Annual Report of the Federal Reserve Board, 1948

THIRTY-FIFTH ANNUAL REPORT of the BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM COVERING OPERATIONS FOR THE YEAR 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, June JO, 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-fifth Annual Report, prepared by direction of the Board of Governors of the Federal Reserve System, covering operations during the calendar year 1948. Yours respectfully, THOMAS B. MCCABE, Chairman. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

TEXT OF REPORT Page Introduction i Federal Reserve Policies under Changing Conditions 2 Legislative Proposals 4 Power to increase reserve requirements 4 Consumer instalment credit regulation 7 Bank holding company legislation 8 Capital requirements for member banks 9 Financing of business enterprises 9 Federal Reserve Policies in 1948 9 The Public Debt 12 Debt reduction 12 Composition of the debt 13 Ownership of Government securities 14 Bank Credit Developments 16 Reduced growth in bank loans 16 Changes in volume and activity of money 18 Availability of bank reserves 20 Bank earnings and earning assets 23 Capital accounts 25 Nonbank Sources of Investment Funds 26 Changes in Structure of Interest Rates 27 Increased Supplies and More Selective Price Movements 29 More selective price movements 31 Production close to capacity and demand 33 International Trade and Finance 35 Exports and imports of the United States 36 Means of financing export surplus 37 Changes in Banking Structure 38 Number of banking offices 38 Changes in Federal Reserve membership 39 Par and nonpar banks 39 Check routing symbols 40 Designation of reserve cities 40 Digitized for FRASER in http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Page Bank Supervision by the Federal Reserve System 40 Examination of Federal Reserve Banks 41 Examination of State member banks 41 Bank holding companies 42 Trust powers of national banks 42 Foreign branches and banking corporations 42 Changes in Regulations of the Board of Governors 44 Reserves of member banks . 44 Membership of State banks 44 Check clearing and collection . . 44 Interlocking bank directorates 44 Margin requirements for purchasing securities.... 45 Consumer instalment credit 45 Litigation 46 Suit regarding condition of membership 46 Hearing under Clayton Antitrust Act 46 Legislation 46 Consumer instalment credit 46 Reserves of member banks 46 Real-estate loans 47 Criminal provisions 47 Reserve Bank Operations 47 Earnings and expenses 47 Foreign transactions 48 Volume of operations 50 Bank premises 50 Reserve Bank Personnel 50 Chairmen and Deputy Chairmen 50 Directors 51 Class C Directors 51 Branch Directors 51 Change in Presidents 52 Staff 53 Board of Governors—Staff 53 Appointments of Board members and designation of Chairman 53 Staff 53 Board of Governors—Income and Expenses 55 Research and Advisory Services 56 Publications and Releases 58 Federal Reserve Meetings 59 IV Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

TABLES Page 1. Statement of Condition of the Federal Reserve Banks (In Detail), Dec. 31, 1948 62 2. Statement of Condition of Each Federal Reserve Bank, End of 1948 and 1947 64 3. Holdings of United States Government Securities by Federal Reserve Banks, End of December 1946, 1947, and 1948 68 4. Federal Reserve Bank Holdings of Special Short-Term Treasury Certificates Purchased Directly from the United States, 1942-48 69 5. Volume of Operations in Principal Departments of Federal Reserve Banks, 1944-48 69 6. Earnings and Expenses of Federal Reserve Banks during 1948.. 70 7. Earnings and Expenses of Federal Reserve Banks, 1914-48 72 8. Bank Premises of Federal Reserve Banks and Branches, Dec. 31, 1948. • • • 74 9. Number and Salaries of Officers and Employees of Federal Reserve Banks, Dec. 31, 1948 75 10. Federal Reserve Bank Discount, Interest, and Commitment Rates, and Buying Rates on Bills (In Effect Dec. 31, 1948). . 76 11. Member Bank Reserve Requirements 77 12. Maximum Rates on Time Deposits 77 13. Margin Requirements 77 14. Minimum Down Payments and Maximum Maturities on Consumer Instalment Credit Subject to Regulation W 78 15. Member Bank Reserves, Reserve Bank Credit, and Related Items—End of Year 1918-48 and End of Month 1948 79 16. Analysis of Changes in Number of Banking Offices during 1948 80 17. Number of Banking Offices on Federal Reserve Par List and not on Par List, by Federal Reserve Districts and States, Dec. 31, 1948 81 APPENDIX Record of Policy Actions—Board of Governors 84 Record of Policy Actions—Federal Open Market Committee 94 Action of Federal Advisory Council on Bank Holding Company Legislation, Sept. 21, 1948 100 Memorandum of Federal Advisory Council on Credit Conditions, Nov. 22, 1948 102 Board of Governors of the Federal Reserve System 104 Federal Open Market Committee 104 Federal Advisory Council 105 Directors and Senior Officers of Federal Reserve Banks 106 Map of Federal Reserve Districts 118 Index 119 Digitized for FRASER v http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Federal Reserve policies during most of 1948, as in the preceding eight years, were directed toward exerting restraint on inflationary credit expansion while at the same time maintaining stability in the market for Government securities. During the late fall of 1948 and more definitely in 1949, economic developments began to reflect widespread abatement of the inflationary pressures. The adjustments evident in the economy then called for relaxation of measures of credit restraint, and accordingly the Board of Governors took prompt action to modify its policies. Inflationary forces continued dominant in the economy during the greater part of 1948, the year covered by this Thirty-fifth Annual Report of the Board of Governors of the Federal Reserve System. Commodity prices, which had risen sharply in 1946 and 1947, advanced generally until late summer of 1948 after showing some weakness early in the year. Production increased moderately from the unusually high levels reached in 1947. Incomes continued to expand, as did expenditures for consumer goods, housing, plant and equipment, and public works. Federal Government expenditures increased as programs of international aid and military defense expanded, while personal income taxes were reduced. Businesses, farmers, home owners, and individuals continued to borrow. Further lending by banks and other financing institutions was made possible in part by widespread selling of Government securities to the Federal Reserve. However, the over-all volume of credit was checked somewhat by voluntary action by the banks as well as compulsory restraints on private credit expansion. As the year progressed, supplies in many lines came more nearly into balance with demands and in some cases exceeded demands at prevailing prices. After August, commodity prices declined in both wholesale and retail markets. The average level of wholesale prices, which had risen 16 per cent in 1947, was no higher at the end of 1948 than at the beginning. Consumer prices rose 3 per cent in 1948 compared with 9 per cent in 1947. Toward the end of the year credit expansion slackened and persistent selling of Government bonds by nonbank investors ceased. In the early months of 1949, further easing of inflationary pressures was reflected in a slackening in consumer buying, more general price reductions, declines in production and employment, a rise in unemployment from the very low levels of recent years, and a decline in bank credit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 ANNUAL REPORT OF BOARD OF GOVERNORS FEDERAL RESERVE POLICIES UNDER CHANGING CONDITIONS In view of the inflationary tendencies prevailing during most of 1948, as well as of the possibility of further inflation through credit expansion, the policies of the Federal Reserve System continued to be directed toward exercising as much restraint upon credit expansion as was possible under the limitations imposed by the need for supporting the market for Government securities. Notwithstanding further substantial credit growth, monetary expansion was more effectively restrained in 1948 than in any other year since before the war. The principal limiting element was the substantial surplus of the Treasury, reinforced by restrictive policies pursued by the Federal Reserve. Early in 1949, as evidences of economic readjustment indicated less need for restrictive credit policies, the Board of Governors relaxed certain of its regulations and requirements. In March, it reduced margin requirements on security loans by brokers and banks, fixed in Regulations T and U, from 75 to 50 per cent of the market value of the collateral securities (in May it made a further change permitting a 25 per cent margin in the case of securities acquired through the exercise of subscription rights when certain specified conditions are followed). In March and again in April, it amended Regulation W, governing consumer instalment credit, to reduce minimum down payments on articles other than automobiles and to increase the maximum period permitted for repayment of all credits under the regulation. The April amendment also raised the specific exemption in terms of sales price of articles covered by instalment contracts. In April, the Board also reduced reserve requirements by 2 percentage points on demand deposits at member banks in central reserve cities, by I percentage point on demand deposits at all other member banks, and by one-half percentage point on time deposits at all member banks. The effect on the money market of this reduction was offset, however, because banks sought, and Federal Open Market Committee policy of maintaining short-term rates required, sales of securities from the System's portfolio. In anticipation of the expiration on June 30 of the remaining temporary reserve authority, releasing the residue of approximately 800 million dollars of reserves, the Open Market Committee on June 28 modified its policy so that reserves thus released or accruing later might have effect in the money market. In taking all of these steps, the Federal Reserve authorities acted in conformity with a long-established policy of administering credit controls in a flexible manner so as to meet changes in economic conditions. The Treasury cash surplus exerted some drain on bank reserves during the first quarter of 1949 but the amount was much less than in the same period of 1948. Banks were under relatively little pressure and such reserves as were needed were readily available. After March, the money market became easier. Many banks increased their holdings of Treasury bonds in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 3 the first quarter and subsequently there was also a demand for short-term. Government securities. Bond yields declined slightly and shorter term money rates became less firm even at their relatively low levels. The banking system has emerged from the long period of inflationary pressures exceptionally well equipped to meet changed conditions. Banks have a large proportion of their assets in liquid and riskless form. Loans are close to record volume but cash and Government securities constitute about twothirds of all assets of commercial banks. This is a somewhat larger proportion than in 1939 and more than twice that for 1929. The volume of highly speculative loans appears much smaller than has often been the case in the past. Mortgage loans, which have expanded rapidly on the basis of high property values, are generally on a better amortization basis than was previously customary, and a large portion of them are insured by Government agencies. The Federal Reserve System is also much better equipped than ever before to meet the credit needs of the economy in a period of downward readjustment. Through open market operations, the System has virtually unlimited means of supplying the money market with additional reserves, if the situation should call for such action. The Reserve Banks have about 23 billion dollars of gold certificate reserves, only half of which are currently needed to meet gold reserve requirements. Accordingly, the System could more than double its note and deposit liabilities. Furthermore, the Banking Act of 1935, by removing some of the technical limitations on the lending functions of the Reserve Banks, placed them in a position to lend to member banks on any assets considered to be acceptable as security for advances. This makes possible a liberal lending policy on the part of the Reserve Banks. Also, the Reserve Banks have authority to make so-called Section 13b loans for working capital purposes to business and industry when other credit is unavailable. Although the Federal Reserve System has substantial powers to act for the purpose of counteracting contraction of credit, the System continues to lack adequate means of coping with a recurrence of strong inflationary pressures. This country has a virtually unlimited potential for further increase in deposits and bank reserves as well as for a more rapid use of money. The volume of deposits and currency outstanding is nearly three times the maximum prewar level, and the turnover of bank deposits is currently less rapid than it has been in previous periods of high economic activity. Spending for all purposes could be considerably expanded through more active use of the money supply already outstanding. The problem of exercising credit restraint in the United States, or of encouraging expansion, centers on the supply of bank reserves. While individual banks obtain or lose reserves largely through the shifting of deposits among banks, the banking system as a whole acquires reserves in three major Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4 ANNUAL REPORT OF BOARD OF GOVERNORS ways: imports of gold, return of currency from circulation, and purchases of Government securities by the Federal Reserve Banks. If credit expansion, during a period of inflation, is to be held in check, additional reserves arising principally from these sources have to be absorbed or immobilized. Commercial banks alone hold more than 60 billion dollars of marketable Government securities, which they can convert at will into reserves capable of supporting an enormous credit expansion. The exceptional and assured liquidity of the banking system, which is an element of strength in a period of recession, can be a source of danger in a period of boom. Also, sales,of securities to the Federal Reserve from the large volume of nonbank holdings can create additional reserves. As the Board has pointed out in previous Annual Reports and other statements, large-scale selling of Government securities to the Federal Reserve increases the supply of money and of bank reserves and thus accentuates inflationary pressures when production is insufficient to satisfy demand. Continuous market transactions aggregating large amounts are inevitable in view of the large volume of marketable Government securities outstanding and the wide distribution of their ownership. Therefore, regular and active participation in the market by the Federal Reserve is necessary for the maintenance of orderly conditions and the prevention of unnecessarily wide fluctuations in prices. In earlier periods, when the public debt w^as a relatively small part of the debt structure, there was little or no need for supporting the market for Government securities and, therefore, no problem of dealing with additional bank reserves created through support operations. Federal Reserve policies could be and were directed primarily toward the maintenance of the volume of bank reserves and the cost of obtaining reserves at levels that conformed to the current needs of the economy. With a large Government debt which is likely to be a dominant part of the debt structure for many years, the Federal Reserve has to cope with the dual problem of maintaining an orderly Government security market and exercising control over the volume of bank reserves. LEGISLATIVE PROPOSALS Proposals for legislation wThich the Board has repeatedly presented to the Congress have been in general designed to enable the Federal Reserve authorities to meet more effectively the responsibilities placed with the System by the Congress. Power to increase reserve requirements. In its Annual Reports and other public statements since the end of the war, the Board of Governors has stressed the limited effectiveness of the traditional instruments of credit policy in the general monetary situation created by war finance. In August 1948, the Congress granted temporary authority for increasing the reserve requirements of member banks. This temporary authority expired on June 30, 1949. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 5 In his Economic Report for 1949, the President pointed out that the monetary authorities should at all times be in a position to carry out their traditional functions of exerting effective restraint upon excessive credit expansion in an inflationary period and conversely of easing credit conditions in a time of deflationary pressures. The powers of the Federal Reserve to exert effective restraint on credit expansion are limited by the obligation to support the market for Government securities. In order to be in a better position to discharge its responsibility for maintaining sound credit conditions, the Board requested continuation of the temporary authority to apply a supplemental reserve requirement to member banks, and the extension of the requirement to all insured banks. The Board recognized that the proposed supplemental reserve requirement was not the perfect or final way of providing the Federal Reserve with adequate means to perform its primary function. It was proposed as an interim authority that could be used, if necessary, without making drastic changes in existing practices, until a more fundamental solution could be provided. Chairman McCabe summarized the Board's views in a statement presented before the Banking and Currency Committee of the Senate on May 11, 1949, recommending that the temporary authorities with respect to consumer instalment credit and special reserve requirements be extended, provided the latter were made applicable to all insured commercial banks. The statement continued: We are suggesting the extension of these authorities in the hope thaf the Congress will .in the meantime survey the entire framework and functioning of our financial system and of the role of banking and Government therein. It is evident from the resolutions which members of this Committee have sponsored to create a National Monetary Commission that you are well aware of the need for a thorough and painstaking study of this whole complicated and difficult subject. We hope that you will press ahead to authorize such a review and reappraisal in all its ramifications of the function of the entire banking system and its role in contributing to national economic stability through the financing of individuals, business enterprises, and Government. We in the Federal Reserve System are naturally concerned over the areas of controversy that surround the System's functioning and responsibilities as a central banking, monetary, regulatory, and supervisory authority. We trust that Congress will review its delegation of authority and responsibility to the System to be sure that they are commensurate wTith each other and with the objectives established by Congress. Such a review would include consideration: (1) of the System's open market powers and their relation to Federal financing and the administration of the public debt; (2) of the use of selective credit controls such as those over security loans and consumer instalment loans and of the proper sphere for the application of such types of control; (3) of the distribution of bank regulatory and supervisory power among the various Government Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

6 ANNUAL REPORT OF BOARD OF GOVERNORS agencies; (4) of the need for some mechanism of policy coordination on the domestic financial front such as we have available through the National Advisory Council on the international financial front; (5) of the objectives of central banking and supervisory policies; and (6) of the relation of the Federal Reserve System as a central banking organization to the banks of the nation, both member and nonmember. In any such review the role and function of reserves will inevitably receive prominent consideration. As you know, the System has been conducting extensive studies of this subject and believes that a more scientific formula for establishing reserves can be determined by the Congress. I feel confident that solutions to these problems can be found without impairment of our long established institutions, or encroachment upon either State or national prerogatives. Indeed, it is imperative to find solutions that avoid, on the one hand, extremes of centralization which would threaten the dual banking system, or, on the other hand, jeopardize the effectiveness of national policy by disunity, discrimination, and divided counsels. The Board feels strongly that all insured commercial banks, and not member banks alone, should participate when national monetary conditions require that additional reserves be set aside. Banks now enjoying the protection of Federal deposit insurance include 95 per cent of all commercial banks and hold 98 per cent of all deposits in commercial banks, while member banks of the Federal Reserve System include slightly less than half of the total number and hold about 85 per cent of the deposits. The banking laws of the 48 States lack uniformity and do not take into account the relation of bank reserves to national credit and monetary requirements. It will require statesmanship of the highest order on the part of the financial community and public authorities, both State and national, to bring about a long overdue reform in all banking laws covering reserve requirements. Otherwise the dual banking system will be jeopardized, particularly in a period of emergency. Only wise action, promptly undertaken, can insure the preservation of the dual banking system. It is inequitable to have member banks bear the entire burden of credit action undertaken in the public interest. Any expansion in reserves is likely to spread throughout the banking system and increase the lending power of nonmember as well as of member banks. Member banks already carry higher effective reserves than nonmembers, even where requirement percentages are the same. Member banks can count as reserves only their balances with the Federal Reserve Banks. Nonmember banks can count vault cash, balances with city correspondents, and, in some States, securities issued by the Federal Government or by States or their political subdivisions. Correspondent balances do not immobilize funds but simply shift lending capacity from one bank to another. Nonmember banks, nevertheless, benefit by the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 7 strength which the very existence of the Federal Reserve System gives to the entire credit structure of the country. Failure to apply national monetary measures to all insured banks seriously impairs the effectiveness of national monetary policy. What is needed for an effective and flexible national monetary policy is a system of bank reserves that will apply to all commercial banks enjoying the benefit of Federal insurance of deposits but permit continuance of our dual Federal and State chartering and supervision of banks. Differences in reserve requirements should be based more largely on the nature of deposits than on the location of banks. It is essential, in view of the potential sources of bank reserves and possible changes in the country's credit needs, that reserve requirements for all insured banks be as uniform as practicable in order to apportion basic reserves equitably in the banking system as a whole and to regulate their amount to accommodate the needs of commerce, industry, and agriculture. Consumer instalment credit regulation. The Congress in August 1948 also granted the Board of Governors temporary authority, which expired June 30, 1949, to reinstate controls over consumer instalment credit, and the President in his Economic Report for 1949 recommended that this authority be continued. The Board has urged that the Congress pass legislation extending this authority for an additional period of two years with the basic objective of furthering economic stability. In adapting the regulation to changing economic conditions, under a continuing authority, the Board would have in view the prevention of excessive expansion or contraction of consumer instalment credit as well as contributing to sound credit conditions in this area and in the economy generally. Modifications of the regulation, effective March 7 and April 2J, 1949, are examples of the flexible use of this authority. Considered against the long background of credit history, consumer instalment credit is relatively new. Its rapid development goes back only to World War I. It began to assume recognized importance in our credit structure towards the mid-twenties. Since that time the outstanding credit volume has shown a noteworthy growth trend, as well as wide fluctuations. Its volume at the end of 1948 stood at 8.6 billion dollars contrasted with roughly 1.2 billion in the mid-twenties. A continuing growth trend for consumer instalment credit can be a constructive development for the economy. Sustained expansion of instalment credit has accompanied a more widespread use of durable consumer goods, especially those of high unit value, and consequently has contributed to a rising standard of personal consumption. Wide fluctuations in volume about the growth trend, however, are undesirable from the standpoint of stability. The addition of credit funds to consumer spending power from income accentuates economic upswing and at maximum limits of production can only make Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

5 ANNUAL REPORT OF BOARD OF GOVERNORS for inflationary pressures. Liquidation of instalment credit diverts consumer income to repayment of old debts and accentuates business downswing. In some circumstances it may seriously aggravate deflationary tendencies. The use of instalment credit by consumers is especially volatile because it is so closely associated with the acquisition of expensive durable goods and high-priced services. For most consumers, the purchase of these goods and services is occasional. In each case the purchase represents a very important buying decision, and in most instances the decision is postponable. While continuing fluctuations in instalment credit volume are to be expected, a moderating influence on such fluctuations can be exercised by the regulation of credit terms. During boom periods, higher required down payments and shorter maturities can damp down the rate of increase of this credit. During recession periods, smaller required down payments and longer maturities can help to brake the speed of decline. Regulation along these lines is administratively practicable, and can be exercised in a manner that is consistent with our economic and political system. Such a regulation would not in itself enable attainment of greater financial stability for the economy. It could be, however, a useful supplement to other monetary and credit instruments available for this purpose. Established public policy in this country recognizes that broad monetary and credit controls, properly administered, are a principal means of fostering the national objective of a rising standard of living on the basis of sustained high levels of output and employment and stable values. As a result of recent war finance, the Reserve System's available means of influencing current credit developments with a view to greater economic stability have been seriously weakened. Extension of the Reserve System's temporary authority to regulate consumer instalment credit would have gone some distance toward remedying this condition. Bank holding company legislation. The Board again urges the enactment of legislation to provide more effective supervision and control of bank holding companies and to curb abuses in that field. Congress endeavored to deal with this problem in the Banking Act of 1933 by requiring holding company affiliates of member banks to obtain voting permits from the Board in order to vote their stock in such banks. However, the Board's experience in administering the law over a period of more than 15 years has demonstrated the need for additional legislation if regulation of bank holding companies is to be effective in correcting and preventing practices which are contrary to public policy and interest. The regulation of bank holding companies as an incident to the granting of voting permits is largely on a voluntary basis since holding companies can control subsidiary banks without voting their stock. In addition to failing to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM t) reach those companies which elect not to obtain voting permits, the present law fails to reach others because of the inadequate definition of the term "holding company affiliate." Even in those cases in which bank holding companies obtain voting permits, the law prescribes few requirements or restrictions and does not vest in the Board the authority necessary to require corrections in the policies and practices of holding companies. Hearings on this subject were held by the Senate and House Committees on Banking and Currency of the 8oth Congress and a bill was reported favorably by the Senate Committee, but no further action was taken. The Board believes the existing law is clearly inadequate and that new Legislation, providing for the regulation of all bank holding companies and including provisions controlling expansion and requiring the divorcement of activities unrelated to banking, should receive prompt consideration. Capital requirements for member banks. The Board has recommended in previous Annual Reports that consideration be given to amendment of the statutory provisions prescribing capital requirements for the admission of State banks to membership in the Federal Reserve System and the establishment of branches by such banks. Legislation of this nature is needed because, without justification, the present arbitrary requirements prevent many sound banks from becoming members of the Federal Reserve System, although they otherwise would be entitled to membership. Most of these banks are insured by the Federal Deposit Insurance Corporation. In addition, present statutory requirements result in unwarranted discrimination between State member banks and other State banks in connection with the establishment of branches. In order to correct this situation, the Board urges the enactment of legislation repealing the existing requirements and vesting full discretion in the Board to determine the adequacy of the capital of State banks applying for membership and of State member banks desiring to establish branches, except that a minimum capital of $50,000 (or $25,000 in the case of banks heretofore organized) would be required for admission to membership. Financing of business enterprises. The Board has heretofore called attention to the fact that Section 13b of the Federal Reserve Act, which authorizes Federal Reserve Banks to make and guarantee business loans, contains undesirable restrictive provisions. In previous Annual Reports, it has recommended legislation to broaden the authority of the Reserve Banks in this field. FEDERAL RESERVE POLICIES IN 1948 In 1948 a large Treasury surplus, a substantial part of which was used to retire Government securities held by the Federal Reserve System, absorbed bank reserves and deposits. The anti-inflationary effects on bank reserves, however, were more than offset by purchases of Government securities by the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

IO ANNUAL REPORT OF BOARD OF GOVERNORS Federal Reserve System in carrying out its market support policy. Banks were also supplied with a moderate amount of reserves through gold acquisitions and a return flow of currency from circulation. Continued expansion in bank loans provided new deposits, but this expansion was smaller than in other recent years. The net result of all factors was a small decline in bank deposits and currency held by the public—the first decrease for any year since 1937. Policies pursued by the Federal Reserve to restrain credit expansion included the following: 1I) In consultation with the Treasury, the Federal Reserve accepted cash for maturing securities held by the System and thus prevented the return of reserves to the banking system. (2) Likewise, interest rates on Treasury bills and certificates were permitted to rise and banks and others wTere thereby encouraged to hold more of these securities, which made it possible for Federal Reserve holdings to be reduced. In line with this policy, discount rates at Federal Reserve Banks were raised. (3) Reserve requirements of member banks were increased so as to absorb additional reserves made available by the gold inflow and by Federal Reserve purchases in support of the market for Government securities. (4) Regulation of consumer instalment credit was reimposed for the purpose of slackening the rapid rate of growth of this volatile type of credit. (5) High margin requirements were retained on loans for purchasing and carrying securities in order to discourage the possible development of speculative credit expansion in this field. The cash surplus of the Treasury, which was largely responsible for the reduction in bank deposits during 1948, amounted to 8 billion dollars for the year as a whole. It was supplemented by about 1.5 billion dollars obtained from sales of savings bonds and savings notes in excess of redemptions. The bulk of these funds was obtained in the first quarter of the year. The surplus was used largely to retire over 5 billion dollars of Government securities held by the Federal Reserve Banks. The Federal Open Market Committee, which directs transactions in Government securities for the Federal Reserve Banks, accepted cash for as many of the System's holdings of maturing issues as the cash position of the Treasury would permit. Occasional reduction by the Treasury in the amount of weekly offerings of Treasury bills also resulted initially in a decrease in Federal Reserve holdings of bills and some drain on bank reserves. Rates on Treasury bills, which had been permitted to rise from % per cent in the summer of 1947 to about 1 per cent near the end of that year, rose further in the latter half of 1948 to about 1% per cent. Rates on new offerings of one-year certificates, which had been raised from % per cent in 1947 to 1% per cent at the beginning of 1948, were increased to 1J4 Per Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 11 cent in the fourth quarter of 1948. The higher rates contributed to increases in holdings of these securities, particularly bills, by both banks and nonbank investors, and in substantial declines in Federal Reserve holdings. Policies pursued by the Federal Reserve served to limit the expansion of bank loans, but Federal Reserve purchases of Government securities from nonbank holders provided funds for an increase in loans by nonbank lenders. Also, the demand for credit slackened somewhat in the course of the year. Although measures of restraint did not prevent a further expansion in bank loans, the rate of growth slackened, particularly in the last quarter of the year, as compared with other recent years. Total loans of commercial banks increased by 4.4 billion dollars in 1948, compared with 6.9 billion in 1947. Deposits and currency held by individuals and business declined by 6 billion dollars in the first quarter of 1948, reflecting the large Treasury surplus. They increased by more than 5 billion dollars during the remainder of the year, largely as a result of bank loan expansion, Federal Reserve purchases of Government securities from nonbank holders, and the gold inflow. The ability of banks and other investors to sell Government securities through the market to the Federal Reserve and the large amount of securities outstanding limited the restraining effect of monetary and fiscal policies. To the extent that banks needed additional reserves, the drain on bank reserves resulting from the Treasury surplus and its use to retire securities held by the Federal Reserve was offset by bank sales of securities, which the Federal Reserve purchased. Banks were also in a position to meet increases in reserve requirements by selling Government securities. Nevertheless, the combined measures exerted some degree of restraint. When banks find it necessary to sell Government securities in order to offset a drain on reserves resulting from Treasury withdrawals of cash or to meet an increase in reserve requirements, their liquidity is reduced and they are likely to be less willing to sell additional amounts in order to increase loans. Conversely, additional reserves flowing to banks, unless absorbed by some means, serve as an inducement to expand loans. So long as bank holdings of Government securities, particularly short-term issues, can be readily converted to other uses without the risk of loss in liquidation, they are in effect excess reserves. Thus, an increase in bank holdings of short-term Government securities expands the potential lending power of banks. Conversely, a decrease in such holdings and any measures which limit their availability serve to reduce the potential liquidity of banks. It is primarily through the means outlined in the foregoing pages that monetary and fiscal policies may influence the lending activities of banks and also to some extent the willingness of other owners of Government securities to hold them or to shift to other assets. Whether Government securities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

12 ANNUAL REPORT OF BOARD OF GOVERNORS are to be held or sold is decided by the banks and other holders of the securities. As long as the Reserve System functioned as the residual buyer of the securities offered for sale the initiative in the creation of bank credit rested with the market, not with those charged with responsibility for national monetary policy. THE PUBLIC DEBT Changes in the volume, structure, and ownership of the Federal Government debt continued in 1948 to be an important factor in monetary and credit developments. As in the preceding year, an excess of Treasury cash receipts over cash outlays made possible further reduction in the public debt. As the table shows, the cash surplus was larger in 1948 than in 1947, reflecting an increase in cash receipts and some decline in cash outlays. A small part of the surplus was used to increase the Treasury's cash balance, which had been drawn down during 1947* The more substantial part of the surplus was used to repay cash borrowings, principally marketable debt issues. The debt reduction thus achieved was partly offset by an increase in noncash borrowing, chiefly through special issues to Government agencies and trust funds. Debt reduction. The total public debt outstanding was further reduced by 4 billion dollars in 1948 to a total of 253 billion at the end of the year. The reduction was larger than in 1947, when retirement of debt was TREASURY CASH OPERATIONS AND CHANGES IN CASH BALANCE AND PUBLIC DEBT [In billions of dollars] Calendar year Item 1948 1947 1946 Cash operating income1 45.0 44.3 41.6 Cash operating outgo1 36.9 38.6 41.4 Net cash surplus (+) +8.1 +5.7 +0.2 Change in Treasury cash balance + 1.1 2-2.2 -22.5 Change in public debt: Net cash repayment of borrowing3 -7.0 -7.9 -22.7 Noncash borrowing, etc.4 ' +2.9 +5.4 +3.5 Change in debt5 -4.1 -2.5 -19.2 Public debt, end of period5 252.9 257.0 259.5 1 The cash budget differs from the budget based on the Treasury's daily statement principally in that all receipts and expenditures are consolidated and intergovernmental transfers of funds are excluded. Refunds of taxes, which amounted to 2.2 billion dollars in 1948, 2.6 billion in 1947, and 2.8 billion in 1946, are treated as a deduction from cash income rather than as cash outgo as formerly. 2 Includes also a decrease of 1.8 billion dollars in the Exchange Stabilization Fund in part payment of the United States contribution to the International Monetary Fund. 3 Includes principally net changes in marketable debt, net sales or redemptions of savings bonds and savings notes, and net market sales or purchases of marketable issues by Government agencies and trust funds. 4 Includes principally changes in special issues to Government agencies and trust funds, net accrued interest on savings bonds and Treasury bills, and amounts of Federal securities issued in payment of certain budget expenditures, such as armed forces leave bonds. Includes also small adjustment for net market sales or purchases of marketable issues by Government agencies and trust funds which do not affect total outstanding debt. 5 Includes guaranteed debt. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 13 also made possible by a Treasury cash surplus. The total reduction effected through cash surpluses in these two years was much smaller than that in 1946, when cash balances accumulated largely during the last war loan drive were used to reduce the debt by 19 billion dollars. The amount of the debt in marketable form decreased by 8 billion dollars in 1948, while nonmarketable issues held by the public increased by about 2 billion and special issues to Federal agencies by nearly 3 billion. The decline in outstanding marketable securities was smaller than in 1947, but so also was the increase in nonmarketable public and special issues. Matured and other noninterest-bearing debt declined slightly in 1948 after increasing in 1947. Composition of the debt. Composition of the Government debt has been changing gradually as the result of refunding, further sales of special issues to Government agencies, and increased efforts to place more savings bonds. In 1948, the Treasury retired 2.9 billion dollars of bills. Maturities of other marketable issues totaled 35.5 billion dollars, including 21.2 billion of. certificates, 7.8 billion of notes, and 6.4 billion of bonds. About 5.4 billion of these maturities were paid off in cash. The remainder was refunded into short-term securities which, with the exception of one 18-month note issue, were one-year certificates. As a result of the debt operations, the amount of outstanding marketable bonds was reduced by 6.4 billion dollars. Shortterm types of securities were reduced by 1.8 billion. As indicated in the table, a reduction of 2.9 billion dollars in bills was partly offset by an increase of 1.1 billion in notes and certificates. PUBLIC DEBT OUTSTANDING AT END OF 1948, BY TYPE OF ISSUE fin billions of dollars] Change during Type of issue 1948 1948 1947 1946 Gross public debt, total1 252.9 -2.5 -19.2 Marketable public issues, total2 157.5 -8.3 -10.9 -22.2 Treasury bills 12.2 -2.9 -1.9 (3) Certificates and notes 33.7 +11 -7.5 -21.0 Treasury bonds 111.4 -6.4 -1.5 -1.1 Nonmarketable public issues, total. 61.4 + 1.9 +2.8 -0.7 Savings bonds 55.1 +3.0 +2.3 +1.6 Savings notes 4.6 -0.8 -0.3 -2.5 Other 1.8 -0.3 +0.9 +0.2 Special issues 31.7 +2.8 +4.4 +4.6 Debt bearing no interest -0.5 + 1.2 -0.9 Detail on marketable public issues, due or callable: Within 1 year 49.1 -1.7 -4.2 -15.6 1-5 years 44.1 -5.9 + 10.4 +4.2 5 years and over, total 64.4 -0.7 -17.0 -10.8 Bank-eligible bonds 14.7 -0.7 -17.0 -8.2 Restricted bonds 49.6 -2.6 1 Includes guaranteed securities. 2 Includes a small amount of postal saving and prewar bonds not shown separately. 3 Less than 50 million dollars. NOTE: Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF BOARD OF GOVERNORS The total of nonmarketable public debt issues held by the public increased further in 1948 but by a moderate amount, 1.9 billion dollars. Savings bonds outstanding increased by 3 billion dollars, as 7.3 billion of sales, together with net interest accruals on outstanding bonds, exceeded redemptions. The sales volume in 1948 resulted in part from an increase in the annual purchase limit permitted for individuals and a special drive to place savings bonds with both individuals and savings institutions. At the end of 1948, about three-fifths of the debt of 253 billion dollars was composed of marketable issues. The remainder included 32 billion dollars of special issues held by Government agencies and trust funds, 55 billion of savings bonds held largely by individuals and redeemable on demand or short notice, and small amounts of several other types of nonmarketable issues, largely savings notes held by corporations. The marketable debt of 157.5 billion dollars included about 46 billion dollars of short-term types of securities (bills, certificates, and notes) and about 47 billion of Treasury bonds due or callable within five years. Of the 64 billion dollars of bonds with longer periods to run, almost 50 billion were issues that are restricted as to ownership by banks. Ownership of Government securities. The largest change in ownership of Government securities during the year was the decline of 6 billion dollars in commercial bank holdings, as is shown in the accompanying chart and table. OWNERSHIP OF U. S. GOVERNMENT SECURITIES BILLIONS OF DOLLARS BILLIONS OF DOLLARS 100 100 1945 1947 '49 1941 1943 1945 1947 NOTE: Chart relates to interest-bearing debt, direct and guaranteed. Reported holdings are shown for (1) Federal agencies and trust funds and (2) Federal Reserve Banks, and Treasury estimates for other groups. Figures are for June and December 1941 and for end of each month thereafter. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 15 The Treasury cash surplus and its use to retire Government securities held by the Federal Reserve, together with increases in reserve requirements, resulted in a drain on bank reserves which the banks met by selling Government securities, largely certificates and notes. Changes in types of securities held by the banks also reflected other factors. Holdings of Treasury bonds that matured were for the most part exchanged for certificates and notes, offsetting to this extent market sales of these types of securities. Commercial banks also sold some Treasury bonds, but they added to their holdings of bills. Reserve Bank holdings of Government securities increased by 800 million dollars notwithstanding the policy of accepting cash for as many maturing holdings as the cash position of the Treasury would permit and the consequent retirement of 5.5 billion dollars of maturing securities. The Reserve Banks made substantial purchases of restricted bonds from insurance companies and other nonbank investors. They also bought some bank-eligible bonds and made some net purchases of certificates and notes, but sold a substantial amount of bills. OWNERSHIP OF UNITED STATES GOVERNMENT SECURITIES1 [Partly estimated. Par values, in billions of dollars] Amount Change in held on Type of owner Dec. 31, 1948 1948 1947 1946 U. S. Government agencies and trust funds, total2. 37.3 +3.0 +3.4 +3.9 Marketable issues 5.5 -{-0.2 -1.0 -0.7 Special issues 31.7 +2.8 +4.4 +4.6 Federal Reserve Banks, total 23.3 +0.8 -0.8 -0.9 Bills, certificates , and notes 12.4 -7.4 -2.9 -0.7 Bank-eligible bonds 4.0 +1.7 +1.5 -0.2 Restricted bonds 7.0 +6.4 +0.6 Commercial banks, total 62.6 -6.1 -5.8 -16.3 Bills, certificates, and notes 16.9 +0.8 -4.8 -17.9 Bonds, due or callable: Within 5 years 32.9 -6.0 +10.5 +7.8 After 5 years 106 -1.3 -11.3 -5.9 Nonmarketable issues 2.2 +0.4 -0.2 -0.3 Mutual savings banks 11.5 -0.5 +0.2 + 1.1 Insurance companies 21.5 -2.8 -1.0 +0.9 State and local governments 7.9 +0.6 + 1.0 -0.2 Other corporations and associations8. . . 21.2 (4) -1.2 -7.8 Individuals5 67.6 + 1.0 + 1.7 +0.1 Total, all investors 252.9 -4.1 -2.5 -19.2 1 Includes guaranteed securities. 2 Includes nonmarketable issues not shown separately. 8 Includes savings and loan associations, dealers and brokers, and investments of foreign balances and international accounts in this country. 4 Less than 50 million dollars. s Includes partnerships and personal trust accounts. Insurance companies and mutual savings banks, which had maintained or expanded their Government security portfolios in the early postwar period, reduced them in 1948 by 2.8 billion and 0.5 billion dollars, respectively. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

16 ANNUAL REPORT OF BOARD OF GOVERNORS These changes resulted largely from sales of long-term, restricted Treasury bonds. Other nonbank investors, including nonfinancial corporations, brokers and dealers, State and local governments, and individuals increased their total holdings of Government securities during the year. They sold marketable bonds on balance, but increased their holdings of certificates and bills by about 4 billion dollars. Purchases of savings bonds exceeded redemptions. BANK CREDIT DEVELOPMENTS The money supply in the hands of businesses and individuals declined somewhat in 1948 following a rapid growth in the preceding postwar years. The decline occurred entirely in the first quarter of the year and reflected the large Treasury cash surplus, which was either used to retire securities held by the banking system, including the Reserve Banks, or held in Treasury balances. Loan expansion at commercial banks and gold inflow, which continued during the year, accounted for a substantial growth in deposits during the last nine months. For the year as a whole, these factors almost offset the contractive effect on the money supply of Treasury operations. Expansion of bank loans was not as great in 1948 as in either of the two preceding years. Growth in loans slackened considerably in the last quarter of the year following action by the Federal Reserve, largely under special legislation enacted in August, to absorb funds available to banks for lending and to place under restraint the demand for consumer instalment credit. Substantial amounts of loans by nonbank lenders and some decline in the credit needs of business reduced somewhat the demand for bank loans. Programs for encouraging restraint in lending, undertaken by the banks themselves under the leadership of the American Bankers Association and by the bank supervisory agencies, also helped to limit loan expansion. Reduced growth in bank loans. Slackened expansion in 1948 characterized bank lending to businesses, consumers, and real-estate owners in all sections of the country. Total loans at commercial banks increased by about 4.4 billion dollars as compared with 6.9 billion in 1947 and over 5 billion in 1946. Business loans, which usually decline over the first half of the year and rise in the second half, showed considerably less than the normal seasonal reduction in the first half of 1948. Early in the second half of the year rapid expansion in the volume of these loans was resumed. After September, however, bank loans to businesses showed .little further growth as compared with an increase of about 2 billion dollars in the same period of the previous year. Total growth in bank loans to businesses was about 0.7 billion dollars in 1948 compared with about 4 billion in 1947, as shown in the chart. Most of the increase occurred at banks in New York City and in the Southwest and Far West, while in 1947 the increase was more general throughout the country. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 17 COMMERCIAL BANK LOANS ALL INSURED BANKS BILLIONS OF DOLLARS JUNE AND DECEMBER BILLIONS OF DOLLARS 1939 1940 I94I 1945 1946 1947 1948 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. Business demand for bank credit was less active in 1948 than in other postwar years, in part because a larger volume of funds was obtained from other sources. As is indicated in the following section of this report, in 1948 businesses financed a larger proportion of their capital expansion programs from retained earnings and funds obtained from sales of securities and loans from nonbank lenders than they did in 1947* Bank loans to real-estate owners increased by about 1.4 billion dollars in 1948, which was somewhat less than in previous postwar years. The volume of new mortgages continued about as large as in 1947, but banks acquired a smaller proportion of the total. They were more selective in making realestate loans and showed a growing tendency to regard their existing mortgage portfolios as large enough under existing conditions. Banks continued to be active lenders to consumers in 1948, accounting for about 40 per cent of the expansion of more than 2 billion dollars in consumer instalment credit during the year. Instalment credit extended by banks to consumers expanded at the rate of about 80 million dollars each month through September 1948. In the last quarter of the year, however, this type of indebtedness showed little further change. In part, leveling off of bank loans to consumers reflected reimposition in September of the Board's regu- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

l8 ANNUAL REPORT OF BOARD OF GOVERNORS lation of consumer instalment credit under authority granted by Congress in August. Agricultural loans at banks, which had risen only gradually in 1947 and 1946, increased by more than 1 billion dollars in 1948. Most of the growth in such loans was associated with large crop surpluses and the consequent decline in prices of leading crops to Government support levels. Many farmers obtained bank loans on wheat, corn, and cotton that were guaranteed by the Commodity Credit Corporation under the Government's price support program. Other loans to farmers showed only moderate expansion, which occurred in the first half of the year. Loans for purchasing and carrying securities increased 300 million dollars during 1948, as a result of a sharp expansion late in the year in loans to brokers and dealers for carrying United States Government securities. Loans for purchasing and carrying corporate stocks and bonds declined somewhat. Banks participated to an almost negligible extent in the large amount of financing in the market by corporations and by State and local governments in 1948. Although the volume of such issues for new money was over 8 billion dollars, commercial bank holdings of these securities increased only about 0.2 billion dollars as compared with an increase of nearly a billion dollars in 1947. Most of the change in 1948 occurred in the first half of the year, when an increase in holdings of State and local government securities at reserve city and country banks more than offset a reduction in holdings of such securities and corporate securities at central reserve city banks. Changes in volume and activity of money. The decline in total deposits and currency held by businesses and individuals was about 1 billion dollars in 1948. This reduction was small in contrast with the very rapid monetary expansion during the war and first two postwar years. It was the first year-to-year decline in the money supply held by businesses and individuals since 1937, as is shown in the chart. In the first quarter of the year deposits and currency of individuals and businesses declined 6 billion dollars, as shown in the table on page 20. This decline reflected primarily seasonally large Treasury receipts from income taxes and other sources which were applied to retiring bank-held securities and building up Treasury deposit balances. In each of the subsequent three quarters, privately held deposits and currency increased somewhat. Expansion of bank credit and gold inflow more than offset some further monetary contraction effected by a moderate Treasury cash surplus. The Federal Reserve Banks purchased |n the market a substantial volume of long-term Government securities sold by nonbank investors, particularly insurance companies. These transactions were especially large in the last half of the year. During most of the year, and particularly in the first quarter, nonbank investors were net buyers of short-term Government securities, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 19 Taking all classes of Government securities, both long-term and short-term, nonbank investors were net purchasers in the first part of the year and net sellers in the second half. For the year as a whole, sales of long-term Government securities by nonbank investors as a group were practically balanced by their purchases of short-term issues. On balance, therefore, these transactions tended neither to increase nor decrease the supply of bank deposits. In the first quarter of the year, however, the effect was to reduce deposits, whereas in the last two quarters the effect was to increase deposits. BANK DEPOSITS AND CURRENCY BILLIONS OF DOLLARS BILLIONS OF DOLLARS 180 180 1930 1932 1938 1940 1946 1948 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 through March 1949. Currency in circulation outside banks was reduced about 400 million dollars in 1948, with the strengthening of the postwar tendency to return $10 and $20 bills from circulation. Privately held demand deposits declined by 1.6 billion dollars in 1948 in contrast with an increase of nearly 4 billion in the previous year. Time deposits rose by 1.1 billion dollars, after having risen by 2.5 billion in 1947. In 1948 nearly the entire increase occurred in the first half of the year. The decrease in demand deposits was distributed among nearly all the major groups of holders—businesses, farmers, and individuals. Demand deposits of individuals as a group declined by an amount approximately equal to the increase in their holdings of Government securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2O ANNUAL REPORT OF BOARD OF GOVERNORS MAJOR FACTORS AFFECTING DEPOSITS AND CURRENCY [Tn billions of dollars, partly estimated] Factor Fourth Third Second First quarter quarter quarter quarter Total (Sign indicates effect on deposits and currency) Bank loans1 + 1.0 +2.0 + 1.2 +0.9 +5.2 +7.4 Gold inflow. +0.4 +0.3 +0.4 +0.4 + 1.5 +2.9 Purchases (+) or sales (—) of U. S. Government securities by commercial banks and Federal Reserve Banks from or to nonbank investors +0.7 +0.8 +0.2 -1.5 +0.2 +0.2 Restricted bonds, net +1.5 +2.6 (2) +1.8 +5.9 +0.6 Other securities, net -0.8 -1.8 +0.2 -3.3 -5. 7 -0.4 Retirement of U.S. Government securities held by: Federal Reserve Banks -0.4 -1.1 -0. 3 -3.7 -5. 5 -3.2 Commercial banks -0.1 -0.5 -0. 2 -0.2 -0. 9 -3.6 Treasury deposits +0.9 -0.4 +0.3 -2.1 j 3 + 1.2 Other factors, net -0.3 +0.1 +0.1 +0.2 -0. 1 + 1.1 Change in deposits and currency held by individuals and businesses, total +2.2 +1.2 +1.7 -6.0 -0. 9 +6.0 Demand deposits adjusted. + 1.6 + 1.2 +1.2 -5.6 -1. 6 +3.8 T C i u m rr e e n d c e y p o o s u it t s side banks + + 0 0 . . 2 4 + -0 0 . . 1 1 +0.5 + -0 0 . . 9 5 +1. 4 1 + -0 2 . . 3 5 (2) -0. 1 Includes loans of commercial and mutual savings banks. 2 Less than 50 million dollars. NOTE: Changes are based on figures for Dec. 31, 1946, Dec. 31, 1947, and Mar. 31, June 30, Sept. 29, and Dec. 31, 1948. Quarterly figures may not add to yearly total because of rounding. Expenditures of all private groups in the economy continued to expand throughout 1948 despite the moderate decline in the privately held money supply. This development reflected a further increase in the average rate at which money was used. Over the three years following the end of the war, the annual rate of turnover of demand deposits at banks rose significantly. At banks in leading cities outside New York, the ratio between the amount of checks drawn on demand deposits and the amount of deposits outstanding was about one-fifth higher in 1948 than in 1945, the last war year. In fact, use of demand deposits at these banks was about as rapid in 1948 as it was on an average over the four-year period 1938-41, although the volume of these deposits was about three times as large. Availability of bank reserves. From the end of the war, and particularly from mid-1947 until the end of 1948, Federal Reserve credit policies and Treasury fiscal and debt management programs had as a major objective as much restraint on the availability of bank reserves and therefore on monetary and credit expansion as was consistent with maintenance of orderly and stable conditions in the market for Government securities. Action toward this objective on the basis of existing powers included concentration of the Treasury program of debt retirement on securities held by the Reserve Banks, upward adjustment of rates on short-term Government securities and in the Federal Reserve discount rate, reduction in Federal Reserve support prices for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 21 MEMBER BANK RESERVES, RESERVE BANK CREDIT, AND RELATED ITEMS BILLIONS OF DOLLARS WEDNESDAY FIGURES 8ILLJ0NS OF DOLLARS NONMEMBER DEPOSITS I 1941 1942 1943 1944 1945 1946 1947 1948 '49 TOTAL RESERVE BANK HOLDINGS OF U. S. GOVERNMENT SECURITIES NOTES AND CERTIFICATES I 1941 1942 1943 1944 1946 1946 1947 1946 '49 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

22 ANNUAL REPORT OF BOARD OF GOVERNORS medium-term and long-term Government securities, and increases in reserve requirements on deposits of member banks. Treasury operations exerted a contractive force on bank reserves of 5.8 billion dollars in 1948, as is shown in the table. Most of this effect was concentrated in the first quarter of the year when seasonally large income tax payments increased substantially the Treasury balances at the Reserve Banks and these funds were used largely for retirement of securities held by the Reserve Banks. In addition to the loss of reserve funds which banks sustained because of Treasury operations, member banks were required to hold a larger volume of reserves as a result of actions taken by the Board of Governors to raise reserve requirements. Effective in February and again in June, reserve requirements of member banks in New York and Chicago were increased by 2 percentage points on net demand deposits, and each of these actions increased required reserves by almost 500 million dollars. During September, largely in accordance with additional authority granted to the Board in August at the special session of Congress, reserve requirements were raised at all classes of member banks by 2 percentage points on net demand deposits and 1.5 percentage points on time deposits. As a consequence, required reserves were increased by about 2 billion dollars. MAJOR FACTORS AFFECTING MEMBER BANK RESERVES [In billions of dollars! 1948 Factor Fourth Third Second First 1947 quarter quarter quarter quarter Total (Sign indicates effect on bank reserves) Gold inflow +0.4 +0.3 +0.4 +0.4 + 1.5 +2.9 Currency returned from circulation -0.1 -0.2 -0.1 + 1.1 +0.6 +0.1 Reserve Bank market purchases of Government securities, net +0.3 +3.2 +0.8 +2.0 +6.3 +2.5 Retirement of securities held by Reserve Banks -0.4 -1.1 -0.3 -3.7 -5.5 -3.2 Treasury deposits at the Reserve Banks.-. . . . +0.5 +0.3 C1) -1.1 -0.3 -0.5 Nonmember deposits at Reserve Banks -0.3 0) +0.1 -0.1 -0.3 -0.1 Other factors, net +0.1 +0.1 -0.1 +0.1 +0.3 +0.1 Change in member bank reserve balances, total +0.5 +2.6 +0.8 -1.3 +2.6 +1.8 Change due to deposit changes +0.3 +0.3 +0.2 -0.9 -0.1 +0.8 Change due to Board action increasing requirements +2.0 +0.5 +0.5 +3.0 Excess reserves. . . +0.2 +0.3 +0.1 -0.8 -0.3 +0.9 1 Less than 50 million dollars. Banks were supplied with reserves in 1948 as a result of a further gold inflow of 1.5 billion dollars. This gold was received in part settlement of the country's large excess of exports over imports. A return flow of currency from circulation of 600 million dollars also added to the reserve funds available to banks. The additional reserves needed were supplied through Federal Reserve purchases of Government securities sold for the most part by com- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 2$ mercial banks. Over the full year 1948 these purchases amounted to a net of 6.3 billion dollars. Banks continued throughout the year to increase their loans, thus creating additional deposits and adding to reserve requirements. During the last nine months of the year, member bank reserve requirements increased by about 800 million dollars as a result of growth in deposits. Had reserve requirements not been raised by Board action, member banks could have expanded credit without selling any securities during this period. Bank earnings and earning assets. Member bank net current earnings before income taxes were larger in 1948 than in any previous year. They amounted to 1,033 million dollars, an increase of 104 million or 11 per cent over the amount reported in 1947. Increased earnings on loans more than offset decreased earnings on United States Government securities and increased expenses. The ratio of net current earnings before income taxes to total capital accounts increased to 12 per cent, the highest level since the 1920's. The ratio of net current earnings before income taxes to total assets rose from 0.73 per cent in 1947 to 0.79 per cent in 1948. EARNINGS RATIOS OF MEMBER BANKS PERCENTAGES OF CAPITAL ACCOUNTS ANNUAL FIGURES 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. Member bank net profits after taxes (and after adjustments for losses, recoveries, profits on securities, and transfers to and from valuation reserves) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF BOARD OF GOVERNORS decreased 32 million dollars and amounted to 621 million for the year. The decline in net profits, in contrast to the increase in net current earnings, reflects principally an increase in transfers to establish reserves for losses on loans under the reserve method of accounting for bad debts as authorized by the Bureau of Internal Revenue in December 1947. Net profits were 7.2 per cent of total capital accounts and, as is shown in the chart on page 23, the ratio of net profits to total capital accounts continued its downward trend from the peak of nearly 11 per cent reached in 1945. The lower ratio in 1948 was due in part to increases in capital accounts. Earning assets of member banks amounted to about 96 billion dollars at the close of 1948, a decrease of over 2 billion during the year. A decline of nearly 6 billion dollars in holdings of United States Government securities during the year was partly offset by an increase of more than 3 billion in loans. These changes were somewhat similar to those in 1947 but, as is shown in the table, the increase in loans was less than in the previous year, and the decrease in Government securities somewhat more. MEMBER BANK LOANS AND INVESTMENTS [In billions of dollars] Change during year Item Outstanding Dec. 31, 1948 1948 1947 Loans and investments, total. . 95.6 -2.2 +1.5 Loans, total 4-3.4 +5.9 Commercial and industrial loans 17.6 +0.6 +3.8 Agricultural loans 1.8 +0.7 +0.2 Loans for purchasing or carrying securities. 2.2 +0.3 -1.1 Real-estate loans 8.2 + 1.1 + 1.8 Consumer loans 5.6 +0.9 + 1.4 All other, including loans to banks 1.0 -0.1 U. S. Government securities, total 52.2 -5.8 -5.1 Bills, certificates, and notes 13.4 +0.8 -4.2 Bonds 38.8 -6.6 -0.9 State and local government securities 4.5 +0.3 +0.7 Other securities 2.9 -0.2 1 This loan total is a net figure, comparable with other totals in table and with loan totals for previous years. Individual loan items are gross figures (i.e., before deduction of valuation reserves). They do not add to total and are not entirely comparable with net figures shown in previous reports. Before computing annual changes for 1948, individual loan items for the end of 1947 were adjusted to a gross basis. Total holdings of Treasury bills, certificates, and notes increased for the first time since 1945, and Government bond holdings declined by 6.6 billion dollars in contrast to a decline of less than 1 billion in the previous year. These shifts resulted from higher yields available on short-term securities, the retirement of bonds maturing or called for redemption, and perhaps some uncertainty as to whether the current support level of Government bond prices would be continued. The average yield to member banks on their Government security holdings increased slightly from 1.53 per cent in 1947 to 1.56 in 1948. The average yield on loans also continued to increase, from 3.56 to 3.83 per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 25 Capital accounts. Capital accounts of member banks increased by 337 million dollars in 1948, as compared with an increase of 369 million in the previous year. Retention of profits accounted for most of the increase. Sales of additional common stock increased slightly and retirements of preferred stocks and capital notes declined slightly from 1947, resulting in a capital increase of 11 million dollars from these transactions, as compared with a net decline of 6 million in 1947. Dividend payments amounted to 294 million dollars in 1948, an increase of 13 million over the previous year. They represented 3.4 per cent of total capital accounts at the year end and 47 per cent of net profits. The ratio of average total capital accounts to average total assets increased for the third successive year, as is shown in the accompanying chart, and amounted to 6.6 per cent in 1948. In contrast, the ratio of average total CAPITAL RATIOS OF MEMBER BANKS PERCENTAGES OF TOTAL ASSETS AND'RISK ASSETS" PER CENT ANNUAL RATES PER CENT 30 30 / X 25 y / 25 CAPITAL \ TO"RISK ASSETs" \ \ V \ 20 - 20 y 15 15 / ^_ >—. 10 rAPITAI ^S. TO TOTM_ ASSETS ^ - ^— c 0 1 1 1 1 1 1 l 1 l 1920 1925 J930 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. capital accounts to average risk assets, defined to include all assets other than cash assets and United States Government securities, continued to decline from the peak reached in 1944 and amounted to only 20 per cent in 1948, the lowest ratio since 1930. The decline has resulted from a far greater relative growth in so-called risk assets than in total capital accounts. In 1947 and 1948 there were increases of nearly 7 billion and 4 billion dollars, respectively, in risk assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

26 ANNUAL REPORT OF BOARD OF GOVERNORS Changes in the distribution of member banks assets by broad groups during the past two decades are shown in the accompanying chart. It will be noted that loans and securities other than those of the United States Government, which comprised three-fourths of total assets in 1929, were only a fifth of the total in 1945 and, notwithstanding the subsequent increase in loans and decline in holdings of Government securities, were still only about a third of the total at the end of 1948. CHANGES IN MEMBER BANK ASSETS NONBANK SOURCES OF INVESTMENT FUNDS A lower rate of expansion of private loans and investments by commercial banks in 1948 was accompanied by a substantial increase in lending and investing by other groups in the economy. Financial institutions other than commercial banks—especially the savings institutions—increased their investments in business securities and mortgages. Individuals purchased a considerably larger volume of corporate and State and local government securities last year than in the previous year. Finally, business enterprises invested slightly more of their own funds in 1948 than in 1947. Savings institutions as a group extended a substantially greater volume of credit to private borrowers in 1948 than they did in previous years. This credit was extended largely to provide business corporations with additional funds for carrying out capital expansion programs and to finance the purchase of homes and other construction. The amount of new savings flowing to such institutions was slightly smaller in 1948 than in other recent years. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 27 The increase in their lending was financed by the liquidation of a large volume of United States Government securities. During 1948 the life insurance companies are estimated to have reduced their portfolios of United States Government securities by 3.3 billion dollars. The proceeds of this liquidation were added to 3.6 billion dollars of receipts from other sources, mainly new individual savings, to provide nearly 7 billion of funds for increased private investment. This increase was approximately 35 per cent larger than the increase in 1947. The principal increases in life insurance investments in 1948 occurred in corporate securities—4.2 billion dollars—and in mortgages—2.2 billion. At mutual savings banks, additional deposits and retained earnings amounting to 0.7 billion dollars, together with a reduction of 0.5 billion in holdings of United States Government securities, provided 1.2 billion for new investment in 1948, as compared with 1.0 billion in 1947. They invested most of these funds in business securities and real-estate mortgages. Savings and loan associations, in contrast to life insurance companies and mutual savings banks, invested slightly less in 1948 than in 1947—1.8 billion dollars as compared with 1.9 billion. Funds came largely from new savings. A small decline in holdings of Government securities was partly offset by an increase in cash. The continued large volume of internal funds available to business corporations in 1948—principally from retained profits, amounts set aside for depreciation allowances, and a small reduction in liquid asset holdings— enabled them in the aggregate to finance their record expenditures with relative ease. Such funds amounted to 16.3 billion dollars in 1948 and 15.5 billion in 1947. The total of internal funds was a slightly larger proportion of total business funds from all sources, external as well as internal, in 1948 than in the preceding year. The large volume of internal funds available to businesses in 1948 was largely, invested in plant, equipment, inventories, and customer credit. During 1948 individuals and unincorporated businesses reduced their holdings of currency and demand deposits by approximately 1 billion dollars. At the same time individuals increased their holdings of corporate and State and local government securities by almost 3 billion dollars, which was slightly more than double the increase in 1947. Individuals also added further to their holdings of United States Government securities. CHANGES IN STRUCTURE OF INTEREST RATES Short-term money rates rose further in 1948, chiefly as a result of official policies permitting a rise in rates on short-term Government securities while maintaining yields on long-term Treasury bonds. Yields on corporate and municipal bonds fluctuated during the year but were slightly lower at the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

28 ANNUAL REPORT OF BOARD OF GOVERNORS end than at the beginning. Stock yields rose to quite high levels for prosperity conditions. In the first two months of 1948, rates on short-term Government securities continued to rise as they had during the last half of 1947 and then changed little until August. One-year certificates were offered at 1% per cent and rates on Treasury bills were just under 1 per cent. In August, the Treasury announced i}i per cent one and one-half year notes in exchange for notes maturing September 15, and 1% per cent one-year certificates for certificates and notes maturing October 1. Rates on Treasury bills rose to about ij^ per cent by the end of the year. Federal Reserve Bank discount rates, which had been raised from 1 per cent to 1J/4 per cent in January, were increased again in mid-August to 1^ per cent. MONEY RATES WEEKLY AVERAGES OF DAILY FIGURES 1945 1946 1948 1949 NOTE: For Treasury bills, rate is average discount on new issue during week. Federal Reserve discount rate is for the Federal Reserve Bank of New York. Rate on business loans at banks is average for loans made at banks in 19 selected cities in the first 15 days of March, June, September, and December. Some increases also occurred in the interest rates charged by banks on loans to their customers. Average rates for all types of short-term business loans made by banks in 19 selected money centers rose from 2.1 per cent in December 1947 to 2.6 per cent in December 1948, as is shown in the accompanying chart. The rise in rates applied to business loans of all sizes. Bond yields generally, which had advanced somewhat during the last four months of 1947, showed little further change in 1948. The average yield Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM %9 on high-grade corporate bonds, for example, was 2.8 per cent in December 1948 compared with 2.9 per cent in December 1947. A slight decline in yields in the first half of the year was followed by a rise in the summer and another slight decline in the closing weeks of the year. Yields on other grades of corporate bonds and on municipal bonds fluctuated more during the year than did those on high-grade corporate issues and showed small, mixed changes for the year as a whole. INCREASED SUPPLIES AND MORE SELECTIVE PRICE MOVEMENTS During 1948 production in most areas of the world increased further and more goods and services were made available to consumers and producers than at any other time since the end of the war. As a consequence, many of the shortages which had persisted during 1946 and 1947 were eliminated, and price developments became more selective—by country, by product, and by stage of production and distribution. The increase in supplies resulted largely from further progress toward orderly conditions of production and trade in many parts of the world, further development by the United States of a broad program of aid to Western Europe, expansion in plant capacity and material supplies, and more favorable growing conditions for crops in important areas. Demand, while uneven and not as much in excess of supply as before, on the whole was still strong, providing the incentive required for heavy production in this period. In the United States, where production before 1948 had already risen to levels very close to capacity, further increases were generally moderate. Crop production was considerably larger than in 1947, and there were substantial increases in construction activity and electric power production. Output of manufactures and minerals expanded only moderately, owing in some instances to supply limitations but in others to a leveling off or a reduction in demand. As before, more goods were shipped abroad than were received but the difference, which had been very great in 1947, was considerably reduced in 1948 because exports declined and imports increased. Government purchases for stockpiling and other military purposes expanded, but altogether the share of domestic production available for civilian use was somewhat larger than in 1947 and actual supplies available to consumers and businesses reached new high levels. Some of the increased product available for civilian use went into business inventories, facilitating future production, speeding the delivery of goods to customers, and weakening the bargaining position of sellers. As a consequence of this and of various other developments, such as the replenishment or building up of supplies of goods in the hands of domestic consumers and a reduction in export demand, inflationary pressures eased somewhat. The general level of wholesale commodity prices, which had advanced rapidly in 1947, declined early in 1948. Then it rose to a new Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF BOARD OF GOVERNORS peak in the third quarter, with sharp advances in meats, livestock, and metals and metal products, and little change for most other commodities. In the last quarter of 1948, prices declined to about the level prevailing at the end of 1947, and in early 1949 they declined more sharply. Wage rates advanced further in 1948, particularly during the late spring and summer months. In capital markets, farm land values showed some further rise until the latter part of the year, while real property values in urban areas continued close to earlier high levels and security prices showed little change. Reflecting the larger volume of goods sold as well as the higher level of prices prevailing, total expenditures for goods and services during the year amounted to 255 billion dollars, as compared with 232 billion in 1947, an increase of 10 per cent. The rise from the fourth quarter of 1947 to the fourth quarter of 1948 was almost as large as this. The course of expenditures in 1948 is shown in the chart for the total and for broad types of outlays. Subsequently, in the first quarter of 1949, expenditures showed the first significant decline since the period immediately following the end of the war. GROSS NATIONAL PRODUCT ANNUAL RATES ANNUAL RATES BILLIONS OF DOLLARS SEASONALLY ADJUSTED, QUARTERLY AT ANNUAL RATES BILLIONS OF DOLLARS 300 300 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 NOTE: U. S. Department of Commerce data. From the fourth quarter of 1947 to the fourth quarter of 1948, outlays by governments for currently produced goods and services rose by 12.5 billion dollars. Federal outlays showed a marked increase, chiefly for military purposes and foreign aid in the form of grants, and there was further substantial growth in outlays by State and local governments, both for current operations and for construction projects, particularly schools and highways. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM The slight reduction indicated for private domestic and foreign investment together reflected a sharp decline in net foreign investment which more than offset a 7.5 billion dollar increase in domestic investment. The sharp decline in foreign investment was due chiefly to marked declines in net exports of goods and in the share of Federal aid to other countries which took the form of loans rather than grants. The rise in domestic investment reflected mainly a further rise in outlays for producers' equipment and an increase in inventory accumulation. Part of the increase in inventory accumulation was accounted for by a shift in the situation on farms where, because of very large crops, stocks were being increased rather than depleted. Personal consumption expenditures in the fourth quarter of 1948 were at an annual rate about 10 billion dollars higher than in the final quarter of 1947. Meanwhile personal disposable income increased by about 18.5 billion and consumption expenditures declined as a proportion of personal disposable income. Expenditures for new houses, regarded as investment rather than consumption outlays, were at about the same level at the end of 1948 as a year earlier. There was a substantial increase in net current personal saving, which includes expenditures for new houses as well as accumulations of securities and liquid assets minus increases in debt. Consumer indebtedness for housing and other purposes continued to increase, although at a slackened rate toward the end of the year. PERSONAL INCOME AND EXPENDITURES [In billions of dollars] Year Fourth quarter1 Item 1948 1947 1948 1947 Personal income 213.6 195.2 219.6 203.1 Disposable income2 192.6 173.6 199.4 180.9 Consumption expenditures.. 177.7 164.8 181.0 171.1 Durable goods 22.7 21.0 22.9 22.1 Nondurable goods 103.6 96.5 105.1 100.2 Services 51.4 47.3 53.0 48.8 Personal saving 14.9 8.8 18.4 9.7 1 Seasonally adjusted quarterly totals at annual rates. 2 Disposable income is personal income less income taxes. SOURCE: U. S. Department of Commerce. More selective price movements. Price movements, which had been very generally upward most of the time from the end of the war through 1947, became much more selective in 1948, especially in commodity markets but also to some extent in markets for real property. Upward adjustment of wages was also somewhat more selective. The general level of wholesale prices, which had risen 16 per cent the previous year, showed no net change in 1948 and consumer prices rose only 3 per cent, as compared with 9 per cent in 1947. In wholesale markets, prices of some products, notably metals and many of their manufactures, rose further, as demand continued in excess of supply during most of the year; at the other extreme, prices of crops declined Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF BOARD OF GOVERNORS sharply, to Federal price support levels, under the impact of harvests greatly in excess of current use. Consumer prices were higher at the year-end than at the beginning of the year for most types of goods and services but were somewhat lower for foods. Comparative data are given in the accompanying table. CHANGES IN PRICES Percentage increase or decrease Group Dec. 1947 Dec. 1946 1935-39 to to to Dec. 1948 Dec. 1947 Dec. 1948 Basic commodity prices (28 items) -15 + 17 + 153 General wholesale index: Total -1 + 16 + 101 Farm products -10 +17 + 133 Foods + -5 5 + 11 + + 1 8 1 8 5 +17 Other commodities Textile products -1 +10 + 107 Building materials +6 +21 + 126 Fuel and light + 10 +30 +82 Metals and products + 15 + 12 +89 Consumers' prices +3 +9 +71 Food + 11 + 105 Apparel +5 + 100 Rent +4 +8 +20 +6 NOTE.—Based on Bureau of Labor Statistics da^a. While net changes in prices over the whole year were small, changes within the year were large. In the first few weeks of 1948, the rapid rise in prices which had characterized the latter part of 1947 came to an end and in February prices of numerous products, especially grains and livestock, dropped sharply. There were declines in retail as well as wholesale markets for some products, particularly meats. The reaction in prices, however, did not become general. During the spring and summer months, although crop prospects improved and prices of some crops remained near Federal support levels, prices in many markets advanced considerably, bringing the general average to a new high. Cotton prices rose from 32 cents a pound in February to 37 cents in May and June. During the summer, metal prices rose more rapidly than at any time since the end of 1946, when Federal price controls were removed; livestock and meat prices advanced to new peaks, despite the prospect of greatly increased feed supplies; and prices of fuels rose somewhat further. This strengthening did not extend to as many markets as had earlier advances but it was nevertheless important. Beginning in May it was accompanied by further wage advances which, though not as large as those in 1946 and 1947, were substantial. The whole upward movement in prices and wages after the reaction in prices early in the year reflected largely the widespread strength of existing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 33 demand, although for some commodities, such as nonferrous metals, interruptions to supply were also important. The demand situation was strong at this time, partly because many demands deferred from the war period had not been fully met, an expanded defense program and a program of economic aid to Western Europe were being inaugurated, and Federal taxes on personal incomes were being reduced. To some extent the rise in metal prices represented an adjustment of prices to market conditions which had prevailed for some time rather than a response to further expansion in demand. The high point of this advance in commodity prices as a whole was reached in August, and during the remaining months of the year there were declines in both wholesale and retail markets. Sharp reductions in prices of livestock and meats, marked continuing declines in textiles, and reductions in some types of lumber were offset only in part by further increases in metals and metal products. In markets for some metal products such as household appliances, moreover, sales declined toward the end of the year, production schedules were revised downward from earlier exceptional peak levels, and later, in the early part of 1949, prices were reduced somewhat. Prices in used car markets declined rather more than seasonally. Supplies of fuel, which had been very short in the winter of 1947-48, increased and inventories accumulated, setting the stage for some decline in production and prices of fuel in the early part of 1949. In general, the easing of inflationary pressures in the latter part of the year was in marked contrast to the resurgence of upward pressures in the latter part of 1947, but activity and employment continued at a high level, incomes reached a new peak, and unemployment remained at a very low level. Later, in the first quarter of 1949, further easing in the general situation was reflected in further price reductions, declines in production and employment, and an increase in unemployment. Production close to capacity and demand. In broad terms, production in 1948 continued close to capacity and, for a variety of reasons, supplies came to approximate demands in most lines and to exceed demands in a number of other lines. As the year began, much progress had already been made in replenishing inventories at all stages of production, distribution, and consumption and in modernizing and expanding the country's industrial plant. During 1948 output was larger than in 1947 and the volume of goods exported was reduced from earlier peak levels. Domestic consumer demand continued strong until the latter part of the year when there was some weakening in a number of markets. At the year-end public programs called for further increases in outlays and private investment programs were still large in many lines, particularly the public utilities, but in some other lines, such as residential building, less new work was being undertaken. Production was larger in 1948 than in 1947, partly because capacity and supplies in some lines had been increased and partly because weather con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

34 ANNUAL REPORT OF BOARD OF GOVERNORS ditions were much more favorable to crops. Construction activity rose further in 1948 as supplies of materials and labor expanded and in some fields, such as residential building, supply came to equal or exceed demand at existing high price levels, tending to ease the market for both old and new houses and to encourage caution on the part of potential home buyers, financing agencies, and builders. Electric power output expanded further by a large amount, but capacity and output at the end of the year were still inadequate to meet expanding demand in some areas, particularly the Pacific Northwest. In industry—at factories and mines—output for the year, at 192 per cent of the 1935-39 average, was moderately higher than the 1947 level of 187. It showed little change during the course of the year, however, as further advances in output of some products, notably steel, automobiles, and petroleum, were offset by declines in output of some other products such as cotton textiles, shoes, and coal. In many industries, such as the machinery, chemicals, and food processing industries, output continued at earlier high levels. In transportation there was not much change in the total volume of traffic from 1947 to 1948, partly because much of the increased output of agricultural products was held on farms. There was some further shift of traffic from the railroads to other forms of transportation; toward the end of the year carloadings fell below the levels prevailing late in 1947. Substantial current output of freight cars eased the shortage of railroad equipment, and demand for new automobile trucks was fairly well maintained although the number of trucks on the road reached a new peak. As long as production in the economy was generally close to capacity but still short of demand, and as long as prices consequently were increasing at a rapid rate, one important question was how much production might be short of demand. Another was how long it would take to increase production enough to make up the difference and this posed the question of the course of demand as well as of supply. Would demand increase further, especially if military or related demands expanded? On the other hand, would it perhaps decline, as some of the more urgent deferred demands were met ? By the beginning of 1949, as production seemed to be catching up with or exceeding demand in an increasing number of lines, and as price declines became more numerous, questions concerning the course of prices and employment in the immediate future came more into the foreground. Earlier weaknesses in some prices during 1947 and 1948 had been followed by sharp advances and the extent of future demands, especially in connection with international developments, was not known. It was evident also that the financial position of consumers and producers was still relatively strong and that, as in other postwar years of generally rising incomes, sellers having excess stocks had often been able to dispose of them by reducing prices only moderately. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 35 But, as supplies increased throughout the economy, in the hands of consumers as well as producers and distributors, demands were becoming less urgent. Consumers were saving more of their incomes and there were important questions concerning the course of consumer buying and the utilization of the increased personal savings together with the exceedingly large volume of undistributed business profits available for investment purposes. In the field of private investment the general tendency was toward a lower rate of expenditure, while Government outlays for goods and services were rising somewhat. On the whole, the prospective course of prices, production, employment, incomes, and expenditures appeared to be downward in the early part of 1949 but economic activity was still not far below the peak levels reached during 1948. INTERNATIONAL TRADE AND FINANCE In 1948 there was a sharp reduction in the United States export surplus from the record peacetime level of 1947. As has been indicated earlier, this development was the combined result of a substantial decline in exports and a marked increase in imports. Exports of goods and receipts for services performed for foreigners amounted to 16.8 billion dollars in 1948, a decline of 2.9 billion from the preceding year. At the same time, imports and payments to foreigners for services amounted to 10.5 billion dollars, a figure almost one-fourth larger than in 1947. While still large, the export surplus, amounting to 6.3 billion dollars, was the smallest since 1942, and was 44 per cent below the level of 1947. In the financing of the export surplus, the greatest change from the pattern of 1947 occurred with respect to the use of foreign gold and dollar assets. The net liquidation of such assets during the year was less than 1 billion dollars, as compared with 4.5 billion in 1947. There was also a decrease in United States Government aid, which, notwithstanding inauguration of the European Recovery Program, declined from 5.7 billion dollars in 1947 to 4.7 billion in 1948. Partly as a result of continued political uncertainty abroad, private investment and lending by international institutions continued at relatively low levels. While the previous depletion of foreign gold and dollar resources and the decrease in United States aid were in part responsible for the reduction in the export surplus, this decline should also' be regarded as evidence of a gradual return to a more balanced situation for the world as a whole. In large measure, the export surplus of recent j^ears has reflected the contribution of the United States to postwar reconstruction. It was, therefore, to be expected that, as reconstruction proceeded, the abnormal dependence of foreign countries on United States production and financial assistance would Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

36 ANNUAL REPORT OF BOARD OF GOVERNORS diminish and that the United States would purchase an increasing amount of goods and services from abroad. The movement toward international balance reflected in the United States balance of payments in 1948 was by no means uniform for all countries. The United Kingdom, largely because of a persistent sellers' market abroad and continued austerity at home, was able to reduce its over-all external deficit by more than four-fifths and its gold and dollar deficit by more than onehalf. Canada and Italy also substantially improved their positions and, largely as a result of increased exports, were able to increase their dollar holdings during the year. Other countries, such as France, did not succeed in materially reducing their balance-of-payments gap, and Germany and Japan continued to need large amounts of outside aid. Finally, further deterioration in the international economic positions of such countries as South Africa, Argentina, and Mexico led to losses of reserves, tighter import controls, or currency depreciation. The long-run policy of the United States continued to be directed toward the gradual elimination of trade restrictions as an important step in bringing about a high level of mutually beneficial international trade. An important objective of the European Recovery Program has been to prepare the European nations to participate in freer multilateral trade. Exports and imports of the United States. Recorded exports of merchandise in 1948 amounted to 12.6 billion dollars, as compared with 15.3 billion in 1947. Owing to a 7 per cent increase in the average level of prices of export commodities, the decline in physical volume of exports was even greater than indicated by the decline in dollar amount. Receipts from services and investments, amounting to 3.4 billion dollars, were slightly below the 1947 level. Recorded United States imports of merchandise amounted to 7.1 billion dollars in 1948, an increase of 1.3 billion from the level of 1947. This increase was accounted for by an 11 per cent increase in the import price level and by a roughly similar increase in physical volume. The growth in imports was shared by all major types of commodities. Payments to foreign countries for services and on investments increased from 2.4 billion dollars in 1947 to 2.8 billion in 1948. Imports of goods and services were equal to 4.7 per cent of the national income of the United States in 1948, as compared with 4.2 per cent in 1947. In the years immediately preceding the war, the corresponding percentage was about 6 per cent. Until recent years, an export balance in United States merchandise trade with Europe, North America, and Africa was usually offset in part by an import balance with Asia and with South America. Since the war, however, United States exports have exceeded imports in every major area. This continued to be true in 1948, but to a less impressive extent. In the case of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 37 each major foreign area, the ratio of United States imports to United States exports was considerably higher in 1948 than in 1947. Recorded exports and imports of merchandise, by areas, are shown in the accompanying table. UNITED STATES MERCHANDISE TRADE [Dollar items in millions] 1948 trade Imports as a percentage of exports Area Net 1935-39 Exports Imports exports 1948 1947 annual average Recorded trade, total $12,619 $7,070 $5,549 56.0 37.4 82.4 Africa 785 407 378 51.8 39.8 53.1 Asia .... 2,094 1,332 762 63.6 44.9 145.7 Europe 4,286 1,092 3,194 25.5 14.4 55.3 North America 3,393 2,538 855 74.8 56.0 81.4 Oceania 153 164 -11 107.2 48.6 40.8 South America 1.908 1,537 371 80.6 52.5 118.8 Unrecorded trade1 779 641 138 Total $13,398 $7,711 $5,687 57.6 37.8 84.9 1 Consists mainly of certain U. S. Government transactions. On the export side, sales of Government surplus property to foreigners, and certain categories of civilian supplies distributed by the armed forces in occupied areas, accounted for the bulk of such transactions in 1947 and 1948. Means of financing export surplus. About three-fourths of the total export surplus of the United States in 1948 was financed by gifts and loans from the United States Government. The dollars to cover the remaining net exports were derived, as shown by the table on page 38, from private United States investments and gifts, from loans by the International Bank and the International Monetary Fund, and from the sale of gold and other foreign-owned assets to the United States. In contrast with 1947, these sales were of relatively minor importance to the financing of the export surplus in 1948. In 1948, the United States Government extended financial assistance to foreign countries amounting to 4.7 billion dollars, or 17 per cent less than in 1947. The amount of donations, however, was more than twice as large as in 1947, since the great bulk of Government assistance in 1948 took the form of gifts rather than loans. European countries received more than threefourths of the aid extended by the United States Government in 1948, largely as part of the European Recovery Program. Private gifts and investments continued to finance a part of the net exports from the United States. The net amount of charitable contributions and personal remittances in 1948 was about 600 million dollars. The net outflow of private capital, amounting to about 900 million dollars, consisted mainly of advances by parent companies in this country to their subsidiaries abroad. As previously indicated, various countries found it necessary to draw on their holdings of gold and other liquid assets in the United States. Net Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF BOARD OF GOVERNORS sales of gold to the United States by foreign countries amounted to 1.5 billion dollars during the year. In considerable part, however, these sales were offset by an increase of 1 billion dollars in foreign banking funds held in the United States. Part of the gold sales represented new foreign production of gold, which remained at the 1947 level of about 7°° million dollars (not including Soviet production). Total foreign gold and dollar holdings, which had been depleted considerably in 1947, thus remained approximately constant in 1948. FOREIGN TRADE OF THE UNITED STATES AND MEANS OF FINANCING1 [In billions of dollars] 1948 1947 United States exports, total 16.8 19.7 Goods 13.4 16.1 Services 3.4 3.7 United States imports, total. 10.5 8.5 Goods 7.7 6.1 Services 2.8 2.4 Net purchases from United States by foreign countries 6.3 11.3 Sources of financing utilized by foreign countries, total 7.5 12.3 United States Government, net total 4.7 5.7 0.9 3.9 Credits 3.8 1.8 Donations United States—private, net total 1.5 1.3 Foreign investment (long- and short-term) 0.9 0.7 Donations 0.6 0.6 International institutions, net total 0.4 0.8 Dollars disbursed by International Bank 0.2 0.3 Dollars drawn from International Monetary Fund . 0.2 0.5 Foreign countries' own capital assets, net total. . . 0.9 4.5 Sales of gold to United States 1.5 2.8 Reduction of banking funds in United States 2-1.0 1.2 Liquidation of other assets in United States 0.3 0.5 Errors and omissions -1.1 -1.0 1 This table is derived largely from U. S. balance-of-payments data compiled by the Department of Commerce. Gold and dollar transactions between the United States and the International Monetary Fund and the International Bank are omitted while gold and dollar financing provided by the Fund and the Bank are included. ECA disbursements that are ultimately to be placed on a loan basis are treated as credits. Details may not add to totals because of rounding. 2 Increase. CHANGES IN BANKING STRUCTURE Number of banking offices. There was a net increase of 189 banking offices in the United States in 1948. This was the fifth consecutive annual increase and followed somewhat larger increases of 207 in 1947 and 225 in 1946. The number of newly organized banks and branches was 242, as compared with 271 in 1947 and 301 in 1946. The banking offices that went out of existence in 1948 totaled 53, a smaller number than in either of the two preceding years. At the end of 1948 there were 19,164 banking offices (14,703 banks and 4,461 branches and additional offices). There were also 70 banking facilities at military reservations, excluded from the foregoing figures, a decrease of one during the year; at the end of the war, there were about 350 of these offices. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 39 The number of banks (head offices) declined in 1948 for the first time since 1944. The net decline of 11 compares with net increases of 14 in 1947* 32 in 1946, and 18 in 1945. The number of new banks opened for business was 80, a decline from the corresponding figures of 111 in 1947 and 144 m 1946. These declines followed increases beginning in 1943 and reaching a peak in 1946. Twenty of the 80 banks opening for business were member banks, 41 were insured nonmember banks, and 19 were noninsured banks. Of the 91 banks discontinued through consolidation, liquidation, etc., 56 became branches. The number of banks in operation at the end of 1948 was 14,703 (14,171 commercial banks and 532 mutual savings banks). The number of branches and additional offices, exclusive of offices at military reservations, increased by a net of 200 during the year. This increase in 1948, although only slightly larger than in 1947 and 1946, was the largest since 1934. The number of such offices has increased in every year since 1933 except 1942, when it remained unchanged. Approximately 40 per cent of the new banks opened for business in the past four years have been in Georgia, Illinois, and Texas, where branch banking is prohibited. About the same percentage of the new branches have been in California, Massachusetts, Michigan, and New York, while the new banks opened in these four States have amounted to only 6 per cent of the total. Changes in Federal Reserve membership. Membership in the Federal Reserve System decreased for the first time since 1938. The loss of 5 banks in 1948 compares with net gains of 23 in 1947 and 16 in 1946. The number of national banks decreased by a net of 14 and the number of State member banks increased by a net of 9. Admissions to membership were more than offset by consolidations, etc., in which 37 banks became branches. Of the 49 banks admitted to membership, 17 were national banks and 32 were State banks; of the latter, 5 were newly organized and 2J were already in operation. All but one of the 2J had previously been admitted to membership in the Federal Deposit Insurance Corporation and their total deposits amounted to about 83 million dollars. A survey made by the Reserve Banks as of December 31 showed that nearly one-third of the nonmember commercial banks were ineligible for membership in the Federal Reserve System on the basis of statutory capital requirements. The 6,918 member banks in operation at the end of 1948 accounted for 49 per cent of the number and 85 per cent of the deposits of all commercial banks in the country. The State member banks accounted for 21 per cent of the number and 65 per cent of the deposits of all State commercial banks. These percentages have remained practically unchanged in recent years. Par and nonpar banks. During 1948 there was a net increase of 24 in the number of banks on the Federal Reserve Par List and a net decrease of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4O tfNUAL REPORT OF BOARD OF GOVERNORS 30 in the number of nonpar banks.1 These changes continued the trend of several years but the number of banks involved was somewhat smaller. During the year, 112 banks were added to the Par List, 7 were withdrawn, and 81 banks formerly on the list terminated existence. Of the latter, 72 were absorbed by other par banks and 55 of the 72 were converted into branches. There were net increases in nonpar banks in only three States. At the end of 1948 there were 12,061 banks remitting at par and 2,011 nonpar banks. The latter represented only 14 per cent of the banks on which checks are drawn and held a very small proportion of the deposits of all commercial banks in the country. The number of nonpar branches of commercial banks, which has been decreasing slightly in recent years, was 318 at the end of the year. In February 1949, when the last nonpar bank in one State came on the Par List, there were 5 Federal Reserve districts and 28 States and the District of Columbia in which all banks were on the Federal Reserve Par List. In each of 5 other States, the number of nonpar banks was less than 10. At the end of 1948 over 99 per cent of the banks not on the Par List were in the following 15 States: Minnesota 416, Georgia 294, Mississippi 165, Arkansas 124, North Carolina 116, Wisconsin 107, Alabama 106, Louisiana 103, South Dakota 100, Tennessee 95, North Dakota 89, South Carolina 89, Missouri 67, Florida 63, and Texas 58. Check routing symbols. Further progress was made during 1948 in the uses of routing symbols on checks to facilitate their collection. The program was inaugurated by the American Bankers Association and the Federal Reserve System in June 1945. Nearly all of the banks on the Federal Reserve Par List now have 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 as of December 1, 1948, it was found that 58 per cent of all checks clearing through Federal Reserve Banks carried routing symbols in the approved location. Designation of reserve cities. In accordance with the basis for the classification of reserve cities adopted in December 1947 by the Board of Governors and published in the 1947 Annual Report, 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 Spokane, Washington. BANK SUPERVISION BY THE FEDERAL RESERVE SYSTEM The year 1948 ended with a very moderate decrease in the total resources of all member banks. There were also changes in the character of assets held 1 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 Federal Reserve Banks for payment, and also such nonmember banks as have agreed to do so. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 4* by the banks, representing in the main a continuing shift from what are usually termed riskless assets (cash assets and United States Government securities) into loans. The larger volume of risk assets commensurately increased the responsibilities of bank managements and bank supervisory authorities to detect and correct elements of weakness as they develop. While the number and volume of assets of State member banks with problem characteristics were small in the aggregate, the fact remains that the high level of business activity in 1948, as in the past several years, tended to obscure real and potential elements of risk in loans and to increase the difficulty of their proper appraisal by bank managements and examiners. Manifestly, a diminution of business activity could affect adversely the collectibility of many loans and disclose a greater degree of deterioration than is now apparent. Difficulty in finding and attracting capable bank personnel continued to be a problem during the year, for some of the smaller banks in particular. The continued increase in risk assets in 1948 was not offset by proportionate increases in aggregate capital. Therefore, the need for capital became even more pronounced. While a relatively few State member banks sold additional common stock during the year, many were reluctant to take such action. In some cases this reluctance appears to spring from unwillingness of controlling interests to dilute their stockholdings through sales of new stock. In other cases lack of market appears to be the most important obstacle. In such circumstances it has been urged that caution be exercised in further expansion of risk assets and disbursement of earnings through cash dividends. The Board continued during the year to work closely with the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Executive Committee of the National Association of Supervisors of State Banks on matters of mutual interest pertaining to bank examination and supervision. Examination of Federal Reserve Banks. The Board's Division of Examinations examined each of the twelve Federal Reserve Banks and their twentyfour 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 conduct 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. In order to avoid duplication and to minimize inconvenience to the banks examined, wherever practicable joint examinations are made in cooperation with the State banking authorities or alternate examinations are made by agreement with State authorities. The 1948 program for the examination of State member banks was substantially completed, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

42 ANNUAL REPORT OF BOARD OF GOVERNORS A conference of the Vice Presidents in charge of bank examination and supervision at the several Federal Reserve Banks was held at the offices of the Board of Governors on February 12 and 13, 1948 to consider current supervisory problems. Representatives of the Comptroller of the Currency and the Federal Deposit Insurance Corporation participated in the conference. The annual convention of the National Association of Supervisors of State Banks, held in Louisville, Kentucky, in September, afforded another opportunity for an informal meeting of the bank supervisory officers of the Federal Reserve Banks with representatives of the Board to consider matters of current interest. Bank holding companies. During 1948 the Board acted on applications for voting permits submitted by holding company affiliates of banks and authorized the issuance of four 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. In accordance with established practice, a number of 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. As mentioned in previous reports, the existing statutes do not provide adequate means for regulation of bank holding companies. The Board's recommendations for the strengthening of such regulation are presented earlier in this report. Trust powers of national banks. During the year, 13 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 10 national banks were terminated by voluntary liquidation or consolidation. At the end of 1948 there were 1,788 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. Foreign branches and banking corporations. The Board approved six applications made during 1948 by member banks pursuant to the provisions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 43 of Section 25 of the Federal Reserve Act for permission to establish foreign branches. During the year member banks opened eight foreign branches, several of which had been authorized by the Board prior to 1948. The new branches were distributed geographically as follows: Brazil 3, Germany 1, Japan 3, Philippines 1. Owing to disturbed conditions, the operations of one foreign branch were in temporary suspension at the end of the year under the provisions of the Board's Regulation M. The types of banking operations conducted by branches in Germany and Japan are restricted by the terms of the licenses issued by the military occupation authorities. At the end of 1948, seven member banks had in active operation a total of 89 branches in 22 foreign countries and possessions of the United States. Of the 89 branches, four national banks were operating 83, and three State member banks were operating 6.. The foreign branches in active operation were distributed geographically as follows: Latin America 46 England 10 Argentina 10 Brazil 8 Far East 17 Chile 2 China.. Colombia 3 Hong Kong. Cuba 16 India Mexico. Japan Panama Philippines. Peru Singapore... Uruguay Venezuela U. S. Possessions 11 Canal Zone 4 Continental Europe. Puerto Rico 7 Belgium France Germany Total 89 At the end of 1948 there were four 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 investment by member banks in the stock of corporations engaged principally in international or foreign banking. These corporations are First of Boston International Corporation, International Banking Corporation, Morgan & Cie., Incorporated, and Bankers Company of New York. One of the four has no foreign affiliates or branches, one has a branch in England and during the year opened a branch in France, one operates a branch in France, and one has an English fiduciary affiliate. During the year the agreement with the Board under which French American Banking Corporation operated was terminated, owing to the acquisition by other interests of the stock in the Corporation formerly held by member banks. The Board's Division of Examinations examined during the year the head office of The Chase Bank, the one banking corporation in active operation organized under the provisions of Section 25(a) of the Federal Reserve Act and chartered by the Board 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

44 ANNUAL REPORT OF BOARD OF GOVERNORS CHANGES IN REGULATIONS OF THE BOARD OF GOVERNORS Reserves of member banks. The Board's Regulation D, relating to reserves required to be maintained by member banks with Federal Reserve Banks, was amended to increase the required reserves against demand deposits for banks in central reserve cities from 20 to 22 per cent effective February 27, 1948, and from 22 to 24 per cent effective June 11, 1948. It was again amended effective September 24, 1948, as to banks in reserve and central reserve cities, and effective September 16, 1948, as to other member banks, to increase the required reserves against time deposits from 6 to 7.5 per cent for all member banks, and to increase the required reserves against demand deposits from 24 to 26 per cent for central reserve city banks, from 20 to 22 per cent for reserve city banks, and from 14 to 16 per cent for other member banks. The regulation also was amended in minor respects effective September 16, 1948, to reflect changes in the applicable statutes. Effective in May 1949, the Board reduced reserve requirements by 2 percentage points on net demand deposits at member banks in central reserve cities, by 1 percentage point on net demand deposits at all other member banks, and by one-half percentage point on time deposits at all member banks. These reductions became effective May 5, 1949 for member banks in reserve and central reserve cities and May 1, 1949 for other member banks. Membership of State banks. The Board's Regulation H, relating to membership of State banks in the Federal Reserve System, was amended effective September 1, 1948, to eliminate certain conditions of membership which were not considered essential as standard conditions of membership for State member banks of the Federal Reserve System. This action was taken as part of a program to accomplish greater uniformity in the conditions of membership applicable to State member banks. Check clearing and collection. The Board's Regulation J, relating to the clearing and collection of checks by Federal Reserve Banks, was amended effective January 1, 1949, pursuant to recommendations of the American Bankers Association, to permit conditional payment of checks and other cash items presented by Federal Reserve Banks. The amendment authorizes a procedure under which a cash item which a Federal Reserve Bank presents to a drawee bank, and for which remittance or settlement is made by the drawee bank on the day it receives the item, may be returned for credit or refund at any time prior to midnight of the drawee's next business day. Interlocking bank directorates. The Board's Regulation L, relating to interlocking bank directorates under the Clayton Act, was amended effective July 1, 1948, to permit a director, officer, or employee of a member bank to be at the same time a director, officer, or employee of not more than one bank which is principally engaged in international or foreign banking and which does not receive deposits or make loans in the United States except as may be incidental to its international or foreign business, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 45 Margin requirements for purchasing securities. The Board's Regulation T, relating to the extension and maintenance of credit by brokers, dealers, and members of national securities exchanges, and Regulation U, relating to loans by banks for the purpose of purchasing or carrying stocks registered on a national securities exchange, were amended effective April I, 1948, to permit a customer to make substitutions on certain conditions in an undermargined account without having to supply additional margin. Previously, substitutions were limited by the rule that the proceeds of sales of securities in an undermargined account be used to the extent necessary to increase the margin on the remaining securities until it was on the margin basis prescribed by the regulations. Effective March 30, 1949, the margin requirements under the Board's Regulations T and U were reduced from 75 per cent to 50 per cent. Effective May 1, 1949, these regulations were amended to simplify operations in the special cash account under Regulation T and to relax further the provisions relating to substitutions of securities under the regulations. Effective May 16 the regulations were amended to permit a 25 per cent margin in the case of securities acquired through subscription rights when specified conditions are met. Consumer instalment credit. The Board's Regulation W, relating to consumer instalment credit, was reissued effective September 20, 1948, in much the'same form as the regulation was when terminated on November 1, 1947. The new regulation covered instalment sales and loans for the purchase of 12 kinds of consumers' durable goods, excluding articles selling for less than $50. It also covered instalment loans for most other consumer purposes. The regulation required down payments of at least 33% per cent on purchases of automobiles and 20 per cent on purchases of the other listed articles. On all types of instalment credit subject to the regulation, maturities were restricted to 15 months for credits not exceeding $i,OOO-and 18 months for larger amounts (with monthly payments of at least $70 on amounts over $1,000). Instalment credits in excess of $5,000 were not regulated. The regulation was amended effective November I, 1948, to permit customer trials of appliances without prior down payments under certain specified conditions. Effective January 1, 1949, Regulation W was amended to provide that, for purposes of the exemption of articles selling for less than $50, any applicable sales taxes might be disregarded. Effective March 7, 1949, the regulation was amended to reduce required down payments on articles other than automobiles from 20 per cent to 15 per cent and to increase to 21 months the maximum period permitted for repayment of all credits under the regulation. Certain technical changes were made at the same time. Effective April 2.J, 1949, the required down payment on articles other than automobiles was reduced to 10 per cent, the maximum period permitted for repayment of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

46 ANNUAL REPORT OF BOARD OF GOVERNORS all credits under the regulation was increased to 24 months, and the exemption of articles selling under $50 was changed to an exemption of articles selling under $100. LITIGATION Suit regarding condition of membership. The Supreme Court of the United States on March 15, 1948 reversed the decision of the United States Court of Appeals for the District of Columbia in the suit of Peoples Bank, Lakewood Village, California, against the members of the Board of Governors. The suit asked for a declaration that a condition of membership accepted by the Peoples Bank at the time of its admission to membership in the Federal Reserve System was invalid and sought an injunction against its enforcement. The Supreme Court held that "the Bank's grievance here is too remote and insubstantial, too speculative in nature, to justify an injunction against the Board of Governors, and therefore equally inappropriate for a declaration of rights." Two Justices dissented and two Justices did not participate in the decision. A rehearing was denied April 19, 1948. The opinions of the Supreme Court are reported in 333 U. S. 426 and were printed in the Federal Reserve Bulletin for April 1948, pages 398-402. Hearing under Clayton Antitrust Act. On June 24, 1948, the Board issued a complaint against Transamerica Corporation, a holding company having its principal place of business in San Francisco, California, together with a notice of a hearing to determine whether an order should be entered requiring the Corporation to cease and desist from violating Section 7 of the Clayton Antitrust Act, which vests specifically in the Board the responsibility for enforcement with respect to banks, banking associations, and trust companies. The complaint charged that the Corporation violated the Act by acquiring the stock of numerous banks. After certain preliminary motions had been heard and disposed of, the taking of testimony began before a Hearing Officer on February 2, 1949. LEGISLATION Consumer instalment credit. A Joint Resolution approved August 16, 1948, restored the Board's authority to regulate consumer credit for a period ending June 30, 1949, in accordance with Executive Order No. 8843, dated August 9, 1941, in so far as it relates to instalment credit. This authority had been terminated on November 1, 1947, by a Joint Resolution approved August 8, 1947. Reserves of member banks. The Joint Resolution approved August 16, 1948, also amended Section 19 of the Federal Reserve Act to give the Board additional authority to increase the reserves required to be maintained by member banks with Federal Reserve Banks during a period ending June 30, 1949. This amendment authorized the Board to increase the required reserves against time deposits to a maximum of 7.5 per cent for all member banks Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 47 and to increase the required reserves against demand deposits to not more than 30 per cent for central reserve city banks, 24 per cent for reserve city banks, and 18 per cent for other member banks. Real-estate loans. An Act approved May 25, 1948, amended the third paragraph of Section 24 of the Federal Reserve Act, so as to make it clear that the restrictions and limitations of that section upon real-estate loans by national banks do not apply to loans which are made to established industrial or commercial businesses and in which the Reconstruction Finance Corporation cooperates or purchases a participation. Criminal provisions. Under an Act approved June 25, 1948, which became effective September 1, 1948, Title 18 of the United States Code, entitled "Crimes and Criminal Procedure," was revised and codified into the criminal code. The Act repealed certain criminal provisions contained in Sections 12B and 22 of the Federal Reserve Act and in related statutes and incorporated the substance of these provisions in the revised Title 18. RESERVE BANK OPERATIONS Earnings and expenses. Current earnings and expenses of the various Federal Reserve Banks are given in detail in Table 6 on pages 70-71, and a condensed annual statement for all the Reserve Banks combined since 1914 is shown in Table 7 on pages 72-73. The table below gives a condensed comparative summary for all of the Reserve Banks for the years 1947 and 1948. EARNINGS, EXPENSES, AND DISTRIBUTION OF NET EARNINGS OF FEDERAL RESERVE BANKS 1947 and 1948 [In thousands of dollars] Item 1948 Current earnings 304,161 158,656 Current expenses 72,710 65,393 Current net earnings. 231,451 93,263 Additions to current net earnings 6,517 2,887 Deductions from current net earnings 414 508 Net additions. 6,103 2,379 Transferred to reserves for contingencies 40,421 406 Paid U. S. Treasury (Sec. 13b) 36 Paid U. S. Treasury (interest on outstanding F. R. notes). 166,690 75,224 Net earnings after reserves and payments to U. S. Treasury 30,443 19,976 Dividends paid 11,920 11,523 Transferred to surplus (Sec. 13b). 87 Transferred to surplus (Sec. 7). . . 18,523 8,366 The increase of about 145 million dollars in current earnings in 1948 reflected principally an increase of 143 million in earnings on United States Government securities in the System Open Market Account. Current expenses increased only about 7 million dollars, so that current net earnings were 138 million more in 1948 than in 1947. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4 8 ANNUAL REPORT OF BOARD OF GOVERNORS After net additions to current net earnings of 6 million dollars (consisting mostly of net profits on sales of United States Government securities) transfers to reserves for contingencies of 40 million, and payments of 167 million to the United States Treasury as interest on outstanding Federal Reserve notes, remaining net earnings were 30 million dollars in 1948. Dividends to member banks, as provided in the Federal Reserve Act, totaled about 12 million dollars, leaving 18 million, which was transferred to surplus. As noted above, earnings on Reserve Bank holdings of United States Government securities were 143 million dollars more in 1948 than in 1947. This increase reflected a higher average rate of earnings in 1948, which resulted from a somewhat higher yield on Treasury bills and certificates and a shift from Treasury bills into bonds, with little change in total holdings. Earnings from discounts and advances were greater in 1948 than in 1947, reflecting the increases made in the Federal Reserve Bank discount rates in 1948, as well as a larger volume of loans. The accompanying table shows average holdings, earnings, and average rates of earnings on loans and securities of the Federal Reserve Banks during the past four years. RESERVE BANK EARNINGS ON LOANS AND SECURITIES, 1945-48 [Dollar amounts in thousands] U. S. Discounts Accept- Government Indus- Item and year Total and ances securities, trial advances purchased direct and loans guaranteed Average daily holdings: 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 1948^ 21,841,623 330,706 21,509,321 1,596 Earnings: 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 1948 303,316 4,371 298,903 42 Average rate of earnings (per cent): 1945 0.65 0.53 0.50 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 1948 1.39 1.32 1.39 2.64 Based on holdings at opening of business. 2 Less than $500. Foreign transactions. Total dollar and gold assets of foreign central banks and governments held by the Federal Reserve Banks increased in 1948 by nearly 900 million dollars, thereby reversing the downward trend which had been in evidence since the high point of about 7 billion dollars was reached in September 1945. The increase, however, was less than the amount of foreign-owned gold that was shipped to this country during the year. At the end of the year, dollar deposits, earmarked gold, United States Government securities, and other dollar assets held for all such accounts amounted to about 4.2 billion dollars. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 49 The rise in assets held for foreign account took the form largely of United States Government securities and dollar deposits, although the amount of gold held under earmark also showed a net increase of 195 million dollars for the year. The amount of gold and dollar assets held by the Federal Reserve Bank of New York for the International Bank for Reconstruction and Development and the International Monetary Fund increased only moderately. This contrasted with the sharp net rise in 1947, when member countries made large payments covering their participation in the Fund and the Bank. As a result of increased demands from foreign central banks for loans against gold, the total of such loans outstanding rose from about 50 million dollars at the end of 1947 to a new record high of nearly 260 million in August, but then receded to about 190 million at the end of 1948. These loans, which were designed to cover temporary requirements for dollar exchange on the part of the borrowing countries, were made for periods not exceeding three months. Interest was at the discount rate of the Federal Reserve Bank of New York, which was raised from 1 to 1/2 per cent during the year. Of four loans on gold outstanding at the beginning of the year, two were repaid in full, and one in part during the year. Loans were made to five other central banks during the year, of which two were repaid in full, while the amount advanced to the other three had been considerably reduced by the end of the year. Three regular foreign accounts were opened during the year, one of which represented the transfer of a balance from an account which the Federal Reserve Bank of New York had previously maintained as fiscal agent of the United States. The Federal Reserve Bank of New York, as fiscal agent of the United States, continued to operate the United States Stabilization Fund in accordance with authorization and instructions from the Treasury Department and to act in a fiscal agency capacity in the administration of foreign funds control. 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 handled a variety of operations during the year for the International Bank for Reconstruction and Development and the International Monetary Fund. Operations undertaken for the International Bank included making investments in United States Government securities, holding securities in custody, receiving deposits, making payments under loans granted by the Bank, and acting as fiscal agent of the Bank in connection with its two bond issues floated in 1947. For the Fund, the operations consisted largely of making dollar payments in connection Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

50 ANNUAL REPORT OF BOARD OF GOVERNORS with its foreign exchange and gold transactions with member countries, and of holding gold and securities in custody. Volume of operations. Operations in the principal departments of the Federal Reserve Banks during 1948 were on the whole somewhat higher than in 1947 and checks collected and currency and coins handled registered increases to new all-time peaks. As in the preceding two years of adjustment from a war economy, there was some decline in 1948 in the number of issues, redemptions, and exchanges of Government securities by Reserve Banks acting as fiscal agents for the United States Treasury and Government agencies. Volume of operation figures for 1948 as compared with the previous four years are shown in Table 5 on page 69. Bank premises. The policy stated in the 1947 Annual Report of approving the preparation of plans for needed building construction or extensive alterations and repairs at Federal Reserve Banks and their branches but not authorizing commencement of construction unless of an emergency character was continued during 1948. Under this policy the only construction projects authorized in 1948 were completion of the rehabilitation of the building acquired by the Federal Reserve Bank of St. Louis in 1944, air conditioning of a few floors at the Federal Reserve Bank of Chicago in order to complete the air conditioning of the building, and construction of a coin vault in the Detroit Branch of the Federal Reserve Bank of Chicago. In addition, the Federal Reserve Bank of San Francisco was authorized to proceed with the preparation of final plans for the construction of buildings to house its Portland and Seattle Branches on sites acquired in 1946 and 1945, respectively, and to execute purchase contracts for structural steel and elevators for these buildings. The Portland and Seattle Branches occupy rented quarters, and in each case the owners of the buildings have asked that the space be vacated as soon as possible for other use. 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 106. The Chairmen and Deputy Chairmen at the Federal Reserve Banks were redesignated to serve as such for the year 1948, except for the following changes : Harold D. Hodgkinson, Vice President, General Manager and Chairman of Management Board, Wm. Filene's Sons Company, Boston, Massachusetts, who had been a Class C director of the Federal Reserve Bank of Boston since January 1, 1947, was appointed Deputy Chairman for the year 1948. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 51 Robert T. Stevens, Chairman of the Board, J. P. Stevens and Company, Inc., New York, New York, was appointed a Class C director of the Federal Reserve Bank of New York on May 14, and designated Chairman and Federal Reserve Agent for the remaining portion of the year 1948. He formerly served as a Class B director of the Federal Reserve Bank of New York from January 1, 1934, to January 8, 1942, when he was called into active service with the United States Army. Wm. H. Bryce, Vice President, Dixie Wax Paper Company, Memphis, Tennessee, was appointed a Class C director of the Federal Reserve Bank of St. Louis on March 22, and Deputy Chairman for the remaining portion of the year 1948. Directors. A list of the directors of the Federal Reserve Banks and Branches as of the close of the year is shown on pages 107-15. The Board of Governors made the following appointments of new directors either for terms beginning January 1, 1948, or to fill vacancies during the year: Class C Directors. Ames Stevens, Treasurer, Ames Worsted Company, Lowell, Massachusetts, was appointed a Class C director of the Federal Reserve Bank of Boston on July 26. Robert T. Stevens, Chairman of the Board, J. P. Stevens and Company, Inc., New York, New York, was appointed a Class C director of the Federal Reserve Bank of New York on May 14. Allan B. Kline, President, American Farm Bureau Federation, Chicago, Illinois, was appointed a Class C director of the Federal Reserve Bank of Chicago for the term beginning January 1, 1948. Wm. H. Bryce, Vice President, Dixie Wax Paper Company, Memphis, Tennessee, was appointed a Class C director of the Federal Reserve Bank of St. Louis on March 22. Branch Directors. Lewis B. Swift, President, Taylor Instrument Companies, Rochester, New York, was appointed a director of the Buffalo Branch of the Federal Reserve Bank of New York on January 23. R. E. Ebert, President, Dixie Home Stores, Inc., Greenville, South Carolina, was appointed a director of the Charlotte Branch of the Federal Reserve Bank of Richmond for the term beginning January 1, 1948. J. Roy Faucett, a partner of Faucett Brothers, Northport, Alabama, was appointed a director of the Birmingham Branch of the Federal Reserve Bank of Atlanta for the term beginning January 1, 1948. Marshall F. Howell, Secretary-Treasurer, Bond-Howell Lumber Company, Jacksonville, Florida, was appointed a director of the Jacksonville Branch of the Federal Reserve Bank of Atlanta for the term beginning January 1, 1948. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

52 ANNUAL REPORT OF BOARD OF GOVERNORS Howard Phillips, Vice President and General Manager, Dr. P. Phillips Company, Orlando, Florida, was appointed a director of the Jacksonville Branch of the Federal Reserve Bank of Atlanta on February 5. Mr. Phillips formerly served as a director of the Jacksonville Branch from February 28, 1938, to April 18, 1942, when he was called to active service in the Army of the United States. J. Hillis Miller, President, University of Florida, Gainesville, Florida, was appointed a director of the Jacksonville Branch of the Federal Reserve Bank of Atlanta on August 16. C. E. Brehm, Acting President, University of Tennessee, Knoxville, Tennessee, was appointed a director of the Nashville Branch of the Federal Reserve Bank of Atlanta for the term beginning January 1, 1948. Ben R. Marsh, Vice President and General Manager, Michigan Bell Telephone Company, Detroit, Michigan, was appointed a director of the Detroit Branch of the Federal Reserve Bank of Chicago for the term beginning January 1, 1948. A. Howard Stebbins, Sr., Chairman of Board, Stebbins and Roberts, Inc., Little Rock, Arkansas, was appointed a director of the Little Rock Branch of the Federal Reserve Bank of St. Louis on February 11. Alvin A. Voit, President, The Mengel Company, Louisville, Kentucky, was appointed a director of the Louisville Branch of the Federal Reserve Bank of St. Louis on January 20. Smith D. Broadbent, Jr., of Cadiz, Kentucky, was appointed a director of the Louisville Branch of the Federal Reserve Bank of St. Louis on June 15. Mr. Broadbent is engaged in farming. M. P. Moore, a partner of E. E. Moore and Company, Senatobia, Mississippi, was appointed a director of the Memphis Branch of the Federal Reserve Bank of St. Louis for the term beginning January 1, 1948. C. W. Cotton, President, C. W. Cotton Supply Company, Tulsa, Oklahoma, was appointed a director of the Oklahoma City Branch of the Federal Reserve Bank of Kansas City for the term beginning January 1, 1948. Joseph W. Seacrest, Co-Publisher, Nebraska State Journal, Lincoln, Nebraska, was appointed a director of the Omaha Branch of the Federal Reserve Bank of Kansas City on April 16. Edward E. Hale, Chairman of the Department and Professor of Economics, University of Texas, Austin, Texas, was appointed a director of the San Antonio Branch of the Federal Reserve Bank of Dallas for the term beginning January 1, 1948. Henry C. Isaacson, President, Isaacson Iron Works, Seattle, Washington, was appointed a director of the Seattle Branch of the Federal Reserve Bank of San Francisco on January 16. Change in Presidents. Laurence F. Whittemore resigned as President of the Federal Reserve Bank of Boston effective October 4, to become President Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 53 of the New York, New Haven and Hartford Railroad Company. Mr. Whittemore had served as a Class B director from September 7, 1944* to February 28, 1946, and as President of the Bank since March 1, 1946. Joseph A. Erickson was appointed President of the Federal Reserve Bank of Boston to succeed Mr. Whittemore and assumed office on December 15. Mr. Erickson formerly was Executive Vice President of the National Shawmut Bank of Boston. Staff. At the end of 1948, the total number of officers and employees of the twelve Federal Reserve Banks and their twenty-four branches was 19,087, representing a decline of 277 since the end of 1947. The total Reserve Bank personnel has declined steadily since 1943 when it was at its peak owing to the great expansion in the volume of operations resulting from the war. The total number of officers and employees of the Reserve Banks and Branches at the end of each year beginning with 1941 was as follows: 1941 14,083 1945 23,522 1942 19,972 1946 21,430 1943 24,741 1947 19,364 1944 24,442 1948 19,087 BOARD OF GOVERNORS—STAFF Appointments of Board members and designation of Chairman. The appointment of Thomas B. McCabe, of Pennsylvania, as a member of the Board of Governors for the unexpired portion of the term ending January 31, 1956, was approved by the Senate on April 12. On April 15 the President designated him as Chairman of the Board for a four-year term and he took the oath of office as a member of the Board. M. S. Szymczak, of Illinois, whose term as a member of the Board of Governors expired on January 31, 1948, was reappointed by the President and confirmed by the Senate for an additional term of 14 years. Staff. On December 31, 1948, the Board's staff, exclusive of those on leave without pay, numbered 517, as compared to 504 at the end of 1947. Carl E. Parry, Director of the Division of Security Loans, retired March 31, as a member of the Board's staff, under the provisions of the Federal Reserve Retirement System. Mr. Parry became associated with the Board on October. 1, 1924, and had served as Director of the Division of Security Loans since November 24, 1934. Winfield W. Riefler rejoined the Board's staff on May 10, as Assistant to the Chairman of the Board. He was a member of the research staff of the Board of Governors from 1923 to 1933 and a director of the Federal Reserve Bank of Philadelphia in 1941 and 1942. Mr. Riefler had been a professor at the Institute for Advanced Study, Princeton, New Jersey, since 1935 and has served as an officer or director of several organizations engaged in economic research. From 1942 to 1944 he was in London as United States Minister and Special Assistant to the Ambassador. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

54 ANNUAL REPORT OF BOARD OF GOVERNORS J. Burke Knapp resigned as an Assistant Director of the Board's Division of Research and Statistics effective May 23, to accept a position with the Department of State. Mr. Knapp was associated with the Board's Division of Research and Statistics from February 1940 to August 1944, when he resigned to accept a position with the Department of State. He returned to the Board in October 1945, and served as Special Assistant to the Chairman until June 1, 1946, when he was appointed an Assistant Director of the Division of Research and Statistics. Frank A. Southard, Jr., was appointed an Associate Director of the Board's Division of Research and Statistics to be in charge of all international activities of the Division and assumed his duties on August 16. Mr. Southard was Chairman of the Department of Economics at Cornell University and was on leave of absence serving as Director of the Office of International Finance of the Treasury Department at that time. During the war, he was Financial Adviser at the Allied Force Headquarters in the Mediterranean. Robert F. Leonard, formerly the Director of the Division of Examinations, was appointed Associate Director of the Division of Bank Operations, effective September 1. Mr. Leonard became Director of the Division of Bank Operations on January 1, 1949, following the retirement of Mr. Smead, former Director, at the end of 1948. Edwin R. Millard, formerly an Assistant Director of the Division of Examinations, was appointed Director of the Division of Examinations to succeed Mr. Leonard, effective September 1. Frederic Solomon and John C. Baumann were appointed Assistant General Counsel, effective August 13. Mr. Solomon and Mr. Baumann had been Assistant Counsel in the Board's Legal Division for a number of years. Bonnar Brown resigned as Assistant Director of the Division of Research and Statistics effective October 15, to become associated with the Stanford Research Institute, Stanford, California. On October 1, 1937, Mr. Brown was employed as a member of the staff of the Division of Security Loans and served as Assistant Director of that Division from July 1, 1944, until October 1, 1947, when he was appointed Assistant Director of the Division of Research and Statistics. On December 6, the title of J. Leonard Townsend, formerly Associate General Counsel of the Board's Legal Division, was changed to that of Solicitor. Mr. Townsend assumed charge of a separate division in the Board's organization which is responsible for the representation of the Board in all litigation to which the Board may be a party, and for the institution and conduct of all formal proceedings by or on behalf of the Board to enforce provisions of law or of the Board's regulations. As Solicitor, Mr. Townsend also continues to handle questions arising in connection with the proposed legislation relating to the regulation of bank holding companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 55 Prior to his association with the Board's legal staff, Mr. Townsend had been Assistant Solicitor of the Securities and Exchange Commission. Before entering government service, Mr. Townsend had been engaged in the general practice of law in Washington with the Honorable A. Mitchell Palmer, former Attorney General of the United States, and with the Honorable James M. Beck, former Solicitor General of the United States. Clarence C. Hostrup was appointed an Assistant Director of the Division of Examinations effective December 12. Mr. Hostrup became associated with the Board on October 1, 1933, and had been a Federal Reserve Examiner since January 1, 1934. Edward L. Smead, Director of the Division of Bank Operations, retired at the end of the year as a member of the Board's staff, under the provisions of the Federal Reserve Retirement System. Mr. Smead became associated with the Board on April 19, 1915, and had served as Director of the Division of Bank Operations since April 12, 1920. Mr. Smead also served successively as Acting Administrator for the War Loans Committee and Administrator for War Loans during the period from October 1942 to August 1946. J. R. Van Fossen, Assistant Director of the Division of Bank Operations, also retired as of the close of the year as a member of the Board's staff, under the provisions of the Federal Reserve Retirement System. Mr. Van Fossen joined the Board's staff on October 22, 1917, and had served as Assistant Director of the Division of Bank Operations since January 1, 1922. BOARD OF GOVERNORS—INCOME AND EXPENSES The following table shows the income and expenses of the Board for the year 1948: OPERATING SURPLUS, January 1, 1948 $ 340,067 .67 Adjustment in 1948 applicable to preceding years 917.46 $ 339,150.21 INCOME: Assessments on Federal Reserve Banks 3,243,670.69 Sale of Federal Reserve Bulletin 14,916.82 Sale of other publications 29,121.25 Miscellaneous 6,712.81 3,294,421.57 3,633,571.78 EXPENSES: Salaries 2,083,777.12 Retirement contributions—regular 150,867.05 Retirement contributions—special 421,972.00 Traveling expenses 146,307 .72 Postage and expressage 19,227.31 Telephone and telegraph 62,596.51 Printing and binding 139,778.69 Stationery and supplies 27,022.01 Furniture and equipment, including rental 35,402.65 Books and subscriptions 10,932 .15 Heat, light, and power 32,811.50 Repairs and alterations (building and grounds) 7,338.59 Repairs and maintenance (furniture and equipment) 4,797 .42 Medical service and supplies 1,139.51 Insurance 2,663.02 Miscellaneous: Survey of consumer finances $127,597.19 Cafeteria (net) 30,933.89 All other 17,237.85 175,768.93 3,322,402.18 OPERATING SURPLUS, December 31, 1948 $ 311,169.60 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

56 ANNUAL REPORT OF BOARD OF GOVERNORS In addition to the foregoing, the Board made certain expenditures on a reimbursable basis for which it received reimbursements in 1948 as follows: Printing Federal Reserve notes, including cost of additional equipment $3,533,182.00 Leased wire service (telegraph) 96,561.22 Leased telephone lines 9,684.00 Federal Reserve Issue and Redemption Division (Comptroller of the Currency) 89,511.90 Miscellaneous 17,826.25 The accounts of the Board for the year 1948 were audited by the Auditor of the Federal Reserve Bank of New York, who certified them to be correct. RESEARCH AND ADVISORY SERVICES Analysis of conditions affecting the availability and use of money continued to be the major objective of the Board's research activities during 1948. Subjects of special importance included Treasury financing and the market for Government securities, bank and nonbank credit, the capital markets, liquid asset holdings and current saving, production and employment, prices, gross national product and individual incomes, and the effect of foreign commitments on domestic resources. On several occasions, members of the Board appeared before congressional committees to give information regarding monetary and credit conditions and the ability of the Federal Reserve to meet possible contingencies. Members of the Board's staff assisted congressional committees to investigate special problems and participated in public and private conferences relating to agricultural credit, building codes, home mortgage credit, industrial classification, and national income and productivity. Staff members also served on many interdepartmental committees concerned with analysis of particular economic developments and the improvement of statistics and other information required to interpret current developments. A third annual survey of consumer finances was sponsored by the Board of Governors early in 1948 to obtain information regarding changes in the financial position of consumers. The data collected also reflected the attitude of consumers toward the economic outlook and their plans with respect to saving, liquid asset holdings, and investment. The survey was conducted for the Board by the Survey Research Center, a division of the Institute for Social Research, University of Michigan. The results were published in the Federal Reserve Bulletin. A fourth annual survey is being conducted in 1949. Work has continued on the study of the flow of money payments. Financial statements tracing these flows on an annual basis have been completed for most sectors of the economy, covering the period from 1936 to 1947. The statement showing the flow of funds through the banking sector was published in the January 1948 Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 57 The Board of Governors sponsored the publication of the pamphlet, Distribution of Bank Deposits by Counties, showing demand and time deposits of individuals, partnerships, and corporations in all banks by counties, States, and Federal Reserve districts, as of December 31, 1947* Data for national banks and banks in the District of Columbia were obtained by the Comptroller of the Currency, for State member banks by the Board of Governors of the Federal Reserve System, and for nonmember banks by the Federal Deposit Insurance Corporation; data for noninsured banks were obtained with the cooperation of the State bank supervisory authorities. The pamphlet was published in July 1948. Corresponding data for the war years 1941-44, obtained in the same manner, are available in pamphlets published by the Treasury Department. Early in 1948 the Board of Governors and the Federal Reserve Banks conducted a nation-wide survey of the lending operations of sales finance companies during 1947. The results of the survey, which complement the release on the activities of sales finance companies issued monthly by the Board of Governors, were published in the Bulletin for July 1948. Progress was made in revising and supplementing the Board's regular statistical series to improve their composition and increase their usefulness for analysis of current developments. The quarterly series of interest rates on bank loans to business was completely revised to take account of the new and more satisfactory data that have recently become available through Federal Reserve surveys. The revised series was first published in the Bulletin for March 1949. The new monthly series of assets and liabilities of all banks in the United States, referred to in the Board's Annual Report for 1947, was completed and published for the first time in the Bulletin for April 1948. This series continues the semi-annual data published by the Board over a long period, and is comparable with the semi-annual series announced by the three Federal bank supervisory authorities as of June 30, 1947 except for exclusion of banks in the possessions of the United States. Various components of the Board's consumer credit statistics were revised to give them broader coverage or to make them more representative of shortterm credit. The revision was described in the Bulletin for August 1948. Following discussions with the trade, the Board's statistics on department store sales and stocks were expanded to include data for additional subdepartments and published on the new basis beginning with April 1948. In connection with the increased activities of the United States in world affairs, the Board's staff continued to provide studies in the international economic and financial field to help furnish a basis for United States policy decisions. As in the two preceding years, a large part of this work was closely geared to the activities of the National Advisory Council on International Monetary and Financial Problems, of which the Chairman of the Board of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

58 ANNUAL REPORT OF BOARD OF GOVERNORS Governors is a member. Members of the Board's staff collaborated closely with the other agencies represented on the Council, and were active in interdepartmental committees and working groups preparing material for use by the Council. The Council gave close attention to financial problems arising under the European Recovery Program and to important questions dealing with other foreign lending and assistance activities of the United States and with policies and operations of the International Fund and the International Bank. The Board's staff also continued to work on the special problems and operating responsibilities of the Federal Reserve System in the international field. The Board continued to cooperate in projects of an international nature by supplying members of its staff for assignments abroad. Early in the year, two of the Board's economists spent three months in Manila assisting representatives of the Philippine Government in drafting central bank legislation. In March, two examiners from the Board's staff with one representative each from the Federal Reserve Banks of Richmond and Chicago, went to Haiti at the request of the Haitian Government as members of a mission to examine the Banque Nationale de la Republique d'Haiti. In the late spring, one of the Associate Directors of the Board's Division of Research and Statistics headed a financial mission to Japan, and an economist from the Board's staff was also a member of this mission. At the end of August, a member of the Board's staff was assigned as an adviser to the Joint Brazil- United States Technical Commission for a period of four months; a Vice President of the Federal Reserve Bank of New York was one of the three members of this Commission. In the fall of the year, a member of the Board's staff was sent abroad to study economic and financial conditions in France and Italy. Late in the year, one of the Board's economists was given six months' leave of absence to act as General Policy Adviser to the Central Bank of the Philippines, and another economist was lent to the Government of Ceylon for a period of six months to assist representatives of that government in drafting central bank legislation. In addition, the Board from time to time provided the services of members of its staff to the Economic Cooperation Administration to assist in work on specific problems. The Board had numerous visitors from foreign central banks and governments who had come to the United States for 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, supervisory methods, and related matters. PUBLICATIONS AND RELEASES During the year 1948, interest in the Board's publications and releases continued to increase. There was a special demand for the 1947 edition of the publication entitled, THE FEDERAL RESERVE SYSTEM—ITS PURPOSES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 59 AND FUNCTIONS. This booklet was used extensively in teaching and training programs of educational and business institutions. Several periodic releases were initiated. In addition 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. MEMBER BANK CALL REPORT. Three issues, one each in April, July, and October. STATE BANK MEMBERS AND NONMEMBER BANKS THAT MAINTAIN CLEARING ACCOUNTS WITH FEDERAL RESERVE BANKS. Complete list in February with monthly supplements. LIST OF STOCKS REGISTERED ON NATIONAL SECURITIES EXCHANGES. Complete list in February with supplements in May, August, and November. BANKING STUDIES (1941). Reprinted in March. THIRTY-FOURTH ANNUAL REPORT OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM. Published in May. RETAIL CREDIT SURVEY—1947. Published in July. DISTRIBUTION OF BANK DEPOSITS BY COUNTIES, December 31, 1947. Published in July. PAR LIST. Complete list in August with monthly supplements. FEDERAL RESERVE MEETINGS The Federal Open Market Committee met in Washington on February 27, March 1, May 20, October 4, November 15, and November 30, 1948, 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 94-99 of this report. Conferences of the Chairmen of the Federal Reserve Banks were held on May 29-31 and December 9-10, and were attended by members of the Board of Governors. The Conference of Presidents of the Federal Reserve Banks held meetings on February 25-26, May 18, October 1-2, and November 29, and the Board of Governors met with the Presidents on February 27, May 21, October 5, and December 1. Meetings of the Federal Advisory Council were held on February 15-17, April 25-27, September 19-21, and November 14-16. The Board of Governors met with the Council on February 17, April 2y^ September 21, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

60 ANNUAL REPORT OF BOARD OF GOVERNORS November 16. 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 in all matters within the jurisdiction of the Board. During the year conferences were held by each of the following, attended by representatives of the Federal Reserve Banks and of the Board of Governors: Federal Reserve Bank officers in charge of examination departments, trust examiners, personnel concerned with accounting, and personnel administering Regulation W (consumer instalment credit). Meetings were held with Committees of the Presidents' Conference, such as the Committee on Collections and the Subcommittee on Personnel; and representatives of the Board met also with other groups to discuss international monetary and credit matters, domestic credit problems, bank holding company legislation, consumer credit statistics, and other subjects with which the Board was concerned. 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. 1—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) DECEMBER 31, 1948 ASSETS [Amounts in boldface type are those shown in the Board's weekly statement. In thousands of dollars.] Interdistrict settlement fund 7,745,986 Gold certificates on hand 1,010,444 Gold certificates with Federal Reserve Agent 13,579,000 Gold certificates on hand and due from U. S. Treasury 22 ,335 ,430 Redemption fund for Federal Reserve notes. 630,650 Total gold certificate reserves 22,966 ,080 Other cash: United States notes 31,468 Silver certificates 220,159 Standard silver dollars 2,521 National and Federal Reserve Bank notes 4,207 Subsidiary silver, nickels, and cents 33,948 Total other cash 292,303 Discounts and advances secured by U. S. Government securities: Discounted for member banks 32,630 Discounted for others 32,630 Other discounts and advances: Discounted for member banks 50 Foreign loans on gold 190,125 190,175 Total discounts and advances 222 ,805 Industrial loans.#. 832 U. S. Government securities in System Open Market Account: Bills 5,487 ,406 Certificates 6,077,569 Notes 790,550 Bonds 10,977,221 Total U. S. Government securities 23 ,332,746 Total loans and securities 23 ,556,383 Due from foreign banks 49 Federal Reserve notes of other Federal Reserve Banks 186,738 Uncollected items: Transit items 2,631,640 Exchanges for clearing house 163,257 Other cash items 65,374 Total uncollected items 2 ,860,271 Bank premises: Land 13,070 Buildings (including vaults) 45,754 Fixed machinery and equipment 17,868 Total buildings 63,622 Less depreciation allowances 44,344 19,278 Total bank premises 32 ,348 Other assets: Industrial loans past due 163 Miscellaneous assets acquired account industrial loans 126 Miscellaneous assets acquired account closed banks 43 Total 332 Less valuation allowances 166 Net. Fiscal Agency and other expenses, reimbursable 2,563 Interest accrued 67,883 Premium on securities 72,828 Deferred charges. 1,119 Sundry items receivable 1,671 Real estate acquired for banking house purposes 1,955 Suspense account 430 All other 84 Total other assets 148 ,699 Total assets 50,042 ,871 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) 25,127,171 Less: Held by issuing Federal Reserve Banks 906,046 Forwarded for redemption 60,022 966,068 Federal Reserve notes, net (includes notes held by U. S. Treasury and by Federal Reserve Banks other than issuing Bank) 24 ,161,103 Deposits: Member bank—reserve account 20,479,200 U. S. Treasurer—general account 1 ,122 ,900 Foreign 641,692 Other deposits: Nonmember bank—clearing accounts 105,055 Officers' and certified checks 7,491 Federal Reserve exchange drafts 1,592 International organizations l 297,738 All other 135,376 Total other deposits 547 ,252 Total deposits 22,791,044 Deferred availability items 2,319,336 Other liabilities: Accrued dividends unpaid Unearned discount 14 Discount on securities 8,849 Sundry items payable 1,622 Suspense account 160 All other liabilities 7 Total other liabilities 10,652 Total liabilities 49,282 ,135 CAPITAL ACCOUNTS Capital paid in 201,351 Surplus (Sec. 7) 466,711 Surplus (Sec. 13b) 27 ,543 Other capital accounts: Reserves for contingencies: Reserve for registered mail losses 7,131 All other 58,000 Earnings and expenses: Current earnings (2) Current expenses (2) Current net earnings (2) Add—profit and loss (2) Deduct—dividends accrued since January 1, (2) interest on Federal Reserve notes (2) Unallocated net earnings (2) Total other capital accounts 65,131 Total liabilities and capital accounts 50,042,871 1 Includes such organizations as the International Bank for Reconstruction and Development and the International Monetary Fund. 2 Amount in this account closed out at end of year. 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 1948 AND 1947 [In thousands of dollars] Total Boston New York Philadelphia Cleveland Richmond Item 1948 1947 1948 1947 1948 1947 1948 1947 1948 1947 1948 1947 ASSETS Gold certificates 22,335,43020,810,170 757,179 759,61 7,390,4403,259,3541,011,0541,016,5381,442,1561,434,229 971,500 1,044,281 Redemption fund for Federal Reserve notes 630,650 687,127 54,026 56,120 55,182 120,919 60,212 60,691 75,340 75,702 57,788 60,479 Total gold certificate reserves 22,966,08021,497,297 811,205 815,732 7,445,622 3,380,2731,071,2661,077,2291,517,496 1,509,9311,029,2881,104,760 Other cash 292,30r 272,631 32,787 24,804 42,544 39,412 17,967 14,687 22,367 23,878 20,827 19,620 Discounts and advances: Secured by U. S. Govt. securities. . 32,680 34,444 1,090 2,23, 17,860 24,955 2,095 3,455 215 1,704 1,275 615 Other 190,125 50,981 11,978 3,238 60,840 16,905 15,400 3,386 17,492 5,C~~ 9,316 2,479 Total discounts and advances. . . 222,805 85,425 13,068 5,473 78,700 41,860 17,495 6,841 17,707 6,790 10,591 3,094 Industrial loans 832 1,387 767 1,357 65 30 U. S. Government securities: Bills 5,487,40611,433,410 340,112 771,910 1,317,805 3,270,067 391,965 798,366 526,0771,040,322 356,374 636,584 Certificates 6,077,569 6,796,505 408,558 442,209 1,457,291 1,482,995 434,121 468,634 582,657 647,980 394,702 485,785 Notes 790,550 1,476,550 53,144 96,070 189,560 322,183 56,469 101,811 75,790 140,776 51,341 105,536 Bonds 10,977,221 2,852,*""" 737,933 185,619 2,632,140 622,496 784,103 196,7111,052,386 271.C"" 712,905 203,909 Total U. S. Govt. securities 23,332,74622,559,334 1,539,7471,495,808 5,596,796 5,697,7411,666,658 1,565,5222,236,910 2,101,0731,515,3221,431,814 Total loans and securities 23,556,383 22,646,146 1,552,815 1,501,281 5,675,496 5,739,6011,684,920 1,573,720 2,254,617 2,107,8631,525,9781,434,938 Due from foreign banks 95 6 Federal Reserve notes of other Federal O Reserve Banks 186,738 162,242 7,511 9,130 20,331 17,676 10,935 10,866 10,515 8,922 33,918 22,291 70 Uncollected items 2,860,271 2,984,999 239,342 244,218 507,095 670,430 173,597 192,379 290,167 275,270 243,580 253,489 Bank premises 32,348 33,007 1,185 1,241 8,023 8,239 3,053 3,182 4,867 4,938 2,557 2,637 Other assets 148,699 115,237 10,004 7,544 35,252 25,057 10,279 7,455 14,209 10,780 9,682 8,219 Total assets 50,042,87147,711,654 2,654,8522,603,95613,734,37912,880,7192,972,0212,879,526 4,114,2423,941,5912,865,8322,845,959 1 After deducting $33,000 participations of other Federal Reserve Banks on Dec. 31, 1948, and $64,000 on Dec. 31, 1947. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes 24,161,10324,820,434 1,421,7081,472,299 5,582,297 5,765,916 1,662,5311,681,8802,144,6502,139,963 1,657,802 1,741,896 Deposits: Member bank—reserve account. . . 20,479,200 17,899,371 859,338 766,622 6,701,274 5,573,276 951,233 867,114 1,510,027 1,386,873 848,901 784,772 U. S. Treasurer—general account. . 1,122,900 870,031 85,223 66,431 184,745 229,639 104,176 77,363 104,469 79,221 69,937 43,913 Foreign 641,692 391,849 40,049 21,125 ^09,368 ues.ooo 51,492 26,649 58,484 30,597 31,150 16,121 Other 547,252 569,433 6,025 7,444 430,976 6,060 4,707 12,347 12,185 5,918 2,062 472,411 Total deposits 22,791,044 19,730,684 990,635 861,622 7,526,363 6,443,326 1,112,961 975,8331,685,327 1,508,876 955,906 Deferred availability items 2,319,336 2,449,763 193,312 224,606 390,869 449,937 134,949 164,635 213,208 227,328 212,326 221,555 Other liabilities including accrued dividends 10,652 14,806 642 901 2,670 4,109 674 1,086 1,383 624 762 Total liabilities 49,282,135 47,015,687 2,606,297 !, 559,42813,502,199 12,663,288 2,911,1152,823,246 4,044,2713,877,550 2,826,658 2,811,081 CAPITAL ACCOUNTS Capital paid in 201,351 195,517 11,364 11,243 69,333 14,681 14,370 19,073 18,843 8,717 8,220 Surplus (Sec. 7) 466,711 448,189 29,347 28,117 143,019 138,596 36,704 35,350 43,968 42,173 22,417 21,210 Surplus (Sec. 13b) 27,543 27,543 3,011 3,011 7,319 7,319 4,489 4,489 1,006 1,006 3,349 3,349 Other capital accounts 65,131 24,718 4,833 2,157 12,509 2,628 5,032 2,071 5,924 2,019 4,691 2,099 Total liabilities and capital accounts. . 50,042,871 47,711,654 2,654,852 2,603,956 13,734,379 12,880,719 2,972,0212,879,526 4,114,2423,941,5912,865,832 2,845,959 Contingent liability on acceptances purchased for foreign correspondents. 3,32! 2,460 210 15' 2l,065 2787 270 199 306 228 163 121 Commitments to make industrial loans. 1,643 7,434 75 46 490 969 1,642 131 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve Agent 25,127,17125,705,984 1,492,676 1,535,998 5,749,057 5,929,626 1,730,9921,746,1012,234,859 2,229,858 1,732,817 1,805,525 Held by Federal Reserve Bank and forwarded for redemption 966,068 885,550 70,968 63,699 166,760 163,710 68,461 64,221 90,209 89,895 75,015 63,629 P^ederal Reserve notes, net3 24,161,10324,820,434 1,421,7081,472,299 5,582,297 5,765,916 1,662,5311,681,8802,144,6502,139,963 1,657,8021,741,8 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificates 13,579,000 12,719,000 460,000 460,000 4,870,000 3,570,000 550,000 550,000 745,000 735,000 625,000 675,000 Eligible paper 30,080 32,410 1,090 2,23~ 17,810 24,880 2,09.r 3,455 1,275 615 U. S. Government securities 12,200,000 13,550,000 1,100,000 1,000,000 2,400,000 1,200,0001,200,000 1,500,0001,566]000 1,150,000 1,150,000 1,100,000 Total coll ateral held 25,809,080 26,301,410 1,561,0901,562,23; 5,887,810 5,994,880 1,752,0951,753,455 2,245,000 2,235,000 1,776,275 1,825,615 1 After deducting $432,276,000 participations of other Federal Reserve Banks on Dec. 31, 1948, and $223,720,000 on Dec. 31, 1947. 2 After deducting $2,264,000 participations of other Federal Reserve Banks on Dec. 31, 1948, and $1,673,000 on Dec. 31, 1947. 3 Includes Federal Reserve notes held by the U. S. Treasury and by Federal Reserve Banks other than the issuing Bank. ON 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 1948 AND 1947—Continued [In thousands of dollars] Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Item 1948 1947 1948 1947 1948 1947 1948 1947 1948 1947 1948 1947 1948 1947 ASSETS Gold certificates 1,059,4831,013,770 4,371,528 4,182,995 669,692 620,743 470,419 431,975 827,337 750,224 574,293 505,160 2,790,349 2,791,289 Redemption fund for Federal Reserve notes 44,408 40,529 106,421 90,074 44,871 46,693 23,136 22,880 36,192 35,619 26,711 26,180 46,363 51,241 C Total gold certificate reserves... 1,103,8911,054,299 4,477,949 4,273,069 714,563 667,436 493,555 454,855 863,529 785,843 601,004 531,340 2,836,7122,842,530 > Other cash 23,506 23,750 40,332 42,326 16,622 15,047 12,128 6,793 11,516 10,380 14,918 12,455 36,789 39,479 r Discounts and advances: w Secured by U. S. Govt. securities. . 35 2,300 175 500 50 175 7,035 700 100 475 o Other 7,795 2,075 25,857 6,882 6,845 1,771 4,753 1,265 6,654 1,771 6,464 1,670 16,731 4,453 H Industr T ia o l ta lo l a d n i s scounts and advances. . 7,830 2,155 28,157 7,057 7,345 1,821 4,92 8 1,265 13,689 2,471 6,464 1,670 16,831 4,928 O" U. S. Government securities: oDO Bills 275,100 531,611 797,316 1,535,867 302,977 568,921 167,963 298,577 255,774 522,437 248,684 395,279 507,2591,063,469 > Certificates 304,687 396,910 863,550 946,565 335,561 390,354 186,029 223,788 283,281 328,193 275,429 363,390 551,703 619,702 Notes 39,633 86,229 112,328 205,644 43,648 84,804 24,198 48,618 36,848 71,300 35,827 78,94' 71,764 134,632 Bonds 550,320 166,605 1,559,731 397,328 606,086 163,852 336,001 93,936 511,660 137,759 497,477 152,534 996,479 260,125 Total U. S. Govt. securities 1,169,740 1,181,355 3,332,925 3,085,4041,288,272 1,207,931 714,191 664,919 1,087,5631,059,6891,057,417 990,1502,127,205 2,077,928 Total loans and securities 1,177,570 1,183,510 3,361,082 3,092,4611,295,617 1,209,752 719,119 666,184 1,101,252 1,062,160 1,063,881 991,8202,144,036 2,082,856 Due from foreign banks 2 13 1 2 3 Federal Reserve notes of other Federal Reserve Banks 19,581 16,919 22,147 22,440 8,853 10,191 9,274 8,158 8,153 10,128 10,122 7,051 25,398 18,470 O Uncollected items 180,309 174,514 464,344 464,388 160,762 161,999 73,484 67,641 154,841 159,158 126,991 109,719 245,759 211,794 90 Bank premises 1,574 1,559 3,191 3,064 1,941 1,973 1,177 1,208 2,386 2,456 756 797 1,638 1,713 Other assets 7,536 6,700 21,183 15,992 8,593 7,162 4,465 3,657 6,820 5,726 6,738 6,012 13,938 10,933 Total assets 2,513,969 2,461,255 8,390,235 7,913,753 2,206,9532,073,563 1,313,2031,208,498 2,148,499 2,035,854 1,824,412 1,659,1975,304,2745,207,783 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes 1,329,272 1,397,716 4,598,426 4,636,568 1,144,264 1,143,968 631,349 626,969 939,231 949,067 623,721 624,739 2,425,852 2,639,453 Deposits: Member bank—reserve account... 874,451 789,320 3,121,362 2,655,849 776,122 691,845 506,653 450,542 942,409 868,410 967,561 863,227 2,419,869 2,201,521 U. S. Treasurer—general account. 75,302 55,312 114,069 101,887 84,998 41,733 74,130 43,975 80,835 40,670 71,341 39,504 73,675 50,383 Foreign 26,064 13,489 86,455 44,744 22,885 11,515 15.893 8,225 22,249 11,515 21,614 10,857 55,989 29,012 Other 3,939 2,347 10,925 5,724 10,236 8,161 2,842 2,645 3,133 4,325 3,053 2,292 51,798 45,130 Total deposits 979,756 860,468 3,332,8112,808,204 894,241 753,254 599,518 505,3871,048,626 924,9201,063,569 915,880 2,601,3312,326,046 Deferred availability items 171,763 173,035 353,456 372,809 138,815 150,013 61,750 57,024 131,455 135,688 108,995 93,632 208,438 179,501 Other liabilities including accrued dividends 490 619 1,753 2,337 563 678 381 867 457 601 418 446 894 1,205 Total liabilities 2,481,2812,431,838 8,286,4467,819,9182,177,883 2,047,9131,292,998 1,190,2472,119,7692,010,276 1,796,703 1,634,697 5,236,5155,146,205 CAPITAL ACCOUNTS Capital paid in 7,874 7,514 25,480 23,827 6,693 6,404 4,472 4,293 6.968 6,522 7,852 7,304 18,844 18,089 Surplus (Sec. 7) 20,028 19,110 68,842 66,217 17,974 16,972 11,797 11,233 17,008 16,148 14,954 14,111 40,653 38,952 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 4,024 2,031 8,038 2,362 3,882 1,753 2,863 1,652 3,617 1,771 3,596 1,778 6,122 2,397 Total liabilities and capital accounts 2,513,969 2,461,255 8,390,235 7,913,753 2,206,9532,073,563 1,313,203 1,208,498 2,148,4992,035,8541,824,4121,659,197 5,304,274 5,207,783 Contingent liability on acceptances purchased for foreign correspondents. 136 101 453 335 120 86 83 62 117 113 81 293 217 Commitments to make industrial loans. 288 400 31 351 580 3,750 103 143 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve Agent 1,399,0571,458,483 4,747,788 4,769,0111,186,2041,187,366 648,743 644,064 969,727 972,664 659,057 660,981 2,576,194 2,766,307 Held by Federal Reserve Bank and forwarded for redemption 69,785 60,767 149,362 132,443 41,940 43,398 17,394 17,095 30,496 23,597 35,336 36,242 150,342 126,854 Federal Reserve notes, net1 .... 1,329,2721,397,716 4,598,426 4,636,568 1,144,2641,143,968 631,349 626,969 939,231 949,067 623,721 624,739 2,425,852 2,639,453 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificates 575,000 675,000 2,765,000 2,990,000 315,000 315,000 210,000 200,000 280,000 280,000 184,000 169,000 2,000,000 2,100,000 Eligible paper 500 50 175 7,035 700 100 475 U. S. Government securities 850,000 800,000 2,000,0001,800,000 950,000 950,000 450,000 450,666 700,000 700,000 500,666 500,000 800,000 1,000,000 Total collateral held 1,425,000 1,475,000 4,765,000 4,790,000 1,265,500 1,265,050 660,175 650,000 987,035 980,700 684,000 669,000 2,800,100 3,100,475 1 Includes Federal Reserve notes held by the U. S. Treasury and by Federal Reserve Banks other than the issuing Bank. ON 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 1946, 1947, AND 1948 [In thousands of dollars] Rate of December 31 Change during Type of issue interest (Per cent) 1948 1947 1946 1948 1947 Treasury bonds: 1947-52 4M 12,000 -12,000 1948-50* 49,600 39,600 -49,600 + 10,000 1 19 9 4 4 8 8 * -51 2 lH% 1 6 0 6 0 , , 0 5 0 0 0 0 1 2 0 5 0 , , 0 5 0 0 0 0 -1 -6 0 6 0 , , 0 5 0 0 0 0 + 41,000 1949-51*, June ' 102', 360 4,700 7,750 + 97,660 -3,050 1 1 9 9 4 4 9 9 - - 5 5 1 1 * * , . S D e e p c t 2 2 1 4 7 7 0 , , 0 3 8 6 1 5 1 5 8 , , 7 5 0 5 6 1 500 + + 2 1 4 5 1 1 , , 3 8 7 1 5 4 + + 1 5 8 , , 2 5 0 5 6 1 1949-52 2 24,525 32,000 suboo -7,475 + 500 1 1 1 9 9 9 5 5 4 0 0 9 - - - 5 5 5 2 2 3 * * T toS M ep a t r 2 2 2 V2 4 1 7 2 3 2 1 9 , , , 6 5 2 0 2 8 0 4 4 7 5 8 7 7 , , , 0 6 2 0 6 6 0 1 5 3 7 6 4 ' , , 1 8 0 0 0 0 + + 3 1 - 6 3 5 4 1 ,0 , ,2 2 0 1 6 0 9 3 + + + 2 8 3 0 , , , 5 0 4 0 6 6 0 5 1 1 1 9 9 5 5 1 0 - - 5 5 4 2, Sept 2 2% V2 6 6 3 1 , , 2 1 0 7 0 5 7 8 1 6 , , 3 4 5 0 0 0 7 8 0 1 , , 0 8 0 0 0 0 -2 -8 5 , , 1 2 5 2 0 5 ' + + 4 1 , , 6 3 0 5 0 0 1951-55 3 12,229 19,520 16,000 -7,291 + 3,520 1951-53* 2 787,429 400,666 21,150 + 386,763 + 379,516 1 1 1 1 1 1 1 1 9 9 9 9 9 9 9 9 5 5 5 5 5 5 5 5 2 4 3 2 2 2 1 1 - - - - - - - - 5 5 5 5 5 5 5 5 4 6 5 4 4 5 5 3 * * * * * , . . . J J D M u u e n n a c e e r.. 2 2 2 2 2 2 2 M M V2 5 4 1 8 7 0 1 1 3 3 6 4 3 8 0 , , , , , , 9 7 3 1 1 6 9 0 2 4 0 0 4 7 3 8 5 3 2 1 4 3 5 8 7 1 3 3 8 4 0 3 4 6 , , , , , , , , 1 7 2 2 2 8 7 2 5 4 1 3 7 0 9 3 0 2 0 6 0 6 0 8 " 3 3 i3 1 1 ; , , 7 6 5 o 0 0 0 0 o + + + + - - 3 1 + 2 1 - 8 4 2 9 3 6 6 0 9 5 9 2 , , , , , 1 , , , 1 2 3 4 7 5 8 5 6 3 6 4 5 2 9 0 5 8 7 2 7 8 7 + + + + + 2 + 1 + + 3 1 1 8 7 8 3 2 3 8 2 3 4 , , , , , , , , 2 5 7 6 1 7 8 7 4 3 0 3 9 5 1 7 2 8 6 0 6 0 0 0 1 1 1 1 9 9 9 9 5 5 5 5 5 6 6 6 - - - - 6 5 5 5 8 0 9 9 * * 2 2 2 2 % % Y M 2 3 8 3 3 8 , , 4 3 6 6 1 3 2 3 6 2 9 3 1 0 1 , , , , 2 3 5 5 6 1 4 9 9 6 5 1 1 6 4 , , 9 5 4 00 0 + + - - 3 2 4 2 0 1 6 0 , , , , 3 5 7 1 1 4 7 9 6 5 2 2 + + + + 2 5 1 1 9 6 6 6 1 , , , , 3 3 0 5 2 1 4 9 9 6 5 1 1 19 9 5 5 9 8 - - 6 6 2 3 *1, June 2 2 % % '" 'ii;725 7 5 2 5 , ,5 5 2 9 4 1 4 5 0 , , 0 9 0 00 0 + - 9 6 3 0 5 ,8 ,5 6 9 6 7 + + 5 3 5 1 , , 5 6 2 9 4 1 1959-62*1, Dec 2}4 991,121 113,693 + 815,404 + 113,693 1960-65 2% 929,097 96,185 -32,935 + 58,935 1962-67*1 2M 63,250 16,260 + 165,410 + 16,260 1 1 1 1 1 1 9 9 9 9 9 9 6 6 6 6 6 6 3 5 4 4 6 7 - - - - - - 6 7 6 7 6 7 8 0 1 9 2 9 * * * * * * 1 1 1 1 1 1 , , , J J D u u e n n c e e 2 2 2 2 2 2 V V Y V V V 2 > 2 2 2 2 4 2 3 1 1 1 3 8 5 6 8 0 4 5 9 1 1 0 , , , , , , 4 5 2 9 6 6 0 7 8 8 7 6 9 6 2 0 0 8 5 6 2 1 3 8 1 1 0 3 , , , , , , 1 4 0 8 6 3 5 1 3 4 7 2 2 7 0 2 7 8 '37^250' + 1 + + + + + , 1 3 2 3 1 7 9 4 6 8 5 5 7 6 4 3 2 , , , , , , 2 5 6 7 8 5 5 1 3 5 3 6 6 9 7 2 7 5 + + + + + + 5 6 2 1 8 1 1 3 0 3 , , , , , , 4 0 8 1 6 3 3 1 4 5 7 2 7 7 0 2 2 8 1 19 9 6 6 7 7 - - 7 7 2 2 * * 1 , , S D ep e t c 2 2V V i 2 1,2 1 3 6 7 0 , , 0 0 9 8 7 2 2 1 1 1 0 0 , , 3 7 1 7 6 7 + 2, + 1 0 4 0 9 , , 4 3 7 0 7 5 + + 2 5 1 5 0 , , 4 3 7 1 7 6 2V2 2,310,793 Total Treasury bonds 10,977,221 2,852,869 75535,,339000 + 8,124,352 + 2,099,479 Treasury notes:* Mar. 15, 1947 Xi 3,500 -3,500 Sept. 15, 1947 10,000 -10,000 Sept. 15, 1947 w 46,400 -46,400 Sept. 15, 1948 VA 548,150 295,400 -548 JSO' + 252,750 Oct. 1,1948 1 928,400 -928,400 + 928,400 Jan. 1,1949 IVs 244 ^ 050 + 244,050 Apr. 1,1950 lH 546,500 + 546,500 Total Treasury notes 790,550 1,476,550 355,300 -686,000 + 1,121,250 Certificates* Vs 6,338,863 7,496,012 -6,338,863 -1,157,149 l 457,642 -457,642 + 457,642 '4|556;372' +4,550,372 IX 1,527,197 + 1,527,197 Total certificates 6,077,569 6,796,505 7,496,012 -718,936 -699,507 Treasury bills:* Option accounts 4,905,617 -4,905,617 System account 5,487,406 11,433,410 9,839,366 -5,946,004 + 1,594,044 Total bills . .. 5,487,406 11,433,410 14,744,983 -5,946,004 -3,311,573 Total holdings... 23,332,746 22,559,334 23,349,685 +773,412 -790,351 * Taxable. 1 Restricted as to commercial bank ownership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM t NO. 4—FEDERAL RESERVE BANK HOLDINGS OF SPECIAL SHORT-TERM TREASURY CERTIFICATES PURCHASED DIRECTLY FROM THE UNITED STATES, 1942-48 * • fin millions of dollars] Date Amount Date Amount Date Amount 1942—June 16 58 1943—Mar. 6 543 1943—June 15 : 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 !There were no issues during the years 1944, 1946, 1947, and 1948. Interest rate \i per cent throughout. NO. 5—VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS OF FEDERAL RESERVE BANKS, 1944-48 [Number in thousands; amounts in thousands of dollars] 1944 1945 1946 1947 1948 NUMBER OF PIECES HANDLED1 Discounts and advances: Notes discounted and advances made 10 Industrial loans: Loans made .3 Commitments to make industrial loans () () () () () 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 c te o d unted. . . 3 4, , 1 0 6 0 7 6 , , 2 8 6 9 5 8 4 3 , , 5 0 6 1 2 6 , , 7 7 0 1 9 9 3 5 , , 4 7 2 4 3 3 , , 5 8 4 6 7 2 3 6 , , 4 1 9 5 1 9 , , 9 6 6 9 2 7 3 6 , , 7 5 5 3 4 1 , , 5 1 8 2 4 8 U. S. Government checks. . . . 426,460 510,608 380,634 331,914 331,866 All other 1,288,465 1,341,342 1,597,377 1,668,651 1,780,185 Collection items handled: U. S. Government coupons paid 17,054 18,292 20,192 19,003 17,417 All other » . 4,622 4,483 4,551 37,135 11,373 Issues, redemptions, and exchanges of U. S. Government securities.. 357,782 382,067 245,904 177,351 164,556 Transfer of funds 906 939 1,059 1,148 1,220 AMOUNTS HANDLED Discounts and advances 14,922,128 34,778,804 20,133,819 17,234,926 19,138,175 Industrial loans: Loans made 20,381 14,043 3,445 9,296 15,994 Commitments to make industrial loans 4,769 2,350 8,845 6,069 2,187 Currency received and counted. . . 17,157,034 18,307,687 20,945,847 22,099,562 24,307,644 Coin received and counted 417,014 445,892 519,892 622,054 578,857 Checks handled: U. S. Government checks 127,931,710 124,610,917 80,419,096 72,577,329 69,605,341 All other 532,755,045 563,498,349 651,457,054 719,630,054 799,771,839 Collection items handled: U. S. Government coupons paid 1,840,647 2,348,172 2,817,311 2,491,424 2,379,155 All other 7,962,994 9,295,666 9,312,790 6,455,968 4,965,273 Issues, redemptions, and exchanges of U. S. Government securities. . 264,138,176 302,353,553 278,422,685 254,060,950 321,953,221 Transfer of funds 215,006,532 223,490,280 252,991,164 316,459,625 393,459,807 1 Two or more checks, coupons, etc., handled as a single item are counted as one "piece." 2 Less than 50. K Increase reflects mid-year 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 1948 Phila- Cleve- Rich- Minne- Kansas San Item System Boston New York delphia land mond Atlanta Chicago St. Louis apolis City Dallas Francisco CURRENT EARNINGS Discounts and advances $4,370,951 $253,546 $1,410,523 $299,520 $376,153 $259,604 $193,434 $705,193 $190,412 $88,859 $202,049 $116,230 $275,428 Industrial loans 42,099 33,538 2,351 6,210 Commitments to make industrial loans 14,385 424 5,559 1,120 753 2,499 1,249 1,418 1,363 U. S. Government securities.. 298,903,034 20,050,265 71,691,49121,349,29528,654,25619,411,67814,986,85242,591,87316,325,579 9,148,680 13,932,51313,522,03827,238,514 All other 830,349 17,966 120,830 9,493 229,207 22,316 31,451 108,162 27,476 8,889 182,152 12,987 59,420 Total current earnings... 304,160,818 20,322,201 73,222,84421,691,846 29,265,175 19,697,06915,218,700 43,407,72716,544,716 9,246,428 14,318,13213,651,25527,574,725 CURRENT EXPENSES Operating expenses: Salaries: Officers 3,448,209 212,909 686,148 172,488 289,630 233,321 247,141 414,683 220,969 181,571 242,869 218,779 327,701 Employees 49,162,858 3,125,008 12,098,548 2,970,649 4,206,414 3,129,523 2,242,702 7,731,717 2,836,921 1,451,069 2,613,646 2,158,103 4,598,558 Retirement System contributions 5,031,949 317,910 1,190,223 299,721 427,578 330,078 248,949 758,330 295,292 146,703 289,727 231,228 496,210 Legal fees 21,070 358 160 11,000 5,910 42 100 3,333 80 Directors' fees and expenses 271,772 19,431 17,549 17,339 19,201 17,921 36,068 17,125 22.645 19,350 30,055 23,372 31,716 Federal Advisory Council, fees and expenses.. 22,180 1,472 1,204 1,139 1,808 1,060 2,175 1,757 1,832 2,089 2,841 2,915 Traveling expenses (other than of directors and members of Federal Advisory Council) 731,236 39,658 98,636 30,620 59,903 63,745 43,591 96,714 60,134 46,544 58,028 52,921 80,742 Postage and expressage. . 8,297,751 813,633 1,336,664 543,774 718,930 717,236 608,869 1,108,785 445,449 277,686 465,363 410,651 850,711 Telephone and telegraph. 508,509 23,598 94,567 30,297 46,643 28,312 42,942 38,034 44,403 23,315 40,602 33,362 62,434 Printing, stationery, and supplies 3,834,151 311,970 757,085 227,347 309,096 200 098 218,327 765,227 224,470 101,826 216,689 159,931 342,085 Insurance 635,463 45,752 140,589 28,867 52,138 37,789 29,058 88,907 48,368 28,657 41,128 30,273 63,937 Taxes on real estate 1,850,018 191,086 478,083 91,436 216,490 85,753 77,060 251,441 79,887 90,825 102,677 46,449 138,831 Depreciation (building).. 1,359,172 70,733 240,861 129,213 258,389 87,896 55,699 186,451 92,672 31,406 84,765 46,233 74,854 Light, heat, power, and water 743,721 48,061 194,905 42,910 94,453 47,630 38,940 91,044 50,974 26,270 29,512 38,443 40,579 Repairs and alterations.. 611,042 31,734 68,037 28,012 112,385 22,340 49,336 109,024 51,540 45,658 41,473 22,428 29,075 Rent 343,986 6,556 7,339 1,210 7,113 33,793 120,170 10,541 1,356 18,425 11,196 126,287 Furniture and equipment, including rental 3,030,583 144,031 492,839 232,465 300,054 249,395 212,686 494,031 211,579 90,283 145,104 189,401 268,715 All other •1,190,993 89,587 163,040 69,749 210,070 57,042 63,606 167,344 '86,449 70,158 61,187 52,966 99,795 Inter-Bank expenses 29,479 -318,183 37,901 43,048 22,928 19,184 63,637 16,845 11,698 16,377 15,909 41,177 Total operating expenses '81,094,663 5,522,966 17,740,955 4,972,266 7,373,350 5,339,222 4,270,21312,504,421 '4,800,970 2,646,263 4,499,816 3,747,819 7,676,402 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Less reimbursement for certain fiscal agency and other expenses '16,814,392 972,072 3,310,522 841,450 1,313,498 1,000,480 980,763 3,097,002 '939,776 527,260 1,045,364 837,923 1,948,282 Net operating expenses.. 64,280,271 4,550,894 14,430,433 4,130,816 6,059,852 4,338,742 3,289,450 9,407,419 3,861,194 2,119,003 3,454,452 2,909,896 5,728,120 Assessment for expenses of Board of Governors 3,243,670 204,420 1,035,555 261,768 299,362 158,694 132,681 442,737 115,549 80,229 115,543 110,478 286,654 Federal Reserve currency: Original cost 4,425,883 286,573 869,225 337,464 339,459 367,505 414,766 877,611 307,469 88,202 156,629 163,675 217,305 Cost of redemption 760,364 44,749 131,808 47,775 58,863 62,724 73,096 115,746 44,232 18,666 34,500 32,077 96,128 Total current expenses . . 72,710,188 5,086,636 16.467,021 4,777,823 6,757,536 4,927,665 3,909,99310,843,513 4,328,444 2,306,100 3,761,124 3,216,126 6,328,207 PROFIT AND LOSS Current net earnings 231,450,630 15,235,565 56,755,82316,914,023 22,507,63914,769,40411,308,707 32,564,21412,216,272 6,940,328 10,557,008 10,435,12921,246,518 Additions to current net earnings: Profits on sales of U. S. Government securities (net) 6,214,838 424,725 1,502,316 456,165 596,016 396,690 327,611 826,315 322,194 179,381 299,614 279,104 604,707 All other 301,849 704 3,788 3,567 69 358 1,657 289,304 137 828 1,032 405 Total additions 6,516,687 425,429 1,506,104 459,732 596,085 397,048 329,268 1,115,619 322,331 180,209 300,646 279,509 604,707 Deductions from current net earnings: Special depreciation on bank buildings 282,238 282,238 All other 131,943 4,511 3,757 1,247 109,899 4,587 1,143 2,582 185 344 1,440 1,769 Total deductions. . . 414,181 4,511 3,757 1,247 109,899 4,587 1,143 284,820 185 344 479 1,440 1,769 Net additions 6,102,506 420,918 1,502,347 458,485 486,186 392,461 328,125 830,799 322,146 179,865 300,167 278,069 602,938 Transferred to reserves for contingencies 40,420,453 2,675,977 9,884,088 2,960,087 3,906,750 2,592,033 1,992,637 5,676,601 2,129,843 1,210,753 1,845,874 1,820,182 3,725.628 Paid U. S. Treasury (interest on outstanding F. R. notes) 166,690,356 11,071,200 39,809,04112,184,07716,153,37010,855,278 8,260,729 23,621,237 9,014,434 5,081,916 7,743,024 7,589,53815,306,512 Net earnings after reserves and payments to U. S. Treasury 30,442,327 1,909,306 8,565,041 2,228,344 2,933,705 1,714,554 1,383,466 4,097,175 1,394,141 827,524 1,268,277 1,303,478 2,817,316 Dividends paid 11,919,809 679,032 4,141,797 874,343 1,138,865 508,237 465,488 1,472,491 392.300 262,776 407,803 460,093 1,116,584 Transferred to surplus (Sec. 7) 18,522,518 1,230,274 4,423,244 1,,3 54,.00 1 1,.79 4,.84 0 1,206,317 917,978 2,624,684 1,001,841 564,748 860,474 843,385 1,700,732 448,188,608 28,116,876138,595,95335,350,216 42,172,710 21,210,35019,109,885 66,217,13316,971,98611,232,568 16,147,92614,110,815 38,952,190 Surplus (Sec. 7), January 1. . 466,711,126 29,347,150143.019.19736,704,21743,967,55022,416.66720,027,86368,841,81717,973,82711,797,316 17,008,400 14,954,200 40,652,922 Surplus (Sec. 7), December 31 r Revised. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 7—EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS, 1914-48 Bank and period e C a u rn rr i e n n g t s e C x u p r e r n e s n e t s U N . b S e e m f t . o e e r T n e a t r r s e n p a t i a s n o y u g - r s y1 Div p i a d i e d nds F p r a T a id n re c t a h o s i s u U e ry . t 2 a S x . Pa ( T i S d r e e c t a o . s u 1 U 3 ry b . ) S. P F ( a I . T i n d R r t e e . t a r o n e s u s o U t r t e y o . s n S ) . T t ( r o S a e n s c s u . f r e p 1 r l 3 r u e b s d ) T t r o ( a S n s e s u c f r e . p r l 7 r u e ) s d 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 1 1 9 9 2 2 3 2 5 5 0 0 , , 4 7 9 0 8 8 , , 6 5 9 6 9 6 2 2 9 9 , , 5 7 5 6 9 4 , , 0 1 4 7 9 3 1 1 2 6 , , 7 4 1 9 1 7 , , 2 7 8 3 6 6 6 6, , 5 3 5 0 2 7 , , 7 0 1 3 7 5 1 3 0 , , 6 8 1 5 3 0 , , 0 6 5 05 6 2 — 5 6 4 5 5 9 ,9 5 0 1 4 3 7w0 1924 38,340,449 28,431,126 3,718,180 6,682,496 113,646 —3,077,962 o is 1925 41,800,706 27,528,163 9,449,066 6,915,958 59,300 2,473,808 70 1926 47,599,595 27,350,182 16,611,745 7,329,169 818,150 8 464,426 H 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 O 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 O 70 1932 50,018,817 26,291,381 22,314,244 9,282,244 2,011,418 11,020,582 1933 49,487,318 29,222,837 7,957,407 8,874,262 -916,855 1934 48,902,813 29,241,396 15,231,409 8,781,661 $-60,323 6,510,071 1935 42,751,959 31,577,443 9,437,758 8,504,974 $ 297,667 27,695 607,422 1936 37,900,639 29,874,023 8,512,433 7,829,581 227,448 102,880 352,524 w 1 1 9 9 3 3 8 7 4 3 1 6 , , 2 2 3 6 3 1 , , 1 4 3 2 5 8 2 2 8 8 , , 9 8 1 0 1 0 , , 6 6 0 1 8 4 1 9 0 , , 5 8 8 0 1 1 , , 9 24 5 7 4 8 7 , , 0 9 1 4 9 0 , , 1 9 3 6 7 6 1 11 7 9 6 , , 5 6 2 2 4 5 -41 6 9 7 , , 1 3 4 0 0 4 2 1 , , 6 8 1 6 6 2 , , 3 4 5 3 2 3 70 1939 38,500,665 28,646,855 12,243,365 8,110,462 24,579 -425,653 4,533,977 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 1948 304,160,818 72,710,188 197,132,683 11,919,809 166,690,356 18,522,518 Total—1914-48.. . 2,382,499,229 1,055,001,656 1,255,247,264 266,629,883 149,138,300 2,188,893 241,914,174 s -3,658 <595,379,672 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Aggregate for each Federal Reserve Bank, 1914-48: Boston 160,031,132 75,043,687 81,755,625 18,544,742 7,111,395 280,843 16,105,846 + 135,412 39,577,387 New York 658,429,057 252,679,369 397,381,131 91,419,829 68,006,262 369,115 58,176,983 -433,413 179,842,355 Philadelphia 180,806,648 78,958,679 99,780,898 24,027,637 5,558,901 722,406 17,856,193 +290,661 51,325,100 Cleveland 218,842,475 98,072,920 112,126,765 26,855,815 4,842,447 82,930 23,164,043 -9,907 57,191,437 Richmond 128,439,761 62,188,519 61,423,310 11,233,617 6,200,189 172,493 15,663,568 -71,516 28,224,959 Atlanta 114,341,527 51,371,966 56,202,311 9,583,817 8,950,561 79,265 12,283,283 +5,491 25,299,894 Chicago 328,030,880 140,201,880 174,666,870 31,137,792 25,313,526 151,045 33,870,572 + 11,681 84,182,254 St. Louis 109,690,323 55,583,953 47,639,902 9,268,916 2,755,629 7,464 12,567,467 -26,514 23,066,940 Minneapolis 73,047,545 35,957,004 34,697,355 6,428,364 5,202,900 55,615 7,206,198 +64,875 15,739,403 Kansas City 113,983,939 61,035,277 48,599,273 8,963,998 6,939,100 64,213 11,500,958 -8,674 21,139,678 Dallas 90,825,154 47,048,845 39,330,283 8,730,718 560,049 102,083 10,595,083 +55,336 19,287,014 San Francisco 206,030,788 96,859,557 101,643,541 20,434,638 7,697,341 101,421 22,923,980 -17,090 50,503,251 Total 2,382,499,229 1,055,001,656 1,255,247,264 266,629,883 149,138,300 2,188,893 241,914,174 -3,658 595,379,672 j M 1 Current earnings less current expenses, plus other additions and less other deductions. d 2 The Banking Act of 1933 eliminated the provision in the Federal Reserve Act requiring payment of a franchise tax. W J On Dec. 31, 1948, surplus (Sec. 13b)—relating to funds received from the Secretary of the Treasury under Section 13b of the Federal Reserve Act for the purpose of making 73 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, 1948, surplus (Sec. 7)—accumulated pursuant to Section 7 of the Federal Reserve Act—amounted to $466,711,126 ($595,379,672 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 73 for contingencies). C W 73 W 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, 1948 Cost Federal Reserve Bank or Net branch Building Fixed ma- book value Land (Including chinery and Total vaults) equipment Boston... $ 1246,726 % 3,542,603 $ 662,157 $ 5451,486 $ 1 184,948 New York 5215,656 12,183,528 4,827,595 22226,779 6799,350 Annex 592,679 1,451,570 215,418 2 259,667 850,731 Buffalo 255,000 465,707 720,707 372,525 Philadelphia 1884,357 *4,463,369 *920,743 7268,469 3052,938 Cleveland. . . 1295490 6 464,253 1,636 430 9 396,173 2 372,304 Cincinnati... 380744 * 1038,384 *200 131 *1 619,259 1 242,075 Pittsburgh. . 781364 1049,451 379694 2 210,509 1252,747 Richmond... 271924 2 101,178 663667 3 036 769 1071 578 Annex 80 333 482,482 109 132 671947 146252 Baltimore. . . 250487 1247,262 331970 1829 719 910870 Charlotte. . . 105701 291 175 154449 551325 427938 Atlanta 283000 1461474 308082 2,052556 740 150 Birmingham 124137 330680 65 491 520308 136492 Jacksonville 45842 238231 39669 323 742 87 433 Nashville 48000 211616 35091 294707 99 247 New Orleans 277078 762455 212281 1,251814 510 589 Chicago 2,963548 6 426 383 1,779 868 11,169799 2,242304 Detroit 1,022064 1081 281 176355 2,279700 948 866 St. Louis... . 1,355374 2,126302 1,320 454 4,802130 1,316638 Little Rock.. 85007 240733 151092 476832 188923 Louisville. . . 131,177 226 259 72,463 429899 168372 Memphis 128,542 287468 105837 521847 267,332 Minneapolis. 600,521 2,316746 660,969 3,578,236 1,067,827 Helena 15,710 126401 44,142 186,253 109,206 Kansas City 495,300 3,391101 933,404 4,819,805 1.538,605 Denver 101,512 449,876 79,268 630,656 275,773 Oklahoma City. . . . 65,021 409,890 95,480 570,391 222,550 Omaha 176,427 397,938 94,548 668,913 348,964 Dallas 189,831 1,350,945 *451,242 *1,992,018 435,709 El Paso 39,003 114,644 30,191 183,838 44,171 Houston 78,812 313,335 112,111 504,258 153,630 San Antonio 75,002 159,743 55,859 290,604 122,334 San Francisco 412,996 3,144,407 784,102 4,341,505 927,892 Los Angeles 443,488 988,109 323,195 1,754,792 486,376 Salt Lake City 114,075 341,449 84,814 540,338 224,039 Total.. 21,631,928 61,678,428 18,117,394 101,427,750 32,347,678 OTHER REAL ESTATE ACQUIRED FOR BANKING HOUSE PURPOSES Boston i 372,588 $ 78,793 451,381 291,341 New York 45,000 125,864 170,864 63,700 Pittsburgh 1 316,537 316,537 220,000 Richmond 107,248 1,099 108,347 72,914 Charlotte 10,868 10,868 10,868 Atlanta 35,000 35,000 35,000 Jacksonville 1 155,617 155,617 155,617 St. Louis 176,055 413,023 $146,456 735,534 600,139 San Francisco 60,000 60,000 60,000 Los Angeles 35,000 35,000 35,000 Portland2 160,000 160,000 160,000 Seattle2 1 250,000 250,000 250,000 Total 1,723,913 618,779 146,456 2,489,148 1,954,579 * Revised. 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, 1948] President Other officers Employees1 Total Federal Reserve Bank (Including branches) Annual salary Number Annual salaries Number Annual salaries Number Annual salaries Boston $25,000 19 $196,450 1,265 $3,249,789 1,285 $3,471,239 New York 50,000 50 667,945 3,959 11,985,988 4,010 12,703,933 Philadelphia . 25,000 13 147,500 1,068 2,923,683 1,082 3,096,183 Cleveland 25,000 28 264,250 1,749 4,118,164 1,778 4,407,414 R A i t c la h n m ta o nd .. 2 2 5 5 , , 0 0 0 0 0 0 2 3 3 0 2 23 1 3 2 , , 6 7 0 0 0 0 1,2 9 8 9 4 7 3 2 , , 0 2 1 6 6 5 , , 7 7 7 51 7 1 1 , , 3 0 0 2 8 8 3 2 , , 2 5 5 2 4 4 , , 4 3 7 51 7 j Chicago 35,000 37 385,450 2,903 7,383,538 2,941 7,803,988 St. Louis.. 25,000 23 201,200 1,137 2,792,194 1,161 3,018,394 Minneapolis 25,000 17 162,000 626 1,474,363 644 1,661,363 Kansas City 25,000 25 224,400 1,113 2,620,731 1,139 2,870,131 Dallas. . . .. 25,000 24 203,500 929 2,173,601 954 2,402,101 San Francisco 25,000 35 313,800 1,715 4,680,860 1,751 5,019,660 Cw Total $335,000 324 $3,212,795 18,745 $48,685,439 19,081 $52,233,234 73 1 Includes 563 part-time employees. NOTE: During the year 1948, $10,768,324 was reimbursed to the Banks on account of salaries. VH3 W 3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

j6 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, 1948 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 IX IX IX \Yi IX IX IX ^X IX IX IX IX Advances to member banks under Sec. 10(b) of the Federal Reserve Act 2 2 2 2 2 2 2 2 2 2 2 2 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) lYi 2Yi 2Yi 2Yi 2Y2 2Yi 2H 2X 2% 2Y2 2Y2 2Y2 Loans to industrial or commercial businesses under Sec. 13b of the Federal Reserve Act, direct or in participation with financing institutions.. . 2 }^-5 2J^-5 2^-5 2Y2-5 2)^-5 2M-5 2%-h 3-5 2H-5 2Y2-5 2Y2-5 2Y2-5 Discounts for and purchases from financing institutions under Sec. 13b of the Federal Reserve Act: On portion for which institution is obligated... . (:) C1) (2) 0) C1) 0) 2Y2S IY2-2 I1) 0) 0) C1) On remaining portion 23^-5 Commitments to make loans under Sec. 13b of the Federal Reserve Act: To industrial or commercial businesses J^-lki X~l \iX-iX X-iH X-iX X-Wi Y2-1XX-iX X-iX To financing institutions. . X-1X X-V/A XrlX X-V/A X-V4 YA-V/A XrlX X-iX 4) ix Effective minimum buying A rates on prime bankers' acceptances payable in dollars.. (5) (5) (5) (5) (5) (5) (5) (5) (5) (5) (5) 1-90 days "\YI 91-120 days 121-180 days 1 Rate charged borrower by financing institution less commitment rate. 2 Rate charged borrower, but not to exceed 1 per cent above the discount rate. 3 Rate charged borrower. 4 Financing institution is charged X 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. 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 A M u a g r . . 1 1 6 , , 1 1 9 9 3 3 7 6 - - A Fe p b r. . 3 2 0 8 , , 1 1 9 9 3 3 7 7 2 1 2 9 H V2 1 1 7 5 M i 1 o 2 3 v 24 4 5 ^ i4 May 1, 1937-Apr. 15, 1938 26 20 14 6 Apr. 16, 1938-Oct. 31,1941 22 M nv 12 5 Nov. 1, 1941-Aug. 19, 1942 26 20 2 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-June 10,1948 22 20 14 6 June 11, 1948-Sept. 15, 1948 24 20 14 6 Sept. 16-24, 1948-Apr. 30-May 4, 19492 26 22 16 7^ May 1-5, 1949-June 29-30, 1949 2 24 21 15 7 June 30-July 1, 1949 and after 2 24 20 14 6 1 Demand deposits subject to reserve requirements, i.e., total demand deposics 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. 2 Changes effective Sept. 16, May 1, and July 1 at country banks; Sept. 24, May 5, and June 30 at other classes. 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, Types of deposit to Jan. 31, 1935 Savings deposits Postal Savings deposits Other time deposits payable: In 6 months or more In 90 days to 6 months In less than 90 days coco cococo Feb. 1, 1935, In effect to beginning Dec. 31, 1935 Jan. 1, 1936 2V2 2V2 2V2 2 2 V V 2 2 2 2 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 REQUIREMENTS1 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- Jullyy 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 75 100 275 For short sales 50 50 75 100 275 Regulation U: For loans by banks on stocks. 40 50 75 100 275 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. 2 Changed to 50 per cent effective Mar. 30, 1949. 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 INSTALMENT CREDIT SUBJECT TO REGULATION W Prescribed by Board of Governors of the Federal Reserve System effective September 20, 1948, in accordance with Public Law 905, approved August 16, 1948 Effective Sept. 20, 19481 Type of credit. Minimum Maximum down maturity (P p e a r y m ce e n n t t )2 (Months)4 [nstalment sales: Group A 15-18 Automobiles Group B 20 15-18 Cooking stoves and ranges, dishwashers, ironers, mechanical refrig- • erators, washing machines, combination units incorporating any of the foregoing. Room-unit air conditioners, radio or television sets and phonographs, sewing machines, vacuum cleaners, furniture and softsurface floor coverings. [nstalment loans: To purchase listed articles 15-18 Other 15-18 1 Effective Mar. 7, 1949 the down payment became 15 per cent for all articles except automobiles, which remained at 33 J^ per cent, and maximum maturities were changed to 21 months for all credits under the regulation, regardless of amount. Effective Apr. 27, 1949, the down payment became 10 per cent for all articles except automobiles, which remained at 33 1/3 per cent, and maximum maturities were changed to 24 months for all credits under the regulation. 2 Down payments determined after deduction of any trade-in, except in case of automobiles. 8 Where credit is to purchase listed articles, requirements same as on instalment sales of the respective articles. 4 Maximum maturities for all instalment credits under the regulation, prior to Mar. 7, 1949, were 15 months for credits of $1,000 or less, and 18 months for credits over $1,000, provided that if the maturity was more than 15 months the monthly payment must have been at least $70. NOTE: Limitations are 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—MEMBER BANK RESERVES, RESERVE BANK CREDIT, AND RELATED ITEMS—END OF YEAR 1918-48 AND END OF MONTH 1948 [In millions of dollars] Reserve Bank credit outstandin 2 8 U. S.Government 3 securities End of year or month §1 1 8 88 § 1 1 S H & 1918... 1,766 239 28 1919... 2,215 300 27 1920... 2,687 287 26 1921... 1,144 234 32 1922.... 618 436 29 1923.... 723 134 30 1924.... 320 540 75 1925.... 643 375 61 1926.... 637 315 48 1927.... 582 617 291 1928.... 1,056 228 54 1929.... 632 511 77 1930.... 251 729 164 1931.... 638 817 360 1932.... 235 1,855 422 1933... 98 2,437 443 1934... 7 2,430 396 1935.... 5 2,431 216 1936... 3 2,430 491 1937... 10 2,564 752 1938.... 4 2,564 841 1939.... 7 2,484 1,351 1940.... 3 2,184 1,285 1941.... 3 2,254 1,467 1942.... 6 6,189 2,793 1943.... 511,543 1,630 1944.... 8018,846 1,243 1945.... 24924,262 947 1946.... 16323,350 753 1947.... 8522,559 2,853 1948— Jan 32721,925 4,791 Feb 43121,024 5,688 Mar 43020,887 5,671 24920,340 6,167 MPay'. '•'. '• 30620,662 6,319 June 26521,366 6,206 July.... 31821,325 6,757 Aug 32321,577 7,781 Sept 32523,413 9,260 Oct 33923,04210,925 Nov. 33723,20611,181 Dec 22323,33310,977 ,s11 <tac ton M PQ 211 273 261 202 407 104 465 314 267 326 174 434 565 457 1,433 1,994 2,034 2,215 1,939 1,812 1,723 1,133 899 787 3,396 9,913 17,603 23,315 22,597 19,706 17,134 15,336 15,216 14,173 14,343 15,160 14,568 13,796 14,153 12,117 12,025 12,356 tol g •g < 493 2,498 777 3,292 380 3,355 185 1,563 351 1,405 382 1,238 441 1,302 441 1,459 430 1,381 456 1,655 524 1,809 440 1,583 393 1,373 398 1,853 55 2,145 153 2,688 26 2,463 50 2,486 67 2,500 39 2,612 34 2,601 102 2,593 87 2,274 104 2,361 484 6,679 691 12,239 819 19,745 580 25,091 581 24,093 536 23,181 530 22,782 655 22,109 291 21,607 269 20,858 608 21,576 268 21,900 392 22,035 207 22,107 333 24,071 494 23,875 339 23,881 542 24,097 kcots o 1 H S 2,873 2,707 2,639 3,373 3,642 3,957 4,212 4,112 4,205 4,092 3,854 3,997 4,306 4,173 4,226 4,036 8,238 10,125 11,258 12,760 14,512 17,644 21,995 22,737 22,726 21,938 20,619 20,065 20,529 22,754 22,935 23,036 23,137 23,169 23,304 23,532 23,679 23,725 23,872 24,004 24,166 24,244 saer iats 1 H 1,795 1,707 1,709 1,842 1,958 2,009 2,025 1,977 1,991 2,006 2,012 2,022 2,027 2,035 2,204 2,303 2,511 2,476 2,532 2,637 2,798 2,963 3,087 3,247 3,648 4,094 4,131 4,339 4,562 4,562 4,561 4,561 4,559 4,562 4,562 4,565 4,565 4,571 4,575 4,580 4,585 4,589 ilucri -i a •"f PQ — -2 > II 1 a » 1 4,951 288 5,091 385 5,325 218 4,403 214 4,530 225 4,757 213 4,760 211 4,817 203 4,808 201 4,716 208 4,686 202 4,578 216 4,603 211 5,360 222 5,388 272 5,519 284 5,536 3,029 5,882 2,566 6,543 2,376 6,550 3,619 6,856 2,706 7,598 2,409 8,732 2,213 11,160 2,215 15,410 2,193 20,449 2,303 25,307 2,375 28,515 2,287 28,952 2,272 28,868 1,336 28,111 1,305 28,019 1,325 27,781 1,325 27,716 1,319 27,812 1,322 27,903 1,327 27,866 1,323 28,055 1,321 28,118 1,321 28,176 1,321 28,331 1,332 28,224 1,325 (d yru I larel t o -I •a M i g 51 121 31 101 57 23 96 27 11 29 38 23 51 39 16 29 17 65 18 26 23 27 29 30 19 28 54 110 8 43 3 132 121 189 544 255 244 259 142 407 923 441 634 653 368 1,732 867 1,360 799 1,278 579 1,716 440 1,598 977 1,308 393 822 870 961 2,343 1,049 1,591 1,154 1,972 999 1,236 826 1,684 1,057 1,928 859 1,755 1,067 1,919 864 1,664 843 1,610 1,074 1,601 932 1,123 1,189 iedeF •rehi stnuoeca Member bank reserve balances 1 1 O 118 1,636 51 208 1,890 68 298 1,781 285 1,753""99 276 1,934 275 1,898 14 258 2,220 59 272 2,212 -44 293 2,194 -56 301 2,487 63 348 2,389 -41 393 2,355 -73 375 2,471 96 354 1,961 -33 355 2,509 576 360 2,729 859 241 4,096 1,814 253 5,587 2,844 261 6,606 1,984 263 7,027 1,212 260 8,724 3,205 251 11,653 5,209 284 14,026 6,615 291 12,450 3,085 256 13,117 1,988 339 12,886 1,236 402 14,373 1,625 495 15,915 1,458 607 16,139 562 563 17,899 1,499 551 16,919 768 556 17,062 762 588 16,639 655 546 16,944 737 546 17,021 848 592 17,389 742 572 17,696 877 565 17,679 837 585 19,986 1,038 542 19,736 742 541 19,894 809 590 20,479 1,202 1 Includes Government overdrafts in 1918, 1919, and 1920. 2 Figures available only on call dates prior to 1929. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

8o ANNUAL REPORT OF BOARD OF GOVERNORS NO. 16—ANALYSIS OF CHANGES IN NUMBER OF BANKING OFFICES DURING 1948 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 insurec Number of banks, Dec. 31, 1947. . 14,714 14,181 5,005 6,478 783 U94 339 Changes during 1948: New banks2 +80 +80 + 15 + 5 + 41 + 19 Consolidations and absorptions: Banks converted into branches.. -56 -56 -21 -16 -18 -1 Other -20 -19 -9 -1 -6 2 Voluntary liquidations3 -12 -12 -1 -8 -3 Unclassified -3 -3 —3 Inter-class changes: Conversions— National into State -2 + 2 State into national +3 -1 -2 Federal Reserve membership:4 Admissions of State banks +27 -26 -1 Fe W de i r t a h l d r d a e w po al s s i t o i f n s S u t r a a t n e ce b : a 5 nks. . -4 + 4 Admissions of State banks + 33 -33 Withdrawals of State banks.... Net increase or decrease -11 -10 -14 +9 + 20 -25 -1 Number of banks, Dec. 31, 1948. . 14,703 14,171 4,991 ll,927 6,498 758 U93 339 Number of branches^ Dec. 31, 1947 4,261 4,090 1,817 1,168 1,038 67 124 47 Changes during 1948: De novo branches + 162 + 151 +68 +36 +41 +6 +8 +3 Banks converted into branches.... + 56 + 56 + 31 + 19 + 6 Branches discontinued -18 -18 -6 -6 -6 Inter-class branch changes: State member to national +3 -3 Nonmember to State member. . + 5 -5 Noninsured to insured + 5 -5 Net increase or decrease + 200 + 189 +96 + 51 + 41 + 1 +8 + 3 Number of branches,6 Dec. 31, 1948 4,461 4,279 1,913 1,219 68 132 50 1,079 Number of banking facilities at military reservations,7 Dec. 31 1947 71 71 53 13 Changes during 1948: 5 Established + 1 + 1 + 1 Discontinued -2 -2 o Net decrease — 1 i — 1 Number of banking facilities at military reservations,7 Dec. 31,1948 70 70 52 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. 3 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 Covers all branches and other additional offices at which deposits are received, checks paid, or money lent. 7 "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

FEDERAL RESERVE SYSTEM 8l NO. 17—NUMBER OF BANKING OFFICES ON FEDERAL RESERVE PAR LIST AND NOT ON PAR LIST, BY FEDERAL RESERVE DISTRICTS AND STATES, DECEMBER 31, 19481 w T h o ic ta h l c b h a e n c k k s s o a n re On par list Not on par list drawn, and their (nonmember) Federal Reserve branches & offices Total Member Nonmember district or State Branches Branche Branche: Branches Banks and Banks Banks and Banks and Banks and offices offices offices offices DISTRICT Boston 495 302 495 336 222 159 New York 908 858 908 783 795 125 63 Philadelphia. . . 841 140 841 645 103 196 37 Cleveland 1,134 274 1,134 704 236 430 38 Richmond 1,009 462 798 478 219 320 122 211 Atlanta 1,183 175 557 346 122 211 17 626 Chicago 2,488 579 2,434 1,003 230 1,431 325 54 St. Louis 1,469 133 1,126 495 40 631 33 343 Minneapolis. . . 1,278 112 620 476 26 144 18 658 Kansas City. . . 1,749 9 1,740 760 6 980 3 9 Dallas 1,015 41 906 618 19 288 13 109 San Francisco.. 503 1,248 502 268 1,179 234 69 1 Total 14,072 4,333 12,061 4,015 6,912 3,197 5,149 818 2,011 STATE Alabama 224 23 118 23 23 29 106 Arizona 10 44 10 44 5 33 5 11 A Ca rk li a fo n r s n a i s a 2 1 3 9 0 3 91 1 7 9 1 1 9 0 3 6 917 5 1 6 1 7 4 873 1 7 3 9 9 44 4 '124 Colorado 142 1 142 1 92 1 50 Connecticut. . . 115 26 115 26 66 13 49 13 Delaware 39 14 39 14 17 4 22 10 Dist. of Col 19 39 19 39 16 36 3 3 Florida 181 2 118 2 73 2 45 63 Georgia 394 31 100 27 65 26 35 1 294 Idaho 47 48 47 48 27 45 20 3 Illinois 882 3 880 3 504 3 376 Indiana 97 486 97 237 41 249 Iowa 666 162 666 162 165 501 162 Kansas 608 606 214 392 Kentucky 383 39 383 39 112 25 271 14 Louisiana 161 65 58 42 46 36 12 6 103 Maine 63 69 63 69 38 37 25 32 Maryland 163 109 163 109 77 73 86 36 Massachusetts . 183 162 183 162 146 146 37 16 Michigan 442 216 442 216 229 166 213 50 Minnesota 679 6 263 6 206 6 57 416 Mississippi. . . . 205 58 40 10 32 3 8 165 Missouri 595 528 180 348 67 Montana 112 112 84 28 Nebraska 409 2 409 2 144 2 265 Nevada 8 18 8 18 6 17 2 1 New Hampshire 74 2 74 2 52 1 22 1 New Jersey.... 334 141 334 141 286 126 48 15 New Mexico. . . 49 11 49 11 34 2 15 9 New York 646 730 646 730 567 679 79 51 North Carolina. 209 181 93 64 54 35 39 29 116 North Dakota. 150 24 61 6 42 19 6 Ohio 666 204 666 204 425 177' 241 27 Oklahoma 384 1 376 1 225 1 151 Oregon 70 88 70 88 33 82 37 6 Pennsylvania. . 979 166 979 166 749 140 230 26 Rhode Island. . 19 42 19 42 11 30 8 12 South Carolina. 149 37 60 33 32 27 28 6 South Dakota.. 170 48 70 23 62 20 8 3 100 Tennessee 293 82 198 66 81 54 117 12 95 Texas 895 3 837 3 567 3 270 58 Utah 55 22 55 22 31 20 24 Vermont 69 11 69 11 40 2 29 9 Virginia 314 96 309 96 203 48 106 48 5 W We a s s t h i V ng ir t g o i n n . i a . . . . 1 18 2 1 2 124 1 12 8 1 0 124 1 5 0 3 9 117 6 7 8 1 7 1 1 Wisconsin 550 150 443 101' 164 279 80' 107 Wyoming 55 55 41 14 1 Does not include mutual savings banks, on a few of which some checks are drawn, but does include 70 banking facilities (see footnote 7, Table 16). The difference in the number of member banks on Dec. 31, 1948 shown in this table and in Table 16 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 96 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

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

RECORD OF POLICY ACTIONS BOARD OF GOVERNORS JANUARY 9, 1948 Changes in Rates on Discounts and Advances to Member Banks under Section 13, 13(a), and 10(b) of the Federal Reserve Act, and in Minimum Buying Rates on Bankers' Acceptances. The Board approved for the Federal Reserve Banks of New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and Dallas, effective January 12, 1948, a rate of i1/^ per cent on discounts and advances under Sections 13 and 13(a) of the Federal Reserve Act except advances to individuals, partnerships and corporations other than member banks under the last paragraph of Section 13; and a rate of 1^4 Per cent on advances under Section io(b). Votes for this action: Messrs. Eccles, Szymczak, Draper, Evans, Vardaman, and Clayton. Votes against this action: none. Pursuant to the policy established by this action, the Board subsequently approved the rates mentioned above for the Federal Reserve Bank of Boston effective January 14; for the Federal Reserve Bank of San Francisco effective January 15; and for the Federal Reserve Bank of Kansas City effective January 19. Also on January 9, to be effective January 12, the Board approved, by the same votes, a minimum buying rate of 1% per cent on bankers' acceptances for the Federal Reserve Bank of New York, and subsequently approved the same rate for the following Federal Reserve Banks, effective on the dates indicated : Boston January 14, 1948 Philadelphia January 19, 1948 Cleveland January 26, 1948 Richmond February 14, 1948 Atlanta January 24, 1948 Chicago January 19, 1948 St. Louis January 23, 1948 Minneapolis January 15, 1948 Kansas City January 30, 1948 Dallas February 14, 1948 San Francisco January 15, 1948 While minor changes were made at some of the Federal Reserve Banks in rates on advances to individuals, partnerships, and corporations other than member banks under the last paragraph of Section 13 and in various rates under Section 13b, the new rates were within the limits of rates Digitized for FRApSreEvRio usly established at other Federal Reserve Banks. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 84

FEDERAL RESERVE SYSTEM 85 These actions were taken by the Board as a part of an anti-inflationary program, described elsewhere in this report, which was designed to keep pressure on member bank reserves and thereby to restrain the expansion of bank credit while at the same time continuing the policy of supporting the long-term rate on Government bonds. The effect of the increase, together with the increase from one per cent to 1% per cent in the issuing rate on one-year Treasury certificates, effected by the Treasury in connection with the refunding of the November and December 1947 issues of maturing Treasury securities, was to increase rates in the short-term area of the market, thereby reducing the spread between the long- and short-term rates and increasing the inducement for banks to hold short-term Government issues. It was pointed out that, as long as the System continued its policy of supporting the market for United States Government securities, member banks would have ready access to reserves through the sale of such securities and that, if the discount rate were fixed at a somewhat higher level than the issuing rate on Treasury certificates, banks would be encouraged to adjust their reserve position through the sale of certificates and bills rather than by borrowing from the Federal Reserve Banks. The discount rate of the Federal Reserve Banks was fixed at 1% per cent for that reason. JANUARY 23, 1948 Increase in Reserve Requirements of Member Banks in Central Reserve Cities. The supplement to Regulation D, Reserves of Member Banks, was amended, effective as of the opening of business on February 27, 1948, to require that member banks in central reserve cities (except such banks in outlying sections of such cities as were authorized by the Board to maintain lower reserves) maintain reserves of 22 per cent, instead of 20 per cent, of their net demand deposits. Votes for this action: Messrs. Eccles, Draper, Evans, and Vardaman. Votes against this action: none. The effect of this increase was to raise the required reserves of member banks in central reserve cities by approximately 500 million dollars and the increase was approved as one step in the anti-inflationary program, discussed elsewhere in this report, which was designed to restrain further inflationary expansion of bank credit. The Board would have preferred to take action affecting the required reserves of all member banks but was unable to do so for the reason that requirements of reserve city and country banks were already at the maximum permitted under the law. The action was not taken earlier because the reserve position of banks had been under considerable pressure during the latter part of 1947, and, while it had been anticipated that the banks would also be under pressure during February and March, the return flow of currency after the year-end and increased reserves resulting from System purchases of securities in December had eased the money market and total loans of member banks in central reserve cities had increased. The action of the Board had the effect of reducing the supply of Government securities which the central reserve city banks had available for sale to the Federal Reserve Banks to create reserves for further loan expansion and absorbed some of the reserves created by the sale to the Federal Reserve Banks of securities by nonbank holders during December and January. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 ANNUAL REPORT OF BOARD OF GOVERNORS MARCH 5, 1948 Amendments to Regulation T, Extension and Maintenance of Credit by Broloars, 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. Effective April 1, 1948, Regulations T and U were amended to permit a customer to make substitutions in an undermargined account (one having a margin of less than 75 per cent) without having to supply additional margin. Votes for this action: Messrs. Eccles, Szymczak, Draper, Evans, and Clayton. Votes against this action: none. A typical method of making such substitutions would be by selling one security and purchasing another. Previously such substitutions had been limited by the rule that the proceeds of sales of securities in an undermargined account must be used to the extent necessary to increase the margin on the remaining securities until it was on the 75 per cent basis. The changes were essentially technical amendments which did not add to the amount of credit available for stock market transactions under existing regulations. The substitutions permitted by the amendments made it somewhat easier for customers with undermargined accounts to shift their holdings from one security to another in cases where there was no increase in the total holdings or total credit. JUNE I, 1948 Increase in Reserve Requirements of Member Banks in Central Reserve Cities. The supplement to Regulation D, Reserves of Member Banks, wras amended, effective as of the opening of business on June 11, 1948, to require that member banks in central reserve cities (except such banks in outlying sections of such cities as were authorized by the Board to maintain lower reserves) maintain reserves of 24 per cent, instead of 22 per cent, of their net demand deposits. Votes for this action: Messrs. Eccles, Draper, Evans, Vardaman, and Clayton. Votes against this action: Messrs. McCabe and Szymczak. When this action was taken, the reserve position of central reserve city banks was easy and there were increasing evidences that an inflationary psychology was again taking hold of the country. It was the feeling of the majority of the Board that action at this time should be taken as a part of the anti-inflationary program discussed elsewhere in this report for the purpose of limiting the reserves available for the expansion of bank credit. The reasons for the action were substantially the same as those which prompted similar action by the Board on January 23, 1948. Messrs. McCabe and Szymczak voted "no" because they felt that much of the restraining effect of an increase in reserve requirements at central reserve city banks in June would be nullified by System open market operations to maintain stability in short-term rates pending the Treasury refinancing. They favored postponing decision until later in the summer when the Treasury refinancing would be out of the way and the probable course of credit developments could be more clearly evaluated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 87 JULY I, 1948 Amendment to Regulation L, Interlocking Bank Directorates under the Clayton Act. Regulation L was amended, effective July 1, 1948, by the addition of a new paragraph (f) providing that any director, officer, or employee of a member bank of the Federal Reserve System might be at the same time a director, officer, or employee of not more than one bank which was principally engaged in international or foreign banking and did not receive deposits or make loans in the United States except as might be incidental to its international or foreign business. Votes for this action: Messrs. Szymczak, Draper, Evans, Vardaman, and Clayton. Votes against this action: none. The statute authorized the Board by regulation to permit an interlocking relationship between a member bank and not more than one other bank. It also contained a specific exemption of an interlocking directorate between a member bank and a corporation principally engaged in foreign banking which has an agreement with the Board under Section 25 of the Federal Reserve Act. In the circumstances, since the only competition between a member bank and a corporation principally engaged in foreign banking is to a limited extent in the field of international banking, it was felt that it would be appropriate to amend the regulation to permit interlocking directorates between a member bank and not more than one corporation principally engaged in foreign banking even though not subject to an agreement with the Board under Section 25. AUGUST 3, 1948 Amendment to Regulation H, Membership of State Banking Institutions in the Federal Reserve System. Regulation H was amended effective September 1, 1948, to eliminate certain conditions of membership in the Federal Reserve System relating to the sale of real-estate obligations and the exercise of trust powers. The amendment added the following paragraph to footnote numbered six concerning the effect of the elimination of these conditions: "For many years, the Board prescribed, as standard conditions of membership, a condition which, in general, prohibited banks from engaging as a business in the sale of real-estate loans to the public and certain conditions relating to the exercise of trust powers, including one which prohibited self-dealing in the investment of trust funds. The elimination of these conditions as standard conditions of membership does not reflect any change in the Board's position as to the undesirability of the practices formerly prohibited by such conditions; and attention is called to the fact that engaging as a business in the sale of real-estate loans to the public or failing to conduct trust business in accordance with the applicable State laws and sound principles of trust administration may constitute unsafe or unsound practices and violate condition numbered 1." Votes for this action: Messrs. McCabe, Eccles, Szymczak, Draper, Evans, Vardaman, and Clayton. Votes against this action: none. In connection with the foregoing change in the standard conditions of membership, the conditions of membership of each State bank member were reviewed and certain additional conditions were canceled in individual cases. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

55 ANNUAL REPORT OF BOARD OF GOVERNORS State member banks were informed of this and of the foregoing action in a letter reading as follows: Over the period of more than 30 years since the Federal Reserve System was established the number and type of conditions of membership have varied from time to time. Practically all State member banks, however, are subject to present standard conditions of membership numbered 1 and 2, which have been prescribed since January 1, 1936, or to conditions prescribed in earlier years which contain provisions comparable in whole or in part. The Board's program contemplates the retention of these conditions, conditions prohibiting or restricting the exercise of unusual powers which banks apparently had under their charters or applicable State laws when admitted to membership, and only such other conditions as appear desirable in the light of the facts of particular cases. As a result there will be a much greater uniformity and simplicity in the conditions of membership applicable to State member banks, regardless of the dates of admission to membership. The program does not reflect any lowering of the standards expected of State member banks and the cancellation of a condition of membership is not to be construed as indicative of any change in the Board's views as to the desirability or undesirability of the practice to which the former condition referred. For correction of unsound policies and practices with respect to matters previously covered by specific conditions of membership, reliance will be placed upon the regular examination and supervisory procedures and the general conditions of membership. The program is one of cancellation only. No conditions have been added, and no provisions have been expanded or reworded. The Federal Reserve Banks have been requested to advise each member bank of any cancellation and, for the convenience of the member bank, to furnish it with a copy of the conditions or portions thereof which continue in effect. AUGUST 12, 1948 Changes in Rates on Discounts and Advances to Member Banks under Sections 13, 13(a), and 10(b) of the Federal Reserve Act; on Advances to Individuals, Partnerships, and Corporations other than Member Banks under the Last Paragraph of Section 13; and in Minimum Buying Rates on Bankers' Acceptances. The Board approved for the Federal Reserve Banks of Boston, New York, Cleveland, Richmond, Atlanta, Chicago, Minneapolis, Dallas, and San Francisco, effective August 13, 1948, a rate of 1^ per cent on discounts and advances under Sections 13 and 13(a) except advances to individuals, partnerships, and corporations other than member banks under the last paragraph of Section 13; and a rate of 2 per cent on advances under Section io(b). Votes for this action: Messrs. McCabe, Eccles, Szymczak, Draper, Evans, Vardaman, and Clayton. Votes against this action: none. Pursuant to the policy established by the foregoing action, the Board subsequently approved the rates mentioned above for the Federal Reserve Bank of Philadelphia effective August 23; for the Federal Reserve Bank of St. Louis effective August 19; and for the Federal Reserve Bank of Kansas City effective August 16. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 89 Also on August 12, to be effective August 13, the Board approved, by the same votes, for the Federal Reserve Banks of Boston, New York, Richmond, Atlanta, Chicago, and Dallas a minimum buying rate of ij^4 per cent on bankers' acceptances, and subsequently approved the same rate for the following Federal Reserve Banks, effective on the dates indicated: Philadelphia August 23, 1948 Cleveland August 30, 1948 St. Louis August 19, 1948 Minneapolis August 23, 1948 Kansas City August 16, 1948 San Francisco August 21, 1948 In furtherance of conformity with the above rates, the Board approved a rate of 2^4 Per cent for advances under the last paragraph of Section 13, on August 12 for the Federal Reserve Bank of Chicago effective August 13, and on August 20 for the Federal Reserve Bank of Minneapolis effective August 23. While other changes, of a minor nature, were made at some of the Federal Reserve Banks in rates on advances to individuals, partnerships, and corporations other than member banks under the last paragraph of Section 13 and in various rates under Section 13b, the new rates were within the limits of rates previously established at other Federal Reserve Banks. These rates were approved for substantially the same reasons as prompted similar action of the Board on January 9, 1948, and to maintain the desired relation of the discount rates of the Federal Reserve Banks with the issuing rate on Treasury certificates which the Secretary of the Treasury had announced would be increased to 1^4 Per cent m connection with the refunding of certificates and notes maturing on October 1, 1948. AUGUST 17, 1948 Adoption in Revised Form of Regulation W, Consumer Instalment Credit. Mr. Evans moved that in the revised Regulation W to be issued by the Board, the down payment requirement for automobiles be fixed at 33/4 per cent with 20 per cent for all other items covered by the regulation ; and that for credits not exceeding $1,000, the maximum maturity be fixed at 15 months, and for credits in excess of $1,000, the maximum maturity be fixed at 18 months, except that the monthly payments on credits of more than $1,000 be not less than $70. Mr. Vardaman moved to amend Mr. Evans' motion to provide for a down payment of 20 per cent for furniture and 33^3 per cent for all other items, and a maximum maturity of 15 months for all credits. Mr. Vardaman's motion was put by the Chair and lost, Messrs. Eccles and Vardaman voting "aye," and Messrs. Szymczak, Draper, Evans, and Clayton voting "no." Mr. Clayton then moved that Mr. Evans' motion be amended to provide for a down payment of 20 per cent for furniture and 33^3 per cent for all other items, and a maximum maturity of 18 months for all credits. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

9O ANNUAL REPORT OF BOARD OF GOVERNORS Mr. Clayton's motion was put by the Chair and lost, Mr. Clayton voting "aye," and Messrs. Eccles, Szymzak, Draper, Evans, and Vardaman voting "no." Mr. Evans' original motion was then put by the Chair and carried. Votes for this action: Messrs. Eccles, Szymczak, Draper, Evans, Vardaman, and Clayton. Votes against this action: none. Thereupon, by the same votes, the Board adopted Regulation W in the revised form provided in Mr. Evans' motion, to become effective September 20, 1948, under the authority of Public Law 905 (S.J. Res. 157)5 approved August 16, 1948, authorizing the Board of Governors of the Federal Reserve System to exercise consumer instalment credit controls until June 30, 1949. The majority of the Board disapproved Mr. Vardaman's and Mr. Clayton's motions because it was felt that a down payment of 33r/3 per cent for any items other than automobiles and a return to the over-all maturity of 15 months prescribed by the old regulation which expired November 1, 1947 would provide a more restrictive change from terms currently being offered than would be suitable in the existing situation, and that an over-all maturity of 18 months would not provide sufficient restraint. With the exception of down payments and maturities, the regulation was in substantially the same form as Regulation W which expired on November 1, 1947. A fundamental purpose of the revised Regulation W was to restrain the expansion of consumer instalment credit. From the end of 1945 to the end of June 1948, such credit had been growing rapidly at a rate of about 2 billion dollars a year, and this credit growth materially contributed to inflationary pressures in markets for consumer and other goods. Since the November 1, 1947 expiration of the old regulation, terms offered by merchants and lenders in the consumer instalment credit field had been relaxed considerably. The requirements of the regulation issued effective September 20, 1948, were somewhat less restrictive than those in effect at the expiration of the old regulation, but somewhat tighter than terms generally in effect before September 20, 1948. SEPTEMBER 8, 1948 Increase in Reserve Requirements of Member Banks and Amendment to Regulation D, Reserves of Member Banks. The supplement to Regulation D, Reserves of Member Banks, was amended to increase member bank reserve requirements 2 percentage points against net demand deposits and 1J/2 percentage points against time deposits, effective September 16, 1948, at banks in non-reserve cities and September 24, 1948, at other banks, except that as to member banks in outlying sections of reserve and central reserve cities which have been authorized to maintain the same reserves as banks in non-reserve cities, the amendment was to be effective September 16, 1948. Regulation D was also amended in certain minor respects to conform to required changes in the law. Votes for this action: Messrs. McCabe, Eccles, Szymczak, Draper, Evans, Vardaman, and Clayton. Votes against this action: none. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 91 This action, like the two previous actions in 1948, was taken in an inflationary period as a part of the program of the Federal Reserve System to restrain the inflationary expansion of bank credit, and to that end utilized additional authority granted the Board by the Congress at the special session in August. It placed reserve requirements on time deposits at the maximum authorized by the Congress and requirements on net demand deposits at 2 percentage points less than the maximum at reserve and non-reserve city banks and at 4 percentage points less than the maximum at central reserve city banks. OCTOBER 27\ 1948 Amendment to Regulation W, Consumer Instalment Credit. Effective November 1, 1948, subsection 6(g) of Regulation W was amended to permit the delivery of a listed article (other than an automobile) exclusively for the purpose of a bona fide trial, approval, or demonstration without a deposit equal to the required down payment, •provided that certain specified conditions were followed and that within 10 days after such delivery the required down payment or the return of the article was obtained. Votes for this action: Messrs. McCabe, Eccles, Draper, and Evans. Votes against this action: none. The amendment was designed to reduce certain technical difficulties experienced by instalment dealers subject to the regulation, and was not intended to result in any relaxing of the credit restrictions. It had been the custom for some dealers to deliver appliances and other articles subject to the customer's approval or for demonstration purposes. When such deliveries were made in anticipation of an instalment sale, the regulation previously had required a down payment at or before the time of delivery. The amendment provided that if certain specified conditions were followed, the seller might allow a trial period of not more than 10 days without previously obtaining the down payment. NOVEMBER 24, 1948 Amendment to Regulation J, Check Clearing and Collection. Regulation J, Check Clearing and Collection, was amended effective January 1, 1949, to authorize a procedure for the conditional payment of cash items presented by Federal Reserve Banks subject to the right of drawee banks to return unpaid items for credit or refund on the next business day following their receipt by the drawee. Votes for this action: Messrs. McCabe, Eccles, Szymczak, Draper, Evans, Vardaman, and Clayton. Votes against this action: none. The reasons for this action are set forth in the following statement released in the morning papers of November 26, 1948: Several months ago, the American Bankers Association recommended that the Board of Governors of the Federal Reserve System amend its Regulation J, relating to the clearing and collection of checks by Federal Reserve Banks, in order to authorize a procedure for the conditional Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

92 ANNUAL REPORT OF BOARD OF GOVERNORS payment of cash items presented by Federal Reserve Banks subject to the right of a drawee bank to return unpaid items for credit or refund on the next business day after their receipt by the drawee. The recommendation was made in the light of the fact that in recent years many banks have adopted the practice of "delayed posting" which involves a procedure of this kind with respect to the return of unpaid items and that the practice has been recognized by the enactment of statutes in a number of States and by rules adopted by numerous clearing house associations. On April 16, 1948, the Board of Governors published in the Federal Register a preliminary notice of proposed amendments to its Regulation J to give effect to the procedure recommended by the American Bankers Association; and at that time a statement with respect to the proposed changes was sent by the Federal Reserve Banks to their member banks for their information. The Board has now adopted the amendments to Regulation J, to become effective January 1, 1949, in the form in which they were previously published in the Federal Register (except for a change in the footnote and one other minor change). These amendments are being published in the Federal Register on or about November 30, 1948. It is contemplated that the Federal Reserve Banks will amend their operating circulars or letters relating to the collection of cash items to conform to the amendments to the Regulation. In effect, the amendments to the Regulation and to the operating circulars or letters of the Federal Reserve Banks authorize the Federal Reserve Banks to accept, as conditional, payment for checks and other cash items made on the day such items are received by a drawee bank and to permit the drawee bank to return items as unpaid, for credit or refund, at any time up to midnight of the drawee's next business day following receipt of and remittance for such items. It should be noted that adoption of these amendments does not mean that any bank is required to follow the practice of delaying the return of unpaid cash items; and any bank may continue to return unpaid cash items with its remittance on the day of receipt. It is also to be noted that the procedure provided for in these amendments for the return of unpaid items on the day after presentment and remittance applies only to checks and other items handled by the Reserve Banks as "cash items" and does not apply to items handled by them as "noncash items" under the Board's Regulation G. In May 1948 the American Bankers Association transmitted to banks which are members of the Association a suggested form of collection agreement with depositors, for use by banks on deposit tickets, signature cards, and the like, in order that the banks may be afforded adequate protection with respect to the collection of items in accordance with such conditional payment procedure. The Association has also drafted a model statute authorizing a procedure of this kind and has informed the Board of Governors that it will send a copy of the proposed statute, together with an explanatory statement, to the State Bankers Association of each State, urging its adoption. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 93 DECEMBER 17, 1948 Amendment to Regulation W, Consumer Instalment Credit. Effective January 1, 1949, Regulation W, Consumer Instalment Credit, was amended to release from the scope of the regulation articles selling for $50 or more only because of the inclusion of applicable sales taxes in the price of the article to the purchaser. Votes for this action: Messrs. McCabe, Eccles, Szymczak, Draper, Evans, and Clayton. Votes against this action: none. In communities and regions which had sales taxes, the effect of adding the tax to prices just under $50 was to raise the price of some articles above the $50 level at which Regulation W became applicable. The Board's view was that such situations called for a technical exception, and the amendment was adopted to reduce operating difficulties in the trade, particularly for those merchants serving areas which include some localities with sales taxes and others without them. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

RECORD OF POLICY ACTIONS FEDERAL OPEN MARKET COMMITTEE MARCH I, 1948 (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, 1948— was held on February 2J 1948, for the purpose of ratifying actions which } had been taken under existing policies and of discussing developments in the monetary and credit situation. At that meeting no policy actions were taken.) 1. Authority to Effect Transactions in System Account. 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 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. Votes for this action: Messrs. Eccles, Sproul, Clayton, Draper, Evans, Gilbert, Leedy, Szymczak, Vardaman, Williams, and Young. Votes against this action: none. During February a very sharp decline occurred in prices of farm products and foods which served to weaken somewhat the pressure on the general price level. Although the future trend was not clear when this meeting was held it appeared that the underlying economic conditions would foster further upward price movements and that the situation would continue to be fundamentally an inflationary one. The volume of capital expenditures and consumer buying which characterized 1947 had continued into 1948 and the demand for funds was reflected in part in very large sales of Treasury bonds to the System account and in further increases in bank loans. For reasons outlined in the Annual Report of the Board of Governors for the year 1948, Digitized for FRASER http://fraser.stlouisfed.org/ 94 Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 95 of which this record is a part, these movements, together with an inflow of gold and a return flow of currency, were adding to the inflationary pressures in the economy. In the period December 9, 1947 to February 28, 1948, inclusive, total securities in the System account declined by approximately 900 million dollars. However, the composition of the account changed very materially, Treasury bill holdings having been reduced by about 3 billion dollars and certificates by about 2.9 billion, while note holdings increased nearly 300 million and bonds 4.5 billion. Since the meeting of the Committee on December 9, 1947, the policy of combating inflation had been further implemented by additional retirements of maturing Government debt, a downward revision on December 24, 1947* of the prices at which the System would purchase Treasury bonds in the market in carrying out the policy of maintaining the long-term issuing rate on Government securities, an increase in the issuing rate of one-year Treasury certificates fr.om 1 to 1^ per cent followed by an increase in January in the discount rates of the Federal Reserve Banks from 1 to 1^ per cent, and an increase in February in reserve requirements of central reserve city banks from 20 to 22 per cent of net demand deposits. Discussions with the Treasury had continued during the period and the representatives of the Federal Open Market Committee had expressed the opinion that Federal Reserve credit and Treasury debt management policies during the immediate future or until conditions changed should be determined with a view to exercising continuing restraint upon the expansion of bank credit. It was also suggested that the existence of a large Treasury surplus during the first quarter of the year would be the principal weapon available in the credit field for combating inflation, that retirement of Government securities held by the Federal Reserve Banks should be continued as long as surplus funds were available and that funds of the Treasury held in war loan accounts should be withdrawn at such times as would aid in carrying out the policy of keeping bank reserves under pressure. A further proposal was that at the proper time it would be desirable for the rate on one-year Treasury certificates to rise to 1% Per cent with a further increase in the discount rates of the Federal Reserve Banks. There was also discussion of the desirability of channeling withheld tax payments through war loan accounts and of the issuance of a new series of savings notes the yields on which would be more in line with existing short-term rates. The approval of the direction adopted at this meeting, which was in substantially the same form as the direction issued at the meeting on December 9, 1947, continued the existing open market policy of the Committee which, as part of the program outlined above, was for the purpose of keeping pressure on the market and thereby restraining the expansion of bank credit while at the same time continuing the policy of supporting the long-term rate pn Government bonds. MAY 20, 1948 1. Authority to Effect Transactions in System Account. 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 ANNUAL REPORT OF BOARD OF GOVERNORS 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 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 1.5 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. Votes for this action: Messrs. McCabe, Sproul, Clayton, Draper, Eccles, Evans, Gilbert, Leedy, Szymczak, Williams, and Young. Votes against this action: none. Although important changes in the economic situation had occurred since the previous meeting of the Federal Open Market Committee, they did not change the fundamentally inflationary situation with which the Committee had to deal. It was the view of the Committee, therefore, that its existing anti-inflationary policy of keeping pressure on the money market for the purpose of restraining the expansion of bank reserves should be continued and the above direction was issued for that purpose. In taking this action it was understood that discussions with the Treasury of credit and debt management policies would be continued with a view to a further increase in the shortterm rate to be followed at the appropriate time by an increase in the discount rates at the Federal Reserve Banks and in reserve requirements of banks in central reserve cities. The direction was in the same form as the direction issued at the meeting of the Committee on March 1, 1948, except that the limitation contained in the first paragraph on the amount by which the securities in the account could be increased or decreased was reduced from 3 billion dollars to 1.5 billion. The reduction was made because it was felt that the factors affecting the Government securities market and the changes in the System account that would be required to carry out System policies in the interim before another meeting of the Committee would not call for a larger authority. OCTOBER 4, 1948 1. Increase in the Authority to Effect Transactions in System Account. The actions of the members of the Federal Open Market Committee on August 11 and September 24, 1948, increasing from 1.5 billion dollars to 3 billion and from 3 billion to 4 billion, respectively, the limitations on the authority of the executive committee with respect to increases or decreases in the total amount of securities in the System account, as contained in the first paragraph of the direction issued at the meeting of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 97 the Federal Open Market Committee on May 20, 1948, were approved, ratified, and confirmed. Votes for this action: Messrs. McCabe, Sproul, Clayton, Draper, Eccles, Evans, Gilbert, Leedy, Szymczak, Williams, and Young. Votes against this action: none. Following the previous meeting of the Committee pressure on the market for restricted Treasury bonds developed to an unexpected extent and during the latter part of the period the pressure on bank eligible bonds again increased. By August 11 Treasury bonds held in the System account had increased from 6.3 billion dollars on May 19 to J.2 billion and by September 24 these holdings had grown to about 9 billion. Holdings of certificates had also increased. It appeared at the time the actions of the members of the Committee were taken that pressure on the bond market would continue for a further period and the increased authorities were approved in order that the executive committee might carry out the policy of supporting the long-term rate on Treasury bonds and maintaining stable and orderly conditions in the Government security market. 2. Authority to Effect Transactions in System Account. 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 ofl 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 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. Votes for this action: Messrs. McCabe, Sproul, Clayton, Draper, Eccles, Evans, Gilbert, Leedy, Szymczak, Williams, and Young. Votes against this action: none. When this meeting of the Committee was held the inflationary elements in the economy continued strong and an appraisal of the situation appeared to justify the conclusion that the prospects for the rest of 1948 were clearly expansionary and that a downturn was not to be expected even \{ some of the "soft spots" in the economy should spread. Discussion by members of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 AXNUAL REPORT OF BOARD OF GOVERNORS the executive committee and by representatives of the full Committee with representatives of the Treasury had continued since the previous meeting of the Committee and several actions had been taken to carry out the antiinflationary program of keeping the reserve position of banks under pressure and discouraging further inflationary credit expansion. Effective June 11, 1948, the Board of Governors increased reserve requirements on demand deposits of member banks in central reserve cities by 2 percentage points and following the granting of increased authority at the special session of Congress in August reserve requirements of all membei banks were increased by 2 percentage points on demand deposits and 1^2 percentage points on time deposits, effective September 16 for non-reserve city banks and September 24 for reserve and central reserve city banks. On August 9 the Treasury announced that the certificates and notes maturing on October 1 would be refunded into 1% per cent certificates. This announcement was followed by an adjustment in short-term rates to bring them in line with the 1/4 per cent rate and by an increase in the discount rates at all Federal Reserve Banks from 1% Per cent to IJ4 per cent. On August 18 the Treasury announced a new issue of savings notes, Series D, with a higher scale of interest rates than the previous issue. On August 19 the Board of Governors announced the reissuance of its regulation on consumer instalment credit under authority granted by the special session of the Congress. During the period the Treasury continued to manage its balances with the Federal Reserve Banks and in war loan accounts so as to further the policy of keeping pressure on bank reserves and to utilize available balances to retire maturing debt. To the extent possible, the effects on bank reserves of securities purchased for the System account in carrying out the policy of supporting the long-term rate on Treasury bonds and maintaining stable and orderly conditions in the Government security market had been offset by the sale of Treasury bills from the System account. The above direction was adopted so that the management of the System open market account could be continued as a part of the anti-inflationary program to the fullest extent possible consistent with the policy of supporting the Government bond market and maintaining stable and orderly conditions in that market. It was the opinion of the Committee at this meeting that other steps that might be taken to carry out the program would include (1) a further increase in short-term rates with corresponding increases in the bill rate with a view to bringing about greater flexibility in the bill market and increasing the holdings of bills outside the Federal Reserve Banks, (2) a further increase in the discount rates at the Federal Reserve Banks to follow the increase in short-term rates, (3) the continued retirement of Government debt to the extent permitted by Treasury balances, (4) the continued timing of calls on war loan accounts to exert some drain on bank reserves, and (5) continued study of the situation for the purpose of determining what, if any, action should be taken further to increase member bank reserve requirements. The limitation of 2 billion dollars contained in the first paragraph of the direction set forth above represented an increase of 500 million over the limitation in the direction issued at the meeting on May 20, 1948. The limitation was fixed at that amount for the reason that it appeared that over the next month or more a very substantial amount of securities would have to be purchased in carrying out the policy of supporting the long-term rate on Government bonds. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 99 NOVEMBER 30, 1948 (A meeting of the Federal Open Market Committee was held on November 15, 1948, to consider monetary and credit and debt management problems but no policy actions were taken at that time.) 1. Authority to Effect Transactions in System Account. 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 ofE 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 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. Votes for this action: Messrs. McCabe, Clayton, Draper, Eccles, Evans, Gilbert, Leedy, Szymczak, Vardaman, Williams, Young, and Rounds (alternate for Mr. Sproul). Votes against this action: none. When this meeting was held the situation had again changed considerably. Pressure on the long-term Government bond market, which had continued through the early part of November, had subsequently eased. The economy continued to operate at a high level but the outlook for total expenditures was obscure because increases were expected in Governmental expenditures while reductions might occur in consumer and business demands. Various alternative actions that might be taken by the Committee were considered, and it was agreed that the above direction, which was in the same form as the direction issued at the meeting on October 4, 1948, should be adopted to enable the System to continue to cope with conditions as they developed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ACTION OF FEDERAL ADVISORY COUNCIL ON BANK HOLDING COMPANY LEGISLATION SEPTEMBER 21, 1948 In connection with proposed bank holding company legislation, the Council adopted the following resolution on May 20., 1947: RESOLUTION The Council for the past few years has at almost every meeting discussed the holding company situation, the inadequacies of existing legislation, and proposals for additional legislation in connection with it. (1) The Council believes that holding company legislation should be enacted at this time. Experience has shown that the present legislation is inadequate and that additional legislation is urgently necessary. (2) It approves the general approach to the holding company problem embodied in Senate Bill 829. (3) It believes Senate Bill 829 should be amended— (a) By adding to the declaration of policy and the standards for Federal Reserve Board, Comptroller of the Currency, and Federal Deposit Insurance Corporation action a more definite statement of objectives and standards. (A memorandum is attached which was the subject of discussion between the Board of Governors and the Federal Advisory Council which indicates the type of amendments in this regard which the Council believes necessary.) [The memorandum follows below.] (b) By granting tax exemption to such holding companies as are required to divest themselves of nonbanking assets. Simple justice requires that such tax exemption should be granted, and a precedent exists for it in the utility holding company legislation. (c) By requiring a larger percentage than 10 per cent of the ownership of stock in two or more banks in order to create an automatic holding company relationship. (d) By providing that incidental ownership of bank stocks in fiduciary capacities such as executor, trustee under a will, etc., should not create an automatic holding company relationship. The Council urges the Board to submit amendments in accordance with these suggestions and to press for the enactment of the bill as so amended. MEMORANDUM SUBMITTED IN CONNECTION WITH THE FOREGOING RESOLUTION 1. To reach and regulate any banking operation which, functioning in an area or with a structure larger than that permitted to independent banks, can Digitized foor rF RdAoSesE,R t hrough the medium of concentrated control, jeopardize independent http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 100

FEDERAL RESERVE SYSTEM IOI competitive banking at local or regional levels or place independent banks under the particular circumstances at a competitive disadvantage; 2. To confine the size and expanse of any such banking operation, regardless of its competitive or other aspects, within limits consistent with adequate and sound banking; and 3. To control the magnitude and expanse of any such banking operation, regardless of all other considerations, to the end that, in the event of adverse general economic conditions, such an operation will not be subjected to any inordinate pressure arising from unwieldiness due solely to mere size and expanse which, in turn, may put an inordinate pressure on the nation's banking structure. * * * * * On February 17, 1948, the Council adopted the following resolution regarding bank holding company legislation : RESOLUTION The Federal Advisory Council has approved by resolution Bank Holding Company legislation. It believes that Senate Bill No. 829 with the amendments suggested by the Council in its resolution of May 20, 1947 should be passed by this session of the Congress and that action by the Congress should not be delayed. The Federal Advisory Council urges the Board of Governors of the Federal Reserve System to use its best efforts to secure the passage of the bill, with the amendments suggested by the Council and asks that this resolution be transmitted to the members of the Senate and House Banking and Currency Committees. * * * * * The Council reaffirms the position it took on bank holding company legislation as expressed in the above resolutions, and favors the enactment of such legislation at the next session of the Congress. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MEMORANDUM OF FEDERAL ADVISORY COUNCIL ON CREDIT CONDITIONS, NOVEMBER 22, 1948 The unforeseen outcome of the election has brought at least a temporary reluctance on the part of business concerns in some sections of the country to promote further capital expansion programs. This hesitation to proceed with business plans will probably continue until the Administration program relating to taxes, labor legislation, and other measures concerning business has been announced and the attitude of the new Congress can be appraised. The election has also affected the security markets. The Government bond market has been stronger, partly because of the feeling that the Administration will maintain the present support policy for Government securities, and partly because of the feeling that it is likely the volume of new corporate securities offered will be less because of the cancellation or postponement of expansion plans and that a Government bond yielding 2j4 per cent may be an attractive investment in comparison with the probable yield on the reduced supply of high-grade corporates. The members of the Council do not now find any clear and uniform economic trend evident throughout the twelve Federal Reserve districts. The Council, therefore, believes that until the trend following the election becomes much clearer, it would not be advisable "to rock the economic boat." Specifically, the Council believes it would not be desirable under present circumstances to change (i) the reserve requirements, (2) the rediscount rate, or (3) the support policy for Government securities. The Council further believes that increasing bank reserves is not the proper method of dealing with the problem of inflation. One of the results of an increase in bank reserves under current conditions is the transfer of Government securities from banks to the Federal Reserve System, thereby largely nullifying any possible benefits from increasing the reserves and making the problem of debt management by the Treasury more difficult. An increase in member bank reserves not only makes membership in the System less desirable, but it also affects the earnings of some banks adversely. The over-all earnings of banks may be satisfactory, but the arbitrary character of an increase in reserves in all banks affects the earnings of individual banks unfairly. The repeated emphasis on bank deposits and on the banks as a major factor in causing inflation gives the public an erroneous impression of the principal reasons for the current inflation, which are to be found in the great expansion in the production of durable goods including housing and in large expenditures for defense, foreign aid, and veterans' assistance. Attempts to control through monetary policy an inflation which has resulted from conditions largely outside the banking system are certain to be unsuccessful. The Council appreciates that members of the Board have on some occasions called attention publicly to those factors outside the banking system which are principally responsible for the inflation. If these facts could be re-emphasized whenever the occasion permits, it woud be very helpful to a better public understanding of the situation. Digitized for FRASER http://fraser.stlouisfed.org/ 102 Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM IO3 With the conditions now prevailing, any proposals to increase reserves under the present authority, to request additional authority to impose still higher reserves, or to seek authority for special reserves for banks would in view of the foregoing comments be opposed by the Council, and by bankers generally, as detrimental to the best interests of the economy. The Council believes it would be helpful if a comprehensive study could be made of the whole question of bank reserves, including such subjects as the purposes bank reserves serve, whether authority to vary reserves should be granted or whether they should be fixed definitely by legislation, and the proper relationship of reserves to the various classes of deposits, and to the size and location of banks. This study might be undertaken by a committee including representatives of the banking agencies of the Federal Government, the banking departments of the State governments and the banks. An objective and exhaustive study in this field would be a useful guide to ultimate legislation. In relation to the matter of interest rates on Government securities, the Council has at other times stated that under present conditions it would be beneficial to our economy to have a modest rise in short-term rates. Even a small increase in these rates is helpful in reducing the demand for credit by making both borrowers and bankers aware of the dangers in the present situation. The timing of any increase in such rates should be a matter of agreement between the Board of Governors and the Treasury. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM [December 31, 1948] Term Expires THOMAS B. MCCABE, of Pennsylvania, Chairman January 31, 1956 MARRINER S. ECCLES, of Utah January 31, 1958 M. S. SZYMCZAK, of Illinois January 31, 1962 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, 10^2 ELLIOTT THURSTON, Assistant to the Board CHESTER MORRILL, Special Adviser to the Board WINFIELD W. RIEFLER, Assistant to the Chairman S. R. CARPENTER, Secretary BRAY HAMMOND, Assistant Secretary MERRITT SHERMAN, Assistant Secretary GEORGE B. VEST, General Counsel FREDERIC SOLOMON, Assistant General Counsel JOHN C. BAUMANN, Assistant General Counsel J. LEONARD TOWNSEND, Solicitor WOODLIEF THOMAS, Director, Division of Research and Statistics RALPH A. YOUNG, Associate Director, Division of Research and Statistics FRANK A. SOUTHARD, JR., Associate Director, Division of Research and Statistics EDWIN R. MILLARD, Director, Division of Examinations GEORGE S. SLOAN, Assistant Director, Division of Examinations C. C. HOSTRUP, Assistant Director, Division of Examinations EDWARD L. SMEAD, Director, Division of Bank Operations ROBERT F. LEONARD, Associate 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 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, 1948] MEMBERS THOMAS B. MCCABE, Chairman (Board of Governors) ALLAN SPROUL, Vice Chairman (Elected by Federal Reserve Bank of New York) LAWRENCE CLAYTON (Board of Governors) ERNEST G. DRAPER (Board of Governors) MARRINER S. ECCLES (Board of Governors) R. M. EVANS (Board of Governors) R. R. GILBERT (Elected by Federal Reserve Banks of Atlanta, St. Louis, and Dallas) H. G. LEEDY (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) ALFRED H. WILLIAMS (Elected by Federal Reserve Banks of Boston, Philadelphia, and Richmond) C. S. YOUNG (Elected by Federal Reserve Banks of Cleveland and Chicago) EXECUTIVE COMMITTEE OFFICERS THOMAS B. MCCABE, Chairman CHESTER MORRILL, Secretary ALLAN SPROUL, Vice Chairman S. R. CARPENTER, Assistant Secretary MARRINER S. ECCLES GEORGE B. VEST, General Counsel M. S. SZYMCZAK J. LEONARD TOWNSEND, Assistant General ALFRED H. WILLIAMS Counsel WOODLIEF THOMAS, Economist KARL R. BOPP, Associate Economist /\OJMM 1 WATROUS H. IRONS, Associate Economist FEDERAL RESERVE BANK OF NEW YORK JOHN K. LANGUM, Associate Economist ROBERT G. ROUSE, Manager of System T. BRUCE ROBB, Associate Economist Digitized for FROApSeEnR M arket Account JOHN H. WILLIAMS, Associate Economist http://fraser.stlouisfed.org/ 104 Federal Reserve Bank of St. Louis

FEDERAL ADVISORY COUNCIL [December 31, 1948] iviEMBERS District No. 1—CHARLES E. SPENCER, JR., Chairman, The First National Bank of Boston, Boston, Massachusetts. District No. 2—W. RANDOLPH BURGESS, Chairman, Executive Committee, 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 of Columbus, 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, Chairman, Commerce Trust Company, Kansas City, Missouri. District No. 11—J. E. WOODS, Chairman, Temple National Bank, Temple, 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, ex officio OFFICERS President, EDWARD E. BROWN First Vice President, CHARLES E. SPENCER, Second Vice President, ROBERT V. FLEMING JR. Secretarv. HERBERT V. PROCHNOW7 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 [December 31, 1948] CHAIRMEN AND DEPUTY CHAIRMEN OF BOARDS OF DIRECTORS Chairman and Federal Reserve Bank of— Deputy Chairman Federal Reserve Agent Boston Albert M. Creighton Harold D. Hodgkinson New York Robert T. Stevens William I. Myers Philadelphia Vacancy 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 Wm. H. Bryce Minneapolis Roger B. Shepard W. D. Cochran Kansas City Robert B. Caldwell Robert L. Mehornay Dallas J. R. Parten R. B. Anderson San Francisco Brayton 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. Shepard, Chairman of the Federal Reserve Bank of Minneapolis, served as Chairman of the Conference and as Chairman of the Executive Committee until December. The other members of the Executive Committee were Mr. Avery, Chairman of the Federal Reserve Bank of Chicago, and Mr. Dearmont, Chairman of the Federal Reserve Bank of St. Louis. At the meeting of the Conference on December 10, Mr. Dearmont 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. Wilbur, Chairman of the Federal Reserve Bank of San Francisco, and Mr. Stevens, Chairman of the Federal Reserve Bank of New York. 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, 1948—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 : 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 Allan Forbes President, State Street Trust Company, Boston, Mass.. . 1950 Class B : Frederick S. Blackall, jr President and Treasurer, The Taft-Peirce Manufacturing Company, Woonsocket, R. 1 1948 Roy L. Patrick President, Rock of Ages Corporation, Burlington, Vt.. . . 1949 Philip R. Allen Director, Bird & Son, inc., E. Walpole, Mass 1950 Class C.- Ames Stevens Treasurer, Ames Worsted Company, Lowell, Mass 1948 Harold D. Hodgkinson Vice President, General Manager and Chairman of Management Board, Wm. Filene's Sons Company, Boston, Mass 1949 Albert M. Creighton Chairman of the Board 1950 District No. 2—New York Class A: 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 Frederic E. Worden Chairman of the Board and President, The National Bank of Auburn, Auburn, N.Y 1950 Class B: 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 Charles E. Adams Chairman of the Board, Air Reduction Company, Inc., New York, N. Y 1950 Class C: William I. Myers Dean, New York State College of Agriculture, Cornell University, Ithaca, N. Y 1948 Robert D. Calkins Director and Vice President, General Education Board, New York, N. Y 1949 Robert T. Stevens Chairman of the Board, J. P. Stevens and Co., Inc., New York, N. Y 1950 Buffalo Branch Appointed by Federal Reserve Bank: Charles H. Diefendorf President, The Marine Trust Company of Buffalo, Buffalo, N. Y 1948 Raymond F. Leinen Executive Vice President, Lincoln Rochester Trust Company, Rochester, N. Y „ 1949 C. George Niebank President, Bank of Jamestown, Jamestown, N. Y 1949 Clyde C. Brown President, The Cuba National Bank, Cuba, N. Y 1950 Appointed by Board of Governors: Carl G. Wooster Farmer, Union Hill, N. Y 1948 Thomas Robins, Jr President, Hewitt-Robins, Inc., Buffalo, N. Y 1949 Lewis B. Swift President, Taylor Instrument Companies, Rochester, N. Y 1950 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, 1948—Cont. District No. 3—Philadelphia Term Expires DIRECTORS—Cont. Dec. 31 Class A : George W. Reily President, Harrisburg National Bank, Harrisburg, Pa... 1948 John B. Henning President, Wyoming National Bank, Tunkhannock, Pa.. . 1949 Archie D. Swift Chairman of the Board, Central-Penn National Bank, Philadelphia, Pa 1950 Class B: Albert G. Frost President, The Esterbrook Pen Company, Camden, N. J. 1948 William J. Meinel President and General Manager, Heintz Manufacturing Company, Philadelphia, Pa 1949 Walter H. Lippincott President and Director, Lobdell Company, Wilmington, Del 1950 Class C: Vacancy 1948 Warren F. Whittier Agricultural Consultant, Chester Springs, Pa 1949 C. Canby Balderston Dean, Wharton School of Finance and Commerce, University of Pennsylvania, Philadelphia, Pa 1950 District No. 4—Cleveland Class A : Ben 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 John T. Rohr President, The Toledo Trust Company, Toledo, Ohio 1950 Class B: Joel M. Bowlby President, The Eagle-Picher Company, Cincinnati, Ohio. . 1948 Ross Pier Wright Secretary-Treasurer, Reed Manufacturing Company, Erie, Pa 1949 L. H. Lund Vice President and Treasurer, Westinghouse Electric Corporation, Pittsburgh, Pa 1950 Class C: Reynold E. Klages President, Columbus Auto Parts Company, Columbus, Ohio 1948 George C. Brainard President and General Manager, Addressograph-Multigraph Corporation, Cleveland, Ohio 1949 A. Z. Baker Chairman of the Board, The Cleveland Union Stock Yards Company, Cleveland, Ohio 1950 Cincinnati Branch Appointed by Federal Reserve Bank: Neil McElroy President, 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 Walter H. J. Behm President, The Winters National Bank and Trust Company of Dayton, Dayton, Ohio 1950 Appointed by Board of Governors: Francis H. Bird Dean, College of Business Administration, University of Cincinnati, Cincinnati, Ohio 1948 S. Headley Shouse Tobacco and livestock raiser, Lexington, Ky 1949 Paul G. Blazer Chairman of the Board, Ashland Oil & Refining Company, Ashland, Ky 1950 Pittsburgh Branch Appointed by Federal Reserve Bank: 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 T. C. Swarts Executive Vice President, Woodlawn Trust Company, Aliquippa, Pa 1950 Appointed by Board of Governors: A. H. Burchfield, Jr President and General Manager, Joseph Home Company, Pittsburgh, Pa 1948 Howard W. Jordan President, Pennsylvania Rubber Company, Jeannette, Pa. 1949 Josiah M. Koch Vice President, Quaker State Oil Refining Corporation, Oil City, Pa ,,,..... 1950 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM IO9 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1948—Cont. District No. 5—Richmond Term Expires DIRECTORS Cont. ^CC. SI Class A : Tames 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 Tohn A. Svdenstricker Cashier, First National Bank in Marlinton, Marlinton, W. Va 1950 Class B: Charles C. Reed President, WTilliams & Reed, Inc., Richmond, Va 1948 H. L. Rust, Jr President, H. L. Rust Company, Washington, D. C 1949 Cary L. Page President and Treasurer, Jackson Mills, Wellford, S. C. 1950 Class C: YV. G. Wysor Management Counsel, Southern States Cooperative, Inc., Richmond, Va 1948 Edward R. Stettinius, Jr Rector, University of Virginia, Rapidan, Va 1949 Charles P. McCormick President and Chairman of Board, McCormick & Company, Inc., Baltimore, Md 1950 Baltimore Branch Appointed by Federal Reserve Bank: 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 President, The Western National Bank of Baltimore, Baltimore, Md 1949 W. Bladen Lowndes President, Fidelity Trust Company, Baltimore, Md 1950 Appointed by Board of Governors: James E. Hooper Vice President, William E. Hooper and Sons Company, Baltimore, Md 1948 L. Vinton Hershey President and General Manager, Hagerstown Shoe Company, Hagerstown, Md 1949 James M. Shriver President, The B. F. Shriver Company, Westminster, Md. 1950 Charlotte Branch Appointed by Federal Reserve Bank: Angus E. Bird Chairman of the Board, The Citizens & Southern National Bank of South Carolina, Columbia, 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 N. S. Calhoun President, Security National Bank, Greensboro, N. C... 1950 Appointed by Board of Governors: R. Flake Shaw Executive Vice President and Secretary, North Carolina Farm Bureau Federation, Greensboro, N. C 1948 W. A. L. Sibley Vice President and Treasurer, Monarch Mills, Union, S. C 1949 R. E. Ebert President, Dixie Home Stores, Inc., Greenville, S. C 1950 District No. 6—Atlanta Class A : R. C. Williams President, The First National Bank of Atlanta, Atlanta, Ga 1948 W. D. Cook Chairman of the Board, First National Bank in Meridian, Meridian, Miss 1949 George J. WThite President, The First National Bank of Mount Dora, Mount Dora, Fla 1950 Class B. 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 A. B. Freeman Chairman of the Board, Louisiana Coca-Cola Bottling Company, Ltd., New Orleans, La 1950 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, 1948—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class C: J F. Porter President, Tennessee Burley Tobacco Growers Associaa tion, Columbia, Tenn 1948 Rufus C. Harris President, The Tulane University of Louisiana, New Orleans, La 1949 Frank H. Neely President, Rich's, Inc., Atlanta, Ga 1950 Birmingham Branch Appointed by Federal Reserve Bank: 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 W. C. Bowman Chairman of the Board, The First National Bank of Montgomery, Montgomery, Ala 1950 Appointed by Board of Governors: Wm. Howard Smith President, McQueen-Smith Farms, Prattville, Ala 1948 Thad Holt President-Treasurer, Voice of Alabama, Inc., Birmingham, Ala » 1949 J. Roy Faucett Faucett Brothers, Northport, Ala 1950 Jacksonville Branch Appointed by Federal Reserve Bank: J. S. Fairchild Executive Vice President, 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 J. T. Shands President, The Atlantic National Bank of Jacksonville, Jacksonville, Fla 1950 Appointed by Board of Governors: J. Hillis Miller President, University of Florida, Gainesville, Fla 1948 Howard Phillips Vice President and General Manager, Dr. P. Phillips Company, Orlando, Fla 1949 Marshall F. Howell Secretary-Treasurer, Bond-Howell Lumber Co., Jacksonville, Fla 1950 Nashville Branch Appointed by Federal Reserve Bank : Edward Potter, Jr President, Commerce Union Bank, Nashville, Tenn 1948 L. R. Driver President, The First National Bank in Bristol, Bristol, Tenn 1949 T. L. Cathey President, Peoples and Union Bank, Lewisburg, Tenn.. . 1949 W. H.Hitchcock President, First and Peoples National Bank, Gallatin, Tenn 1950 Appointed by Board of Governors: H. C. Meacham Farmer, Franklin, Tenn 1948 W Bratten Evans President, Tennessee Enamel Manufacturing Company, Nashville, Tenn 1949 C. E. Brehm Acting President, University of Tennessee, Knoxville, Tenn 1950 New Orleans Branch Appointed by Federal Reserve Bank: 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, The First National Bank of McComb City, McComb City, Miss 1949 T. J. Eddins President, Bank of Slidell, Slidell, La 1950 Appointed by Board of Governors: John J. Shaffer, Jr Planter, Ellendale, La 1948 E. O. Batson President, Batson-McGehee & Company, Inc., Millard, Miss 1949 H. G. Chalkley President, Sweet Lake Land and Oil Company, Inc., Lake Charles, La 1950 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM III DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1948—Cont. District No. 7—Chicago Term Expires DIRECTORS—Cont. Dec. 31 Class A: 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 Vivian W. Johnson President, First National Bank, Cedar Falls, Iowa 1950 Class B: William C. Heath President, A. O. Smith Corporation, Milwaukee, Wis 1948 William J. Grede President, Grede Foundries, Inc., Milwaukee, Wis 1949 Nicholas H. Noyes Vice President in Charge of Finances, Eli Lilly and Company, Indianapolis, Ind 1950 Class C.- Clarence W. Avery President and Chairman, The Murray Corporation of America, Detroit, Mich 1948 Paul G. Hoffman Director, The Studebaker Corporation, South Bend, Ind. 1949 Allan B. Kline President, American Farm Bureau Federation, Chicago, 111 1950 Detroit Branch Appointed by Federal Reserve Bank: Rudolph E. Reichert President, Ann Arbor Bank, Ann Arbor, Mich 1948 Charles A. Kanter President, The Manufacturers National Bank of Detroit, Detroit, Mich 1948 Charles T. Fisher, Jr President, The National Bank of Detroit, Detroit, Mich. 1949 Appointed by Board of Governors: Ernest Gilbert Farmer, Waldron, Mich 1948 Ben R. Marsh Vice President and General Manager, Michigan Bell Telephone Company, Detroit, Mich 1949 District No. 8—St. Louis Class A: Phil E. Chappell President, Planters Bank and Trust Company, Hopkinsville, Ky 1948 G. R. Corlis President, Anna National Bank, Anna, 111 1949 Tom K. Smith Chairman of Board, Boatmen's National Bank, St. Louis, Mo 1950 Class B: A. Wessel Shapleigh President, Shapleigh Hardware Company, St. Louis, Mo. 1948 K. August Engel President, Arkansas Democrat Company, Little Rock, Ark. 1949 Louis Ruthenburg President and General Manager, Servel, Inc., Evansville, Ind 1950 Class C: J. P. Redman Farmer, Cairo, 111 1948 Russell L. Dearmont Chief Counsel for Trustee, Missouri-Pacific Lines, St. Louis, Mo 1949 Wm. H. Bryce Vice President, Dixie Wax Paper Company, Memphis, Tenn 1950 Little Rock Branch Appointed by Federal Reserve Bank: 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 Geo. S. Neal President, Bank of Russellville, Russellville, Ark 1950 Appointed by Board of Governors: Cecil C. Cox Farmer, Stuttgart, Ark 1948 Ralph E. Plunkett President, Plunkett-Jarrell Grocer Company, Little Rock, Ark 1949 A. Howard Stebbins, Sr Chairman of Board, Stebbins and Roberts, Inc., Little Rock, Ark 1950 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

112 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1948—Com. Term Expires DIRECTORS—Cont. Dec. 31 Louisville Branch Appointed by Federal Reserve Bank: 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 Wallace M. Davis Vice President, Citizens Fidelity Bank and Trust Company, Louisville, Ky 1950 Appointed by Board of Governors: Geo. O. Boomer President, The Girdler Corporation, Louisville, Ky 1948 Smith D. Broadbent, Jr Farmer, Cadiz, Ky 1949 Alvin A. Voit President, The Mengel Company, Louisville, Ky 1950 Memphis Branch Appointed by Federal Reserve Bank : 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 W. P. Kretschmar Chairman of Board, Commercial National Bank, Greenville, Miss 1950 Appointed by Board of Governors: Leslie M. Stratton, Jr Executive Vice President, Stratton-Warren Hardware Company, Memphis, Tenn 1948 Hugh M. Brinkley Farmer, Hughes, Ark 1949 M. P. Moore Partner, E. E. Moore and Company, Senatobia, Miss 1950 District No. 9—Minneapolis Class A : 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 J. R. McKnight President, Pierre National Bank, Pierre, S. D 1950 Class B: Rav C. Lange President, Chippewa Canning Company, Chippewa Falls, Wis 1948 Homer P. Clark. Chairman of the Board, West Publishing* Company, St. Paul, Minn 1949 Walter H. McLeod President, Missoula Mercantile Company, Missoula, Mont. 1950 Class C.- Paul E. Miller Director, Agricultural Extension Division, University of Minnesota, Minneapolis, Minn 194 8 W. D. Cochran G. M. C. Truck Distributor, Iron Mountain, Mich 1949 Roger B. Shepard Chairman of the Board 1950 Helena Branch Appointed by Federal Reserve Bank : Theodore Jacobs President, First National Bank, Missoula, Mont 1948 E. D. MacHaffie President, State Publishing Company, Helena, Mont 1948 B. M. Harris President, Yellowstone Bank, Columbus, Mont 1949 Appointed by Board of Governors: R. B. Richardson President, Western Life Insurance Company, Helena, Mont 1948 Malcolm E. Holtz Agriculturist, Great Falls, Mont 1949 District No. 10—Kansas City Class A : T A Dines Chairman of the Board, United States National Bank, Denver, Colo 1948 M A. Limbocker Chairman of the Board and President, Citizens National Bank, Emporia, Kan 1949 W L Bunten Executive Vice President, Goodland State Bank, Goodland, Kan 1950 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM II3 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1948—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class B: Willard D. Hosford Vice President and General Manager, John Deere Plow Company, Omaha, Neb 1948 J. M. Bernardin Lumberman, Kansas City, Mo 1949 L. C. Hutson President and General Manager, Chickasha Cotton Oil Company, Chickasha, Okla 1950 Class C: Lyle L. Hague Farmer and stockman, Cherokee, Okla 1948 Robert B. Caldwell Caldwell, Downing, Noble and Garrity, Kansas City, Mo. 1949 Robert L. Mehornay President, North-Mehornay Furniture Company, Kansas City, Mo 1950 Denver Branch Appointed by Federal Reserve Bank : J. D. Allen President, The First National Bank of Eagle County, Eagle, Colo 1948 Albert K. Mitchell Rancher, Albert, N. M 1948 P. K. Alexander Vice President, The First National Bank of Denver, Denver, Colo 1949 Appointed by Board of Governors: M. E. Noonen Sheep rancher, Kremmling, Colo 1948 W. A. Alexander Vice President and Assistant General Manager, The Denver Tramway Corporation, Denver, Colo 1949 Oklahoma City Branch Appointed by Federal Reserve Bank: 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 S. A. Bryant President, The Farmers National Bank, Cushing, Okla... 1949 Appointed by Board of Governors: Rufus Green Rancher and farmer, Duncan, Okla 1948 C. W. Cotton President, C. W. Cotton Supply Company, Tulsa, Okla. 1949 Omaha Branch Appointed by Federal Reserve Bank : Fred W. Marble President, Stock Growers National Bank, Cheyenne, Wyo. 1948 Walter S. Byrne General Manager, Metropolitan Utilities District of Omaha, Omaha, Neb 1949 I. R. Alter President, First National Bank, Grand Island, Neb 1949 Appointed by Board of Governors: Fred S. Wallace Farmer, Gibbon, Neb. 1948 Joseph W. Seacrest Co-Publisher, Nebraska State Journal, Lincoln, Neb 1949 District No. 11—Dallas Class A : Walter P. Napier Chairman of the Board, Alamo National Bank, San Antonio, Texas 1948 J. Edd McLaughlin Vice President, Security State Bank and Trust Companv, Rails, Texas .'. 1949 W. L. Peterson President, The State National Bank, Denison, Texas. . . . 1950 Class B : 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 W. F. Beall President and General Manager, 3 Beall Brothers 3, Department Stores, Jacksonville, Texas 1950 Class C: R. B. Anderson General Manager, W. T. Waggoner Estate, Vernon, Texas 1948 T. R. Parten President, Woodley Petroleum Company, Houston, Texas 1949 "G. A. Frierson G. A. Frierson & Son, Shreveport, La 1950 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

114 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1948—Cont. Term Expires DIRECTORS—Cont. Bee. 31 El Paso Branch Appointed by Federal Reserve Bank: 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 W. H. Holcombe Executive Vice President, Security State Bank, Pecos, Texas 1950 Appointed by Board of Governors: Dorrance D. Roderick President, Newspaper Printing Corporation, El Paso, Texas 1948 Hiram S. Corbett President, J. Knox Corbett Lumber Company, Tucson, Ariz 1949 Hal Bogle Livestock feeding, farming and ranching, Dexter, N. M. 1950 Houston Branch Appointed by Federal Reserve Bank: James A. Elkins Attorney, Vinson, Elkins, Weems & Francis, 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 R. Lee Kempner Chairman of the Executive Committee, United States National Bank, Galveston, Texas 1950 Appointed by Board of Governors: Ross Stewart President, C. Jim Stewart and Stevenson, Inc., Houston, Texas 1948 George A. Slaughter Farming, Wharton, Texas 1949 J. E. Wheat Attorney at Law, Woodville, Texas 1950 San Antonio Branch Appointed by Federal Reserve Bank : 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 E. R. L. Wroe President, American National Bank, Austin, Texas 1950 Appointed by Board of Governors: Henry P. Drought Attorney at Law, San Antonio, Texas 1948 Holman Cartwright Livestock and farming, Twin Oaks Ranch, Dinero, Texas 1949 Edward E. Hale Chairman of the Department and Professor of Economics, The University of Texas, Austin, Texas 1950 District No. 12—San Francisco Class A : Carroll F. Byrd 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 Chas. H. Stewart President, Portland Trust and Savings Bank, Portland, Ore 1950 Class B: Reese H. Taylor President, Union Oil Company of California, Los Angeles, Calif. 1948 Walter S. Johnson President, American Box Corporation, San Francisco, Calif . 1949 St. George Holden St. George Holden Realty Company, San Francisco, Calif. 1950 Class C.- 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 Wm. R. Wallace, Jr Member of the firm, Williamson & Wallace, Attorneys at Law, San Francisco, Calif 1950 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 115 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1948—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Los Angeles Branch Appointed by Federal Reserve Bank : 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 VV. R. Bimson President, The Valley National Bank of Phoenix, Phoenix, Ariz 1949 Appointed by Board of Governors: Fred G. Sherrill Vice President, J. G. Boswell Company, Los Angeles, Calif 1948 Y. Frank Freeman Vice President, Paramount Pictures, Inc., Hollywood, Calif 1949 Portland Branch Appointed by Federal Reserve Bank: 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 E. B. MacNaughton Chairman of the Board, The First National Bank of Portland, Portland, Ore 1949 Appointed by Board of Governors: R. B. Taylor Livestock and farming, Adams, Ore 1948 Aaron M. Frank President, Meier and Frank Company, Inc., Portland, Ore. 1949 Salt Lake City Branch Appointed by Federal Reserve Bank : Chas. L. Smith Chairman of the Board, First Security Bank of Utah, N. A., Salt Lake City, Utah 1948 John A. Schoonover President, The Idaho First National Bank, Boise, Idaho 1948 D. F. Richards President, American National Bank of Idaho at Idaho Falls, Idaho Falls, Idaho 1949 Appointed by Board of Governors: Merle G. Hyer Livestock and farming, Lewiston, Utah 1948 Henry Aldous Dixon President, Weber College, Ogden, Utah 1949 Seattle Branch Appointed by Federal Reserve Bank: Benj. N. Phillips Chairman of the Board, 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 Lawrence M. Arnold Chairman of the Board, Seattle-First National Bank, Seattle, Wash 1949 Appointed by Board of Governors: John M. McGregor Manager, McGregor Land & Livestock Company, Hooper, Wash 1948 Henry C. Isaacson President, Isaacson Iron Works, Seattle, Wash 1949 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

n6 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1948—Cont SENIOR OFFICERS OF FEDERAL RESERVE BANKS [December 31, 1948] Federal Reserve President Vice Presidents Bank of— First Vice President Boston Joseph A. Erickson Robert B. Harvey1 Alfred C. Neal William Willett E. G. Hult Carl B. Pitman E. O. Latham O. A. Schlaikjer R. F. Van Amringe New York ... Allan Sproul E. O. Douglas A. Phelan L. R. Rounds H. H. Kimball H. V. Roelse L. W. Knoke Robert G. Rouse Walter S. Logan V. Willis R. B. Wiltse Philadelphia . . Alfred H. Williams Karl R. Bopp Wm. G. McCreedy W. J. Davis Robert N. Hilkert P. M. Poorman2 E. C. Hill 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. Black1 John K. Langum Neil B. Dawes O. J. Netterstrom Charles B. Dunn W. R. Diercks A. L. Olson E. C.Harris Alfred T. Sihler W. W. Turner St. Louis Chester C. Davis O. M. Attebery Paul E. Schroeder F. Guy Hitt Wm. E. Peterson William H. Stead C. A. Schacht 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 H. G. Leedy L. H. Earhart John Phillips, Jr. Kansas City . . Henry O. Koppang Delos C. Johns G. H. Pipkin R. L. Mathes C. E. Sandy1 D. W. Woolley Dallas R. R. Gilbert E. B. Austin W. H. Holloway R. B. Coleman Watrous H. Irons W. D. Gentry H.R. DeMoss L. G. Pondrom2 W. E. Eagle C. M. Rowland Mac C. Smyth San Francisco . .C. E. Earhart Albert C. Agnew W. L. Partner W. N. Ambrose C. R. Shaw H. N. Mangels D. L. Davis H. F. Slade J. M. Leisner2 W. F. Volberg O. P. Wheeler Cashier. 2Also Cashier. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 117 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1948—Cont. VICE PRESIDENTS IN CHARGE OF BRANCHES OF FEDERAL RESERVE BANKS Federal Reserve Bank of— Branch Chief Officer New York . . . Buffalo I. B. Smith1 Cleveland . . . Cincinnati B. J. 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. Hams St. Louis Little Rock C. M. Stewart Louisville C. A. Schacht Memphis Paul E. Schroeder Minneapolis . Helena R. E. Towle Kansas City . Denver G. H. Pipkin Oklahoma City R. L. Mathes Omaha L. H. Earhart Dallas El Paso C. M. Rowland 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 aGeneral 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. During the year Mr. Davis, President of the Federal Reserve Bank of St. Louis, served as Chairman of the Conference and Mr. Peyton, President of the Federal Reserve Bank of Minneapolis, served as Vice Chairman. In May Mr. Charles G. Young, Jr., Assistant to the General Counsel of the Federal Reserve Bank of St. Louis, was elected Secretary to succeed Mr. William F. Treiber, Assistant Vice President and Secretary of the Federal Reserve Bank of New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 00 BOUNDARIES OF FEDERAL RESERVE DISTRICTS AND THEIR BRANCH TERRITORIES c o c 73 O < w I73 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

Page Acceptances, bankers, buying rates on: Changes in 84, 88 Table 76 Amendments to Federal Reserve Act: (See Federal Reserve Act) American Bankers Association: Check routing symbols program inaugurated by 40 Assets and liabilities of Federal Reserve Banks 62, 64 Audit of accounts of Board by Federal Reserve Bank of New York 56 Bank credit developments 16 Bank earnings and earning assets 23 Bank holding companies: Applications for voting permits acted on 42 Legislation requested for more effective supervision and control 8 Resolution of Federal Advisory Council in connection with proposed legislation IOO Bank premises of Federal Reserve Banks and Branches: Construction authorized 50 Value of land and buildings 62, 64, 74 Bank supervision by the Federal Reserve System 40 Bankers acceptances, buying rates on 76, 84, S8 Banking offices: Analysis of changes 80 Number of 38 Baumann, John C, appointed Assistant General Counsel 54 Board of Governors: Audit of accounts by Federal Reserve Bank of New York 56 Employees, number of 53 Income and expenses 55 Members: List of 104 McCabe, Thomas B.: Appointment as Member and designation as Chairman 53 Statement before Banking and Currency Committee of Senate on reserve requirements and consumer instalment credit 5 Szymczak, M. S., reappointed for fourteen-year term 53 Office of Solicitor, new division established 54 Officers 104 Publications and releases 58 Research and advisory services 56 Staff: (See Staff of Board) Bond holdings, changes in 1948 27 Bonds: (See Government securities) Branch banks: Domestic: Capital requirements of member banks, legislation to be recommended to aid establishment of g Increase during year ?>() Number and analysis of changes go Federal Reserve System: Bank premises, cost and value of 74 Detroit Branch, construction of coin vault 50 Directors, list of y lO Examination of A L Portland, preparation of final plans authorized 50 Seattle, preparation of final plans authorized $ 0 Vice Presidents in charge of ^ Digitized for FRASER 11 http://fraser.stlouisfed.org/ 119 Federal Reserve Bank of St. Louis

I2O INDEX Page Branch banks—Continued Foreign: Applications approved during year 42 Number and location of 43 Brehm, C. E., appointed director at Nashville Branch 52 Brice, William H., appointed Class C Director at St. Louis and designated Deputy Chairman 51 Broadbent, Smith D., Jr., appointed director at Louisville Branch 52 Brown, Bonnar, resignation as Assistant Director of Division of Research and Statistics 54 Buying rates on bills at Federal Reserve Banks 76 Capital accounts: Federal Reserve Banks 63, 65, 67 Member banks 25 Capital requirements for member banks, legislation recommended 9 Carloadings, decrease during year 34 Chairmen of Federal Reserve Banks: Conference of 106 Designations for year 50 Executive Committee 106 List of 106 Meetings of 59 Stevens, Robert T., designated at New York 51 Charts: Bank deposits and currency, 1929-48 19 Capital ratios of member banks 25 Changes in member bank assets, 1929, 1939, 1945, and 19^8 26 Commercial bank loans, 1939-48 17 Earnings ratios of member banks, 1919-48 23 Gross national product, 1939-48 30 Member bank reserves, reserve bank credit, and related items 21 Money rates 28 Ownership of U. S. Government securities 14 Check routing symbols, progress in use of 40 Clayton Antitrust Act, hearing against Transamerica Corporation for violation of 46 Clearing and collection: Amendment to Regulation J to permit conditional payment of checks 44, 91 Check routing symbols, progress in use of 40 Par list: Changes in par and nonpar banks during year 39 Number of banks on list and number not on list, by States 81 Commitment rates at Federal Reserve Banks 76 Committees: Executive, of Chairmen's Conference 106 Executive, of Federal Advisory Council 105 Executive, of Federal Open Market Committee 104 Comptroller of the Currency: Cooperation pertaining to bank examination and supervision 41 Condition reports of Federal Reserve Banks: All banks combined 62 Each bank 64 Conferences: (See also Meetings) Vice Presidents in charge of bank examinations and supervision at Federal Reserve Banks 42 Consumer finances, third annual survey of 56 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 12T Page Consumer instalment credit: Joint resolution restoring Board's authority to regulate 46 Legislation to regulate temporarily 7 Minimum down payments and maximum maturities under Regulation W. . . 78 Regulation W, reissued and amendments approved 45, 89, 91, 93 Statement of Chairman McCabe before Banking and Currency Committee of Senate 5 Cotton, C. W., appointed director at Oklahoma City Branch 52 Court cases: Peoples Bank, Lakewood Village, California, vs. Members of Board of Governors, decision of Supreme Court 46 Credit: Consumer: {See Consumer instalment credit) Developments during 1948 I Policies pursued by Federal Reserve System to restrain expansion 10 Volume extended by savings institutions 26 Credit conditions, memorandum of Federal Advisory Council on 102 Crops, prospects during year 32 Currency: Circulation outside banks 20 Major factors affecting 19 Deposits: Businesses and individuals, decline in 19 Federal Reserve Banks 63, 65, 67 Major factors affecting 19 Time, maximum rates on yy Deputy Chairmen, Federal Reserve Banks: Bryce, William H., appointed at St. Louis 51 Hodgkinson, Harold D., appointed at Boston 50 List of 106 Redesignated for 1948 50 Directors, Federal Reserve Banks: Appointments during year ' 51 Brice, William H., appointed Class C at St. Louis and designated Deputy Chairman 51 Classes of 107 Hodgkinson, Harold D., appointed Deputy Chairman at Boston 50 Kline, Allan B., appointed Class C at Chicago 51 List of 107 Stevens, Ames, appointed Class C at Boston 51 Stevens, Robert T., appointed Class C and designated Chairman and Federal Reserve Agent at New York 51 Directors, Federal Reserve Branch Banks: Appointments during year 51 Brehm, C. E., appointed at Nashville 52 Broadbent, Smith D., Jr., appointed at Louisville 52 Cotton, C. W., appointed at Oklahoma City 52 Ebert, R. E., appointed at Charlotte 51 Faucett, J. Roy, appointed at Birmingham 51 Hale, Edward E., appointed at San Antonio 52 Howell, Marshall F., appointed at Jacksonville 51 Isaacson, Henry C, appointed at Seattle 52 List of i y O Marsh, Ben. R., appointed at Detroit 52 Miller, J. Hillis, appointed at Jacksonville 52 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 INDEX Page Directors, Federal Reserve Branch Banks—Continued Moore, M. P., appointed at Memphis 52 Phillips, Howard, appointed at Jacksonville 52 Seacrest, Joseph W., appointed at Omaha 52 Stebbins, A. Howard, Sr., appointed at Little Rock 52 Swift, Lewis B., appointed at Buffalo 51 Voit, Alvin A., appointed at Louisville 52 Directory: Board of Governors of the Federal Reserve System 104 Federal Advisory Council 105 Federal Open Market Committee 104 Federal Reserve Banks, directors and officers 106 Discount rates at Federal Reserve Banks: Changes in 84, 88 Table 76 Dividends: Federal Reserve Banks 47, 71, 72 Member banks, amount of 25 Earnings: Federal Reserve Banks, on Government securities 48 Member banks 23 Earnings and expenses of Federal Reserve Banks: 1914-1948 72 1947 and 1948 47 1948 70 Ebert, R. E., appointed director at Charlotte Branch 51 Economic developments during 1948 I Employees: Board of Governors, number of 53 Federal Reserve Banks: Number of 53 Number and salaries of 75 Erickson, Joseph A., appointed President at Boston 53 Examinations: % Federal Reserve Banks 41 State member banks 41 Executive Orders: 8843, Joint Resolution restoring Board's authority to regulate consumer instalment credit 46 Expenditures, personal in 1948 31 Expenses of Board of Governors 55 Exports: Decline during year 29 Means of financing surplus 2>7 United States, merchandise in 1948 36 United States, reduction in surplus 35 Faucett, J. Roy, appointed director at Birmingham Branch 51 Federal Advisory Council: Executive Committee 105 Meetings of 60 Members and officers 105 Memorandum on credit conditions 102 Resolution in connection with proposed bank holding company legislation 100 Federal Deposit Insurance Corporation: Cooperation pertaining to bank examination and supervision 41 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 123 Page Federal Open Market Committee: Executive Committee 104 Meetings in Washington 59 Members and officers 104 Policy actions 94 Federal Reserve Act: Section 12B, certain criminal provisions repealed 47 Section 13b, amendment needed to aid financing of business enterprises.... 9 Section 19, Joint Resolution to give Board additional authority to increase reserves of member banks 46 Section 22, criminal provisions repealed 47 Section 24, Act amending, regarding instructions as to real-estate loans. ... 47 Federal Reserve Bank of Boston: Personnel: Erickson, Joseph A., appointment as President 53 Whittemore, Laurence F., resignation as President 53 Federal Reserve Bank of Chicago: Air conditioning of building 50 Federal Reserve Bank of New York: Audit of accounts of Board of Governors 56 Foreign accounts of 49 Federal Reserve Bank of St. Louis: Rehabilitation of building 50 Federal Reserve Banks: Assets and liabilities of 62, 64 Bank premises 50, 62, 64, 74 Branches: (See Branch banks, Federal Reserve System) Capital accounts 63, 65, 67 Chairmen: (See Chairmen of Federal Reserve Banks) Condition of 62, 64 Directors: (See Directors) Discount rates 76, 84, 88 Dividends paid 47, 71, 72 Earnings and expenses: 1914-1948 72 1947 and 1948 47 1948 70 Earnings on loans and securities 48 Employees 53, 75 Examinations 41 Foreign transactions 48 Holdings of Government securities 68 Holdings of special short-term Treasury certificates 69 Officers, list of 1 ] 6 Officers and employees: Number of 53 Number and salaries of 75 Presidents, list of 116 Vice Presidents, list of 116 Volume of operations ^o Volume of operations in principal departments 6g Federal Reserve notes: Cost of printing ^6 Interest paid to U. S. Treasury 72 Issued to and held by Federal Reserve Banks 63, 65, 67 Federal Reserve policies in 1948 g Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 INDEX Page Federal Reserve policies under changing conditions 2 Federal Reserve System: Map 118 Membership, changes in 39 Policies under changing conditions 2 Fiduciary powers, authority granted to national banks during year 42 First Vice Presidents of Federal Reserve Banks, list of 117 Foreign accounts of Federal Reserve Bank of New York 49 Foreign banking corporations: Branches in operation 42 Number in operation 43 Foreign central banks, loans against gold 49 Foreign trade of the United States 38 Foreign transactions of Federal Reserve Banks 48 Franchise tax paid to Treasury 72 Gold: Foreign, depletion of 35 Inflow during 1948 22 Government securities: Holdings of banks during 1948 ;> Holdings by Federal Reserve Banks 15, 68 Outstanding at end of 1948 13 Ownership of 14 Rates on short-term, rise in 28 Retirement and refunding of maturing bonds 13 Grand Rapids, Michigan, designation as reserve city terminated 40 Hale, Edward E., appointed director at San Antonio Branch 52 Hodgkinson, Harold D., appointed Deputy Chairman at Boston 51 Hostrup, Clarence C, appointed Assistant Director, Division of Examinations. . . 55 Howell, Marshall F., appointed director at Jacksonville Branch 52 Imports: Increase during year 35 United States, merchandise in 1948 36 Income and expenses of Board of Governors 55 Inflation, developments during 1948 I Interlocking bank directorates: Amendment to Regulation L in regard to international or foreign banking 44, 87 International affairs, cooperation of Board of Governors in projects by supplying members of staff 58 International Bank for Reconstruction and Development, operations handled by Federal Reserve Bank of New York 49 International Monetary Fund, operations handled by Federal Reserve Bank of New York 49 International trade and finance 35 Investment funds, nonbank sources of 26 Isaacson, Henry C, appointed director at Seattle Branch 52 Kline, Allan B., appointed Class C Director at Chicago 51 Knapp, J. Burke, resignation as Assistant Director of the Division of Research and Statistics 54 Legislation: Bank holding company: Enactment to provide more effective supervision and control recommended 8 Resolution of Federal Advisory Council IOO Capital requirements for member banks, recommended 9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 125 Page Legislation—Continued Consumer instalment credit: Joint Resolution restoring authority to Board to regulate 46 Request for power to regulate 7 Criminal provisions, Title 18 of United States Code revised and codified into criminal code 47 Financing of business enterprises, amendment to Section 13b of Federal Reserve Act, recommended 9 Proposals to be presented to Congress 4 Real-estate loans, Act amending Section 24 of Federal Reserve Act 47 Reserve requirements, power to increase to be requested 5 Reserves of member banks, joint resolution amending Section 19 of Federal Reserve Act to give Board additional authority to increase 46 Leonard, Robert F., Director of Division of Bank Operations, appointment of. ... 54 Loans: Agricultural, increase in 18 Bank, reduced growth in 16 Foreign central banks against gold 49 Industrial, amendment to Section 13b of Federal Reserve Act Recommended to aid financing of business enterprises 9 Real-estate, Act amending Section 24 of Federal Reserve Act 47 Loans and investments: Commercial banks, expansion of private loans 26 Member banks 24 Map of Federal Reserve System 118 Margin requirements: Amendment to Regulations T and U, reducing 45 Reduction in 2 Regulations T and U, table yy Marsh, Ben R., appointed director at Detroit Branch 52 McCabe, Thomas B.: Appointed Member of Board of Governors and designated Chairman 53 Statement before Banking and Currency Committee of Senate on reserve requirements and consumer instalment credit 5 Meetings: Chairmen of Federal Reserve Banks. 59 Federal Advisory Council 60 Federal Open Market Committee 59 Miscellaneous 60 Presidents of Federal Reserve Banks 60 Member banks: Analysis of changes 80 Capital accounts 25 Earnings and earning assets 23 Loans and investments 24 Number of 39, 80 Reserve requirements yy Reserves 79 Membership in Federal Reserve System: Amendment to Regulation H to eliminate certain conditions of membership 44, 87 Capital requirement for member banks to be recommended as aid to 9 Changes during year 39^ 80 Suit regarding condition of membership, decision of Supreme Court of the United States 46 Merchandise trade of United States during 1948 $y Millard, Edwin R., appointed Director of Division of Examinations 54 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 INDEX Page Miller, J. Hillis, appointed director at Jacksonville Branch 52 Money: Changes in volume and activity of 18 Supply in hands of businesses and individuals 16 Moore, M. P., appointed director at Memphis Branch 52 Mutual savings banks: Analysis of changes 80 Deposits and earnings 2.7 National Association of Supervisors of State Banks, cooperation pertaining to bank examination and supervision 41 National banks: Analysis of changes 80 Trust powers granted during year 42 National City (National Stock Yards) Illinois, classified as reserve city... 40 Nonmember banks: Analysis of changes 80 Ineligible for membership 39 Par list, number on list and number not on list 81 Ogden, Utah, designation as reserve city terminated 40 Operations of Federal Reserve Banks, volume of 50, 69 Par List: Changes during year 39 Number of banks on list and not on list by Federal Reserve Districts and States 81 Parry, Carl E., Director of Division of Security Loans, retirement of 53 Peoples Bank, Lakewood Village, California, decision of Supreme Court on suit regarding condition of membership 46 Personal income and expenditures 31 Phillips, Howard, appointed director at Jacksonville Branch 52 Policy actions, Board of Governors: Discount rates, changes in 84, 88 Regulation D, Reserves of Member Banks: Increase in reserve requirements of member banks 90 Increase in reserve requirements of member banks in central reserve cities 85, 86 Regulation H, Membership of State Banking Institutions, amendment to. ... 87 Regulation J, Check Clearing and Collection, amendment to 91 Regulation L, Interlocking Bank Directorates under the Clayton Act, amendment to 87 Regulation T, Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges, amendment on substitutions in undermargined accounts 86 Regulation U, Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange, amendment on substitutions in undermargined accounts 86 Regulation W, Consumer Instalment Credit: Adoption in revised form 89 Amendments to 91 93 y Policy actions, Federal Open Market Committee: Authority to effect transactions in System account: Meeting of March 1 94 Meeting of May 20 . 95 Meeting of October 4 97 Meeting of November 30 99 Increase in authority to effect transactions in System account 96 Postal savings deposits, interest rate on 77 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 127 Page Presidents of Federal Reserve Banks: Conference of 117 Erickson, Joseph A., appointment at Boston 53 List of 116 Meetings of 60 Whittemore, Laurence F., resignation at Boston 52 Prices: Commodity, fluctuations during year 33 Movements during 1948 29 Selective movements during year 31 Trend during 1948 I Upward movement during year 32 Production: Increase during 1948 29 Relation to capacity and demand 33 Public debt: Composition of 13 Outstanding at end of 1948, by type of issue 13 Ownership of 12 Reduction in 12 Treasury cash operations and changes in cash balances 10 Publications and releases of Board of Governors 58 Rates: Buying, on bills 76 Commitment, at Federal Reserve Banks 76 Discount, at Federal Reserve Banks 76, 84, 85 Government securities, short-term 28 Interest: Changes in structure of 27 Federal Reserve notes, paid to Treasury 72 Table 76 Postal savings deposits 77 Savings deposits 77 Time deposits 77 Treasury bills, rise in 10 Real-estate loans, amendment to Section 24 of Federal Reserve Act 47 Receipts and disbursements of Board 55 Regulations, Board of Governors: Changes during year 44 Consumer instalment credit, proposed legislation 7 D, Reserves of Member Banks, amendments to 44, 85, 86, 90 H, Membership of State Banks, amendment to 44, 87 J, Check Clearing and Collection, amendment to 44, 91 L, Interlocking Bank Directorates under the Clayton Act, amendment relating to international or foreign banking 44, 87 T, Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges: Amendments to 2, 45, 86 Margin requirements, table 77 U, Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange: Amendments to 2, 45, 86 Margin requirements, table 77 W, Consumer Instalment Credit: Adoption in revised form gp Amendments to 4^ gi 93 f Minimum down payments and maximum maturities 78 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 INDEX Page Research and advisory services of Board of Governors 56 Reserve Bank credit, table 79 Reserve cities, designation of 40 Reserve requirements: Legislation requested to give Board of Governors power to increase 4 Member banks JJ Statement of Chairman McCabe before Banking and Currency Committee of Senate 5 Reserves: Major factors affecting 22 Manner of acquiring 4 Member banks: Amendment to Regulation D increasing 44, 90 Central reserve cities, amendment to Regulation D increasing 44, 85, 86 Joint Resolution amending Section 19 of the Federal Reserve Act to give Board additional authority to increase 46 1918-1948 79 Resignations: Brown, Bonnar, as Assistant Director, Division of Research and Statistics 54 Knapp, J. Burke, as Assistant Director, Division of Research and Statistics 54 Whittemore, Laurence F., as President at Boston 53 Resolutions: Federal Advisory Council on bank holding company legislation 100 Retirements: Parry, Carl E., Director of Division of Security Loans 53 Smead, EdwTard L., Director of Division of Bank Operations 55 Van Fossen, J. R., Assistant Director of Division of Bank Operations 55 Riefler, Winfield W., reappointment to Staff of Board as Assistant to Chairman 53 Salaries of officers and employees of Federal Reserve Banks 75 Savings and loan associations, investments of 27 Seacrest, Joseph W., appointed director at Omaha Branch 52 Securities, Government: {See Government securities) Securities exchange administration: Substitutions in undermargined accounts, amendments to Regulations T and U 86 Smead, Edward L., Director of Division of Bank Operations, retirement of 55 Solomon, Frederic, appointed Assistant General Counsel 54 Southard, Frank A., appointed Associate Director, Division of Research and Statistics 54 Spokane, Washington, designation as reserve city terminated 40 Staff at Federal Reserve Banks, number of officers and employees 53, 75 Staff of Board of Governors: Baumann, John C, appointed Assistant General Counsel 54 Brown, Bonnar, resignation as Assistant Director of Division of Research and Statistics . 54 Hostrup, Clarence C, appointed Assistant Director of Division of Examinations 55 Knapp, J. Burke, resignation as Assistant Director, Division of Research and Statistics 54 Leonard, Robert F., appointed Director of Division of Bank Operations.... 54 Millard, Edwin R., appointed Director of Division of Examinations 54 Parry, Carl E., Director of Division of Security Loans, retirement of 53 Riefler, Winfield W., appointed as Assistant to Chairman 53 Smead, Edward L., Director of Division of Bank Operations, retirement of 55 Solomon, Frederic, appointed Assistant General Counsel 54 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 129 Page Staff of Board of Governors—Continued Southard, Frank A., appointed Associate Director of Division of Research and Statistics 54 Townsend, J. Leonard, title changed to Solicitor 54 Van Fossen, J. R., Assistant Director of Division of Bank Operations, retirement of 55 State member banks: Analysis of changes 80 Changes in membership during year 39 Examination of 41 Number of 39, 80 Peoples Bank, Lakewood Village, California, vs. Members of Board of Governors, decision of Supreme Court of the United States 46 Stebbins, A. Howard, Sr., appointed director at Little Rock Branch 52 Stevens, Ames, appointed Class C Director at Boston 51 Stevens, Robert T., appointed Class C Director at New York and designated Chairman and Federal Reserve Agent 51 Stock, capital: Federal Reserve Banks 63, 65, 67 Requirements for member banks, legislation recommended 9 Surveys: Consumer finances 56 Lending operations of sales finance companies during 1947 57 Swift, Lewis B., appointed director at Buffalo Branch 51 Szymczak, M. S., reappointment as Member of Board of Governors 53 Townsend, J. Leonard, appointment as Solicitor 54 Transamerica Corporation, complaint issued for violation of Section 7 of Clayton Antitrust Act 46 Treasury: Cash operations and changes in cash balance and public debt 10, 12 Franchise tax paid to 72 Interest on Federal Reserve note issues paid to 72 Treasury bills, holdings by Federal Reserve Banks 68 Treasury certificates, holdings of special short-term by Federal Reserve Banks. .. 69 Trust powers of national banks, authority granted during year 42 United States Stabilization Fund, operation by Federal Reserve Bank of New York 49 Van Fossen, J. R., Assistant Director, Division of Bank Operations, retirement of 55 Violations: Transamerica Corporation under Clayton Antitrust Act 46 Voit, Alvin A., appointed director at Louisville Branch 52 Volume of operations of Federal Reserve Banks 50, 69 Voting permits: Applications of bank holding companies authorized 42 Legislation to be requested for more effective supervision and control of bank holding companies 8 Whittemore, Laurence F., resignation as President at Boston 53 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis