Annual Report of the Federal Reserve Board, 1947

THIRTY-FOURTH ANNUAL REPORT of the BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSr COVERING. OPERATIONS FOR THE YEAR 1947 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, April Q, 1948. 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 Thirty-fourth Annual Report, prepared by direction of the Board of Governors of the Federal Reserve System, covering operation during the calendar year 1947. Yours respectfully, M. S. ECCLES, Chairman pro tern. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

TEXT OF REPORT Page Introduction I Monetary Policy in 1947 3 Inadequacy of Existing Monetary Instruments 7 Legislative Proposals 11 Government Finance 12 Bank Credit Developments 15 Bond Market and Money Rates 25 Demand, Production, and Prices 27 International Trade and Finance 32 Changes in Banking Structure \ 37 Number of banking offices 37 Increase in Federal Reserve membership 37 Par and nonpar banks 38 Check routing symbols 38 Designation of reserve cities 38 Bank Supervision by the Federal Reserve System 40 Examination of Federal Reserve Banks 42 Examination of State member banks 42 Bank holding companies 43 Trust powers of national banks 43 Acceptance powers of member banks 44 Foreign branches and banking corporations 44 Changes in Regulations of the Board of Governors 45 Margin requirements for purchasing securities 45 Consumer credit 45 Litigation 45 Suit regarding removal of bank directors 45 Conviction for violating Regulation W 45 Suit regarding condition of membership 46 Legislation 46 Purchase of Government obligations by Federal Reserve Banks 46 Federal Reserve branch bank buildings 46 Stock of Federal Deposit Insurance Corporation 47 Consumer credit 47 War loan deposits 47 in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

age Reserve Bank Operations 47 Volume of operations 47 Earnings and expenses 48 Foreign transactions 49 Bank premises 50 Reserve Bank Personnel 51 Chairmen and Deputy Chairmen 51 Directors 52 Change in First Vice Presidents 53 Staff 53 Board of Governors—Staff 53 Appointment of Board member 53 Death of Vice Chairman Ransom 53 Staff 53 Board of Governors—Income and Expenses 54 Research and Advisory Services 55 Publications and Releases 58 Federal Reserve Meetings 59 TABLES 1. Statement of Condition of the Federal Reserve Banks (In Detail). Dec. 31, 1947 62 2. Statement of Condition of Each Federal Reserve Bank, End of 1947 and 1946 64 3. Holdings of United States Government Securities by Federal Reserve Banks, End of December 1945, 1946, and 1947. 68 4. Holdings of Special Short-Term Treasury Certificates by the Federal Reserve Banks, 1942-47 69 5. Volume of Operations in Principal Departments of Federal Reserve Banks, I943"47 69 6. Earnings and Expenses of Federal Reserve Banks during 1947. • • • 7° 7. Current Earnings, Current Expenses, and Net Earnings of Federal Reserve Banks and Disposition of Net Earnings, 1914-47 72 8. Bank Premises of Federal Reserve Banks and Branches, Dec. 31, 1947 74 9. Number and Salaries of Officers and Employees of Federal Reserve Banks, Dec. 31, 1947 75 10. Federal Reserve Bank Discount, Interest, and Commitment Rates, and Buying Rates on Bills (In Effect Dec. 31, 1947) 76 11. Member Banks Reserve Requirements 77 12. Maximum Rates on Time Deposits 77 IV Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Page 13. Margin Requirements 77 14. Minimum Down Payments and Maximum Maturities on Consumer Credit Subject to Regulation W 78 15. Analysis of Changes in Number of Banking Offices during 1947. ... 79 16. Number of Banking Offices on Federal Reserve Par List and Not on Par List, by Federal Reserve Districts and States, Dec. 31, 1947. . 80 APPENDIX Record of Policy Actions—Board of Governors 82 Record of Policy Actions—Federal Open Market Committee 88 Statement of Federal Advisory Council on Bank Credit, Consumer Credit Controls, and Bank Reserves 98 Board of Governors of the Federal Reserve System 101 Federal Open Market Committee 101 Federal Advisory Council 102 Directors and Senior Officers of Federal Reserve Banks 103 Map of Federal Reserve Districts 114 Index 115 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 Inflationary forces continued to dominate the nation's economy during 1947 and the early months of 1948. Monetary and fiscal policies were directed toward reducing the influence of credit expansion in furthering inflation. In view of the wartime growth of the public debt, however, and the responsibility of the Federal Reserve System for maintaining an orderly market for Government securities, the Federal Reserve authorities were unable to make use of established instruments to restrain credit expansion to the extent that was previously possible. Accordingly, the Board of Governors recommended to the Congress the adoption of legislation that would restore to the System the power to impose more effective restraints. Total demand by consumers, businesses, and government, based on rising incomes, on the use of previously accumulated savings, and on new borrowing, exceeded the capacity of the economy to supply goods and services. Aggregate output, which at the beginning of 1947 was larger than in any previous peacetime period, showed little further growth in the course of the year. Prices rose under the pressure of vigorous demands, and the total value of the nation's product of goods and services continued to increase. Employment was close to the maximum level possible with the existing labor force. The large volume of employment, rising wage rates, high prices for farm products, and large profits by businesses were reflected in a further growth of national income. Consumer expenditures, which had necessarily been less than income during the war period because of the scarcity of goods available for purchase and the effect of rationing and price controls, increased after the war more rapidly than personal incomes. This reflected the increased availability of goods and the willingness of many consumers to spend freely notwithstanding sharply advanced prices. Many consumers drew upon their large wartime accumulations of savings and others borrowed to supplement current incomes. Although current personal savings were considerably below the abnormally high wartime level, individuals in the aggregate continued to add to their holdings of liquid assets. Heavy business expenditures for equipment, plant, and inventories, prompted by expanding markets and increased earnings, added to the total volume of buying. Farmers, with incomes at record high levels, were likewise active buyers of equipment, as well as of consumers' goods. There was also a sharp expansion in expenditures of State and local governments. Growing domestic expenditures were reinforced by exceptionally active demand for American goods from abroad, reflecting acute needs on the part of war-ravaged Europe and large purchasing power on the part of other countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 ANNUAL REPORT OF BOARD OF GOVERNORS Expenditures by the Federal Government in 1947 were an important factor in total demand, as measured by peacetime standards, although somewhat smaller than in 1946. At the same time, Government cash receipts exceeded cash payments, and a substantial amount of Government securities was retired, particularly of bank-held securities. These fiscal and debt-management developments had an anti-inflationary impact. They not only withdrew funds from current incomes of businesses and individuals and thereby reduced amounts available for spending; they also had the effect of withdrawing reserves from banks, thereby making it necessary for many banks to liquidate Government securities in order to maintain their reserve positions and at the same time meet the growing demand for loans. Increased expenditures by businesses and by State and local governments were financed in part by a large volume of security offerings for new money and a rapid expansion of bank loans. Growing investment in housing resulted in an expansion of mortgage loans, and consumer credit also increased substantially. Vigorous and widespread bank credit demand in 1947 stemmed largely from forces accompanying the high level of economic activity and sharply rising prices. Some of the loans extended by banks facilitated expansion in production of goods and services but, since there was little over-all increase in the total volume of output, the additional money supplied by increases in bank loans was an important inflationary factor. Some of the funds made available through bank loans were used by businesses to bid for scarce materials and manpower or by consumers to swell the demand for limited supplies of goods and services. Thus by borrowing from banks some producers were able to bid away productive resources from others, who in turn were induced by active business conditions to seek additional credit with which to protect their own operations. Similarly, borrowing by consumers was a factor in the rising prices of many consumer items. Some borrowers, moreover, encouraged by inflationary price advances, sought bank loans to purchase and withhold supplies from the market. Loans of this type retarded production and stimulated price advances. In summary, inflationary developments, which had begun because of wartime shortages of goods in relation to income, were carried forward through 1947 by a rising spiral of costs, prices, and incomes, supported by use of past savings and by substantial credit expansion. With additions to the supply of domestic goods limited, with supplies from abroad still small and needs large, with the economy's total expenditures increasing, and with an already abundant money supply and capacity for further credit expansion, the threat of further inflation continued into 1948. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM .3 MONETARY POLICY IN 1947 Policies pursued by the Federal Reserve authorities since 1946, together with measures adopted by the Treasury in connection with management of the public debt, have been designed to absorb bank deposits and bank reserves and to restrain further over-all monetary expansion. With a vigorous demand for loans on the part of nearly all groups of borrowers and with decreases in net earnings, banks have been under pressure to expand their loans. Funds to meet current demands for credit have been made available by the large inflow of gold or have been readily obtainable by banks through selling some part of their greatly expanded holdings of Government securities. Reserves have also been supplied more recently through sales of Government securities by nonbank investors. In the absence of other buyers, a large portion of the securities offered for sale have been purchased by the Federal Reserve Banks in accordance with the System's policy of maintaining an orderly and stable market for the vast volume of Government securities outstanding. Effective limitations on credit expansion could be accomplished only by absorption of bank reserves through a reduction in Federal Reserve holdings of Government securities or by voluntary restraint on the part of borrowers and lenders. Since banks, and at times during the year other investors as well, were selling Government securities on balance in order to obtain funds for other purposes, it was not possible for the Reserve System to reduce its holdings to the extent necessary. In any event, a vigorous attempt to do so would have brought about disorderly conditions in the market for Government securities with widespread repercussions throughout the economy. Some restraint was effected through the use of an excess of Treasury cash receipts over expenditures to retire Government securities held by the Federal Reserve Banks. This excess, which reflected not only a small surplus in budget accounts but also receipts for Government trust accounts invested in special issues and sales of new issues of nonmarketable securities in excess of redemptions, represented the balance of funds being withdrawn from banks by Treasury transactions. When used to retire securities held by the Reserve Banks, these funds are not returned to the market, as they would be if used to retire securities held by others. Banks losing funds through these transactions had to sell Government securities in order to maintain their reserve positions, and particularly to expand loans. These securities, if not taken by other buyers, were purchased by the Federal Reserve Banks, which thereby made additional reserves available to banks. Even though securities were readily salable by banks, the need to sell securities to adjust reserve positions and make loans was a factor of restraint on credit expansion by some banks. During the early months of 1947, banks obtained reserves from the gold inflow and a seasonal return of currency from circulation. Although the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF BOARD OF GOVERNORS Treasury had a large excess of cash receipts over expenditures, much of this excess was returned to the banks through substantial retirement of securities held by commercial banks and other holders. In this period, therefore, banks were able to meet substantial losses of deposits and also expand their loans. In the second quarter of the year, a larger portion of debt retirements were of securities held by Federal Reserve Banks, including a portion of the weekly issues of Treasury bills. These operations utilized Treasury balances accumulated during the first quarter in a manner that did not add to reserves. Bank reserves were increased, however, by the gold inflow, as is shown in the accompanying chart, and bank loans and deposits increased. MEMBER BANK RESERVES, RESERVE BANK CREDIT, AND RELATED ITEMS BILLIONS OF DOLLARS WEDNESDAY FIGURES BILLIONS OF DOLLARS 30 30 .25 25 20 20 15 i r TREASURY CASH AND DEPOSITS. 1945 1946 1947 1948 In the middle part of the year, there was a strong demand for Government bonds on the part of banks and other investors. The Treasury sold substantial amounts of marketable bonds from Government trust funds to meet some of this demand. These sales withdrew funds from the banks which were used to retire maturing debt. There was a growth in the total of bank loans and investments and, notwithstanding the continued gold inflow, banks sold certificates to the Federal Reserve in order to obtain additional reserves. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 5 Beginning in July the Federal Reserve System and the Treasury adopted measures to permit some rise in interest rates on short-term Government securities in order to increase their attractiveness to banks and other investors and to place an additional restraint on further monetary expansion. The System discontinued its buying rate on Treasury bills, which had been fixed at Y% per cent since 1942. The rate on bills rose during the remainder of the year to nearly 1 per cent, as is shown in the chart. The length of term to maturity of newly offered Treasury certificates was shortened in August and September and subsequently higher issuing rates were placed on new issues; these rates rose from % per cent to iJ/% per cent by the end of the year. In October the Treasury sold to institutional investors a 2,y per cent long- 2 term, nonmarketable bond, redeemable at a discount prior to maturity. This issue, together with sales of marketable securities from Government trust funds, absorbed funds seeking investment. After October Federal Reserve holdings of maturing securities other than bills were paid off in full. In this way the Treasury excess of cash receipts was withdrawn from the market and not put back, thereby exerting a maximum of pressure on the reserve position of banks. YIELDS ON TREASURY AND CORPORATE SECURITIES 1944 1945 1946 1947 1948 NOTE: Latest figures shown are for week ended Apr. 3, 1948. The Treasury series include all securities within the classes specified with the following exceptions: the 3-5 year series and, since Dec. 15, 1945, the 7-9 year series, include only selected issues. For data, see Federal Reserve Bulletin for April 1948, tables on p. 427. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

6 ANNUAL REPORT OF BOARD OF GOVERNORS These official measures, designed to restrict the supply of available funds, were accompanied by increased demand for bank credit and for investment funds. Offerings of corporate securities increased and those of State and local government issues continued in large volume; there was a growing demand for mortgage and consumer credit as well as for commercial loans. As a result, bank credit expanded sharply in the last half of 1947. Growing demands for funds, coupled with measures to absorb the supply available for investment and to restrict credit extension, resulted in a rise in money rates and bond yields during the last half of 1947. In October this movement began to affect the Government bond market. During part of November and December, the Federal Reserve and the Treasury through limited purchases supported prices of Government bonds at the levels they had reached in the market, which were in most cases still substantially above par. On December 24 prices of Treasury bonds were permitted to decline to a new level, which maintained the 2Y/ per cent yield on the longest-term 2 Treasury bond and yields on other issues at appropriate levels in relation to this rate and to the i1/^ per cent rate on Treasury certificates. The Federal Reserve System became an active buyer at the new level. Large amounts of Treasury bonds were purchased by the Reserve Banks during December 1947 and the early weeks of 1948 in providing support to the market. A substantial portion of these purchases were from insurance companies and other institutional investors and some were from banks. At the same time banks, as well as other investors, increased their holdings of Treasury bills, certificates, and notes. Since these were largely purchased from Federal Reserve accounts and since during the period the Treasury had a substantial cash surplus, which it continued to use to retire securities held by the Federal Reserve Banks, the total Federal Reserve portfolio of Government securities declined during the early weeks of 1948. In the middle of January 1948, as a measure of restraint upon the use of Federal Reserve Bank credit, the Federal Reserve Banks increased their discount rates on advances to member banks from I to 1^ per cent. The Board of Governors also took action late in January to increase from 20 to 22 per cent, effective February 2y^ 1948, the reserves required to be maintained against net demand deposits by member banks in central reserve cities (New York and Chicago). The requirement for banks in these cities had been at 20 per cent since the latter part of 1942, when it had been reduced from 26 per cent, the maximum permitted under existing law. In view of the expanding volume of bank lending and the accompanying inflationary developments, the Federal and State bank-supervisory agencies issued in November a joint statement urging banks to curtail speculative loans, to guard against overextension of consumer credit, and to confine financing to loans which would help production and not merely increase consumer demand. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 7 Toward the end of 1947 the American Bankers Association sponsored an organized effort by banking leaders to encourage voluntary restraint on inflationary bank credit extension among the country's 15,000 commercial banks. To the extent that individual banks restrict voluntarily their lending and investing programs, anti-inflationary monetary and supervisory policies pursued by the Federal Reserve System and the Treasury are reinforced and made more effective. Such voluntary action, to be effective in restricting credit expansion, requires the adoption by individual banks of rigid standards in all lending operations, with a view to preventing further expansion in the total volume of bank deposits as well as avoiding loans that may involve a high degree of risk. INADEQUACY OF EXISTING MONETARY INSTRUMENTS Since 1945 the Federal Reserve authorities have been confronted by a redundant money supply and demands on the part of banks for additional reserves to support further credit expansion. In this situation, which was largely created through the processes of war finance, the central problem of monetary policy has been to restrain further growth in bank credit, which would add to an already excessive supply of money and thereby increase postwar inflationary pressures. In view of the large volume and widespread distribution of Government securities, which can be sold to the Federal Reserve Banks, thereby creating additional bank reserves, and in view of the need for assuring support to the market for these securities, customary instruments of monetary policy have had only limited applicability to the restraint of credit expansion. Accordingly, in recent Annual Reports and in other public statements the Board has pointed out the present inadequacies of these instruments. The commercial banks of the country hold nearly 70 billion dollars of Government securities, and others, excluding Government agencies and the Federal Reserve, hold another 70 billion of marketable issues that can be readily sold, not to mention some 60 billion of nonmarketable issues redeemable practically on demand. Substantial amounts of marketable issues are regularly being bought and sold in the market, and constant Federal Reserve operations are essential for the maintenance of an orderly market and reasonable stability of prices. In these circumstances, it is not possible for the System to confine its open market operations to meeting the economy's current needs for bank credit. To permit a gradual decline in prices of Government securities, moreover, might result in heavy liquidation of investor holdings. Inflationary potentialities latent in the postwar monetary situation and limitations of the Reserve System's statutory powers for exerting an effective anti-inflationary influence under conditions brought about by the war were first pointed out in the Board's Annual Report for 1945. Developments since that time have emphasized the dilemma of the System in undertaking restrictive action within the existing framework of its authority while maintaining Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

8 ANNUAL REPORT OF BOARD OF GOVERNORS a responsibility for the orderliness and stability of the Government securities market. The Board believes that it would be unwise to set aside this responsibility in view of likely adverse effects on financial institutions, on the Government's fiscal and debt-management operations, and on the financial position of business. After extensive study of the problem of bank credit restraints, the Board concluded that, in order to be in a position to meet further contingencies of inflationary bank credit expansion without abandoning support of the Government securities market, some workable addition to the System's existing authority may be needed, at least on a temporary basis. Rapid bank credit expansion during the second half of 1947 clearly indicated that existing restraints are not adequate for these objectives. In response to a request from committees of Congress, in a session called to consider emergency measures to aid European recovery and to cope with inflationary developments in the economy, the Chairman of the Board of Governors presented an analysis of the credit situation and the Board's proposal for legislation to permit the imposition of more effective restraints. Strengthening of monetary policy to regulate over-all bank credit expansion in accordance with the economy's needs could be accomplished by legislation extending authority to increase the statutory reserve requirements of member banks and to require nonmember banks to hold additional reserves in an amount corresponding to the increase for member banks. In adjusting to higher reserve requirements, banks would be obliged to sell Government securities and thus to reduce their earning assets. Late in 1940, the Board of Governors, the Presidents of the Federal Reserve Banks, and the Federal Advisory Council, in recognition of the inflationary dangers presented by imminent war, recommended to the Congress that additional authority to raise basic reserve requirements for member banks be granted to the Federal Reserve System and that nonmember banks be made subject to similar requirements. In its Annual Reports for 1945 and 1946, the Board again urged such an authority as a possible means of meeting the postwar problem of regulating the pace of monetary expansion. Over the longer run, authority to vary the level of primary reserve requirements might well be adjusted to a revised basis of reserve requirements for individual banks. The present structure of reserve requirements is based on cities in which banks are located and traces back to the National Banking Act, under which banks in certain designated cities were authorized to hold the basic reserves of other banks. A new system of reserve requirements related to the type of deposit business which individual banks perform might be substituted for this outmoded set of standards. Under the new pattern all banks should be required to maintain the same amount of reserves against any one type of deposit and variations in requirements should be entirely in accord- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 9 ance with the type of deposit, e.g., interbank balances, other demand deposits, and savings deposits. This would greatly moderate the arbitrary inequities among banks which result from existing statutory requirements. In addition, vault cash should be made eligible as a reserve asset. The role of interbank balances in our banking system could be given greater recognition, but in such a way that shifts in correspondent balances would not affect the reserve position of the banking system as a whole. An alternative solution to the current problem of restrictive monetary policy, which wTould not require banks to reduce their holdings of earning assets, would be a temporary special reserve authority along the lines proposed by the Board to the called session of the 8oth Congress. Under this plan banks were not to be required to add to their reserve balances with Federal Reserve Banks, but would be permitted to hold as special reserves certain cash assets not now eligible as reserves for member banks, and in addition certain earning assets, namely, Treasury bills, certificates, and short-term notes. Specified cash assets in excess of existing reserve requirements and customary operating funds would be counted toward the special reserve, and an allowance of 20 per cent of demand deposits and 6 per cent of time deposits was proposed as an adequate allowance for these established banking needs. Maximum statutory limits of 25 per cent of gross demand deposits and 10 per cent of time deposits were suggested for the special reserve requirement. Under this measure banks would be restricted as to the amount and types of securities they could sell to obtain additional reserves but would not have to reduce their total holdings of securities in order to meet the requirement. Most banks would probably find it unnecessary to make any adjustment in existing assets at the time of the initial imposition of the requirement. The authority would make it possible for the Federal Open Market Committee to require banks to immobilize a portion of their greatly expanded holdings of Government securities instead of permitting them to treat these holdings as excess reserves, which can be used at will to expand loans. The special reserve requirement could be adjusted by the Committee from time to time in accordance with changes in reserves resulting from gold or currency movements or from purchases or sales of Government securities by the Federal Reserve Banks. The special requirement would not compel any bank to hold Government securities if it preferred to hold cash assets. It would, however, encourage the holding of short-term Government securities and help to maintain a stable market for such issues. The authority, by thus partially insulating a portion of the public debt, would make it possible to limit the volume and raise the cost of private credit without necessarily increasing the interest cost to the Government. It would not prevent banks from obtaining additional funds to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

IO ANNUAL REPORT OF BOARD OF GOVERNORS meet deposit withdrawals or make essential loans, but would impose some restraint on credit expansion. The Board believes that the proposed plan would be the most effective and practical method of dealing with the present monetary and credit situation because it could be used to exert pressures at the places where restraint on bank credit expansion is needed, namely, in the field of private loans. At the same time the plan would protect the interests of the Government, the general public, and the banking system. Use of temporary authority to increase commercial bank reserve requirements, on the basis of either an extension of the existing pattern or a special reserve, would be subject to proper statutory safeguards and governed by the continuation or resumption of excessively rapid bank credit expansion. If present inflationary pressures should relax, the authority need not be applied, or if already applied, its requirements could be eased or withdrawn if necessary to discourage liquidation of bank credit. Potential expansion of bank credit on the basis of any increase in reserves could be reduced by higher levels of reserve requirements. In addition, provision of authority to establish such levels would enable the Federal Reserve System to use its customary instruments of open market operations and discount rates with greater effectiveness and flexibility than postwar conditions have heretofore permitted. Another measure to help curb prevailing inflationary credit tendencies, recommended by the Board to the 8oth Congress, is the re-establishment of control over the terms of consumer instalment credit. Regulation of consumer credit by the Federal Reserve System, which had been in effect under Executive Order since September I, 1941, was terminated on November 1, 1947, by congressional action. Temporary restoration of the Board's authority, so far as it related to consumer instalment credit, was subsequently approved by the Senate—in December, by S. J. Res. 157; the House of Representatives referred the resolution to its Committee on Banking and Currency, which has taken no action on the matter. The Board favors this legislation as a timely anti-inflationary measure. The Board continues to recommend, as an anticyclical measure, the enactment of permanent legislation authorizing the regulation of consumer instalment credit. For the reasons set forth in the Board's Annual Reports for 1945 and 1946, permanent authority would assist in "the over-all program of stabilizing the national economy at a high level of production and employment." Re-establishment of this control at the present time would help to dampen consumer demand, especially for durable goods, financed on time-payment plans. This would help to restrain further inflationary growth in consumer expenditures and reduce upward pressures on consumer and other prices. Consumer instalment credit regulation would also discourage many American families from going too heavily into debt on easy terms for goods, in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM I I many cases of inferior quality, selling at inflated prices. In this way, it would assist in deferring consumer buying until such time as inflationary tendencies have abated and an increase of consumer expenditures would be desirable in the interest of general economic stability. It would also diminish the deflationary effects of debt liquidation in a period of declining incomes. The Board fully recognizes that the current inflationary problem has its genesis largely in the monetary upheaval due to war expenditures and also that many of the basic and continuing causes of present inflationary developments lie outside the field of monetary and banking matters. The Board, nevertheless, believes that the Federal Reserve System should be prepared to take such action in the monetary field as seems necessary to help accomplish the purpose for which the System was established, namely, to provide the basis for a supply of money and credit regulated to the best interests of the economy. LEGISLATIVE PROPOSALS As stated in the previous section, the Board recommended to Congress in 1947 specific legislation to authorize the establishment of a temporary special reserve requirement on commercial banks and also to restore authority to regulate consumer instalment credit. These proposals were especially designed to deal with current inflationary developments in the economy. Other legislative proposals made by the Board were the following. Bank holding company legislation. The Board has repeatedly pointed out the inadequacy of the existing law relating to bank holding companies and the need for new legislation to provide more effective supervision and control of such companies. The Board has recommended legislation which would treat bank holding companies in much the same manner as banks themselves and include provisions regulating expansion and requiring the divorcement of all activities unrelated to banking. During 1947, hearings were held by the Senate and House Committees on Banking and Currency, and the Senate Committee reported favorably a bill, S. 829, designed to carry out the Board's recommendations. The Board believes that this legislation is urgently needed and that action with respect to it should not be delayed. Reserve Bank guarantee of loans to business. The Board again recommends the enactment of legislation, discussed in its Annual Report for 1946, which would give the Federal Reserve Banks more effective authority to guarantee in part business loans made through established banking channels. This proposal is designed primarily to strengthen and make more effective the existing facilities for financing smaller business enterprises. It is intended particularly to assure the availability of long-term loans to supply necessary capital which such businesses could not otherwise obtain. Section 13b of the Federal Reserve Act now authorizes the Federal Reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

12 ANNUAL REPORT OF BOARD OF GOVERNORS Banks to make and to guarantee industrial loans, but it contains provisions which are so restrictive as to impair seriously the ability of the Reserve Banks to assist in business financing. Under the Board's proposal, Section 13b would be repealed and the authority to make loans directly to business enterprises would be eliminated. In lieu of Section 13b, a new statutory provision would be enacted which would give the Reserve Banks more adequate authority to guarantee loans than they now possess. The maximum maturity of a guaranteed loan would be 10 years, and the maximum proportion of a loan which could be guaranteed would be 90 per cent. With the repeal of Section 13b, the Reserve Banks would be required to return funds heretofore advanced to them by the Treasury for use in their industrial loan activities. The appropriation of about 139 million dollars available under existing law for industrial loan operations of the Reserve Banks would be repealed and Government funds no longer would be used for this purpose. Hearings on the Board's proposal were held by the Senate and House Committees on Banking and Currency during 1947 and the Senate bill, S. 408, was reported favorably by the Senate Committee. While the proposed authority would not be used extensively under existing conditions, the Board believes that this legislation should be enacted to provide stand-by authority for use as the need arises. Capital requirements for member banks. As stated in its Annual Report for 1946, the Board believes that the law governing the establishment of branches by national and State member banks should be amended to eliminate requirements, particularly with respect to capital, which result in unwarranted discrimination against these classes of banks. It also believes that consideration should be given to the modification of the capital requirements for the admission of State banks to membership in the Federal Reserve System. GOVERNMENT FINANCE Development of a budget surplus in 1947, for the first calendar year since 1930, was an anti-inflationary influence. This surplus amounted to only 1.8 billion dollars but, as is indicated in the accompanying table, it compared with a deficit of 3.5 billion in 1946 and one of 43.7 billion in 1945. By using this surplus and drawing down the balance in its general fund, the Treasury reduced the public debt by 2.2 billion dollars to 257 billion. Moreover, as previously pointed out, by using cash received from the sale of nonmarketable securities, the marketable public debt was reduced from 177 billion dollars to 166 billion, and a large part of this decline was in the holdings of the banking system. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM BUDGET EXPENDITURES AND RECEIPTS AND CHANGES IN PUBLIC DEBT [In billions of dollars] Calendar year 1947 1946 1945 Expenditures1 42.1 45.1 89.8 44.0 41.6 46.0 Net receipts + 1.8 -3.5 -43.7 Budget surplus (+) or deficit (—) Change in: -0.4 -22.5 + 3.8 General fund balance -2.2 -19.0 + 47.5 Gross public debt -10.9 -22.2 +37.1 Marketable public debt 1 Including net transactions of trust accounts, etc., and clearing account items, which are not ordinarily reflected in the budget surplus or deficit. Total marketable debt that matured or was called during the year amounted to 38 billion dollars, excluding weekly maturities of Treasury bills. Of this total, 30 billion consisted of certificates, 6.3 billion of notes, and 1.5 billion of bonds. About 9 billion of these redemptions were paid off in cash and the remainder were refunded into certificates and short-term notes. In addition, Treasury bills in the amount of nearly 2 billion dollars were paid in cash. Major changes in the composition of the marketable and nonmarketable debt are shown in the following table. PUBLIC DEBT OUTSTANDING, BY TYPE OF ISSUE1 [Par value, in billions of dollars] Type of issue 1947 1946 1945 Interest-bearing debt: total 254.2 257.6 275.7 Marketable issues: total 165.8 176.6 198.8 Treasury bills 15.1 17.0 17.0 Certificates 21.2 30.0 38.2 Treasury notes 11.4 10.1 23.0 Treasury bonds, due or callable: Within 1 year 6.4 1.5 2.3 1-5 years 46.4 .35.8 25.3 After 5 years 65.0 82.0 92.8 Other 0.2 0.2 0.2 Nonmarketable issues: total2.. 59.5 56.5 56.9 Savings bonds 52.1 49.8 48.2 Savings notes 5.4 5.7 8.2 Armed forces leave bonds. 0.8 0.6 Investment bonds 1.0 Depositary bonds 0.3 0.3 0.5 . Special issues 29.0 21>.6 20.0 Matured debt and debt bearing no interest... 2.7 1.5 2.4 Gross public debt 256.9 259.1 278.1 1 Excludes guaranteed securities, which are included in the table on p. 15. 2 Excludes special issues, which are shown separately below. NOTE: Figures are for Dec. 31; details may not add to totals because of rounding. Changes in ownership of the public debt resulted primarily from the debtretirement program but also to an important extent from purchases and sales in the market. The largest decline—nearly 6 billion dollars—was in holdings Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF BOARD OF GOVERNORS of commercial banks; about two-thirds of this reduction reflected retirement of matured issues and the remainder sales to maintain reserve positions in view of Treasury withdrawals of funds and expanding demand for loans. The net decline in P^ederal Reserve holdings of less than a billion dollars reflected retirements of about 3 billion offset by purchases in the market. Individuals added to their holdings of savings bonds. State and local governments further increased their holdings of marketable securities, while corporations continued to reduce theirs. These and other changes are reflected in the accompanying chart. OWNERSHIP OF U. S. GOVERNMENT SECURITIES BILLIONS OF DOLLARS BILLIONS OF DOLLARS 100 100 80 80 60 60 Every class of investor, but particularly insurance companies, commercial banks, and mutual savings banks, offered bank-eligible bonds for sale in the market. Net offerings were absorbed by the Federal Reserve in support of the market. Restricted bonds were sold from United States agency accounts during the summer in order to restrain declines in long-term interest rates. They were originally taken up by institutional investors, but subsequently these investors sold restricted issues, which were purchased by the Treasury and the Federal Reserve. Mutual savings banks purchased enough restricted bonds to cancel their sales of bank-eligible bonds. Commercial banks and to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM I 5 a small extent insurance companies, in addition to selling bonds, sold certificates and notes principally to the Federal Reserve. On the other hand, commercial banks, and to a lesser extent corporations, acquired Treasury bills from the Federal Reserve. Net changes in holdings of the various classes of issues by the major groups of holders are shown in the table. CHANGES IN OWNERSHIP OF UNITED STATES GOVERNMENT SECURITIES DURING 1947 [Partly estimated; par value, in billions of dollars] Type of issue st T a o n o u d t t a i - n l g a t U g r e u .S n s c . t ie G fu s o n a v d n ' s t dR F B e e a s d e n e r k r v a s e l m b C a e o n r m c k ia s - l M s b a a v u n i t n k u g s a s lIn p s c a u o n r m a ie n - s ce m I c n u o d n r i p i v c 's ' i s p , , 's, and others Marketable issues: total -10.9 -1.0 -0.8 -5.8 C1) -1.4 -1.9 Treasury bills -1.9 C1) -3.3 +0.9 (*) +0.1 +0.4 Certificates -8.8 C1) -0.7 -5.1 -0.1 -0.2 -2.7 Treasury notes + 1.3 C1) + 1.1 -0.8 -0.1 -0.4 + 1.5 Treasury bonds: total -1.5 -1.0 -0.8 + 0.2 -1.0 -1.0 Due or callable: +2.1 Within 1 year + 5.0 C1) +0.2 + 3.7 +0.2 +0.1 +0.8 1-5 years + 10.6 -0.2 +0.8 + 6.7 +0.8 + 1.0 + 1.5 5-10 years -17.0 -0.2 +0.4 -11.2 -1.5 -2.0 -2.6 After 10 years: Bank eligible +0.1 +0.1 +0.1 C1) -0.2 -0.1 Restricted .... -0.8 +0.6 -0.1 +0.2 -0.5 Nonmar O ke th ta er ble issues:total2. +2.8 +0.1 -0 C1 . ) 1 + C 0. 1 6 ) +0.4 + C 2 1 . ) 3 +0.2 Special issues +4.4 +4.4 Total, interest-bearing securities8 -3.7 +3.4 -0.8 -5.9 +0.2 -1.0 +0.4 1 Less than .05 billion dollars, 2 Excludes special issues, which are shown separately below. s Includes guaranteed securities, which are excluded in the table on p. 13. Note: Detailed figures may not add to totals because of roundings. Treasury transactions through the surplus and through sales of nonmarketable securities, as has been explained in other sections of this report, had the effect of drawing funds from bank deposits and bank reserves, while retirement of securities returned a portion of the funds. Factors that expanded deposits and reserves, however, more than offset the drain from Treasury operations. BANK CREDIT DEVELOPMENTS Strong demand for bank credit by most of the major users other than the United States Government—businesses, consumers, real estate owners, and State and local governments—was the most striking characteristic^ of the banking situation in 1947. Bank loans increased by about 7 billion dollars, the largest annual increase in the history of American banking. This loan growth, which followed a sharp revival of bank lending activities in 1945 and 1946, raised the year-end volume of outstanding loans at commercial banks above 38 billion dollars, some 2 billion higher than the previous peak in 1929. This growth in loans, together with an increase of about a billion dollars in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

i6 ANNUAL REPORT OF BOARD OF GOVERNORS holdings of other securities, as is shown in the chart, exceeded the further decrease in commercial bank portfolios of United States Government securities. As a consequence, there was a growth in total loans and investments, following a decline in 1946. Bank reserves also increased, as a result of an inflow of gold, which was only partly offset by other factors affecting reserves. Total deposits at commercial banks showed a renewed growth, following the reduction due to the large withdrawals from war loan accounts in 1946. LOANS AND INVESTMENTS OF ALL COMMERCIAL BANKS BILLIONS BILLIONS OF DOLLARS JUNE AND DECEMBER 1929 - 1946; LAST WEDNESDAY OF MONTH 1947 OF DOLLARS 114400 140 - - > 120 irOTAL LOANS AND INYESTMENTS/ \ / 100 / < y \ 80 / \ 1 J / U. S. 6C)V'T 60 4 TIES 60 f 40 —- y LOAMS . 20 pjr——> rstra ~~~• * I— OTHER SECURlTIES 7 i 1 1 0 1929 1931 1937 1939 1945 1947 NOTE: Figures are for all commercial banks in the United States. U. S. Government securities and other securities are for June dates only through 1935. Monthly figures are partly estimated. Nature of loan expansion. Use of bank credit by business continued to grow in 1947, as is shown in the chart on the following page. During the year commercial and industrial loans at all insured commercial banks increased by close to 4 billion dollars, nearly the same growth as occurred in 1946. At the end of the year bank loans to business were over 18 billion dollars, more than twice the amount outstanding at the cessation of hostilities in mid-1945. Vigorous business demand for bank credit reflected sharply increased needs for working capital at current levels of costs, prices, and sales, as well as an extraordinarily large current volume of expenditures for plant and equipment. Many companies, particularly those engaged in processing foods and other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM COMMERCIAL BANK LOANS ALL INSURED BANKS BILLIONS OF DOLLARS CALL REPORT DATES BILLIONS OF DOLLARS 18 16 LOANS FOR PURCHASING OR CARRYING SECURITIES: 1939 1940 1941 1942 1943 1944 1945 1946 1947 NOTE: All insured commercial banks in the United States. Commercial loans include commercial and industrial loans, open market commercial paper, and acceptances. Consumer loans are partly estimated prior to Dec. 31, 1942. agricultural commodities, used bank credit because of higher raw material prices and actual and anticipated advances in other business costs such as wages and transportation expenses. Some concerns borrowed to finance a growing volume of business. A part of the expenditures of big utility companies, oil companies, and manufacturers of machinery were financed out of bank loans. Many of these loans were arranged on a term basis, while many were short-term advances. In numerous instances, bank loans were used as an interim source of funds in anticipation of retained profits or until new security issues were floated. Their effect, however, was to expand the volume of bank credit. Borrowings of instalment finance companies at banks, which are included in business loans, reflect a part of the growth in consumer credit. Farmers as a group have shown little increase in their borrowing at banks since the end of the war. Much of the growth that has occurred is attributable to credit grants for purchase of farm machinery and equipment and for other capital improvements. Loans on farm real estate by banks have increased only moderately. Active residential and nonresidential construction, the extensive relocation of families in recent years, and rising real estate values resulted in further Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

18 ANNUAL REPORT OF BOARD OF GOVERNORS extension of bank credit to owners of urban real estate. Urban mortgage loans of insured commercial banks increased 2 billion dollars over the year and at the end of 1947 amounted to 8.5 billion, or almost one-fourth of the banks' total loan portfolios. A substantially larger portion of new urban mortgage business was handled by banks in 1947 than in prewar years. Consumers had recourse to bank credit in increasing volume in 1947 to finance purchases of durable goods, expenditures for current living, and outlays for other purchases. Bank loans to consumers increased 1.6 billion dollars, largely in instalment loans for repair and modernization of houses and for purchases of automobiles and other consumer durable goods. The increase in total consumer credit, including that extended by dealers and by nonbank lenders as well as by banks, approximated 3.2 billion dollars. This was about one-third of a billion less than the increase during 1946, and most of the difference was due to a smaller increase in charge accounts. For consumer instalment credit, on the other hand, the increase of more than 2 billion dollars was one-third again as large as the growth in 1946. The large increase in consumer instalment credit reflected the influence of such factors as growing supplies of consumer durable goods, a substantial increase in loans for the repair and modernization of residental property, further resort to borrowing by consumers pressed by the rising cost of living, and active promotional work by credit grantors. Consumer instalment credit was under restraint imposed by the Board's Regulation W until November 1, when this regulation was terminated by congressional action. Bank loans for purchasing and carrying securities declined by a further billion dollars in 1947* This decline reflected continued liquidation of the substantial volume of bank credit extended in connection with purchase of Government securities in the Victory Loan Drive at the end of 1945. Loans for purchasing or carrying securities other than United States Government securities changed little throughout the year and maintained an average level slightly below that for 1946. There was a small increase, amounting to less than 50 million dollars, in credit extended for this purpose by brokers to their customers, but these credits continued generally at around the lowest levels of the past three decades. The relative stability in credit to purchase or carry securities accompanied little change in the level of stock prices and the volume of trading on the New York Stock Exchange. A factor in the continued small volume of stock market credit, in contrast to expansion of such credit in most other periods of inflationary developments, was the maintenance of margin requirements at a high level by the Board's Regulations T and U. These requirements, which were raised to the 100 per cent level during 1946, were reduced to 75 per cent effective February 1, 1947. Bank holdings of municipal and corporate securities. State and local governments floated an exceptionally large volume of new securities in 1947, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM and bank portfolios of such securities increased by 900 million dollars. This growth compares with issues for new money of about 2 billion dollars and an increase in the total volume of securities outstanding of somewhat more than a billion. At the end of the year commercial banks held about 5.3 billion of State and local government securities, the largest amount ever held. Several large veterans' bonus issues by States were in part taken by city banks. Country banks expanded their portfolios, largely by subscription to numerous local security offerings of municipalities and other political subdivisions to finance construction projects. Corporate sales of new-money bond issues were large in 1947 but bank holdings of corporate securities did not increase. Growth of deposits. Monetary expansion continued in 1947, and total deposits and currency held by individuals and businesses increased by more than 6 billion dollars. As is shown in the chart, growth was particularly rapid in the last quarter when deposits expanded at a rate of about one billion dollars a month. At the end of 1947, privately held deposits and currency totaled 170 billion dollars, 24 billion more than when hostilities ceased in August 1945 and 107 billion above the level of 1939. Demand deposits of individuals and businesses increased by a net amount BANK DEPOSITS AND CURRENCY BILLIONS OF DOLLARS BILLIONS OF DOLLARS 180 /v 1 . * 160 • T A O N T C ;\ ) L C U D R E Ft P E O N S C IT Y S f< \ / -\-/' /V - A/EXCLUDIh6 140 - /» U. S. GOV 140 / DEPOSIT3 if* i 120 i v' ioo 100 80 y 60 —— ••••Mi [)EMAND DEP A[)JUST 40 40 TIME DEPOSIIrs —< 1 * ** - 20 •*——* ** 1 CURFENCY OUTSIDE BANKS 0 1 1930 1932 1934 1936 1938 1940 1942 1944 1946 NOTE: Figures are partly estimated. Deposits are for all banks in the United States. Demand deposits adjusted exclude U. S. Government and interbank deposits and items in process of collection. Time deposits include deposits in the Postal Savings System and in mutual savings banks. Figures are for June and December, 1929-42; end of month, 1943-46; last Wednesday of month, 1947. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2O ANNUAL REPORT OF BOARD OF GOVERNORS of almost 4 billion dollars. In the first quarter of the year these deposits were drawn down to meet heavy income-tax payments, but in the succeeding three quarters they grew by 6.8 billion dollars. Their total at the end of the year was 87 billion, the largest amount on record. Time deposits at commercial and mutual savings banks increased by about 2.5 billion dollars during the year. The increase, although less than in the war and early postwar periods, was larger than in most previous peacetime years. The slackening rate of growth reflected a substantial reduction in current personal savings from abnormally high wartime levels. Deposit expansion was general throughout the country and occurred at most banks in both large and small centers. Growth was particularly rapid, however, in the middle western and southwestern areas, where it probably reflected in large part the rapid rise in prices of grains and meats. The smallest change was in the northeastern part of the country. Expansion of bank loans was the major factor in the growth of deposits in 1947, as is shown in the accompanying table. A gold inflow of over 3 billion dollars and increased bank holdings of State and local government securities also expanded deposits. A reduction of 1.2 billion dollars in United States Government deposits was an additional factor in private deposit growth. Treasury fiscal and debt-retirement operations, on the other hand, tended to reduce deposit expansion in I947» The Treasury excess of current cash receipts, resulting from the budget surplus and sales of nonmarketable FACTORS IN EXPANSION OF DEPOSIT AND CURRENCY HOLDINGS OF INDIVIDUALS AND BUSINESSES Changes in Amounts Outstanding during 1947 [In billions of dollars, partly estimated] Factors in deposit change Total q F u o a u r r t t e h r q T u h ar ir t d er q S u e a co rt n e d r q F ua ir r s t t er Expansive factors Bank loans + 7.3 + 2.6 + 2.0 + 1.4 + 1.2 Bank holdings of municipal and corporate securities . . . + 1.2 +0.2 +0.5 +0.3 +0.3 Holdings of U. S. Government securities: Commercial and mutual savings banks. . . +0 3 Federal Reserve Banks +0.4 +0.2 Gold certificates + 3.1 +0.8 +0.7 +0.9 +0.8 U. S. Government deposits. . — 1.2 —0 3 -3 2 Other factors, net -0.9 Contractive factors Holdings of U. S. Government securities: Commercial and mutual savings banks. -5 3 — 1 7 -1.7 -2.2 Federal Reserve Banks -0.8 -0.9 -0.5 U S Government deposits +0 5 + 1.8 Other factors, net +0.5 +0.6 +0.4 +0.5 Change in deposits and currency held by individuals and businesses: total +6.2 + 3.5 + 2.6 + 2.8 -2.7 Demand deposits, adjusted + 3.9 +3.0 + 2.1 + 1.7 -2.9 Time deposits . + 2.5 +0.4 +0.4 +0.9 +0.8 Currency outside banks -0.2 +0.1 +0.1 +0.2 -0.6 NOTE: Figures cover all commercial banks, Federal Reserve Banks, mutual savings banks, and the Postal Savings System; interbank items are excluded. Changes for 1947 arc based on figures for the last Wednesday in the first and third quarter and for the June 30 and December 31 call report dates in the second and fourth quarters respectively. Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 21 securities, in the first instance drew upon private deposits. Use of some surplus funds by the Treasury for retirement of securities held by nonbank investors returned funds to private balances. Since most of the Treasury cash surplus was used to retire bank-held debt, however, the deposits drawn down were to a large extent extinguished. It is estimated that the net result of Treasury operations on private bank deposits was a drain of more than 6 billion dollars. Availability of bank reserves. Extension by banks of substantial amounts of credit to individuals, businesses, and State and local governments was made possible in 1947 by an increase in member bank reserves. As is shown in the accompanying table, the banking system acquired about 3 billion dollars of reserves during the year as a consequence of the gold inflow resulting from the large surplus of exports over imports. This increase in bank reserves was offset in part by a shift of funds out of commercial banks by the Treasury and the use of these funds to retire securities held by the Federal Reserve Banks and to increase Treasury balances with the Reserve Banks. The net result was an increase of 700 million dollars in member bank reserve balances. Vigorous demand for bank credit and the desire of bankers to maintain or increase earnings in the face of rising operating costs resulted in substantial bank sales of short-term Government securities to obtain funds to acquire more profitable assets. These securities were largely purchased by the Federal Reserve, and the resulting additions to bank reserves in part offset the effect of the use of excess Treasury receipts to retire securities held by the Reserve Banks. In the period March through June, substantial reduction of Federal Reserve SUPPLY AND USE OF MEMBER BANK RESERVE FUNDS [In millions of dollars] Year ending1 Item December 1947 December 1946 Changes increasing reserves: Gold stock + 2,224 +441 Treasury cash 2-926 -13 Treasury currency +4 + 230 Currency in circulation -60 Reserve Bank credit + 2 Nonmember deposits at Federal Reserve Banks. -395 Treasury deposits at Federal Reserve Banks. . . . -69 Changes decreasing reserves: Reserve Bank credit -1,888 Nonmember deposits at Federal Reserve Banks. + 164 Treasury deposits at Federal Reserve Banks +411 Currency in circulation +545 Other +8 + 113 Member bank reserve balances: total. + 744 +490 Required + 657 + 1,088 Excess + 87 -598 1 Changes based on monthly averages of daily figures for December 1945, 1946, and 1947. 2 The increase in gold stock was substantially smaller than net gold acquisitions from foreign countries because 700 million dollars in gold was contributed by the United States to the International Monetary Fund during the year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

22 ANNUAL REPORT OF BOARD OF GOVERNORS holdings of Government securities by Treasury retirement of marketable securities tended to neutralize the effect of the gold inflow on reserves. Subsequent gold movements were not offset in this way, however, and went to increase member bank reserves and to finance the seasonal increase in currency in circulation late in the year. Since additions to reserves available from the gold inflow were not adequate to meet both the increase in currency circulation and the rapid expansion of bank credit, banks sold some securities to bolster reserve positions in the last quarter. They also benefited in this period by an increase in reserves resulting from Federal Reserve absorption of sales of Government securities by nonbank investors. Treasury operations were almost as restrictive in their effect on bank reserves in 1947 as in 1946, although total operations were much smaller. In 1946 debt retirement was effected by calls on war loan balances at the banks, which had been built up largely during the Victory Loan Drive. These calls in the first instance acted to drain bank deposits and reserves by 29 billion dollars, but 25 billion was returned to bank reserves by the retirement of securities and other Treasury disbursements. The process was largely one of drawing on Treasury deposits at banks to retire Government securities held by banks. It had little net effect on the reserve positions of banks, and it did not affect private deposits and the amount of required reserves, especially since Treasury war loan deposits were at that time not subject to reserve requirements. Cash retirement of securities held by the Reserve System amounted to almost 4.6 billion dollars in 1946. Such retirement in 1947 was little more than 3 billion dollars; in addition there was some increase in Treasury balances at the Reserve Banks, making a total drain on bank reserves through Treasury fiscal and debt retirement operations of 3.5 billion for the year. Bank earnings and earning assets. Member bank net profits after taxes were 653 million dollars in 1947, 105 million lower than in the preceding year and 135 million lower than in the peak year 1945. Net current operating earnings before income taxes were only slightly smaller in 1947 than in 1946 since increased earnings on loans and other earning assets almost entirely offset the decline in earnings on United States Government obligations and increases in all major items of expense. About 43 per cent of net profits was distributed as dividends and the remainder was added to capital accounts. Net profits of member banks were 7.9 per cent of total capital accounts in 1947 as compared with 9.6 per cent in 1946, thus continuing the downward trend of this ratio from the peak of nearly 11 per cent reached in 1945. The declines were due in part to increases in capital accounts. As is shown in the accompanying chart, the present ratio of net profits to total capital accounts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM approximates the level of the late 1920's but is higher than the level of the late 1930's and early 1940's. The upward trend of the ratio of net current earnings before income taxes to total capital accounts was reversed in 1947 when the ratio declined to 11.2 per cent from a high of nearly 12 per cent in 1946. EARNINGS RATIOS OF MEMBER BANKS PERCENTAGES OF CAPITAL ACCOUNTS PER CENT ANNUAL FIGURES PER CENT 1920 1925 1930 1935 1940 1945 NOTE: Net current earnings are total earnings from current operations less current operating expenses. Net profits are net current earnings plus recoveries, profits on securities, etc., less losses and charge-offs and taxes on net income. Capital accounts consist of all forms of capital, including capital notes and debentures, surplus, undivided profits, reserves for contingencies, and other miscellaneous capital accounts. Prior to 1927 profits on securities were included in current earnings; beginning in 1942 taxes on net income were excluded, while recurring depreciation was included, as a current operating expense deduction from earnings. Earning assets of member banks amounted to 98 billion dollars at the close of 1947, an increase of about 1.5 billion during the year. A decline of more than 5 billion dollars in holdings of United States Government obligations during the year was more than offset by an increase of about 7 billion dollars in loans and other securities. Corresponding changes during 1946 had been a decrease of over 15 billion dollars in holdings of United States Government securities and an increase of about 4 billion in holdings of loans and other securities. Low-yield loans for the purpose of purchasing or carrying securities declined further during 1947, both actually and relatively to total loans. Other major classes of loans with higher yields increased, for the most part during the second half of the year. There was a further increase during the year in member bank holdings of State and local government securities. Changes in earning assets during the year are shown in the table on page 24. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

24 ANNUAL REPORT OF BOARD OF GOVERNORS Reflecting debt retirement, shifts in bank portfolios, and increases in yields on short-term Government securities since the middle of 1947, the average yield to member banks from their Government security holdings increased from 1.48 per cent in 1946 to 1.53 in 1947. The average yield on loans also increased, rising from 3.18 per cent to 3.54. This was partly because mem- MEMBER BANK LOANS AND INVESTMENTS [In billions of dollars] Change during year Outstanding Dec. 31, 1947 1947 1946 Loans and investments: total . 97.8 + 1.5 -10.8 Loans: total . 32.6 +5.9 +3.9 Commercial and industrial loans 17.0 +3.8 + 4.2 Agricultural loans 1.0 +0.2 Loans for purchasing or carrying securities 1.9 -1.1 -3.5 Real estate loans 7.1 + 1.8 + 1.9 Consumer loans 4.7 + 1.4 + 1.4 All other, including loans to banks 1.0 -0.1 -0.1 U. S. Government securities, direct and guaranteed: total.. 57.9 -5.1 -15.3 Bills, certificates, and notes 12.6 -4.2 -16.7 Bonds 45.3 -0.9 + 1.4 State and local government securities 4.2 +0.7 +0.3 Other securities 3.1 +0.3 ber banks, particularly reserve city and country banks, tended to hold larger proportions of their loans in the form of higher-yield real estate and consumer loans. Capital accounts. Capital accounts of member banks increased by 369 million dollars in 1947, after having increased by 506 million in 1946 and 621 million in 1945. Retention of profits accounted for the current increase; aggregate sales of additional stock were about the same as retirements of preferred stocks and capital notes held by the Reconstruction Finance Corporation. Dividend payments amounted to 280 million dollars in 1947. The ratio of average total capital accounts to average total assets increased to 6.5 per cent during 1947, capital accounts having increased relatively more than total assets. As is shown in the accompanying chart, this was the second successive year of increase in this ratio. In contrast, the ratio of average total capital accounts to average risk assets, defined to include all assets other than cash and United States Government securities, fell from almost 25 per cent in 1946 to 22 per cent in 1947, the lowest ratio since 1931. The decline from the preceding year resulted from a far greater relative growth in so-called risk assets than in total capital accounts. As has been noted previously, there was an over-all growth of 7 billion dollars in risk assets, including a shift of 5 billion dollars from Government securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM CAPITAL RATIOS OF MEMBER BANKS PERCENTAGES OF TOTAL ASSETS AND "RISK ASSETS*' PER CENT ANNUAL RATES PER CENT 30 30 /-"^ . s /-> 25 \ 25 CAPITAL / TO"RISK ASSETs" \ 20 / 15 15 _^ r.fipfTAI ^"^S^ 10 TO TOTAL ASSETS ^ 1 1 1 1 1 1 1 I 1 i i i i i i I i l i lt 1 1920 1925 1930 1935 1940 1945 NOTE: "Risk assets" represent total assets other than cash assets and U. S. Government securities. Capital and asset figures are based on averages of June and December call date figures 1919-40 and of three or four call date figures thereafter. • Indicates Dec. 31, 1947, call date ratio. BOND MARKET AND MONEY RATES The cost of money increased further in I947> with all of the increase in the second half of the year. At the end of the year long-term rates were close to those prevailing immediately before the war while most short-term rates were near those of the early thirties. Such rates, however, were substantially lower than those of the twenties. Accompanying the increased cost of money, new securities of private corporations and of State and local governments were issued in large volume and bank loans increased substantially. Short-term money rates on United States Government obligations began to rise in July when the Federal Reserve System discontinued the fixed buying rate and repurchase option for Treasury bills issued on or after July 10, 1947. Thereafter rates on Treasury bills, which had been held at y% per cent since 1942, increased sharply, and at the end of the year new issues were yielding almost one per cent. The Treasury also took action to increase yields on Treasury certificates. On August 1 an 11-month % per cent certificate was offered in exchange for a maturing 12-month certificate bearing the same rate. Later a certificate bearing the rate of 1 per cent was issued and in December a 13-month 1% per cent note was offered in exchange for a 12-month % per cent certificate maturing on December 1, as well as for a bond issue maturing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

26 ANNUAL REPORT OF BOARD OF GOVERNORS December 15. This was followed on January 1, 1948 by an exchange offering of a 12-month 1% Per cent certificate. Average yields on 9 to 12-month certificates increased from 0.85 per cent in July to 1.09 per cent in January 1948. Private short-term money rates also firmed somewhat during the last half of 1947. Open market rates on bankers' acceptances, loans to brokers and dealers secured by Government obligations, and commercial paper rose. Some banks also announced increases in the rates charged their commercial and industrial borrowers although the average of such rates continued at a low level. The increase in short-term money rates reflected the pressure of a growing demand for bank credit, which in the third quarter became very large and affected long-term rates. Monetary action to permit some change in shortterm rates introduced a degree of flexibility in the money market. Long-term interest rates on both public and private obligations remained relatively stable prior to September, but in this period excess funds in the market were partly absorbed by substantial sales of marketable Government bonds by Federal agencies and trust funds. Financial institutions, however, largely replenished funds invested in these bonds before the end of September by the sale of other securities to banks. Beginning in September there was a decline in bond prices, with a rise in yields, which was due to many factors that had been accumulating pressure during the two preceding years. Large institutional investors, particularly insurance companies, were confronted with a rapidly increasing demand for funds by home owners, businesses, and State and local governments. In addition, the Treasury offered a new 23/2 per cent long-term nonmarketable bond to savings institutions. Finally, the market was affected by the intensified efforts of monetary authorities to put pressure on bank reserves and restrain credit, and the possibility of future changes in credit policy and interest rates. The rise in long-term interest rates (decline in bond prices), which started in the corporate bond market early in September, proceeded almost uninterruptedly until the middle of October. During these six weeks the yield on high-grade corporate issues increased from 2.52 to 2.70 per cent. The yield on long-term Government bonds remained fairly steady during this period, with the result that the spread between the yields of corporate and Government bonds increased somewhat. In the middle of October the weakness in the corporate bond market spread to Government securities and the yields on taxable Government bonds with a maturity of 15 years or more rose from 2.26 in mid-October to 2.37 per cent in mid-November. At that point the increase was stopped by open market support purchases of these securities by the Federal Reserve System and the Treasury. From mid-November to late December there was practically no change in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 27 yields on long-term Government securities and yields on private long-term obligations fluctuated within a fairly narrow range. On December 24 a new lower support level for Government bonds was established by the Open Market Committee of the Federal Reserve, and yields on Government bonds rose generally to that support level; yields on other types of long-term securities also rose further. The yield on high-grade corporate bonds had risen to 2.91 per cent by the end of the year, that on municipal bonds to 2.46 per cent, and that on long-term Governments to 2.45 per cent. At the end of the year the spread between the yields of high-grade corporate and United States Government bonds was greater than at any time since fully taxable long-term Government • bonds were issued (1941), and the yield on high-grade municipal bonds was higher than the yield on long-term taxable Governments for the first time since early 1942. These changes in the relative costs of different types of long-term money reflected primarily a changing pattern of demand for funds. During the war, corporate and municipal demand for new money was small and Federal Government demand large; during 1946 and 1947, corporate and municipal demand rose considerably while the Federal Government actually reduced the volume of its marketable debt outstanding. The cost of equity funds to corporations also rose somewhat in 1947. Preferred stock yields (dividend-price ratios) fluctuated little during the first three quarters of the year but rose from 3% to 4 per cent during the last quarter. This upward movement reflected primarily the increase in long-term interest rates. Common stock yields, as represented by a dividend-price ratio for industrial issues, were considerably higher at the end of the year (5^ per cent) than at the beginning (4J4 per cent). They have fluctuated widely from year to year in the past, and their average at the end of 1947 was about the average level for the period 1912 to date. In contrast yields on other forms of long-term money have exhibited a marked downward trend since the early twenties. At the end of 1947 they were close to or somewhat below the levels of the late thirties and^ substantially below those of the twenties and early thirties. DEMAND, PRODUCTION, AND PRICES Domestic and foreign demands for goods and services were at exceptionally high levels in 1947 and, although production was in very large volume, inflationary forces continued dominant. Total expenditures for goods and services increased by over 20 billion dollars during the year, as is indicated in the chart, and at the close of the year were at an annual rate of more than 240 billion. Reflecting heavy demands from many sources and inadequate supplies, wholesale commodity prices rose 15 per cent during 1947 and consumer prices advanced 9 per cent. Wage rates increased further, with average Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

28 ANNUAL REPORT OF BOARD OF GOVERNORS hourly earnings of factory workers rising n per cent during the year. Real estate values in farm and urban areas remained at sharply advanced levels or rose somewhat further. GROSS NATIONAL PRODUCT ANNUAL RATES ANNUAL RATES BILLIONS OF DOLLARS SEASONALLY ADJUSTED, QUARTERLY AT ANNUAL RATES BILLIONS OF DOLLARS 250 200 150 100 100 50 1939 1940 (941 1942 1943 1944 1945 1946 1947 NOTE: U. S. Department of Commerce data. In the spring of the year many buyers, who had increased their inventories considerably in 1946, withdrew from the market in the expectation of a decline in prices. As a result there were reductions during the second quarter in output of textiles, shoes, radios, and some other products. The general level of wholesale prices showed little change. Shortages, however, persisted for many industrial products, such as steel and automobiles. Because of unfavorable growing conditions in the United States and abroad, prospects also developed for shortages of agricultural products. The Marshall Program was advanced for Federal financing of a continued large volume of exports to promote economic recovery in Western Europe, and buying by other countries was maintained in substantial volume, despite increasing dollar shortages. Demand for most types of construction expanded, although costs were at very high levels, and new shortages of building materials appeared. A sharp rise in wage rates at coal mines early in July was followed by marked advances in prices of coal and steel products. Requests were announced for large increases in freight rates, and wage rates Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 29 on the railroads were raised. Veterans' terminal leave bonds, amounting to 2 billion dollars, became eligible for cashing in September. As a result of such development, in the second half of the year widespread expectations of lower prices gave way to expectations of higher prices; demands generally expanded; and upward pressures on productive resources and on prices again increased. Production near capacity. As the year ended the physical volume of production was close to practical limits and unemployment was negligible. Total employment increased about 3 per cent during the year and there was little change in the average number of hours worked. Industrial production was slightly larger in December than in January 1947, according to the Board's seasonally adjusted index. Construction activity rose during 1947, but at the end of the year further expansion was limited by shortages of materials. Railroad freight traffic was in about the same volume at the end of 1947 as at the beginning of the year. Altogether, production of goods and services showed only a moderate growth from the early part of 1947 to the end of the year and the possibilities of further increase in the near future were limited. For the year as a whole, production in most parts of the economy was larger than in 1946, a year of transition and of interruptions in activity occasioned by unbalanced supplies and important industrial disputes. Total output at factories and mines, at an average of 187 per cent of the 1935-39 average, was up 10 per cent from the 1946 average of 170, and there was nearly as much expansion in construction activity. In most other lines increases were less marked. Agricultural production, although large, was somewhat below the level of the previous year. Rising demands. The physical volume of supplies available to the market in 1947 failed to keep pace with an unusual combination of rising demands from all sources. With supplies at the year-end only moderately larger, prices were up considerably, and total expenditures for all purposes increased about 10 per cent during the year. This situation was made possible by expanding incomes, further bank credit expansion, continued large holdings of liquid assets, and willingness on the part of buyers to spend freely even with prices at new high levels. Personal incomes were at a seasonally adjusted annual rate of 210 billion dollars in December as compared with 190 billion at the beginning of the year. Wage and salary payments rose by 10 billion dollars or 9 per cent. Farm income increased substantially. Corporate profits after taxes for the year were estimated to have been 17 billion dollars, compared with 12.5 billion in 1946, and there was a further rise in dividend payments. The most marked increases in expenditures during 1947 were for private construction, producers' equipment, and consumer durable goods. Larger expenditures for these goods reflected higher prices as well as increases in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

3O ANNUAL REPORT OF BOARD OF GOVERNORS physical volume and were facilitated by the abundant supply of credit available at low rates. An exceptional instance of this was the practice of financing new veterans' housing with mortgages written for close to the full purchase price of the properties at 4 per cent interest and running for as long as 25 years. Residential construction outlays in the fourth quarter reached a new high level for the postwar period. The increase during 1947 in expenditures for producers' equipment occurred despite the very high level of equipment outlays at the beginning of the year, as compared with other periods of high economic activity such as 1937 and 1929. Inventory accumulation by manufacturers and distributors declined during the first half of the year and apparently was below the 1946 rate of growth. Consumer expenditures expanded about 10 per cent during the year. The increase in purchases of nondurable goods, which was less proportionally than that in outlays for durable goods, reflected higher prices, with increases in physical volume for some nondurable items offset by declines for others. Owing chiefly to the exceptionally high level of food and clothing prices, the proportion of expenditures for nondurable goods to total consumer expenditures continued to be unusually large in 1947 as compared with the relationship in prewar years. On the other hand, a smaller share of expenditures . went for services in 1947, reflecting in part the maintenance of rent controls. Government purchases of goods and services showed a moderate rise in 1947, reflecting a sharp increase in State and local expenditures. Total Federal expenditures were sustained in part by large payments to veterans, interest payments, and aid to foreign countries. The value of recorded merchandise exports in 1947 was 14.5 billion dollars as compared with 9.7 billion in 1946 and a prewar average of 3 billion. After reaching a peak in May exports declined as dollar shortages developed and as new import restrictions abroad became effective. For some products, such as wheat, cotton, and tobacco, exports in 1947 represented 25 to 35 per cent of production, and for cotton and rayon textiles, machinery, steel, and bituminous coal, the proportions ranged from 10 to 15 per cent of production. For most other products, the share going into export markets was much smaller. Merchandise imports were in larger dollar amount than in 1946, reflecting higher prices, but were only about one-third as large as exports. Further price advances. Prices in wholesale and retail markets continued to rise in 1947, although not so rapidly as in the latter part of 1946, when Federal price controls were lifted. Wholesale prices of farm products, foods, and other commodities were all up by about 15 per cent, reflecting the effects of generally rising demands and costs. Throughout the year prices of farm products and foods were at exceptionally high levels in relation to other prices, as is shown in the accompanying chart. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM WHOLESALE PRICES 200 200 180 «•<> 160 140 60 1939 1940 1941 1942 1944 1945 1946 1947 NOTE: Bureau of Labor Statistics index. The largest increases in prices of agricultural products were in grains, reflecting the reduced harvests of feed grains during 1947, a record rate of Government purchases of wheat and flour for export, and prospects of a somewhat reduced wheat crop and continued large grain exports in 1948. As a result partly of larger consumer incomes, prices of livestock and meats in December 1947 were about 15 per cent higher than a year earlier. Cotton prices advanced somewhat during the year owing to the relatively low level of domestic stocks of raw cotton, the moderate size of the crop, and strength in the markets for cotton textile products. Prices of fruits and tobacco were adversely affected by reduced export demand, and sugar prices were held down by a very large increase in supplies. Prices of commodities other than farm products and foods rose in the first quarter, were stable in the second quarter, and then advanced steadily during the second half of the year. In December prices of fuels, iron and steel, lumber, and leather were substantially higher than at the beginning of the year, with the largest increases in bituminous coal and in petroleum products. Large domestic requirements for fuel, limited transportation facilities, and heavy exports contributed to the marked rise in fuel prices. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

32 ANNUAL REPORT OF BOARD OF GOVERNORS Retail prices of goods and services purchased by consumers at the end of 1947 were up 9 per cent from the beginning of the year and 67 per cent as compared with prewar. Prices of foods and many other nondurable goods rose about 10 per cent and in December were double the prewar level. Housing rentals showed a rise of about 5 per cent after the middle of 1947 when controls were modified, but increases over prewar levels were still very much less than in retail prices of commodities. Utility rates also were rising at the end of the year but were still relatively low. INTERNATIONAL TRADE AND FINANCE In 1947, as in 1946, the immense productive power of the United States, called into action at a time when production in much of the rest of the world had not yet recovered from the ravages of war, yielded a high level of exports of goods and services and a huge export surplus. This surplus, amounting to 11.3 billion dollars in 1947 as compared with 8.1 billion in 1946, was far greater than in any previous peacetime year and only slightly below the peak attained at the height of the Lend-Lease program in 10,44. In large measure, the volume of exports and of the export surplus reflects the contribution of the United States to postwar reconstruction in war devastated areas. In addition, countries that escaped war damage and disruption, notably those in the Western Hemisphere, have made great demands upon United States production because of their high levels of domestic income, large deferred demands for many products, and the slow recovery of other sources of supply. This large export surplus would not have been possible without major financial assistance to needy foreign countries by the United States Government. At the same time, major inroads were made upon foreign holdings of gold and dollar assets. By the end of the year, many foreign countries had largely depleted their liquid dollar resources, including lines of credit, and were facing a serious crisis in their payments relations with the United States. While some countries are in a position to impose restrictions upon imports from the United States in order to conserve dwindling reserves of gold and dollars, many foreign areas are critically dependent upon the flow of supplies from the United States. In large measure, the volume of this flow during 1948 will be determined by the scale of financial assistance from the United States Government. It is not expected, however, that exports of goods and services or the export surplus will attain the record level reached during the past year. Exports and imports. Recorded exports of merchandise in 1947 reached an all-time peak of 14.5 billion dollars, almost 50 per cent larger than in 1946. In addition to recorded exports, as is shown in the accompanying table, there were other exports of goods amounting to 1.5 billion dollars and receipts from services amounting to 3.6 billion. The unrecorded exports of goods consisted Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 3^ mainly of two items: (i) civilian supplies distributed by the armed forces ir occupied areas, amounting to over 800 million dollars (excluding freight) and (2) sales of Government surplus property located abroad, amounting tc about 200 million dollars. The marked increase in the dollar value of recorded exports was due mainly to the expanded physical capacity of the United States to produce foi export, but also reflected a 21 per cent increase in the average of export prices Industrial production in the United States was 10 per cent larger in 194; than in 1946, and exports of semi-finished and finished manufactures, whici INTERNATIONAL TRANSACTIONS AFFECTING FOREIGN GOLD RESERVES AND BANKING FUNDS IN THE UNITED STATES, 19471 [In billions of dollars] United States exports: Goods 16.0 Services 3.6 Total 19.6 United States imports: Goods 6.0 Services 2.3 Total 8.3 Net purchases of goods and services from United States by foreign countries 11.3 Sources of financing utilized by foreign countries: United States Government (net)— Credits 4.0 Donations 1.7 Total 5.8 United States—private (net)— Foreign investment (long- and short-term) 0.6 Donations 0.7 Total 1.3 International institutions (net)— Dollars disbursed by International Bank 0.3 Dollars drawn from International Monetary Fund 0.5 Total 0.8 Foreign countries' own capital assets (net)—• Sales of gold to United States 2.8 Reduction of banking funds in United States 1.2 Liquidation of other assets in United States (long- and short-term) 0.5 Total 4.5 Total sources of financing 12.3 Errors and omissions —1.1 Net sales of gold to United States by foreign countries (repeated from table above). . 2.8 Foreign subscriptions in gold to International Monetary Fund 0.7 Net gold losses by foreign countries in international transactions 3.5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

34 ANNUAL REPORT OF BOARD OF GOVERNORS in 1947 accounted for over 70 per cent of all recorded exports, were estimated to be 46 per cent larger, in physical volume terms, than in 1946. In the case of crude foodstuffs, the volume of exports was only moderately greater than in 1946, while in the case of crude materials and manufactured foodstuffs, the volume was actually less. The aggregate volume of recorded exports, adjusted for price changes, was estimated to be 24 per cent larger than in 1946. Total United States imports of goods and services, amounting to 8.3 billion dollars, provided foreign countries in 1947 with dollars sufficient to pay for only two-fifths of United States exports. Recorded imports of merchandise amounted to 5.7 billion dollars, as compared with 4.9 billion in 1946, the increase being attributable entirely to the rise in import prices which occurred during the year. It appears that, in terms of physical volume, recorded imports were actually slightly smaller in 1947 than in 1946. Imports of goods and services have been a smaller proportion of national income than before the war. During the interwar period, total imports averaged about 6 per cent of the national income, but in 1947 the corresponding figure was only about 4 per cent. This smaller proportion of imports is primarily a reflection of production and supply difficulties abroad, particularly in Europe, rather than lack of demand. Merchandise imports from Europe, which in the interwar years accounted for between 40 and 50 per cent of all imports of goods by the United States, amounted to only 14 per cent of such imports in 1947. Before the war, United States trade was characterized by an export surplus of goods and by an import surplus of services. Also, while total sales of United States merchandise to foreign countries regularly exceeded total purchases from abroad, an export balance in merchandise trade with Europe, Africa, and the rest of North America was offset in substantial measure by an import balance with Asia and with South America. In 1947, however, United States sales, both of goods and of services, exceeded purchases in the case of every major area. Recorded exports and imports of merchandise, by areas, are shown in the following table. UNITED STATES BALANCE OF RECORDED MERCHANDISE TRADE, BY AREAS, 1947 [Dollar items in millions] Recorded Recorded Net Imports as a Area exports imports recorded percentage exports of exports Northern North America $2,132 $1,130 $1,002 53.0 Southern North America 1,714 1,022 692 59.6 South America 2,358 1,237 1,121 52.5 Europe 5,214 819 4,395 15.7 Asia, Oceania 2,242 1,205 1,037 53.7 Africa 822 327 495 39.8 Total 14,482 5,740 8,742 39.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 35 In the case of Europe, sales of goods to the United States were sufficient to pay for less than one-sixth of the recorded merchandise exports received from this country. For Asia and the various areas in the Western Hemisphere, the corresponding proportion was one-half or more. Of the total recorded merchandise export surplus, about half was accounted for by net exports to Europe, about a third by net exports to Western Hemisphere countries, and the remainder by net exports to Asia, Oceania, and Africa. Means of financing export surplus. As may be seen from the table on page 33, about half the over-all export surplus of goods and services was financed by loans and gifts from the United States Government, and about two-fifths was financed by the liquidation of foreign-owned gold and dollar assets. The remaining net exports were paid for with dollars secured from private United States investments and gifts and, to a smaller extent, from loans by the International Bank and the International Monetary Fund. European countries received the great bulk of loans and gifts forthcoming from Government and private sources, but nonetheless had to liquidate gold and dollar assets on an extensive scale in order to pay for imports. Countries in the Western Hemisphere paid for most of their net imports from the United States with dollars acquired from their exports to other areas and from the liquidation of gold and dollar assets. During 1947, the United States Government made net donations ("unilateral transfers") to foreign countries amounting to 1.7 billion dollars. More than half of this consisted of transfers of civilian supplies to areas occupied by United States armed forces, and was financed from Department of the Army appropriations. In addition to outright donations, the United States Government in 1947 made net disbursements on foreign loans amounting to 3.9 billion dollars. By far the largest component was the 2.9 billion dollars advanced to Britain under the terms of the Anglo-American Financial Agreement of 1946. Drawings on the British loan were particularly large during July and August, when Britain temporarily restored limited convertibility of the pound sterling. By the end of the year, all but 300 million dollars of the original 3,750 million line of credit had been used up. This unexpectedly rapid utilization of the British loan reflected a number of adverse factors in the development of the British balance of payments, including a marked rise in world prices, unfavorable weather conditions in the winter of 1946-47, and the insistence by most countries selling to Britain that payment be made in dollars or other convertible currencies. Most of the other Government lending in 1947 was done by the Export-Import Bank, which made net disbursements, after allowing for some repayments on earlier loans, amounting to 729 million dollars. Private gifts and investments assisted substantially in financing net exports from the United States in 1947. The net amount of charitable contributions and personal remittances was 700 million dollars. The net outflow of private Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

36 ANNUAL REPORT OF BOARD OF GOVERNORS capital, amounting to 640 million dollars, consisted mainly of advances by parent companies in this country to their subsidiaries abroad. Two international institutions, the International Monetary Fund and the International Bank, commenced active operations in 1947. The Fund, which is designed to provide short-term assistance to countries confronted with temporary balance-of-payments deficits, made its first advance in May, and during the year made a total of 464 million dollars available to its members. The Bank, which was created for the purpose of making long-term loans for reconstruction and development, began lending operations in June. By the end of the year, it had made loan commitments of about 500 million dollars and actual disbursements of 300 million. In spite of the large foreign grants and loans made by the United States during 1947, many foreign countries found it necessary to make substantial drafts on their holdings of gold and dollar resources. Net sales of gold to the United States by foreign countries amounted to 2.8 billion dollars during the year. Foreign production (outside the U.S.S.R.), which remained at the 1946 level of about 700 million dollars, was approximately offset by the gold subscribed by foreign countries to the International Monetary Fund during the year. There appears to have been some movement of gold into private hoards in foreign countries. The total gold reserves of foreign central banks and governments are estimated to have declined from approximately 16 billion dollars at the end of 1946 to less than 13 billion at the end of 1947. Argentina was the principal loser of gold reserves, with an estimated decline during the year of 750 million dollars. The United Kingdom and Canada also lost heavily; from the reports published by these countries concerning their total holdings of gold and United States dollars, it may be deduced that during 1947 their gold reserves declined by about 400 and 250 million dollars respectively. Among the other countries which sustained losses of gold reserves, France showed a decline during the year of 310 million dollars; Sweden, 275 million; South Africa, 175 million; the Netherlands, 160 million; and Belgium, 140 million. Only the U.S.S.R., which apparently retained most of the new domestic production, made any substantial net gain. Drawings on dollar banking funds held in the United States by foreign countries supplied a net amount of 1,150 million dollars toward meeting foreign requirements during 1947* The dollar balances of foreign central banks and governments were drawn upon to the extent of over 1,200 million dollars net, mainly as a result of heavy drafts upon the Canadian, British, Chinese, and Italian accounts. This decline in official balances was partly compensated by a small net increase in private banking funds. At the end of the year, official balances stood at T.8 billion dollars and private balances at 3.0 billion. Foreign countries also made net sales to the United States of marketable dollar securities (both stocks and bonds, including United States Government Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 37 bonds) amounting to 170 million dollars during 1947. The Netherlands and France were the largest sellers. CHANGES IN BANKING STRUCTURE Number of banking offices.1 In 1947, for the fourth successive year, there was an increase in the number of banking offices in the United States, exclusive of banking facilities at military reservations. Net growth was not quite as large as in 1946, although considerably larger than in 1945. The figures for the four years were: 207 in 1947, 225 in 1946, in in 1945, and 12 in 1944. The sum of these increases is larger by about 75 than the decreases that occurred between 1939 and 1943. The total number of newly organized banks and branches was 271 in 1947, 301 in 1946, 185 in 1945, and 108 in 1944. The number that went out of existence for various reasons was about the same in 1947 as in the preceding two years. At the end of 1947 there were 18,975 banking offices (14,714 banks and 4,261 branches and additional offices). There were also 71 banking facilities at military reservations, a decrease of 8 during the year. The number of banks (head offices) increased by 14 in 1947, as compared with 32 in 1946 and 18 in 1945. During 1947 there were ill banks opened for business, of which 33 were member banks, 66 insured nonmember banks, and 12 noninsured banks. On the other hand, 97 banks were discontinued through consolidation, liquidation, etc.; of these, 55 became branches. The number of banks in operation at the end of 1947 was 14,714 (14,181 commercial banks and 533 mutual savings banks). The number of branches and additional offices, exclusive of offices at military reservations, increased by a net of 193 during 1947. This compares with increases of 193 in 1946 and 94 in 1945. The number of such offices has increased every year since 1933, except when it remained unchanged in 1942. Increase in Federal Reserve membership. Membership in the Federal Reserve System continued to increase; in 1947 there was a net gain of 23 banks as compared with gains of 16 in 1946 and 70 in 1945. The number of national banks decreased by a net of 2 and the number of State member banks increased by a net of 25. Of the 73 banks admitted to membership, 21 were national banks and 52 were State banks; of the latter, 14 were newly organized and 38 were already in operation. All but one of the 38 had previously been admitted to membership in the Federal Deposit Insurance Corporation and their total deposits amounted to about 157 million dollars. About onehalf of the 73 banks admitted to membership were located in three Federal Reserve districts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

38 ANNUAL REPORT OF BOARD OF GOVERNORS The 6,923 member banks in operation at the end of 1947 accounted for 47 per cent of the number and 85 per cent of the deposits of all commercial banks in the country. Both percentages were practically the same as in 1946. The State member banks accounted for 21 per cent of the number and 65 per cent of the deposits of all State commercial banks, the same percentages as in 1946. Par and nonpar banks. During 1947 there was a net increase of 69 in the number of banks on the Federal Reserve Par List and a net decrease of 42 in the number of nonpar banks.2 These changes continued the trend of several years. During the year 158 banks were added to the Par List, 2 were withdrawn, and 87 banks formerly on the list terminated existence. Of the 87 discontinued par banks, 80 were absorbed by other par banks and 53 of the 80 were converted into branches. There were net increases of 10 or more par banks in two States, Texas (23) and Georgia (12). At the end of 1947 there were 12,037 banks remitting at par and 2,041 nonpar banks; the latter represented only 14 per cent of all banks on which checks are drawn and held a very small portion of the deposits of all commercial banks in the country. Of the 4,090 branches of commercial banks in existence at the end of the year, 3,823 were remitting at par. All banks in 27 States and the District of Columbia are on the Federal Reserve Par List and the number of nonpar banks in each of 5 other States was less than 10. Approximately 99 per cent of the banks not on the Par List were in the following 16 States: Minnesota 413, Georgia 280, Mississippi 167, Arkansas 129, North Carolina 118, Alabama no, Wisconsin 109, Louisiana and North Dakota 102, South Dakota 101, Tennessee 99, South Carolina 93, Missouri 68, Florida 63, Texas 60, and Oklahoma 10. Check routing symbols. Pursuant to the program inaugurated by the American Bankers Association and the Federal Reserve System in June 1945, further progress was made during 1947 in the use of routing symbols on checks to facilitate their collection. Approximately 96 per cent of the banks on the Federal Reserve Par List as of December 1, 1947 have had check routing symbols printed on some of their checks in the approved location, i.e., in the upper right-hand corner. On the basis of a survey made in December 1947, it was found that 46 per cent of all checks clearing through Federal Reserve Banks carried routing symbols in the approved location. Designation of reserve cities. The Federal Reserve Act, Section 11 (e), empowers the Board to add to or reclassify central reserve and reserve cities or to terminate their designation as such. Late in 1947, after consideration over 2 The Federal Reserve Par List comprises all member banks, which are required under the law to remit at par for checks forwarded to them by the Reserve Banks for payment, and also such nonmember bank s as have agreed to do so. The revision referred to in the preceding footnote, although it added 115 banks that had not previously been included in the all-bank series, added only 11 par and 3 nonpar banks that had not previously been included in par and nonpar statistics. These additions are not included in figures describing changes during the year but are included in year-end totals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 39 a long period, the Board of Governors adopted a standard or basis for the classification of these cities. On October 24, 1947, the Board published in the Federal Register notice of a proposed action with respect to the reclassification of certain cities. In accordance with the notice, a number of banks submitted letters, and representatives of banks in a number of the cities whose status would be changed appeared before the Board and presented their views. After due and careful consideration of relevant matter presented, the Board concluded that a logical, fair, and appropriate standard for determining the designation and termination of reserve cities is one determined (1) by the ratio of interbank demand deposits held by member banks in each city to the aggregate amount of interbank demand deposits held by all member banks of the Federal Reserve System, and (2) by such a ratio in combination with a ratio of interbank demand deposits held by member banks in each city to the aggregate amount of all demand deposits held by member banks in such city. The Board also concluded that the standard should be applied at threeyear intervals. In accordance with these conclusions, the Board adopted a basis for classification of central reserve and reserve cities to become effective March 1, 1948, in effect as follows: Central reserve cities. The cities of New York and Chicago are classified (and continued) as central reserve cities. Reserve cities: 1. The City of Washington, D. C. and every city except New York and Chicago in which there is situated a Federal Reserve Bank or a branch of a Federal Reserve Bank are classified (and continued) as reserve cities. 2. Every city in which, on the dates of official call reports of condition in the two years ended June 30, 1947, member banks of the Federal Reserve System, exclusive of their offices in other cities, held an aggregate amount of demand deposits owing to banks equal, on the average, to one-third of one per cent or more of the aggregate amount of demand deposits owing to banks by all member banks of the Federal Reserve System. 3. Every city in which, on the dates of official call reports of condition in the two years ended June 30, 1947, member banks of the Federal Reserve System, exclusive of their offices in other cities, held an aggregate amount of demand deposits owing to banks equal, on the average, to one-fourth of one per cent or more of the aggregate amount of demand deposits owing to banks by all member banks of the Federal Reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4O ANNUAL REPORT OF BOARD OF GOVERNORS System and also equal, on the average, to 33{/£ per cent or more of the aggregate amount of all demand deposits held by member banks in such city. 4. The Board of Governors, prior to March 1, 1948, will also designate (and continue) as a reserve city, any city now classified as a reserve city (although not within the scope of paragraphs 1, 2, or 3 above) if a written request for the continuance of such city as a reserve city is received by the Federal Reserve Bank of the district in which the city is located on or before February 16, 1948 from every member bank which has its head office or a branch in such city (exclusive of any member bank in an outlying district of such city permitted by the Board of Governors to maintain reduced reserves) together with a certified copy of a resolution of the board of directors of such member bank duly authorizing such request. 5. Effective as of March 1 of each third year after March 1, 1948, the Board of Governors will reconsider the designations according to the standards outlined above. In accordance with paragraph 4 above, requests for continuance of reserve city status were received from member banks in nine cities which would otherwise have been discontinued as reserve cities; and, acting pursuant to that paragraph, the Board classified and continued those cities as reserve cities. As the result of Board action, the following changes were made in the classification of reserve cities, effective March 1, 1948: the city of National City (National Stock Yards), Illinois was classified as a reserve city, and the designations of the following cities as reserve cities were terminated: Grand Rapids, Michigan; Ogden, Utah; and JSpokane, Washington. The Board's action resulted in a net reduction in required reserves of member banks of less than one million dollars. BANK SUPERVISION BY THE FEDERAL RESERVE SYSTEM Continuation during 1947 of the high level of banking activity, with generally expanding loan portfolios, brought increasing responsibilities to bank managements and supervisory authorities. Total loans of all commercial banks in the United States increased during the year by 7.1 billion dollars, reaching 38.2 billion at the end of 1947. At a time when national output and employment are close to a maximum limit, an increase in the total loans of the banking system makes for inflation, even though any particular bank may have contributed little or nothing to such an outcome. This was recognized in the joint statement issued on November 24, 1947 by the Board of Governors, the Comptroller Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 41 of the Currency, the Federal Deposit Insurance Corporation, and the Executive Committee of the National Association of Supervisors of State Banks. The statement stressed the need for bankers, as a means of combating inflationary developments, to exercise extreme caution in their lending policies and to confine their extensions of credit, so far as practicable, to productive purposes. The prime responsibility for maintaining any bank in sound condition rests by law and logic upon its directors and managing officers. Bank supervisory authorities have the function of pointing out to bank management, as occasion requires, what appear to be elements of risk and weakness in bank assets and management, and any adverse banking trends. The extent to which each bank reduces and eliminates undue risks and weaknesses, and adapts its policies to changing conditions and foreseeable trends, determines, to a major degree, the collective strength of the nearly 15,000 banks in the American banking system. Assets of individual banks may be sound but, paradoxically, the aggregates of specific types of assets held by the banking system may at times reach proportions dangerous to the system as a whole and thus affect an individual bank. Such situations have arisen in the past, and can develop again. Past experience has clearly shown that many problems and subsequent losses have their origin in assets acquired during boom conditions such as prevailed during 1947. High levels of business activity tend to obscure underlying weaknesses in bank assets and to increase the difficulty of their proper appraisal both by examiners and by managements. During the year there were some instances of deterioration in the quality of loan portfolios, particularly in cases where the managements aggressively expanded loan accounts. Although such cases were scattered geographically and fairly limited in number, they were the cause of concern inasmuch as they evidenced an apparent willingness to take undue risks. The volume of loans in State member banks adversely classified during the year was small in the aggregate, but in an increasing number of instances the examiners pointed out hazards in certain loans or groups of loans unless conditions continued to be favorable. • In recent years bank credit has been extended in a period of generally rising prices enabling many credit lines, weak when made, to be paid out without loss. It seems probable that this fact may not be fully realized by some of the younger credit men in banks and by newcomers in the field of bank management who are not conditioned by experience to visualize the problems of wTorking out credit extensions under less favorable and more variable economic conditions. The problem of maintaining adequate and capable credit and loan supervisory staffs in banks has been accentuated also by the retirement from active duties of many older bankers. Because Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

42 ANNUAL REPORT OF BOARD OF GOVERNORS of the apparent lack of appreciation on the part of some banks of the necessity for maintaining adequate and current credit data, supervisory stress was continued on the need for such information and the importance of close supervision of all credit lines. Continuation of the shift from large holdings of cash and United States Government securities into other assets, largely loans, in many cases accentuated the need for larger aggregate capital to offset the expansion in risk assets and the high level of deposits. In many banks, increasing costs of operations reduced the proportion of earnings available for this purpose. Some State member banks sold new common stock but others, in need of additional capital, have seemingly been reluctant to issue stock notwithstanding favorable conditions, or have professed inability to raise capital locally. In such cases it is incumbent upon management to exercise proper restraint in credit policies in order to maintain a reasonable relation of capital to risk assets. During the year the Board requested each Federal Reserve Bank to review cases of State member banks in its district in which the Reconstruction Finance Corporation owned preferred capital, with a view to developing concrete plans for retiring as much as possible of such capital where it could be done on a basis consistent with the public interest. Investment of Government funds in bank capital was an emergency and temporary measure made necessary by the Banking Holiday in 1933, and was not intended to become a permanent arrangement. It was thought that private investment funds were generally available to supply the capital needs of banks, and that banks should rely thereon for their full requirements. During the year the Board maintained formal and informal contacts on matters of mutual supervisory interest with the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Association of Supervisors of State Banks. Examination of Federal Reserve Banks. The Board's Division of Examinations examined each of the twelve Federal Reserve Banks and their twenty-four branches during the year as required by law. Examination of State member banks. State member banks are subject to examinations made by direction of the Board of Governors or of the Federal Reserve Banks by examiners selected or approved by the Board of Governors. The established policy is to have at least one regular examination of each State member bank, including its trust department, during each calendar year, by examiners for the Reserve Bank of the district in which the bank is situated, with additional examinations if considered desirable. The 1947 program for the examination of State member banks was substantially completed. In order to avoid duplication and to minimize inconvenience to the banks examined, wherever practicable joint examinations are made in co- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 43 operation with the State banking authorities or alternate examinations are made by agreement with State authorities. The annual convention of the National Association of Supervisors of State Banks held in Washington September 23 through 26 afforded a convenient occasion for the holding of the annual conference of representatives of the bank examination departments of the twelve Federal Reserve Banks. The conference was held in the Board's offices in Washington on September 22, 23, and 26, allowing representatives of the Reserve Banks and of the Board to attend the open sessions of the convention of the Association and discuss matters of mutual interest with the State bank supervisors. In view of the problems affecting the supervisory activities of the Board and the Reserve Banks, emphasis of the conference was placed upon the supervisory aspects rather than the more detailed aspects of examination procedure. Representatives of the Insurance and Protective Committee of the American Bankers Association and The National Association of Bank Auditors and Comptrollers addressed the conference. Bank holding companies. During 1947 the Board acted upon applications for voting permits submitted by holding company .affiliates of banks and authorized the issuance of six permits for general purposes and five permits for limited purposes. The regular annual reports were obtained from holding company affiliates to provide information with respect to the organizations to which voting permits have been granted. As in previous years, a substantial number of the holding company affiliates were examined during the year by examiners for the Federal Reserve Banks in whose districts the principal offices of the holding companies are located. Section 301 of the Banking Act of 1935 provides that the term "holding company affiliate" shall not include, except for the purposes of Section 23A of the Federal Reserve Act, any organization which is determined by the Board not to be engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies. During the year the Board made such determinations with respect to seven organizations. The existing statutes do not provide adequate means for regulation of bank holding companies. As discussed elsewhere in this report, recommendations have been made by the Board with a view toward the strengthening of such regulation. Trust powers of national banks. During the year, 14 national banks were granted authority by the Board to exercise one or more trust powers under the provisions of Section 11 (k) of the Federal Reserve Act. This number includes the grant of additional powers to one bank which previously had been granted certain trust powers. Trust powers of 11 national banks Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

44 ANNUAL REPORT OF BOARD OF GOVERNORS were terminated, 9 by voluntary liquidation or consolidation and 2 by voluntary surrender. At the end of 1947, there were 1,785 national banks holding permits to exercise trust powers. A list of such banks, with indication of the power or powers each bank is authorized to exercise, will be supplied to those requesting it. Acceptance powers of member banks. One application by a member bank for increased acceptance powers, made pursuant to the provisions of Section 13 of the Federal Reserve Act, was received during the year and approved by the Board. As was mentioned in the Annual Report for 1946, the Reserve Banks reviewed the list of member banks in their districts holding increased acceptance powers to ascertain whether in such cases the additional powers were needed. The powers had been granted many years ago in most cases and, at the end of the year, there was a cumulative aggregate of 59 voluntary surrenders of such powers. At the end of the year, 93 member banks held authority granted by the Board to accept drafts or bills of exchange to an amount not exceeding at any one time, in the aggregate, IOO per cent of the bank's paid-up and unimpaired capital stock and surplus, and 30 member banks (29 of which also held IOO per cent acceptance powers) held authority granted by the Board to accept drafts or bills drawn to furnish dollar exchange. Foreign branches and banking corporations. During 1947 the Board approved 11 applications made by member banks pursuant to the provisions of Section 25 of the Federal Reserve Act for permission to establish foreign branches. Member banks opened 9 foreign branches during the year, distributed geographically as follows: Brazil 1, Germany 2, Japan 3, Philippines 3. No foreign branches wrere closed. Branches operating in Germany and Japan are restricted as to the types of banking operations conducted by the terms of the licenses issued by the military occupation authorities. At the end of 1947, seven member banks were operating a total of 82 branches in 22 foreign countries and possessions of the United States. Of the 82 branches, four national banks were operating 76, and three State member banks were operating 6. The foreign branches were distributed geographically as follows: Latin America England 10 Argentina Brazil M U C P P C C e a h o u r e r n u i l b x u l o a g e a i m m c u o a b a y ia 1 2 3 3 1 1 6 I Far E J S C H I P n a a i h h o n p d s i i n g t l i a n a i g a n a p p p K o i r n o e e n s g 1 2 4 2 4 1 14 Venezuela 1 U. S. Possessions 11 Continental Europe. . Canal Zone 4 Belgium Puerto Rico 7 France Germany Total 82 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 45 No change occurred during the year in the list of the five corporations organized under State laws which operate under agreements entered into with the Board pursuant to Section 25 of the Federal Reserve Act relating to the investment by member banks in the stock of corporations engaged principally in international or foreign banking. These corporations are: First of Boston International Corporation, French American Banking Corporation, International Banking Corporation, Morgan & Cie. Incorporated, and Bankers Company of New York. Two of the five have no foreign branches, one operates a branch in England, one operates a branch in France, and one has an English fiduciary affiliate. There is in operation one banking corporation, The Chase Bank, organized under the provisions of Section 25(a) of the Federal Reserve Act to engage in international or foreign banking. The bank has a fiduciary affiliate in England and operates a branch in France, two branches in China, and a branch in Hong Kong. Its head office was examined during the year by the Board's Division of Examinations. CHANGES IN REGULATIONS OF THE BOARD OF GOVERNORS Margin requirements for purchasing securities. As stated in the Board's Annual Report for 1946, the Board's Regulation T, entitled "Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges," and Regulation U, entitled "Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange," were amended effective February 1, 1947, to reduce margin requirements from 100 per cent to 75 per cent, both for purchases of registered securities and for short sales. Consumer credit. The Board's Regulation W, relating to consumer credit, ceased to be operative after November 1, 1947, in accordance with a resolution of Congress approved on August 8, 1947. LITIGATION Suit regarding removal of bank directors. The Supreme Court of the United States on January 6, 1947, sustained an order of the Board, issued under Section 30 of the Banking Act of 1933, removing from office two directors of a national bank in Paterson, New Jersey, on the basis of a finding by the Board that the directors had violated Section 32 of the Banking Act of 1933. The opinions of the Supreme Court were published in the Board's Annual Report for 1946, and also appear in 329 U. S. 441 and 67 S. Ct. 411. Conviction for violating Regulation W. The United States Circuit Court of Appeals for the Sixth Circuit on April 7, 1947, affirmed the judgments Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

46 ANNUAL REPORT OF BOARD OF GOVERNORS of the District Court, described in the Board's Annual Report for 1946, adjudging Consumers Home Equipment Co. and A. B. Chereton, its President, guilty of contempt for violating an injunction issued by the District Court restraining the defendants from violating the Board's Regulation W. Certiorari was denied by the United States Supreme Court on June 23, 1947. The opinion of the Court of Appeals was published in the Federal Reserve Bulletin for May 1947 at page 532, and also appears in 161 Fed. (2d) 360. Suit regarding condition of membership. In the suit of the Peoples Bank, Lakewood Village, California, against the individual members of the Board, described in the Board's Annual Report for 1946, the United States Court of Appeals for the District of Columbia on April 14, 1947, reversed the District Court which had refused to enjoin the members of the Board from enforcing a condition of membership imposed upon the bank at the time of its admission to the Federal Reserve System. The Court of Appeals by a divided vote held that the condition was invalid if construed literally. However, the Court held that if the condition were construed in the manner stated in its opinion, there would be no inconsistency between it and the statute. The Court therefore remanded the case to the District Court for the entry of a judgment so construing the condition and denying the injunction. The United States Supreme Court granted certiorari; and on March 15, 1948, with two Justices dissenting, the Supreme Court reversed the judgment on the ground that the plaintiff's grievance was too remote, insubstantial, and speculative in nature to justify consideration by the courts. The opinions of the Court of Appeals were published in the Federal Reserve Bulletin for May 1947 at pages 533-540, and also appear in 161 Fed. (2d) 636. The opinions of the Supreme Court were published in the Federal Reserve Bulletin for April 1948. LEGISLATION Purchase of Government obligations by Federal Reserve Banks. An Act approved April 28, 1947, amended Section I4(b) of the Federal Reserve Act to authorize until July 1, 1950, the purchase or sale by Federal Reserve Banks, 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 guaranteed as to principal and interest, provided the aggregate amount acquired directly from the United States held at any one time by the twelve Federal Reserve Banks shall not exceed 5 billion dollars. Similar authority granted by an amendment to Section I4(b) which was contained in the Second War Powers Act had expired on March 31, 1947. Federal Reserve branch bank buildings. Under a provision of Section 10 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 47 of the Federal Reserve Act, the cost of a branch bank building of a Federal Reserve Bank, exclusive of the cost of vaults, permanent equipment, furnishings, and fixtures, is limited to $250,000. This provision was amended by an Act approved July 30, 1947, to provide that the limitation shall not apply as long as the aggregate of such costs subsequently incurred by all Federal Reserve Banks for branch bank buildings with the approval of the Board does not exceed 10 million dollars. Stock of Federal Deposit Insurance Corporation. An Act approved August 5, 1947, provided for the retirement and cancelation under certain conditions of the capital stock of the Federal Deposit Insurance Corporation, including both that subscribed to by the United States and that subscribed to by the Federal Reserve Banks. The Act provided that the amount received by the Corporation for such stock should be paid in both instances to the Treasury of the United States. Pursuant to this Act, the stock subscribed to by the Federal Reserve Banks was retired and canceled on October 7, 1947. Consumer credit. A Joint Resolution approved August 8, 1947* continued the authority of the Board to exercise regulatory control of consumer credit pursuant to Executive Order No. 8843 for a temporary period but provided that such control should not be exercised after November 1, 1947, except during the time of war beginning after the enactment of the resolution or a national emergency subsequently declared by the President. War loan deposits. The provisions of Section i2B(h)(i) and Section 19 of the Federal Reserve Act, as amended by the Act of April 13, 1943, exempting war loan accounts of the United States from deposit insurance assessments and from member bank reserve requirements, expired on June 30, 1947, as a result of the Proclamation of the President of the United States, issued on December 31, 1946, terminating the period of hostilities of World War II. RESERVE BANK OPERATIONS Volume of operations. Except for checks and paper currency and coin handled, which increased to new high levels, the volume of operations at the Federal Reserve Banks generally declined again during 1947. The principal declines were in issues, redemptions, and exchanges of Government securities. The decline in Government security issues and redemptions was offset to some extent by the substantial redemptions of Armed Forces Leave Bonds subsequent to September 1, 1947. Table 5 on page 69 shows the volume of operations in the principal departments of the Federal Reserve Banks for the past five years. Reserve Bank holdings of loans and securities during 1947 were below the 1946 levels. Average daily holdings of loans and securities and earnings thereon are given in the first table on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF BOARD OF GOVERNORS RESERVE BANK EARNINGS ON LOANS AND SECURITIES, 1944-47 [Dollar amounts in thousands] U. S. Discounts Accept- Government Indus- Item and year Total and ances securities, trial advances purchased direct and loans guaranteed Daily average holdings: 1944 $14,917,596 $135,459 $14,772,201 $9,936 1945 . 21,742,589 375,958 $ 22 21,363,244 3,365 1946 23,570,260 310,308 8,457 23,250,195 1,300 19471 22,552,491 218,755 384 22,331,740 1,612 Earnings: 1944 103,837 724 102,810 303 1945 141,631 1,977 (2) 139,553 101 1946 149,703 2,497 43 147,125 38 1947 157,823 2,195 4 155,564 60 Average rate of earnings (per cent): 1944 0.70 0.53 0.70 3.05 1945 0.65 0.53 6.50 0.65 2.99 1946 0.64 0.80 0.51 0.63 2.90 1947 0.70 1.00 1.01 0.70 3.75 1 Based on holdings at opening of business. 2 Less than $500. Earnings and expenses. Current earnings, current expenses, and the distribution of net earnings of the various Federal Reserve Banks are given in detail in Table 6 on pages 70-71, and a condensed annual statement since 1914 for all the Reserve Banks combined is shown in Table 7 on pages 72-73. A condensed comparative summary for all of the Reserve Banks for the years 1946-47 is given below. EARNINGS, EXPENSES, AND DISTRIBUTION OF NET EARNINGS OF FEDERAL RESERVE BANKS 1947 and 1946 [In thousands of dollars] Item 1947 1946 Current earnings 158,656 150,385 Current expenses 65,393 57,235 Current net earnings 93,263 93,150 Net additions to current net earnings 1,973 1,626 Net earnings before payments to U. S. Treasury 95,236 92,524 Paid U. S. Treasury (Sec. 13b) 36 67 Paid U. S. Treasury (Interest on outstanding F. R. notes) 75,224 Net earnings 19,976 92,457 Dividends paid 11,523 10,962 Transferred to surplus (Sec. 13b) 87 28 Transferred to surplus (Sec. 7) 8,366 81,467 Current earnings were 158 million dollars in 1947, or about 8 million dollars more than the year before. Current expenses increased commensurately so that current net earnings were approximately the same as in 1946. After adding profits on sales of Government securities and deducting noncurrent charges, net earnings for the year before payments to the United Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 49 States Treasury amounted to 95 million dollars, or about 3 million dollars more than in 1946. After payment of 12 million dollars for the dividend to member banks, as provided in the Federal Reserve Act, $36,000 to the United States Treasury under Section 13b of the Federal Reserve Act relating to industrial loans, and 75 million dollars to the United States Treasury as interest on outstanding Federal Reserve notes not covered by gold certificates pledged with the Federal Reserve agents as collateral for such notes, 8 million dollars was added to the surplus of the Reserve Banks. Since the Federal Reserve Act does not contemplate Federal Reserve payments to the Treasury under Section 13b after cancelation of the Federal Deposit Insurance Corporation stock held by the Reserve Banks, and since the stock was retired on October 7, 1947, the $36,000 payment referred to above reflects only industrial loan and commitment operations for the period January I to October 7. The payments to the United States Treasury of interest on Federal Reserve notes outstanding not covered by gold certificates pledged with the Federal Reserve agents were in accordance with the Board's policy adopted in April 1947 of paying into the Treasury approximately 90 per cent of net earnings after dividends of the Federal Reserve Banks. Foreign transactions. Continued foreign requirements for dollars resulted in a decline of approximately 2 billion dollars in 1947 in total assets held by the Federal Reserve Banks for account of foreign central banks and governments. At the end of the year dollar deposits, earmarked gold, and securities held for all such accounts, including those maintained by foreign depositors with the Federal Reserve Bank of New York acting as fiscal agent of the United States, amounted to approximately 3.4 billion dollars as compared with slightly more than 5.3 billion dollars at the end of 1946 and a high of about 7 billion dollars in September 1945. A decline of more than one billion dollars in the amount of gold held under earmark for foreign central banks and governments was largely responsible for the reduction in total assets and the remainder occurred mainly in holdings of United States Government securities and dollar deposits. There was, on the other hand, a substantial increase in the amount of gold and dollar assets held by the Federal Reserve Bank of New York for the International Monetary Fund and the International Bank for Reconstruction and Development, both of which first entered upon active operations during 1947. Increased activity in loans to foreign central banks and governments by the Federal Reserve Banks against gold held under earmark in the Federal Reserve Bank of New York, which first became evident in 1946, continued during the past year. The total of such loans outstanding, however, declined from about 150 million dollars at the end of 1946 to about 50 million dollars at the end of 1947. Interest on these loans, which were all made for periods not exceeding three months, was at the discount rate of the Federal Reserve Bank of New York, which remained at one per cent throughout the year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

5O ANNUAL REPORT OF BOARD OF GOVERNORS Loans against gold to five foreign central banks were outstanding at the beginning of 1947. During the year new loans were made to the central banks of six countries, while seven central banks repaid outstanding loans in full. As a result, loans against gold to four central banks were outstanding at the end of the year. One regular foreign central bank account was opened during the year and two accounts were opened by the Federal Reserve Bank of New York acting as fiscal agent of the United States. On the other hand, three fiscal agency accounts, which were established during the war to facilitate this Government's operations abroad, were closed. The Federal Reserve Bank of New York, as fiscal agent of the United States, continued to operate the United States Exchange Stabilization Fund in accordance with authorization and instructions from the Treasury Department, and it acted as agent for the Treasury in the administration of foreign funds control. In cooperation with the other Reserve Banks, the New York Reserve Bank also rendered service during the year to the Export-Import Bank, in its capacity as fiscal agent for the participation of commercial banks in the 200 million dollar Export-Import Bank credit to the Kingdom of the Netherlands. Acting under the Executive Order of January 15, 1934, and Treasury regulations issued thereunder, the Federal Reserve Banks continued to collect and analyze reports from banks, security brokers and dealers, and others covering the international movement of capital. The Federal Reserve Bank of New York performed rather extensive operations during the year as depositary for the International Bank for Reconstruction and Development and the International Monetary Fund. The New York Reserve Bank was also requested, as provided in the Bretton Woods Agreements Act, to act as fiscal agent of the International Bank in connection with that Bank's first two bond issues, dated July 15, 1947. Bank premises. Reference is made elsewhere in this report to the amendment of Section 10 of the Federal Reserve Act providing that the $250,000 limitation on the cost of branch buildings, exclusive of the cost of the vaults, permanent equipment, furnishings, and fixtures, shall not apply as long as the aggregate of such costs subsequently incurred by all the Reserve Banks, with approval of the Board, does not exceed 10 million dollars. The Board's policy under this authorization is to approve the preparation of plans for needed building construction but not to authorize commencement of construction during present conditions of inflationary pressures and shortages of labor and materials unless the need therefor is of an emergency, as distinguished from an urgent, character. The Federal Reserve Banks have been informed that this policy also applies to head-office buildings. In September the Federal Reserve Bank of Cleveland acquired at a cost of $1,221,000 the building in which its Cincinnati Branch has occupied rented quarters since 1927. This building was constructed in 1927 by the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 5 I Cincinnati Chamber of Commerce on land owned by the Federal Reserve Bank and included certain improvements, principally a vault, constructed by the Bank when quarters in the building were leased for occupancy by the branch. Only minor alterations and repairs were necessary upon acquisition of the building, although extensive rehabilitation is contemplated when building conditions are more favorable. The Federal Reserve Bank of Atlanta filled in the light court at its headoffice building and razed an old building on property adjoining the New Orleans Branch quarters, which was purchased in 1945 as a site for a future addition. The lot will be used for loading and unloading purposes upon completion of certain improvements. RESERVE BANK PERSONNEL Chairmen and Deputy Chairmen. One of the three Class C directors appointed by the Board of Governors for each Federal Reserve Bank is designated annually to serve as Chairman of the Board of Directors and as Federal Reserve Agent, and another Class C director is appointed annually as Deputy Chairman. A list of the Chairmen and Deputy Chairmen is shown on page 103. The Chairmen and Deputy Chairmen at the Federal Reserve Banks were redesignated to serve as such for the year 1947, except for the following changes: Donald K. David, Dean, Graduate School of Business Administration, Harvard University, Boston, Massachusetts, who had been a Class C director of the Federal Reserve Bank of Boston since January 1, 1946, was appointed Deputy Chairman for the year 1947. W. G. Wysor, General Manager, Southern States Cooperative, Inc., Richmond, Virginia, who had been a Class C director of the Federal Reserve Bank of Richmond since January 8, 1937, and Deputy Chairman since January 1, 1938, was designated Chairman and Federal Reserve Agent for the year 1947. Charles P. McCormick, President, McCormick & Company, Inc., Baltimore, Maryland, who had been a Class C director of the Federal Reserve Bank of Richmond since August 31, 1939, was appointed Deputy Chairman for the year 1947. Clarence W. Avery, President and Chairman, The Murray Corporation of America, Detroit, Michigan, who had been a Class B director of the Federal Reserve Bank of Chicago since November 17, 1942, was appointed a Class C director on'March 6, and designated Chairman and Federal Reserve Agent for the remaining portion of the year 1947. Paul G. Hoffman, President, The Studebaker Corporation, South Bend, Indiana, who had been a Class C director of the Federal Reserve Bank of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

52 ANNUAL REPORT OF BOARD OF GOVERNORS Chicago since November 16, 1942, Avas appointed Deputy Chairman for the year 1947. Brayton Wilbur, President, Wilbur-Ellis Company, San Francisco, California, who had been a Class C director of the Federal Reserve Bank of San Francisco since July 5, 1944, was designated Chairman and Federal Reserve Agent on May 2, 1947. Directors. A list of the directors of the Federal Reserve Banks and branches as of the close of the year is shown on pages 104-11. The Board made the following appointments of new directors either for terms beginning January 1, 1947, or to fill vacancies during the year: Class C Directors. Harold D. Hodgkinson, Vice President, General Manager and Chairman of Management Board, Wm. Filene's Sons Company, Boston, Massachusetts, was appointed a Class C director of the Federal Reserve Bank of Boston for the term beginning January I, 1947. Edward R. Stettinius, Jr., Rector, University of Virginia, Charlottesville, Virginia, was appointed a Class C director of the Federal Reserve Bank of Richmond on July 3. Clarence W. Avery, President and Chairman, The Murray Corporation of America, Detroit, Michigan, was appointed a Class C director of the Federal Reserve Bank of Chicago on March 6. William R. Wallace, Jr., Attorney at Law, San Francisco, California, was appointed a Class C director of the Federal Reserve Bank of San Francisco on September 30. Branch Directors. L. Vinton Hershey, President, Hagerstown Shoe Company, Hagerstown, Maryland, was appointed a director of the Baltimore Branch of the Federal Reserve Bank of Richmond for the term beginning January 1, 1947- W. A. L. Sibley, Vice President and Treasurer, Monarch Mills, Union, South Carolina, was appointed a director of the Charlotte Branch of the Federal Reserve Bank of Richmond for the term beginning January 1, 1947. Thad Holt, President and Treasurer, Voice of Alabama, Inc., Radio Station WAPI, Birmingham, Alabama, was appointed a director of the Birmingham Branch of the Federal Reserve Bank of Atlanta on April 1. W. T. Bland of Lake Jem, Florida, was appointed a director of the Jacksonville Branch of the Federal Reserve Bank of Atlanta on March 11. Mr. Bland is a citrus fruit grower and nurseryman. E. O. Batson, President, Batson-McGehee Company, Inc., Millard, Mississippi, was appointed a director of the New Orleans Branch of the Federal Reserve Bank of Atlanta on June 24. Ralph E. Plunkett, President, Plunkett-Jarrell Grocer Company, Little Rock, Arkansas, was appointed a director of the Little Rock Branch of the Federal Reserve Bank of St. Louis for the term beginning January 1, 1947. Hugh M. Brinkley of Hughes, Arkansas, was appointed a director of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 53 the Memphis Branch of the Federal Reserve Bank of St. Louis for the term beginning January i, 1947. Mr. Brinkley is engaged in farming. Rufus Green of Duncan, Oklahoma, was appointed a director of the Oklahoma City Branch of the Federal Reserve Bank of Kansas City for the term beginning January 1, 1947. Mr. Green is engaged in ranching and farming. Hiram S. Corbett, President, J. Knox Corbett Lumber Company, Tucson, Arizona, was appointed a director of the El Paso Branch of the Federal Reserve Bank of Dallas for the term beginning January 1, 1947. R. B. Taylor of Adams, Oregon, was appointed a director of the Portland Branch of the Federal Reserve Bank of San Francisco for the term beginning January 1, 1947. Mr. Taylor is engaged in livestock and farm operations. Merle G. Hyer of Lewiston, Utah, was appointed a director of the Salt Lake City Branch of the Federal Reserve Bank of San Francisco for the term beginning January 1, 1947. Mr. Hyer is engaged in livestock and farm operations. Change in First Vice Presidents. H. N. Mangels, who had been a member of the staff of the Federal Reserve Bank of San Francisco since 1916, and an officer since 1920, was appointed First Vice President, effective January 1, 1947. Mr. Mangels succeeded Mr. C. E. Earhart, who was appointed President of the Federal Reserve Bank of San Francisco. Staff. At the end of 1947 the total number of officers and employees of the twelve Federal Reserve Banks and their twenty-four branches was 19,364, representing a decline of 2,066 since the end of 1946. This was the fourth successive year of decline following several successive years of increase due to the great expansion in the volume of operations during the war years. The total number of officers aird employees of the Reserve Banks and branches at the end of each year beginning with 1940 was as follows: 1940 11,640 1944 24,442 1941 14,083 1945 23,522 1942 19,972 1946 21,430 1943 24,741 1947 19.364 BOARD OF GOVERNORS—STAFF Appointment of Board Member. The nomination of Lawrence Clayton of Boston, Massachusetts, to be a member of the Board of Governors of the Federal Reserve System for the unexpired portion of the term ending January 31, 1952, was confirmed by the Senate on February 10, 1947. Mr. Clayton took the oath of office on February 14, 1947. Death of Vice Chairman Ransom. Ronald Ransom, who had been a member of the Board of Governors since February 3, 1936, and had served as Vice Chairman since August 6, 1936, died on December 2, 1947. Staff. On December 31, 1947, the Board's staff, exclusive of those on leave without pay, numbered 504, as compared to 480 at the end of 1946. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

54 ANNUAL REPORT OF BOARD OF GOVERNORS Leo H. Paulger, Special Adviser to the Board of Governors, retired as a member of the Board's staff, under the provisions of the Federal Reserve Retirement System, April I, 1947. He joined the Board's staff in January 1932, and served continuously as Director of the Division of Examinations until August 1946, when he was made Special Adviser to the Board of Governors. Chandler Morse, resigned as an Assistant Director of the Board's Division of Research and Statistics, effective September 5, 1947, in order to accept a position on the faculty of Williams College, Williamstown, Massachusetts. Bonnar Brown was appointed an Assistant Director of the Board's Division of Research and Statistics, effective October 19, 1947. Mr. Brown, after two years of service at the Federal Reserve Bank of San Francisco, had been serving as Assistant Director of the Board's Division of Security Loans since July 1, 1944. Lowell Myrick was appointed an Assistant Director of the Board's Division of Bank Operations, effective November 4, 1947. Mr. Myrick has served continuously with the Division of Bank Operations since his original appointment on December 16, 1921. The designation of J. Leonard Townsend was changed from Assistant General Counsel to Associate General Counsel, and that of Ralph A. Young from Assistant Director, Division of Research and Statistics, to Associate Director, Division of Research and Statistics, effective December 28, 1947. BOARD OF GOVERNORS—INCOME AND EXPENSES The following table shows the income and expenses of the Board for the year 1947: OPERATING SURPLUS, January 1, 1947 $ 335,294.13 Adjustment in 1947 for expenses applicable to preceding years 119.04 $ 335,413.17 INCOME: Assessments on Federal Reserve Banks 2,639,666.74 Sale of Federal Reserve Bulletin 12,774.02 Sale of other publications 24,333.93 Miscellaneous 10,491.50 2,687,266. 19 3,022,679.36 EXPENSES: Salaries 1,936,166.40 Retirement contributions 135,011.64 Traveling expenses 110,743.80 Postage and expressage 21,896.45 Telephone and telegraph 51,876.22 Printing and binding 156,953.81 Stationery and supplies 22,070.47 Furniture and equipment, including rental 34,175.90 Books and subscriptions 8,426.42 Heat, light and power 30,972.28 Repairs and alterations (building and grounds) 5,363.43 Repairs and maintenance (furniture and equipment) 5,160.41 Medical service and supplies 897.05 Insurance 3,316.85 Miscellaneous: Consumer finances and liquid assets surveys $119,890.56 Cafeteria loss 26,838.71 Allother 12,851.29 159,580.56 2,682,611.69 OPERATING SURPLUS, December 31, 1947 $ 340,067.67 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 55 In addition to the foregoing, the Board made certain expenditures on a reimbursable basis for which it received reimbursements in 1947 as follows: Printing Federal Reserve notes. $3,051,674.00 Leased wire service (telegraph) 93,045.14 Leased telephone lines 10,162.00 Federal Reserve Issue and Redemption Division (Comptroller of the Currency) 67,619.89 Miscellaneous 14,573.38 The accounts of the Board for the year 1947 were audited by the Auditor of the Federal Reserve Bank of New York, who certified them to be correct. RESEARCH AND ADVISORY SERVICES The Board's research activities during 1947 continued to be directed toward analyzing current developments in the fields of money and credit, Treasury financing, production and employment, national income, prices, and international finance. Procedures for making projections of the gross national product and related factors were further developed. Investigations of the conditions affecting the availability and use of money and credit were continued and from time to time the results of special studies were released to the public. An important feature of the research work was the study of inflationary developments in banking, business, housing, and agriculture. Members of the Board's staff assisted congressional committees which were investigating these problems and participated in public and private conferences relating to agricultural credit, home mortgage credit, national income, and productivity. Staff members also served on many interdepartmental committees concerned with the analysis of national economic developments as well as with the improvement of statistics and other information which would contribute to a better understanding of current developments. Special assistance was provided to groups preparing reports on the effects of foreign aid on the nation's resources and on domestic, economic, and fiscal problems. Important facts concerning member bank loans to commercial and industrial concerns, determined by a sample survey as of November 20, 1946 conducted by the Reserve Banks and the Board of Governors, were published in the Federal Reserve Bulletin during 1947. The survey provided information of value to bankers in formulating loan policies, to commercial and industrial concerns in planning to meet their credit requirements, and to the Federal Reserve authorities in considering national credit policies. A special survey of loans outstanding to farmers at insured commercial banks in mid-1947 was made by the Federal Reserve System, in cooperation with the Federal Deposit Insurance Corporation. This survey was similar to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

56 ANNUAL REPORT OF BOARD OF GOVERNORS the Federal Reserve survey of member bank loans to commercial and industrial concerns in that it provided valuable information concerning the purpose, characteristics, geographic distribution, and prevalence of an important type of bank credit. Findings relating to various aspects of the loans were published in the Bulletin during the last quarter of the year. For the second successive time, the Board of Governors sponsored a national survey of consumer finances early in the year. These annual surveys provide insight into the shifting financial positions of consumers; their purchases and plans to purchase durable goods and houses; their current attitudes and plans with regard to saving, liquid asset holdings, and investment; and their expectations as to general economic conditions. At the request of the President's Council of Economic Advisers, as well as for the information of the Federal Reserve System and the public, the second annual survey was supplemented at mid-year by an interim survey on the basis of a smaller national sample than had been used in the primary survey. In addition to supplying needed current information, this interim survey was a useful experiment in the further development of research work in this area. Both surveys were conducted for the Board by the Survey Research Center, University of Michigan, and the results were published in the Bulletin. A third annual survey is being conducted in the early part of 1948. On July 1 the Board of Governors took over the conduct of a project begun under other auspices and designed to trace flows of money payments by accounting techniques. The feasibility and potential significance of annual financial statement estimates designed to reveal money inflows and outflows for various sectors of the economy had previously been demonstrated through an exploratory private study covering the years 1936-42. This study was conducted by the National Bureau of Economic Research at the suggestion of and under a grant from the Committee for Economic Development; the Board of Governors cooperated in its planning and execution. The project the Board has now undertaken aims to develop similar financial statements on a current basis, so far as that proves feasible. The first completed step in this task is a comprehensive consolidated condition statement for the banking system which relates banking assets to the money supply for selected dates from June 30, 1929 to September 23, 1947. It is expected that this balance sheet will hereafter be compiled for the end of each quarter. Some of the Board's regular statistical series were revised, including revisions made to increase and improve the coverage of the weekly series of statistics reported by member banks in leading cities. As of June 30, 1947, a single semi-annual series of assets and liabilities of all banks in the United States and its possessions was announced by the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Board of Governors. This series, compiled by the Federal Deposit Insurance Corporation, replaced Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 57 the three series previously compiled and published separately by the three agencies. In December the Board inaugurated a new monthly series of assets and liabilities of all banks in the United States (excluding possessions). The series presents separate figures, which are partly estimated, for all banks, all commercial banks, and for all member banks by class of bank. The cooperative arrangement whereby the Federal Reserve System and the Robert Morris Associates had provided annual financial statement data for manufacturing and trade concerns for the years 1939-46 continued in 1947, covering 1946 reports. This arrangement, however, has been discontinued. Similar data for analytical purposes became available in the new quarterly series compiled by the Securities and Exchange Commission and the Federal Trade Commission. Work in the international field continued at an intensive pace as a result of the critical problems which developed in the international economic and financial relationships of the United States. A large part of the work was closely geared to the activities of the National Advisory Council on International Monetary and Financial Problems and was carried out in close collaboration with the other agencies represented on the Council. Members of the Board's staff in the international field were active in interdepartmental committees and working groups preparing material for use by the Council in connection with foreign lending activities of the United States and with operations of the International Fund and Bank. During the last months of the year they were also heavily absorbed with interdepartmental work on the European Recovery Program, especially in the preparation of legislation and documentation for submission to the Congress. A number of special studies were prepared during the year for the Department of State covering economic and financial conditions in various foreign countries. Continuing attention was also devoted to the special problems and operating responsibilities of the Federal Reserve System in the international field. The Board continued to cooperate in projects in the international field by supplying members of its staff for assignments abroad. The Assistant Director of the Division of Research and Statistics in charge of international matters attended the annual meeting of the Governors of the International Fund and Bank in London as a member of the United States Delegation headed by the Secretary of the Treasury. Another member of the Board's staff devoted much of his time to the development of improved monetary and banking organizations and practices in Latin American countries; he spent two and a half months in Ecuador participating in the preparation of new central bank legislation. A third spent five months in the Philippine Islands as a member of the Joint Philippine-American Finance Commission, which was charged with the preparation of a study of financial and budgetary prob- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

58 ANNUAL REPORT OF BOARD OF GOVERNORS lems of the Philippine Government. The services of members of the staff, on leave without pay, were also made available to the Military Government authorities in Germany and Korea. The Board had numerous visitors from foreign central banks and governments, who had come to the United States on official negotiations, or for consultation with financial authorities, international organizations, bankers, and others. It also facilitated the work of visitors who had come for the study of American banking and supervisory methods and related matters. PUBLICATIONS AND RELEASES The demand for Board publications and releases continued to increase during the year 1947. Schools and colleges particularly made extensive use of material issued by the Board. There was considerable interest in the Board's announcement of the publication of the Federal Reserve Charts on Bank Credit, Money Rates, and Business on a monthly basis beginning in June 1947. Several periodic releases were initiated. In addition to amendments to regulations and various reprints, the following publications were issued: FEDERAL RESERVE BULLETIN. Issued monthly. FEDERAL RESERVE CHARTS ON BANK CREDIT, MONEY RATES, AND BUSINESS. Issued monthly, beginning in June. MEMBER BANK CALL REPORT. Three issues, one each in April, October, and December. PAR LIST, and list of STATE BANK MEMBERS OF THE FEDERAL RESERVE SYSTEM AND NONMEMBER BANKS THAT MAINTAIN CLEARING AC- COUNTS. Monthly supplements for each and complete list for latter in January. LIST OF STOCKS REGISTERED ON NATIONAL SECURITIES EXCHANGES. Quarterly supplements in May, August, and November. BANKING STUDIES (1941). Reprinted in March. FEDERAL RESERVE CHARTS ON CONSUMER CREDIT. Published in April. THIRTY-THIRD ANNUAL REPORT OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM. Published in June. RETAIL CREDIT SURVEY—1946. Published in July. DEBITS AND CLEARINGS STATISTICS, THEIR BACKGROUND AND INTER- PRETATION. Published in October. INTERNATIONAL MONETARY POLICIES (Postwar Economic Studies No. 7) Published in October. FEDERAL RESERVE POLICY (Postwar Economic Studies No. 8). Published in November. THE FEDERAL RESERVE SYSTEM—ITS PURPOSES AND FUNCTIONS (Second Edition). Published in November. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 59 FEDERAL RESERVE MEETINGS The Federal Open Market Committee met in Washington on February 27-28, March i, June 5-6, October 6-7, and December 9, 1947, and the executive committee of the full Committee met from time to time during the year. Under the provisions of Section 12A of the Federal Reserve Act, the Federal Open Market Committee has responsibility for determining the policies under which the open market operations of the Reserve Banks will be carried out. A record of the actions taken by the Committee on questions of policy will be found on pages 88-97 of this report. A Conference of the Chairmen of the Federal Reserve Banks was held on December 1-2, 1947, and was attended by members of the Board of Governors. The Conference of Presidents of the Federal Reserve Banks held meetings on February 25-26, June 4-5, October 3-4, and December 8, and the Board of Governors met with the Presidents on February 28, June 6, October 7, and December 9. Meetings of the Federal Advisory Council were held on March 9-11, May 18-20, September 21-23, and November 16-18. The Board of Governors met with the Council on March 11, May 20, September 23, and November 18. 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. During the year a conference was held at the offices of the Board of Governors in Washington by each of the following: counsel for the various Reserve Banks, Federal Reserve Bank officers in charge of examinations, and Federal Reserve Bank auditors. Other meetings participated in by representatives of the Board of Governors and of the Reserve Banks were held to discuss questions relating to international monetary and credit matters, research and credit problems and policy, Federal Reserve Bank collection systems, personnel administration, expense accounting, and System publications and public relations. 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

62 ANNUAL REPORT OF BOARD OF GOVERNORS NO. I—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) DECEMBER 31, 1947 1 ASSETS [Amounts in boldface type are those shown in the Board's weekly statement. In thousands of dollars.] Interdistrict settlement fund 7,080,726 Gold certificates on hand 1,010,444 Gold certificates with Federal Reserve Agent. 12,719,000 Gold certificates on hand and due from U. S. Treasury 20,810,170 Redemption fund for Federal Reserve notes 687,127 Total gold certificate reserves 21,497,297 Other cash: United States notes 30,767 Silver certificates 207,476 Standard silver dollars 2,244 National and Federal Reserve Bank notes 5,217 Subsidiary silver, nickels, and cents 26,927 Total other cash 272,631 Discounts and advances secured by U. S. Government securities: Discounted for member banks 34,444 Discounted for others ' 34,444 Other discounts and advances: Discounted for member banks 381 Foreign loans on gold 50,600 50,981 Total discounts and advances 85,425 Industrial loans 1,387 U. S. Government securities in System Open Market Account: Bills 11,433,410 Certificates 6,796,505 Notes 1,476,550 Bonds 2,852,869 Total U. S. Government securities 22,559,334 Total loans and securities 22,646,146 Due from foreign banks 95 Federal Reserve notes of other Federal Reserve Banks 162,242 Uncollected items: Transit items 2,713,257 Exchanges for clearing house 197,962 Other cash items 73,780 Total uncollected items 2,984,999 Bank premises: Land 13,070 Buildings (including vaults) 45,562 Fixed machinery and equipment 17,502 Total bank premises 76,134 Less depreciation 42,906 Bank premises, net 33,228 Other assets: Industrial loans past due (2) Miscellaneous assets acquired account industrial loans 139 Miscellaneous assets acquired account closed banks 43 Total 182 Less valuation allowances : . . 68 Net 114 Fiscal Agency and other expenses, reimbursable 3,932 Interest accrued 53,185 Premium on securities 52,437 Deferred charges 1,114 Sundry items receivable 1,895 Real estate acquired for banking house purposes 1,944 Suspense account 593 All other 46 Total other assets 115,260 Total assets 47,711,898 1 Before closing books at end of year. 2 Less than $500. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 63 NO. 1—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) —Continued LIABILITIES Federal Reserve notes outstanding (issued to Federal Reserve Banks) 25,705,984 Less: Held by issuing Federal Reserve Banks 839,380 Forwarded for redemption 46,170 885,550 Federal Reserve notes, net (includes notes held by Treasury and by Federal Reserve Banks other than issuing Bank) 24,820,434 Deposits: Member bank—reserve account 17,898,468 U. S. Treasurer—general account 870,026 Foreign 391,849 Other deposits: Nonmember bank—clearing accounts 134,505 Officers' and certified checks 7,969 Federal Reserve exchange drafts 1,340 All other 425,596 Total other deposits 569,410 Total deposits 19,729,753 Deferred availability items 2,449,763 Other liabilities^ Accrued dividends unpaid 902 Unearned discount 8 Discount on securities 12,208 Sundry items payable 2,406 Suspense account 183 All other liabilities 17 Total other liabilities 15,724 Total liabilities 47,015,674 CAPITAL ACCOUNTS Capital paid in 195,517 Surplus (Sec. 7) 439,823 Surplus (Sec. 13b) 27,455 Other capital accounts: Reserves for contingencies: Reserve for registered mail losses 6,599 All other 18,000 Earnings and expenses: Current earnings 158,656 Current expenses 65,393 Current net earnings 93,263 Add—profit and loss 2,314 Deduct—dividends accrued since January 1 11,523 Interest on Federal Reserve notes 75,224 Unallocated net earnings 8,830 Total other capital accounts 33,429 Total liabilities and capital accounts 47,711,898 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 2—STATEMENT OF CONDITION OF EACH FEDERAL RESERVE BANK AT END OF 1947 AND 1946 [In thousands of dollars] Total Boston New York Philadelphia Cleveland Richmond Item 1947 1947 1946 1947 1946 1947 1946 1947 1946 1947 1946 ASSETS Gold certificates 20,810,17017,587,177 759,612 726,779 6,259,354 5,061,375 1,016,538 858,1451,434,229 1,124,1661,044,281 1,103,170 c Redemption fund for Federal Reserve > notes 687,127 794,116 56,120 55,555 120,919 124,008 60,691 61,009 75,702 77,620 60,479 59,914 f Total gold certificate reserves 21,497,29718,381,293 815,732 782,334 6,380,273 5,185,383 1,077,229 919,1541,509,931 1,201,7861,104,7601,163,084 w Other cash 272,631 267,890 24,804 20,586 39,412 44,537 14,687 19,235 23,878 21,706 19,620 25,076 o Discounts and advances: *3 Secured by U. S. Govt. securities.. 34,444 15,779 2,235 1,285 24,955 2,680 3,455 4,217 1,704 2,316 615 901 Other 50,981 147,300 3,238 8,736 16,905 56,255 3,386 11,330 5,086 12,694 2,479 6,415 Total discounts and advances.... 85,425 163,079 5,473 10,021 41,860 58,935 6,841 15,547 6,790 15,010 3,094 7,316 td Industrial loans 1,387 550 27 1,357 523 30 O > U. S. Government securities: Bills 11,433,-? L4,744,983 771,910 825,149 3,270,067 3,630,224 798,3661,026,4601,040,322 1,452,547 636,584 799,397 Certificates 6,796,505 7,496,012 442,209 554,672 1,482,995 1,890,027 468,634 538,956 647,980 632,265 485,785 448,280 Notes 1,476,550 355,300 96,070 26,291 322,183 89,585 101,811 25,546 140,776 29,968 105,536 21,248 Bonds 2,852,869 753,390 185,619 55,748 622,496 189,958 196,711 54,168 271,995 63,546 203,909 45,054 d Total U. S. Govt. securities 22,559,334 23,349,685 1,495,808 1,461,860 5,697,741 5,799,794 1,565,522 1,645,130 2,101,0732,178,326 1,431,814 1,313,979 O Total loans and securities 22,646,146 23,513,314 1,501,2811,471,908 5,739,601 5,858,729 1,573,720 1,661,200 2,107,8632,193,336 1,434,938 1,321,295 Due from foreign banks 95 102 134 Federal Reserve notes of other Federal Reserve Banks 162,242 163,385 9,130 5,897 17,676 19,882 10,866 8,181 8,922 10,825 22,291 37,399 Uncollected items 2,984,999 2,599,574 244,218 193,426 670,430 576,280 192,379 157,813 275,270 227,369 253,489 227,699 Bank premises 33,007 32,406 1,241 1,297 8,239 8,459 3,182 3,170 4,938 3,850 2,637 2,686 Other assets 115,237 48,449 7,544 3,399 25,057 11,182 7,455 2,912 10,780 4,320 8,219 2,746 Total assets 47,711,654 45,006,413 2,603,956 2,478,854 12,880,719 11,704,486 2,879,526 2,771,673 3,941,591 3,663,201 2,845,959 2,779,990 1 After deducting $64,000 participations of other Federal Reserve Banks on Dec. 31, 1947, and $68,000 on Dec. 31, 1946. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes 24,820,434 24,945,304 1,472,2991,491,783 5,765,916 5,714,364 1,681,880 1,699,277 2,139,963 2,124,731 1,741,896 1,781,923 Deposits: Member bank—reserve account. . .17,899,371 16,138,878 766,622 715,408 5,573,276 4,903,039 867,114 818,125 1,386,873 1,199,768 784,772 733,111 U. S. Treasurer—general account. . 870,031 392,869 66,431 29,866 229,639 94,716 77,363 34,511 79,221 32,896 43,913 13,889 Foreign 391,849 508,016 21,125 30,769 1168,000 1189,873 26,649 39,555 30,597 44,320 16,121 22,398 Other 569,433 313,638 7,444 5,027 472,411 224,947 4,707 2,424 12,185 10,896 2,062 2,317 Total deposits 19,730,684 17,353,401 861,622 781,070 6,443,326 5,412,575 975,833 894,615 1,508,876 1,287,880 846,868 771,715 Deferred availability items 2,449,763 2,019,896 224,606 161,770 449,937 362,569 164,635 122,081 227,328 187,075 221,555 192,135 Other liabilities including accrued dividends 14,806 9,392 901 448 4,109 2,811 898 528 1,383 824 762 385 Total liabilities 47,015,687 44,327,993 2,559,428 2,435,07112,663,288 11,492,319 2,823,246 2,716,5013,877,550 3,600,510 2,811,081 2,746,158 CAPITAL ACCOUNTS Capital paid in 195,517 186,830 11,243 11,095 68,888 65,801 14,370 13,926 18,843 18,304 8,220 7,771 Surplus (Sec. 7) 448,189 439,823 28,117 27,557 138,596 136,549 35,350 34,720 42,173 41,394 21,210 20,676 Surplus (Sec. 13b) 27,543 27,455 3,011 3,012 7,319 7,253 4,489 4,489 1,006 1,007 3,349 3,325 Other capital accounts 24,718 24,312 2,157 2,119 2,628 2,564 2,071 2,037 2,019 1,986 2,099 2,060 Total liabilities and capital accounts 47,711,654 45,006,413 2,603,956 2,478,85412,880,719 11,704,486 2,879,526 2,771,673 3,941,591 3,663,201 2,845,959 2,779,990 Contingent liability on bills purchased for foreign correspondents 2,460 6,547 157 2787 22,181 199 543 228 609 308 Commitments to make industrial loans. 7,434 8,309 490 1,281 1,642 1,596 78 37 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: H Is e s b u l y d e d b F y e t d o F e e r F a d l e e d r R a e e l r s a R e l r e v R s e e e r s A v e e g r v e B e n t an B k a . n .. k . 25,7 8 0 8 5 5 , , 9 5 8 5 4 0 25,7 7 4 9 1 6 , , 6 3 0 0 6 2 1,53 6 5 3 , , 9 6 9 9 8 9 1,53 4 7 5 , , 1 3 7 9 5 2 5,9 1 2 6 9 3 , , 6 7 2 1 6 0 5,8 1 7 6 6 2 , , 6 2 0 4 5 1 1,74 6 6 4 , , 1 22 0 1 1 1,74 4 7 7 , , 0 8 7 0 9 2 2,22 8 9 9 , , 8 8 5 9 8 5 2,19 6 1 6 , ,6 3 6 9 2 3 1,80 6 5 3 , , 5 6 2 2 5 9 1,83 5 5 3 , , 0 1 7 5 5 2 Federal Reserve notes, net3 24,820,434 24,945,304 1,472,2991,491,783 5,765,916 5,714,364 1,681,880 1,699,277 2,139,963 2,124,731 1,741,896 1,781,923 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificates 12,719,000 11,053,000 460,000 455,000 3,570,000 3,470,000 550,000 550,000 735,000 645,000 675,000 760,000 Eligible paper . . 32,410 12,812 2,235 1,285 24,880 2,680 3,455 4,217 615 800 U. S. Government securities 13,550,000 15,226,565 1,100,0001,100,000 2,400,000 2,500,000 1,200,000 1,200,000 i 500',666 !550^000 1,150,000 1,100,000 Total collateral held 26,301,410 26,292,377 1,562,235 1,556,285 5,994,880 5,972,680 1,753,455 1,754,217 2,235,000 2,195,000 1,825,615 1,860,800 1 After deducting $223,720,000 participations of other Federal Reserve Banks on Dec. 31, 1947, and $317,868,000 on Dec. 31, 1946 2 After deducting $1,673,000 participations of other Federal Reserve Banks on Dec. 31, 1947, and $4,366,000 on Dec. 31, 1946. 3 Includes Federal Reserve notes held by the U. S. Treasury and by Federal Reserve Banks other than the issuing Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 2—STATEMENT OF CONDITION OF EACH FEDERAL RESERVE BANK AT END OF 1947 AND 1946—Continued [In thousands of dollars] Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Item 1947 1946 1947 1946 1947 1946 1947 1946 1947 1946 1947 1946 1947 1946 ASSETS Gold certificates . . .... 1,013,7701,024,3264,182,9953,369,273 620,743 596,006 431,975 357,057 750,224 586,156 505,160 466,064 2,791,2892,314,660 CJ Redemption fund for Federal Reserve > notes 40,529 46,254 90,074 136,644 46,693 46,456 22,880 21,360 35,619 34,018 26,180 25,003 51,241 106,275 Total gold certificate reserves. . . 1,054,2991,070,5804,273,0693,505,917 667,436 642,462 454,855 378,417 785,843 620,174 531,340 491,067 2,842,5302,420,935 Other cash 23,750 20,753 42,326 31,560 15,047 15,515 6,793 5,734 10,380 18,520 12,455 12,396 39,479 32,272 d o Discounts and advances: & Secured by U. S. Government H securities 80 550 175 50 280 700 3,450 475 100 Other 2,075 5,187 6,882 18,291 1,771 4,641 1,265 3,413 1,771 4,504 1,670 4,368 4,453 11,466 O w Total discounts and advances. 2,155 5,737 7,057 18,291 1,821 4,921 1,265 3,413 2,471 7,954 1,670 4,368 4,928 11,566 o Industrial loans > J0 U. S. Government securities: d B C i e l r ls ti ficates . .... 3 5 9 3 6 1 , , 9 6 1 1 0 1 3 7 8 0 1 2 , , 3 5 5 7 2 7 1, 9 5 4 3 6 5 , , 5 8 6 6 5 72,3 9 6 5 2 1 , , 8 7 5 78 2 3 5 9 6 0 8 , , 3 9 5 2 4 1 4 6 1 3 2 1 , , 8 2 3 5 1 9 2 2 2 9 3 8 , , 7 5 8 7 8 7 3 2 7 2 4 8 , , 2 14 5 4 3 3 5 2 2 8 2 , ,4 1 3 9 7 3 3 6 7 4 2 8 , , 3 39 9 9 8 3 3 6 9 3 5 , , 3 2 9 7 0 9 4 37 8 4 7 , , 8 9 5 5 2 9 1, 6 0 1 6 9 3 , , 7 4 0 6 2 91, 7 8 1 0 0 3 , , 4 9 5 0 7 7 * O 4 Notes . . 86,229 18,075 205,644 45,113 84,804 19,567 48,618 10,814 71,300 17,651 78,947 17,767 134,632 33,675 Bonds 166,605 38,328 397,328 95,659 163,852 41,492 93,936 22,929 137,759 37,428 152,534 37,675 260,125 71,405 Total U. S. Govt. securities... 1,181,3551,140,3323,085,4043,455,4021,207,9311,105,149 664,919 636,140 1,059,6891,075,876 990,150 918,253 2,077,9282,619,444 w Total loans and securities.... 1,183,5101,146,0693,092,4613,473,6931,209,7521,110,070 666,184 639,553 1,062,1601,083,830 991,820 922,621 2,082,8562,631,010 7* O Due from foreign banks . . . 4 4 13 14 3 3 2 3 3 3 3 3 8 9 J0 Federal Reserve notes of other Federal Reserve Banks ........ 16,919 14,290 22,440 22,944 10,191 9,669 8,158 4,338 10,128 7,583 7,051 4,815 18,470 17,562 174,514 168,736 464,388 387,336 161,999 148,065 67,641 62,219 159,158 136,969 109,719 100,078 211,794 213,584 Bank premises 1,559 1,526 3,064 3,057 1,973 2,011 1,208 1,240 2,456 2,527 797 795 1,713 1,788 Other assets 6,700 2,641 15,992 6,938 7,162 3,199 3,657 1,475 5,726 2,308 6,012 2,355 10,933 4,974 Total assets 2,461,2552,424,5997,913,7537,431,4592,073,5631,930,9941,208,4981,092,9792,035,8541,871,914 1,659,1971,534,130 5,207,7835,322,134 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes 1,397,7161,449,774 4,636,568 4,573,144 1,143,968 1,120,120 626,969 592,688 949,067 922,170 624,739 604,311 2,639,4532,871,019 Deposits: Member bank—reserve account. 789,320 748,1012,655,8492,366,137 691,845 607,336 450,542 398,589 868,410 772,506 863,227 783,0902,201,5212,093,668 U.S. Treasurer—general account 55,31 21,855 101,88" 65,227 41,733 21,768 43,975 20,505 40,670 19,010 39,504 19,791 50,383 18,835 Foreign 13,489 18,109 44,744 63,860 11,515 16,203 8,225 11,914 11,515 15,727 10,857 15,250 29,012 40,038 Other 2,34 1,814 5,724 4,303 8,161 9,338 2,645 2,527 4,325 635 2,292 869 45,130 48,541 Total deposits 860,468 789,8792,808,204 2,499,52 753,254 654,645 505,387 433,535 924,920 807,878 915,880 819,0002,326,0462,201,082 Deferred availability items 173,03. 156,051 372,809 265,651 150,013 130,928 57,024 48,689 135,688 116,746 93,632 86,868 179,501 189,333 Other liabilities including accrued dividends 619 365 2,337 1,886 678 364 867 285 601 332 446 241 1,205 923 Total liabilities 2,431,838 2,396,0697,819,9187,340,2082,047,913 1,906,057 1,190,2471,075,197 2,010,2761,847,1261,634,6971,510,4205,146,2055,262,357 CAPITAL ACCOUNTS Capital paid in 7,514 7,109 23,827 22,435 6,404 6,103 4,293 4,071 6,522 6,167 7,304 6,865 18,089 17,183 Surplus (Sec. 7) 19,110 18,663 66,217 65,078 16,972 16,577 11,233 10,997 16,148 15,729 14,111 13,777 38,952 38,106 Surplus (Sec. 13b) 762 762 1,429 1,429 521 521 1,073 1,073 1,137 1,137 1,307 1,307 2,140 2,140 Other capital accounts 2,031 1,996 2,362 2,309 1,753 1,736 1,652 1,641 1,771 1,755 1,778 1,761 2,397 2,348 Total liabilities and capital accounts 2,461,255 2,424,5997,913,7537,431,4592,073,5631,930,9941,208,4981,092,979 2,035,8541,871,914 1 1,534,1305,207,7835,322,134 -r- Contingent liability on bills purchased for foreign correspondents. 101 335 877 86 222 62 164 86 216 209 217 550 Commitments to make industrial loans 400 351 382 580 4,225 3,750 450 155 143 183 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve Agent ,458,4831,503,304 4,769,011 4,694,6211,187,3661,160,309 644,064 608,201 972,664 949,614 660,981 641,2942,766,3072,996,936 Held by Federal Reserve Bank. . 60,767 53,530 132,443 121,477 43,398 40,189 17,095 15,513 23,597 27,444 36,242 36,983 126,854 125,917 Federal Reserve notes, net1.. . 1,397,716 1,449,774 4,636,568 4,573,1441,143,9681,120,120 626,969 592,688 949,067 922,170 624,739 604,3112,639,4532,871,019 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificates 675,000 615,0002,990,0002,020,000 315,000 300,000 200,000 189,000 280,000 280,000 169,000 169,0002,100,0001,600,000 Eligible paper 50 280 700 3,450 475 100 U. S. Government securities. . . . 800,000 900,0001,800,0002,700,666 950,000 951,565 '450,666 425,666 700,000 700,000 500,606 Vob.ooo 1,000,0001,600,000 Total collateral held. ,475,0001,515,000 4,790,000 4,720,000 ,265,050 1,251,845 650,000 614,000 980,700 983,450 669,000 669,0003,100,4753,200,100 ^Includes Federal Reserve notes held by the U. S. Treasury and by Federal Reserve Banks other than the issuing Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

68 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 3—HOLDINGS OF UNITED STATES GOVERNMENT SECURITIES BY FEDERAL RESERVE BANKS, END OF DECEMBER 1945, 1946, AND 1947 [In thousands of dollars] Rate of December 31, Change during Type of issue interest (Per cent) 1946 1946 1947 Treasury bonds: 1946-56 43,950 -43,950 1946-48 99,700 -99,700 1946-49 47,952 -47,952 1947-52 4K 12,000 12.000 -12,000 1948-50* 2 39,600 39,600 49,600 + 10,000 1948-51 100,500 100.500 100,500 1948* 25,000 25,000 66,000 '+41^660 1949-51*. June 2 7,750 7,750 4,700 -3,050 1949-51*, Sept 2 500 500 5,706 +5,206 1949-51*. Dec 2 18,551 + 18,551 1949-52 31,500 31,500 32,000 +500 1949-53 74,100 74,100 77,600 +3,500 1950-52*, Mar 2 8,065 +8,065 1950-52*. Sept 2 36,800 36,800 57,261 +20,461 1950-52. Sept 70,000 70,000 71,350 + 1,350 1951-54 81,800 81,800 86,400 +4,600 1951-55 16,000 16,000 19,520 +3,520 1951-53* 2 21,150 21,150 400,666 +379,516 1951-53 2% 31,500 31,500 44,270 + 12,770 1951-55* 2 3,700 +3,700 1952-54*. Mar 2K 38,242 +38,242 1952-54*. June 2 174,796 + 174,796 1952-55*. June 2K 31,600 31,600 50,236 + 18,636 1 1 9 9 5 5 3 2 - - 5 5 5 4*. Dec 2 13^700 13^700 28 1 3 6 , , 8 23 1 8 0 +2 + 8 2 3 , , 5 8 3 1 8 0 1954-56 2 3,150 +3,150 1955-60 2K 14,500 14,500 30,545 +16,045 1956-58* 2% 6,940 6,940 63,269 +56,329 1956-59* 2K 291,591 +291,591 1956-59 2% 5,000 5,000 21,316 + 16,316 1958-63 2H 40,900 40,900 72,591 +31,691 1959-62*', June 2K 55,524 +55,524 1959-62*', Dec 2H 113,693 + 113,693 1960-65 2H 37,250 37,250 96,185 +58,935 1962-67*' 2% 16,260 + 16,260 1963-68*' 2K 20,672 +20,672 1964-69*', June 2K 8,437 +8,437 1964-69*', Dec 2K 13,328 + 13,328 1965-70*' J2K 51,017 +51,017 1966-71*' 2K 3,152 +3,152 1967-72*', June 2% 61,840 +61,840 1967-72*, Sept 2K 57,200 55,300 110,777 -1,900 +55,477 1967-72*', Dec 2K 210,316 +210,316 Total Treasury bonds 946,892 753,390 2,852,869 -193,502 +2,099,479 Treasury notes:* Tan. 1,1946 .90 576,550 -576,550 Mar. 15, 1946 1 74,400 -74,400 July 1,1946 .90 899,500 -899,500 Dec. 15, 1946 IK 273,800 -273,800 Mar. 15. 1947 IK 3,500 +3,500 -3,500 Sept. 15, 1947 10,000 + 10,000 -10,000 Sept. 15, 1947 IK 46,400 +46,400 -46,400 Sept. 15, 1948 IK 295,400 295,400 548,150 +252,750 Oct. 1,1948 i 928,400 +928,400 Total Treasury notes 2,119,650 355,300 1,476,550 -1,764,350 +1,121,250 Certificates of indebtedness* 8,364,461 7,496,012 6,338,863 -868,449 -1,157,149 457,642 +457,642 Total certificates 8,364,461 7,496,012 6,796,505 -868,449 -699,507 Treasury bills:* Bought under repurchase option 4,851,923 4,905,617 +53,694 -4,905,617 System account 7,979,322 9,839,366 11,433,410 + 1,860,044 + 1,594,044 Total Treasury bills 12,831,245 14,744,983 11,433,410 + 1,913,738 -3,311,573 Total holdings. . 24,262,248 23,349,685 22,559,334 -912,563 -790,351 * Taxable issues. r Restricted as to commercial bank ownership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 69 NO. 4—HOLDINGS OF SPECIAL SHORT-TERM TREASURY CERTIFICATES BY THE FEDERAL RESERVE BANKS, 1942-471 [In millions of dollars] Date Amount Date Amount Date Amount 1942—June 16 58 1943—Mar. 6 543 I943—june is... 805 19 70 8 . 591 16 659 20 47 9 648 17... 350 22 34 10 632 18 . 256 23 94 11 790 19... 212 Sept. 15 324 12 940 Sept. 8 11 16 189 13 . 1,043 9 .. 126 17 286 15 1,302 10 243 18 76 16 1,250 11 246 19 53 17 981 13 214 Nov. 27 139 18 836 14 179 28 329 19 778 15 .. 424 30 422 20 768 16 258 Dec. 1 98 22 603 1945—Mar. 15 . . 4 10 16 23 700 Dec. 4 107 15 145 24 512 5 318 1943—Jan. 29 115 25 432 6 374 30 202 26 384 7 484 Mar. 2 3 27 304 8 484 4 174 29 104 10 202 5 354 30 40 1 There were no issues during the years 1944, 1946, and 1947. Interest rate X per cent throughout. NO. 5—-VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS OF FEDERAL RESERVE BANKS, 1943-47 [Number in thousands; amounts in thousands of dollars] 1943 1944 1945 1946 1947 NUMBER OF PIECES HANDLED1 Discounts and advances: Notes discounted and advances made 11 Industrial loans: Loans made .3 .3 Commitments to make industrial loans .1 () () () () C C C o h u i e r n r c e k r n s e c c y h e a i r v n e e d c d l e e i a v d n e : d d c a o n u d n t c e o d unted... 3 2 , , 8 8 1 7 0 4, , 0 3 9 0 9 0 3 4 , , 0 16 0 7 6 , , 2 8 6 9 5 8 3 4 , , 0 5 1 6 6 2 , ,7 7 0 1 9 9 3 5 , , 4 7 2 4 3 3, , 8 5 6 4 2 7 3 6, , 1 4 5 9 9 1 , , 6 9 9 6 7 2 U. S. Government checks 266,686 426,460 510,608 380,634 331,914 All other 1,246,384 1,288,465 1,341,342 1,597,377 1,668,651 Collection items handled: U. S. Government coupons paid 16,527 17,054 18,292 20,192 19,003 All other 5,072 4,622 4,483 4,551 37,135 Issues, redemptions, and exchanges of U. S. Government securities 270,608 357,782 382,067 245,904 177,351 Transfer of funds 865 906 939 1,059 1,148 AMOUNTS HANDLED Discounts and advances 2,840,341 14,922,128 34,778,804 20,133,819 17,234,926 Industrial loans: Loans made 60,265 20,381 14,043 3,445 9,296 Commitments to make industrial loans 10,221 4,769 2,350 8,845 6,069 Currency received and counted... 15,599,680 17,157,034 18,307,687 20,945,847 22,099,562 Coin received and counted 381,254 417,014 445,892 519,892 622,054 Checks handled: U. S. Government checks 113,791,554 127,931,710 124,610,917 80,419,096 72,577,329 All other 509,640,311 532,755,045 563,498,349 651,457,054 719,630,054 Collection items handled: U. S. Government coupons paid 1,481,520 1,840,647 2,348,172 2,817,311 2,491,424 All other 7,882,053 7,962,994 9,295,666 9,312,790 6,455,968 Issues, redemptions, and exchanges of U. S. Government securities 211,749,395 264,138,176 302,353,553 278,422,685 254,060,950 Transfer of funds 203,510,209 215,006,532 223,490,280 252,991,164 316,459,625 1 Two or more checks, coupons, etc., handled as a single item are counted as one "piece." 2 Less than 50. 3 Increase reflects change in method of counting items. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 6—EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS DURING 1947 Item System Boston New York d P e h lp il h a i - a C la le n v d e- m Ri o c n h d - Atlanta Chicago St. Louis M ap in o n li e s - K C an it s y as Dallas Fra S n a c n is* CURRENT EARNINGS Discounted bills $2,194,546 $151,040 $675,838 $152,126 $216,756 $134,814 $84,408 $242,863 $144,406 $96,444 $110,819 $44,232 $140,800 Purchased bills 3,890 3,890 Industrial loans 60,438 418 57,475 512 2,033 Commitments to make industrial loans 19,205 14 7,359 633 602 885 7,369 440 105 1,798 U. S. Government securities. . 155,563,861 10,388,433 38,130,99111,193,23714,783,785 9,884,765 8,236,96220,934,866 8,078,124' 4,506,670 7,551,605 6,749,71315,124,710 All other... 813,626 14,798 96,641 10,381 181,582 20,642 25,206 140,354 82,579 9,994 172,169 10,231 49,049 Total current earnings. . 158,655,566 10,554,689 38,907,36011,413,23315,189,48210,041,366 8,349,21121,318,968 8,312,478 4,613,108 7,835,033 6,804,28115,316,357 CURRENT EXPENSES Operating expenses: Salaries: Officers 3,290,148 180,374 678,029 175,058 284,008 223,806 222,308 402,207 215,621 173,329 215,786 207,029 312,593 Employees 48,754,014 2,959,295 11,802,120 2,948,926 4,178,482 3,017,815 2,436,559 7,449,938 2.852,430 1,452,293 2,558,932 2,380,043 4,717,181 Retirement System contributions 5,033,943 301,361 1,186,167 297,220 423,550 313,788 273,795 751,954 306,638 145,221 278,432 252,100 503,717 Legal fees 19,378 358 11,599 7,017 8 250 119 20 Directors' fees and ex- 7 penses 238,525 12,524 15,868 15,251 16,191 35,424 17,308 19,959 15,617 23,634 21,511 30,474 Federal Advisory Coun- 14,764 cil, fees and expenses. . 21,355 1,390 1,028 1,778 970 2,448 1,720 2,140 1,843 2,053 1,615 3,303 Traveling expenses 1,067 (other than of directors and members of Federal Advisory Council) 646,469 37,853 87,427 24,747 56,214 54,186 43,139 80,784 57,540 39,836 43,466 49,796 71,481 Postage and expressage.. 7,289,327 705,627 1,127,117 497,121 635,763 632,255 587,275 946,173 369,457 257,711 412,133 372,629 746,066 Telephone and telegraph. 491,114 21,016 89,692 30,496 45,962 27,123 42,015 36,622 41,721 23,448 38,600 32,112 62,307 Printing, stationery, and supplies 3,666,589 271,773 704,812 242,367 287,806 202,415 281,581 604,007 233,383 94,180 192,940 194,024 357,301 Insurance 618,707 46,267 161,959 29,198 49,455 36,319 29,318 85,610 41,365 18,084 34,568 27,694 58,870 Taxes on real estate 1,786,651 166,396 457,810 91,436 227,469 86,421 77,725 229,113 79,992 84,943 105,540 45,940 133,866 Depreciation (building).. 1,121,087 79,684 221,060 100,242 203,202 92,606 42,548 98,420 66,260 31,406 70,312 40,493 74,854 Light, heat, power, and water 645,449 43,607 150,955 36,288 80,977 43,760 37,569 81,193 43,860 24,976 29,021 36,811 36,432 Repairs and alterations.. 523,259 21,676 61,708 15,345 114,745 14,224 36,940 58,238 78,652 22,143 65,530 23,775 10,283 Rent 648,624 21,106 5,833 37,398 74,418 14,948 67,357 233,211 14,072 4,533 28,444 15,299 132,005 Furniture and equipment, including rental 2,966,705 109,520 620,807 222,406 289,642 183,192 238,818 396,778 205,033 69,280 127,449 214,337 289,443 All other 1,058,264 74,894 146,376 68,295 152,240 49,458 52,128 159,818 86,954 62,073 55,876 48,989 101,163 Inter-Bank expenses.... 23,227 -246,783 29,396 33,751 17,783 14,880 49,357 12,702 9,073 12,701 11,976 31,937 Total operating ex- Digitized for FRASpEenRse s . f 78,819,608 5,077,948 17,270,927 4,874,434 7,161,730 5,027,268 4,521,827 11,682,701 4,727,779 2,529,989 4,295,536 3,976,173 7,673,296 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Less reimbursement for certain fiscal agency and other expenses.... 20,628,180 1,095,409 3,946,385 987,637 1,565,917 1,185,601 1,469,443 3,930,303 1,173,069 641,159 1,196,574 1,115,932 2,320,751 Net operating expenses. . 58,191,428 3,982,539 13,324,542 3,886,797 5,595,813 3,841,667 3,052,384 7,752,398 3,554,710 1,888,830 3,098,962 2,860,241 5,352,545 Assessment for expenses of Board of Governors 2,639,667 167,648 845,995 214,164 244,862 128,360 107,131 358,628 93,699 65,186 93,049 88,714 232,231 Federal Reserve currency: Original cost 3,918,191 243,522 739,438 274,870 386,905 316,494 320,429 627,555 274,752 90,472 165,500 155,014 323,240 Cost of redemption 643,689 28,477 103,915 41,346 50,183 47,954 63,790 104,516 35,955 18,610 31,180 31,255 86,508 Total current expenses.. 65,392,975 4,422,186 15,013,890 4,417,177 6,277,763 4,334,475 3,543,734 8,843,097 3,959,116 2,063,098 3,388,691 3,135,224 5,994,524 PROFIT AND LOSS Current net earnings 93,262,591 6,132,503 23,893,470 6,996,056 8,911,719 5,706,891 4,805,477 12,475,871 4,353,362 2,550,010 4,446,342 3,669,057 9,321,833 Additions to current net earnings: Profits on sales of U. S. Government securities. 2,639,959 185,598 636,645 199,902 255,338 167,375 140,048 340,409 130,373 74,733 128,464 115,634 265,440 Recoveries of, and withdrawals from allowances for, losses on industrial loans (net) . . 119,809 728 94,871 24,210 All other 127,124 314 3,063 5,166 43 1,738 935 107,449 4,045 783 2,729 571 288 Total additions.... 2,886,892 186,640 734,579 205,068 255,381 193,323 140,983 447,858 134,418 75,516 131,193 116,205 265,728 Deductions from current net earnings: Charge-offs and special depreciation on bank premises 464,497 220,944 100,000 143,553 Reserves for contingencies 406,463 37,862 64,383 34,947 32,643 38,602 34,463 52,647 17,008 11,289 16,611 17,140 48,868 All other 42,931 17,064 5,752 2,839 1,896 8,065 1,012 1,858 82 594 479 1,115 2,175 Total deductions. . . 913,891 54,926 70,135 37,786 255,483 46,667 35,475 154,505 160,643 11,883 17,090 18,255 51,043 Net additions 1,973,001 131,714 664,444 167,282 -102 146,656 105,508 293,353 -26,225 63,633 114,103 97,950 214,685 Net earnings before payments to U. S. Treasury. .. 95,235,592 6,264,217 24,557,914 7,163,338 8,911,617 5,853,547 4,910,985 12,769,224 4,327,137 2,613,643 4,560,445 3,767,007 9,536,518 Paid to U. S. Treasury (Sec. 13b) . . 35,605 24,808 7,059 1,992 88 427 401 500 11 83 236 Paid U.S. Treasury (interest on outstanding* Federal Reserve notes) 75,223,818 5,034,646 18,367,942 5,672,116 7,010,672 4,808,290 4,022,554 10,249,336 3,553,033 2,124,282 3,757,934 3,005,545 7,617,468 Netearnings. 19,976,169 1,229,571 6,165,164 1,484,163 1,900,945 1,043,265 888,343 2,519,461 773,703 488,861 802,500 761,379 1,918,814 Dividends paid 11,523,047 671,129 4,052,771 853,837 1,123,393 485,085 441,270 1,380,234 378,794 253,251 383,667 427,300 1,072,316 Transferred to surplus (Sec. 13b) 86,772 -1,214 65,566 -1,461 23,881 Transferred to surplus (Sec. 7) 8,366,350 559,656 2,046,827 630,326 779,013 534,299 447,073 1,139,227 394,909 235,610 418,833 334,079 846,498 Surplus (Sec. 7), January 1. . 439,822,258 27,557,220136,549,12634,719,89041,393,69720,676,05118,662,81265,077,90616,577,077 10,996,95815,729,09313,776,73638,105,692 Surplus (Sec. 7), December 31 448,188,608 28,116,876138,595,95335,350,21642,172,71021,210,35019,109,88566,217,13316,971,98611,232,56816,147,92614,110,81538,952,190 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 7—CURRENT EARNINGS, CURRENT EXPENSES, AND NET EARNINGS OF FEDERAL RESERVE BANKS AND DISPOSITION OF NET EARNINGS, 1914-47 Earnings and expenses Disposition of net earnings Bank and period Net earnings Franchise tax Paid to U. S. Paid to U. S. Transferred Transferred Current Current before pay- Dividends paid to U. S. Treasury Treasury to surplus to surplus earnings expenses ments to paid Treasury2 (Sec. 13b) (interest on (Sec. 13b) (Sec. 7) U. S. Treasuryi F. R. notes) 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 w 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 o 1924 38 340 449 28 431 126 3 718 180 6 682 496 113 646 —3 077 962 o 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 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 Oil 418 11 020 582 1933 49,487,318 29,222,837 7,957,407 8,874,262 -916,855 o 1934 48,902,813 29,241,396 15,231,409 8,781,661 $-60,323 6,510,071 o 1935 42,751,959 31,577,443 9,437,758 8,504,974 $ 297,667 27,695 607,422 w 1936 37,900,639 29,874,023 8,512,433 7,829,581 227,448 102,880 352,524 7» 1937 41,233,135 28,800,614 10,801,247 7,940,966 176,625 67,304 2,616,352 o 1938 36 261 428 28,911 608 9,581,954 8,019,137 119,524 —419,140 1,862,433 1939 38,500,665 28,646,855 12,243,365 8,110,462 24,579 * -425,653 4,533,977 7* C/l 1940 43,537,805 29,165,477 25,860,025 8,214,971 82,152 -54,456 17,617,358 1941 41 380 095 32,963 150 9,137,581 8,429,936 141,465 -4,333 570,513 1942 52,662,704 38,624,044 12,470,451 8,669,076 197,672 49,602 3,554,101 1943 69 305 715 43,545 564 49 528,433 8,911,342 244,726 135,003 40,237,362 1944 104,391,829 49,175,921 58,437,788 9,500,126 326,717 201,150 48,409,795 1945 142,209,546 48,717,271 92,662,268 10,182,851 247,659 262,133 81,969,625 1946 150,385 033 57,235 107 92,523,935 10,962,160 67,054 27,708 81,467,013 1947 158,655,566 65,392,975 95,235,592 11,523,047 35,605 $75,223,818 86,772 8,366,350 Total—1914-47 2,078,338,411 982,291,468 1.058.114,581 254.710.074 149,138,300 2,188,893 75,223.818 3-3,658 4576,857,154 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Aggregate for each Federal Reserve Bank, 1914-47: Boston 139,708,931 69,957,051 68,775,119 17,865,710 7,111,395 280,843 5,034,646 + 135,412 38,347,113 New York 585,206,213 236,212,348 349,007,049 87,278,032 68,006,262 369,115 18,367,942 -433,413 175,419,111 Philadelphia 159,114,802 74,180,856 85,368,477 23,153,294 5,558,901 722,406 5,672,116 +290,661 49,971,099 Cleveland 189,577,300 91,315,384 93,039,690 25,716,950 4,842,447 82,930 7,010,673 -9,907 55,396,597 Richmond 108,742,692 57,260,854 48,853,478 10,725,380 6,200,189 172,493 4,808,290 -71,516 27,018,642 Atlanta 99,122,827 47,461,973 46,558,116 9,118,329 8,950,561 79,265 4,022,554 +5,491 24,381,916 Chicago 284,623,153 129,358,367 146,948,458 29,665,301 25,313,526 151,045 10,249,335 +11,681 81,557,570 St. Louis 93,145,607 51,255,509 37,231,327 8,876,616 2,755,629 7,464 3,553,033 -26,514 22,065,099 Minneapolis 63,801,117 33,650,904 28,787,915 6,165,588 5,202,900 55,615 2,124,282 +64,875 15,174,655 Kansas City 99,665,807 57,274,153 39,587,972 8,556,195 6,939,100 64,213 3,757,934 -8,674 20,279,204 Dallas 77,173,899 43,832,719 30,437,267 8,270,625 560,049 102,083 3,005,545 +55,336 18,443,629 San Francisco 178,456,063 90,531,350 83,519,713 19,318.054 7,697,341 101,421 7,617,468 -17,090 48,802,519 Total 2,078,338,411 982,291,468 1,058,114,581 254,710,074 149,138,300 2,188,893 75,223,818 -3,658 576,857,154 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. w 3 On Dec. 31, 1947, 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 O w making loans to industry—amounted to $27,542,653 ($27,546,311 received from the Secretary of the Treasury minus the $3,658 net debits shown here). 4 On Dec. 31. 1947, surplus (Sec. 7)—accumulated pursuant to Section 7 of the Federal Reserve Act—amounted to $448,188,608 ($576,857,154 retained net earnings, shown here, minus $139,299,557, charge-off cost of Federal Deposit Insurance Corporation stock, and $500,000, charge-off on bank premises, plus $11,131,011 transferred from reserves for contingencies). in ft Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

74 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 8—BANK PREMISES OF FEDERAL RESERVE BANKS AND BRANCHES DECEMBER 31, 1947 Cost Federal Reserve Bank or Net branch Building Fixed ma- book value Land (Including chinery and Total vaults) equipment Boston $ 1,246,726 $ 3,542,603 $ 662,157 $ 5,451,486 1,240,780 New York 5,215,656 12,183,528 4,823,123 22,222,307 6,987,215 Annex.... 592,679 1,451,570 215,418 2,259,667 872,665 Buffalo 255,000 465,707 720,707 379,200 Philadelphia... 1,884,357 4,471,943 911,987 7,268.287 3,181,969 Cleveland 1,295,490 6,464,253 1,626,573 9,386,316 2,463,791 Cincinnati 380,744 1,301,717 279,462 1,961,923 1,200,000 Pittsburgh 781,364 1.049,451 379.694 2,210,509 1,273,736 Richmond 271,924 2,101,178 663,667 3,036,769 1,105,176 Annex. . . . 80,333 482,482 109,132 671,947 153,489 Baltimore 250,487 1,247,262 331,970 1,829,719 935,815 Charlotte 105,701 291,175 150,107 546,983 442,921 Atlanta 283,000 1,423,762 287,941 1,994,703 702,870 Birmingham. . . 124,137 330.680 65,491 520,308 141,209 Jacksonville. . . 45,842 238,231 39,669 323,742 90,767 Nashville 48,000 211,616 35,091 294,707 102,149 New Orleans... 277,078 762,455 212,281 1,251,814 522,116 Chicago 2,963,548 6,371,915 1,443,104 10,778,567 2.125,740 Detroit 1,022,064 1,052,107 174,116 2,248,287 937,767 St. Louis 1,355,374 2,111,809 1,296,893 4,764,076 1,335,905 Little Rock 85,007 240,733 151,092 476,832 192,833 Louisville 131,177 226,259 72,463 429,899 171,275 Memphis 128,542 287.468 106,062 522,072 272,615 Minneapolis. . . 600,521 2,316,746 660,969 3,578,236 1,093,493 Helena 15,710 126,401 44,142 186,253 114,946 Kansas City... 495,300 3,391,101 931,949 4,818,350 1,588,658 Denver 101,512 449,876 79,268 630,656 283,024 Oklahoma City 65,021 409,890 95,480 570,391 229,168 Omaha 176,427 397,938 91,455 665,820 355,355 Dallas 189,831 1,350,945 452,161 1,992,937 457,616 El Paso 39,003 114,644 30,191 183,838 46,030 Houston....... 78,812 313,335 112,111 504,258 163,891 San Antonio... 75,002 159,743 54,619 289,364 129.873 San Francisco.. 412,996 3,144,407 784,102 4,341,505 976,155 Los Angeles 443,488 988,109 323,195 1,754,792 506.138 Salt Lake City. 114,075 341,449 84,814 540,338 230,868 Total 21,631,928 61,814,488 17,781,949 101,228,365 33,007,218 OTHER REAL ESTATE ACQUIRED FOR BANKING HOUSE PURPOSES Boston $ 364,188 $ 78,793 $ 442,981 $ 282,941 New York 45,000 125,864 170,864 64,800 Pittsburgh.... 1316,537 316,537 220,000 Richmond 106 481 1,099 107,580 72,147 Charlotte... 10,868 10,868 10,868 Atlanta 35 000 35,000 35,000 Jacksonville »155,617 155,617 155,617 St. Louis.. . 176,055 389,828 146,456 712,339 597,205 San Francisco 60 000 60,000 60,000 Los Angeles 35,000 35,000 35,000 Portland2... 160,000 160,000 160,000 Seattle* 1250,000 250,000 250,000 Total . 1,714,746 595,584 146,456 2,456,786 1,943,578 1 Includes building on site. 2 The Portland and Seattle Branches occupy rented quarters. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 9—NUMBER AND SALARIES OF OFFICERS AND EMPLOYEES OF FEDERAL RESERVE BANKS [December 31, 1947] President Other officers Employees1 Total Federal Reserve Bank (Including branches) Annual Salary Number Annual salaries Number Annual salaries Number Annual salaries W Boston . . .. . $ 25,000 15 $ 157,250 1,250 $ 3,024,340 1,266 $ 3,206,590 New York 50,000 49 617,770 3,935 11,049,204 3,985 11,716,974 Philadelphia . . .. ... ... 25,000 13 145,000 1,103 2,876,482 1,117 3,046,482 25,000 28 252,500 1,801 4,024,584 1,830 4,302,084 Richmond, . . 25,000 23 201,500 1,333 2,802,347 1,357 3,028,847 Atlanta 25,000 29 206,100 1,055 2,236,592 1,085 2,467,692 Chicago. . . 35,000 34 366,950 2,860 7,090,112 2,895 7,492,062 25,000 23' 190,490 1,195 2,713,652 1,219 2,929,142 25,000 17 150,350 639 1,436,740 657 1,612,090 Kansas City 25,000 22 189,500 1,105 2,367,518 1,128 2,582,018 Dallas 25,000 23 185,800 896 2,124,881 920 2,335 681 San Francisco 25,000 34 289,100 1,870 4,651,176 1,905 4,965,276 Total $335,000 310 $2,952,310 19,042 $46,397,628 19,364 $49,684,938 1 Includes 553 part-time employees. NOTE: During the year 1947, $13,620,781 was reimbursed to the Banks on account of salaries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

7 6 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, 1947 Bos- New Phil- Cleve- Rich- At- Chi- St. Min- Kan- Dal- San Type of transaction ton York adel- land mond lanta cago Louis neap- sas las Franphia olis City cisco Discounts for and advances to member banks under Sees. 13 and 13a of the Federal Reserve Act 1 1 1 1 1 1 1 1 1 1 1 1 Advances to member banks under Sec. 10(b) of the Federal Reserve Act IK IK IK IK IK IK Advances to individuals, partnerships, or corporations other" than member banks secured by direct obligations of the United States (last paragraph of Sec. 13 of the Federal Reserve Act) 2 2 2 2 2 2 2 2 2 Loans to industrial or commercial businesses under Sec. 13b of the Federal Reserve Act, direct or in participation with financing institutions... 2K-5 2K-5 2K-5 Discounts for and purchases from financing institutions under Sec. 13b of the Federal Reserve Act: On portion for which in- On s t r i e tu m ti a o in n i n is g o p b o l r i ti g o a n ted.... 8 8 00 2 1 1- - 5 5 23^-5 1-1K w <*) (? Commitments to make loans under Sec. 13b of the Federal Reserve Act: To industrial or commercial businesses K-l H-iH To financing institutions.. H-iH H-iH (4) K-H-iH (4) K- H-iH Minimum buying rates on prime bankers' acceptances payable in dollars (5) 1-90 days 91-120 days 121-180 days 1 1 Rate charged borrower by financing institution less commitment rate. 2 May charge same rate as charged borrower by financing institution, if lower. 8 Rate charged borrower. 4 Financing institution is charged 34 per cent on undisbursed portion of loan. 5 The same minimum rates in effect at the Federal Reserve Bank of New York generally apply to any purchases made by other Federal Reserve Banks. 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 to principal and interest by the United States, or by obligations of Federal Intermediate Credit Banks maturing 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 maturities 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 loans and commitments made under Section 13b of the Federal Reserve Act may have maturities not exceeding 5 years. SPECIAL NOTE: Federal Reserve Bank discount rates on eligible paper were increased during January 1948. See text, p. 6. Discount rates currently in effect are published in the Federal Reserve Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 77 NO. 11—MEMBER BANK RESERVE REQUIREMENTS [Per cent of deposits] Net demand deposits1 Time deposits Period in effect (All member Central reserve Reserve Country banks) city banks city banks banks June 21, 1917-Aug. 15, 1936 13 10 7 3 Aug. 16, 1936-Feb. 28, 1937 19K 15 10K 4K Mar. 1, 1937-Apr. 30, 1937 22K 17H May 1, 1937-Apr. 15, 1938 26 20 14 6 Apr. 16, 1938-Oct. 31, 1941 22K 17K 12 5 Nov. 1, 1941-Aug. 19, 1942 26 20 14 6 Aug. 20, 1942-Sept. 13, 1942 24 20 14 6 Sept. 14, 1942-Oct. 2, 1942 22 20 14 6 Oct. 3, 1942-Feb. 26, 1948 20 20 14 6 Feb. 27, 1948 • 22 20 14 6 1 Demand deposits subject to reserve requirements, i.e., total demand deposits minus (1) cash items in process of collection, (2) demand balances due from domestic banks, and (3) war loan and Series E bond accounts during the period Apr. 13, 1943 to June 30, 1947, and all U. S. Government demand accounts Apr. 24, 1917 to Aug. 23, 1935. NO. 12—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 annum] Nov. 1, 1933, Feb. 1, 1935, In effect Types of deposit to to beginning Jan. 31, 1935 Dec. 31, 1935 Jan. 1, 1936 Savings deposits 3 2K 2K Postal Savings deposits 3 2K 2% Other time deposits payable: In 6 months or more 3 2K 2V* In 90 days to 6 months 3 2K 2 In less than 90 days 3 2K 1 NOTE : Maximum rates that may be paid by insured nonmember banks as established by the Federal Deposit Insurance Corporation, effective Feb. 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. 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] Nov. 1, 1937- Feb.5,1945- July 5, 1945- Jan. 21, 1946- Effective Feb. 4, 1945 July 4, 1945 Jan. 20, 1946 Jan. 31, 1947 Feb. 1, 1947 Regulation T: For extensions of credit by brokers and dealers on listed securities 40 50 75 100 75 For short sales 50 50 75 100 75 Regulation U: For loans by banks on stocks. 40 50 75 100 75 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 per cent) and the maximum loan value. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF BOARD OF GOVERNORS NO. 14—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, until November 1, 1947. Consumer credit controls under Regulation W ceased to be operative after November 1, 1947, in accordance with the Joint Resolution of Congress (S.J.Res. 148) approved on August 8, 1947. As revised effective December 1, 1946 Type of credit Down Maximum payment maturity (Per cent) i (Months) Instalment sales: Mechanical refrigerators 15 Washing machines, dishwashers, and ironers , 33K 15 Cooking stoves and ranges. 33K 15 Combination units incorporating foregoing. 33^ 15 Sewing machines and vacuum cleaners 15 Radios and phonographs. 15 Room-unit air conditioners 15 Furniture and soft-surface floor coverings. 20 15 Automobiles 15 Instalment loans: To purchase listed articles. Other 15 Renewals, revisions, and consolidations of instalment credit. 15 1 Down payments determined after deduction of any trade-in, except in case of automobiles. 8 Where credit was to purchase listed articles, requirements same as on instalment sales of the respective articles. NOTE: The above limitations were subject to various exceptions; for exceptions in detail, and for additional provisions not reflected in this table, the regulation should be consulted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 79 NO. 15—ANALYSIS OF CHANGES IN NUMBER OF BANKING OFFICES DURING 1947 Commercial and stock savings banks and nondeposit trust companies Mutual savings All Member Nonmember banks banks banks banks Total Na- State In- Non- In- Nontional member sured insured sured insured Number of banks, Dec. 31, 1946. 14,585 14,044 5,007 U.893 6,457 690 1191 350 Changes during 1947: N Su e s w p e b n a s n io k n s s 2 + 1 - 1 1 1 +111I + 19 +14 +66 + - 1 1 2 Consolidations and absorptions: Banks converted into branches. -55 -55 -19 -11 -23 -2 Other -29 -29 -7 -4 -13 -5 Voluntary liquidations3 -11 -11 -2 -1 -3 -5 Unclassified -1 -1 -1 Inter-class changes: Conversions— National into State ... -1 + 1 Feder S a t l a t R e e i s n e t r o v e n a m ti e o m n b al ership:4 +8 ' "-6 Admissions of State banks.... +38 -37 -1 Withdrawals of State banks .. -5 +5 Federal deposit insurance:6 Admissions of State banks +28 -28 +3 -3 Withdrawals of State banks.. . -1 +1 Net increase or decrease +14 +14 -2 +25 +21 -30 +3 -3 Number of banks, Dec. 31,1947 before revision... 14,599 14,058 5,005 1,918 6,478 660 194 347 Changes due to revision of series6. . + 115 +123 + 123 -8 Number of banks after revision. 14,714 14,181 5,005 1,918 6,478 783 194 339 Number of branches,7 Dec. 31, 1946 4,059 3,902 1,721 1,118 1,001 62 115 42 Changes during 1947: De novo branches... + 160 +146 +64 +32 +47 +3 +9 +5 Banks converted into branches.... +55 +55 +30 + 16 +9 Branches discontinued -21 -21 -3 -13 Unclassified . -1 -1 -1 Inter-class branch changes: National to State member -1 + 1 State member to national +4 -4 Nonmember to State member. +7 -7 Insured to noninsured -1 +1 Net i N nc o r n e i a n s s e u r o e r d d t e o c r i e n a s s u e red +193' ' +i79 ' " * +9 i ' •+49" + + 3 6 1 +3 +9 +5 Number on Dec. 31,1947, before revision 4,252 4,081 1,812 1,167 1,037 65 124 47 Changes in number of branches due to revision of series6 +9 +9 +5 +1 +1 +2 Number of branches ,7 after revision 4,261 4,090 1,817 1,168 1,038 67 124 47 Number of banking facilities at military reservations,8 Dec. 31, 1946 79 79 60 14 5 Changes during 1947: Established +2 +2 +2 Reopened at veterans hospital . . . Discontinued -10 -10 Q i Inter-class change • Net decrease " "-8 -8 -7 -1 Number of banking facilities at military reservations,8 Dec. 31, 1947 71 71 53 13 5 1 The State member bank figures and the insured mutual savings banks figures both include three member mutual savings banks. These banks are not included in the total for "commercial banks" and are included only once in "all banks." 2 Exclusive of new banks organized to succeed operating banks. 8 Exclusive of liquidations incident to the succession, conversion, and absorption of banks. 4 Exclusive of conversions of national banks into State member banks, or vice versa. Such changes do not affect Federal Reserve membership; they are included under "conversions." 5 Exclusive of insured nonmember banks converted into national banks or admitted to Federal Reserve membership, or vice versa. Such changes do not affect Federal Deposit Insurance Corporation membership; they are included in the appropriate groups under "inter-class bank changes." 6 As of June 30, 1947 the series was revised to conform (except that it excludes possessions) with the number of banks in the revised all bank series announced in November 1947 by the Federal bank supervisory authorities. The revision resulted in a net addition of 115 banks and 9 branches. 7 Covers all branches and other additional offices at which deposits are received, checks paid, or money lent. * "Banking facilities" are provided through arrangements made by the Treasury Department with banks designated as depositaries and financial agents of the Government. The figures shown do not include branches that have also been designated by the Treasury Department as "banking facilities." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

8o ANNUAL REPORT OF BOARD OF GOVERNORS NO. 16—NUMBER OF BANKING OFFICES ON FEDERAL RESERVE PAR LIST AND NOT ON PAR LIST, BY FEDERAL RESERVE DISTRICTS AND STATES, DECEMBER 31, 1947* Total banks, On par list branches, and Not on par list Federal Reservec o h f e f c ic k e s s a o r n e w d h ra ic w h n Total Member Nonmember (Nonmember) district or State Branches Branches Branches Branches 3ranches Banks and Banks and Banks and Banks and Banks and offices offices offices offices offices DISTRICT Boston 493 289 493 289 336 214 157 75 New York 926 835 926 835 797 770 129 65 Philadelphia. . . 844 134 844 134 647 99 197 35 Cleveland 1,145 247 1,145 247 710 214 435 33 Richmond 1,010 430 790 305 475 200 315 105 ' 220' ' "125' Atlanta 1,166 163 547 127 340 111 207 16 619 36 Chicago 2,484 561 2,428 535 1,000 216 1,428 319 56 26 St. Louis...... 1,467 131 1,115 71 495 40 620 31 352 60 Minneapolis. . . 1,278 111 609 41 475 26 134 15 669 70 Kansas City. . . 1,751 7 1,740 7 758 4 982 3 11 Dallas 1,007 36 897 28 613 19 284 9 110 8 San Francisco.. 507 1,204 503 1,204 271 1,138 232 66 4 Total 14,078 4,148 12,037 3,823 6,917 3,051 5,120 772 2,041 325 STATE Alabama 222 22 112 22 87 22 25 110 Arizona 10 40 10 40 5 30 5 io Arkansas 228 19 99 5 66 1 33 4 129 14 California 192 896 192 896 115 854 77 42 Colorado 142 142 1 92 1 50 Connecticut. . . 115 22 115 22 65 11 50 11 Delaware 39 14 39 14 17 4 22 10 Dist. of Col.. . . 19 38 19 38 16 35 3 3 Florida 178 2 115 2 71 2 44 63 Georgia 379 31 99 27 64 26 35 1 280 4 Idaho 48 45 48 45 26 43 22 2 Illinois 878 3 876 3 503 3 373 2 Indiana 487 89 487 89 237 33 250 56 Iowa 664 162 664 162 163 501 162 Kansas ... 609 607 214 393 2 Kentucky 385 36 385 36 113 25 272 11 Louisiana 160 63 58 41 46 36 12 5 102 22 Maine 63 69 63 69 38 37 25 32 Maryland 166 101 166 101 78 68 88 33 Massachusetts. 182 152 182 152 147 140 35 12 Michigan 442 206 442 206 229 160 213 46 Minnesota . 677 6 264 6 208 6 56 413 Mississippi. . . . 206 55 39 7 31 1 8 6 167 48 Missouri .... 594 526 180 346 68 Montana 112 112 82 30 Nebraska 410 2 410 2 145 2 265 Nevada 8 18 8 18 6 17 2 1 New Hampshire 73 2 73 2 52 1 21 1 New Jersey.... 340 137 340 137 292 121 48 16 New Mexico. . . 47 8 47 8 33 14 8 New York.. . . . 658 714 658 714 575 661 83 53 North Carolina. 205 170 87 48 53 28 34 20 *"iis* in' North Dakota. 151 24 49 5 41 8 5 102 19 Ohio 668 189 668 189 424 165 244 24 Oklahoma 384 1 374 1 225 1 149 10 Oregon 69 81 69 81 32 76 37 5 Pennsylvania. .. 990 149 990 149 758 125 232 24 Rhode Island. . 19 41 19 41 11 29 8 12 South Carolina. 150 33 57 31 31 27 26 4 93 2 South Dakota.. 170 47 69 21 63 20 6 1 101 26 Tennessee 295 74 196 58 81 46 115 12 99 16 Texas 889 4 829 4 563 4 266 60 Utah 60 15 60 15 34 13 26 2 Vermont 69 10 69 10 40 2 29 8 Virginia 314 88 307 87 202 42 105 45 7 1 Washington.... 123 119 119 119 54 112 65 7 4 "West Virginia 182 180 108 72 2 Wisconsin 552 150 443 99 163 21 280 78 109 51 Wyoming 55 55 38 17 1 Does not include mutual savings banks, on a few of which some checks are drawn, but does include 71 banking facilities (see footnote 8, Table 15). The difference in the number of member banks on Dec. 31, 1947 shown in this table and in Table 15 is due to the fact that this table excludes 3 nondeposit trust companies and 3 mutual savings banks on which no checks are drawn. The difference between the number of nonmember commercial banks is due to the fact that this table excludes 100 banks and trust companies on which no checks are drawn. Back figures.—See Banking and Monetary Statistics, Table 15, and previous Annual Reports. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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RECORD OF POLICY ACTIONS JANUARY 17, 1947 Members present: Mr. Eccles, Chairman; Mr. Draper; Mr. Evans. Amendments to Regulation T, Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges, and Regulation U, Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange. By unanimous vote and effective February i, 1947, Regulations T and U were amended to reduce from, 100 per cent to 75 per cent the margin requirements prescribed on registered securities (other than exempted securities) in a general account and on short sales under Regulation T and on stocks under Regulation U. The change restored margin requirements to the levels prevailing prior to January 21, 1946. When the Board increased margin requirements from 75 per cent to 100 per cent, effective January 21, 1946, accumulated and prospective inflationary pressures had reached dangerous proportions because of the vast expansion of the country's money supply resulting from war financing, the rising level of current incomes, the huge backlog of public wants and needs, and the acute shortage of most goods to satisfy this demand. Under these circumstances, the Board felt that any growth in the use of credit for the purpose of buying securities could only intensify inflationary pressures. While it was recognized that margin requirements would have only a minor influence in combating general inflation, the Board nevertheless felt that it should do what it could to curb inflationary developments brought about by speculative activity in the stock markets. In the intervening year economic conditions and prospects had altered somewhat. The supply of money was reduced during the year as a result of a substantial decrease of the Government debt held by the banking system, and this had had a salutary effect. In contrast with the behavior of most prices, stock prices, which had risen sharply for several months prior to January 1946 and continued to rise somewhat further after that time, subsequently declined materially. The level at the beginning of 1947 was about the same as that existing when margin requirements were increased to 75 per cent. At the same time, the volume of credit in the stock market had been substantially reduced until that used for carrying listed securities was at about the lowest level in the last thirty years. In these circumstances some readjustment in margin requirements was appropriate. By its action the Board restored the 75 per cent level in effect from July 5, 1945 until January 21, 1946. The resulting requirement, with this adjustment to changed economic conditions, continued to be restrictive without being prohibitive. 82 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 83 APRIL 23, 1947 Members present: Mr. Draper, Chairman pro tern; Mr. Evans; Mr. rardaman; Mr. Clayton. Establishment of Interest Rate Payable by the Federal Reserve Banks on Federal Reserve Notes. Under authority of the fourth paragraph of Section 16 of the Federal Reserve Act, the Board, by unanimous vote, established for each Federal Reserve Bank for the three months' period ending March 31, 1947, a specified rate of interest per annum on that amount of the Federal Reserve notes of each such Bank which equalled the average daily total amount of its outstanding Federal Reserve notes during such period less the average daily amount of gold certificates held during such period by the Federal Reserve Agent as collateral security for such notes. Interest in an amount calculated in the manner and at the rate specified for each Federal Reserve Bank was required to be paid by such Bank to the United States on April 24, 1947. The reasons for and the purpose of the Board's action are contained in the following announcement released in the press on April 24, 1947: "As a result of operations essential to Government financing during and since the war, and operations required by the needs of business and the public for credit and currency, earnings of the twelve Federal Reserve Banks have been at relatively high levels. On the basis of present estimates, it is expected that net earnings of the Federal Reserve Banks for 1947, after payment of the statutory dividends to member banks, will aggregate more than $60,000,000. In view of these facts, and of the fact that at the end of 1946 the surplus of each Federal Reserve Bank was equal to its subscribed capital, the Board has decided to invoke the authority, granted to it under Section 16 of the Federal Reserve Act, to levy an interest charge on Federal Reserve notes issued by the Federal Reserve Banks. The purpose of this interest charge is to pay into the Treasury approximately 90 per cent of the net earnings of the Federal Reserve Banks for 1947. "The authority to levy an interest charge on Federal Reserve notes not covered by gold certificates has not been used previously, chiefly because of the existence, prior to 1933, of so-called franchise tax provisions of the law which had a similar effect; that is, of transferring excess earnings of the Reserve Banks to the Treasury. Under these provisions, which were repealed in 1933, each Federal Reserve Bank was required to pay a franchise tax to the Government equal to 90 per cent of its net earnings after it had accumulated a surplus equal to its subscribed capital. To the end of 1932, the Federal Reserve Banks had paid franchise taxes to the United States Treasury amounting to $149,000,000, and at that time the Federal Reserve Banks had accumulated surplus accounts of $278,000,000, as compared with subscribed capital aggregating $302,000,000. In the amendment of the Federal Reserve Act, contained in the Banking Act of I933> providing for the establishment of the Federal Deposit Insurance Corporation, Congress required each Federal Reserve Bank to pay an amount equal to one-half of its surplus on January 1, 1933, as a subscription to the capital stock of the FDIC on which no dividends would Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 85 DECEMBER 19, 1947 Members present: Mr. Eccles, Chairman; Mr. Szymczak; Mr. Draper; Mr. Evans; Mr. Vardaman; Mr. Clayton. Standard for Classification of Reserve Cities. By unanimous vote, the following standard for classification of reserve cities was adopted, for the reasons set forth in the statement, to become effective March 1, 1948: For a considerable period of time, the Board of Governers of the Federal Reserve System has been considering the adoption of a standard or basis for the classification of central reserve and reserve cities in order to enable it properly to discharge its responsibilities under the provision of the Federal Reserve Act which empowers the Board to add to or reclassify such cities or to terminate their designation as such. For many years prior to the enactment of the Federal Reserve Act in 1913, national banks had been permitted by law to carry a part of their reserves with other national banks in cities known as central reserve or reserve cities, and accordingly national banks in such cities were required to maintain higher reserves against their deposits. The Federal Reserve Act, following the National Bank Act in this respect, provided for differentials in the reserve requirements of member banks of the Federal Reserve System according to their location in central reserve cities, reserve cities, or elsewhere. Central reserve and reserve cities existing in 1913 were continued as such by the Federal Reserve Act, but the Board of Governors was given authority to make changes in the designations of such cities. From time to time since the enactment of the Federal Reserve Act, the Board has designated cities as reserve cities and terminated the reserve city status of other cities. Such determinations by the Board have been made on the basis of the facts of particular cases without the consistent application of any uniform guiding principle; and consequently certain anomalous and illogical situations have developed in the classifications of reserve cities. The Board, therefore, concluded that the existing classifications are unsatisfactory and that there is a need for the establishment of a logical, fair, and appropriate basis for the designation and termination of reserve cities. On October 24, 1947, the Board, acting in accordance with Section 4 of the Administrative Procedure Act and Section 2 of the Rules of Procedure of the Board of Governors of the Federal Reserve System, published in the Federal Register notice of a proposed action with respect to the classification of cities as reserve and central reserve cities and the termination of the designation of certain cities as reserve cities. This notice stated that interested persons might submit to the Board written data, views, and arguments with respect to the proposal, and accordingly a number of banks submitted letters expressing their views and comments. In addition, representatives of banks in a number of the cities whose status would be affected by the proposal appeared before the Board and made an oral presentation of their views. After due and careful consideration of all* relevant matter thus presented to the Board with respect to the proposal, the Board has concluded that a logical, fair, and appropriate standard for determining the designation and termination of reserve cities is one that is determined by the ratio of interbank demand deposits held by member banks in each city to the aggregate amount of interbank demand deposits held by all member banks of the Federal Reserve System, or by such a ratio considered in connection with the ratio of interbank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 ANNUAL REPORT OF BOARD OF GOVERNORS demand deposits held by member banks in each city to the aggregate amount of all demand deposits held by the member banks in such city; and that such standard for the designation and termination of reserve cities should be reapplied at three-year intervals. In opposition to the discontinuance of certain cities as reserve cities under the Board's proposal it was contended by the representatives of member banks in such cities that such discontinuance would adversely affect the business of banks in those cities, would detract from their prestige, would not take into account their geographical situation, or would . deprive them of certain advantages with respect to deposits under applicable State law. The Board feels that such objections, while they may be important to the banks involved, are not to be regarded as controlling factors in determining whether cities should be classed as reserve cities in view of the purpose of such classifications. However, the Board recognizes the fact that certain cities now classified as reserve cities have held this status for many years, in some instances since before the enactment of the Federal Reserve Act, and, since the continuance of such cities as reserve cities would mean that member banks therein must carry higher reserves than would be required of them if such cities were discontinued as reserve cities in accordance with the standard indicated above, the Board is willing that such cities be continued as reserve cities if all the member banks in such cities request that this be done. In accordance with the conclusions reached above and pursuant to authority conferred upon it by Section n (e) of the Federal Reserve Act and other provisions of that Act, the Board hereby adopts the rule set forth below, to become effective March i, 1948: Classification of Central Reserve and Reserve Cities. (a) Central reserve cities. The cities of New York and Chicago are hereby classified (and continued) as central reserve cities. (b) Reserve cities. (1) The city of Washington, D. C, and every city except New York and Chicago in which there is situated a Federal Reserve Bank or a branch of a Federal Reserve Bank are hereby classified (and continued) as reserve cities. (2) The following are also classified as reserve cities: (A) Every city in which, on the dates of official call reports of condition in the two years ended June 30, 1947, member banks of the Federal Reserve System, exclusive of their offices in other cities, held an aggregate amount of demand deposits owing to banks equal, on the average, to one-third of one per cent or more of the aggregate amount of demand deposits owing to banks by all member banks of the Federal Reserve System; and (B) Every city in which, on the dates of official call reports of condition in the two years ended June 30, 1947, member banks of the Federal Reserve System, exclusive of their offices in other cities, held an aggregate amount of demand deposits owing to banks equal, on the average, to one-fourth of one per cent or more of the aggregate amount of demand deposits owing to banks by all member banks of the Federal Reserve System and also equal, on the average, to 33V3 Per cent or more of the aggregate amount of all demand deposits held by the member banks in such city. On the basis of (A) and (B) above, the following cities, in addition to the reserve cities classified as such under paragraph (1) above, are hereby classified (and continued) as reserve cities: Columbus, Ohio; Des Moines, Iowa; Indianapolis, Indiana; Milwaukee, Wis- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 87 consin; St. Paul, Minnesota; Lincoln, Nebraska; Tulsa, Oklahoma; Wichita, Kansas; Fort Worth, Texas; Cedar Rapids, Iowa; and Sioux City, Iowa; the following city is hereby added and is hereby classified as a reserve city: National City (National Stock Yards), Illinois; and the designation of the following cities as reserve cities is hereby terminated (unless the present classification of such cities is continued in accordance with paragraph (3) below) : Toledo, Ohio; Dubuque, Iowa; Grand Rapids, Michigan; Peoria, Illinois; Kansas City, Kansas; Pueblo, Colorado; St. Joseph, Missouri; Topeka, Kansas; Galveston, Texas; Waco, Texas; Ogden, Utah; and Spokane, Washington. (3) The Board of Governors of the Federal Reserve System, prior to March 1, 1948, will also designate (and continue) as a reserve city any city now classified as a reserve city (although not within the scope of paragraphs (1) or (2) above) if a written request for the continuance of such city as a reserve city is received by the Federal Reserve Bank of the district in which the city is located on or before February 16, 1948 from every member bank which has its head office or a branch in such city (exclusive of any member bank in an outlying district of such city permitted by the Board of Governors to maintain reduced reserves) together with a certified copy of a resolution of the board of directors of such member bank duly authorizing such request. (4) Effective as of March 1 of each third year after March 1, 1948, the Board of Governors (a) will continue as reserve cities or designate as additional reserve cities all cities then falling within the scope of paragraph (1) above and all cities which then meet the standard prescribed in paragraph (2) above based upon official call reports of condition in the two-year period ending on June 30 of the year preceding such third year; and (b) will terminate the designation as reserve cities of all other cities, except that the Board will continue the designation as a reserve city of any city which then has the designation of a reserve city and does not then fall within the scope of paragraph (1) or of paragraph (2) based upon the new two-year period, if a request for the continuance of such designation is made by every member bank (as specified in paragraph (3) above) in such city and, together with a certified copy of a resolution of the bank's board of directors authorizing such request, is received by the Federal Reserve Bank of the district not later than the 15th day of February of such third year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

RECORD OF POLICY ACTIONS FEDERAL OPEN MARKET COMMITTEE MARCH I, 1947 Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman; Mr. Clayton; Mr. Davis; Mr. Draper; Mr. Evans; Mr. Gidney; Mr. Peyton; Mr. Vardaman; Mr. Whittemore. (A meeting of the Federal Open Market Committee—the last before the members of the Committee took office who were elected as representatives of the Federal Reserve Banks for terms of one year beginning March 1, 1947— was held on February 27 for the purpose of ratifying actions which had been taken under existing policies and of discussing developments in the international and domestic monetary and credit situation. At that meeting no policy actions were taken.) 1. Authority to Effect Transactions in System Account. Upon motion duly made and seconded, and by unanimous vote, the following direction to the executive committee was approved: 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 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 administration of the account or for the purpose of maintaining an orderly market in Treasury securities and a general level of prices and yields of Government securities which will support the Treasury issuing rates of % per cent for one-year certificates and 2^ per cent for 27-year bonds restricted as to ownership; provided that the aggregate amount of securities held in the account at the close of this date [other than (1) bills purchased outright in the market on a discount basis at the rate of Y& per cent per annum and bills redeemed at maturity and (2) special short-term certificates of indebtedness purchased from time to time for the temporary accommodation of the Treasury] shall not be increased or decreased by more than 1.5 billion dollars. That the executive committee be further directed, until otherwise directed by the Federal Open Market Committee, to arrange for the purchase 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 accommodation of the Treasury; provided that the amount of such certificates held in the account at any one time shall not exceed 1.5 billion dollars. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 ANNUAL REPORT OF BOARD OF GOVERNORS be paid. These stock subscriptions amounted to $139,000,000 and reduced the surplus of the Federal Reserve Banks to an equivalent figure, or considerably less than one-half of their subscribed capital. Congress, therefore, eliminated the franchise tax in order to permit the Federal Reserve Banks to restore their surplus accounts from future earnings. "Net earnings for the next ten years were relatively small, and at the end of 1944 tne combined surplus accounts of the Federal Reserve Banks were less than 75 per cent of their subscribed capital. During the next two years, however, net earnings increased substantially, due primarily to large holdings of Government securities accumulated through open market operations. This made possible transfers to surplus accounts which increased the combined surplus of the Federal Reserve Banks to $439,823,000 at the end of 1946, as compared with subscribed capital of $373,66o,ooo. "Under the circumstances, the Board concluded that it would be appropriate for the Federal Reserve Banks to pay to the Treasury the bulk of their net earnings after providing for necessary expenses and the statutory dividend. In effect, this will involve paying currently to the Treasury funds which, under existing law, would otherwise come to it only in the event of liquidation of the Federal Reserve Banks. The Federal Reserve Act still provides that, in case of liquidation of the Federal Reserve Banks, any surplus remaining after the payment of all claims shall be paid to the Treasury. It is expected that the present payments will be made at quarterly intervals. By invoking its authority under Section 16 of the Federal Reserve Act, the Board is able to accomplish the same results as were accomplished by the payment of a franchise tax, i. e., the transfer of excess earnings to the Government. The payments can thus be reflected in current revenues and taken into account in the Government's budget without further legislation. "In the event of restoration of a franchise tax by the Congress, the Board would, of course, withdraw the requirement that Federal Reserve Banks pay interest on Federal Reserve notes, as there would be no justification for utilizing both means of accomplishing the same purpose— namely, payment of excess earnings of the Federal Reserve Banks to the Treasury. "In his Budget Message for 1948 the President recommended that Congress authorize the Federal Deposit Insurance Corporation to repay the $139,000,000 of capital furnished by the Federal Reserve Banks, and accepted the proposal of the Board of Governors that Congress at the same time authorize the payment of this sum to the Treasury instead of to the Reserve Banks. Similarly, the President in his Budget Message concurred in the Board's further recommendation that Congress release to the Treasury general fund approximately $139,000,000 earmarked for payments to the Reserve Banks to enable them to make loans to industry under Section 13b of the Federal Reserve Act. Legislation has been introduced in Congress to repeal Section 13b and to substitute therefor authority for the Reserve Banks, upon request of any commercial bank, to guarantee in part loans made by such bank to business enterprises. If this legislation be enacted, the Federal Reserve Banks would rely upon their own surplus funds for this purpose, without resort to Government funds." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 89 When this meeting was held the members of the Committee had the benefit of recent discussions of the members of the executive committee, and of representatives of the full Committee with representatives of the Treasury, with respect to the changes that might be made in Treasury financing, debt management, and System credit policies to adjust them to changing conditions. Since the previous meeting there had been further discussions of the desirability of the termination by the Federal Open Market Committee of the y% per cent rate at which the Federal Reserve Banks stood ready to purchase bills, a change in procedure to provide for the direct replacement of maturing Treasury bills held by the Federal Reserve Banks, an increase in the rate at which bills were issued by the Treasury, and steps that might be taken to return to the Treasury the increased earnings of the Federal Reserve Banks which would result from an increase in the bill rate. Consideration was also given to the means available to combat the resumption, when the current debt retirement program came to an end, of pressure on the long-term rate which would result from sales by banks of short-term Treasury issues and the purchase of longterms for the purpose of improving earnings. The Treasury debt retirement program, which was designed to keep the reserve position of member banks under pressure, had been continued and, with the announced retirement of 2.9 billion dollars of securities maturing in March 1947, would result in cash payments on maturing securities of 4.2 billion in the first three months of 1947 and of 27.4 billion since March 1, 1946, with a net reduction in the debt of 21 billion dollars during the 13-month period. Treasury receipts had been higher and expenditures lower than anticipated and it appeared that additional amounts of Government securities could be retired during the remaining months of the fiscal year. It was the view of the Committee that the posted rate of Y% per cent for the purchase and sale of Treasury bills by the Federal Reserve Banks no longer served its original purpose and should be discontinued. It was felt that action should not be taken, however, until the question of future policy with respect to Treasury bills had been more fully established. It was agreed, therefore, that action to terminate the rate might be deferred temporarily. For the reasons which prompted the open market policy actions of the Committee in 1946 and because of the continued inflationary conditions which are reviewed in the Annual Report of the Board of Governors of which this record is a part, the Committee continued to be of the opinion that monetary and credit policy should be directed, as a part of the program of the Government for combating inflation, toward restraining the further expansion of bank credit without increasing the cost of carrying the Government debt. The above direction was issued in order to continue the existing open market policies of the System, which were designed to keep pressure on the reserves of member banks while, at the same time, maintaining orderly conditions in the Government securities market. This involved the continuation of a general level of prices and yields of Government securities which would support the Treasury issuing rates on Treasury certificates and long-term Treasury bonds. The direction set forth above was in the same form as the direction issued at the previous meeting of the committee on October 3, 1946, except that the limitation contained in the first paragraph on the amount by which the total securities held in the account could be changed was reduced from 2 billion dollars to 1.5 billion. This change was made for the reason that it was anticipated that smaller Treasury operations in connection with the retirement of public debt would make the larger authority unnecessary. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

9O ANNUAL REPORT OF BOARD OF GOVERNORS JUNE 5, 1947 Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman; Mr. Clayton; Mr. Davis; Mr. Draper; Mr. Evans; Mr. Gidney; Mr. Peyton; Mr. Szymczak; Mr. Whittemore. 1. Increase in Authority to Effect Transactions in System Account. Upon motion duly made and seconded, and by unanimous vote: The action of the members of the Federal Open Market Committee on April 2, 1947, pursuant to a recommendation of the executive committee, increasing from 1.5 billion to 2 billion dollars the limitation on the authority of the executive committee with respect to increasing or decreasing the total amount of securities in the System account, contained in the first paragraph of the direction issued at the meeting on March 1, 1947, was approved, ratified, and confirmed. Under the direction issued at the last meeting of the Federal Open Market Committee, the total amount of securities held in the System account had been reduced on April 1 by more than 1.1 billion dollars. At a meeting of the executive committee of the Federal Open Market Committee on the latter date it appeared that further contemplated retirement of the Government debt might result in further substantial reductions in System account holdings of securities. The executive committee recommended, therefore, and the members of the Committee approved, the increase of 500 million dollars referred to above. 2. Tender of Maturing Treasury Bills for New Issues. Upon motion duly made and seconded, and by unanimous vote: The actions of the members of the Federal Open Market Committee on April 24, 1947, (a) authorizing each Federal Reserve Bank to place weekly tenders for new Treasury bills in an amount not exceeding the amount of weekly maturities in the option account and authorizing the Federal Reserve Bank of New York to place tenders for new Treasury bills in an amount not exceeding the amount of weekly maturities in the System open market account, and (b) amending the direction issued by the Committee on March 1, 1945, with respect to the purchase of Treasury bills to read as follows, were approved, ratified, and confirmed. "Until otherwise directed by the Federal Open Market Committee, the 12 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 to be upon the condition that the Federal Reserve Bank, upon the request of the seller on or before the last business day preceding the closing day on which the Treasury will accept tenders of the bills for new Treasury bills, will sell to him Treasury bills of like amount and maturity at the same rate of discount. All bills purchased under this direction are to be held by the purchasing Federal Reserve Bank in its own account and prompt reports of all transactions in Treasury bills are to be made to the Manager of the System Open Market Account." Following the meeting of the Federal Open Market Committee on March 1, 1947, there were further discussions with representatives of the Treasury of a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 91 program looking toward the elimination of certain wartime financing methods and controls which were considered to be no longer desirable or necessary. These discussions included (i) the establishment by the BoaTd of Governors of an interest charge on Federal Reserve notes, which would have the effect of transferring surplus earnings of the Federal Reserve Banks to the Treasury, (2) permission to bidders for future issues of Treasury bills to make payment in cash or by the surrender of maturing bills, and (3) the elimination of the posted % per cent buying rate and repurchase option on Treasury bills. On April 24 the first two of these steps were announced and put into effect. The above stated actions on April 24 by the members of the Federal Open Market Committee were for the purpose of adjusting open market procedure to the changed arrangement with respect to Treasury bills. The direction of March 1, 1945, provided that the original seller of the bills could repurchase bills at his request at any time before their maturity. The revised direction set forth above required that the request to repurchase be made on or before the last business day preceding the closing day on which the Treasury would accept tenders of bills for new Treasury bills. This change, however, applied only to bills issued on or after April 25, 1947. On May 5, 1947, the members of the Federal Open Market Committee approved a procedure which provided for the transfer each week of maturing bills held by the individual Reserve Banks to the System account and for a single tender of all maturing bills in payment for new bills to be held in the System account. This action was for the purpose of improving and simplifying the handling of tenders of maturing bills for new bills and involved no question of open market policy. 3. Authority to Effect Transactions in System Account. Upon motion duly made and seconded, and by unanimous vote, the following direction to the executive committee was approved: 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 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 administration of the account or for the purpose of maintaining an orderly market in Treasury securities and a general level of prices and yields of Government securities which will support the Treasury issuing rates of % per cent for one-year certificates and 2^/2 per cent for 27-year bonds restricted as to ownership; provided that the aggregate amount of securities held in the account at the close of this date [other than (1) maturing bills transferred to the System account from the option accounts of the Federal Reserve Banks pursuant to the direction issued by the Federal Open Market Committee on May 5, 1947, bills purchased outright in the market on a discount basis at the rate of Y% per cent per annum, bills redeemed or exchanged at maturity, and bills taken in exchange for maturing bills, and (2) special short-term certificates of indebtedness purchased from time to time for the temporary accommodation of the Treasury] shall not be increased or decreased by more than 2 billion dollars. 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

92 ANNUAL REPORT OF BOARD OF GOVERNORS 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 accommodation of the Treasury; provided that the amount of such certificates held in the account at any one time shall not exceed 1.5 billion dollars. Following the actions announced on April 24, 1947, there were further discussions with representatives of the Treasury of the proposed elimination of the ^8 per cent posted rate and repurchase option on Treasury bills, but no decision as to the timing of this action was reached. There were also discussions of questions relating to Treasury financing, including an increase in the rate on Treasury certificates, and the issuance by the Treasury of a long-term Series G type security. The retirement of Government debt, for anti-inflationary purposes, had been continued and while the steps that had been taken by the System and the Treasury apparently had stopped temporarily the decline in yields on long-term securities resulting from "playing the pattern of rates," it was expected by the Committee that the long-term rate would continue to be under pressure. In that event, the Committee would be faced with the alternative of allowing the long-term rate to decline further or of permitting the short-term rate to rise to a point where there would be no incentive for banks to continue to "play the pattern of rates" with the resulting increase in member bank reserves. The Committee therefore decided that, until a decision was reached on action to discontinue the posted rate on Treasury bills and to increase the short-term rate, no change should be made in existing open market policies, and that the direction issued by the Federal Open Market Committee on March 1, 1947, and amended on April 2, 1947, with respect to the purchase of Treasury bills, should be changed only to the extent necessary to bring the direction into conformity with the procedure approved on May 5, 1947, for transferring maturing bills held by the Federal Reserve Banks to the System account and the exchange of bills in the System account for new bills. OCTOBER 6-7, 1947 Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman; Mr. Clayton; Mr. Davis; Mr. Draper; Mr. Evans; Mr. Gidney; Mr. Peyton; Mr. Szymczak; Mr. Vardaman; Mr. Whittemore. 1. Elimination of Posted Rate on Treasury Bills. Upon motion duly made and seconded, and by unanimous vote: The action of the members of the Federal Open Market Committee on July 2, 1947, discontinuing the posted rate on Treasury bills issued on or after July 10, 1947, in accordance with the following amended direction to the Federal Reserve Banks, was approved, ratified, and confirmed. "Until otherwise directed by the Federal Open Market Committee, the 12 Federal Reserve Banks are directed to purchase all Treasury bills issued prior to July 10, 1947, that may be offered to such Banks on a discount basis at the rate of % per cent per annum, any such purchases to be upon the condition that the Federal Reserve Bank, upon the request of the seller on or before the last business day preceding the closing day on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 93 which the Treasury will accept tenders of the bills for new Treasury bills, will sell to him Treasury bills of like amount and maturity at the same rate of discount. All bills purchased under this direction are to be held by the purchasing Federal Reserve Bank in its own account and prompt reports of all transactions in Treasury bills are to be made to the Manager of the System Open Market Account." Following the meeting of the Federal Open Market Committee on June 5, 1947, there were further discussions with the Treasury of the proposed discontinuance of the posted % per cent rate on Treasury bills and agreement was-reached that the rate should be terminated as to all bills issued on or after July 10, 1947. The above direction was issued to accomplish that result. The reasons for the action are set forth in the following statement released to the press for publication in the morning papers of July 3, 1947: "The Federal Open Market Committee of the Federal Reserve System has directed the Federal Reserve Banks to terminate the policy of buying all Treasury bills offered to them at a fixed rate of y% per cent per annum and to terminate the repurchase option privilege on Treasury bills. The new policy will apply to bills issued on or after July 10, 1947. Existing policy will continue to apply to bills issued prior to that date. "The above action was taken by the Committee after consultation with the Secretary of the Treasury. "The so-called posted rate on Treasury bills was a wartime measure adopted in 1942 to facilitate war financing and to stabilize the market for Government securities. It was designed primarily to encourage banks to make fuller use of their excess reserves and thus bring about a wider distribution of Treasury bills. Under current peacetime conditions these arrangements no longer serve their original purpose and tend to distort conditions in the money market and the securities market. Certificates of indebtedness, which bear a higher rate than Treasury bills, have largely replaced bills in the market, not only as a medium for the investment of short-term funds but also as a means by which banks adjust their reserve positions. "Increased amounts of Treasury bills have been sold to the Federal Reserve Banks by the market, and bills have gradually ceased to be a market instrument. Currently, only about 1.5 billion dollars of the nearly 16 billion total of Treasury bills outstanding are held outside the Federal Reserve Banks. The Treasury bill rate has thus been eliminated as a factor in the money market. The need for large-scale borrowing of new money by the Treasury ceased with the completion of the Victory Loan Drive and since that time the public debt has been reduced substantially. Consequently there is no reason for continuing this wartime mechanism. On the contrary, its elimination will serve a useful purpose in restoring the bill as a market instrument and giving added flexibility to the Treasury's debt management program. "Under the new policy the Treasury bill rate will be expected to find its level in the market in proper relation to the yields on certificates of indebtedness. The Federal Reserve System will continue to purchase and hold Treasury bills as well as other Government securities in amounts deemed necessary in the maintenance of an orderly Government security market and the discharge of the System's responsibility with regard to the general credit situation of the country. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 ANNUAL REPORT OF BOARD OF GOVERNORS "As a result of the action taken by the Board of Governors of the Federal Reserve System in April to transfer to the Treasury the excess earnings of the Federal Reserve Banks, the Reserve Banks are now paying into the Treasury approximately 90 per cent of their net earnings after dividends. Since most of the Treasury bills now outstanding are held by the Federal Reserve Banks, whatever increase in interest cost to the Treasury results from the termination of the posted buying rate and repurchase option will be largely offset by increased Reserve Bank payments to the Treasury." 2. Revised Authority to Effect Transactions in the System Account. Upon motion duly made and seconded, and by unanimous vote: A change made by the members of the Federal Open Market Committee on August 8, 1947, in the direction issued to the executive committee on June 5, 1947, so as to provide for supporting the current issuing rate on Treasury certificates instead of the % rate previously prevailing, was approved, ratified, and confirmed. The direction as revised read as follows: "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 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 administration of the account or for the purpose of maintaining an orderly market in Treasury securities and a general level of prices and yields of Government securities which will support the Treasury current issuing rate for certificates and 2j4 per cent for 27-year bonds restricted as to ownership; provided that the aggregate amount of securities held in the account at the close of this date [other than (1) maturing bills transferred to the System account from the option accounts of the Federal Reserve Banks pursuant to the direction issued by the Federal Open Market Committee on May 5, 1947, bills purchased outright in the market on a discount basis at the rate of Y& per cent per annum, bills redeemed or exchanged at maturity, and bills taken in exchange for maturing bills, and (2) special short-term certificates of indebtedness purchased from time to time for the temporary accommodation of the Treasury] shall not be increased or decreased by more than 2 billion dollars. "The executive committee be further directed, until otherwise directed by the Federal Open Market Committee, to arrange for the purchase 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 accommodation of the Treasury; provided that the amount of such certificates held in the account at any one time shall not exceed 1.5 billion dollars." As the first step in a program which contemplated an increase to one per cent in the issuing rate on Treasury certificates, the Treasury in July announced that the August 1 maturity of certificates would be refunded into an 11-month % per cent certificate. The direction issued by the Federal Open Market Committee on June 5, 1947, provided for support of an issuing rate of Y% per Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 95 cent for one-year certificates, and the anticipated issuance by the Treasury of certificates at a higher rate made necessary the approval of the change in the above direction, which required that the current issuing rate on Treasury certificates be supported instead of the % per cent rate as previously. 3, Increase in Authority to Effect Transactions in System Account. Upon motion duly made and seconded, and by unanimous vote: The action of the members of the Federal Open Market Committee on September 4, 1947, increasing from 2 billion dollars to 2.75 billion the authority of the executive committee contained in the first paragraph of the direction issued at the meeting of the full Committee on June 5 and amended on August 8, 1947, was approved, ratified, and confirmed. When the action was taken on September 4, the authority granted to the executive committee had been used to the extent of increasing the amount of securities held in the System account by 1.8 billion dollars. In view of the program for refunding Treasury securities maturing on September 1, September 15, and October 1, and of possible open market transactions over the tax payment period, it appeared that the executive committee would need further authority to increase the amount of securities in the System account to carry out the existing policies. The increase in the authority was granted for that reason. 4. Authority to Effect Transactions in System Account. Upon motion duly made and seconded, and by unanimous vote, the following direction to the executive committee was approved: The executive committee is 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 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 light of the general credit situation of the country, for the practical administration of the account, for the maintenance of stable and orderly conditions in the Government security market, and for the purpose of relating the supply of funds in the market more closely to the needs of commerce and business; 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 shall not be increased or decreased by more than 2 billion dollars. The executive committee is further directed, until otherwise directed by the Federal Open Market Committee, to arrange for the purchase 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 accommodation of the Treasury; provided that the total amount of such certificates held in the account at any one time shall not exceed 1.5 billion dollars. In the period since the previous meeting of the Committee conditions affecting the money market had changed considerably. Inflationary pressures had increased and there were indications that they would continue to be strong in the months immediately ahead. Conditions were favorable to further credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 ANNUAL REPORT OF BOARD OF GOVERNORS growth, bank loans were expanding rapidly and the demand for capital funds was strong, and there were further substantial gold imports. Because of the policy of supporting the Government securities market, which the Committee felt was a sound policy and should be continued, banks had ready access to additional reserves by the sale of securities to the System account. There was no prospect of the accumulation of substantial Treasury cash balances that could be used for the retirement of Government debt at this time, and therefore, the restraining influence of such accumulation could not be imposed. It was also recognized that the strongest forces working toward inflation lay outside the field of monetary policy and debt management and that measures available to the System and the Treasury could have only limited effectiveness. It was the view of the Committee that, since further credit expansion would add to the inflationary pressures, the situation was such as to justify the Treasury and the Federal Reserve System taking such actions as were available to them to eliminate or moderate excessive credit expansion. While continuing the existing policy of maintaining orderly conditions in the Government security market, it was agreed that with a view to preventing to the extent possible further expansion of bank credit, there should be action by the appropriate authorities to carry out an anti-inflationary program which would contemplate (i) continued use of Treasury balances when available to retire Government debt, particularly bills and certificates held by the Federal Reserve Banks, (2) a further increase in the short-term rate on Government securities to 1]/% per cent, (3) an increase in the discount rates at the Federal Reserve Banks in keeping with the increase in the rate on short-term Government securities, (4) an increase in reserve requirements of member banks in central reserve cities, (5) a statement by the Board of Governors emphasizing, in connection with the termination of Regulation W, the dangers of more liberal instalment credit terms and a further growth of outstanding consumer credit, (6) a joint statement by the Federal and State bank supervisory agencies which would point out the dangers of further overall expansion of bank credit through the medium of bank loans, and (7) a change in the policy with respect to the refunding of maturing savings bonds to encourage the reinvestment of proceeds of maturing bonds in new issues of savings bonds. The language in the first paragraph of the direction issued by the Committee, setting forth the considerations governing transactions for the System account, was changed from the direction previously in effect for the purpose of relating it more closely to the current policies of the Committee in the light of existing monetary and credit conditions. DECEMBER 9, 1947 Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman; Mr. Clayton; Mr. Draper; Mr. Evans; Mr. Gidney; Mr. Gilbert (alternate for Mr. Davis); Mr. Peyton; Mr. Szymczak; Mr. Vardaman, Mr. Whittemore. 1. Authority to Effect Transactions in System Account. Upon motion duly made and seconded, and by unanimous vote, the following direction to the executive committee was approved: The executive committee is directed, until otherwise directed by the Federal Open Market Committee, to arrange for such transactions for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 97 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 light of the general credit situation of the country, for the practical administration of the account, for the maintenance of stable and orderly conditions in the Government security market, and for the purpose of relating the supply of funds in the market more closely to the needs of commerce and business; 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 shall not be increased or decreased by more than 3 billion dollars. The executive committee is further directed, until otherwise directed by the Federal Open Market Committee, to arrange for the purchase 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 accommodation of the Treasury; provided that the total amount of such certificates held in the account at any one time shall not exceed 1.5 billion dollars. The above direction, which was in the same form as the direction issued at the meeting on October 7, 1947, was adopted for substantially the same reasons as the earlier direction. Inflationary forces had continued strong, substantial amounts of long-term Government securities were being sold to the System to meet the demands for funds, and it was felt that the existing open market policy should be continued as a means, coupled with other actions by the System and with debt-management policies of the Treasury, of.keeping pressure on the market and thereby restraining the expansion of bank credit. It was understood that, in carrying out the direction, the executive committee would continue the existing prices at which Government securities were being supported until after the Treasury January refunding had been completed, at which time prices of bonds should be permitted to decline rapidly, if the market did not support itself, to a level not more than 100^2 and not less than par on the longest restricted 2^2 per cent issue and to not less than par on 1% per cent one-year certificates. It was also understood that if, before the completion of the January refunding, market selling should increase substantially, the executive committee would be authorized to permit prices to decline to the level stated above as rapidly as was consistent with the maintenance of orderly market conditions. The limitation contained in the first paragraph of the direction was increased from 2 billion to 3 billion dollars because it was felt that it would be desirable for the executive committee to have the enlarged authority, in order to be in position to meet adequately the conditions that were likely to prevail in connection with the Treasury's refunding operations and tax collections before another meeting of the Committee. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

STATEMENT OF FEDERAL ADVISORY COUNCIL ON BANK CREDIT, CONSUMER CREDIT CONTROLS, AND BANK RESERVES NOVEMBER 18, 1947 The Board of Governors of the Federal Reserve System submitted the following question to the Federal Advisory Council: "The Board is very concerned about the rapid expansion of bank credit. The Board, therefore, desires to have the views of the Council as to the further steps that might be taken to correct this serious situation through monetary or fiscal means." The Federal Advisory Council gave the Board of Governors the following statement in answer to the foregoing question: The Council has reviewed the question of the volume of bank credit both in the aggregate and as shown in the banks with which they are familiar. We do not know what "serious situation" in bank credit the Board has in mind. For the past year the total volume of bank credit (i.e. the available amount of bank money) as measured by adjusted demand deposits has shown only a moderate increase. As bank loans have increased, the banks have decreased their investments. We find nothing in bank loans themselves to suggest that growth of loans has been an active inflationary factor. It rather appears to have been a reflection of the very high level of business activity and high prices. To a large extent growth of loans is a direct result of Government policies. For example, an increase of nearly 4 billion dollars in the real estate loans by insured banks since the end of the war reflects directly the purchase of FHA and GI mortgages in the housing program. The Reconstruction Finance Corporation is encouraging bank lending by guaranteeing risky loans. Commercial loans are influenced by high prices and active movement of agricultural and manufactured products for the foreign aid program. High wages and high costs of materials have meant that business needed more money to take care of its customers. There is nothing in the figures or our experience to suggest that there exists any substantial lending for speculation or for unnecessary uses. Loans for carrying securities are much reduced. In this period the Government, through various agencies, has been making loans that the banks refrained from making because of their speculative nature. The Reserve System itself is asking for more power to guarantee loans on the presumption that bank lending is too cautious. The causes of our present inflation are not in current banking policies but are found in the great wartime expansion of buying power together with unusual events and public policies since that time. Among recent inflationary causes may be listed the following: 98 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 99 The foreign aid program. A cycle of wage increases in excess of increases in either the cost of living or productivity. A shorter working week. A short corn crop. Veterans' bonuses and relief payments. Agricultural price subsidies. United States Government spending of 36 billion dollars a year. Housing subsidies. In the face of these developments a substantial increase in bank loans was inevitable and the banks have shown restraint. The dangers in the present situation are understood by bankers and there is hardly a bank in the country which has not been warning its customers against overexpansion. The loans being made are mostly for direct production. The first thing to do is to reconsider Government policies which are inflationary and especially excessive Government spending and subsidies. We recognize that even though the causes of inflation are largely outside the sphere of monetary policy, the Reserve System has a special responsibility for bank credit and in this situation should take all reasonable care to assure conservative credit policies. In this special area we suggest that the System and the Treasury already have large powers, without new legislation, to place credit under broad restraints. One of these powers is the discount rate which is a recognized instrument for serving notice on the public of the need for restraint in the use of credit. Similarly by open market operations the System can control the reserves of the member banks and limit their lending power. The Board also still has the power to raise reserve requirements in central reserve cities and so tighten money. The Treasury by the pricing of new issues and the handling of its balances has great influence on the rate and volume of money. In the past year the System and the Treasury have used these powers effectively. The money markets and the policies of business men are today so sensitive to action of these sorts which the Reserve System and the Treasury take that present powers are ample to place all restraints on credit expansion which the System and the Treasury may consider necessary. The Council wishes it clearly understood that it shares the apprehension of the Board of Governors with respect to inflation dangers. It does, however, most strenuously object to the singling out of the increase in bank loans as a principal contributing factor; and it has attempted to point out above, the vastly more important elements of inflation—of which bank loans are a barometer. This is not to say that there have not been unwise bank loans in some cases. After all, banking is a form of human endeavor, operated by human beings. It would be amazing if there were not some errors in judgment. But we submit that, on the record, there is no evidence of bank credit expansion beyond that which could be expected under all the circumstances. There is every Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

IOO ANNUAL REPORT OF BOARD OF GOVERNORS evidence that loans are today doing a wholesome and constructive work in their intended place in the economy. The Council has studied the increase in consumer credit in relation to the termination of Regulation W. While consumer credit has increased substantially, much of this reflects the availability of automobiles and household appliances. There is so far too little experience on which to judge the effect of the termination of Regulation W. The American Bankers Association is undertaking with considerable success to ensure maintenance by banks of sound lending standards. This effort towards voluntary cooperation seems to the Council the sensible and the democratic method of dealing with this problem, both with respect to the banks and other lenders. The Council is opposed to legislation giving the Board new regulatory powers in this matter. Suggestions in the President's message to Congress with respect to credit control indicate the possibility that the Federal Reserve Board may present to Congress the proposal in its 1945 Annual Report for a required bank reserve of short-term Government securities. The Council therefore wishes to state its views on this proposal. The proposal as we understand it is that banks should be required by law to maintain, in addition to cash reserves, reserves of short-term Government securities in a percentage relationship to deposits, to be fixed from time to time by the Federal Reserve Board. The Council is unanimously opposed to this scheme for the following reasons: (1) It is impractical. The operations of banks are so different, reflecting as they do adaptation to the varying needs of their communities and customers, that no percentage of short-term Government security holdings can be applied fairly or practically to all banks. Any percentage high enough to offer any measure of restraint on a substantial number of banks will have disastrous effects on many other banks, compelling them to liquidate sound and necessary loans and thus actually check production. The very banks which have served the business in their communities most aggressively and helpfully would be hardest hit. (2) Such a plan would substitute the edicts of a board in Washington for the judgments of the boards of directors of 15,000 banks throughout the country as to the employment of a substantial part of the funds of their banks. This is a step towards socialization of banking. (3) As indicated earlier, the Federal Reserve System and the Treasury already possess large powers of credit control not now being fully used. Such new powers as those proposed are not necessary. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM [December 31, 1947] Term Expires MARRINER S. ECCLES, of Utah, Chairman January 31, 1958 M. S. SZYMCZAK, of Illinois January 31, 1948 ERNEST G. DRAPER, of Connecticut January 31, 1950 R. M. EVANS, of Virginia January 31, 1954 JAMES K. VARDAMAN, JR., of Missouri January 31, i960 LAWRENCE CLAYTON, of Massachusetts January 31, 1952 ELLIOTT THURSTON, Assistant to the Chairman CHESTER MORRILL, Special Adviser to the Board of Governors S. R. CARPENTER, Secretary BRAY HAMMOND, Assistant Secretary MERRITT SHERMAN, Assistant Secretary GEORGE B. VEST, General Counsel J. LEONARD TOWNSEND, Associate General Counsel WOODLIEF THOMAS, Director, Division of Research and Statistics RALPH A. YOUNG, Associate Director, Division of Research and Statistics J. BURKE KNAPP, Assistant Director, Division of Research and Statistics BONNAR BROWN, Assistant Director, Division of Research and Statistics ROBERT F. LEONARD, Director, Division of Examinations EDWIN R. MILLARD, Assistant Director, Division of Examinations GEORGE S. SLOAN, Assistant Director, Division of Examinations EDWARD L. SMEAD, Director, Division of Bank Operations J. R. VAN FOSSEN, Assistant Director, Division of Bank Operations J. E. HORBETT, Assistant Director, Division of Bank Operations LOWELL MYRICK, Assistant Director, Division of Bank Operations CARL E. PARRY, Director, Division of Security Loans FRED A. NELSON, Director, Division of Personnel Administration LISTON P. BETHEA, Director, Division of Administrative Services GARDNER L. BOOTHE, II, Assistant Director, Division of Administrative Services FEDERAL OPEN MARKET COMMITTEE [December 31, 1947] MEMBERS MARRINER S. ECCLES, Chairman (Board of Governors) ALLAN SPROUL, Vice Chairman (Elected by Federal Reserve Bank of New York) LAWRENCE CLAYTON (Board of Governors) CHESTER C. DAVIS (Elected by Federal Reserve Banks of Atlanta, St. Louis, and Dallas) ERNEST G. DRAPER (Board of Governors) R. M. EVANS (Board of Governors) RAY M. GIDNEY (Elected by Federal Reserve Banks of Cleveland and Chicago) J. N. PEYTON (Elected by Federal Reserve Banks of Minneapolis, Kansas City, and San Francisco) M. S. SZYMCZAK (Board of Governors) JAMES K. VARDAMAN, JR. (Board of Governors) LAURENCE F. WHITTEMORE (Elected by Federal Reserve Banks of Boston, Philadelphia, and Richmond) EXECUTIVE COMMITTEE OFFICERS MARRINER S. ECCLES, Chairman CHESTER MORRILL, Secretary ALLAN SPROUL, Vice Chairman S. R. CARPENTER, Assistant Secretary ERNEST G. DRAPER GEORGE B. VEST, General Counsel JAMES K. VARDAMAN, JR. J. LEONARD TOWNSEND, Assistant General CHESTER C. DAVIS Counsel WOODLIEF THOMAS, Economist Af^xT-r PAUL W* MCCRACKEN, Associate Economist AUHJN 1 ALFRED C. NEAL, Associate Economist FEDERAL RESERVE BANK OF NEW YORK WILLIAM H. STEAD, Associate Economist ROBERT G. ROUSE, Manager of System Open DONALD S. THOMPSON, Associate Economist Market Account JOHN H. WILLIAMS, Associate Economist IOI Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL ADVISORY COUNCIL [December 31, 1947] MEMBERS District No. 1—CHARLES E. SPENCER, JR., President, The First National Bank of Boston, Boston, Massachusetts. District No. 1—W. RANDOLPH BURGESS, Vice Chairman, The National City Bank of New York, New York, New York. District No. 3—DAVID E. WILLIAMS, President, Corn Exchange National Bank and Trust Company, Philadelphia, Pennsylvania. District No. 4—JOHN H. MCCOY, President, The City National Bank and Trust Company, Columbus, Ohio. District No. 5—ROBERT V. FLEMING, President, The Riggs National Bank, Washington, District of Columbia. District No. 6—J. T. BROWN, President, The Capital National Bank of Jackson, Jackson, Mississippi. District No. 7—EDWARD E. BROWN, Chairman, The First National Bank of Chicago, Chicago, Illinois. District No. 8—JAMES H. PENICK, President, Worthen Bank and Trust Company, Little Rock, Arkansas. District No. 9—HENRY E. ATWOOD, President, First National Bank of Minneapolis, Minneapolis, Minnesota. District No. 10—JAMES M. KEMPER, President, Commerce Trust Company, Kansas City, Missouri. District No. 11—ED H. WINTON, President, Continental National Bank of Fort Worth, Fort Worth, Texas. District No. 12—RENO ODLIN, President, Puget Sound National Bank of Tacoma, Tacoma, Washington. EXECUTIVE COMMITTEE EDWARD E. BROWN, ex officio CHARLES E. SPENCER, JR., ex officio W. RANDOLPH BURGESS DAVID E. WILLIAMS JOHN H. MCCOY ROBERT V. FLEMING OFFICERS President, EDWARD E. BROWN Secretary, WALTER LICHTENSTEIN Vice President, CHARLES E. SPENCER, JR. Acting Secretary, HERBERT V. PROCHNOW 102 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM IO3 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS [December 31, 1947] CHAIRMEN AND DEPUTY CHAIRMEN OF BOARDS OF DIRECTORS Chairman and Federal Reserve Bank of— Deputy Chairman Federal Reserve Agent Boston Albert M. Creighton Donald K. David New York Vacancy William I. Myers Philadelphia Thomas B. McCabe Warren F. Whittier Cleveland George C. Brainard Reynold E. Klages Richmond W. G. Wysor Charles P. McCormick Atlanta Frank H.Neely J. F. Porter Chicago Clarence W. Avery Paul G. Hoffman St. Louis Russell L. Dearmont Douglas W. Brooks Minneapolis Roger B. Shepard W. D. Cochran Kansas City Robert B. Caldwell Robert L. Mehornay Dallas J. R. Parten R. B. Anderson San Francisco Bray ton Wilbur Harry R. Wellman CONFERENCE OF CHAIRMEN The Chairmen of the Federal Reserve Banks are organized into a Conference of Chairmen which meets from time to time to consider matters of common interest, and to consult with and advise the Board of Governors. Mr. Henry F. Grady served as Chairman of the Conference and as Chairman of the Executive Committee until May 1, when he resigned as Chairman of the Federal Reserve Bank of San Francisco. The other members of the Executive Committee were Mr. Parten, Chairman of the Federal Reserve Bank of Dallas, and Mr. Shepard, Chairman of the Federal Reserve Bank of Minneapolis. Mr. Parten succeeded Mr. Grady as Chairman of the Conference and served until December 1. At the meeting of the Conference on December 2, Mr. Shepard was elected Chairman of the Conference and Chairman of the Executive Committee. The other members of. the Executive Committee elected at that time were Mr. Avery, Chairman of the Federal Reserve Bank of Chicago, and Mr. Dearmont, Chairman of the Federal Reserve Bank of St. Louis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

IO4 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont. DIRECTORS Class A and Class B directors are elected by the member banks of the district. 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, employees, 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 of the Federal Reserve System. District No. 1—Boston Term Expires Dec. 31 Class A.- Allan Forbes President, State Street Trust. Company, Boston, Mass 1947 Leon A. Dodge. President, The First National Bank of Damariscotta, Damariscotta, Me 1948 Earle W. Stamm President, The National Bank of Commerce of New London, New London, Conn 1949 Class B.- Philip R. Allen Director, Bird & Son, inc., E. Walpole, Mass 1947 Frederick S. Blackall, jr President and Treasurer, The Taft-Peirce Manufacturing Company, Woonsocket, R. I 1948 Roy L. Patrick President, Rock of Ages Corporation, Burlington, Vt 1949 Class C.- Albert M. Creighton Chairman of the Board 1947 Donald K. David Dean, Graduate School of Business Administration, Harvard University, Boston, Mass 1948 Harold D. Hodgkinson Vice President, General Manager and Chairman of Management Board, Wm. Filene's Sons Company, Boston, Mass.. 1949 District No. 2—New York Class A.- Harry H. Pond Chairman of the Board, The Plainfield Trust Company, Plainfield, N. J 1947 Howard A. Wilson President, Citizens National Bank and Trust Company of Fulton, Fulton, N. Y 1948 Winthrop W. Aldrich Chairman of the Board, The Chase National Bank of the City of New York, New York, N. Y 1949 Class B: Charles E. Adams Chairman, Air Reduction Company, Inc., New York, N. Y.. 1947 Carle C. Conway Chairman of the Board, Continental Can Company, Inc., New York, N. Y 1948 Lewis H. Brown Chairman of the Board, Johns-Manville Corporation, New York, N. Y 1949 Class C: Vacancy 1947 William I. Myers Dean, New York State College of Agriculture, Cprnell University, Ithaca, N. Y.. V 1948 Robert D. Calkins Director and Vice President, General Education Board, New York, N. Y 1949 Buffalo Branch Appointed by Federal Reserve Bank: Charles H. Norton President, Erie County Trust Company, East Aurora, N. Y. 1947 Charles H. Diefendorf President, The Marine Trust Company of Buffalo, Buffalo, N. Y. 1948 Raymond F. Leihen Executive Vice President, Lincoln Rochester Trust Company, Rochester, N. Y 1949 C. George Niebank President, Bank of Jamestown, Jamestown, N. Y 1949 Appointed by Board of Governors: Marion B. Folsom Treasurer, Eastman Kodak Company, Rochester, N. Y 1947 Carl G. Wooster Farmer, Union Hill, N. Y 1948 Thomas Robins, Jr President, Hewitt-Robins, Incorporated, Buffalo, N. Y 1949 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM IO5 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont. Term Expires DiRECTORS—Cont. Dec. 31 District No. 3—Philadelphia Class A: Howard A. Loeb Chairman, Tradesmens National Bank & Trust Company, Pir hiiiiilaaud.ecilppihxiicat,, Prda 1947 J G o e h o n r . g e B W . H . e R n e n i i l n y g P P• r r e e s s i i•• d d e e n n t t , , W Ha y r o r m is i b n u g r g N " N at a io t• i n o a n l a l B -B an a k n- , k T , u H- n a k r h r-i- a s n b n u- o rg ck , , P P a a 1 9 48 1949 Class B.- Charles A. Higgins Chairman and President, Hercules Powder Company, Inc., Wilmington, Del 1947 Albert G. Frost President, The Esterbrook Pen Company, Camden, N. J 1948 William J. Meinel President and General Manager, Heintz Manufacturing 4 Company, Philadelphia, Pa 1949 Class C: C. Canby Balderston Dean, Wharton School of Finance and Commerce, University of Pennsylvania, Philadelphia, Pa 1947 Thomas B. McCabe President, Scott Paper Company, Chester, Pa 1948 Warren F. Whittier Agricultural Consultant, Chester Springs, Pa 1949 District No. 4—Cleveland Class A: F. F. Brooks Chairman of the Board, Peoples First National Bank & Trust Company, Pittsburgh, Pa 1947 B. R. Conner President, The First National Bank of Ada, Ada, Ohio 1948 John D. Bainer President, The Merchants National Bank and Trust Company of Meadville, Meadville, Pa 1949 Class B: George D. Crabbs Industrialist, Cincinnati, Ohio 1947 Thomas E. Millsop President, Weirton Steel Company, Weirton, W. Va 1948 Ross Pier Wright Secretary-Treasurer, Reed Manufacturing Company, Erie, Pa. 1949 Class C: A. Z. Baker Chairman of the Board, The Cleveland Union Stock Yards Company, Cleveland, Ohio 1947 Reynold E. Klages President, Columbus Auto Parts Company, Columbus, Ohio. 1948 George C. Brainard President and General Manager, Addressograph-Multigraph Corporation, Cleveland, Ohio 1949 Cincinnati Branch Appointed by Federal Reserve Bank: Walter H. J. Behm President, The Winters National Bank and Trust Company of Dayton, Dayton, Ohio 1947 Neil McElroy Vice President and General Manager, The Procter & Gamble Company, Cincinnati, Ohio 1948 Spears Turley Vice President and Trust Officer, State Bank and Trust Company of Richmond, Kentucky, Richmond, Ky 1948 Waldo E. Pierson President, The First National Bank of Cincinnati, Cincinnati, Ohio 1949 Appointed by Board of Governors: Paul G. Blazer Chairman of the Board, Ashland Oil & Refining Company, Ashland, Ky 1947 Francis H. Bird Dean, College of Business Administration, University of Cincinnati, Cincinnati, Ohio 1948 S. Headley Shouse Tobacco and Livestock Raiser, Lexington, Ky 1949 Pittsburgh Branch Appointed by Federal Reserve Bank: T. C. Swarts Executive Vice President, Woodlawn Trust Company, Aliquippa, Pa 1947 Archie J. McFarland President, Wheeling Steel Corporation, Wheeling, W. Va 1948 Laurence S. Bell Executive Vice President, The Union National Bank of Pittsburgh, Pittsburgh, Pa 1948 R. E. Bowie President, Security Trust Company, Wheeling, W. Va. 1949 Appointed by Board of Governors: Josiah M. Koch Vice President, Quaker State Oil Refining Corporation, Oil City, Pa 1947 A. H. Burchfield, Jr Vice President and General Manager, Joseph Home Company, Pittsburgh, Pa 1948 Howard W. Jordan President, Pennsylvania Rubber Company, Jeannette, Pa.,. 1949 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

IO6 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont. Term Expires DIRECTORS—Cont, Dec. 31 District No. 5—Richmond Class A: John A. Sydenstricker Cashier, First National Bank in Marlinton, Marlinton, W. Va. 1947 James D. Harrison President, First National Bank of Baltimore, Baltimore, Md. 1948 Warren S. Johnson President, Peoples Savings Bank and Trust Company, Wilmington, N. C 1949 Class B.- Edwin Malloy President & Treasurer, Cheraw Cotton Mills, Inc., Cheraw, S. C 1947 Charles C. Reed President, Williams & Reed, Inc., Richmond, Va 1948 H. L. Rust, Jr President, H. L. Rust Company, Washington, D. C 1949 Class C.- Charles P. McCormick President and Chairman of Board, McCormick & Company, Inc., Baltimore, Md 1947 W. G. Wxysor General Manager, Southern States Cooperative, Inc., Richmond, Va 1948 Edward R. Stettinius, Jr Rector, University of Virginia, Charlottesville, Va 1949 Baltimore Branch Appointed by Federal Reserve Bank: W. Bkden Lowndes President, Fidelity Trust Company, Baltimore, Md 1947 Holmes D. Baker President, The Citizens National Bank of Frederick, Frederick, Md 1948 George M. Moore Vice President, The Union National Bank of Clarksburg, Clarksburg, W. Va 1949 Eugene G. Grady Vice President, The Western National Bank of Baltimore, Baltimore, Md 1949 A ppointed by Board of Governors: James M. Shriver President, B. F. Shriver Company, Westminster, Md 1947 James E. Hooper Vice President, William E. Hooper and Sons Company, Baltimore, Md 1948 L. Vinton Hershey President, Hagerstown Shoe Company, Hagerstown, Md.. . . 1949 Charlotte Branch Appointed by Federal Reserve Bank: N. S. Calhoun President, Security National Bank, Greensboro, N. C 1947 Angus E. Bird Chairman of Board, The Citizens & Southern National Bank of South Carolina, Charleston, S. C ^ 1948 Allen H. Sims Executive Vice President and Trust Officer, Citizens National Bank in Gastonia, Gastonia, N. C 1949 George S. Crouch President, Union National Bank, Charlotte, N. C 1949 Appointed by Board of Governors: Charles L. Creech Chairman of Board, B. F. Huntley Furniture Company, Winston-Salem, N. C _ 1947 R. Flake Shaw Executive Secretary, North Carolina Farm Bureau Federation, Greensboro, N. C 1948 W. A. L. Sibley Vice President and Treasurer, Monarch Mills, Union, S. C.. . 1949 District No. 6—Atlanta Class A.- George J. White President, The First National Bank of Mount Dora, Mount Dora, Fla 1947 R. C. Williams President, The First National Bank of Atlanta, Atlanta, Ga.. . 1948 W. D. Cook President, First National Bank in Meridian, Meridian, Miss. 1949 Class B.- Ernest T. George President, Seaboard Refining Company, Ltd., New Orleans, La 1947 J. A. McCrary Vice President and Treasurer, J. B. McCrary Company, Inc., Atlanta, Ga . 1948 Donald Comer Chairman of the Board, Avondale Mills, Birmingham, Ala.. . 1949 Class C.- Frank H. Neely President, Rich's, Inc., Atlanta, Ga 1947 J. F. Porter President, Tennessee Burley Tobacco Growers Association, Columbia, Tenn 1948 Rufus C. Harris President, The Tulane University of Louisiana, New Orleans, La 1949 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM IO7 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Birmingham Branch Appointed by Federal Reserve Bank: Gordon D. Palmer President, The First National Bank of Tuskaloosa, Tuscaloosa, Ala 1947 M. B. Spragins President, The First National Bank of Huntsville, Huntsville, Ala 1948 James G. Hall Executive Vice President, The First National Bank of Birmingham, Birmingham, Ala 1949 R. L. Adams President, Bank of York, York, Ala 1949 Appointed by Board of Governors: John C. Curry Administrative Assistant to Algernon Blair, Contractor, Montgomery, Ala 1947 Win. Howard Smith President, McQueen-Smith Farms, Prattville, Ala 1948 Thad Holt President and Treasurer, Voice of Alabama, Inc., (Radio Station WAPI), Birmingham, Ala 1949 Jacksonville Branch Appointed by Federal Reserve Bank: J. L. Dart President, The Florida National Bank of Jacksonville, Jacksonville, Fla 1947 J. S. Fairchild Cashier, The First National Bank of Winter Garden, Winter Garden, Fla 1948 Max Losner President, The First National Bank of Homestead, Homestead, Fla 1949 H. S. Moody Executive Vice President, Manatee River Bank & Trust Company, Bradenton, Fla 1949 Appointed by Board of Governors: Walter J. Matherly Dean, College of Business Administration, University of Florida, Gainesville, Fla 1947 Charles S. Lee Planter and cattle raiser, Oviedo, Fla 1948 W. T. Bland Citrus fruit grower and nurseryman, Lake Jem, Fla 1949 Nashville Branch Appointed by Federal Reserve Bank: B. L. Sadler President, First National Bank in Harriman, Harriman, Tenn. 1947 Edward Potter, Jr President, Commerce Union Bank, Nashville, Tenn 1948 L. R. Driver President, The First National Bank in Bristol, Bristol, Tenn. 1949 W. G. Birdwell Cashier, Citizens Bank and Trust Company, Carthage, Tenn. 1949 to Appointed by Board of Governors: Clyde B. Austin President, The Austin Company, Inc., Greeneville, Tenn.. .. 1947 H. C. Meacham Farmer, Franklin, Tenn 1948 W. Bratten Evans President, Tennessee Enamel Manufacturing Company, Nashville, Tenn 1949 New Orleans Branch Appointed by Federal Reserve Bank: J. F. McRae President, The Merchants National Bank of Mobile, Mobile, Ala 1947 T. G. Nicholson President, The First National Bank of Jefferson Parish at Gretna, Gretna, La 1948 John Legier President, National American Bank of New Orleans, New Orleans, La 1949 W. S. Johnson Executive Vice President, First National Bank of McComb City, McComb City, Miss 1949 Appointed by Board of Governors: H. G. Chalkley, Jr President, Sweet Lake Land and Oil Company, Inc., Lake Charles, La 1947 John J. Shaffer, Jr Planter, Ellendale, La 1948 E. O. Batson President, Batson-McGehee Company, Inc., Millard, Miss... . 1949 District No. 7—Chicago Class A.- Vivian W. Johnson President, First National Bank, Cedar Falls, Iowa 1947 Walter J. Cummings Chairman, Continental Illinois National Bank and Trust Company of Chicago, Chicago, 111 1948 Horace S. French President, The Manufacturers National Bank of Chicago, Chicago, 111 1949 Class .B.- Nicholas H. Noyes Vice President in Charge of Finances, Eli Lilly and Company, Indianapolis, Ind 1947 William C. Heath President, A. O. Smith Corporation, Milwaukee, Wis 1948 Wm. J. Grede President, Grede Foundries, Inc., Milwaukee, Wis 1949 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

IO8 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class C.- Simeon E. Leland Dean, College of Liberal Arts, and Professor of Economics, Northwestern University, Evanston, 111 1947 Clarence W. Avery President and Chairman, The Murray Corporation of America, Detroit, Mich 1948 Paul G. Hoffman President, The Studebaker Corporation, South Bend, Ind 1949 Detroit Branch Appointed by Federal Reserve Bank: Charles T. Fisher, Jr President, The National Bank of Detroit, Detroit, Mich 1947 Rudolph E. Reichert President, Ann Arbor Bank, Ann Arbor, Mich 1948 Charles A. Kanter President, The Manufacturers National Bank of Detroit, Detroit, Mich 1948 Appointed by Board of Governors: Prentiss M. Brown Chairman, The Detroit Edison Company, Detroit, Mich 1947 Ernest Gilbert Farmer, Waldron, Mich 1948 District No. 8—St. Louis Class A.- Tom K. Smith Chairman of Board, Boatmen's National Bank, St. Louis, Mo. 1947 Phil E. Chappell President, Planters Bank and Trust Company, Hopkinsville, Ky 1948 G. R. Corlis President, Anna National Bank, Anna, 111 1949 Class B.- Louis Ruthenburg President and General Manager, Servel, Inc., Evansville, Ind. 1947 A. Wessel Shapleigh President, Shapleigh Hardware Company, St. Louis, Mo 1948 K. August Engel President, Arkansas Democrat Company, Little Rock, Ark.. . 1949 Class C.- Douglas W. Brooks President, The Newburger Company, Memphis, Tenn 1947 J. P. Redman Farmer, Cairo, 111 1948 Russell L. Dearmont Chief Counsel for Trustee, Missouri-Pacific Lines, St. Louis, Mo v 1949 Little Rock Branch Appointed by Federal Reserve Bank: Geo. S. Neal President, Bank of Russellville, Russellville, Ark 1947 Chas, A. Gordon Vice President, Simmons National Bank, Pine Bluff, Ark.. .. 1948 Lloyd Spencer President, First National Bank, Hope, Ark . 1948 Emmet Morris Chairman, Worthen Bank and Trust Company, Little Rock, Ark 1949 Appointed by Board of Governors: S. M. Brooks President, Brooks Advertising Agency, Little Rock, Ark 1947 Cecil C. Cox Farmer, Stuttgart, Ark 1948 Ralph E. Plunkett President, Plunkett-Jarrell Grocer Company, Little Rock, Ark 1949 Louisville Branch Appointed by Federal Reserve Bank: Wallace M. Davis Vice President, Citizens Fidelity Bank and Trust Company, Louisville, Ky 1947 Lee L. Persise President, The State Bank of Salem, Salem, Ind 1948 H. Lee Cooper President, Ohio Valley National Bank, Henderson, Ky 1948 A. C. Voris President, Citizens National Bank, Bedford, Ind 1949 Appointed by Board of Governors: E. J. O'Brien, Jr President, E. J. O'Brien & Company, Louisville, Ky 1947 Geo. O. Boomer President, The Girdler Corporation, Louisville, Ky 1948 Rosco Stone Farmer, Hickman, Ky 1949 Memphis Branch Appointed by Federal Reserve Bank: W. P. Kretschmar Chairman of Board, Commercial National Bank, Greenville, Miss 1947 Norfleet Turner President, First National Bank, Memphis, Tenn 1948 H. W. Hicks President, First National Bank, Jackson, Tenn 1948 W. W. Campbell President, National Bank of Eastern Arkansas, Forrest City, Ark 1949 A ppointed by Board of Governors: J. Holmes Sherard President, Jno. H. Sherard & Son, Sherard, Miss 1947 Leslie M. Stratton, Jr Executive Vice P/esident, Stratton-Warren Hardware Company, Memphis, Tenn 1948 Hugh M. Brinkley Farmer, Hughes, Ark 1949 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 109 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont. Term Expires DIRECTORS—Cont. Dec. 31 District No. 9—Minneapolis Class A: J. R. McKnight President, Pierre National Bank, Pierre, S. D 1947 F. D. McCartney Vice President, First National Bank, Oakes, N. D 1948 Clarence E. Hill Chairman of the Board, Northwestern National Bank, Minneapolis, Minn 1949 Class B: J. E. O'Connell President, Eddy's Bakeries, Inc., Helena, Mont 1947 Ray C. Lange President, Chippewa Canning Company, Chippewa Falls, Wis 1948 Homer P. Clark Chairman of the Board, West Publishing Company, St. Paul, Minn 1949 Class C.- Roger B. Shepard Chairman of the Board 1947 Paul E. Miller Director, Agricultural Extension Division, University of Minnesota, Minneapolis, Minn 1948 W. D. Cochran W. D. Cochran Freight Lines, Iron Mountain, Mich 1949 Helena Branch Appointed by Federal Reserve Bank: B. M. Harris President, Yellowstone Bank, Columbus, Mont 1947 Theodore Jacobs President, First National Bank, Missoula, Mont 1948 E. D. MacHaffie President, State Publishing Company, Helena, Mont 1948 A ppointed by Board of Governors: Malcolm E. Holtz Agriculturist, Great Falls, Mont 1947 R. B. Richardson President, Western Life Insurance Company, Helena, Mont. 1948 District No. 10—Kansas City Class A: W. L. Bunten. Executive Vice President, Goodland State Bank, Goodland, Kans 1947 T. A. Dines Chairman of the Board and President, United States National Bank, Denver, Colo 1948 M. A. Limbocker Chairman of the Board and President, Citizens National Bank, Emporia, Kans 1949 Class B: L. C. Hutson President and General Manager, Chickasha Cotton Oil Company, Chickasha, Okla 1947 Willard D. Hosford Vice President and General Manager, John Deere Plow Company, Omaha, Nebr 1948 J. M. Bernardin Lumberman, Kansas City, Mo 1949 Class C.- Robert L. Mehornay President, North-Mehornay Furniture Company, Kansas City, Mo 1947 Lyle L. Hague Farmer and stockman, Cherokee, Okla 1948 Robert B. Caldwell Caldwell, Downing, Noble and Garrity, Kansas City, Mo 1949 Denver Branch Appointed by Federal Reserve Bank: P. K. Alexander Vice President, The First National Bank of Denver, Denver, Colo 1947 J. D. Allen President, The First National Bank of Eagle County, Eagle, Colo 1948 Albert K. Mitchell Rancher, Albert, N. M 1948 Appointed by Board of Governors: W. A. Alexander Vice President and Assistant General Manager, The Denver Tramway Corporation, Denver, Colo '. 1947 M. E. Noonen Sheep rancher, Kremmling, Colo 1948 Oklahoma City Branch Appointed by Federal Reserve Bank: S. A. Bryant President, The Farmers National Bank, Cushing, Okla 1947 D. M. Tyler First Vice President, Dewey Portland Cement Company, Dewey, Okla 1948 Hugh L. Harrell Vice President, First National Bank and Trust Company, Oklahoma City, Okla - 1948 A ppointed by Board of Governors: Lloyd Noble President, Noble Drilling Corporation, Tulsa, Okla 1947 Rufus Green Rancher and farmer, Duncan, Okla J94§ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

IIO ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Com. Term Expires DIRECTORS—Cont. Dec. 31 Omaha Branch Appointed by Federal Reserve Bank: George W. Holmes President, First National Bank, Lincoln, Nebr 1947 Walter S. Byrne General Manager, Metropolitan Utilities District of Omaha, Omaha, Nebr 1947 Fred W. Marble President, Stock Growers National Bank, Cheyenne, Wyo.. . 1948 A ppointed by Board of Governors: L. E. Hurtz President, Fairmont Creamery Company, Omaha, Nebr 1947 Fred S. Wallace Farmer, Gibbon, Nebr 1948 District No. 11—Dallas Class A: J. E. Woods Chairman of Board, Temple National Bank, Temple, Texas. . 1947 Walter P. Napier Chairman of the Board, Alamo National Bank, San Antonio, Texas 1948 J. Edd McLaughlin Vice President, Security State Bank and Trust Company, Rails, Texas 1949 Class B: W. F. Beall President and General Manager, 3 Beall Brothers 3, Department Stores, Jacksonville, Texas 1947 J. R. Milam President, The Cooper Company, Inc., Waco, Texas 1948 George L. MacGregor Chairman of the Board, President and General Manager, Dallas Power and Light Company, Dallas, Texas 1949 Class C: G. A. Frierson Frierson Company, Inc., Merchants, Frierson, La 1947 R. B. Anderson General Manager, W. T. Waggoner Estate, Vernon, Texas. .. 1948 J. R. Parten President, Woodley Petroleum Company, Houston, Texas. .. 1949 El Paso Branch Appointed by Federal Reserve Bank: J. E. Moore President, First National Bank, Roswell, N. M 1947 W. S. Warnock Vice President, El Paso National Bank, El Paso, Texas 1948 W. Henry Wooldridge President, Lone Star Motor Company, El Paso, Texas 1948 George G. Matkin Vice President, State National Bank, El Paso, Texas 1949 Appointed by Board of Governors: Hal Bogle Livestock and farming, Dexter, N. M.. 1947 Dorrance D. Roderick President, Newspaper Printing Corporation, El Paso, Texas. . 1948 Hiram S. Corbett President, J. Knox Corbett Lumber Company, Tucson, Ariz. 1949 Houston Branch Appointed by Federal Reserve Bank: John W. McCullough President, Hutchings-Sealy National Bank, Galveston, Texas. 1947 James A. Elkins President, City National Bank, Houston, Texas 1948 B. C. Roberts President, Wharton Bank & Trust Company, Wharton, Texas. 1948 Melvin Rouff First Vice President, Houston National Bank, Houston, Texas. 1949 A ppointed by Board of Governors: J. E. Wheat Attorney-at-Law, Woodville, Texas 1947 Ross Stewart General Manager, C. Jim Stewart and Stevenson, Houston, Texas 1948 George A. Slaughter Farming, Wharton, Texas 1949 San Antonio Branch Appointed by Federal Reserve Bank: T. C. Frost Vice President, Frost National Bank, San Antonio, Texas... 1947 Robert D. Barclay. President, National Bank of Commerce, San Antonio, Texas.. 1948 C. L. Skaggs President, The First National Bank of Weslaco, Weslaco, Texas 1948 Riley Peters Executive Vice President, First State Bank, Kerrville, Texas.. 1949 Appointed by Board of Governors: J. M. Odom General Contractor, Austin, Texas 1947 Henry P. Drought Attorney-at-Law, San Antonio, Texas 1948 Holman Cartwright Livestock and farming, Twin Oaks Ranch, Dinero, Texas. . . . 1949 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM I I I DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Com. Term Expires DIRECTORS—Cont. Dec. 31 District No. 12—San Francisco Class A: Chas. H. Stewart President, Portland Trust and Savings Bank, Portland, Ore.. . 1947 Carroll F. Byrd Chairman of the Board and Executive Vice President, The First National Bank of Willows, Willows, Calif 1948 William W. Crocker President, Crocker First National Bank of San Francisco, San Francisco, Calif 1949 Class B: St. George Holden St. George Holden Realty Company, San Francisco, Calif.. . 1947 Reese H. Taylor President, Union Oil Company of California, Los Angeles, Calif 1948 Walter S. Johnson President, American Box Corporation of California, San Francisco, Calif 1949 Class C.- William R. Wallace, Jr Attorney-at-Law, San Francisco, Calif... 1947 Harry R. Wellman Director, Giannini Foundation of Agricultural Economics, University of California, Berkeley, Calif 1948 Brayton Wilbur President, Wilbur-Ellis Company, San Francisco, Calif 1949 Los Angeles Branch Appointed by Federal Reserve Bank: F. E. Snedecor President, The First National Bank of Corona, Corona, Calif. 1947 M. Vilas Hubbard President, Citizens Commercial Trust and Savings Bank of Pasadena, Pasadena, Calif 1948 Frank L. King President, California Bank, Los Angeles, Calif 1948 Appointed by Board of Governors: Y. Frank Freeman Vice President, Paramount Pictures, Inc., Hollywood, Calif.. . 1947 Fred G. Sherrill Vice President, J. G. Boswell Company, Los Angeles, Calif. . 1948 Portland Branch Appointed by Federal Reserve Bank: E. B. MacNaughton Chairman of the Board, The First National Bank of Portland, Portland, Ore 1947 William C. Christensen President, The Commercial National Bank of Hillsboro, Hillsboro, Ore 1948 W. W. Flint President, The First National Bank of Cottonwood, Cottonwood, Idaho '. 1948 Appointed by Board of Governors: Aaron M. Frank President, Meier and Frank Company, Inc., Portland, Ore.. . 1947 R. B. Taylor Livestock and farming, Adams, Ore 1948 Salt Lake City Branch Appointed by Federal Reserve Bank: D. F. Richards President, American National Bank of Idaho Falls, Idaho Falls, Idaho 1947 Chas. L. Smith President, The First National Bank of Salt Lake City, Salt Lake City, Utah 1948 John A. Schoonover President, The Idaho First National Bank, Boise, Idaho. . . . 1948 Appointed by Board of Governors: Henry Aldous Dixon President, Weber College, Ogden, Utah 1947 Merle G. Hyer Livestock and farming, Lewiston, Utah 1948 Seattle Branch Appointed by Federal Reserve Bank: Lawrence M. Arnold Chairman of the Board, Seattle-First National Bank, Seattle, Wash 1947 Benj. N. Phillips President, The First National Bank in Port Angeles, Port Angeles, Wash 1948 Fred C. Forrest Chairman of the Board and President, The First National Bank of Pullman, Pullman, Wash 1948 Appointed by Board of Governors: John T. Tenneson President, Superior Packing Company, Seattle, Wash 1947 John M. McGregor Manager, McGregor Land & Livestock Company, Hooper, Wash 1948 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

I 12 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont. SENIOR OFFICERS OF FEDERAL RESERVE BANKS Federal Reserve President Vice Presidents Bank of— First Vice President Boston. Laurence F. Whittemore Robert B. Harvey1 Carl B. Pitman William Willett E. G. Hult O. A. Schlaikjer E. O. Latham R. F. Van Amringe New York. Allan Sproul E. O. Douglas A. Phelan L. R. Rounds J. W. Jones H. V. Roelse H. H. Kimball Robert G. Rouse L. W. Knoke V. Willis Walter S. Logan R. B. Wiltse Philadelphia.... Alfred H. Williams Karl R. Bopp Wm. G. McCreedy W. J. Davis Robert N. Hilkert C. A. Mcllhenny E. C. Hill P. M. Poorman1 Cleveland. Ray M. Gidney W. D. Fulton B. J. Lazar Wm. H. Fletcher J. W. Kossin Martin Morrison A. H. Laning2 Donald S. Thompson Richmond. Hugh Leach R. L. Cherry R. W. Mercer J. S. Walden, Jr. Claude L. Guthrie2 W. R. Milford E. A. Kincaid C. B. Strathy Edw. A. Wayne Atlanta. W. S. McLarin, Jr. P. L. T. Beavers T. A. Lanford L. M. Clark V. K. Bowman E. P. Paris J. E. Denmark S. P. Schuessler Joel B. Fort, Jr. Chicago. C. S. Young Allan M. Black* John K. Langum Charles B. Dunn Neil B. Dawes O. J. Netterstrom W. R. Diercks A. L. Olson J. H. Dillard Alfred T. Sihler E. C. Harris St. Louis. Chester C. Davis O. M. Attebery C. A. Schacht F. Guy Hitt Wm. E. Peterson William H. Stead William B. Pollard C. M. Stewart Minneapolis.... J. N. Peyton H. G. McConnell R. E. Towle O. S. Powell A. W. Mills2 Sigurd Ueland Otis R. Preston Harry I. Ziemer Kansas City.... H. G. Leedy L. H. Earhart John Phillips, Jr. Henry O. Koppang Delos C. Johns G. H. Pipkin R. L. Mathes D. W. Woolley2 Dallas R. R. Gilbert E. B. Austin W. H. Holloway W. D. Gentry R. B. Coleman Watrous H. Irons H. R. DeMoss L. G. Pondrom2 W. E. Eagle Mac C. Smyth San Francisco... . C. E. Earhart W. N. Ambrose C. R. Shaw H. N. Mangels D. L. Davis H. F. Slade J. M. Leisner2 W. F. Volberg W. L. Partner O. P. Wheeler * Cashier. 2Also Cashier. NOTE: See p. 113 for note on Conference of Presidents, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 113 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont. VICE PRESIDENTS IN CHARGE OF BRANCHES OF FEDERAL RESERVE BANKS Federal Reserve Bank of— Chief Officer New York.... Buffalo I. B. Smith1 Cleveland Cincinnati Lazar Pittsburgh j.'w. Kossin Richmond Baltimore W. R. Milford Charlotte R. L. Cherry Atlanta Birmingham P. L. T. Beavers Jacksonville T. A. Lanford Nashville Joel B. Fort, Jr. New Orleans E. P. Paris Chicago Detroit E. C. Harris St. Louis Little Rock C. M. Stewart Louisville C. A. Schacht Memphis William B. Pollard Minneapolis. . Helena R. E. Towle Kansas City. , Denver G. H. Pipkin Oklahoma City R. L. Mathes Omaha L. H. Earhart Dallas El Paso Mac C. Smyth Houston W. H. Holloway San Antonio W. E. Eagle San Francisco Los Angeles W. N. Ambrose Portland D. L. Davis Salt Lake City W. L. Partner Seattle C. R. Shaw General Manager. CONFERENCE OF PRESIDENTS The Presidents of the Federal Reserve Banks are organized into a Conference of Presidents which meets from time to time to consider matters of common interest, and to consult with and advise the Board of Governors. Mr. Sproul, President of the Federal Reserve Bank of New York and Mr. Davis, President of the^Federal Reserve Bank of St. Louis, who had served during 1946 as Chairman of the Conference and Vice Chairman, respectively, were reelected to serve until the conclusion of the first meeting of the Conference held during or after February 1948. Mr. William F. Treiber, Assistant Vice President and Secretary of the Federal Reserve Bank of New York, who was appointed Secretary of the Conference in June 1946, continued to serve during 1947. 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 73 w s 73 O > 7* D o o w 5« o JO BOUNDARIES OF FEDERAL RESERVE DISTRICTS BOUNDARIES OF FEDERAL RESERVE BRANCH TERRITORIES BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM FEDERAL RESERVE BANK CITIES FEDERAL RESERVE BRANCH CITIES NOTE: There has been no change in district or branch territory boundaries since the publication of the description in the Annual Report of the Board of Governors for 1942, pp. 138-45. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX Page Acceptance of drafts and bills of exchange by member banks: Applications approved 44 Bankers, buying rates on 76 Surrender of powers 44 Amendments to Federal Reserve Act: (See Federal Reserve Act) American Bankers Association: Check routing symbols program 38 Effort to encourage voluntary restraint on inflationary bank credit extension 7 Assets and liabilities of Federal Reserve Banks 62 Audit of accounts of Board by Federal Reserve Bank of New York 55 A very, Clarence W., appointed Class C director at Chicago and designated Chairman and Federal Reserve Agent 51, 52 Bank credit: Demand in 1947, discussion 2 Developments during year 15 Restraint on, effort sponsored by American Bankers Association 7 Statement of Federal Advisory Council regarding volume of 98 Bank holding companies: Legislation to provide effective supervision and control of, recommended to Congress 11 Voting permits granted to 43 Bank premises: (See Banking quarters) Bank supervision by the Federal Reserve System 40 Banking offices: Analysis of changes 79 Number of 37 Banking quarters: Buildings of Federal Reserve branch banks, amendment to Federal Reserve Act on cost of 46 Cincinnati Branch, purchase of building for 50 Federal Reserve Bank of Atlanta, rilling in of light court 51 Federal Reserve Banks and branches 50, 74 New Orleans Branch, improvements to 51 Batson, E. O., appointed director at New Orleans 52 Bland, W. T., appointed director at Jacksonville 52 Board of Governors: Audit of accounts by Federal Reserve Bank of New York 55 Employees, number of 53 Income and expenses 54 Members: Clayton, Lawrence, appointment of 53 List of 101 Ransom, Ronald, death of 53 Officers 101 Publications and releases 58 Research and advisory services 55 Staff: (See Staff of Board) Bond market and money rates 25 Bonds: (See Government securities) Branch banks: Domestic: Analysis of changes 79 Capital requirements of member banks, modification recommended to Congress 12 Digitized for FRASER 115 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Il6 INDEX Branch banks—Continued Page Domestic—Continued Increase during 1947 37 Number of , 79 Federal Reserve System: Bank premises, cost and value of 74 Buildings, amendment to Federal Reserve Act on cost of 46 Cincinnati, purchase of building for 50 Directors, list of 104 Examination of 42 New Orleans, improvement to property of 51 Vice Presidents in charge of 113 Foreign: Applications to establish, approved 44 Number and location of 44 Brinkley, Hugh M., appointed director at Memphis 52 Brown, Bonnar, appointed Assistant Director of Division of Research and Statistics 54 Budget expenditures and receipts and changes in public debt 13 Buying rates on bills at Federal Reserve Banks 76 Capital accounts: Federal Reserve Banks 63, 65 Member banks 24 Capital requirements for member banks, modification recommended to Congress 12 Central reserve cities, classification of 39, 86 Chairmen of Federal Reserve Banks: Avery, Clarence W., designated at Chicago 51 Conference of 103 Designations for year 51 Executive Committee 103 List of 103 Meeting of Conference of 59 Wilbur, Brayton, designated at San Francisco 52 Wysor, W. G., designated at Richmond . 51 Charts: Bank deposits and currency 19 Capital ratios of member banks 25 Commercial bank loans—all insured banks 17 Earnings ratios of member banks—percentage of capital accounts 23 Gross national product 28 Loans and investments of all commercial banks 16 Member bank reserves, reserve bank credit, and related items 4 Ownership of U. S. Government securities 14 Wholesale prices 31 Yields on Treasury and corporate securities 5 Check routing symbols, progress in use of 38 Clayton, Lawrence, appointed member of Board of Governors 53 Clearing and collection: Check routing symbols, progress in use of 38 Federal Reserve par list: Changes in par and nonpar banks during 1947 38 Number of banks on list and number not on list 80 Commitment rates at Federal Reserve Banks 76 Committees: Executive, of Chairmen's Conference 103 Executive, of Federal Advisory Council 102 Executive, of Federal Open Market Committee 101 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 11 7 Page Condition reports of Federal Reserve Banks: All banks combined 62 Each bank 64 Conferences: (See Meetings) Consumer credit: Conviction of Consumers Home. Equipment Company for violating Regulation W 45 Joint resolution continuing authority for temporary period but control not to be exercised after November 1, 1947 47 Legislation recommended to Congress to help curb prevailing inflationary credit tendencies 10 Minimum down payments and maximum maturities under Regulation W. .. 78 Regulation W terminated 45 Statement of Federal Advisory Council on control of 98 Consumer expenditures, discussion of increase in 1 Consumers Home Equipment Company, conviction for violating Regulation W. . 45 Corbett, Hiram S., appointed director at El Paso 53 Corporate securities, yields on 5 Court cases: Consumers Home Equipment Company, conviction for violating Regulation W 45 Peoples Bank, Lakewood Village, California, suit regarding condition of membership 46 Removal of bank directors by order of Board sustained by Supreme Court 45 Credit: (See Bank credit; Consumer credit) David, Donald K., appointed Deputy Chairman at Boston 51 Deaths: Ransom, Ronald, Vice Chairman of Board of Governors 53 Demand, production, and prices 27 Deposits: Factors in expansion of holdings of individuals and businesses 20 Growth during 1947 19 Maximum rate on yy War loan, expiration of Act exempting from deposit insurance assessments and reserve requirements 47 Deputy Chairmen, Federal Reserve Banks: David, Donald K., appointed at Boston 51 Designations for year 51 Hoffman, Paul G., appointed at Chicago 51 List of 103 McCormick, Charles P., appointed at Richmond 51 Directors: Federal Reserve Banks: Appointments during year 51 Avery, Clarence. W., appointed Class C and designated Chairman and Federal Reserve Agent 51, 52 Classes of 104 David, Donald K., appointed Deputy Chairman at Boston 51 Hodgkinson, Harold D., appointed at Boston 52 Hoffman, Paul G., appointed Deputy Chairman at Chicago 51 List of 104 McCormick, Charles P., appointed Deputy Chairman at Richmond 51 Stettinius, Edward R., Jr., appointed Class C at Richmond 52 Wallace, William R., Jr., appointed Class C at San Francisco 52 Wilbur, Brayton, designated Chairman and Federal Reserve Agent at San Francisco , , , 52 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Il8 INDEX Directors—Continued Page Federal Reserve Banks—Continued Wysor, W. G., designated Chairman and Federal Reserve Agent at Richmond 51 Federal Reserve branch banks: Appointments during year 52 Batson, E. O., appointed at New Orleans 52 Bland, W. T., appointed at Jacksonville 52 Brinkley, Hugh M., appointed at Memphis 52 Corbett, Hiram S., appointed at El Paso 53 Green, Rufus, appointed at Oklahoma City 53 Hershey, L. Vinton, appointed at Baltimore 52. Holt, Thad, appointed at Birmingham 52 Hyer, Merle G., appointed at Salt Lake City 53 List of 104 Plunkett, Ralph E., appointed at Little Rock 52 Sibley, W. A. L., appointed at Charlotte 52 Taylor, R. B., appointed at Portland 53 National banks, removal of, order of Board sustained by Supreme Court. . . 45 Directory: Board of Governors of the Federal Reserve System 101 Federal Advisory Council 102 Federal Open Market Committee 101 Federal Reserve Banks, directors and officers 104 Discount rates at Federal Reserve Banks 6, 76 Dividends, Federal Reserve Banks 48, 71 Dollar exchange, application of member banks to accept for furnishing 44 Earnings and expenses of Federal Reserve Banks 48, 70, 72 Earnings of member banks 22 Employees: Board of Governors, number of 53 Federal Reserve Banks: Number of 53 Number and salaries of 75 Examinations: Federal Reserve Banks and branches 42 State member banks 42 Expenditures of Government, total for year 13 Expenses of Board of Governors 54 Exports: Means of financing surplus 35 Volume of 33 Federal Advisory Council: Meetings held during year 59 Members and officers 102 Statement regarding volume of bank credit, consumer credit controls, and bank reserves of short-term Government securities 98 Federal Deposit Insurance Corporation: Capital stock, act providing for retirement and cancellation of 47 Federal Open Market Committee: Meetings held during year 59 Members and officers 101 Policy actions 88 Federal Reserve Act: Section 10, amendment on cost of Federal Reserve branch bank buildings. . 46 Section 13, amendment recommending Reserve Bank guarantee of loans to business 12 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 119 Page Federal Reserve Act—Continued Section 13b, repeal recommended by Board 12 Section 14(b) amended to authorize purchase of Government obligations by Federal Reserve Banks 46 Federal Reserve Bank of Atlanta: Building, alterations to 51 Federal Reserve Bank of New York: Audit of accounts of Board 55 Foreign transactions of 49 Federal Reserve Bank of San Francisco: Staff: Mangels, H. N., appointed First Vice President 53 Federal Reserve Banks: Assets and liabilities of 62 Bank premises of 50, 74 Branches: (See Branch banks, Federal Reserve System) Capital accounts 63, 65 Chairmen, list of 103 (See also Chairmen, Federal Reserve Banks) Condition of each bank 64 Deputy Chairmen, list of 103 (See also Deputy Chairmen, Federal Reserve Banks) Directors: (See Directors) Discount rates 6, 76 Dividends paid : 48, 72 Earnings and expenses 48, 72 Earnings on loans and securities 48 Employees 53, 75 Examination of 42 Foreign transactions of 49 Holdings of Government securities 68 Holdings of Treasury certificates 69 Officers, list of 103 Officers and employees: Number of 53 Number and salaries of 75 Operations, volume of 47, 69 Presidents, list of 112 Real estate acquired for banking house purposes 74 Vice Presidents, list of 112 Volume of operations 47 Volume of operations in principal departments 69 Federal Reserve notes: Cost of printing 55 Establishment of interest rate paid by Federal Reserve Banks 83 Federal Reserve System: Map 114 Membership, increase in 37 Fiduciary powers, applications for national banks approved and powers terminated during year 43 First Vice Presidents: List of 112 Mangels, H. N., appointment at San Francisco * 53 Foreign banking corporations, number in operation 44 Foreign branches of American banking institutions 44 Foreign trade and finance 32 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

I2O INDEX Page Foreign transactions of Federal Reserve Banks 49 Government expenditures in 1947, discussion of 2 Government finance, review for year 12 Government securities: Holdings by Federal Reserve Banks 68 Holdings of commercial banks and others 7 Interest rates on, changes in 5 Market for 25 Ownership of, changes during 1947 15 Purchase and sale by Federal Reserve Banks and effect on bank reserves. . 3 Purchase by Federal Reserve Banks 5 Purchase by Federal Reserve Banks authorized by amendment to Section 14 46 Statement of Federal Advisory Council on bank reserves of short-term 98 Yields on, discussion of 27 Green, Rufus, appointed director at Oklahoma City 53 Hershey, L. Vinton, appointed director at Baltimore. 52 Hodgkinson, Harold D., appointed Class C director at Boston 52 Hoffman, Paul G., appointed Deputy Chairman at Chicago 51 Holt, Thad, appointed director at Birmingham 52 Hyer, Merle G., appointed director at Salt Lake City 53 Imports: Goods and services, review of 34 Inflationary developments during 1947, discussion of 1 Interest rates: {See Rates) International Bank, operations of 36 International Monetary Fund, operations of 36 International trade and finance 32 Joint statement of bank supervisory agencies, urging banks to curtail speculative loans 6 Legislation: Bank holding companies, to provide more effective supervision in control of, recommended 11 Capital requirements for member banks, modification recommended to Congress 12 Consumer credit: Joint resolution continuing authority for temporary period 47 Permanent legislation to authorize regulation of, recommended by Board 10 Federal Reserve branch bank buildings, amendment on cost of 46 Loans to business, recommendation for legislation for Reserve Bank guarantee of 11 Purchase of Government obligations by Federal Reserve Banks 46 Special reserve requirement on commercial banks, legislation recommended to authorize establishment of 9 Stock of Federal Deposit Insurance Corporation, act to provide for retirement and cancellation of 47 War loan deposits, expiration of Act exempting from deposit insurance assessments and reserve requirements 47 Loans: Business, legislation recommended for Reserve Bank guarantee of 11 Expansion during 1947 16 Foreign, by Federal Reserve Bank of New York 49 Increase in, pressure on banks discussed 3 Securities, for purchasing and carrying by banks 18 Speculative, joint statement issued by bank supervisory agencies urging banks to curtail 6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 121 Page Loans and investments: Member banks 24 Review of developments. 16 Mangels, H. N., appointed First Vice President at San Francisco 53 Map of Federal Reserve System 114 Margin requirements: Amendments to Regulations T and U to reduce from 100 per cent to 75 per cent 45, 82 Regulations T and U, table 77 McCormick, Charles P., appointed Deputy Chairman at Richmond 51 Meetings: Auditors of Federal Reserve Banks 59 Chairmen of Federal Reserve Banks 59 Counsel for Federal Reserve Banks 59 Examination departments of Federal Reserve Banks 59 Federal Advisory Council 59 Federal Open Market Committee 59 Miscellaneous conferences attended by representatives of Board and Federal Reserve Banks 59 National Association of Supervisors of State Banks, annual convention of. . 43 Presidents of Federal Reserve Banks 59 Member banks: Analysis of changes 79 Capital accounts 24 Earnings and earning assets 22 Loans and investments 24 Number of 79 Membership in the Federal Reserve. System: Capital requirements for admission of State banks, modification recommended to Congress 12 Increase during year 37 Peoples Bank, Lakewood Village, California, suit regarding condition of membership 46 Monetary instruments, inadequacy of existing 7 Monetary policies in 1947 3 Money rates, discussion of 25 Morse, Chandler, resignation as Assistant Director of Division of Research and Statistics 54 Municipal and corporate securities, bank holdings of 18 Mutual savings banks, analysis of changes 79 Myrick, Lowell, appointed Assistant Director of Division of Bank Operations.. 54 National Association of Supervisors of State Banks, annual convention of 43 National banks: Analysis of changes 79 Fiduciary powers, applications approved and powers terminated 43 Nonmember banks: Analysis of changes 79 Par list, number on list and number not on list 80 Operations of Federal Reserve Banks, volume of 47, 69 Par list: Changes during year 38 Number of banks on list and not on list by Federal Reserve districts and States 80 Paulger, Leo H., Special Adviser to the Board, retirement of 54 Peoples Bank, Lakewood Village, California, suit regarding condition of membership * 46 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 INDEX Page Plunkett, Ralph E., appointed director at Little Rock 52 Policy actions, Board of Governors: Establishment of interest rate paid by the Federal Reserve Banks on Federal Reserve notes 83 Regulation T, Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges, amendment to 82 Regulation U, Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange, amendment to.. 82 Reserve cities, standard for classification of 85 Policy actions, Federal Open Market Committee: Authority to effect transactions in System account: Meeting of March 1 88 Meeting of June 5 91 Meeting of October 6-7 95 Meeting of December 9 96 Elimination of posted rate on Treasury bills 92 Increase in authority to effect transactions in System account: Meeting of June. 5 90 Meeting of October 6-7. . . 95 Revised authority to effect transactions in System account 94 Tender of maturing Treasury bills for new issues . . 90 Postal savings deposits, rate on . . 77 Presidents of Federal Reserve Banks: Conference of . 113 List of 112 Meetings held during year 59 Prices, fluctuations during 1947 discussed 29 Production during 1947 29 Public debt: Changes during year 13 Outstanding, by types of issue 15 Publications and releases of Board 58 Ransom, Ronald, member of Board of Governors, death of 53 Rates: Buying rates on bills 76 Commitment 76 Discount: Increase at Federal Reserve Banks 6 Table 76 Interest: Changes during 1947 26 Establishment by Federal Reserve Banks on Federal Reserve notes 83 Government securities 5 Table . 76 Money, during 1947 26 Postal savings deposits 77 Savings deposits 77 Time deposits 77 Real estate acquired by Federal Reserve Banks for banking house purposes. ... 74 Receipts and disbursements of Board 54 Regulations, Board of Governors: T, Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges, amendment to reduce margin requirements 45, 82 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 123 Page Regulations, Board of Governors—Continued U, Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange, amendment to reduce margin requirements 45, 82 W, Consumer Credit, termination of 45 Relations with dealers in securities: Suit regarding removal of bank directors, order of Board sustained by Supreme Court 45 Research and Advisory Services of Board 55 Reserve cities, basis for classification of 38, 85 Reserve requirements: Authority to raise discussed. . . 8 Member banks 77 Reserves: Availability of 21 Changes causing increase and decrease of 21 Effect of reduction in Federal Reserve holdings of Government securities on 3 Increase in requirements at central reserve cities 6 Special, discussion of plan 9 Statement of Federal Advisory Council on bank reserves of short-term Government securities 98 Resignations: Morse, Chandler, as Assistant Director of Division of Research and Statistics 54 Retirements: Paulger, Leo H., Special Adviser to the Board 54 Salaries of officers and employees of the Federal Reserve Banks 75 Securities: Government: {See Government securities) Municipalities and corporations, bank holdings of 18 Securities exchange administration: Amendments to Regulations T and U to reduce margin requirements 45, 82 Sibley, W. A. L., appointed director at Charlotte 52 Staff at Federal Reserve Banks, number of officers and employees 53, 75 Staff of Board of Governors: Brown, Bonnar, appointed Assistant Director of Division of Research and Statistics 54 Members "of official staff 101 Morse, Chandler, resignation as Assistant Director of Division of Research and Statistics 54 Myrick, Lowell, appointed Assistant Director of Division of Bank Operations 54 Number of employees 53 Paulger, Leo H., Special Adviser to Board, retirement of 54 Townsend, J. Leonard, title changed to Associate General Counsel 54 Young, Ralph A., title changed to Associate Director, Division of Research and Statistics 54 State member banks: Analysis of changes 79 Examination of 42 Increase during year , 37 Stettinius, Edward R., Jr., appointed Class C director at Richmond 52 Stock, capital: Federal Deposit. Insurance Corporation, Act providing for retirement and cancellation of 47 Requirements for member banks, modification recommended 12 Surveys: Consumer finances 56 Loans outstanding to farmers 55 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 INDEX Page Taylor, R. B., appointed director at Portland 53 Townsend, J. Leonard, title changed to Associate General Counsel 54 Treasury certificates, holdings by Federal Reserve Banks 69 Trust powers of national banks, changes in banks granted authority and number terminated during year 43 Volume of operations of Federal Reserve Banks 47, 6.9 Voting permits, number authorized during year 43 Wallace, William R., Jr., appointed Class C director at San Francisco.... 52 War loan deposits, expiration of Act exempting from deposit insurance assessments and reserve requirements 47 Wilbur, Brayton, designated Chairman and Federal Reserve Agent at San Francisco 52 Wysor, W. G., designated Chairman and Federal Reserve Agent at Richmond. . 51 Yields on Government securities, discussion of 27 Young, Ralph A., title changed to Associate Director of Division of Research and Statistics 54 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis