. WISCONSIN^ (43 banks) Red Bud First State Bank Antigo Fidelity Savings Bank Rich view Rich view State Bank Beloit Beloit Savings Bank Ridgway Gallatin County Bank Beloit State Bank St. Elmo Fayette County Bank Berlin Farmers & Merchants Bank St. Peter First State Bank Burlington Bank of Burlington Teutopolis Teutopolis State Bank Chilton Commercial Bank Vandalia Farmers & Merchants Bank Cudahy Cudahy State Bank De Forest De Forest-Morrisonville Bank INDIANA^ (14 banks) Denmark Denmark State Bank Bloomfield Bloomfield State Bank Edgerton Tobacco Exchange Bank Charlestown First Bank of Charlestown Evansville Union Bank & Trust Co. Corydon Old Capital Bank & Trust Co. Fox Lake State Bank of Fox Lake French Lick French Lick State Bank Francis Creek State Bank of Francis Creek Hardinsburg State Bank of Hardinsburg Green Bay Peoples Trust & Savings Bank Loogootee Union Bank Green Lake Green Lake State Bank Oaktown Oaktown Bank Kaukauna Bank of Kaukauna Orleans Bank of Orleans Kewaunee State Bank of Kewaunee Petersburg Citizens State Bank Lake Mills Bank of Lake Mills Richland Lake State Bank Lancaster Lancaster State Bank Salem State Bank of Salem Manitowoc Manitowoc Savings Bank Sandborn Sandborn Banking Co. Marathon State Bank of Marathon City Scottsburg Scott County State Bank Markesan Markesan State Bank Washington Citizens Loan & Trust Co. Milwaukee American State Bank Commonwealth Mutual Savings KENTUCKY^ (11 banks) Bank Home Savings Bank Bardstown Farmers Bank & Trust Co. Marshall & llsley Bank Campbellsville Citizens Bank & Trust Co. Northern Bank Clay Farmers Bank Park Savings Bank Danville Boyle Bank & Trust Co. Teutonia Avenue State Bank Hartford Citizens Bank West Side Bank Hopkinsville Planters Bank & Trust Co. Digitized for Fi RExAcSluEsiRve of part of State located in another district. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

i34 ANNUAL REPORT OF BOARD OF GOVERNORS STATE BANK AND TRUST COMPANY MEMBERS-Continued DISTRICT NO. 8—Continued DISTRICT NO. 9-Continued KENTUCKY—continued MICHIGAN—continued Louisville Kentucky Title Trust Co. Lincoln Bank & Trust Co. Escanaba State Savings Bank Louisville Trust Co. Ewen State Bank of Ewen Middletown Bank of Middletown Gladstone Gladstone State Savings Bank Owensboro First-Owensboro Bank & Trust Gwinn Gwinn State Savings Bank Co. Iron River Miners State Bank Ishpeming Peninsula Bank MISSOURI (68 banks) L'Anse Commercial Bank Manistique State Savings Bank Arnold Bank of Maxville Menominee Commercial Bank Buffalo O'Bannon Banking Co. Newberry Newberry State Bank California Farmers & Traders Bank Ontonagon Citizens State Bank Camdenton Camden County Bank Sault Ste. Marie Central Savings Bank Carrollton Carroll County Trust Co. Sault Savings Bank Clayton. St. Louis County Bank South Range South Range State Bank Clinton Union State Bank Crane Bank of Crane MINNESOTA (24 banks) Cuba Peoples Bank Eldon Bank of Eldon Austin Austin State Bank Elsberry Bank of Lincoln County Caledonia Sprague State Bank Fair Play Citizens State Bank Cannon Falls Security State Bank Farmington United Bank Chatfield Root River State Bank Fenton Farmers & Merchants Bank Clinton Clinton State Bank Fulton Callaway Bank Hawley State Bank of Hawley Glasgow Glasgow Savings Bank Houston Security State Bank Hannibal Farmers & Merchants Bank & Lakefield Farmers State Bank Trust Co. Madelia Farmers State Bank Keytesville Bank of Keytesville Minneapolis Fidelity State Bank Lancaster Schuyler County State Bank Northfield State Bank of Northfield Lebanon State Bank of Lebanon Owatonna Security Bank & Trust Co. State Savings Bank Plainview Peoples State Bank. Luxemburg Lemay Bank & Trust Co. Rockville State Bank of Rockville Maplewood Maplewood Bank & Trust Co. Rushmore First State Bank Peoples State Bank St. Cloud Zapp State Bank Marshall Wood & Huston Bank Sleepy Eye State Bank of Sleepy Eye Memphis Bank of Memphis Springfield Farmers & Merchants State Bank Mexico Mexico Savings Bank State Bank of Springfield- Moberly .* City Bank & Trust Co. Virginia State Bank of Virginia Mechanics Bank & Trust Co. Wadena Wadena County State Bank Monroe City Monroe City Bank Welcome Welcome State Bank Montrose Montrose Savings Bank West Concord Farmers State Bank Normandy Normandy State Bank Winona Merchants Bank Paris Paris Savings Bank. Pine Lawn Pine Lawn Bank & Trust Co. MONTANA (26 banks) Polo Farmers Bank Anaconda Daly Bank & Trust Co. St. Charles St. Charles Savings Bank Belt Belt Valley Bank Union Savings Bank Big Timber Citizens Bank & Trust Co. Ste. Genevieve Bank of Ste. Genevieve Billings Security Trust & Savings Bank St. Louis Baden Bank Bozeman Gallatin Trust & Savings Bank Bremen Bank & Trust Co. Security Bank & Trust Co. Cass Bank & Trust Co. Broadus Powder River County Bank Chippewa Trust Co. Butte Metals Bank & Trust Co. Easton-Taylor Trust Co. Cascade Stockmens Bank Jefferson Bank & Trust Co. Choteau Citizens State Bank Jefferson-Gravois Bank Columbus Yellowstone Bank Lindell Trust Co. Deer Lodge Deer Lodge Bank & Trust Co. Manchester Bank Denton Farmers State Bank Manufacturers Bank & Trust Co. Fromberg Clarks Fork Valley Bank Mercantile-Commerce Bank & Glasgow Farmers-Stockgrowers Bank Trust Co. Great Falls Montana Bank & Trust Co. Mississippi Valley Trust Co. Hamilton Ravalli County Bank Mound City Trust Co. Helena Union Bank & Trust Co. North St. Louis Trust Co. Laurel Yellowstone Bank Plaza Bank Libby First State Bank Southern Commercial & Savings Richey First State Bank Bank Ronan Ronan State Bank Southwest Bank Terry State Bank of Terry Tower Grove Bank & Trust Co. Townsend State Bank of Townsend United Bank & Trust Co. Victor Farmers State Bank St. Louis County. .. Gravois Bank Worden Farmers State Bank Sedalia Sedalia Bank & Trust Co. Springfield Southern Missouri Trust Co. SOUTH DAKOTA (23 banks) Steelville Community Bank Sweet Springs Chemical Bank Alcester State Bank of Alcester Tipton Tipton Farmers Bank Arlington. Citizens State Bank Vandalia Vandalia State Bank Belle Fourche Bank of Belle Fourche Versailles Bank of Versailles Belvidere Belvidere State Bank Vienna Maries County Bank Buffalo First State Bank Washington Franklin County Bank Custer Custer County Bank Webster Groves Webster Groves Trust Co. Faith Farmers State Bank Flandreau Farmers State Bank DISTRICT NO. 9 (94 banks) Freeman Merchants State Bank Fulton Fulton State Bank MICHIGAN* (15 banks) Huron Farmers & Merchants Bank Bark River Bark River State Bank Madison Security Bank & Trust Co. Digitized for F1 RExAcSluEsiRve of part of State located in another district. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM *35 STATE BANK AND TRUST COMPANY MEMBERS-Continued DISTRICT NO. 9—Continued DISTRICT NO. 10—Continued SOUTH DAKOTA-continued MISSOURI—continued Miller Hand County State Bank Kansas City Commerce Trust Co. Mitchell Commercial Trust & Savings Mercantile Home Bank & Trust Bank Co. Mobridge Citizens Bank Merchants Bank Onida Onida Bank King City First State Bank Presho Farmers & Merchants State Bank Lamar Barton County State Bank Sioux Falls Union Savings Bank Neosho Bank of Neosho Sturgis Bear Butte Valley Bank Rich Hill Security Bank Toronto Bank of Toronto St. Joseph Empire Trust Co. Vermillion Citizens Bank South St. Joseph....First St. Joseph Stock Yards Webster Security Bank Bank Woonsocket Sanborn County Bank Stanberry Farmers State Bank WISCONSIN^ (6 banks) NEBRASKA (14 banks) Boyceville Bank of Boyceville Alma Harlan County Bank Glenwood City First State Bank Bancroft Citizens Bank Menomonie Bank of Menomonie Blair Washington County Bank Kraft State Bank Blue Hill Commercial Bank Rhinelander Merchants State Bank Chappell Deuel County State Bank Tomahawk Bradley Bank Hartington Bank of Hartington Lexington Farmers State Bank North Platte McDonald State Bank DISTRICT NO. 10 (96 banks) Pawnee City Citizens State Bank Scribner Farmers State Bank COLORADO (15 banks) Stromsburg Stromsburg Bank Brighton Brighton State Bank Valley Bank of Valley Craig Moffat County State Bank Wahoo Wahoo State Bank Del Norte Rio Grande County Bank Wallace Farmers State Bank Delta Colorado Bank & Trust Co. Denver Central Savings Bank & Trust NEW MEXICO^ (2 banks) Co. International Trust Co. Aztec Citizens Bank Eaton Eaton Bank Taos First State Bank Fort Morgan Farmers State Bank Grand Junction United States Bank OKLAHOMA^ (10 banks) Gunnison Gunnison Bank & Trust Co. Hotchkiss First State Bank Ada Oklahoma State Bank La Junta Colorado Savings & Trust Co. Canton Bank of Canton Sterling Commercial Savings Bank Eldorado First State Bank Security State Bank Fairview Fairview State Bank Yuma Farmers State Bank Garber Bank of Garber Medford Grant County Bank Okarche First Bank of Okarche. KANSAS (32 banks) Purcell First State Bank Stroud First State Bank Abilene Citizens Bank Woodward Bank of Woodward Augusta Prairie State Bank Burns Burns State Bank Caldwell Stock Exchange Bank WYOMING (10 banks) Clay Center Union State Bank Evanston Stockgrowers Bank Eldorado Citizens State Bank Gillette Stockmens Bank Ellsworth Citizens State Bank Lusk Lusk State Bank Goodland Goodland State Bank Mountain View Uinta County State Bank Great Bend American State Bank Newcastle First State Bank Hiawatha Morrill & Janes Bank Saratoga Saratoga State Bank Hill City Farmers & Merchants Bank Sundance Sundance State Bank Horton Home State Bank Wheatland State Bank of Wheatland Hoxie Hoxie State Bank Stock Growers Bank Hutchinson Hutchinson State Bank Worland Farmers State Bank Kansas City Riverview State Bank Kinsley Kinsley Bank Lamed First State Bank DISTRICT NO. 11 (95 banks) Liberal Citizens State Bank Luray Peoples State Bank ARIZONA! (1 bank) Ness City First State Bank Tucson Southern Arizona Bank & Trust Norton First State Bank Oakley.. Farmers State Bank Co. Osage City Citizens State Bank Pratt Peoples Bank LOUISIANA! (2 banks) Rossville Peoples State Bank St. Marys St. Marys State Bank Minden Minden Bank & Trust Co. Sedan Sedan State Bank Shreveport Continental-American Bank & Sylvan Grove Sylvan State Bank Trust Co. Tonganoxie First State Bank Topeka Fidelity Savings State Bank NEW MEXICO! (3 banks) Wakefield Farmers & Merchants State Bank Winfield The State Bank Carlsbad American Bank Deming Mimbres Valley Bank Logan McFarland Bros. Bank MISSOURI (13 banks) Albany Gentry County Bank OKLAHOMA! (1 bank) Carthage Bank of Carthage Craig Bank of Craig Atoka Atoka State Bank Digitized for F1R EAxScluEsRiv e of part of State located in another district. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

i 3 6 ANNUAL REPORT OF BOARD OF GOVERNORS STATE BANK AND TRUST COMPANY MEMBERS—Continued DISTRICT NO. 11-Continued | DISTRICT NO. 11—Continued TEXAS (88 banks) TEXAS—continued Aransas Pass First State Bank Wellington Wellington State Bank Bandera First State Bank West Columbia First Capitol State Bank Bangs First State Bank Wharton Security Bank & Trust Co. Bay City Bay City Bank & Trust Co. Wharton Bank & Trust Co. Beaumont Security State Bank & Trust Co. Winters Winters State Bank Beeville State Bank & Trust Co. Yorktown First State Bank Brackettville First State Bank Bremond First State Bank DISTRICT NO. 12 (72 banks) Brenham Washington County State Bank Brownfield Brownfield State Bank ARIZONA* (1 bank) Bryan First State Bank & Trust Co. Celina First State Bank Buckeye Buckeye Valley Bank Clarendon Farmers State Bank Cleveland Farmers State Bank CALIFORNIA (18 banks) Clifton Farmers State Bank Crosby Crosby State Bank Auburn Placer County Bank Crowell Crowell State Bank Carmel Bank of Carmel Cuero Farmers State Bank & Trust Co. Fairfield Solano County Bank Dalhart Citizens State Bank Lakewood Village... Peoples Bank Dallas Liberty State Bank Lodi Farmers & Merchants Bank De Kalb State Bank of De Kalb Long Beach Farmers & Merchants Bank Del Rio Del Rio Bank & Trust Co. Los Angeles California Bank Dodson First State Bank California Trust Co. Dumas First State Bank Union Bank & Trust Co. East Bernard Union State Bank Newman Bank of Newman Eden Eden State Bank Oakland Bank of Commerce Ferris Farmers & Merchants State Bank Pasadena Citizens Commercial Trust & Forney Forney State Bank Savings Bank Franklin First State Bank First Trust & Savings Bank Fredericksburg Security State Bank Salinas Monterey County Trust & Sav Gatesville Guaranty Bank & Trust Co. ings Bank Gladewater First State Bank San Francisco American Trust Co. Gonzales Gonzales State Bank Wells Fargo Bank & Union Granger First State Bank Trust Co. Hamilton Hamilton Bank & Trust Co. San Rafael Bank of San Rafael Hempstead Citizens State Bank Santa Paula Citizens State Bank Houston Citizens State Bank Guardian Trust Co. IDAHO (10 banks) University State Bank Iola Iola State Bank Aberdeen Bank of Aberdeen Kerrville First State Bank American Falls American Falls Bank Knox City Citizens State Bank Arco Butte County Bank Kosse First State Bank Glenns Ferry Glenns Ferry Bank Ladonia Farmers & Merchants State Bank Hazelton Hazelton State Bank Llano Moore State Bank Malad City J. N. Ireland & Co., Bankers Loraine First State Bank Orofino Bank of Orofino L M o a r d e i n so z n o v .. i ; l le L F o ar re m n e z r o s S S t t a a t t e e B B a a n n k k R So ic d h a f i S el p d r . i ngs L Fi a r r s g t i l S li t e a r t e e C B o a . n , k B ankers Marion Marion State Bank Twin Falls Twin Falls Bank & Trust Co. Marlin First State Bank Matador First State Bank NEVADA (2 banks) Mathis First State Bank Elko Nevada Bank of Commerce Maypearl First State Bank McAllen City State Bank & Trust Co. Pioche Bank of Pioche Monahans First State Bank Mount Pleasant Guaranty Bond State Bank OREGON (6 banks) Muleshoe..., Muleshoe State Bank Albany Bank of Albany Pearsall Security State Bank Beaverton First Security Bank Ralls Security State Bank & Trust Co. Dallas Dallas City Bank Rankin First State Bank Halsey Halsey State Bank Richardson Citizens State Bank Myrtle Point Security Bank Robert Lee Robert Lee State Bank Oakland E. G. Young & Co. Bank Roby Citizens State Bank Rockwall First State Bank Roscoe Roscoe State Bank UTAH (21 banks) Royse City Citizens State Bank Brigham State Security Bank Rusk Farmers & Merchants State Cedar City Bank of Southern Utah Bank & Trust Co. Ephraim Bank of Ephraim San Marcos State Bank & Trust Co. Gunnison Gunnison Valley Bank Schertz Schertz State Bank Seguin Seguin State Bank & Trust Co. Heber Commercial Bank of Heber City Helper Helper State Bank Seminole Seminole State Bank Shamrock Farmers & Merchants State Bank Kaysville Barnes Banking Co. Logan Cache Valley Banking Co. Shiro Farmers State Bank Nephi Commercial Bank Silsbee Silsbee State Bank Sin ton Commercial State Bank Ogden Commercial Security Bank Price Carbon Emery Bank Spearman First State Bank Provo Farmers & Merchants Bank Spur Spur Security Bank Salina First State Bank Sulphur Springs Sulphur Springs State Bank Salt Lake City Tracy Loan & Trust Co. Taft First State Bank Utah Savings & Trust Co. Thorndale Thorndale State Bank Walker Bank & Trust Co. Tomball Guaranty Bond State Bank Spanish Fork Bank of Spanish Fork Trent Home State Bank Commercial Bank Digitized for F1 RExAcSluEsiRve of part of State located in another district. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM J37 STATE BANK AND TRUST COMIP ANY MEMBERS-Continued DISTRICT NO. 12—Continued DISTRICT NO. 12—Continued UTAH—continued WASHINGTON—continued Springville Springville Banking Co. Lacrosse First State Bank Vernal Bank of Vernal Puyallup Citizens State Bank Ridgefield Ridgefield State Bank Uintah State Bank Ritzville Ritzville State Bank WASHINGTON (14 banks) Rockford Farmers & Merchants Bank Seattle Seattle Trust & Savings Bank Almira Almira State Bank Selah Selah State Bank Cashmere Cashmere Valley Bank Spokane Washington Trust Co. Coulee City Security State Bank Union town Farmers State Bank Kelso Cowlitz Valley Bank Wilbur State Bank of Wilbur Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

i 3 8 ANNUAL REPORT OF BOARD OF GOVERNORS DESCRIPTION OF FEDERAL RESERVE DISTRICTS Land area Civilian Federal Reserve district (square population1 miles) May 1, 1942 No. 1—Boston 62,573 7,956,045 No. 2—New York 52,153 16,608,287 No. 3—Philadelphia... 37,023 7,686,381 No. 4—Cleveland 74,027 11,689,081 No. 5—Richmond 152,471 12,520,242 No. 6—Atlanta 247,778 12,703,285 No. 7—Chicago 190,446 19,813,670 No. 8—St. Louis 195,902 10,069,182 No. 9—Minneapolis... 412,304 5,218,317 No. 10—Kansas City.. 480,537 7,468,974 No. 11—Dallas 386,447 7,734,901 No. 12—San Francisco 685,438 11,513,912 Total 2,977,099 130,982,277 FEDERAL RESERVE DISTRICTS DISTRICT NO. 1—BOSTON 62,573 7,956,045 Connecticut (excluding Fairfield County) 4,266 1,318,852 31,040 822,226 7,907 4,272,255 New Hampshire 9,024 477 703 Rhode Island 1,058 720,872 Vermont 9,278 344,137 DISTRICT NO. 2—NEW YORK 52,153 16,608,287 Connecticut (Fairfield County) 633 446,824 New Jersey (northern part) 3,591 3,285,607 Counties of— Bergen Hunterdon Morris Sussex Essex Middlesex Passaic Union Hudson Monmouth Somerset Warren New York 47,929 12,875,856 DISTRICT NO. 3—PHILADELPHIA 37,023 7,686,381 Delaware 1,978 275,478 New Jersey (southern part) 3,931 940,819 Counties of— Atlantic Cape May Gloucester Ocean Burlington Cumberland Mercer Salem Camden Pennsylvania (eastern part) 31 114 6,470,084 Counties of— Adams Clinton Lebanon Philadelphia Bedford Columbia Lehigh Pike Berks Cumberland Luzerne Potter Blair Dauphin Lycoming Schuylkill Bradford Delaware McKean Snyder Bucks Elk Mifflin Sullivan Cambria Franklin Monroe Susquehanna Cameron Fulton Montgomery Tioga Carbon Huntingdon Montour Union Center Juniata Northampton Wayne Chester Lackawanna Northumberland Wyoming Clearfield Lancaster Perry York DISTRICT NO. 4—CLEVELAND 74,027 11,689,081 Kentucky (eastern part) 17,772 1,314,810 Counties of— Bath Elliott Jessamine Lincoln Bell Estill Johnson McCreary Boone Fayette Kenton Madison Bourbon Fleming Knott Magoffin Boyd Floyd Knox Martin Bracken Garrard Laurel Mason Breathitt Grant Lawrence Menifee Campbell Greenup Lee Montgomery Carter Harlan Leslie Morgan Clark Harrison Letcher Nicholas Clay Jackson Lewis Owsley 1 Persons in the armed forces are not included. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM *39 DESCRIPTION OF FEDERAL RESERVE DISTRICTS—Continued Land area Civilian Federal Reserve district (square population miles) May 1,1942 DISTRICT NO. 4—CLEVELAND—Continued Kentucky (eastern part) Counties of—Continued Pendleton Powell Rockcastle Whitley- Perry Pulaski Rowan Wolfe Pike Robertson Scott Woodford Ohio 41,122 6,930,496 Pennsylvania (western part) 13,931 3,246,354 Counties of— Allegheny Crawford Indiana Venango Armstrong Erie Jefferson Warren Beaver Fayette Lawrence Washington Butler Forest Mercer Westmoreland Clarion Greene Somerset West Virginia (northern part) 1,202 197,421 Counties of— Brooke Marshall Tyler Hancock Ohio Wetzel DISTRICT NO. 5-RICHMOND 152,471 12,520,242 District of Columbia 61 821,299 Maryland 9,887 1,895,329 North Carolina 49,142 3,456,909 South Carolina 30,594 1,896,417 Virginia .;. .^ 39,899 2,792,135 West Virginia (southern part) 22,888 1,658,153 Counties of— Barbour Hardy Mingo Roane Berkeley Harrison Monongalia Summers Boone Jackson Monroe Taylor Braxton Jefferson Morgan Tucker Cabell Kanawha Nicholas Upshur Calhoun Lewis Pendleton Wayne Clay _ Lincoln Pleasants Webster Doddridge Logan Pocahontas Wirt Fayette McDowell Preston Wood Gilmer Marion Putnam Wyoming Grant Mason Raleigh Greenbrier Mercer Randolph Hampshire Mineral Ritchie DISTRICT NO. 6-ATLANTA 247,778 12,703,285 Alabama 51,078 2,889,043 Florida 54,262 1,940,913 Georgia 58,518 3,057,284 Louisiana (southern part) 26,630 1,677,450 Parishes of— Acadia Evangeline Rapides Tangipahoa Allen Iberia St. Bernard Terrebonne Ascension Iberville St. Charles Vermilion Assumption Jefferson St. Helena Vernon Avoyelles Jefferson Davis St. James Washington Beauregard Lafayette St. John the West Baton Calcasieu La Fourche Baptist Rouge Cameron Livingston St. Landry West Feliciana East Baton Orleans < St. Martin Rouge Plaquemines St. Mary East Feliciana Pointe Coupee St. Tammany Mississippi (southern part) 1,062,884 Counties of— Adams Harrison Lawrence Scott Amite Hinds Leake Sharkey Claiborne Issaquena Lincoln Simpson Clarke Jackson Madison Smith Copiah Jasper Marion Stone Covington Jefferson Neshoba Walthall Forrest Jefferson Davis Newton Warren Franklin Jones Pearl River Wayne George Kemper Perry Wilkinson Greene Lamar Pike Yazoo Hancock Lauderdale Rankin Tennessee (eastern part) 31,198 2,075,711 Counties of— Anderson Clay Grainger Jackson Bedford Cocke Greene Jefferson Bledsoe Coffee Grundy Johnson Blount Cumberland Hamblen Knox Bradley Davidson Hamilton Lawrence Campbell De Kalb Hancock Lewis Cannon Dickson Hawkins Lincoln Carter Fentress Hickman Loudon Cheatham Franklin Houston McMinn Claiborne Giles Humphreys Macon Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 ANNUAL REPORT OF BOARD OF GOVERNORS DESCRIPTION OF FEDERAL RESERVE DISTRICTS-Continued Land area Civilian Federal Reserve district (square population miles) May 1, 1942 DISTRICT NO. 6-ATLANTA-Continued Tennessee (eastern part) Counties of—C ontinued Marion Perry Sequatchie Van Buren Marshall Pickett Sevier Warren Maury Polk Smith Washington Meigs Putnam Stewart Wayne Monroe Rhea Sullivan White Montgomery Roane Sumner Williamson Moore Robertson Trousdale Wilson Morgan Rutherford Unicoi Overton Scott Union DISTRICT NO. 7—CHK :AGO 190,446 19,813,670 Illinois (northern par t) 35,333 6,688,217 Counties of— Boone Ford Livingston Rock Island Bureau Fulton Logan Sangamon Carroll Grundy McDonough Schuyler Cass Hancock McHenry Shelby Champaign Henderson McLean Stark Christian Henry Macon Stephenson Clark Iroquois Marshall Tazewell Coles Jo Daviess Mason Vermilion Cook Kane Menard Warren Cumberland Kankakee Mercer Whiteside De Kalb Kendall Moultrie Will De Witt Knox Ogle Winnebago Douglas Lake Peoria Woodford Du Page La §alle Piatt Edgar Lee Putnam 26,779 2,839,447 Counties of— Adams Fountain La Porte Ripley Allen Franklin Madison Rush Bartholomew Fulton Marion St. Joseph Benton Grant Marshall Shelby Blackford Hamilton Miami Starke Boone Hancock Monroe Steuben Brown Hendricks Montgomery Tippecanoe Carroll Henry Morgan Tipton Cass Howard Newton Union Clay Huntington Noble Vermillion Clinton Jasper Ohio Vigo Dearborn Jay Owen Wabash Decatur Jennings Parke Warren De Kalb Johnson Porter Wayne Delaware Kosciusko Pulaski Wells Elkhart Lagrange Putnam White Fayette Lake Randolph Whitley 55,986 2,444,848 40,484 5,240,867 Counties of— Alcona Eaton Lapeer Ogemaw Allegan Emmet Leelanau Osceola Alpena Genesee Lenawee Oscoda Antrim Gladwin Livingston Otsego Arenac Grand Traverse Macomb Ottawa Barry Gratiot Manistee Presque Isle Bay Hillsdale Mason Roscommon Benzie Huron Mecosta Saginaw Berrien Ingham Midland St. Clair Branch Ionia Missaukee St. Joseph Calhoun Iosco Monroe Sanilac Cass Isabella Montcalm Shiawassee Charlevoix Jackson Montmorency Tuscola Cheboygan Kalamazoo Muskegon Van Buren Clare Kalkaska Newaygo Washtenaw Clinton Kent Oakland Wayne Crawford Lake Oceana Wexford Wisconsin (southern part.1) 31,864 2,600,291 Counties of— Adams Door Juneau Marquette Brown Fond du Lac Kenosha Milwaukee Calumet Grant Kewaunee Monroe Clark Green Lafayette Oconto Columbia Green Lake Langlade Outagamie Crawford Iowa Manitowoc Ozaukee Dane Jackson Marathon Portage Dodge Jefferson Marinette Racine Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 141 DESCRIPTION OF FEDERAL RESERVE DISTRICTS—Continued Land area Civilian Federal Reserve district (square population miles) May 1, 1942 DISTRICT NO. 7-CHICAGO-Continued Wisconsin (southern part) Counties of—- Continued Richland Sheboygan Waukesha Wood Rock Vernon Waupaca Sauk Walworth Waushara Shawano Washington Winnebago DISTRICT NO. 8—ST. ]L OUIS 195,902 10,069,182 Arkansas 52,725 1,964,725 Illinois (southern pai t) 20,613 1,286,303 Counties of— Adams Franklin Macoupin Randolph Alexander Gallatin Madison Richland Bond Greene Marion St. Clair Brown Hamilton Massac Saline Calhoun Hardin Monroe Scott Clay Jackson Montgomery Union Clinton Jasper Morgan Wabash Crawford Jefferson Perry Washington Edwards Jersey Pike Wayne Effingham Johnson Pope White Fayette Lawrence Pulaski Williamson 9,399 639,434 Counties of— Clark Greene Martin Spencer Crawford Harrison Orange Sullivan Daviess Jackson Perry Switzerland Dubois Jefferson Pike Vanderburg Floyd Knox Posey Warrick Gibson Lawrence Scott Washington Kentucky (western part} 22,337 1,436,091 Counties of— Adair Crittenden Hopkins Ohio Allen Cumberland Jefferson Oldham Anderson Daviess Larue Owen Ballard Edmonson Livingston Russell Barren Franklin Logan Shelby Boyle Fulton Lyon Simpson Breckinridge Gallatin McCracken Spencer Bullitt Graves McLean Taylor Butler Grayson Marion Todd Caldwell Green Marshall Trigg Calloway Hancock Meade Trimble Carlisle Hardin Mercer Union Carroll Hart Metcalfe Warren C C a h s r e is y t i < a n H H e e n n d ry e rson M M o u n h r l o en e berg W W a a s y h n i e n gton Clinton Hickman Nelson Webster Mississippi (northern Dart} 21,328 1,066,679 Counties of— Alcorn De Soto Monroe Tate Attala Grenada Montgomery Tippah Benton Holmes Noxubee Tishomingo Bolivar Humphreys Oktibbeha Tunica Calhoun Itawamba Panola Union Carroll Lafayette Pontotoc Washington Chickasaw Lee Prentiss Webster Choctaw Leflore Quitman Winston Clay Lowndes Sunflower Yalobusha Coahoma Marshall Tallahatchie Missouri (eastern part} 58,737 2,833,315 Counties of— Adair Clark Hickory Maries Audrain Cole Howard Marion Barry Cooper Howell Mercer Benton Crawford Iron Miller Bollinger Dade Jefferson Mississippi Boone Dallas Johnson Moniteau Butler Daviess Knox Monroe Caldwell Dent Laclede Montgomery Callaway Douglas Lafayette Morgan Camden Dunklin Lawrence New Madrid Cape Girardeau Franklin Lewis Oregon Carroll Gasconade Lincoln Osage Carter Greene Linn Ozark Cedar Grundy Livingston Pemiscot Chariton Harrison Macon Perry Christian Henry Madison Pettis Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142. ANNUAL REPORT OF BOARD OF GOVERNORS DESCRIPTION OF FEDERAL RESERVE DISTRICTS-Continued Land area Civilian Federal Reserve district (square population miles) May 1, 1942 DISTRICT NO. 8-ST. LOUIS-Continued Missouri (eastern part) Counties of—Continued Phelps Reynolds Saline Sullivan Pike Ripley Schuyler Taney Polk St. Charles Scotland Texas Pulaski St. Clair Scott Warren Putnam St. Francois Shannon Washington Ralls St. Louis Shelby Wayne Randolph St. Louis City Stoddard Webster Ray Ste. Genevieve Stone Wright Tennessee (western part) 10,763 842,635 Counties of— Benton Fayette Henry Shelby Carroll Gibson Lake Tipton Chester Hardeman Lauderdale Weakley Crockett Hardin McNairy Decatur Haywood Madison Dyer Henderson Obion DISTRICT NO. 9—MINNEAPOLIS 412,304 5,218,317 Michigan (northern part) 16,538 297,990 Counties of— Alger Dickinson Keweenaw Menominee Baraga Gogebic Luce Ontonagon Chippewa Houghton Mackinac Schoolcraft Delta Iron Marquette Minnesota 80,009 2,676,218 Montana 146,316 521,622 North Dakota 70,054 592,960 South Dakota 76,536 587,493 Wisconsin (northern part) 22,851 542,034 Counties of— Ashland Dunn Oneida Sawyer Barron Eau Claire Pepin Taylor Bayfield Florence Pierce Trempealeau Buffalo Forest Polk Vilas Burnett Iron Price Washburn Chippewa La Crosse Rusk Douglas Lincoln St. Croix DISTRICT NO. 10—KANSAS CITY 480,537 7,468,974 Colorado 103,967 1,089,361 Kansas 82,113 1.718,496 M issouri (western part) 10,533 901,230 Counties of— Andrew Cass Holt Nodaway Atchison Clay Jackson Platte Barton Clinton Jasper Vernon Bates De Kalb McDonald Worth Buchanan Gentry Newton Nebraska 76,653 1,242,970 New Mexico (northern part) 48,045 281,967 Counties of— Bernalillo Mora San Miguel Valencia Colfax Rio Arriba Santa Fe Harding Sandoval Taos McKinley San Juan Union Oklahoma (northwestern part) Counties of— Adair Ellis Logan Pontotoc Alfalfa Garfield Love Pottawatomie Beaver Garvin McClain Roger Mills Beckham Grady Mcintosh Rogers Blaine Grant Major Seminole Caddo Greer Mayes Sequoyah Canadian Harmon Murray Stephens Carter Harper Muskogee Texas Cherokee Haskell Noble Tillman 61,720 2,003,063 Cimarron Hughes Nowata Tulsa Cleveland Jackson Okfuskee Wagoner Comanche Jefferson Oklahoma Washington Cotton Kay Okmulgee Washita Craig Kingfisher Osage Woods Creek Kiowa Ottawa Woodward Custer Latimer Pawnee Delaware La Flore Payne Dewey Lincoln Pittsburg Wyoming Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 97,506 231,887

FEDERAL RESERVE SYSTEM 143 DESCRIPTION OF FEDERAL RESERVE DISTRICTS—Continued Land area Civilian Federal Reserve district (square population miles) May 1, 1942 DISTRICT NO. 11—DALLAS 386,447 7,734,901 Arizona (southeastern part) 23,227 140,225 Counties of— Cochise Greenlee Pima Santa Cruz Graham Louisiana (northern part) 18,547 747,683 Parishes of— Bienville De Soto Madison Tensas Bossier East Carroll Morehouse Union Caddo Franklin Natchitoches Webster Caldwell Grant Ouachita West Carroll Catahoula Jackson Red River Winn Claiborne La Salle Richland Concordia Lincoln Sabine New Mexico (southern part) 238,828 Counties of— Catron Eddy Lincoln Sierra Chaves Grant Luna Socorro Curry Guadalupe Otero Torrance De Baca Hidalgo Quay Dona Ana Lea Roosevelt Oklahoma (southeastern part) 7,563 168,339 Counties of— Atoka Choctaw Johnston Marshall Bryan Coal McCurtain Pushmataha Texas 6,439,826 DISTRICT NO. 12—SAN FRANCISCO 11,513,912 Arizona (northwestern part) 90,353 354,934 Counties of— Apache Maricopa Navajo Yavapai Coconino Mohave Pinal Yuma Gila California 156,803 7,185,142 Idaho 82,808 476,953 Nevada 109,802 128,157 Oregon 96,349 1,064,590 Utah 82,346 553,717 Washington 66,977 1,750,419 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

i4 ANNUAL REPORT OF BOARD OF GOVERNORS 4 FEDERAL RESERVE BRANCH TERRITORIES [December 31, 1942] ' BUFFALO BRANCH (district No. 2).--The 10 most westerly counties in'the State of New York, as follows: Monroe Orleans Allegany Wyoming i Chautauqua Genesee Erie Cattaraugus Livingston Niagara CINCINNATI BRANCH (district No 4).—That part of the State of Keritucky in Federal Reserve district No. 4, and the following counties in southern Ohio: Adams Clermont Greene Meigs Ross Athens Clinton Hamilton Miami Scioto Brown Darke Highland Montgomery Vinton Butler Fayette Jackson Pike Warren Clark Gallia Lawrence Preble Washington PITTSBURGH BRANCH (district No. 4).—Those parts of the States of Pennsylvania and West Virginia included in Federal Reserve district No. 4. BALTIMORE BRANCH (district No. 5).—The State of Maryland and the following counties in the State of West Virginia: Barbour Grant Lewis Pendleton Taylor Berkeley Hampshire Marion Pleasants Tucker Braxton Hardy Mineral Preston Upshur Calhoun Harrison Monongalia Randolph Webster Doddridge Jackson Morgan Ritchie Wirt Gilmer Jefferson Nicholas Roane Wood CHARLOTTE BRANCH ( ict No 5).—The following counties in the States of North Carolina and South Car NORTH CAROLINA Alamance Catawba Guilford Mecklenburg Stanly Alexander Chatham Haywood Mitchell Stokes Alleghany Cherokee Henderson Montgomery Surry Anson Clay Iredell Moore Swain Ashe Cleveland Jackson Polk Transylvania Avery Davidson Lee Randolph Union Buncombe Davie Lincoln Richmond Watauga Burke Forsyth Macon Rockingham Wilkes Cabarrus Gaston Madison Rowan Yadkin Caldwell Graham McDowell Rutherford Yancey SOUTH CAROLINA Abbeville Edgefield Lancaster Newberry Saluda Aiken Fairfield Laurens Oconee Spartanburg Anderson Greenville Lexington Pickens Union Cherokee Greenwood McCormick Richland York Chester BIRMINGHAM BRANCH (district No. 6).—The State of Alabama except the following counties: Baldwin Covington Geneva Houston Pike Barbour Dale Henry Mobile Russell Coffee and towns and cities in Lee and Chambers counties located on or south of the Atlanta & West Point Railroad and the Western Railway of Alabama. JACKSONVILLE BRANCH (district No 6).—The entire State of Florida. NASHVILLE BRANCH (district No. 6).—That part of the State of Tennessee included in Federal Reserve district No. 6 with the exception of the city of Chattanooga. NEW ORLEANS BRANCH (district No. 6).—Those parts of the States of Louisiana and Mississippi located in FederJ Reserve district No. 6, and the counties of Baldwin and Mobile in the State of Alabama. SAVANNAH AGENCY (district No. 6).—Savannah, Ga. DETROIT BRANCH (district No. 7).—The following counties in the State of Michigan: Bay Ingham Livingston Saginaw Tuscola Genesee Jackson Macomb Sanilac Washtenaw Hillsdale Lapeer Monroe St. Clair Wayne Huron Lenawee Oakland Shiawassee LITTLE ROCK BRANCH (district No. 8).—The State of Arkansas exKcceepptt tth e following counties: Baxter Craighead Greene """Mississippi Sabastian2 Benton1 Crawford Lawrence Phillips Sharp Boone Crittenden Lee Poinsett Washington Carroll Cross Madison Randolph Woodruff Clay ffultpn .Marion. St. Francis and except also the towns of jbeValls BluffOPrairie.County]^ and J [ejaaJPolk County). LOUISVILLE BRANCH (district No 8).—That part of the State of Kentucky included in Federal Reserve district No. 8, with the exception of the town of Mgrganfield (Union County), and the following counties in the State of Indiana: Clark Floyd Jefferson Orange Switzerland Crawford Harrison Lawrence Perry Washington Dubois3 Jackson Martin* Scott MEMPHIS BRANCH (district No. 8).—Those parts of the States of Mississippi and Tennessee included in Federal Reserve district No. 8, with the exception of Union City (Obion County), Tejmesjsee^and^Paris (Henry County)) Tennessee, and the following counties in the State of Arkansas: Craighead Cross Lee Phillips St. Francis Crittenden Lawrence Mississippi Poinsett Woodruff also the town of JDe Vails Bluff (Prairie County), Arkansas*. 1 Town of-Gentry assigned to Little Rock Branch. 2 Town or-Mansfiela assigned tt o. Little Rock Branch. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM M5 FEDERAL RESERVE BRANCH TERRITORIES—Continued HELENA BRANCH (district No. 9).—The entire State of Montana. DENVER BRANCH (district No. 10').—The entire State of Colorado and that part of the State of New Mexico in cluded in Federal Reserve district No. 10. OKLAHOMA CITY BRANCH (district No. 10).—That part of the State of Oklahoma located in Federal Reserve district No. 10. OMAHA BRANCH (district No. 10).—The entire States of Nebraska and Wyoming. EL PASO BRANCH (district No. 11).—That part of the States of Arizona and New Mexico located in Federal Re serve district No. 11, and the following counties in the State of Texas: Andrews Ector Jeff Davis Midland Reeves Brewster1 El Paso Loving Pecos Ward Crane Hudspeth Martin Presidio Winkler Culberson HOUSTON BRANCH (district No. 11).—The following counties in the southeastern part of the State of Texas: Anderson Cherokee Jackson Nacogdoches Shelby Angelina Colorado Jasper Newton Trinity Austin Fayette Jefferson Orange Tyler # Bastrop Fort Bend Lavaca Polk . Victoria Brazoria Galveston Lee Refugio Walker Brazos Grimes Liberty Sabine Waller Burleson Hardin Madison San Augustine Washington Calhoun Harris Matagorda San Jacinto Wharton Chambers Houston Montgomery SAN ANTONIO BRANCH (district No. 11).--The following counties in the State of Texas: Aransas De Witt Hidalgo La Salle Starr Atascosa Dimmit Jim Hogg Llano Terrell Bandera Duval Jim Wells Live Oak Travis Bee Edwards Karnes Mason Uvalde Bexar Frio Kendall Maverick Val Verde Blanco Gillespie Kenedy McMullen Webb Brooks Goliad Kerr Medina Willacy Caldwell Gonzales Kimble Nueces Wilson Cameron Guadalupe Kinney Real Zapata Comal Hays Kleberg San Patricio Zavalla Los ANGELES BRANCH (district No. 12).—That part of the State of Arizona located in Federal Reserve district No. 12, and the following counties in the State of California: Imperial Los Angeles Riverside San Diego Ventura Inyo Orange San Bernardino Santa Barbara • PORTLAND BRANCH (district No 12).—The entire State of Oregon, and the town of Ilwaco and the following counties in the State of Washington: Asotin Columbia Garfield Skamania Walla Walla Clark Cowlitz Klickitat Wahkiakum Also, the following counties in the State of Idaho: Benewah Boundary Idaho Latah Nez Perce Bonner Clearwater Kootenai Lewis Shoshone SALT LAKE CITY BRANCH (district No. 12).—The entire State of Utah and the following counties in the States of Idaho and Nevada: IDAHO Ada Bonneville Custer Jerome Payette Adams Butte Elmore Lemhi Power Bannock Camas Franklin Lincoln Teton Bear Lake Canyon Fremont Madison Twin Falls Bingham Caribou Gem Minidoka Valley- Blaine Cassia Gooding Oneida Washington Boise Clark Jefferson Owyhee NEVADA Clark Elko Lincoln White Pine SEATTLE BRANCH (district No. 12).—The entire State of Washington except the town of Ilwaco and the follow ing counties which are affiliated with the Portland Branch: Asotin Columbia Garfield Skamania Walla Walla Clark Cowlitz Klickitat Wahikiakum 1 Transferred from San Antonio zone to El Paso zone effective Jan. 2, 1943. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM BOUNDARIES OF FEDERAL RESERVE DISTRICTS AND THEIR BRANCH TERRITORIES > o 8 O w o > o o o < o ^^ BOUNDARIES OP FEDERAL RESERVE DISTRICTS — BOUNDARIES OF FEDERAL RESERVE BRANCH TERRITORIES ^L BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM <§) FEDERAL RESERVE BANK CITIES • FEDERAL RESERVE BRANCH CITIES O FEDERAL RESERVE BANK AGENCY JANUARY 2. 1943 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SfSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX Page Acceptances, buying rates 74 Acceptances to 100 per cent of capital and surplus, application approved during year 43 Agricultural credit 2.3 Agricultural production discussed 3 Amendments to Federal Reserve Act: (See Legislation) American Bankers Association, compilation of consumer instalment loan series taken over by Federal Reserve System 44 Amortization of debt for nonproductive purposes, joint announcement of Federal bank supervisory agencies 112. Assets and liabilities: (See Condition statements) Audit of accounts of Board for 1942. 54 Baker, A. Z., appointed Class C director at Cleveland 48 Bank credit: (See Credit) Bank failures 81 Bank holding companies 42. Bank mergers 81 Bank premises: Federal Reserve Banks 51 Member banks, December 31, 1942. 76 Bank supervision and the banking structure 39 Bank supervisory agencies: Amortization of debt for nonproductive purposes, joint statement on 112. Bank holdings of Government securities, supervisory policy regarding 2.1 Inventories, letter for guidance of examiners in use of credit for accumulation of .... 113 Banking offices: Number of, 1933-1942. 80 Banks: Branches: Number of: 1933-1941 80 1941, analysis of changes in 81 Business volume, increase during year 39 Consolidations, absorptions, etc 81 Loans to, by member banks: December 31, 1941 78 Number of: 1933-1941 80 1942., analysis of changes in 81 Suspensions: Number of 81 (See also Federal Reserve Banks; Mutual savings banks; National banks; Nonmember banks; Private banks; State member banks) Bills: Bought by Federal Reserve Banks: All banks combined: 1918-1941, end of year figures 79 1942., end of month figures 79 Bought in open market by Federal Reserve Banks: Volume of operations 67 Discounted by Federal Reserve Banks: All banks combined: 1918-1941, end of year figures 79 1942., end of month figures 79 December 31, 1941 60 Each bank, end of year figures 62. Earnings on, each bank 68 Volume of operations 67 Board of Governors: Audit of accounts for 1942. by Federal Reserve Bank of Philadelphia 54 Division of Personnel Administration, creation of 53 Expenses for 1942. 54, 73 Library, increase in services of 47 Members: Evans, R. M., appointed for unexpired term 53 List of 115 Ransom, Ronald, reappointed for full term 53 Officers 115 Policy actions: (See Policy actions) Digitized for FRASER 147 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

148 INDEX Board of Governors—Continued. Page Publications, distribution of 47 Receipts and disbursements for 19^ 72. Regulations: (See Regulations) Research and advisory services 44 Staff: Boothe, Gardner L., II, appointed Assistant Administrator for War Loans Com mittee 53 Cravens, Kenton R., appointed Administrator for War Loans Committee 53 Dreibelbis, J. P., designated General Attorney 54 Leonard, Robert F., appointed director of Division of Personnel Administration. 53 Number of employees during year, changes in 54 Pollard, William B., appointed Assistant Chief of Division of Examinations.... 54 Smead, E. L., appointed Acting Administrator of War Loans Committee. ...... 53 Stark, Walter R., appointed Assistant Director of Division of Research and Sta tistics 54 Vest, George B., designated Assistant General Attorney 54 Voluntary payroll deduction plan for purchase of War Savings bonds 54 Wingfield, B. Magruder, designated Assistant General Attorney 54 Bonds: Government: (See Government securities) Yields: Monthly and yearly figures 83 Branch banks: Federal Reserve: (See Federal Reserve Banks) Foreign of member banks and foreign banking corporations 43 Number of: 1941 40 1933-1942. 80 1941, analysis of changes in 81 Briscoe, Dolph C, appointed Class C director at Dallas 48 Brokers and dealers in securities: Loans to, by member banks, December 31, 1942. 78 Building operations of Federal Reserve Banks 51 Business indexes 84 Canadian-United States economic relations 46 Capital: Federal Reserve Banks: All banks combined, December 31, 1941 61 Each bank, end of year figures 62. Member banks, December 31, 1942. 77, 78 Cartwright, Holman, appointed director at San Antonio Branch 48 Central reserve city member banks: Assets and liabilities, December 31, 1941. 76 Classification of loans, Government direct obligations, and capital, December 31,1941. 78 Reserve requirements, amendments to Regulation D reducing 17, 57, 97, 98, 99 Certificates of indebtedness, holdings of Federal Reserve Banks 66 Chairmen of Federal Reserve Banks: Changes during year 48 List of 117 Meetings during year 55 Charts: Banking developments in New York and other cities 19 Excess reserves of member banks 18 Federal Reserve portfolio of Government obligations under three kinds of credit action 30 Industrial production for war and for civilian purposes 4 Member bank reserves and related items 13 National income and bank credit 2.% New York City banks, factors of gains and losses of reserve funds 18 Reserve Bank holdings of United States Government securities 15 Reserve requirements of member banks under three kinds of Federal Reserve credit action 30 Total consumer debt i5 Wholesale prices 5 Check clearing and collection: Par list: Discussion of changes in list 40 Number of banks on list and number not on list 81 Digitized for FVRoAlSumERe of operations at Federal Reserve Banks 67 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 149 Page Chicago, excess reserves of member banks in 18 Civilian goods, supply of 6 Coins received and counted by Federal Reserve Banks 67 Commercial paper: Discount rates, open market 83 Member bank holdings, December 31, 194Z 78 Commitment rates of Federal Reserve Banks 74 Committees: Executive Development of Conference of Presidents 54 Federal Open Market: (See Federal Open Market Committee) Insurance, to administer self-insurance plan 51 National Agricultural Credit, study of credit problems of farmers Z3 Retirement System, changes being considered 52. Victory Fund, organized for distribution of Government securities 1 War Loans, created 53 Comptroller of the Currency, joint statement issued by 2.1 Condition statements: Federal Reserve Banks: All banks combined, December 31, 1941 60 Each bank, end of year figures 61 Member banks, December 31, 1942. 76, 78 Conferences: Bank examination departments of Federal Reserve Banks 41 Chairmen of Federal Reserve Banks 55 Presidents of Federal Reserve Banks 55 (See also Meetings) Congress, reports by Board on proposed legislation 55 Consolidations, absorptions, etc., of banks 40, 81 Construction contracts awarded: Indexes of value of 84 Consumer credit: Minimum down payments and maximum maturities on 73 Regulation W: Administration of 14 Amendments to 14, 57, 86-100 Restrictions during year, discussed 3, iz, 14 Statistics collected in connection with 44 Consumer goods : Decrease in supplies during year 6 Correspondence: Letter to Federal supervisory agencies for guidance of 2.1 Use of credit for accumulation of inventories, letter to financing institutions on 113 Country member banks: Assets and liabilities 76 Classification of loans, Government direct obligations, and capital 78 Cozzo, J. B., appointed Deputy Chairman at Dallas 48 Cravens, Kenton R., appointed Administrator for War Loans Committee 53 Credit, bank: Federal Reserve: 1918-1941, end of year figures 79 1941, end of month figures 79 Policies adopted to aid war effort 1 Restrictions on nonessential : 2.2. Use for accumulation of inventories, letter to financing institutions 13, 113 Creighton, Albert M., designated Chairman and Federal Reserve Agent at Boston 48 Cuba, report of American Technical Mission 46 Currency: Circulation, 1918-1941 79 Federal Reserve Bank notes, issuance of 50 Federal Reserve notes: (See Federal Reserve notes) Received and counted by Federal Reserve Banks 67 Custodian for other agencies, function of Federal Reserve Banks 35 Department store sales index , 84 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

io INDEX 5 Depositaries of Government funds: Page Function of Federal Reserve Banks 35 Nonmember banks as, amendment to Federal Reserve Act 55 Deposits: Federal Reserve Banks: All banks combined, December 31, 1941 61 Each bank, end of year figures 62 Government: Federal Reserve Banks: All banks combined : 1918-1941, end of year figures 79 1942., end of month figures 79 Each bank, end of year figures 62 Member banks, December 31, 1941 76 Nonmember deposits in Federal Reserve Banks: 1918-1941, end of year figures 79 1942., end of month figures 79 Reserves required for member banks 75 Savings, interest rates on 75 Time, interest rates on 75 Directors, Federal Reserve Banks: Baker, A. Z., appointed Class C at Cleveland 48 Briscoe, Dolph C, appointed Class C at Dallas— 48 Chairmen and Deputy Chairmen 117 Class C, appointments during year 48 Classes of 47 Cozzo, J. B., appointed Deputy Chairman at Dallas 48 Creighton, Albert M., appointed Class C and designated Chairman and Federal Re serve Agent at Boston 48 Hoffman, Paul G., appointed Class C at Chicago 48 Leland, Simeon E., appointed Chairman and Federal Reserve Agent at Chicago 48 Lewis, Frank J., resignation as Class C and Chairman at Chicago 48 List of 119 Taylor, Jay, appointed Chairman at Dallas 48 Waymack, W. W., appointed Deputy Chairman at Chicago 48 Wellman, Harry R., appointed Class C at San Francisco 48 Directors, Federal Reserve Branch Banks: Appointment of 47 Cartwright, Holman, appointed director at San Antonio 48 Executive head, change from Managing Director to Vice President at one 39 Freeman, Y. Frank, appointed director at Los Angeles 48 List of 119 Number reduced at some 39 Richardson, R. B., appointed director at Helena 48 Steen, William H., appointed director at Portland 48 Discount rates at Federal Reserve Banks: Discussion 2., 20 Table 74 Dividends: Federal Reserve Bank stock, amendment to Federal Reserve Act on taxation of. .... 55 Federal Reserve Banks: Each Federal Reserve Bank, 1942 69 Federal Reserve Banks combined, 1914-1942 70 Member banks 77 Down payment and maximum maturity on consumer credit under Regulation W 73 Dreibelbis, J. P., designated General Attorney 54 Durable goods index 84 Earnings and expenses: Federal Reserve Banks: All banks combined 70 Each bank 68 Year 1942 49 Earnings on bills and securities at Federal Reserve Banks 50 Economic Stabilization, Director appointed 5 Employees of Federal Reserve Banks, number and salaries 71 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX I51 Employment: Page Developments during year discussed 3 Factory employment index 84 Nonagricultural employment index 84 Evacuation of Japanese from military areas 37 Evans, R. M., appointed member of Board of Governors for unexpired term 53 Examinations: Federal Reserve Banks 41 Foreign banking corporations 43 Reports, uniform inscription adopted 42. State member banks 41 Expenses: Board of Governors of the Federal Reserve System 54, J-L Federal Reserve Banks 68, 70 Factory employment index 84 Federal Advisory Council: Meetings during year 55 Members and officers 116 Federal Deposit Insurance Corporation : Joint statement of examination and supervisory policy 2.1 Membership changes 81 Federal Open Market Committee: Discount rate of % per cent on purchase of Treasury bills established by 14, 104 Direction to Federal Reserve Banks amended 108 Meetings during year 54 Members and officers 115 Membership of, amendment to Federal Reserve Act, regrouping Federal Reserve Banks for election of 56 Policy actions: (See Policy actions) Repurchase option, authority to Federal Reserve Banks to give to seller of bills.2., 14, 106 Federal Reserve Act: Amendments: (See Legislation) Reports on bills introduced in Congress 55 Federal Reserve Bank notes : Issuance of reserve stocks 50 Federal Reserve Bank of Boston: Staff: Paddock, W. W., election as President 49 Willett, William, elected First Vice President 49 Young, R. A., resignation as President 48 Federal Reserve Bank of New York: Loans to foreign bank 37 Stabilization fund operations 37 Federal Reserve Bank of Philadelphia: Audit of accounts of Board for 1942. 54 Federal Reserve Bank of San Francisco: Evacuation of Japanese from military areas 37 Federal Reserve Banks: Assessment for expenses of Board of Governors 54 Branches: Building operations of 52. Directors, list of 119 Examination of 41 Fiscal agency activities increased 38 Personnel to be strengthened 39 Responsibilities enlarged 38 Territory of 144 Chairmen and Deputy Chairmen: Appointments during year 48 List of 117 Meetings of 55 Custodians for Government departments and agencies 35 Depositaries of Government funds 35 Depositary, custodian, and other functions 35 Directors: Appointment of Class C 48 List of 119 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ix INDEX 5 Federal Reserve Banks—Continued. Page Dividends paid: All banks combined 50, 70 Each bank 69 Earnings and expenses: All banks combined 70 Discussion of 49 Each bank 68 Earnings on bills and securities 50 Employees, numbers and salaries 71 Examination of 41 Fiscal agents under war program 31 Functions performed for Government agencies 35 Officers: Changes during year 49 List of 118 Number and salaries of 71 Operations during year 49 Presidents: Changes during year 48 List of 118 Meetings 55 Profit and loss account 69 Purchase of Government securities direct from Treasury z, 16 Retirement system contributions 68 Salaries of officers and employees . 68, 71 Staff, expansion in 49 Vice Presidents, list of 118 Volume of operations 49, 67 Federal Reserve districts: Area, square miles 138 Map showing outline 146 Population 138 Territory comprising 138 Federal Reserve notes: Circulation 63 Clearing of, new plan adopted 50 Collateral security, end of year figures 63 Issued 63 Redemption fund: All banks combined, December 31, 1941 60 Each bank, end of year figures 6z Federal Reserve policies to aid war financing 9,2.9 Federal Reserve System: Activities during 1942. 2. Membership: Changes in 81 State bank and trust company members iz6 Policies during 1941 reviewed 9, Z9 War economy, place in 3 Fiduciary powers: National banks granted authority to exercise, changes during year 4z Fiscal agency operations of Federal Reserve Banks 31 Foreign accounts maintained by Federal Reserve Banks 36 Revision of regulations under consideration 51 Foreign banking corporations 43 Foreign banks: Deposits of, held by Federal Reserve Banks: All banks combined, December 31,1941 61 Each bank, end of year figures 63 Loans to 37 Foreign branches of member banks and foreign banking corporations 19 Foreign funds control: Federal Reserve Banks as agents for Treasury 36 Franchise tax paid by Federal Reserve Banks to Government, 1917-1931 70 Freeman, Y. Frank, appointed director at Los Angeles Branch 48 Freight-car loadings, indexes 84 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX I53 Gold: Page Reserves of foreign countries held by Federal Reserve Banks 36 Stock, monetary in United States: 1918-1941, end of year figures 79 1941, end of month figures 79 Gold certificates: Federal Reserve Bank holdings: All banks combined, December 31, 1941 60 Each bank, end of year figures 62. Government securities: Bank holdings of 66 Bond yields: Table 83 Distribution of 11 Federal Reserve Bank holdings: All banks combined* End of December 1941 and 1941. in detail 66 December 31, 1941 60 1918-1941, end of year figures 79 1941, end of month figures 79 Each bank, end of year figures 62. Earnings on 68 Federal Reserve purchases iz Fiscal agency operations of Federal Reserve Banks 31 Insurance, self, plan adopted by Federal Reserve Banks 52. Interest rate on 66 Issue, redemption, and exchange of, work of Federal Reserve Banks in connection with 31, 67 Issues: Amounts and types of 76, 78 Available to banks 10 Available to nonbanking investors 10 During year to meet war needs 9 Member bank holdings 76, 78 Nonbanking investors, purchase by zj Offerings during year for war financing program 9 Open markets operations in 12. Ownership of 11 Purchase by Federal Reserve Banks direct from Treasury x, 16 Purchases by Federal Reserve System 11 Reserve Bank holdings of, chart 15 Resolutions of Federal Open Market Committee authorizing transactions in 103 Supervisory policy regarding bank holdings of, joint statement zi Treasury bills : Discount rates on 14, 83, 104, 108 (See also Treasury bills) Treasury bonds and notes, holdings of Federal Reserve Banks 66 Treasury notes: Holdings by Federal Reserve Banks 66 Yields 83 Victory Fund drive * 11 Volume handled by Federal Reserve Banks 67 War effort, policies as to distribution and marketing „ 1 Guarantee charges and rates on loans under Regulation V 91 Schedule revised ioz Hoffman, Paul G., appointed Class C director at Chicago 48 Holding company affiliates 41 Voting permits issued to 42. Income: Growth during year 6 National income payments, indexes 84 Industrial advances or Federal Reserve Banks: All banks combined, December 31, 1941 60 Commitments 63 Each bank, end of year figures 62. Earnings on 68 Rates on: Changes in 93 Table 74 Digitized for FRVAolSuEmRe of operations 67 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

*54 INDEX Industrial production: Page Increase in 1941 discussed 3 Indexes 84 Inflation: Methods of counteracting discussed 3 Role of credit authorities in preventing 2.6 Inscription on examination reports, adoption of uniform 41 Interdistrict collection system: Discussion of changes 40 Number of banks on list and number not on list 82. Volume of operations at Federal Reserve Banks 67 Interest rates: Federal Reserve Banks 74 Open market, in New York City 83 Savings deposits 75 Time deposits 75 United States Government securities 66 Inventories: Use of credit for accumulation of 2.3, 113 Investments: Member banks, December 31, 1942. 76 Japanese, evacuation from military areas 37 Joint statements, Federal bank supervisory agencies: Amortization of debt for nonproductive purposes 112. Supervisory policy regarding bank holding of Government securities 2.1 Legislation: Cuban Central Bank and Stabilization Fund -. 46 Federal Open Market Committee, amendment to Federal Reserve Act on membership of 56 Nonmember banks as depositaries of United States, amendment to Federal Reserve Act 5 5 Purchases of Government obligations by Federal Reserve Banks direct from United States 55 Reports to Congress on proposed 55 Reserves, amendment to Federal Reserve Act to allow changes in central reserve cities without making other changes 17, 56 Reserves, loans or dividends while deficient, amendment to Federal Reserve Act 56 Stabilization of cost of living, wage rates, etc 5 Taxation of dividends on Federal Reserve Bank stock, amendment to Federal Reserve Act 55 Leland, Simeon E., appointed Chairman at Chicago 48 Leonard, Robert F., appointed director of Division of Personnel Administration 53 Lewis, Frank J., resignation as Class C director and Chairman at Chicago 48 Library of Board, increase in services of 47 Loans: Bank lending vs. nonbank lending 2.J Brokers loans by member banks 78 Commercial and industrial, special survey of 44 Industrial, rates on, changes approved 93 (See also Industrial advances) Real estate loans of member banks 78 Security loans by member banks 78 Total for member banks, December 31, 1941 76, 78 Trend during year. 11 Loans and investments: Member banks, December 31, 1941 76, 78 Manpower problem discussed 3 Map: Federal Reserve districts 146 Margin requirements: Table of 75 Meetings: Bank examination departments of Federal Reserve Banks. 41 Chairmen of Federal Reserve Banks 55 Federal Advisory Council 55 Federal Open Market Committee 54 Presidents of Federal Reserve Banks 55 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX J55 Member banks: Page Changes in number during year 39 Condition statements, December 31, 1942 76, 78 National banks: (See National banks) Number of 80 State member banks: (See State member banks) Membership in Federal Reserve System: Changes during year 40 State banks and trust companies 126 Minerals production index 84 Money in circulation: 1918-1941, end of year figures 79 1941, end of month figures 79 Money rates: Open market in New York City 83 Mutual savings banks: Banking offices, 1933-1942 80 Branches: 193 3-1942 80 1942, analysis of changes in 81 Number of: 1933-1942 80 1942, analysis of changes in 81 National banks: Acceptance powers granted 43 Assets and liabilities, December 31, 1942 76 Banking offices, 1933-1942 80 Branches: Number of: 193 3-1942 80 1942, analysis of changes in 81 Classification of loans, Government direct obligations, and capital, December 31, 1942 78 Number of: 1933-1942 80 1942, analysis of changes in 81 Trust powers of 42 New York City, excess reserves of member banks in 17 Nondurable goods production index 84 Nonmember banks: Changes in number during year 39 Depositaries of United States, amendment to Federal Reserve Act 55 Deposits of, held by Federal Reserve Banks: 1918-1941, end of year figures 79 1942, end of month figures 79 Insured: Banking offices, 1933-1942 80 Branches 80, 81 Number of 80, 81 Par list, number of banks on list and number not on list 40, 82 Uninsured: Banking offices, 1933-1942 80 Branches 80, 81 Number of 80, 81 Non-par banks, number of 40, 82 Open market account: Authority to effect transactions in, direction to executive committee approved: Meeting of March 2 103 Meeting of May 8 104 Meeting of June 22 105 Meeting of August 3 107 Meeting of September 28 109 Meeting of December 14 no Authority to increase amount of securities in 106, no Purchase of Government securities 13 Review for second and third quarters 13 Open market operations by Federal Reserve System 12 Paddock, W. W., election as President at Boston 49 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

I56 INDEX Par list: Page Number of banks on 40 Tabic 8z Payroll deduction plan for purchase of War Savings bonds 54 Payrolls, factory, index 84 Policy actions: Board of Governors: Advances to individuals, partnerships, and corporations other than banks, rate reduced 100 Guarantee charges on loans under Regulation V, schedule 91, 102. Preferential rate on advances to member banks secured by short-term obligations of United States, establishment of 100 Rates on advances to member banks under section 10(b) 89 Rates on advances to nonmember banks, reduction approved 88 Rates on discounts and advances under Section 13 and 13 a of Federal Reserve Act 88 Rates on industrial advances under Section 13b, changes approved 93 Regulation A, Discounts for and Advances to Member Banks by Federal Reserve Banks: Amendment to subsection h of Section 1 98 Amendment to subsection b of Section z 89 Regulation D, Reserves of Member Banks: Amendment requiring that deficiencies be computed on basis covering weekly periods 86 Amendment to conform with recent amendment to Federal Reserve Act 95 Reduction in reserve requirements of member banks in central reserve cities 97, 98, 99 Regulation S, Industrial Loans by Federal Reserve Banks, amendment adopted. . 93 Regulation V, War Financing, adopted 89 Guarantee charges and rates on loans under 91, 102. Regulation W, Consumer Credit: Amendment No. 3 adopted 86 Amendment No. 4 adopted <$L Amendment No. 5 adopted 95 Amendment No. 6 adopted 96 Amendment No. 7 adopted 96 Amendment No. 8 adopted 97 Amendment No. 9 adopted 100 Federal Open Market Committee: Authority to effect transactions in System open market account: Meeting of March x 103 Meeting of May 8 104 Meeting of June 2.2. 105 Meeting of August 3 107 Meeting of September 2.8 109 Meeting of December 14 no Authority to increase amount of securities in System account 106, no Treasury bills, direction to Federal Reserve Banks to purchase at posted discount rate 104,108 Treasury bills, purchase by Federal Reserve Banks under repurchase option 106 Post-war problems, studies being made 45 Postal savings (deposits: Interest rate on, paid by member banks 75 Presidents of Federal Reserve Banks: Changes during year 48 List of 118 Meetings during year 55 Press statements: Regulation V, War Financing 90 Price controls, imposition discussed . 4 Prices: Wholesale commodity, index 84 Private banks: Banking offices, 1933-1942. 80 Branches: 1933-1941 80 1942., analysis of changes in 81 Number of: 1933-1942. 80 1941, analysis of changes in 81 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX *57 Production, industrial: (See Industrial production) Page Publications of Board issued during year, distribution of 47 Ransom, Ronald, reappointed member of Board of Governors for full term 53 Rates: Advances to individuals, partnerships, and corporations other than banks, reduction in 100 Advances to member banks under Section 10(b), reduction approved 10, 89 Advances to nonmember banks secured by direct obligations of United States, reduc tion approved xo, 88 Buying rates on bills at Federal Reserve Banks 14, 74 Commitment rates 74 Discount at Federal Reserve Banks 74 Reduction in i, xo, 88 Discount rate of % per cent on purchase of Treasury bills established by Federal Open Market Committee 14, 104, 108 Industrials loans under Section 13b of Federal Reserve Act, changes approved 93 Interest, at Federal Reserve Banks 74 Open market rates in New York City 83 Preferential rates on advances to member banks secured by short-term obligations of United States 100 Savings deposits 75 Time deposits 75 Ration banking plan 51 Real estate: Loans on, by member banks, December 31, 1942. 78 Member bank holdings, December 31, i^z 76 Regional economic problems, program of research undertaken 45 Regulations, Board of Governors: A, Discounts for and Advances to Member Banks by Federal Reserve Banks: Amendment to subsection b of Section 2. 89 Amendment to subsection h of Section 1 98 Amendments during year 57 D, Reserves of Member Banks: Amendment to conform to recent amendment to Federal Reserve Act 95 Amendment requiring that deficiencies be computed on basis covering weekly periods 86 Amendments during year 57 Reduction in requirements in central reserve cities 17, 97, 98, 99 S, Industrial Loans by Federal Reserve Banks: Amendment to 57 Amendment adopted 93 T, Extensions of Credit by Brokers or Dealers on Listed Securities: Margin requirements 75 U, Loans by Banks on Stocks: Margin requirements 75 V, War Financing: Adopted 57> 89 Guarantee charges and rates on loans under 91 Schedule revised ioi Issuance discussed 33 W, Consumer Credit: Administration of 2.4 Amendment No. 3 adopted 86 Amendment No. 4 adopted 91 Amendment No. 5 adopted 95 Amendment No. 6 adopted <)6 Amendment No. 7 adopted 96 Amendment No. 8 adopted 97 Amendment No. 9 adopted 100 Changes during year M* 57 Minimum down payments and maximum maturities 73 Regulations, Foreign funds control, amended 36 Reports: Congress, on legislation during year 55 Revision of certain forms for 45 Repurchase of bills from Federal Reserve Banks by seller, option given x, 14, 106 Research service of Board 44 Reserve city member banks: Assets and liabilities, December 31,1941 76 Digitized for FRCAlaSssEifRic ation of loans, Government direct obligations, and capital, December 31,1942. 78 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

i 5 8 INDEX Reserve requirements: Page Discussion of 2., 31 Member banks 75 Member banks in central reserve cities, amendment to Regulation D reducing. . 17, 97, 98, 99 Regulation D, amendments to 57, 95 Reserves: Actions of Board to provide adequate for war needs 1,31 Amendment to Federal Reserve Act to permit changes in central reserve cities without making other changes 17, 56 Decline during year 12. Deficient: Loans or dividends by member banks, amendment to Federal Reserve Act 56 Excess of member banks 17 Federal Reserve Banks: All banks combined, December 31, 1942. 61 Each bank, end of year figures 62. Member banks: Account in Federal Reserve Banks: All banks combined, December 31, 1942. 61 Each bank, end of year figures 63 Amendment to Federal Reserve Act authorizing Board to change requirements in central reserve cities 17, 56 Amendment to Regulation D providing that deficiencies be computed for weekly periods ." 86 Excess: 1918-1941, end of year figures 79 1942., end of month figures 79 Increase in requirements 60 Reduction in requirements at central reserve city banks 17, 97, 98, 99 Total: 1918-1941, end of year figures 79 1942., end of month figures 79 Retirement System, changes under consideration 52. Richardson, R. B., appointed director at Helena Branch 48 Salaries at Federal Reserve Banks 68, 71 Savings deposits, interest rate on 75 Securities: Government: (See Government securities) Loans on, by member banks, December 31, 1942. 78 Smead, E. L., appointed Acting Administrator or War Loans Committee 53 Staff of Board: (See Board of Governors) Staff of Federal Reserve Banks, expansion in 49 Stark, Walter R., appointed Assistant Director of Division of Research and Statistics. ... 54 State member banks: Assets and liabilities, December 31, 1942. 76 Banking offices, 1933-1941 80 Branches: Number of: 1933-1942. 80 1941, analysis of changes in 81 Classification of loans, Government direct obligations, and capital, December 31,1942. 78 Examination of 41 List of, December 31, 1942. 12.6 Number of: 1933-1941 80 1941, analysis of changes in 81 States and political subdivisions: Obligations of, owned by member banks 76 Statistics collected by Federal Reserve System 44 Steen, William H., appointed director at Portland Branch 48 Stock prices: Table 83 Studies undertaken by Board during year 44 Surplus: Federal Reserve Banks 69, 70 Member banks 77 Suspensions, banks 40, 81 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX J59 Taxation: Page Dividends on Federal Reserve Bank stock, amendment to Federal Reserve Act 55 Use as weapon against inflation 2.6 Taylor, Jay, appointed Chairman at Dallas 48 Treasury bills: Discount rate of ^ per cent on purchase of, established by Federal Open Market Com mittee 14, 104 Direction to Federal Reserve Banks amended 108 Holdings of Federal Reserve Banks 34, 66 Repurchase option, Federal Reserve Banks given authority by Federal Open Market Committee z, 14, 106 Treasury bonds and notes, holdings of Federal Reserve Banks 66 Treasury currency outstanding, 1918-1942. 79 Treasury policy for financing war 9 Trust company members of Federal Reserve System 12.6 Trust powers, national banks granted authority to exercise and to terminate during year. . 4Z United States Government deposits: (See Deposits, Government) United States Government securities: (See Government securities) Vest, George B., designated Assistant General Attorney 54 Victory Fund drive 11 Victory Fund organization 3Z Voting permits issued to holding company affiliates 42. Wage controls, imposition of 4 War: Contracts, financing of 2.2. Cost of, increase in expenditures during year 7 Economy, transition to 3 Finance, policies of Federal Reserve System in connection with program 9, 2.9 Financing program of Treasury 9 Loans : Applications for 34 Financing war production, responsibility of Federal Reserve System 31 Guarantee charges and rates on loans under Regulation V 91, 102. Regulation V adopted 57, 89 War Loans Committee created 53 War Savings bonds : Voluntary payroll deduction plan for purchase of 54 Waymack, W. W., appointed Deputy Chairman at Chicago 48 Wellman, Harry R., appointed Class C director at San Francisco 48 Wholesale commodity prices index 84 Willett, William, elected First Vice President at Boston 49 Wingfield, B. Magruder, designated Assistant General Attorney 54 Young, R. A., resignation as President at Boston 48 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis