Annual Report of the Federal Reserve Board, 1950

THIRTY-SEVENTH 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, March 31,1951. 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-seventh Annual Report, prepared by direction of the Board of Governors of the Federal Reserve System, covering operations during the calendar year 1950. Yours respectfully, THOMAS B. MCCABE, Chairman. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CONTENTS TEXT OF REPORT Page Introduction 1 Economic Setting of Federal Reserve Action 4 Federal Reserve Credit Policy and Action 7 Modification of credit ease in first half of 1950 8 Increase in discount rates 9 Open market operations in second half of 1950 9 Rise in interest rates 10 Bank reserve positions 11 Increase in reserve requirements 12 Regulation of consumer instalment credit 14 Regulation of real estate credit 16 Regulation of stock market credit 18 Voluntary restraint by lenders 19 Loan Guarantees for Defense Production 19 Credit and Monetary Expansion 21 Increased volume and use of money 21 Commercial bank credit 23 Changes in ownership of United States Government securities 25 Banking Operations and Structure 27 Bank earnings and profits 27 Bank earning assets 28 Capital accounts 28 Number of banking offices 28 Changes in Federal Reserve membership 29 Par and nonpar banks 30 Check routing symbols 31 Bank Supervision by the Federal Reserve System 31 Examination of Federal Reserve Banks 31 Examination of State member banks 31 Bank holding companies 31 Trust powers of national banks 32 Foreign branches and banking corporations 32 iii Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Page Changes in Regulations of the Board of Governors 33 Consumer credit 33 Residential real estate credit 34 Loan guarantees for defense production 35 Reserve requirements 35 Hearing and Litigation 36 Transamerica Corporation 36 Legislation 37 Real estate loans 37 Purchase of Government obligations by Federal Reserve Banks 37 Consent to reduction of capital or surplus 37 Federal deposit insurance 38 Defense Production Act 38 Reserve Bank Operations 38 Volume of operations 38 Earnings and expenses 39 Holdings of loans and securities 40 Foreign and international accounts 41 Bank premises 41 Board of Governors—Income and Expenses 43 Federal Reserve Meetings 44 TABLES 1. Statement of Condition of the Federal Reserve Banks (In detail), Dec. 31, 1950 46 2. Statement of Condition of Each Federal Reserve Bank, End of 1950 and 1949 48 3. Holdings of United States Government Securities by Federal Reserve Banks, End of December 1948, 1949, and 1950 52 4. Federal Reserve Bank Holdings of Special Short-Term Treasury Certificates Purchased Directly from the United States, 1943-50 53 5. Volume of Operations in Principal Departments of Federal Reserve Banks, 1946-50 53 6. Earnings and Expenses of Federal Reserve Banks during 1950 54 7. Earnings and Expenses of Federal Reserve Banks, 1914-50 56 8. Member Bank Reserves, Reserve Bank Credit, and Related Items- End of Year 1918-50 and End of Month 1950 58 9. Bank Premises of Federal Reserve Banks and Branches, Dec. 31, 1950 60 10. Number and Salaries of Officers and Employees of Federal Reserve Banks, Dec. 31, 1950 61 11. Federal Reserve Bank Discount, Interest, and Commitment Rates, and Buying Rates on Acceptances (In effect Dec. 31, 1950) 62 iv Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Page 12. Member Bank Reserve Requirements 63 13. Maximum Rates on Time Deposits 63 14. Margin Requirements 64 15. Fees and Rates Established under Regulation V on Loans Guaranteed Pursuant to Defense Production Act of 1950 and Executive Order No. 10161 64 16. Minimum Down Payments and Maximum Maturities on Consumer Instalment Credit Subject to Regulation W 65 17. Maximum Loan Values and Maximum Maturities on Real Estate Construction Credit Subject to Regulation X 66 18. Analysis of Changes in Number of Banking Offices during 1950 67 19. Number of Banking Offices on Federal Reserve Par List and not on Par List, by Federal Reserve Districts and States, Dec. 31, 1950 68 APPENDIX Record of Policy Actions—Board of Governors 70 Record of Policy Actions—Federal Open Market Committee 80 Voluntary Credit Restraint 95 Board of Governors of the Federal Reserve System 98 Federal Open Market Committee 99 Federal Advisory Council 100 Directors and Senior Officers of Federal Reserve Banks 101 Map of Federal Reserve Districts 116 Index 117 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM In 1950, the year covered by this Thirty-seventh Annual Report of the Board of Governors of the Federal Reserve System, inflationary pressures again became a challenge to credit and monetary policy. The general economic situation became especially inflationary following the outbreak of hostilities in Korea and the inauguration of a far-reaching program of national defense in the United States. In consequence, the Government instituted a comprehensive program to restrain inflation, with primary reliance upon fiscal and monetary measures. In accordance with this program, Federal Reserve policy was directed toward restricting, so far as possible, the availability of bank reserves on which multiple credit expansion could be based. At the time of the international crisis businesses and consumers, with high and rising incomes and ample credit, were already buying a record volume of goods and services. After June civilian buying expanded sharply. It was stimulated by anticipation of shortages and supported by a continued rise in incomes, extensive use of credit, and considerable drawing on accumulated liquid assets. Prices advanced rapidly. Federal Government expenditures for defense, which had declined slightly in the early months of the year, rose at an accelerating but moderate rate as the defense effort gained momentum. Nevertheless, for the year as a whole, Federal cash receipts and expenditures remained in approximate balance. A sharp decline in the United States export surplus followed the achievement of extensive economic reconstruction abroad. At the same time continuation of United States Government aid to foreign countries and a sizable flow of private capital abroad resulted in net payments of dollars to foreigners throughout the year. Ensuing purchases of gold and Government securities by foreign monetary authorities exerted a moderating influence on inflationary pressures in this country. Buying by businesses and consumers increased more rapidly than the available supply of goods and became an increasing threat Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 ANNUAL REPORT OF BOARD OF GOVERNORS to economic stability even before production resources were diverted to the defense program in substantial volume. Under these circumstances restraint of purchasing power became an essential part of the defense program. On the fiscal side, it was early and generally recognized that additional taxes were necessary in order to restrain inflationary forces and to finance the defense effort on a pay-as-you-go basis. Congress enacted a broad increase in taxes on personal and business incomes in September and a corporate excess profits tax around the turn of the year. In recognition of the need for limiting the expansion of purchasing power based on credit, the Federal Reserve System on August 18 announced its intention to restrain the expansion of bank credit. On that day the following statement was issued jointly by the Board of Governors and the Federal Open Market Committee: Within the past six weeks loans and holdings of corporate and municipal securities have expanded by 1.5 billion dollars at banks in leading cities alone. Such an expansion under present conditions is clearly excessive. In view of this development and to support the Government's decision to rely in major degree for the immediate future upon fiscal and credit measures to curb inflation, the Board of Governors of the Federal Reserve System and the Federal Open Market Committee are prepared to use all the means at their command to restrain further expansion of bank credit consistent with the policy of maintaining orderly conditions in the Government securities market. The Board is also prepared to request the Congress for additional authority should that prove necessary. Effective restraint of inflation must depend ultimately on the willingness of the American people to tax themselves adequately to meet the Government's needs on a pay-as-you-go basis. Taxation alone, however, will not do the job. Parallel and prompt restraint in the area of monetary and credit policy is essential. In accordance with this declared policy, the Federal Reserve tightened credit requirements progressively. General measures to restrain over-all expansion of bank credit were inaugurated in mid- August when the Federal Reserve Banks increased rediscount rates. Thereafter the Federal Open Market Committee conducted its open market operations so as to make it less attractive for banks and other lending institutions to sell short-term United States Government securities for the purpose of expanding loans and making other investments. The effect of these measures was diminished by Federal Reserve purchases of securities, made principally for the purpose of assuring the successful refunding of maturing or called Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 3 securities and to some extent to maintain a stable market for longterm bonds. On balance, Federal Reserve purchases of securities from banks, insurance companies, and others during the latter part of the year substantially exceeded sales from the System portfolio. The expansionary effect of these net purchases on bank reserves was offset in part only by a gold outflow and a seasonal increase in the demand for currency. At the close of the year, the Board of Governors increased the reserve requirements of all member banks effective early in 1951. In the first few weeks of 1951 the Federal Reserve continued to purchase substantial amounts of long-term Treasury bonds in support of their prices. In March, the Treasury and the Federal Reserve reached an accord with respect to the debt management and monetary policies to be pursued in furthering their common purpose to assure the successful financing of the Government's requirements and, at the same time, to minimize monetization of the public debt. Concurrently the Treasury announced that a long-term 2% per cent nonmarketable bond, with special redemption features, could be obtained in exchange for the outstanding restricted bonds of June and December 1967-72. Following these actions, prices of long-term bonds declined somewhat and Federal Reserve purchases of bonds were substantially reduced. Beginning in September 1950, the Board of Governors applied selective controls to limit the expansion of credit in particular areas. Immediately after the Defense Production Act of September 1950 had authorized controls over consumer credit and real estate credit, the Board reissued Regulation W covering consumer instalment credit for the purchase of major durable goods. This regulation was tightened in mid-October. In this same month the Board also issued Regulation X placing restrictions on loans not guaranteed or insured by Federal agencies for the construction of one- and two-family dwellings, and the Federal Housing Administration and the Veterans Administration acted concurrently to establish comparable terms for guaranteed and insured loans. Early in 1951 the scope of Regulation X was extended to cover three- and four-family dwellings, multi-unit residences, and nonresidential construction. In January 1951 the Board also increased margin requirements for purchasing or carrying listed securities. In August 1950 the Board of Governors joined with other Fed- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4 ANNUAL REPORT OF BOARD OF GOVERNORS eral and State supervisory agencies in urging the cooperation of banks and other lenders in restricting their lending and investing activities. In November and December the Board took additional steps to encourage voluntary limitation of bank lending, and in March 1951 a definite program of voluntary credit restraint under the Defense Production Act was inaugurated. In the months ahead, heavy defense expenditures will be a source of inflationary pressures. As production to meet defense requirements increases further, the supply of goods and services civilians may buy will not keep pace with civilian incomes. In fact, a significant curtailment in the supply of some consumer goods is in prospect as expansion of the military program gains momentum. Although wage and price controls were initiated in late January 1951, extension and vigorous enforcement of fiscal and monetary measures will be needed to curb private spending and absorb excessive purchasing power. As is indicated in the policy statement of August 18, the Board is prepared to request the Congress to grant any additional authority that may be needed to complement existing powers. ECONOMIC SETTING OF FEDERAL RESERVE ACTION Increased demands in many sectors of the economy, supported by easy availability of credit, were reflected in expanding production during the first half of 1950 and moderately rising prices during the second quarter. Incomes already augmented by increased production were swollen by payment of National Service Life Insurance dividends to veterans. In the second quarter, boom conditions were particularly evident in domestic markets for houses, construction materials, and consumer durable goods, as well as for imported primary commodities. Plant expansion was again increasing, stimulated by the growing belief that quick recovery from the moderate recession was the forerunner of a long period of active business. Prices in world markets were generally much higher in the spring of 1950 than in the autumn of 1949, when many foreign currencies were sharply devalued in relation to the dollar. The strength in world prices reflected expansion in world demand which more than offset expanded output in many countries. While increasing production abroad and competitive relationships more favorable to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM foreign producers were reducing the export surplus of the United States, the net effect of international political and economic developments was to stimulate further price advances in world markets and to increase demand, output, and prices in the United States. By midyear a number of industries were operating close to capacity and employment was at high levels. Supplies of many commodities appeared inadequate to meet increasing demands, and prices generally were advancing. The sharpest increases were in prices of basic materials, but there were also considerable advances in markets for other vital commodities, especially foods. Profits were rising rapidly. Heavier buying on the part of consumers and businesses, particularly in this country and to some extent abroad, quickly followed the outbreak of hostilities in Korea on June 25 and the requests for much larger appropriations for national defense and military aid to other countries. Prices rose rapidly, production and employment continued to expand, and the labor market became tighter. New labor contracts providing for higher wage rates and other adjustments in wages were negotiated in many industries. Thus during the summer, before there was any marked increase in defense expenditures or diversion of resources to defense production, prospects for price increases and shortages were creating immediate heavy demands for goods and manpower. Consumers were using their current incomes freely and in many cases drawing on their liquid assets or using credit to finance purchases, particularly of houses, automobiles, and other durable goods. Businesses were borrowing heavily to finance increased production and, where conditions permitted, to increase and hold inventories—all at advanced prices. Many industries were initiating or expediting plant expansion programs in expectation of increased demand for products and future shortages of materials and labor. During early autumn demand pressures eased temporarily, reflecting more favorable military developments, earlier satisfaction of many urgent civilian demands, increased output of goods, increased imports of many materials—and also the several fiscal and credit measures taken to restrict demand. For a short period prices showed little additional rise. During this phase, however, incomes rose further and both credit and monetary expansion continued at an exceptionally rapid rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF BOARD OF GOVERNORS SELECTED BUSINESS INDEXES 1947-49-100 NOTE.—Seasonally adjusted series except for prices and commercial loans. Inventory and loan data as of end of month. Loans include commercial, industrial, and agricultural loans, open market paper, and acceptances reported by member banks in leading cities. Department of Commerce inventory, income, and retail sales series and Bureau of Labor Statistics price and employment series converted to 1947-49 base by Federal Reserve; employment series seasonally adjusted by Federal Reserve. After Chinese forces entered the Korean conflict in the winter, a substantially larger defense program appeared more imminent. There was a resurgence of heavy demand pressures, while business activity continued at earlier record levels. Prices, wages, and bank credit advanced at accelerated rates. At the end of 1950, as shown by the chart, the physical volume of industrial production (output Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 7 at factories and mines) was nearly 20 per cent larger than at the beginning of the year and 10 per cent larger than at midyear. Nonagricultural employment was at a record high of 46.6 million, 2.9 million more than a year earlier. The greater part of the increase was in manufacturing industries, where hours of work were also increased. Unemployment of 2.2 million in December was 1.3 million less than a year earlier. Inflationary pressures were reflected in an advance of 45 per cent in the prices of basic commodities during the year. Wholesale commodity prices rose 17 per cent and consumer prices 7 per cent, with about three-fourths of the advances occurring after June. Capital values also advanced, particularly in the second half of the year. Prices of farm land and urban real estate reached new highs by the end of the year. Prices of common stocks rose substantially to the highest levels since 1930. The value of all goods and services produced (gross national product) was at an annual rate of 300 billion dollars in the last quarter of 1950, about one-fifth greater than a year earlier. Most of the increase occurred after June. In the last quarter of the year personal income after taxes, despite the increase in tax rates, was about 13 per cent higher than in the last quarter of 1949. Developments after the adverse turn on the Korean front heightened prospects for the curtailment in output of numerous consumer durable goods and diminished further the possibility that supplies of other commodities would be sufficient to meet total demands at prevailing prices. Additional cuts were ordered in the use of materials for civilian goods. The President called for greater expedition of the defense program and to this end on December 16 proclaimed a state of national emergency. The Congress promptly approved large supplementary appropriations for defense and military aid and enacted an excess profits tax. Early in 1951 a preliminary program of direct controls for prices and wages was instituted by the Economic Stabilization Agency. FEDERAL RESERVE CREDIT POLICY AND ACTION Spending by businesses and consumers in 1950, especially after June, was supported by an exceptional expansion of credit by banks and other lenders. Commercial and mutual savings banks increased their credit to private borrowers and State and local gov- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

8 ANNUAL REPORT OF BOARD OF GOVERNORS ernments by more than 13 billion dollars in 1950, with about threefourths of the expansion in the last half. Deposits and currency held by businesses and individuals showed little change from January to June, when there is usually a seasonal decline, and then increased by almost 7 billion dollars in the last half of the year. Federal Reserve credit policies in the first part of the year were directed toward modifying prevailing conditions of extreme monetary ease. When pressures for credit and monetary expansion became greatly intensified after June, the Federal Reserve authorities on August 18 issued the general statement of policy given on page 2. Action during the remainder of the year was directed toward implementing this policy while at the same time aiding Treasury refunding operations. Modification of credit ease in first half of 1950. The year began in a financial climate of decided credit ease resulting from a series of policy actions taken some months earlier to promote recovery from the 1949 downturn. During the first few months of 1950, as the economy advanced to higher levels of production and employment with prices increasing in some sectors, the System moved ahead with a program formulated in November 1949 for modifying prevailing easy credit conditions. In January the Federal Reserve sold United States Government securities in order to absorb reserves which were supplied to banks largely by a seasonal return of currency from circulation. Over the following five months open market purchases and sales of Government securities were conducted so as to remove some of the stimulus to credit growth and to hold member bank reserves at about the level reached at the end of January. In the long-term market investment funds were readily available at very low rates by early 1950. Insurance companies, pension funds, and personal trusts, in particular, had substantial amounts available, reflecting both extensive current savings and a backlog of funds previously accumulated. Under the impact of abundant investment funds, capital values were increasing and prices of long-term bonds were subject to considerable upward pressure. In order that sustained expansion in production and employment should not be jeopardized by overextension financed through longterm credit and by excessive price increases, the Federal Reserve early in 1950 began to sell freely from its portfolio of long-term Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM y Government bonds, so as to absorb some of the long-term funds seeking investment. This was continued over the first eight months of the year and in that period the Federal Reserve sold 2.5 billion dollars of long-term bonds that were not eligible for purchase by commercial banks. Federal Reserve action to modify the conditions of monetary and credit ease was reflected in moderate changes in interest rates. Rates on short-term Government securities, which had begun to rise in late 1949, moved irregularly higher for several months. By the end of April 1950 they had advanced about l/$ of 1 per cent and reached levels close to those prevailing in the spring of 1949. The decline in yields on long-term securities which had continued since mid-1949 was arrested early in 1950 and in part reversed in the following several months. Over the first half of 1950 yields on long-term Government bonds not eligible for bank investment increased somewhat more than ]/ of 1 per cent. Yields on corporate bonds remained 8 stable for several months early in the year and thereafter tended to rise slightly. Yields on State and local government issues remained steady throughout the first half of the year. Increase in discount rates. Following the policy statement of August 18 the discount rates of all the Federal Reserve Banks were increased from ll/ to 1% per cent. This action served to emphasize 2 the intention to resist extending Federal Reserve Bank credit to support an inflationary expansion of bank credit and deposits. To the extent that member banks borrowed from the Reserve Banks, the action also increased the cost of additional reserves. Open market operations in second half of 1950. Beginning in mid-August the Federal Open Market Committee directed its open market operations with a view to restraining bank credit expansion by limiting the availability of bank reserves. It minimized Federal Reserve purchases of short-term United States Government securities in order to discourage the sale of Government securities by banks and other investors, and to encourage investors to hold or to buy securities. From the end of June to mid-August banks had reduced their portfolios of Government securities by about 1.5 billion dollars in order to obtain funds for expanding loans and purchasing municipal and corporate securities. About 1 billion dollars of short-term Government securities had been purchased by the Federal Reserve during Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

10 ANNUAL REPORT OF BOARD OF GOVERNORS this period, but the effect of these purchases on member bank reserves had been offset by sales to nonbank investors of about 1 billion dollars of long-term Government bonds. By mid-August, however, the market demand for long-term bonds was tapering off and the Federal Reserve had less leeway for selling such securities in order to offset its purchases of other securities. Following the Federal Reserve policy announcement of August 18, the Open Market Committee purchased 8 billion dollars of Government securities maturing on September 15 and October 1 to assure the success of Treasury refunding operations, which called for the exchange of maturing issues into 1% per cent 13-month notes. At the same time, in order to offset additions to the System portfolio and to bank reserves resulting from these support purchases, the System made sales of other securities from its portfolio at somewhat higher yields. On balance, Federal Reserve purchases exceeded sales in this period and bank reserves increased. Beginning in September the System also made moderate purchases of restricted bonds, for the purpose of maintaining orderly market conditions when insurance companies and other institutions sold such bonds in order to acquire mortgages and other assets returning higher yields. During October and November there was little change on balance in System holdings of Government securities. In December there were relatively large additions to the Federal Reserve portfolio and a considerable increase in bank reserves. These reflected some liquidation of nonbank holdings of Government securities, in part to meet large cash needs over the year-end, and some sales of issues maturing on December 15 and January 1 by holders who did not take the five-year notes offered in exchange. The expansionary effect of net open market purchases during the second half of the year was partly offset by a net outflow of gold, which exerted a drain on member bank reserves and a restrictive influence on the money market generally. Rise in interest rates. Growing credit demands tended to stiffen short-term money rates further during the last half of 1950. Federal Reserve purchases of short-term Government securities in support of Treasury refunding operations tended on balance to moderate the rise in rates, notwithstanding offsetting sales of other securities by the System. By the end of the year short-term rates were at levels higher than at any time since the early thirties. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

11 FEDERAL RESERVE SYSTEM Rates on three-month Treasury bills, which were about 1.17 per cent at mid-1950, rose to 1.38 per cent by the end of November and stayed in that area over the remainder of the year. Yields on oneyear Treasury notes rose from about 1.23 per cent in June to 1.48 per cent in December and there was a corresponding advance in yields on Treasury securities maturing within three to five years. MONEY RATES WEEKLY AVERAGES OF DAILY FIGURES NOTE.—Rate for Treasury bills is average discount on new issue during week. Federal Reserve discount rate is for the Federal Reserve Bank of New York. Interest rates on short-term credit to private borrowers also increased. Rates on commercial paper of four- to six-month maturities rose from 1% to 1% per cent and the average interest rate charged by banks in large cities for short-term business loans was 2.84 per cent in December as compared with 2.68 per cent in June. In the long-term market, yields on Government securities and high-grade corporate issues advanced slightly over the second half of 1950. Yields on high-grade municipal bonds, on the other hand, declined sharply, reflecting increased demand for tax-exempt securities in view of the higher income taxes. Bank reserve positions. Member bank reserve positions were under some pressure during most of 1950 as a result of rapid loan expansion and the loss of reserves through a sustained gold outflow. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

12 ANNUAL REPORT OF BOARD OF GOVERNORS Banks acquired the reserves they needed by selling a substantial volume of Government securities. As has been pointed out, some of these were purchased by the Federal Reserve, and member bank reserves were increased by more than 1 billion dollars over the year. FACTORS AFFECTING MEMBER BANK RESERVES [In billions of dollars] Year Second First 1950 half half Factor (Sign indicates effect on reserves) Gold stock -1.7 -1.5 -0.2 Currency in circulation -0.1 -0.6 +0.4 Treasury balance at Reserve Banks +0.2 +0.3 -0.1 Federal Reserve Bank credit +2.7 +3.5 -0.8 U. S. Government securities + 1.9 +2.4 -0.6 Other Federal Reserve credit +0.8 + 1.1 -0.2 Member bank reserve balances + 1.1 + 1.7 -0.6 Required reserves + 1.0 + 1.0 Excess reserves +0.1 +0.7 -0.6 1 Less than 50 million dollars. NOTE.—Details may not add to totals because of rounding. Over the first six months of 1950 member bank reserves declined by about 0.6 billion dollars, reflecting pressures generated by continued sales of long-term Government securities from the Federal Reserve portfolio. Other factors affecting reserves were about in balance, as is shown in the table. Over the second half of the year there were drains on reserves from a large outflow of gold and an increase in currency circulation. Such factors taken alone would have accounted for a decrease of reserves of 2.1 billion dollars. Purchases of Government securities by the Federal Reserve Banks and changes in other factors supplying reserves were more than offsetting, however, and total member bank reserves increased by 1.7 billion dollars. The expansion in total reserves exceeded the amount needed to provide for the increase in deposits, and excess reserves increased. Increase in reserve requirements. On December 29, the Board announced an increase in reserve requirements for member banks Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

13 FEDERAL RESERVE SYSTEM MEMBER BANK RESERVES, RESERVE BANK CREDIT, AND RELATED ITEMS BILLIONS OF DOLLARS WEDNESDAY FIOURES BILLIONS OF DOLLAR* RESERVE BANK I/" | CREDIT TREASURY CASH AND DEPOSITS 1942 1943 1944 1945 1946 1947 1948 1949 1950 TOTAL RESERVE BANK HOLDINGS OF U. S. GOVERNMENT SECURITIES 1942 1943 1944 1945 1946 1947 1948 1949 I960 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

14 ANNUAL REPORT OF BOARD OF GOVERNORS of 2 percentage points on demand deposits and 1 percentage point on time deposits. Reserve requirements on net demand deposits at reserve city and country banks were raised to the maximum legal limits of 20 and 14 per cent, respectively, the same requirements that had prevailed during the war period. Requirements on net demand deposits at central reserve city banks were placed at 24 per cent, 2 percentage points less than the maximum under existing authority but above requirements that had prevailed for these banks during most of the war period. Requirements on time deposits at all classes of banks were placed at the legal maximum of 6 per cent. These increases became effective gradually in the period January 11-February 1, 1951, as shown in the table on page 63. The Board's action increased the reserves required of member banks by approximately 2 billion dollars, which amount could otherwise have been the basis for about a sixfold increase in bank credit. The volume of bank credit and the money supply had continued to increase despite restraining action by the System; and, with the post-holiday return flow of currency from circulation, banks would have had additional funds available for lending. The purpose of the increase in reserve requirements was to absorb such funds and generally to reduce the ability of banks further to expand credit. The banks were in a position to adjust to the increased requirements without difficulty. Regulation of consumer instalment credit. In the light of the general economic situation and of the responsibility imposed by the Defense Production Act, the Board reissued Regulation W, effective September 18, 1950, establishing minimum down payments and maximum maturities on instalment credits extended for the purchase of certain major durable goods. Regulation of consumer instalment credit is intended to exert a restraining influence on a credit area in which substantial use of credit by consumers tends to increase demand in relation to supply and as a consequence exerts an upward pressure on prices. It is also intended to reduce demand in an area from which it is necessary to divert critical materials and manpower to defense purposes. Short-term borrowing by consumers on an instalment basis had accelerated in 1950, as is shown in the chart. After a slight seasonal decline in January, the amount of such credit outstanding had moved upward steadily. The sharp upturn in consumer buying of automo- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 15 CONSUMER INSTALMENT CREDIT OUTSTANDING BILLIONS OF DOLLARS END OF MONTH BILLIONS OF DOLLARS 14 12 12 J . A / 10 10 Q 8 / 6 6 / / 4 / y 4 \ 2 e • 0 0 biles and other durable goods in July and August had been facilitated by easy down payment and maturity terms for instalment purchases. In the four months June-September, outstanding instalment credit had increased by 1.7 billion dollars, an unprecedented amount for a four-month period. Intensive studies of the demand-supply situation and of the consumer credit business, including numerous consultations with the trade, were carried on while legislation authorizing regulation of consumer credit was under consideration by the Congress. In establishing terms as soon as the authority became effective, the Board indicated that they could be promptly adapted to changing conditions. As the magnitude and strength of inflationary trends became more apparent during the latter part of September and in October, and were accompanied by continuing strong demand and by further expansion of consumer credit, the Board amended Regulation W, effective October 16, to take account of these developments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

16 ANNUAL REPORT OF BOARD OF GOVERNORS The terms of the reissued regulation and the October modifications are summarized on pages 33-34 and in Table 16, page 65. During the last three months of the year the increase in instalment credit outstanding was 130 million dollars compared with nearly 1 billion in the same months of 1949. The increase for the year 1950 was about 2.6 billion dollars and the total outstanding reached an estimated 13.5 billion by the end of the year. Slowing up in growth of this type of credit after September reflected a sharp reduction in new credits as well as continued large repayments. A survey made by the Board of Governors indicated that prevailing terms were generally much easier in mid-1950 than they had been a year earlier, but that they were substantially stiffened under the regulation. Although the stiffening in terms of instalment credit was undoubtedly an important factor in the reduced volume of new credits, other factors were also working in the same direction. Some purchases which ordinarily would have been made in the fall or later had been made in the summer, and prospective model change-overs as well as a decline from the seasonal peak of automobile travel also affected demand for automobiles. Regulation of real estate credit. Private construction was in record volume in 1950, reflecting primarily the boom in residential building. New housing units started and completed during the year exceeded all previous levels. An important factor in the demand for both new and old residential properties was the large volume of Government guaranteed mortgage funds available from banks and other lenders on very favorable terms. Residential mortgage lending during the first half of the year expanded rapidly and outstanding home mortgage debt increased at a new high rate. In the third quarter the rate of lending and the increase in outstanding debt accelerated, despite action in July to tighten terms and otherwise restrict loans insured or guaranteed by Federal agencies. Title VI of the Defense Production Act of September 1950 provided for broader regulation of real estate credit. It authorized the President to regulate (1) the terms on which real estate loans may be made, insured, or guaranteed by Federal agencies, and (2) the terms on which credit not so insured or guaranteed may be extended in connection with construction or other improvements to real property started after August 3, 1950. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 17 By Executive Order No. 10161, dated September 9, 1950, the President delegated to the Board of Governors the authority to regulate real estate loans made in connection with construction begun after August 3 but not made, insured, or guaranteed by Federal agencies, and required that the Board obtain the concurrence of the Housing and Home Finance Administrator in regulations concerning residential real estate credit. At the same time, the President authorized the Housing and Home Finance Administrator to restrict the terms on which real estate loans involving residential property were made, insured, or guaranteed by Federal agencies, and required him to make sure first, that the restrictions imposed by the Board were made applicable to the fullest extent practicable to such loans, and second, that the relative preferences accorded to veterans under existing law were preserved. During the time the legislation was being considered by the Congress, the Board and the Administrator were preparing regulations to carry out its provisions. On October 11, the Board, with the concurrence of the Housing and Home Finance Administrator, issued Regulation X, and the Federal Housing Administration and the Veterans Administration announced parallel regulations, with the approval of the Administrator, all to become effective October 12. These regulations applied only to credit in connection with one- and two-family properties. They established maximum amounts that could be borrowed, maximum maturities, and minimum amortization requirements for extensions of credit in respect to such properties, including the financing of major additions and improvements. Further details are given on pages 34-35. By amendment effective November 14, 1950, exception was made for credit extended before May 1,1951, in connection with properties on which construction was started before October 12,1950. By steps taken early in 1951 the regulation was revised to apply restrictions to three- and four-family properties, multi-unit residences, and nonresidential construction. These regulations had little effect on the amount of real estate credit extended between their effective dates and the end of 1950 because they did not apply to uninsured credit on existing houses, to the substantial number of houses already under construction, or to credit already committed. By the end of the year the amount of mortgage debt outstanding on small family dwellings was estimated Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

18 ANNUAL REPORT OF BOARD OF GOVERNORS NONFARM MORTGAGE DEBT HOME LOAN BANK BOARD ESTIMATES BILLIONS OF DOLLARS ANNUALLY BILLIONS OF DOLLARS / 40 - 30 TOTAL OUTSTANCING / *> I •" 1 J/ t NEW LOANS MADE -^ *' ^ -- *• NOTE.—Total outstanding on December 31 and new loans made during year. Data for 1950 are preliminary. at about 44 billion dollars, as is shown in the chart. This was an increase of about 7 billion since the end of 1949, and considerably more than twice the amount outstanding at the end of the war. The increase was larger in 1950 than in any previous year. Regulation of stock market credit. The inflationary pressures that developed within the economy during 1950 were reflected in the stock market. Common stock prices advanced on the average by nearly one-fourth, reaching a new postwar high at the close of the year. Stock market credit, as represented by customers' debit balances, increased by 480 million dollars to a total of 1,357 million at the end of December. Stock trading volume during 1950 was about double that of the preceding year, averaging 2 million shares per day as compared with 1 million in 1949. Following a further rise in stock prices and trading activity during the first two weeks of January 1951, as of January 17 the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 19 amended its Regulations T and U governing margin requirements to increase the amount of cash required for the purchase or short sale of listed stocks from 50 to 75 per cent of market value. Voluntary restraint by lenders. In mid-July leaders of private financial groups cautioned their members against extensions of bank credit that would contribute to inflationary pressures. This was followed in early August by a joint statement issued by the Federal and State supervisors of banks and the Home Loan Bank Board urging voluntary cooperation of banks and other lenders in screening their loan applications with great care to avoid making loans that would have inflationary effects. This statement is reproduced on page 95 of this Report. As the unprecedented expansion of bank credit continued during the autumn, the Chairman of the Board of Governors in mid- November addressed a letter to all member banks pointing out that continuation of such expansion would seriously handicap the necessary expansion of military production and urging them to discourage loans that would not contribute to the defense effort. The letter, which is given in full on page 96 of this Report, included the following statement: Commercial banks can also do their part in bringing about restraint of credit by advising borrowers to avoid overstocking of inventories and to postpone unnecessary business expansion and by discouraging various types of loans that do not make a definite contribution to the defense effort. The sacrifice of some earnings at this time is a small price to pay for the defense of the dollar which is of paramount importance. At the end of the year the Federal Reserve was actively cooperating with representatives of banks, investment bankers, and life insurance companies to arrange a voluntary program of credit restraint. Consultations were had with these representatives, pursuant to authority granted to the President under Section 708 of the Defense Production Act and delegated to the Board by Executive Order No. 10161 of September 9, 1950. Under the law action taken in accordance with such a program, pursuant to request of the Board with the approval of the Attorney General, will be exempt from the provisions of the antitrust laws. LOAN GUARANTEES FOR DEFENSE PRODUCTION For the purpose of expediting production and deliveries or services for the defense program, the Defense Production Act of 1950 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

20 ANNUAL REPORT OF BOARD OF GOVERNORS provided for the guarantee of loans made by commercial banks and other financing institutions to contractors, subcontractors, and others engaged in fulfilling Government defense contracts. Executive Order No. 10161, issued on September 9, 1950, named the Departments of the Army, Navy, Air Force, Commerce, Agriculture, and Interior, and the General Services Administration as guaranteeing agencies. It also designated and authorized the Federal Reserve Banks to act on behalf of the guaranteeing agencies as fiscal agents of the United States in the making of such contracts of guarantee, and delegated to the Board of Governors responsibility for supervising all actions and operations of the Reserve Banks in connection with the loan guarantee program. The Board, after consultation with the guaranteeing agencies, issued its Regulation V on September 27, 1950, outlining the authority of the Federal Reserve Banks and the procedures to be followed in receiving applications for loan guarantees, establishing eligibility of the borrower, and approving loan guarantees. Pursuant to the regulation, the Board prescribed a standard form of guarantee agreement and announced a schedule of guarantee fees and establishment of a 5 per cent maximum rate of interest on guaranteed loans (see Table 15, page 64). A maximum of one-half of one per cent was established for any commitment fee charged on guaranteed loans. Up to December 31, 1950 the number and dollar volume of loan guarantees authorized had been relatively small. A total of 62 loans amounting to 31 million dollars had been approved for the issuance of loan guarantees. For the purpose of removing an impediment to the new V-loan program, the Board has recommended to Congress an amendment to the Assignment of Claims Act of 1940 which would clarify the rights of financing institutions taking assignments of defense contracts as security for guaranteed loans. Generally speaking, the primary purpose of the present V-loan program, which is closely patterned after that of World War II, is to facilitate the provision of short-term working capital funds for defense contractors and subcontractors. Experience during the early part of World War II revealed that a number of small and medium-sized subcontractors were often unable, because of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 21 relatively substantial sums required, to obtain needed funds from usual sources. Other concerns, either newly established or with little or no experience in the type of work being undertaken on war contracts, were unable to establish satisfactory credit ratings. Moreover, there were some very large concerns whose working capital requirements for production under war contracts were so great that neither the funds at their disposal nor nonguaranteed credits available from their banks were adequate for their needs. By guaranteeing the financing institutions against loss of principal or interest on loans made under such conditions, the V-loan program greatly facilitated the fulfillment of Government contracts. CREDIT AND MONETARY EXPANSION The 7 billion dollar growth in the money supply during 1950 reflected a large expansion in bank deposits. The volume of currency outside banks showed little change. Most of the monetary expansion was the result of the record increase in bank loans and investments that supplied funds to the private sector of the economy. About one-half of the funds lent by commercial banks went to businesses and about one-fifth to consumers; another fifth went into real estate loans; and a small proportion went to State and local governments. This expansion of credit was accompanied by a sharp reduction in commercial and mutual savings bank holdings of United States Government securities. This reduction was partly offset by additions to Reserve Bank holdings of Government securities. The resulting net decline of 3.6 billion dollars in the Government securities held by the banking system as a whole tended to reduce the money supply, and a gold outflow of 1.7 billion dollars had a similar effect, as shown in the table on page 22. Increased volume and use of money. In the first quarter of the year total deposits and currency held by individuals and businesses declined, as is usual in this period of heavy tax payments. The decrease, however, was smaller than in other recent years and, with bank credit expanding, the money supply was as large by the end of June as at the beginning of the year. After June the money supply increased at an exceptionally rapid rate, as the chart on page 23 shows, especially in the closing months of the year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

22 ANNUAL REPORT OF BOARD OF GOVERNORS MAJOR FACTORS AFFECTING THE MONEY SUPPLY1 [In billions of dollars; partly estimated] 1950 1949 Second First Second First Factor Year Year half half half half (Sign indicates effect on money supply) Bank loans and investments other than U. S. Govt. securities 2 + 13.1 +9.6 +3.5 +2.6 +3.2 -0.6 Bank holdings of U. S. Govt. securities 3 - 3.6 -1.9 -1.7 -0.1 +3.1 -3.2 Gold stock..... - 1.7 -1.5 -0.2 +0.2 +0.2 Treasury deposits + 0.5 + 1.2 -0.7 -0.5 -1.3 +0.8 Other factors - 1.3 -0.6 -0.7 -1.5 -0.8 -0.7 Total money supply + 7.0 +6.8 +0.2 +0.7 +4.2 -3.5 Demand deposits adjusted. + 6.8 +7.5 -0.7 +0.2 +3.9 -3.6 Time deposits adjusted 6... + 0.4 -0.7 + 1.1 + 1.1 +0.1 + 1.0 Currency outside banks. . . - 0.1 +0.1 -0.2 -0.7 +0.1 -0.8 1 Excludes money supply held by banks and the U. S. Government. 2 Commercial and mutual savings banks. 3 Commercial, mutual savings, and Federal Reserve Banks. 4 Less than 50 million dollars. 8 Commercial and mutual savings banks and the Postal Savings System. NOTE.—Data are for end of June and December dates. Data for December 1950 are partly estimated. Details may not add to totals because of rounding. Demand deposits, the largest and most volatile component of the money supply, increased by almost 7 billion dollars, a greater growth than in any postwar year since 1946. Time deposits, on the other hand, rose by only about half a billion dollars, much less than in other recent years. Currency outside banks declined for the fourth consecutive year as wartime accumulations were further reduced. Increased spending during 1950 reflected in part a more rapid turnover of demand deposits. At banks in leading cities outside New York the rate of use of deposits rose steadily during the first half of the year, accelerated sharply during the third quarter, and was at a high rate during the remainder of the year. At year-end deposit turnover, although somewhat more rapid than in other recent years, was slower than during the 1920's. Advance to the turnover Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 23 BANK DEPOSITS AND CURRENCY BILLIONS OF DOLLARS BILLIONS OF DOLLARS 180 TOTAL D:POSITS S ADJU<3TED N. 160 AND CUF?RENCY^*< 160 140 // • 120 - 100 r DEMAND DEPOSITS 100 ADJUSTED .N X 80 - 60 A y TlME DEPOSITS - 40 40 -*"' CURRENCY OUTSDE BANKS - 20 0 1942 1944 1946 1948 1950 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, 1942; end of month, 1943-46; last Wednesday of month, 1947—50 except for June and December call dates. Figures for December 1950 are estimates. rate of the twenties would permit a considerable increase in expenditures without further growth in the money supply. The more active turnover of demand deposits in the last half of the year was accompanied by a more active use of other liquid assets by individuals. Time deposits in commercial banks, mutual savings banks, and the Postal Savings System were drawn down by about three-fourths of a billion dollars in the last half of the year and there were net cash redemptions of savings bonds. Commercial bank credit. Commercial banks increased their outstanding loans and holdings of State and local government and corporate securities by about 11.5 billion dollars in 1950, to a total of almost 65 billion. The increase compared with less than 8 billion in 1947, also an inflationary year, and surpassed all previous records. Credits to businesses accounted for about 50 per cent of the 1950 growth in bank loans and loans to consumers and real estate loans each for about 20 per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

24 ANNUAL REPORT OF BOARD OF GOVERNORS BANK LOANS AND INVESTMENTS OTHER THAN U. S. GOVERNMENT SECURITIES INSURED COMMERCIAL BANKS BILLIONS OF DOLLARS JUNE AND DECEMBER BILLIONS OF DOLLARS .LOANS 20 15 - 10 5 0 . .1 i - PRINCPAL TYPES 1 BUS1NESS / J - J + / ^/ ' - REAL ESTATE ~~ _ CONSUMER All insured commercial banks in the United States. Figures for Dec. 30, 1950 are partly estimated. Business loans include commercial and industrial loans, open market commercial paper, and acceptances. Municipal securities include State and local government obligations. Commercial banks directly or indirectly provide most of the short-term credit sought by businesses from financing institutions, while savings institutions and individuals supply the greater part of the longer term funds. In 1950 bank loans to business rose by about 5 billion dollars, as the chart shows, and bank holdings of corporate securities increased by about 500 million. Business borrowing at banks declined as usual in the early months of the year but, with accelerating recovery prompting many businesses to rebuild inventories, the decline was much less than might have been expected on seasonal grounds. More extensive borrowing began in the early part of June and greatly increased after the out- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 25 break of hostilities in Korea. A considerable part of the increase after the middle of the year reflected borrowing by commodity dealers and processors of agricultural commodities for the purpose of building up their inventories at rising prices. Another substantial part of the increase went to distributors and to sales finance companies. The amount of increased borrowing to finance defense contracts was small. Short-term credit to consumers on an instalment basis also accelerated in 1950, especially during the summer, and commercial banks provided 1.2 billion dollars, or about half, of the 1950 increase in this type of credit. Banks also expanded their noninstalment loans to consumers by about 300 million dollars, bringing the total increase in their consumer credit balances to more than 1.5 billion dollars. As indicated earlier, commercial banks also made a substantial amount of loans to retailers and finance companies in connection with their extensions of credit to consumers. Long-term loans on residential mortgages by commercial banks and other lenders were in record volume throughout 1950. Commercial banks expanded their portfolios of home and other real estate mortgages by more than 2 billion dollars during the year. This amount was substantially less than the increase for life insurance companies, but almost the same as that for savings and loan associations and considerably more than the increase for savings banks. The expansion in real estate loans at commercial banks was larger during 1950 than in any previous year except 1946 and 1947. The new peak of more than 13.5 billion dollars outstanding on December 31, 1950 represented more than one-fourth of the real estate debt held by all institutional lenders. Commercial banks increased their portfolios of State and local government and corporate securities by about 2 billion dollars during 1950, as compared with 1 billion in 1949. The major part of the increase in both years was in State and local government obligations. Banks provided a considerable part of the substantial amounts borrowed by State and local governments to finance postwar programs for improving roads and streets and providing schools, public buildings, sewerage systems, and other government facilities. Changes in ownership of United States Government securities. To obtain funds for expansion of private credit during the year, commercial banks reduced their holdings of United States Govern- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

26 ANNUAL REPORT OF BOARD OF GOVERNORS ment securities by more than 5 billion dollars. Reductions in bank portfolios were particularly large in the third quarter when private demand for loans was expanding rapidly. Nonbank investors as a group and the Federal Reserve Banks increased their holdings of Government securities over the year as a whole. The total marketable portion of the Federal debt, which had increased by 0.2 billion dollars in the first half of the year, declined by 2.9 billion in the second half and by a further 0.8 billion early in January 1951. OWNERSHIP OF UNITED STATES GOVERNMENT DEBT [In billions of dollars, par value, partly estimated] Change for Item Dec. 31, 1950? Year Second First 1950 half half Total debt outstanding 256.7 -0.4 -0.6 +0.2 Marketable 152.5 -2.7 -2.9 Nonmarketable 104.3 +2.2 +2.2 +0.2 C) Debt held by Federal agencies and trust funds, total 39.2 -0.1 + 1.4 -1.5 Marketable 5.4 C) 0) 0) Nonmarketable 33.8 + 1.4 -0.2 -1.5 Debt held by public, total 217.5 -0.3 -2 0 + 1.7 Marketable 147.1 -2.7 -2.9 +0.2 Nonmarketable 70.4 +2.4 +0.9 + 1.6 Distribution of debt held by public: Federal Reserve Banks, total (all marketable) 20.8 + 19 +2.4 -0.6 Bills, certificates, and notes 16.2 +4.5 +3.4 + 1.0 Bank-eligible bonds 1.1 -1.2 -1.0 -0.2 Restricted bonds 3.5 -1.4 C) -1.4 Commercial banks, total 61.6 -5.1 -4.0 -11 Marketable securities, total 59.2 -5.4 -4.4 -0.9 Bills, certificates, and notes 23.2 +0.7 +1.0 -0.3 Bank-eligible bonds 34.9 -6.1 -5.3 -0.7 Restricted bonds 1.1 +0.1 0) 0) Nonmarketable securities 2.5 +0.2 +0.4 -0.2 Nonbank investors, total 135.1 +3.0 -0 4 +3.4 Marketable securities, total 67.1 +0.8 -0.9 + 1.6 Bills, certificates, and notes 18.9 +2.9 +1A +1.4 Bank-eligible bonds 8.1 -3.1 -2.1 -1.1 Restricted bonds 40.2 +1.0 -0.3 +1.3 Nonmarketable securities 68.0 +2.2 +0.4 + 1.7 P Preliminary. 1 Less than 50 million dollars. NOTE.—Includes matured and noninterest-bearing securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 27 Federal Reserve selling of long-term bank-restricted securities during the first eight months of the year resulted in a large shift of these issues from the System account into the portfolios of nonbank investors. Over the year as a whole the System made net sales of about 1.4 billion dollars of restricted bonds, as is shown in the table, and made net purchases of bank eligible securities of about 3.3 billion. Nonbank investors increased their holdings of Government securities by 3.0 billion dollars over the year, including increases amounting to 1.4 billion in the portfolios of foreign monetary authorities and international organizations. The increase in holdings of restricted bonds, totaling about 1 billion dollars, was due to purchases by pension funds, fire, casualty, and marine insurance companies, and miscellaneous investors in excess of sales by life insurance companies. Nonbank investors reduced their holdings of bank-eligible bonds and increased their holdings of bills, certificates, and notes on balance as the result of both exchanges and market transactions. Bonds maturing in March, September, and December were refunded with note issues. Nonfinancial corporations and foreign accounts purchased short-term securities in the market, while insurance companies, mutual savings banks, and miscellaneous investors sold bankeligible bonds, partly for the purpose of acquiring restricted bonds. Life insurance companies as a group reduced their Government security holdings by 1.8 billion dollars, primarily for the purpose of increasing their credits to other borrowers. Nonbank holdings of nonmarketable issues increased by 2.2 billion dollars, reflecting largely the accrual of interest on savings bonds and net purchases of Treasury savings notes. BANKING OPERATIONS AND STRUCTURE Bank earnings and profits. The earnings position of member banks continued to improve during 1950. Net current earnings before income taxes advanced to 1,245 million dollars, an increase of 148 million over 1949. The most important factor in the increase was the rapid growth of loans during the second half of the year which brought annual earnings on loans to 1,634 million dollars, 207 million above the previous year. This, together with smaller increases in other categories, more than offset the increase of 131 million dollars in expenses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

28 ANNUAL REPORT OF BOARD OF GOVERNORS Net profits (after adjustments for losses, recoveries, profits on securities, valuation reserves, and income taxes) amounted to 781 million dollars, an increase of 95 million over 1949. Larger net current earnings and a slight decline in net losses and transfers to reserves were offset in part by larger accruals for income taxes. About 346 million dollars or 44 per cent of net profits was paid out in dividends, which amounted to 3.7 per cent of average total capital accounts. This ratio was up slightly from 1949. Net profits were 8.3 per cent of average capital accounts during the year, slightly above the three preceding years, but below the peak of 10.9 per cent in 1945, when profits on securities were very high. The ratio of net current earnings to average capital accounts continued its upward trend and amounted to 13.2 per cent in 1950 as compared with 12.2 in 1949. Bank earning assets. Earning assets of member banks amounted to 107 billion dollars at the end of 1950, nearly 6 billion more than at the end of 1949. Increases of 8 billion in loans and 2 billion in corporate and State and local government securities were offset in part by a decline in holdings of United States Government obligations of 4 billion dollars. These changes resulted in average earning assets for the year of 6 billion dollars more than in 1949. Capital accounts. Capital accounts of member banks amounted to 9.7 billion dollars at the end of 1950, an increase of about half a billion from the end of 1949. Retention of profits accounted for most of the increase; receipts from sales of common stock amounting to slightly more than 100 million dollars were offset in part by the retirement of preferred stock and reductions in capital accounts incident to mergers. The ratio of average capital accounts to average total assets remained practically unchanged from 1949. However, the ratio of average capital accounts to average "risk assets" (total assets less United States Government securities and cash assets) resumed its downward trend, interrupted in 1949, with a decline from 20.2 per cent in 1949 to 18.9 per cent in 1950. This reflected the increased proportion of earning assets that consisted of loans and securities other than United States Government securities. Number of banking offices. The number of banking offices in the United States increased by 213 in 1950, the seventh consecutive Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 29 annual increase; the number of branches and additional offices increased by 250 and the number of banks declined by 37. At the end of 1950 there were 19,584 banking offices (14,650 banks and 4,934 branches and additional offices). All of these figures exclude banking facilities at military and other Government establishments, of which there were 122 at the end of 1950, an increase of 28 for the year. There were about 350 of these banking facilities at the end of World War II. The number of banks (head offices) declined for the third successive year. A total of 106 banks went out of existence through consolidations, liquidations, and suspensions, but 71 of them became branches. One small noninsured unincorporated private bank, with deposits of only about $42,000, suspended operations. Of the 68 banks opened for business, 15 were members of the Federal Reserve System, 44 were insured nonmembers, and 9 were noninsured. Of the 14,650 banks in operation at the end of the year, 14,121 were commercial banks and 529 were mutual savings banks. The number of branches and additional offices, exclusive of banking facilities at military and other Government establishments, increased by a net of 250 during the year, the largest increase since the early twenties. Approximately one-third of the new branches established were in California, New York, and North Carolina, where either State-wide or area branch banking has had considerable development. Changes in Federal Reserve membership. There were 6,873 member banks in operation at the end of 1950, 19 less than at the end of 1949. The number of offices of member banks, however, increased as the result of the addition of 179 branches. The decline in the number of banks was largely the result of consolidations and conversions of banks into branches and occurred despite the 26 additions to membership. Of the additions to membership, 9 were national banks and 17 were State banks; of the latter, 8 were newly organized and 9 were already in operation. These 9 had total deposits of 55 million dollars and all but 3 were already insured. The 6,873 member banks in operation at the end of 1950 accounted for 49 per cent of the number and held 85 per cent of the deposits of all commercial banks in the country. State member banks accounted for 21 per cent of the number and held 65 per cent of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

30 ANNUAL REPORT OF BOARD OF GOVERNORS the deposits of all State commercial banks. These relationships have varied only slightly in recent years. Although nearly one-half of all commercial banks in the country are members of the Federal Reserve System, the proportion that are members in the various States ranges from 87 per cent in New York to 24 per cent in Iowa. The States with the largest number and proportion of member banks are, with some exceptions, in the northern and eastern sections of the country, while the nonmember banks are concentrated more in the midwestern and southern sections of the country. Variations from State to State in the proportions of member and nonmember banks may be attributed to a number of factors, including differences between State requirements for capital and those prescribed by Federal law for admission to Federal Reserve membership, attitudes toward deposit insurance and par clearance of checks (both of which are required for membership), and the extent to which banking facilities are provided by means of branch systems rather than by single-unit banks. Par and nonpar banks.1 During 1950 there was a net decrease of 16 in the number of banks on the Federal Reserve Par List and a net decrease of 20 in the number of nonpar banks. During the year, a total of 78 banks were added to the par list, 1 withdrew, and 93 banks formerly on the list terminated existence. Of these 93 banks, 84 were absorbed by other par banks (including 65 that were converted into branches) and 9 were liquidated. At the end of 1950 there were 12,162 par-remitting and 1,853 nonpar banks. The latter represented only 13 per cent of the banks on which checks are drawn and held only a very small proportion of the deposits of all commercial banks in the country. There were 4,534 par-remitting branches and 290 nonpar branches of commercial banks as compared with 4,289 and 273, respectively, at the beginning of the year. At the end of the year all banks in 6 Federal Reserve districts, 29 States, and the District of Columbia were on the Federal Reserve Par List. In each of 5 other States the number of nonpar banks was less than 10. Over 99 per cent of the banks not on the par list were 1 This section refers only to banks on which checks are drawn and their branches and offices, including "banking facilities." 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 31 in the following 14 States: Minnesota 413; Georgia 284; Mississippi 161; Arkansas 123; North Carolina 113; Louisiana 104; South Dakota 98; Alabama 96; Tennessee 91; North Dakota 87; South Carolina 84; Missouri 65; Florida 61; and Texas 55. Check routing symbols. The program inaugurated by the American Bankers Association and the Federal Reserve System in June 1945 to facilitate check collection by use of routing symbols was considerably extended during 1950. A survey conducted as of December 1, 1950 showed that practically all banks handling a sizable volume of checks made extensive use of the routing symbols. A count made at all Federal Reserve Banks of more than 8 million checks drawn on par-remitting banks indicated that 76 per cent of the checks carried the routing symbol. This compares with 67 per cent a year ago and 58 per cent in 1948. BANK SUPERVISION BY THE FEDERAL RESERVE SYSTEM Examination of Federal Reserve Banks. The Board's Division of Examinations examined each of the twelve Federal Reserve Banks and their twenty-four branches during the year as required by law. Examination of State member banks. State member banks are subject to examinations made at the 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 1950 program for the examination of State member banks was practically completed. Bank holding companies. During 1950 the Board authorized the issuance of two voting permits for general purposes and six permits for limited purposes to holding company affiliates of member banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

32 ANNUAL REPORT OF BOARD OF GOVERNORS 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 four organizations. Trust powers of national banks. During 1950, 20 national banks were granted authority by the Board to exercise one or more trust powers under the provisions of Section ll(k) of the Federal Reserve Act. This number includes the grant of additional powers to 10 banks which previously had been granted certain trust powers. Trust powers of 13 national banks were terminated, 12 by voluntary liquidation, consolidation, or conversion and one by voluntary surrender. At the end of 1950 there were 1,773 national banks holding permits to exercise trust powers. Foreign branches and banking corporations. The Board approved during 1950 eight applications made by member banks pursuant to the provisions of Section 25 of the Federal Reserve Act for permission to establish foreign branches. Member banks opened four branches abroad in 1950, one each in Brazil, Guam, Mexico, and the Republic of Panama. One branch in China of a member bank was closed during the year. At the end of 1950, seven member banks had in active operation a total of 95 branches in 24 foreign countries and possessions of the United States. Of the 95 branches, four national banks were operating 89 and three State member banks were operating 6. The foreign branches in active operation were distributed geographically as follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 33 Latin America 49 England 10 Argentina 10 Brazil 9 F«'East... 19 Chile ? China 1 ':::;:::;:;;:;::;;; 5 Hon Kon 1 g g Cuba 16 \\da I da I Mexico 2 JaPan 8 Panama •;.'.'.'.';!.';.".'.".•.•.'.'.'.'.• 4 Philippines 5 Peru 1 SjW6 Uruguay 1 Thailand 1 Venezuela 1 U. S. Possessions 12 „ . . .„ . Canal Zone 4 Continental Europe 5 , o Belgium 1 <fuam ••. \ France 1 Puerto Rico 7 Germany 3 Total 95 There was no change during the year in the 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. Of the four corporations in operation, one has no subsidiaries or foreign branches, one operates a branch each in England and France, one operates a branch in France, and one has an English fiduciary affiliate. A routine examination of one such corporation was conducted in 1950 by the Board's Division of Examinations. At the end of 1950 there were in operation two banking corporations organized under the provisions of Section 25(a) of the Federal Reserve Act to engage in international or foreign banking. The head offices of these corporations are located in New York City and both were examined during the year by the Board's Division of Examinations. One such institution operates a branch each in France and Hong Kong and has a fiduciary affiliate in England; a branch formerly operated in China was closed during the year. During 1950 the Board approved the applications of a foreign banking corporation for permission to establish three foreign branches. CHANGES IN REGULATIONS OF THE BOARD OF GOVERNORS Consumer credit. The Board's Regulation W, relating to consumer credit, was reissued on September 8, 1950, effective September 18, 1950, in much the same form as when it expired on June 30, 1949. This was done under authority in Title VI of the Defense Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

34 ANNUAL REPORT OF BOARD OF GOVERNORS Production Act approved September 8, 1950. The new regulation covered instalment sales and loans for the purchase of substantially the same kinds of consumer durable goods as the previous regulation, and likewise unclassified instalment loans for most other consumer purposes. However, unlike the previous regulation, the new regulation also covered residential repairs, alterations, and improvements. A further difference was the reduction of the maximum amount of credit to be regulated from $5,000 to $2,500, except credit involving automobiles. The regulation as reissued prescribed a minimum down payment of 33Ys per cent and a maximum maturity of 21 months for automobiles; a minimum down payment of 15 per cent and a maximum maturity of 18 months for major household appliances; a minimum down payment of 10 per cent and a maximum maturity of 18 months for household furniture and floor coverings; and a minimum down payment of 10 per cent and a maximum maturity of 30 months for residential repairs, alterations, or improvements. Unclassified instalment loans were limited to a maximum maturity of 18 months. Articles selling for less than $100 were excluded from the down payment requirements of the regulation. Effective October 16, 1950, Regulation W was amended by increasing the down payment on appliances from 15 per cent to 25 per cent; by increasing the down payment on furniture and floor coverings from 10 per cent to 15 per cent; by decreasing the maximum maturity for automobiles from 21 months to 15 months; and by decreasing the maximum maturity for appliances, furniture, and floor coverings, and unclassified instalment loans from 18 months to 15 months. In addition, the $100 exemption from the down payment requirement was reduced to $50. Residential real estate credit. The Board's Regulation X, relating to residential real estate credit, was issued by the Board, with the concurrence of the Housing and Home Finance Administrator, effective October 12, 1950, under authority of the Defense Production Act of 1950 and Executive Order No. 10161. The regulation prescribed credit restrictions on housing loans not insured, guaranteed, or extended by Government agencies, and specified maximum amounts which could be borrowed, maximum maturities, and minimum amortization requirements for extensions of credit on resi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 35 dential construction, including the financing of major additions and major improvements. The regulation was not applied to loans on construction begun before noon on August 3, 1950 or to loan commitments made prior to the effective date. The new regulation called for maximum loan values ranging from 90 per cent for a property valued at not more than $5,000 to 50 per cent for a property valued at more than $24,250. All real estate construction credit was limited to a maximum term of 20 years, except that made on properties valued at $7,000 or less under a contract which called for complete amortization by equal periodic payments in 25 years. An alternative method of amortization for loans on properties valued at more than $7,000 called for payments of 5 per cent per year until the loan was reduced to 50 per cent of the value of the property. Value of a residential property, in the great majority of cases, was the bona -fide sales price. In cases which did not involve a sale at the time of the credit extension, value was cost to the borrower if the property had been purchased not more than a year before the credit extension. Otherwise, value was determined by bona fide appraisal of the lender. Effective November 14, 1950, the Board, with the concurrence of the Housing and Home Finance Administrator, amended the regulation so as to exempt from its prohibitions real estate construction credit extended prior to May 1, 1951, on new construction begun prior to October 12, 1950, and to extend until December 31, 1950, the time permitted for filing with the Federal Reserve Banks statements of facts with respect to unwritten agreements to extend credit which were entered into prior to October 12, 1950. Loan guarantees for defense production. The Board revised its Regulation V effective September 27, 1950, under authority of the Defense Production Act of 1950 and Executive Order No. 10161. The regulation governs the general operation of the program of guaranteed loans authorized by the Defense Production Act of 1950. This program, which is described on pages 19-21 of this Report, is patterned after the so-called V-loan program of World War II. Reserve requirements. On December 28, 1950, the Board issued a revised supplement to its Regulation D that increased the amount of reserves required to be maintained with the Federal Reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

36 ANNUAL REPORT OF BOARD OF GOVERNORS Banks by banks which are members of the Federal Reserve System. The increase became effective according to the following schedule: On net demand deposits Effective Central reserve city banks From 22 to 23 per cent January 11, 1951 From 23 to 24 per cent January 25, 1951 Reserve city banks From 18 to 19 per cent January 11, 1951 From 19 to 20 per cent January 25, 1951 Country banks From 12 to 13 per cent January 16, 1951 From 13 to 14 per cent February 1, 1951 On time deposits Central reserve city and reserve city banks From 5 to 6 per cent January 11, 1951 Country banks From 5 to 6 per cent January 16, 1951 HEARING AND LITIGATION Transamerica Corporation. As noted in the last two annual reports, the Board, on June 24, 1948, issued its Complaint against Transamerica Corporation, San Francisco, California, together with a notice of 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. The taking of testimony was continued at intervals during 1950 and was concluded on December 15 in San Francisco. Counsel were directed to prepare recommended findings for submission to the Hearing Officer. In connection with this proceeding, the Board filed suit in June 1950 in the United States Court of Appeals for the Ninth Circuit for an injunction to prevent Bank of America N. T. & S. A., one of the banks listed in the complaint against Transamerica, from converting into branches of that bank 22 banks majority-owned by Transamerica, which were also listed in the complaint. The Court held that the proposed take-overs would deprive the Board as well as the Court of jurisdiction under the Clayton Act with respect to the 22 banks, and enjoined the consummation of the transaction. After the injunction order was issued the banks were made branches of the Bank of America. This was held by the Court to constitute contempt of its injunction order, and Transamerica and Bank of Amer- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 37 ica were required to reverse the transaction and to restore the banks to their status as separate institutions until the completion of the Board's Clayton Act proceeding against Transamerica. The United States Supreme Court denied a petition for certiorari to review the decision of the Court of Appeals. The two opinions and two orders of the Court of Appeals were printed in the Federal Reserve Bulletin for July and September 1950, beginning at pages 823 and 1155, respectively. LEGISLATION Real estate loans. The Housing Act of 1950, approved April 20, 1950, amended Section 24 of the Federal Reserve Act so as to make certain limitations and restrictions on loans made by national banks, secured by real estate, inapplicable to loans for low-cost homes insured under a new Section 8 of Title I of the National Housing Act which provided mortgage insurance for low-cost homes, particularly in suburban and outlying areas. Purchase of Government obligations by Federal Reserve Banks. An Act approved June 30, 1950, amended Section 14(b) of the Federal Reserve Act so as to extend until July 1, 1952, the authority of the Federal Reserve Banks to purchase or sell directly from or to the United States bonds, notes, or other obligations which are direct obligations of the United States or which are fully guaranteed as to principal and interest, provided the aggregate amount acquired directly from the United States held at any one time by the twelve Federal Reserve Banks shall not exceed 5 billion dollars. Consent to reduction of capital or surplus. The Act of August 17,1950, authorizing national banks to convert into and to merge or consolidate with State banks, also provided that when an insured bank converts into or consolidates or merges with an insured State bank, or assumes liability to pay any deposits in another insured bank, the prior written consent of the appropriate Federal banking agency (the Board in the case of State member banks) must be obtained if the capital stock or surplus of the insured bank will be less than that of the converting bank or less than the aggregate capital stock or surplus, respectively, of the merging or consolidating banks or of all parties to the assumption of liabilities. In addition, the Act made certain technical amendments to Sections 9 and 12B of the Federal Reserve Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

38 ANNUAL REPORT OF BOARD OF GOVERNORS Federal deposit insurance. By an Act approved September 21, 1950, Section 12B was withdrawn as a part of the Federal Reserve Act and, with certain amendments, was made a separate Act, to be known as the "Federal Deposit Insurance Act." Some important changes made by the new Act were a modification in the assessment base for determining assessments against insured banks, a dividend credit plan which results in a reduction in the amount of annual assessments, and an increase in the amount of an insured deposit from $5,000 to $10,000. Defense Production Act. The Defense Production Act of 1950, approved September 8, 1950, among other things conferred directly upon the Board the authority to exercise consumer credit controls. Under Executive Order No. 10161, issued by the President pursuant to the Act, the Board was delegated authority to regulate real estate construction credit not made, insured, or guaranteed by Federal agencies, provided that in prescribing, changing, or suspending any regulations in connection with residential real estate credit, the concurrence of the Housing and Home Finance Administrator must be obtained. The Board was also authorized to exercise supervision over the operations of Federal Reserve Banks in connection with guaranteeing defense production loans, and to exercise the functions conferred upon the President by Section 708 (a) and (b) of such Act in connection with voluntary agreements with respect to financing. RESERVE BANK OPERATIONS Volume of operations. Figures showing the volume of operations in principal departments of the Federal Reserve Banks for the past five years are given in Table 5 on page 53. Discounts and advances were less in 1950 than in 1949. There was a corresponding reduction in the number of banks using Federal Reserve discount facilities, 899 in 1950 compared with 1,006 in 1949. The number of pieces of paper currency sorted and counted in 1950 set an all-time record, while the aggregate dollar value thereof was exceeded only in 1948. The volume of coin handled was almost as great during 1950 as in 1949. New peaks were established in check collection operations. The number of issues, redemptions, and exchanges of Government securities effected by the Reserve Banks acting as fiscal agents of the United States, after declining from a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

39 FEDERAL RESERVE SYSTEM peak of 382 million in 1945, turned upward in 1950. The amount thereof exceeded the previous peak established in 1948. The number of transfers of funds continued its rise since 1940, and the amount of such transfers in 1950 set an all-time high. Earnings and expenses. Current earnings, current expenses, and the distribution of net earnings of the various Federal Reserve Banks are given in detail in Table 6 on pages 54-55, and a condensed annual statement for all the Reserve Banks since 1913 is shown in Table 7 on pages 56-57. The table below presents a condensed summary for the year 1950 as compared with 1949. Total current earnings of 275 million dollars in 1950 represent a decline of 41 million from 1949. Current expenses increased by 3 million dollars, leaving current net earnings of 195 million, or 44 million less than in the preceding year. EARNINGS, EXPENSES, AND DISTRIBUTION OF NET EARNINGS OF FEDERAL RESERVE BANKS, 1950 AND 1949 [In thousands of dollars] Item 1950 1949 Current earnings $275,839 $316,537 Current expenses 80,572 77,478 Current net earnings 195,267 239,059 Additions to current net earnings 36,969 31,664 Deductions from current net earnings x 675 43,786 Net additions 36,294 212,122 Net earnings before payments to U. S. Treasury 231,561 226,937 Paid U. S. Treasury (interest on outstanding F. R. notes). . 196,629 193,146 Dividends 13,083 12,329 Transferred to surplus (Sec. 7) 21,849 21,462 1 Includes $408,000 (1950) and $40,394,000 (1949) transferred to reserves for contingencies. 2 Net deductions. Net additions to current net earnings were 36 million dollars (consisting mostly of net profits on the sale of Government securities), making 231 million net earnings before payments to the United States Treasury. After payments of 196 million dollars to the United States Treasury as interest on outstanding Federal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

40 ANNUAL REPORT OF BOARD OF GOVERNORS Reserve notes and 13 million in dividends to member banks, net earnings of 22 million were added to surplus accounts. Holdings of loans and securities. The following table presents a comparison of average daily holdings, earnings for the year, and average rate of interest on loans and securities held by the Federal Reserve Banks during each of the past four years. RESERVE BANK EARNINGS ON LOANS AND SECURITIES, 1947-50 [Dollar amounts in thousands] U.S. Dis- Accept- Government Indus- Item and year Total counts ances securities trial and purdirect and loans advances chased guaranteed Average daily holdings:1 1947 $22,552,491 $218,755 $384 $22,331,740 $1,612 1948 . . . 21,841,623 330,706 21,509,321 1,596 1949 19,804,711 231,201 19,572,664 846 1950 18,536,551 129,081 18,405,083 2,387 Earnings: 1947 157,823 2,195 4 155,564 60 1948 303,316 4,371 298,903 42 1949 315,754 3,472 312,241 41 1950 275,066 2,034 272,916 116 Average rate of interest (per cent): 1947 0.70 1.00 1.01 0.70 3.75 1948 1.39 1.32 1.39 2.64 1949 1.59 1.50 1.60 4.85 1950 1.48 1.58 1.48 4.85 1 Based on holdings at opening of business. Federal Reserve Bank holdings of Government securities averaged more than 1 billion dollars less in 1950 than in 1949, thus extending the downward trend to four straight years from the 1946 record holdings. The average rate of interest received from holdings of securities was also lower than in 1949, resulting primarily from a shift in the relative proportion of holdings from bonds to shorter term securities. Reflecting the lower average yield and smaller holdings, earnings from Government securities declined to below the 1949 and 1948 amounts, but were still in excess of previous years. Holdings of discounts and advances and earnings thereon were also in smaller amounts in 1950 than 1949, and average holdings were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 41 smaller than in any of the preceding three years. On the other hand, industrial loans and earnings therefrom showed a marked increase and were higher than in the preceding years. Foreign and international accounts. Accelerating the upward trend which first became evident in the latter part of 1947, total deposits of foreign central banks and governments with the Federal Reserve Banks and gold and securities held in custody for foreign accounts increased in 1950 by about 2.2 billion dollars to more than 7.2 billion. This net increase was dominated by a rise of 1,246 million dollars in earmarked gold. United States Government securities held in custody and deposits showed smaller, though significant, increases, rising by 903 million dollars and 139 million, respectively. The amount of dollar deposits and gold custodies held by the Federal Reserve Bank of New York for the International Bank for Reconstruction and Development and the International Monetary Fund showed a moderate increase. Combined deposits and custodies held for foreign and international account rose to well over 10 billion dollars at the end of the year, and were substantially in excess of the previous peak of 8.2 billion reached in February 1947. Loans on gold by the Federal Reserve Banks to foreign central banks, which had reached a record high of nearly 260 million dollars outstanding in 1948, had receded to slightly less than 70 million at the end of 1949. The last such loan was paid off in August 1950. 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, and, as fiscal agent of the United States, continued to operate the United States Stabilization Fund in accordance with authorizations and instructions from the Treasury Department. In December the Secretary of the Treasury designated the Federal Reserve Bank of New York as fiscal agent of the United States to act on behalf of the Treasury Department in the administration of the regulations relating to the blocking in this country of the assets of Communist China and North Korea. Bank premises. Considerable progress was made during the year toward alleviating the need for additional permanent space and improving working conditions in the quarters of certain Federal Reserve Banks and Branches. However, in view of the enlarged defense program and the manpower and construction materials Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

42 ANNUAL REPORT OF BOARD OF GOVERNORS situation, the Board in December 1950 advised the Federal Reserve Banks that while it would continue to approve the preparation of plans for needed building construction it would authorize only construction of an emergency character. Work on the new buildings to house the Portland and Seattle Branches of the Federal Reserve Bank of San Francisco had progressed to a point near completion by the end of 1950. The Seattle building was occupied on January 2, 1951, and upon occupancy of the Portland building, all Reserve Banks and Branches will be housed in their own buildings for the first time since the Federal Reserve System was founded. As indicated above, however, there is still need for expanded quarters, especially at some of the Branches, and it continues to be necessary to rent a substantial amount of outside space. Considerable progress was made during the year toward the completion of the new addition and alterations to the Detroit Branch building of the Federal Reserve Bank of Chicago. The Board in 1950 authorized the Federal Reserve Bank of Boston to obtain bids for remodeling and lateral extension of its banking house, the Federal Reserve Bank of Richmond to accept the low bid for the erection of an addition at the rear of the present structure and for alterations in the existing quarters including the construction of a new coin vault, the Federal Reserve Bank of Atlanta to accept the low bid for the construction of the new Jacksonville Branch building, the Federal Reserve Bank of San Francisco to proceed with modernization and improvement of certain facilities and areas in the head-office building, including the building of a new coin and auxiliary vault. The following additional authorizations were given: installation of stand-by oil burning equipment to service one boiler in the building of the Federal Reserve Bank of Chicago; construction of a coin vault in the Federal Reserve Bank of Minneapolis; and modernizing the elevator system in the Federal Reserve Bank of Cleveland. Late in the year a lot situated across the street from the Federal Reserve Bank of Richmond's head-office property was acquired to provide for possible future expansion. The Federal Reserve Bank of Kansas City purchased real estate adjoining its Omaha Branch for the purpose of eventually building an addition. In order that more efficient utilization may be made of the site which the Federal Reserve Bank of San Francisco owns across the street from its main Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 43 quarters, a small strip of land jutting into this lot was acquired during the year. Cost and net book value of Federal Reserve Bank premises are presented in Table 9 on page 60. BOARD OF GOVERNORS—INCOME AND EXPENSES The following table shows the income and expenses of the Board for the year 1950: OPERATING SURPLUS, January 1, 1950 $ 322,607.31 Adjustment in 1950 applicable to preceding years.. 93.19 $ 322,514.12 INCOME: Assessments on Federal Reserve Banks 3,433,700.00 Sale of Federal Reserve Bulletin 12,659.32 Sale of other publications 17,684.41 Miscellaneous 3,986.33 3,468,030.06 3,790,544.18 EXPENSES: Salaries 2,451,447.00 Retirement contributions—regular 189,206.88 Retirement contributions—special 17,088.45 Traveling expenses 198,105.22 Postage and expressage 13,684.61 Telephone and telegraph 86,509.66 Printing and binding 162,338.83 Stationery and supplies 30,358.05 Furniture and equipment, including rental 62,841.07 Books and subscriptions 14,485.43 Heat, light, and power 34,018.36 Repairs and alterations (building and grounds).. 31,093.78 Repairs and maintenance (furniture and equipment) . . 6,071.13 Medical service and supplies 1,421.19 Insurance 4,607.82 All other: Surveys of Consumer Finances.. $154,300.00 Cafeteria (net) 33,411.75 Legal and consultant fees and expenses 33,208.20 Miscellaneous 45,791.76 266,711.71 3,569,989.19 OPERATING SURPLUS, December 31, 1950 $ 220,554.99 In addition to the foregoing, the Board made certain expenditures on a reimbursable basis for which it received reimbursements in 1950 as follows: Printing Federal Reserve notes $5,184,830.98 Leased wire service (telegraph) 97,272.16 Leased telephone lines 9,684.00 Federal Reserve Issue and Redemption Division (Comptroller of the Currency). . 107,366.22 Miscellaneous 20,157.75 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

44 ANNUAL REPORT OF BOARD OF GOVERNORS The accounts of the Board for the year 1950 were audited by the Auditor of the Federal Reserve Bank of Boston, who certified them to be correct. FEDERAL RESERVE MEETINGS The Federal Open Market Committee met in Washington on February 28, March 1, June 13-14, August 18, September 28, October 11, October 30, and November 27,1950, 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 80-94 of this Report. Conferences of the Chairmen of the Federal Reserve Banks were held on January 16-17 and September 18-19,1950, and were attended by members of the Board of Governors. The Conference of Presidents of the Federal Reserve Banks held meetings on February 27, June 12-13, September 21-22, and November 27-28, and the Board of Governors met with the Presidents on March 1, June 14-15, September 27, and November 29. Meetings of the Federal Advisory Council were held on February 19-21, May 14-16, October 1-3, and November 19-21. The Board of Governors met with the Council on February 21, May 16, October 3, and November 21. The Council is required by law to meet in Washington at least four times each year and is authorized by the Federal Reserve Act to consult with and advise the Board on all matters within the jurisdiction of the Board. 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

46 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 1—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) DECEMBER 31, 1950 ASSETS [Amounts in boldface type are those shown in the Board's weekly statement. In thousands of dollars. ] Gold certificates: Interdistrict settlement fund 6,260,848 Gold certificates on hand 1,015,555 Gold certificates with Federal Reserve Agent 13,604,000 20,880,403 Redemption fund for Federal Reserve notes 577,229 Total gold certificate reserves 21,457,632 Other cash: United States notes 30,831 Silver certificates 200,567 Standard silver dollars 2,454 National and Federal Reserve Bank notes 4,771 Subsidiary silver, nickels, and cents 28,093 Total other cash 266,716 Discounts and advances secured by U. S. Government securities: Discounted for member banks 67,240 Discounted for others 67,240 Other discounts and advances: Discounted for member banks 155 Foreign loans on gold 155 Total discounts and advances 67,395 Industrial loans 2,556 U. S. Government securities in System Open Market Account: Bills 1,243,971 Certificates 2,334,195 Notes 12,526,226 Bonds 4,620,075 Other U. S. Government securities 53,100 Total U. S. Government securities 20,777,567 Total loans and securities 20,847,518 Due from foreign banks 24 Federal Reserve notes of other Federal Reserve Banks 170,088 Uncollected items: Transit items 3,915,561 Exchanges for clearing house 254,288 Other cash items 100,159 Total uncollected items 4,270,008 Bank premises: Land 14,096 Buildings (including vaults) 52,813 Fixed machinery and equipment 19,484 Total buildings 72,297 Less depreciation allowances 46,421 25,876 Total bank premises 39,972 Other assets: Industrial loans past due 77 Miscellaneous assets acquired account industrial loans.. 53 Miscellaneous assets acquired account closed banks.... 43 Total 173 Less valuation allowances 143 Net 30 Fiscal Agency and other expenses, reimbursable 2,536 Interest accrued 91,682 Premium on securities 21,973 Deferred charges 886 Sundry items receivable 1,762 Real estate acquired for banking house purposes 939 Suspense account 314 All other 234 Total other assets 120,356 Total assets 47,172,314 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 47 NO. 1—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) —Continued LIABILITIES Federal Reserve notes outstanding (issued to Federal Reserve Banks)..,. 24,548,029 Less: Held by issuing Federal Reserve Banks 871,660 Forwarded for redemption 89,351 961,011 Federal Reserve notes, net (includes notes held by U. S. Treasury and by Federal Reserve Banks other than issuing Bank) 23,587,018 Deposits: Member bank—reserve account 17,680,744 U. S. Treasurer—general account 668,454 Foreign 895,442 Other deposits: Nonmember bank—clearing accounts 87,682 Officers' and certified checks 35,792 Federal Reserve exchange drafts 392 International organizations * 39,373 All other 401,674 Total other deposits 564,913 Total deposits 19,809,553 Deferred availability items 2,901,599 Other liabilities: Accrued dividends unpaid Unearned discount 11 Discount on securities 2,097 Sundry items payable 2,827 Suspense account 355 All other liabilities 310 Total other liabilities 5,600 Total liabilities 46,303,770 CAPITAL ACCOUNTS Capital paid in 225,102 Surplus (Sec. 7) 510,022 Surplus (Sec. 13b) 27,543 Other capital accounts: Reserves for contingencies: Reserve for registered mail losses 7,877 All other 98,000 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 105,877 Total liabilities and capital accounts 47,172,314 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 1950 AND 1949 [In thousands of dollars] Total Boston New York Philadelphia Cleveland Richmond Item 1950 1949 1950 1949 1950 1949 1950 1949 1950 1949 ASSETS z Gold certificates 20,880,40322,622,430 792,128 865,183 6,532,687 7,250,1981,130,2801,208,5081,476,8141,539,111 950,1381,087,376 Redemption fund for Federal Reserve notes 577,229 553,793 53,981 51,417 50,911 49,736 50,563 48,915 67,289 59,127 53,788 52,047 Total gold certificate reserves 21,457,63223,176,223 846,109 916,600 6,583,598 7,299,934 1,180,843 1,257,4231,544,1031,598,2381,003,926 1,139,423 S Other cash 266,716 257,845 28,089 26,367 47,616 41,720 19,125 14,489 22,754 21,343 22,026 21,367 Discounts and advances: Secured by U. S. Govt. securities. . 67,240 8,259 125 1,241 61,960 1,415 3,640 1,695 100 455 575 2,400 Other 155 69,586 4,378 21,962 5,560 49 6,394 3,406 Total discounts and advances. . . 67,395 77,845 125 5,619 61,960 23,377 3,640 7,255 149 6,849 575 5,806 8 Industrial loans 2,556 2,070 27 2,204 1,885 1 1 132 106 U. S. Government securities: Bills 1,296 ,829,247 85,759 333,160 342,060 1,144,483 82,725 328,959 115,311 445,406 80,368 310,023 Certificates 2,334 195 ,275,450 160,919 432,931 544,082 1,487,219 155,228 427,471 216,370 578,791 150,804 402,865 Notes 12,527 226 562,200 863,558 38,785 2,920,763 133,236 833,007 38,296 1,161,131 51,852 809,269 36,092 Bonds 4,620 075 ,217,700 318,509 497,935 1,076,903 1,710,523 307,238 491,655 428,263 665,696 298,484 463,355 Total U. S. Govt. securities 20,777,56718,884,597 ,428,745 1,302,811 4,883,8 4,475,461 1,378,198 1,286,3811,921,075 1,741,745 1,338,9251,212,335 Total loans and securities 20,847,518 18,964,512 ,428,8701,308,430 4,945,795 4,498,838 1,384,042 1,295,5211,921,225 1,748,595 1,339,632 1,218,247 1 Due from foreign banks 24 38 17 112 3 1 Federal Reserve notes of other Federal Reserve Banks 170 088 162,306 6,501 7,982 23,337 24,252 11,382 10,369 11,177 10,825 32,260 19,976 Uncollected items 4,270 008 ,946,781 324,107 225,098 806,762 546,227 268,232 172,456 457,757 267,302 340,963 291,047 Bank premises 39 972 33,738 1,073 1,129 7,657 7,872 2,920 2,987 4,794 4,936 2,870 2,470 Other assets 120 356 101,654 8,365 7,140 27,839 23,583 7,759 6,492 11,247 9,249 7,940 6,475 Total assets 47,172,314 45,643,097 ,643,1162,492,749 12,442,611 12,442,438 2,874,305 2,759,740 3,973,059 3,660,491 2,749,618 2,699,007 1 After deducting $17,000 participations of other Federal Reserve Banks on Dec. 31, 1950, and $26,000 on Dec. 31, 1949. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes 23,587,018 23,482,646 1,423,7881,397,144 5,342,941 5,430,282 1,665,849 1,632,189 2,112,3672,050,079 1,616,465 1.580,160 Deposits: Member bank—reserve account. . 17,680,744 16568,088 783,608 711,482 5,665,077 5,347,438 822,286 788,3351,323,9101,185,987 750,834 708,359 U. S. Treasurer—general account. 668,454 821,354 78,288 69,946 115,722 255,479 58,227 63,750 81,648 66,722 36,831 62,147 Foreign 895,442 766,521 55,925 47,918 1286,468 1246,250 71,016 60,848 80,781 69,975 44,385 37,269 564,913 750,269 7,235 7,750 256,007 464,380 5,142 5,131 14,159 9,162 28,995 43,503 Other Total deposits 19,809,553 ,906,232 925,056 837,096 6,323,274 6,313,547 956,671 918,0641,500,498 1,331,846 861,045 851,278 Deferred availability items 2,901,599 ,412,620 238,367 204,434 518,345 446,138 183,799 143,300 278,953 201,506 226,242 223,472 Other liabilities including accrued dividends 5,600 9,474 813 718 1,732 2,303 239 557 504 979 234 518 Total liabilities 46,303,770 44,810,972 2,588,024 2,439,39212,186,29212,192,270 2,806,5582,694,1103,892,322 3,584,410 2,703,986 2,655,428 CAPITAL ACCOUNTS Capital paid in 225,102 210,891 12,223 12,001 73,383 72,425 15,675 15,084 22,001 19,432 9,845 9,223 Surplus (Sec. 7) 510,022 488,173 32,246 30,778 153,290 148,149 39,710 38,205 48,014 45,957 25,167 23,779 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. 105,877 105,518 7,612 7,567 22,327 22,275 7,873 7,852 9,716 9,686 7,271 7,228 Total liabilities and capital accounts 47,172,314 45,643,0972,643,116 2,492,74912,442,61112,442,4382,874,305 2,759,740 3,973,059 3,660,491 2,749,618 2,699,007 Contingent liability on acceptances purchased for foreign correspondents. 21,430 10,507 1,364 662 26,580 23,319 1,732 841 1,970 967 1,082 515 Commitments to make industrial loans. 3,754 2,288 593 689 458 886 54 15 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve Agent 24,548,029 24,358,525 1,497,261 1,452,244 5,512,262 5,598,022 1,726,012 1,681,5772,205,895 2,143,118 1,695,077 1,647,486 Held by Federal Reserve Bank and forwarded for redemption 961,011 875,879 73,473 55,100 169,321 167,740 60,163 49,388 93,528 93,039 78,612 67,326 Federal Reserve notes, net3 23,587,018 23,482,646 1,423,7881,397,144 5,342,941 5,430,282 1,665,849 1,632,189 2,112,3672,050,079 1,616,465 1,580,160 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificates 13,604,00014,359,000 440,000 440,000 4,570,000 4,670,000 750,000 750,000 865,000 1,000,000 700,000 670,000 Eligible paper 73,065 7,701 125 1,240 61,910 1,415 3,640 1,695 575 2,401 U. S. Government securities 11,665,000 10,800,0001,100,0001,100,000 1,100,000 1,000,000 1,000,0001,000,0001,350,000 1,150,000 1,015,000 1,000,000 Total collateral held. 25,342,06525,166,701 1,540,125 1,541,240 5,731,910 5,671,415 1,753,6401,751,6952,215,000 2,150,000 1,715,575 1,672,401 1 After deducting $608,962,000 participations of other Federal Reserve Banks on Dec. 31, 1950, and $520,250,000 on Dec. 31, 1949. 2 After deducting $14,850,000 participations of other Federal Reserve Banks on Dec. 31, 1950, and $7,188,000 on Dec. 31, 1949. 8 Includes Federal Reserve notes held by the U. S. Treasury and by Federal Reserve Banks other than the issuing Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 2—STATEMENT OF CONDITION OF EACH FEDERAL RESERVE BANK AT END OF 1950 AND 1949—Continued Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Item 1950 1949 1950 1949 1950 1949 1950 1949 1950 1949 1950 1949 1950 1949 > ASSETS Gold certificates 890,800 995,700 4,160,1824,375,007 590,355 686,840 366,114 424,248 833,420 828,480 622,615 685,083 2,534,870 2,676,696 Redemption fund for Federal Reserve notes 39,541 39,851 100,276 82,957 40,725 42,929 21,467 22,338 35,034 34,766 25,463 27,142 38,191 42,568 Total gold certificate reserves.. 930,341 1,035,5514,260,458 4,457,964 631,080 729,769 387,581 446,586 868,454 863,246 648,078 712,2252,573,0612,719,264 Other cash 18,763 21,132 33,633 29,800 15,013 18,957 6,060 5,907 11,232 12,170 11,513 13,849 30,892 30,744 Discounts and advances: Secured by U. S. Govt. securities. 25 29 125 500 49 315 850 o Other 2,850 106 9,627 2,502 1,738 2,552 2,432 6,185 8 Total discounts and advances. 2,879 106 9,752 500 2,502 1,787 315 3,402 2,432 6,185 Industrial loans 185 78 U. S. Government securities: Bills 66,632 258,911 188,646 720,606 63,050 260,982 38,487 156,337 57,724 233,581 56,470 208,889 118,839 427,910 Certificates 125,028 336,446 353,976 936,404 128,757 339,138 72,218 203,156 108,313 303,530 105,961 271,444 212,539 556,055 Notes 670,955 30,1411,899,577 83,890 690,959 30,382 387,549 18,200 581,254 27,193 568,628 24,3181,140,576 49,815 Bonds 247,470 386,962 700,6251,077,003 254,847 390,059 142,940 233,658 214,387 349,106 209,728 312,202 420,681 639,546 Total U. S. Govt. securities...1,110,0851,012,460 3,142,8242,817,9031,137,6131,020,561 641,194 611,351 961,678 913,410 940,787 816,8531,892,6351,673,326 Total loans and securities 1,110,1171,015,339 3,142,930 2,827,6551,138,1131,023,063 641,379 613,216 961,993 916,812 940,787 819,2851,892,6351,679,511 i Due from foreign banks 1 1 1 1 1 1 1 1 1 Federal Reserve notes of other Federal Reserve Banks 20,312 18,865 17,542 18,464 9,788 8,781 5,613 5,154 6,596 6,386 8,363 11,715 17,217 19,537 Uncollected items 277,132 211,621 716,750 435,849 212,192 171,468 113,210 79,245 217,071 163,207 192,457 134,637 343,375 248,624 Bank premises 1,720 1,523 5,062 3,514 3,509 1,926 1,114 1,146 2,639 2,323 677 717 5,937 3,195 Other assets 6,327 5,499 18,403 15,363 6,468 6,803 3,645 3,190 5,836 4,942 5,376 4,208 11,151 8,710 Total assets. 2,364,713 2,309,5328,194,7817,788,614 2,016,1641,960,7681,158,6031,154,4452,073,8221,969,0871,807,2521,696,637 4,874,270 4,709,589 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes 1,276,0911,290,999 4,559,960 4,501,2801,097,4411,090,460 610,643 612,217 919,844 918,194 639,322 640,274 2,322,3072,339,368 Deposits: Member bank—reserve account. 740,422 685,366 2,797,828 2,627,072 651,163 611,854 391,855 394,920 837,399 768,824 891,215 814,8922,025,147 1,923,559 U. S. Treasurer—general account. 38,559 50,493 102,305 56,269 24,659 31,881 22,614 36,733 43,903 44,989 24,311 40,242 41,387 42,703 Foreign 37,283 31,185 122,503 104,963 31,957 27,382 22,193 19,015 32,845 27,382 31,069 26,621 79,017 67,713 Other 42,762 31,948 9,140 12,519 32,296 29,880 4,909 4,997 32,430 35,695 43,543 31,700 88,295 73,604 Total deposits 859,026 798,9923,031,7762,800,823 740,075 700,997 441,571 455,665 946,577 876,890 990,138 913,455 2,233,846 2,107,579 Deferred availability items 191,070 182,689 482,691 370,515 144,199 136,306 82,741 63,781 173,186 141,514 144,546 111,613 237,460 187,352 Other liabilities including accrued dividends 200 454 856 1,679 228 474 171 354 175 396 126 325 322 717 Total liabilities 2,326,3872,273,134 8,075,2837,674,2971,981,9431,928,2371,135,126 1,132,0172,039,7821,936,994 1,774,1321,665,6674,793,935 4,635,016 CAPITAL ACCOUNTS Capital paid in 8,954 8,240 28,698 26,885 7,398 6,894 5,073 4,709 8,306 7,379 9,610 8,456 23,936 20,163 Surplus (Sec. 7) 22,369 21,194 75,345 72,029 20,295 19,118 13,168 12,494 19,047 18,045 16,852 15,873 44,519 42,552 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. 6,241 6,202 14,026 13,974 6,007 5,998 4,163 4,152 5,550 5,532 5,351 5,334 9,740 9,718 Total liabilities and capital accounts 2,364,7132,309,532 8,194,7817,788,614 2,016,1641,960,7681,158,6031,154,4452,073,8221,969,0871,807,2521,696,637 4,874,270 4,709,589 Contingent liability on acceptances purchased for foreign correspondents 909 431 2,987 1,450 779 378 541 263 801 378 758 368 1,927 935 Commitments to make industrial loans 242 54 500 500 500 1,407 144 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve Agent.... 1,364,1981,361,404 4,664,2274,603,8401,141,9891,133,225 623,563 622,585 957,158 949,986 686,687 683,6052,473,700 2,481,433 Held by Federal Reserve Bank. and forwarded for redemption, 88,107 70,405 104,267 102,560 44,548 42,765 12,920 10,368 37,314 31,792 47,365 43,331 151,393 142,065 Federal Reserve notes, net1... 1,276,0911,290,999 4,559,960 4,501,280 1,097,4411,090,460 610,643 612,217 919,844 918,194 639,322 640,274 2,322,307 2,339,368 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificates 625,000 675,000 2,700,000 3,060,000 350,000 400,000 210,000 210,000 280,000 280,000 214,000 204,000 1,900,000 2,000,000 Eligible paper 500 50 6,315 900 U. S. Government securities.... 750,000 700,000 2,000,0001,600,000 900,000 800,000 450,000 450,000 700,000 700,000 500,000 500,000 800,000 800,000 Total collateral held. 1,375,0001,375,000 4,700,000 4,660,0001,250,5001,200,000 660,000 660,050 986,315 980,900 714,000 704,000 2,700,000 2,800,000 1 Includes Federal Reserve notes held by the U. S. Treasury and by Federal Reserve Banks other than the issuing Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

52 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 3—HOLDINGS OF UNITED STATES GOVERNMENT SECURITIES BY FEDERAL RESERVE BANKS, END OF DECEMBER 1948, 1949, AND 1950 [In thousands of dollars] Rate of December 31 Change during Type of issue interest (Per cent) 1950 1949 1948 1950 1949 Treasury bonds: 1949-51*. June... 102,360 -102,360 1949-51* Sept.. . 247,081 -247,081 1949-51*. Dec... 170,365 -170,365 1949-52 24,525 -24,525 1949-53 72,600 -72,600 1950-52* Mar... 116,700 139,284 -116,700 -22,584 1950-52*, Sept.. . 400,000 421,524 -400,000 -21,524 1950-52, Sept.. . 63,200 63,200 -63,200 1951-54 41,500 61,175 -41,500 -19,675 1951-55 11,900 12,229 -11,900 -329 1951-53* 5O8,825 695,600 787,429 -186,775 -91,829 1951-53 18,105 -18,105 1951-55* 7,200 9,300 13,148 -2,100 -3,848 1952-54*, Mar. . . 47,400 65,200 83,994 -17,800 -18,794 1952-54* June... 278,850 443,900 504,323 -165,050 -60,423 1952-55*. June... 96,700 110,100 130,603 -13,400 -20,503 1952-54*. Dec... 191,700 280,100 476,707 -88,400 -196,607 1953-55 1954-56 1955-60 1956-58* 1,000 36,700 83,461 -35,700 -46,761 1956-59* 59,700 338,363 -59,700 -278,663 1956-59 1958-63 11,725 -11,725 1959-62*1, june. . 292,600 483,800 991,121 -191,200 -507,321 1959-62*1, Dec. . 688,100 807,300 929,097 -119,200 -121,797 1960-65 63,250 -63,250 1962-67*1 51,400 28,100 181,670 +23,300 -153,570 1963-68*1 109,000 119,300 285,409 -10,300 -166,109 1964-69*1, June. . 53,500 29,000 161,276 +24,500 -132,276 1964-69*1, Dec.. . 185,600 220,100 359,980 -34,500 -139,880 1965-70*1 341,400 368,700 434,582 -27,300 -65,882 1966-71*1 37,200 34,700 100,668 +2,500 -65,968 1967-72*1, June. . 818,400 969,000 1,237,097 -150,600 -268,097 1967-72*, Sept.. 15,300 160,082 -15,300 -144,782 1967-72*1, Dec.. . 911,200 1,808,500 2,310,793 -897,300 -502,293 Total Treasury bonds 4,620,075 7,217,700 10,977,221 -2,597,625 -3,759,521 Treasurynotes :* Jan. 1949.... 244,050 -244,050 Apr. 1950.... 298,100 546,500 -298,100 -248,400 July 1951-B. 788,470 +788,470 July 1951-C. 82,250 +82,250 July 1951-D. 723,075 +723,075 Aug. 1951-E. 1,665,783 +1,665,783 Oct. 1951-A. 9,800 +9,800 Oct. 15, 1951-F. 4,817,370 +4,817,370 Nov. 1, 1951-G. 3,770,400 +3,770,400 Mar. 15, 1954-A. 205,750 264,100 -58,350 +264,100 Mar. 15, 1955-A. 44,500 +44,500 Dec. 15, 1955-B. 419,828 +419,828 Total Treasury notes 12,527,226 562,200 790,550 + 11,965,026 -228,350 Certificates*. 2,334,195 1,803,000 4,550,372 +531,195 -2,747.372 4,472,450 1,527,197 —4,472,450 +2,945,253 Total certificates 2,334,195 6,275,450 6,077,569 -3,941,255 +197,881 Treasury bills* 1,296,071 4,829,247 5,487,406 -3,533,176 -658,159 Total holdings. 20,777,567 18,884,597 23,332,746 +1,892,970 -4,448,149 * Taxable. i Restricted as to commercial bank ownership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

53 FEDERAL RESERVE SYSTEM NO. 4—FEDERAL RESERVE BANK HOLDINGS OF SPECIAL SHORT-TERM TREASURY CERTIFICATES PURCHASED DIRECTLY FROM THE UNITED STATES, 1943-501 [In millions of dollars] Date Amount Date Amount Date Amount 1943 Tan 29 115 1943—Mar. 19 778 1943—Sept. 9 .. 126 30 202 20 768 10 243 31* 202 21* 768 11 246 Mar 2 3 22 603 12* 246 4 174 23 700 13 214 5 354 24 512 14 179 6 543 25 432 15 424 7* 543 26 384 16 258 8 591 27 304 1945—Mar 15 . 4 9 648 28* 304 Dec 4 107 10 632 29 104 5 318 11 .... 790 30 40 6 374 12 940 Tune 15 805 7 484 13 1,043 16 659 8 484 14* 1,043 17 350 9* 484 15 .... 1,302 18 256 10 202 16 1,250 19 212 1949—June 15 220 17 981 20* 212 16 . 127 18 836 Sept. 8 11 1950—Mar. 15 108 June 15 105 1 There were no issues during the years 1944, 1946, 1947, and 1948. Interest rate J£ per cent throughout. * Sunday or holiday. NO. 5—VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS OF FEDERAL RESERVE BANKS, 1946-50 [Number in thousands; amounts in thousands of dollars] 1946 1947 1948 1949 1950 NUMBER OF PIECES HANDLED1 Discounts and advances: Notes discounted and advances made 8 Industrial loans: Loans made .4 .7 Commitments to make industrial loans () () () () () C C o u i r n r e r n e c c y e i r v e e c d e i a v n ed d a c n o d u n c t o e u d n . t . e . d . . 3,423,547 3,491,962 3,754,584 3,809,865 3,846,397 Checks handled: 5,743,862 6,159,697 6,531,128 7,294,363 7,190,498 U. S. Govt. checks 380,634 331,914 331,866 357,044 365,812 All other 1,597,377 1,668,651 1,780,185 1,847,807 1,955,232 Collection items handled: U. S. Govt. coupons paid. 20,192 19,003 17,417 16,334 15,323 All other 4,551 «7,135 11,373 11,451 12,793 Issues, redemptions, and exchanges of U. S. Govt. securities 245,904 177,351 164,556 151,103 153,886 Transfers of funds 1,059 1,148 1,220 1,232 1,343 AMOUNTS HANDLED Discounts and advances 20,133,819 17,234,926 19,138,175 20,216,071 17,050,334 Industrial loans: Ix>ans made 3,445 9,296 15,994 4,005 6,530 Commitments to make industrial loans 8,845 6,069 2,187 4,130 4,019 Currency received and counted. 20,945,847 22,099,562 24,307,644 23,841,612 24,039,335 C C o h i e n c k r s e c h e a iv n e d d l e a d n : d counted.... 519,892 622,054 578,857 623,678 622,620 U. S. Govt. checks 80,419,096 72,577,329 69,605,341 64,379,607 64,569,739 All other 651,457,054 719,630,054 799,771,839 758,342,771 856,952,849 Collection items handled: U. S. Govt. coupons paid. 2,817,311 2,491,424 2,379,155 2,303,038 2,173,589 All other 9,312,790 6,455,968 4,965,273 4,175,169 4,758,483 Issues, redemptions, and exchanges of U. S. Govt. securities 278,422,685 254,060,950 321,953,221 289,312,802 346,224,112 Transfers of funds 252,991,164 316,459,625 393,459,807 415,887,444 509,167,912 1 Two or more checks, coupons, etc., handled as a single item are counted as one "piece." 2 Less than 50. * Increase reflects midyear 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 1950 Item System Boston New York d P e h lp il h a i - a C l l a e n v d e- m Ri o c n h d - Atlanta Chicago St. Louis M ap in o n li e s - K C an it s y as Dallas Fra S n a c n isco CURRENT EARNINGS Discounts and advances $2,034,591 $106,280 $810,629 $73,756 $186,687 $107,038 $78,262 $233,181 $131,672 $81,248 $116,684 $33,489 $75,665 Industrial loans 115,659 776 100,538 23 5,611 129 8,582 Commitments to make industrial loans 10.859 20 4,074 456 1,648 96 863 3,702 U. S. Government securities. . 272,915,591 18,806,327 63,705,07118,142,248 25,286,36417,623,67914,611,876 41,374,11615,045,668 8,441,06712,659,95212,381,679 24,837,544 All other 762,294 20,087 149,460 9,377 214,945 10,970 22,223 50,690 19,685 5,988 238,109 10,943 9,817 Total current earnings... 275,838,994 18,932,694 64,665,93618,325,939 25,692,09317,747,75414,712,490 41,659,63515,197,121 8,536,88513,015,60812,426,11124,926,728 CURRENT EXPENSES Operating expenses: Salaries: Officers 3,776,882 238,003 744,167 184,211 306,981 258,692 275,375 445,554 260,200 228,425 268,187 240,031 327,056 Employees 50,161,202 3,333,003 11,925,338 3,013,574 4,315,974 3,197,320 2,329,016 7,656,243 3,014,209 1,546,238 2,736,774 2,468,972 4,624,541 Retirement System contributions 5,382,442 351,957 1,216,272 312,995 460,347 349,382 284,553 831,881 318,010 168,182 311,765 277,208 499,890 Legal fees 3,095 25 1,500 400 750 203 171 25 1 20 Directors' fees and expenses 287,003 17,947 23,588 17,617 19,260 18,469 39,366 22,105 23,359 16,993 28,376 25,399 34,524 Federal Advisory Council, fees and expenses. . 22,160 1,432 1,214 1,305 1,949 1,055 2,161 2,232 1,538 2,019 2,189 2,021 3,045 Traveling expenses (other than of directors and members of Federal Advisory Council) 875,223 60,051 116,053 33,062 70,109 77,651 49,732 114,720 71,755 59,865 60,644 54,914 106.667 Postage and expressage. . 9,567,275 848,520 1,441,615 588,912 809,292 830,222 760,705 1,365,520 526,499 325,415 535,317 506,394 1,028,864 Telephone and telegraph. 564,506 30,438 109,481 35,984 50,397 34,197 46,467 37,377 45,736 26,369 40,346 39,841 67,873 Printing, stationery, and supplies 3,893,681 368,103 708,885 250,784 328,675 243,311 246,533 622,472 237,528 126,868 216,249 196,092 348,181 Insurance 682,097 46,676 171,086 31,597 58,314 38,328 31,623 90,542 38,140 18,674 45,994 36,019 75,104 Taxes on real estate 1,954,043 225,439 503,901 94,616 221,821 88,522 82,272 254,941 81,461 94,711 112,164 50,739 143,456 Depreciation (building).. 1,446,802 55,832 253,071 66,351 230,054 114,557 43,303 284,605 141,022 31,406 100,968 50,779 74,854 Light, heat, power, and water 736,529 48,104 144,020 46,299 93,730 54,953 40.096 96,830 59,339 25,975 46,150 41,456 39,577 Repairs and alterations.. 788,972 22,467 58,596 40,777 124,000 47,626 28,337 128,532 120,767 49,214 89,714 55,554 23,388 Rent. 267,032 1,262 9,266 6,412 5,431 18,513 68,740 2,851 6,705 9.226 9,841 128,785 Furniture and equipment, including rental 3,785,126 315,580 792,097 252,635 349,400 281,483 185,327 600,872 199,388 86,340 183,064 206,548 332,392 All other 1,425,910 100,223 181,753 83,370 303,452 74,938 69,901 159,292 104,848 84,788 76,897 67,612 118,836 Inter-Bank expenses 27,628 -300,841 35,084 39,907 21,927 18,419 60,519 15,788 10,964 16,226 15,349 39,030 Total operating expenses 85,619,980 6,092,665 18,090,321 5,099,939 7,790,474 5,738,814 4,551,69912,843,180 5,262,609 2,909,151 4,880,275 4,344,770 8,016,083 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Less reimbursement for certain fiscal agency and other expenses.... 15.797,753 915,724 3,023,164 847,574 1,289,848 897,273 896,353 2,778,845 904,278 550,082 988,289 976,120 1,730,203 Net operating expenses. . 69,822,227 5,176,941 15,067,157 4,252,365 6,500,626 4,841.541 3,655,346 10,064,335 4,358,331 2,359,069 3,891,986 3,368,650 6,285,880 Assessment for expenses of Board of Governors 3,433.700 215,500 1,072,500 272,400 313,900 171,500 143.000 473,900 125,300 86,300 125,700 122,300 311,400 Federal Reserve currency: Original cost 6,548,556 423,854 1,417,756 396,134 484,518 549,330 471,710 1,245,015 338.238 138,749 249,953 194,708 638,591 Cost of redemption 767,288 43,574 145,290 42,468 56,363 61,187 72,700 126,597 42,307 18,310 31,412 38,564 88,516 Total current expenses... 80,571,771 5,859,869 17,702,703 4.963,367 7,355,407 5,623,558 4,342,756 11,909,847 4,864,176 2,602,428 4,299,051 3,724,222 7,324,387 PROFIT AND LOSS Current net earnings 195,267,223 13,072,825 46,963,233 13,362,572 18,336,686 12,124,196 10.369,734 29,749,788 10,332,945 5,934,457 8.716,557 8,701,889 17,602,341 Additions to current net earnings: Profits on sales of U. S. Government securities (net) 36,895,754 2,519,085 8,880,045 2,630,321 3,471,928 2,364,501 1,945,769 5,131,653 1,973,676 1,113,176 1,770,582 1,654,007 3,441,011 All other 73,273 10,815 5,600 1,213 22,857 7,363 286 7,987 174 116 16,476 386 Total additions 36,969,027 2,529,900 8,885,645 2,631,534 3,494,785 2,371,864 1.946,055 5,139,640 1,973,850 1,113.292 1,787,058 1,654,393 3,441,011 Deductions from current net earnings: Reserves for contingencies 408,354 47,676 55,142 22,607 31,791 44,818 40,434 54,821 17,999 11,596 18,444 19,904 43,122 All other 266,556 153,195 4,616 421 13,001 2,029 3,471 1,590 83,918 518 670 523 2,604 Total deductions 674,910 200,871 59,758 23,028 44.792 46,847 43,905 56,411 101,917 12,114 19,114 20,427 45,726 Net additions 36.294,117 2,329,029 8,825,887 2,608,506 3,449,993 2,325,017 1.902,150 5,083,229 1,871,933 1,101,178 1,767,944 1,633,966 3,395,285 Net earnings before payments to U. S. Treasury 231,561,340 15,401,854 55,789.120 15,971,078 21,786,679 14,449,21312,271,884 34,833,01712,204,878 7,035,63510,484,50110,335,855 20,997,626 Paid U. S. Treasury (interest on outstanding F. R. notes) 196,628,857 13,206,117 46,266,41313,539,262 18,516,07412,487,998 10,575,57529,845,729 10,595,592 6,067,408 9,014,088 8,808,32117,706,280 Dividends 13,082,992 728,220 4,381,836 926,806 1,213,209 573,601 521,211 1,670,666 431,812 294,034 468,845 548,793 1,323,959 Transferred to surplus (Sec. 7) 21,849,491 1,467,517 5,140,871 1,505,010 2,057,396 1,387,614 1,175,098 3,316,622 1,177,474 674,193 1,001,568 978,741 1,967,387 Surplus (Sec. 7), January 1... 488,172,896 30,778,154148,148,740 38,205,45745,956,79923,779,18921,193,500 72,028,82119,117,86012,493,85918,045,02415,873,439 42,552,054 Surplus (Sec. 7), December 31. 510,022,387 32,245,671153,289,61139,710,46748,014,19525,166,80322,368,598 75,345,443 20,295,33413,168,05219,046,59216,852,180 44,519,441 Jl Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 7—EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS, 1914-50 Bank and period e C a u rn rr in en g t s e C x u p r e r n e s n e t s U N . b S e e m t f . o e T e r n a e r t e r s n a p i t s a n o u y g r - s y Div p i a d i e d nds F p r a T a i r n d e c a t h o s i u s U r e y . t 2 a S x . Pa ( T S id r e e c t a . o s 1 u U 3 r b y . ) S. P F ( a I . T n id R r te e . t r a o e n s s u o U t r t e y o . s n S ) . T t ( r o S a e n s c u s . f r e 1 p r 3 l r u b e s ) d T to ( r S a s e n u c s r . f p e l 7 r u r ) s ed 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 1 1 9 9 1 1 7 8 6 1 7 6 , , 5 1 8 28 4 , , 3 4 3 1 9 7 1 5 0 , , 1 9 5 5 9 9 , , 7 53 2 3 7 5 9 2 , , 5 7 8 1 2 6 , , 0 3 6 1 7 0 6 5 , , 8 5 0 4 4 0 , , 1 6 8 8 6 4 1,134,234 48 1 , , 3 1 3 3 4 4 , , 3 2 4 3 1 4 25 1919 102,380,583 19,339,633 78,367,504 5,011,832 2,703,894 70,651,778 25 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 19 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 , ,7 5 6 5 4 9 , , 1 0 7 4 3 9 1 12 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 - , 6 5 5 4 9 5 , , 9 5 0 1 4 3 8 1924 38,340,449 28,431,126 3,718,180 6,682,496 113,646 -3,077,962 1925 41,800,706 27,528,163 9,449,066 6,915,958 59,300 2,473,808 1926 47,599,595 27,350,182 16,611,745 7,329,169 818,150 8,464,426 1 1 9 9 2 2 7 8 4 6 3 4 , , 0 0 2 52 4 , , 8 4 6 8 0 4 2 2 6 7 , ,5 9 1 0 8 4 , , 4 8 4 1 3 0 3 1 2 3 , , 1 0 2 4 2 8 , , 0 2 2 4 1 9 8 7 , , 4 7 5 5 8 4 , , 4 5 6 3 3 9 2,5 24 8 9 4 , , 5 6 9 5 1 9 21 5 , , 0 0 7 4 8 4 , , 8 1 9 1 9 9 8 1929 70,955,496 29,691,113 36,402,741 9,583,913 4,283,231 22,535,597 W 1930 36,424,044 28,342,726 7,988,182 10,268,598 17,308 -2,297,724 O 1931 29,701,279 27,040,664 2,972,066 10,029,760 —7,057,694 1932 50,018,817 26,291,381 22,314,244 9,282,244 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 8 1935 42,751,959 31,577,443 9,437,758 8,504,974 297,667 27,695 607,422 I 1936 37,900,639 29,874,023 8,512,433 7,829,581 227,448 102,880 352,524 1937 41,233,135 28,800,614 10,801,247 7,940,966 176,625 67,304 2,616,352 1938 36,261,428 28,911,608 9,581,954 8,019,137 119,524 -419,140 1,862,433 1939 38,500,665 28,646,855 12,243,365 8,110,462 24,579 -425,653 4,533,977 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 1949 316,536,930 77,477,676 226,936,980 12,329,373 193,145,837 21,461,770 1950 275,838,994 80,571,771 231,561,340 13,082,992 196,628,858 21,849,490 Total—1914-50 2,974,875,153 1,213,051,103 1,713,745,584 292,042,248 149,138,300 2,188,893 631,688,869 -3,658 638,690,932 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Aggregate for each | Federal Reserve Bank, 1914-50: Boston 200,575,035 86,376,100 112,158,333 19,964,985 7,111,395 280,843 42,189,790 +135,412 42,475,908 New York 798,734,840 287,731,933 508,685,527 100,021,885 68,006,262 369,115 150,608,909 -433,413 190,112,769 Philadelphia. . . 220,643,524 88,799,383 131,659,304 25,850,093 5,558,901 722,406 44,905,893 +290,661 54,331,350 Cleveland 273,865,824 112,614,503 154,962,584 29,225,777 4,842,447 82,930 59,583,255 -9,907 61,238,082 Richmond 166,448,268 73,198,948 90,036,563 12,347,166 6,200,189 172,493 40,413,136 -71,516 30,975,095 Atlanta 145,933,965 59,808,646 80,615,532 10,590,476 8,950,561 79,265 33,349,110 +5,491 27,640,628 Chicago 416,742,514 163,720,069 242,924,430 34,364,555 25,313,526 151,045 92,397,743 + 11,681 90,685,880 St. Louis 141,909,578 65,000,283 71,690,492 10,107,921 2,755,629 7,464 33,457,545 -26,514 25,388,447 Minneapolis. . . 91,763,460 41,040,542 48,970,617 6,995,229 5,202,900 55,615 19,541,859 +64,875 17,110,139 Kansas City. . . 142,497,366 69,430,644 69,881,905 9,865,434 6,939,100 64,213 29,843,963 -8,674 23,177,870 Dallas 116,856,527 54,235,942 59,350,341 9,772,399 560,049 102,083 27,675,480 +55,336 21,184,993 San Francisco.. 258,904,252 111,094,110 142,809,956 22,936,328 7,697,341 101,421 57,722,186 -17,090 54,369,771 Total 2,974,875,153 1,213,051,103 1,713,745,584 292,042,248 149,138,300 2,188,893 631,688,869 —3,658 638,690,932 ! 1 Current earnings less current expenses, plus other additions and less other deductions. 2 The Banking Act of 1933 eliminated the provision in the Federal Reserve Act requiring payment of a franchise tax. • On Dec. 31, 1950, surplus (Sec. 13b)—relating to funds received from the Secretary of the Treasury under Section 13b of the Federal Reserve Act for the purpose of making loans to industry—amounted to $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, 1950, surplus (Sec. 7)—accumulated pursuant to Section 7 of the Federal Reserve Act—amounted to $510,022,386 ($638, 690, 932 retained net earnings, shown here, minus $139,299,557, charge-off of cost of Federal Deposit Insurance Corporation stock, and $500,000, charge-off on bank premises, plus $11,131,011 transferred from reserves for contingencies). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 8—MEMBER BANK RESERVES, RESERVE BANK CREDIT, AND RELATED ITEMS—END OF YEAR 1918-50 AND END OF MONTH 1950 [In millions of dollars] Reserve Bank credit outstanding Member bank U. S. Government Treas- Treas- reserve securities ury Treas- ury de- Other balances Dis- Gold cur- Money ury posits Non- Federal End of year or month counts All stock rency in cir- cash with member Reserve and Bills, other i Total out- culation hold- Federal deposits acad- certifi- stand- ings Reserve counts vances Total Bonds cates, ing Banks Total Excess2 and notes I 1918 1,766 239 28 211 493 2,498 2,873 1,795 4 951 288 51 121 118 1,636 51 1919 2,215 300 27 273 777 3,292 2,707 1,707 5,091 385 31 101 208 1,890 68 1 1 9 9 2 2 0 1 2 1 , , 6 14 8 4 7 2 2 8 34 7 2 32 6 2 20 6 2 1 3 1 8 85 0 3 1 , , 3 56 5 3 5 3 2 , ,6 3 3 7 9 3 1 1 , , 8 7 4 0 2 9 4 5 ,4 3 0 2 3 5 2 2 1 1 4 8 5 96 7 2 2 7 3 2 28 9 5 8 1 1 ,7 7 5 8 3 1 99 o 1922 618 436 29 407 351 1,405 3,642 1,958 4,530 225 11 29 276 1,934 w 1923 . . 723 134 30 104 382 1,238 3,957 2,009 4,757 213 38 23 275 1,898 14 1924 320 540 75 465 441 1,302 4,212 2,025 4,760 211 51 39 258 2,220 59 1925 643 375 61 314 441 1,459 4,112 1,977 4,817 203 16 29 272 2,212 -44 1926 637 315 48 267 430 1,381 4,205 1,991 4,808 201 17 65 293 2,194 -56 1927 582 617 291 326 456 1,655 4,092 2,006 4 716 208 18 26 301 2 487 63 1928 1,056 228 54 174 524 1,809 3,854 2,012 4,686 202 23 27 348 2,389 -41 1929 632 511 77 434 440 1,583 3,997 2,022 4,578 216 29 30 393 2,355 -73 1930 251 729 164 565 393 1,373 4,306 2,027 4 603 211 19 28 375 2 471 96 1931 638 817 360 457 398 1,853 4,173 2,035 5,360 222 54 110 354 1,961 -33 I 1932 235 1,855 422 1,433 55 2,145 4,226 2,204 5 388 272 g 43 355 2 509 576 1933 98 2,437 443 1,994 153 2,688 4,036 2,303 5,519 284 3 132 360 2,729 859 1934 7 2,430 396 2,034 26 2,463 8,238 2,511 5,536 3,029 121 189 241 4,096 1,814 1935 . . 5 2,431 216 2,215 50 2,486 10,125 2,476 5,882 2,566 544 255 253 5,587 2,844 1936 3 2,430 491 1,939 67 2,500 11,258 2,532 6,543 2,376 244 259 261 6,606 1,984 1937 10 2,564 752 1,812 39 2,612 12,760 2,637 6,550 3,619 142 407 263 7,027 1,212 1938 .... 4 2,564 841 1,723 33 2,601 14,512 2,798 6,856 2,706 923 441 260 8,724 3,205 1939 7 2,484 1,351 1,133 102 2,593 17,644 2,963 7,598 2,409 634 653 251 11,653 5,209 1940 3 2,184 1,285 899 87 2,274 21,995 3,087 8,732 2,213 368 1,732 284 14,026 6,615 1941 3 2,254 1,467 787 104 2,361 22,737 3,247 11,160 2,215 867 1,360 291 12,450 3,085 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1942 6 6,189 2,793 3,396 484 6,679 22,726 3,648 15,410 2,193 799 .278 256 13,117 1,988 1943 5 11,543 1,630 9,913 691 12,239 21,938 4,094 20,449 2,303 579 1,716 339 12,886 1,236 1944 80 18,846 1,243 17,603 819 19,745 20,619 4,131 25,307 2,375 440 1,598 402 14,373 1,625 1945 . 249 24,262 947 23,315 580 25,091 20,065 4,339 28,515 2,287 977 1,308 495 15,915 1,458 1946 .... 163 23 350 753 22 597 581 24,093 20,529 4,562 28,952 2,272 393 822 607 16,139 562 1947 85 22,559 2,853 19,706 536 23,181 22,754 4,562 28,868 1,336 870 961 563 17,899 1,499 1948 223 23,333 10,977 12,356 542 24,097 24,244 4,589 28,224 1,325 1,123 1,189 590 20,479 1,202 1949 78 18,885 7,218 11 667 536 19,499 24,427 4,598 27,600 1,312 821 1,517 706 16,568 1,018 1950— January 145 17,827 7,112 10,715 354 18,326 24,395 4,599 26,941 1,311 677 1.460 720 16,211 698 February 131 17,746 6,857 10 889 349 18,226 24,345 4,602 27,068 1,310 666 L.426 730 15,973 583 March. 225 17,592 6,397 11,195 253 18,070 24,246 4,602 27,042 1,315 1,006 L ,132 766 15,657 507 April .. 113 17 796 6 155 11 641 392 18,301 24,247 4,603 27,048 1,308 858 L ,347 712 15,878 676 May 306 17,389 5,802 11,587 239 17,935 24,231 4,606 27,090 1,309 588 1,254 718 15,814 526 June 43 18 331 5 618 12 713 329 18,703 24,231 4,607 27,156 1,298 950 1,431 771 15,934 436 July 220 17,969 4,888 13,081 277 18,466 24,136 4,609 27,010 1,304 566 1,443 759 16,129 595 August 83 18 356 6 768 11 588 381 18,820 23,627 4,613 27,120 1,304 733 1,190 724 15,989 219 September 72 19,572 3,793 15,779 695 20,340 23,483 4,618 27,161 1,322 1,114 L.374 759 16,709 888 October 116 19 252 4,180 15,072 431 19,798 23,249 4,623 27,228 1,295 569 L.315 749 16,514 589 November 162 19,693 4,364 15,329 783 20,638 23,037 4,627 27,595 1,287 714 1,206 738 16,763 645 December 67 20,778 4,620 16,158 1,371 22,216 22,706 4,636 27,741 1,293 668 1,460 714 17,681 1,172 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

60 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 9 -BANK PREMISES OF FEDERAL RESERVE BANKS AND BRANCHES DECEMBER 31, 1950 Cost Federal Reserve Bank or Net Branch Building Fixed ma- book value Land (Including chinery and Total vaults) equipment Boston $ 1,246,726 $ 3,542,603 662,157 $ 5,451,486 $ 1,073,284 New York 5,215,656 12,183,528 4,837,234 22,236,418 6,481,006 Annex 592,679 1,451,570 215,418 2,259,667 806,864 Buffalo 255,000 465,707 720,707 368,801 Philadelphia. . . 1,884,357 4,463,369 920,743 7,268,469 2,920,234 Cleveland 1,295,490 6,464,253 1,655,970 9,415,713 2,189,330 Cincinnati 380,744 1,038,384 200,131 1,619,259 1,163,862 Pittsburgh 1,189,941 1,049,450 379,694 2,619,085 1,440,769 Richmond 387,411 12,316,397 663,667 3,367,475 1,299,656 Annex 80,333 482,482 109,132 671,947 131,776 Baltimore 250,487 1,247,262 477,619 1,975,368 1,028,742 Charlotte 105,701 308,749 154,449 568,899 410,409 Atlanta 283,000 1,461,474 308,082 2,052,556 691,198 Birmingham. . . 124,137 330,680 65,491 520,308 137,871 Jacksonville. . . 173,114 1340,246 39,669 553,029 310,053 Nashville 48,000 211,616 35,091 294,707 93,444 New Orleans... 277,078 762,455 212,281 1,251,814 487,535 Chicago 2,963,548 6,490,985 2,439,547 11,894,080 2,599,996 Detroit 1,022,064 12,613,919 160,241 3,796,224 2,462,026 St. Louis 1,496,060 2,136,438 1,320,670 4,953,168 1,399,481 Annex 179,720 1,035,281 501,411 1,716,412 1,473,242 Little Rock.. . . 85,007 264,604 158,320 507,931 217,389 Louisville 131,177 226,259 72,463 429,899 162,567 Memphis 128,542 287,468 105,662 521,672 256,764 Minneapolis. . . 600,521 2,316,746 660,969 3,578,236 1,016,496 Helena 15,710 126,401 44,142 186,253 97,725 Kansas City. . . 495,300 3,391,101 1,221,507 5,107,908 1,832,641 Denver 101,512 449,876 79,268 630,656 261,272 Oklahoma City 65,021 409,890 95,480 570,391 209,315 Omaha 176,427 397,938 94,548 668,913 336,184 Dallas 189,831 1,350,945 451,242 1,992,018 390,396 El Paso 39,003 114,644 30,191 183,838 40,452 Houston 78,812 313,335 112,111 504,258 141,588 San Antonio. . . 75,002 159,743 55,859 290,604 104,772 San Francisco.. 412,996 3,144,407 784,102 4,341,505 831,366 Los Angeles.... 443,488 988,109 323,195 1,754,792 446,852 Portland 159,979 2 1,842,509 2,002,488 2,002,488 Salt Lake City. 114,075 341,449 84^814 540,338 210,381 Seattle 250,000 8 2,195,740 2,445,740 2,445,740 Total 23,013,649 68,718,012 19,732,570 111,464,231 39,973,967 OTHER REAL ESTATE ACQUIRED FOR BANKING HOUSE PURPOSES Boston 372,988 131,893 504,881 292,700 New York 45,000 125,864 170,864 61,500 Richmond 153,447 153,447 153,447 Charlotte 10,868 10,868 10,868 Atlanta 35,000 35,000 35,000 Jacksonville. . . 30,000 30,000 30,000 Omaha 258,007 258,007 258,007 San Francisco.. 63,000 63,000 63,000 Los Angeles 35,000 35,000 35,000 Total 1,003,310 257,757 1,261,067 939,522 1 Includes cost of building under construction. 2 Cost of building under construction; Branch occupies rented quarters. s Cost of new building (including fixed machinery and equipment) occupied Jan. 2, 1951. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 10—NUMBER AND SALARIES OF OFFICERS AND EMPLOYEES OF FEDERAL RESERVE BANKS [December 31, 1950] President Other officers Employees l Total Federal Reserve Bank (Including branches) Annual salary Number Annual salaries Number Annual salaries Number Annual salaries Boston . $25 000 18 $206,000 1,238 $3,409,389 1,257 $3,640,389 New York.. 50,000 48 688,950 3,562 12,320,928 3,611 13,059,878 Philadelphia 25 000 16 174,820 1,080 3,149,902 1,097 3,349,722 Cleveland 25,000 29 284,550 1,658 4,574,098 1,688 4,883,648 Richmond 25,000 25 251,200 1,190 3,067,241 1,216 3,343,441 Atlanta 25,000 29 253,700 930 2,398,216 960 2,676,916 Chicago 35 000 36 407,100 2,619 7,540,530 2,656 7,982,630 St. Louis 25,000 27 244,100 1,093 3,027,473 1,121 3,296,573 Minneapolis 25,000 22 194,500 666 1,696,343 689 1,915,843 Kansas City . 25,000 27 258,100 1,036 2,838,793 1,064 3,121,893 Dallas 25,000 25 232,500 909 2,439,086 935 2,696,586 San Francisco 25,000 33 308,800 1,665 4,683,529 1,699 5,017,329 Total $335,000 335 $3,504,320 17,646 $51,145,528 17,993 $54,9S4,84S 1 Includes 557 part-time employees. NOTE.—During the year 1950, the Banks were reimbursed $9,558,935 on account of salaries of officers and employees. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 11—FEDERAL RESERVE BANK DISCOUNT, INTEREST, AND COMMITMENT RATES, AND BUYING RATES ON ACCEPTANCES OS [Per cent per annum] In effect December 31, 1950 > Type of transaction Boston Y N o e r w k d P e h lp il h a i - a C la le n v d e- m Ri o c n h d - Atlanta Chicago L S ou t. is M ap in o n li e s - K C an it s y as Dallas F S ra a n n - Discounts for and advances to member banks under Sees. z 13 and 13a of the Federal Reserve Act IK IK IK IK IK IK IK IK IK Advances to member banks under Sec. 10(b) of the Federal Reserve Act 2H 2H 2M 2K 2M 2H 2K i Advances to individuals, partnerships, or corporations other than member banks secured by direct obligations of the United States (last paragraph of Sec. 13 of the Federal Reserve Act) 2% 2% 2K 2H Loans to industrial or commercial businesses under Sec. 13b of the Federal Reserve Act, direct or in participation with financing institutions 2M-5 3-5 2^-5 Discounts for and purchases from financing institutions under Sec. 13b of the Federal Reserve Act: On portion for which institution is obligated 0) 0) 0) C1) 0) V) C1) On remaining portion () () (*) (*) (3) (3) (*) > Commitments to make loans under Sec. 13b of the Federal Reserve Act: To industrial or commercial businesses To financing institutions , Minimum buying rates on prime bankers' acceptances payable in dollars 1-90 days 91-120 days 121-180 days I 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. * Rate charged borrower. * Financing institution is charged K per cent on undisbursed portion of loan. 1 The same 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 63 NO. 12—MEMBER BANK RESERVE REQUIREMENTS [Per cent of deposits] Net demand deposits l Time deposits Effective date of change (All member Central reserve Reserve Country banks) city banks city banks banks 1917—June 21. 13 10 1936—Aug. 16. 15 10 J< f 1937—Mar. 1. 2 17 \f- May 1. 26 20 1938—Apr. 16. 17 12 1941—Nov. 1. 26 1942—Aug. 20. 24 20 14 Sept. 14. 22 Oct. 3. 20 1948—Feb. 27. 22 June 11. 24 Sept. 16. 16 Sept. 24. 26 22 1949—May 1. 15 27 May 5. 24 21 »7 June 30. 20 36 July 1. 14 Aug. 1. 13 Aug. 11. »5 Aug. 16. 12 »5 Aug. 18. 23 19 Aug. 25. 22 18 Sept. 1. 22 18 1951—Jan. 11. 23 19 Jan. 16. 13 Jan. 25. 24 20 Feb. 1. In effect Mar. 1, 1951 *. 24 20 14 1 Demand deposits subject to reserve requirements, which beginning Aug. 23, 1935, have been total demand deposits minus cash items in process of collection and demand balances due from domestic banks (also minus war loan and series E bond accounts during the period Apr. 13,1943-June30,1947). 3 Requirement became effective at country banks. * Requirement became effective at central reserve and reserve city banks. * Present legal minimum and maximum requirements on net demand deposits—central reserve cities, 13 and 26 per cent; reserve cities, 10 and 20 per cent; country, 7 and 14 per cent, respectively; on time deposits at all member banks, 3 and 6 per cent, respectively. NO. 13—MAXIMUM RATES ON TIME DEPOSITS [Per cent per annum] Nov. 1, 1933 Feb. 1, 1935 In effect Type of deposit to to beginning Jan. 31, 1935 Dec. 31, 1935 Jan. 1, 1936 Savings deposits 3 2X 2^ 3 2H 2X Othe I r n t i 6 m m e o d n e t p h o s s i o ts r p m a o y r a e ble: 3 V4 2H In 90 days to 6 months 3 In less than 90 days 3 1 NOTE.—Maximum rates that may be paid by member banks as established by the Board of Governors under provisions of Regulation Q. Under this regulation 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. 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

64 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 14r-MARGIN REQUIREMENTS * Prescribed by Board of Governors of the Federal Reserve System in accordance with Securities Exchange Act of 1934 [Per cent of market value] Feb. 5, July 5, Jan. 21, Feb. 1, Mar. 30, Effec- 1945- 1945- 1946- 1947- 1949- tive July 4, Jan. 20, Jan. 31, Mar. 29, Jan. 16, Jan. 17, 1945 1946 1947 1949 1951 1951 Regulation T: For extensions of credit by brokers and dealers on listed securities 50 75 100 75 50 75 For short sales 50 75 100 75 50 75 Regulation U: For loans by banks on stocks 50 75 100 75 50 75 1 Regulations T and U limit the amount of credit that may be extended on a security by prescribing a maximum loan value, which is a specified percentage of its market value at the time of the extension; the "margin requirements" shown in this table are the difference between the market value (100 per cent) and the maximum loan value. NO. 15—FEES AND RATES ESTABLISHED UNDER REGULATION V ON LOANS GUARANTEED PURSUANT TO DEFENSE PRODUCTION ACT OF 1950 AND EXECUTIVE ORDER NO. 10161 [In effect December 31, 1950] Fees Payable to Guaranteeing Agency by Financing Institution on Guaranteed Portion of Loan Guarantee fee Percentage of Percentage of loan guaranteed in (P te e r r e c s e t n t p a a g y e a o b f le any fe c e o c m h m arg it e m d ent by borrower) borrower 70 or less 10 10 75 .. 15 15 80 20 20 85 25 25 90 30 30 95 .... . 35 35 Over 95 40-50 40-50 Maximum Rates Financing Institutions May Charge Borrowers [Per cent per annum] Interest rate Commitment rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 65 NO. 16—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 18, 1950, and amended October 16, 1950, under authority of the Defense Production Act of 1950, approved September 8, 1950 September 18, 1950- October 16, 1950- October 15, 1950 Type of credit Minimum Maximum Minimum Maximum p (P a e d y r o m w c e e n n n t t 1 ) ( m M a o tu n r th it s y ) p (P a e d y r o m w c e e n n nt t ) l ( m M a o tu n r th it s y ) Instalment sales: Group A . 33 H 21 15 Automobiles Group B 15 18 25 15 Major appliances a Group C 10 18 15 15 Furniture and floor coverings (soft-surface) Group D 10 30 10 30 Home improvement materials, articles, and services Instalment loans: To purchase listed articles. () Other (unclassified) 15 1 Down payments determined after deduction of any trade-in, except in case of automobiles. a Major appliances consist of cooking stoves and ranges, dishwashers, ironers, mechanical refrigerators and food freezers, washing machines or clothes drying machines, combination units incorporating any of the foregoing, room-unit air conditioners, dehumidifiers, radio or television sets and phonographs, sewing machines, and vacuum cleaners. » Where credit is to purchase listed articles, requirements are same as on instalment sales of the respective articles. NOTE.—The regulation, amendment, and supplement thereto contain additional provisions and various exceptions to limitations not shown in this table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

66 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 17—MAXIMUM LOAN VALUES AND MAXIMUM MATURITIES ON REAL ESTATE CONSTRUCTION CREDIT SUBJECT TO REGULATION X Prescribed by Board of Governors of the Federal Reserve System effective October 12,1950,* and January 12, 19512 under authority of the Defense Production Act of 1950, approved September 8, 1950 Value per family unit Maximu fa m m i l l o y a n u n v i a t lue per Maximum maturity One- to four-unit residential properties and farm residences Not more than $5,000 90 per cent of value per family 25 years for properties valued unit at $7,000 or less * More than $5,000 but not more $4,500 plus 65 per cent of exthan $9,000 cess of value per family unit over $5,000 More than $9,000 but not more $7,100 plus 60 per cent of ex- 20 years for properties valued than $15,000 cess of value per family unit at more than $7,000 * over $9,000 More than $15,000 but not more $10,700 plus 20 per cent of exthan $20,000 cess of value per family unit over $15,000 More than $20,000 but not more $11,700 plus 10 per cent of exthan $24,250 cess of value per family unit over $20,000 Over $24,250 50 per cent of value per family unit Multi-unit residential properties Not more than $7,000 83 per cent of value per family None unit More than $7,000 but not more $5,810 plus 53 per cent of ex- None than $15,000 cess of value per family unit over $7,000 More than $15,000 but not more $10,050 plus 20 per cent of ex- None than $23,500 cess of value per family unit over $15,000 Over $23,500 50 per cent of value per family None unit 1 In the case of one- and two-family residences. 2 In the case of three- and four-family residences and multi-unit residences. 1 If amortized through substantially equal monthly, quarterly, semiannual or annual payments which fully liquidate the original principal amount in the prescribed period. « An alternative to the method of amortization described in footnote 3 is allowed which annually reduces the original principal amount by not less than 5 per cent until the outstanding balance has been reduced to 50 per cent or less of the value of the property. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

67 FEDERAL RESERVE SYSTEM NO. 18—ANALYSIS OF CHANGES IN NUMBER OF BANKING OFFICES DURING 1950 Commercial and stock savings banks and nondeposit trust companies Mutual savings All Member Nonmember banks banks banks banks Total Na- State In- Non- In- Nontional member sured insured sured insured Number of banks, Dec. 31, 1949. 14,687 14,156 4,975 U.917 6,540 727 1192 339 Changes during 1950: New banks 2 +68 +68 +7 +8 +44 +9 Suspensions — 1 — 1 — 1 Consolidations and absorptions: Banks converted into branches.. -71 -71 -21 -11 -38 -1 Other . . -21 -20 —6 -1 -11 -2 -1 Voluntary liquidations* -13 -12 -1 —7 —4 -1 + 1 + 1 +1 Interclass changes: Conversions— National into State — 1 +1 State into national +5 -3 —2 Federal Reserve membership:6 Admissions of State banks . ... +9 -6 -3 Fe W de i r t a h l d d ra e w po a s l i s t o in f s S u t r a a t n e c e b : a 6 nks .... -4 +4 +34 -34 +2 -2 Net increase or decrease -37 -35 -17 -2 +22 -38 +2 -4 Number of banks, Dec. 31,1950. 14,650 14,121 4,958 il,915 689 1194 335 6,562 Number of branches and additional offices,7 Dec. 31,1949... 4,684 4,485 2,012 1,288 1,132 53 141 58 Changes during 1950: De novo branches + 193 + 179 +74 +50 +52 +3 +8 +6 Banks converted into branches +71 +71 +39 +20 + 12 -19 -19 -4 -11 -4 Other changes 8 +5 +5 +5 Interclass branch changes: State member to national .... +9 -9 +6 —5 — 1 Nonmember to State member +5 -5 +3 -3 +3 -3 Net increase or decrease +250 +236 +124 +55 +58 — 1 +11 +3 Number of branches and additional offices,7 Dec. 31, 1950... 4,934 4,721 2,136 1,343 52 152 61 1,190 Number of banking facilities9 on Dec. 31, 1949 . . 94 94 73 14 7 Changes during 1950: Established +34 +34 +3 +6 Discontinued +28 +28 +21 +2 +5 Number of banking facilities9 on Dec. 31, 1950 122 122 94 16 12 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. 1 Exclusive of liquidations incident to the succession, conversion, and absorption of banks. * One institution, reported as a voluntary liquidation in 1949, resumed banking operations. 6 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." 6 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 "interclass bank changes." 7 Covers all branches and other additional offices at which deposits are received, checks paid, or money lent, except banking facilities that are shown separately. 8 Five de novo branches opened prior to 1950 but not previously reported: one each in 1941, 1946 and 1947. and two in 1949. • Banking facilities are provided through arrangements made by the Treasury Department with banks designated as depositaries and financial agents of the Government at military and other Government establishments. These figures 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

68 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 19—NUMBER OF BANKING OFFICES ON FEDERAL RESERVE PAR LIST AND NOT ON PAR LIST, BY FEDERAL RESERVE DISTRICTS AND STATES, DECEMBER 31, 1950 * Total banks on On par list which checks are Not on par list drawn, and their (Nonmember) branches & offices Total Member Nonmember Federal Reserve district or State Branches Branches Branches Branches Branches Banks and Banks and Banks and Banks and Banks and offices offices offices offices offices DISTRICT Boston . 475 338 475 338 325 266 150 72 New York 873 940 873 940 751 872 122 68 Philadelphia.... 835 162 835 162 639 123 196 39 Cleveland 1,117 311 1,117 311 693 267 424 44 Richmond 1 007 545 804 404 477 256 327 148 203 141 Atlanta 1,197 221 596 181 353 154 243 27 601 40 Chicago . . 2,487 616 2,487 616 1,005 260 1,482 356 St. Louis 1,470 146 1,134 87 496 49 638 38 336 59 Minneapolis.... 1,275 111 677 70 477 27 200 43 598 41 Kansas City 1,758 15 1,749 15 756 8 993 7 9 Dallas .. 1 028 60 922 51 630 34 292 17 106 9 San Francisco. . 493 1,359 493 1,359 266 1,273 227 86 Total ... . 14,015 4,824 12,162 4,534 6,868 3,589 5,294 945 1,853 290 STATE Alabama 225 26 129 26 93 26 36 96 Arizona 10 55 10 55 5 41 5 14 Arkansas. 232 19 109 5 68 2 41 3 123 14 California 192 979 192 979 119 929 73 50 Colorado 148 4 148 4 93 3 55 1 Connecticut ... 104 50 104 50 62 43 42 7 Delaware 38 20 38 20 17 8 21 12 Dist. of Col. 19 45 19 45 15 35 4 10 Florida 191 5 130 4 74 4 56 61 1 Georgia 397 42 113 39 66 35 47 4 284 3 Idaho 43 55 43 55 24 50 19 5 Illinois 888 2 886 2 508 2 378 2 Indiana 486 109 486 109 237 55 249 54 Iowa. 662 164 662 164 161 501 164 Kansas 612 610 215 395 2 Kentucky 382 44 382 44 113 27 269 17 Louisiana 165 77 61 54 47 47 14 7 104 23 Maine 62 70 62 70 37 37 25 33 Maryland 164 119 164 119 77 78 87 41 Massachusetts.. 176 176 176 176 140 159 36 17 Michigan . 437 239 437 239 231 183 206 56 Minnesota 678 6 265 6 206 6 59 413 Mississippi 201 68 40 14 31 7 9 7 161 54 ]Vlissouri 595 1 530 1 180 1 350 65 !Montana 110 110 84 26 Nebraska 411 2 411 2 141 2 270 Nevada g 19 8 19 6 18 2 1 New Hampshire 74 2 74 2 52 1 22 1 New Jersey 321 165 321 165 276 149 45 16 New Mexico. . . 51 15 51 15 35 2 16 13 New York 627 782 627 782 547 730 80 52 North Carolina. 208 218 95 83 54 46 41 37 113 135 North Dakota.. 150 22 63 6 43 20 6 87 16 Ohio 659 226 659 226 422 195 237 31 Oklahoma 384 1 376 1 224 1 152 8 Oregon ... . 69 102 69 102 30 90 39 12 Pennsylvania... 965 193 965 193 735 166 230 27 Rhode Island... 15 49 15 49 9 37 6 12 South Carolina. 148 49 64 43 32 35 32 8 84 6 South Dakota.. 169 49 71 24 62 21 9 3 98 25 Tennessee 295 98 204 85 82 63 122 22 91 13 Texas. . 905 12 850 12 578 12 272 55 Utah 55 24 55 24 31 22 24 2 Vermont 69 11 69 11 40 2 29 9 Virginia 313 114 308 114 203 62 105 52 5 Washington 118 144 118 144 52 135 66 9 West Virginia. . 180 179 108 71 1 ^^isconsin 551 152 551 152 164 22 387 130 Wyoming 53 53 39 14 1 Does not include mutual savings banks, on a few of which some checks are drawn, but does include 122 banking facilities (see footnote 9, Table 18). The difference in the number of member banks on Dec. 31, 1950 shown in this table and in Table 18 is due to the fact that this table excludes 2 nondeposit trust Digitized focro mFpRaAniSesE aRnd 3 mutual savings banks on which no checks are drawn. The difference between the number http://fraseorf. sntloonumisefmebde.ro rcgo/m mercial banks is due to the fact that this table excludes 104 banks and trust companies on which no checks are drawn. Federal Reserve Bank of St. Louis

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RECORD OF POLICY ACTIONS BOARD OF GOVERNORS AUGUST 18, 1950 Changes in Rates on Discounts and Advances to Member Banks under Sections 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 Bank of New York, effective August 21, 1950, a rate of 1% per cent on discounts and advances to member banks under Sections 13 and 13(a); a rate of 2J4 per cent on advances under Section 10(b); and a minimum buying rate of 1 % per cent on bankers' acceptances. Votes for this action: Messrs. McCabe, Eccles, Szymczak, Draper, Evans, and Vardaman. Votes against this action: none. Pursuant to the policy established by the foregoing action, the Board subsequently approved the same rates for the other Federal Reserve Banks effective on the dates indicated below: Boston August 21, 1950 Philadelphia August 25, 1950 Cleveland August 25, 1950 Richmond August 25, 1950 Atlanta August 24, 1950 Chicago August 25, 1950 St. Louis August 23, 1950 Minneapolis August 22, 1950 Kansas City August 25, 1950 Dallas August 25, 1950 San Francisco August 24, 1950 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 rates under Section 13b, the new rates were within the limits of rates previously approved for other Federal Reserve Banks. 70 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 71 The reasons for this action were the same as those underlying the policy action of the Federal Open Market Committee on August 18, 1950, as described on pages 83-88 of this Report. The Federal Reserve Bank of New York had acted to increase its rediscount rate from 1/4 to 1% per cent on July 21, 1950, and again on July 27 and August 3, but approval of the increase was deferred by the Board of Governors pending further discussions of System monetary and credit policy and Treasury financing policies. SEPTEMBER 8, 1950 Adoption of Regulation W, Consumer Credit. Regulation W, prescribing minimum down payments and maximum maturities for instalment credit extended in connection with the purchase of specified items of consumer durable goods and of home repairs and improvements up to $2,500, and prescribing maximum maturities for unclassified instalment loans, was adopted to become effective September 18, 1950. Votes for this action: Messrs. McCabe, Evans, Vardaman, Norton, and Powell. Votes against this action: Messrs. Eccles and Szymczak. The Regulation was reinstituted, pursuant to authority contained in the Defense Production Act of 1950, as part of a program of credit-restraint measures designed to facilitate diversion of critical materials and manpower to production of defense needs and in general to reduce the current inflationary pressures that were resulting in higher prices. In announcing its action in a press release dated September 8, the Board emphasized that "the Regulation is a useful supplementary instrument to combat inflation. It applies to an important part, but only to one part, of the credit structure and therefore cannot by itself effectively control inflationary forces." In form, the new Regulation was in general substantially the same as the one in effect from September 20, 1948 to June 30, 1949 under previous statutory authority, and broadly similar to the Regulation that was in effect from September 1, 1941 to November 1, 1947. In the several months preceding September 8, 1950, consumer credit had been expanding at a rate of around 7 or 8 billion dollars a year, reflecting a large demand for automobiles and other consumer durable goods, particularly following the outbreak of war in Korea on June 25, 1950. It was apparent that this unprecedented expansion in consumer credit was adding considerably to inflationary pressures. There had been a material relaxation of instalment credit terms during the past year or more, and the requirements of the Regulation as adopted to become effective September 18 were tighter than terms then being widely offered. The new Regulation provided a maximum maturity of 21 months for automobile instalment credits, of 18 months for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 ANNUAL REPORT OF BOARD OF GOVERNORS other listed articles and unclassified instalment loans, and of 30 months for home modernization and repair credits. Minimum down payments for automobiles were set at one-third and for other listed articles at 10 to 15 per cent. Mr. Eccles voted "no" on the action because he felt the restrictions provided by the proposed Regulations were altogether too liberal under the existing inflationary conditions. They would not accomplish the purposes intended by the statute. He would prefer to make them sufficiently restrictive at this time so as to avoid the necessity of an early amendment. He felt that the least the Regulation should accomplish was to stop the growth in consumer instalment credit and possibly reduce the outstanding volume of such credit if inflationary pressures continued. In particular he believed the terms allowed for automobile credits should be 40 per cent down payment with 15 months' maturity, and for other credits 25 per cent down payment with 15 months' maturity. However, as a compromise he would be willing to support a regulation providing for a one-third down payment with 18 months' maturity on automobiles. Mr. Szymczak voted "no" because he believed terms should be stricter than those provided under the proposed Regulation. He felt that a slow adjustment of terms that would suit the trade was one way of handling the situation, but stated that the key to the Regulation was to be found in the terms set for automobile credits, that the increasing volume of credit even before the Korean crisis had called for restriction of instalment credit, and that developments since June had convinced him that if a consumer credit regulation was to be sufficiently effective, the maturity for new automobile credits should be not more than 18 months and the maturities and down payments of the other classes of listed consumer durable goods should be tightened accordingly. SEPTEMBER 26, 1950 Revision of Regulation V, Loan Guarantees for Defense Production. Regulation V was revised, effective September 27, 1950, in order to reactivate for the current defense program the facilities operated during World War II for promoting war production through loan guaranties. Votes for this action: Messrs. McCabe, Szymczak, Evans, Vardaman, and Norton. Votes against this action: none. The following paragraphs taken from a press statement issued by the Board of Governors on September 27 state the reasons for the reactivated program and describe the procedure contemplated thereunder: "In order to facilitate the defense effort, a program of guaranteed loans patterned after the so-called V-loan program of World War II has been inaugurated under authority of the Defense Production Act Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 73 of 1950 and the President's Executive Order No. 10161 of September 9, 1950. "The guaranteeing agencies of the Government named in the Executive Order are the Department of the Army, the Department of the Navy, the Department of the Air Force, the Department of Commerce, the Department of the Interior, the Department of Agriculture, and the General Services Administration. The program, adopted after consultations among the various guaranteeing agencies and the Board of Governors of the Federal Reserve System, will again be administered through the agency of the Federal Reserve Banks. "Under the Defense Production Act, each of the guaranteeing agencies is authorized to guarantee loans made by banks and other lending institutions to individuals and private corporations for the purpose of financing contracts and other operations which the guaranteeing agency considers necessary for the procurement of materials and the performance of services for the national defense. In the administration of this program, special attention will be given to the financing requirements of small business enterprises engaged in operations relating to the defense effort. "The twelve Federal Reserve Banks are designated in the Executive Order as fiscal agents of the United States to act on behalf of the guaranteeing agencies in the making of guarantees; and the Executive Order authorizes the Board of Governors, after consultation with the guaranteeing agencies, to prescribe regulations governing the operations of the Federal Reserve Banks as such agents, rates and fees to be charged with respect to guaranteed loans, and the forms and procedures to be utilized in connection with the making of such guarantees. * # * * "The following schedule of guarantee fees has been established: Per cent of Guarantee Fee loan guaranteed (Per cent of interest payable by borrower on guaranteed portion of loan) 70 or less 10 75 15 80 20 85 25 90 30 95 35 Over 95 40-50 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

74 ANNUAL REPORT OF BOARD OF GOVERNORS "The maximum rate of interest which may be charged with respect to a guaranteed loan has been set at 5 per cent. "These actions make it possible for the several guaranteeing agencies immediately to provide such guarantees as may be necessary to facilitate the financing of defense contracts. The form of guarantee agreement, the schedule of rates and fees, and the various procedures are subject to change from time to time as experience under the renewed program may make desirable. "In the formulation of policies and procedures there will be frequent consultations between the guaranteeing agencies and the Board of Governors for the purpose of achieving uniformity and coordination to the greatest extent practicable. The program for assisting in the financing of defense contractors—especially the smaller manufacturers and business concerns—is expected to play an important part in carrying out the purposes of the Defense Production Act of 1950. OCTOBER 6, 1950 Adoption of Regulation X, Residential Real Estate Credit. Regulation X, prescribing maximum loan values, maximum maturities, and minimum amortization requirements for non-Governmentaided real estate construction credit in connection with one- and two-family houses and major additions and major improvements thereto, was adopted, with the concurrence of the Housing and Home Finance Administrator, to be effective October 12, 1950. Votes for this action: Messrs. McCabe, Eccles, Szymczak, Evans, Vardaman, Norton, and Powell. Votes against this action: none. By Executive Order No. 10161, dated September 9, 1950, the President delegated to the Board of Governors of the Federal Reserve System the authority vested in him by Section 602 of the Defense Production Act of 1950 to regulate non-Government-aided real estate construction credit. The Executive Order provided that before prescribing, changing, or suspending any regulation pursuant to this authority, the Board of Governors should obtain the concurrence of the Housing and Home Finance Administrator with respect to provisions relating to credit involving residential property. As a first step in the exercise of authority delegated to it, the Board, with the concurrence of the Housing and Home Finance Administrator, issued Regulation X, Residential Real Estate Credit, effective October 12, 1950, prescribing maximum loan values, maximum maturities, and minimum amortization requirements for extensions of non-Government-aided credit in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 75 connection with one- and two-family houses and major additions and major improvements thereto. Pursuant to the terms of the Defense Production Act of 1950, the Regulation applied only in cases where construction had begun after August 3, 1950. The Regulation also did not apply to loans made pursuant to commitments made prior to October 12, 1950. Regulation X was issued by the Board of Governors in order to help to reduce the currently high inflationary pressures in the economy by restricting the flow of funds into the mortgage market and to help to assure that materials and labor required for the defense program would be available when needed. In issuing Regulation X, the Board took into consideration the high level of housing production and estimates that production for 1951 should be reduced to an amount approximately one-third below the record total for 1950. The Board also took into consideration the views of the Housing and Home Finance Administrator and the fact that in delegating to the Administrator the President's authority to restrict Government-aided real estate credit in connection with residential property, Executive Order No. 10161 provided that the Administrator should take such action as might be necessary to insure that the restrictions prescribed by the Board of Governors on non-Governmentaided credit should be applicable to the fullest extent practicable with respect to Government-aided credit, except that relative credit preferences accorded to veterans under existing law should be preserved. While the Regulation issued effective October 12 applied only to credit in connection with oneand two-family houses and major additions and major improvements thereto, the Board, in announcing the Regulation, stated that consideration was being given to the early issuance of regulations applying to other kinds of real estate construction credit. OCTOBER 13, 1950 Amendment to Regulation W, Consumer Credit. Regulation W was amended, effective October 16, 1950, to reduce the maximum maturity on instalment credits from 21 to 15 months for automobiles and from 18 to 15 months for appliances, furniture, and unclassified instalment loans; to increase required down payments on appliances from 15 per cent to 25 per cent and on furniture from 10 per cent to 15 per cent; and to require down payments on all listed articles costing $50 or more instead of $100 or more. Votes for this action: Messrs. McCabe, Eccles, Szymczak, Norton, and Powell. Votes against this action: Messrs. Evans and Vardaman. This action was based upon consideration of reports from Federal Reserve Banks and other sources in the field in all parts of the country which reflected Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 ANNUAL REPORT OF BOARD OF GOVERNORS continued upward pressures on prices in the five weeks since the reissuance of the Regulation was announced on September 8, 1950. While the intensity of these pressures on the market had varied somewhat from time to time, it was clear that the underlying inflationary forces were unabated and had been augmented by the continuing growth of bank credit as well as credit in specific areas, including instalment credit. The Board considered, therefore, that more vigorous application of regulation of instalment credit, coincident with the imposition of real estate credit controls, was in order so that these and other credit measures might more effectively serve in the effort to hold the line until further fiscal measures, as nearly as possible on a pay-as-you-go basis, and such additional credit measures as might be necessary could be brought into play. The action was in accordance with the broad anti-inflationary program of the Government. Likewise, the action was taken pursuant to the statement of August 18 in which the Reserve System declared its purpose to use all the means at its command to restrain further expansion of bank credit. Since the prospect was that pressures on productive capacity, manpower, and the price structure arising out of expanded defense and military aid programs would be increasingly heavy, the amendment was adopted in the light of the System's statutory responsibilities, both under the Federal Reserve Act and under the Defense Production Act, to reduce inflationary forces in various credit areas; to help maintain the purchasing power of the dollar; and to assist other agencies in assuring that the needs of the defense program would be adequately met. While Mr. Evans had no objection to a 15-month maturity, he voted "no" on the proposed amendment because he felt that a reduction to 18 months at this time would make a smoother transition than would be the case if terms were reduced from 21 months to 15 months at one step. Mr. Vardaman voted "no" because he felt that it was not fair to the trade affected by the Regulation to change the Regulation so quickly, after such a short period of trial, and without giving more time for the trade to be heard in opposition to such a relatively drastic tightening of the Regulation. NOVEMBER 10, 1950 Amendment to Regulation X, Residential Real Estate Credit. Regulation X was amended, effective November 14, 1950, with the concurrence of the Housing and Home Finance Administrator, in order to provide an additional exemption for credit in connection with construction begun prior to October 12, 1950, the effective date of the Regulation, and to extend the time for meeting certain requirements in connection with firm commitments made prior to that date. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 77 Votes for this action: Messrs. McCabe, Szymczak, Evans, Vardaman, Norton, and Powell. Votes against this action: none. The amendment provided an additional exemption, to expire May 1, 1951, to provide relief for a limited number of persons and contractors who, between August 3, 1950, and October 12, 1950, had started construction of dwellings for their own use and occupancy but had failed to arrange for permanent financing, or had started construction of dwellings for sale but had not obtained firm commitments for permanent financing for prospective buyers. The amendment was adopted in view of the fact that the exemptions originally permitted by the Regulation were not available to these classes of builders, that there were cases in which persons had started construction unaware of the proposed Regulation, had made substantial investments in partly finished buildings, and could not provide the equity required by the Regulation, and that a substantial and serious economic waste would be caused by forcing such persons to halt construction before the buildings were habitable. The amendment also provided an extension of time under subsection (b) of Section 6 of the Regulation. Under the original terms, the Regulation did not affect credit extended pursuant to a commitment made prior to October 12, 1950, provided that, in the case of an oral commitment, the borrower must have acted in reliance upon it prior to October 12 and advice of the commitment must have been sent to the appropriate Federal Reserve Bank within 30 days from October 12. The Board had received information that many registrants had not filed letters within the specified 30-day period because of lack of knowledge of the Regulation. In these circumstances the Board considered that confusion would be avoided and no harm done for the purposes of the Regulation by extending the time for filing the letters through December 31, 1950. DECEMBER 21, 1950 Increase in Reserve Requirements of Member Banks. The supplement to Regulation D, Reserves of Member Banks, was amended to increase reserve requirements of all member banks by two percentage points with respect to demand deposits and one percentage point with respect to time deposits, effective as follows: On net demand deposits Effective Central reserve city banks From 22 to 23 per cent January 11, 1951 From 23 to 24 per cent January 25, 1951 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 ANNUAL REPORT OF BOARD OF GOVERNORS On net demand deposits—Cont. Effective—Cont. Reserve city banks From 18 to 19 per cent January 11, 1951 From 19 to 20 per cent January 25, 1951 Banks not in reserve or central reserve cities From 12 to 13 per cent January 16, 1951 From 13 to 14 per cent February 1, 1951 On time deposits Central reserve city and reserve city banks From 5 to 6 per cent January 11, 1951 Banks not in reserve or central reserve cities From 5 to 6 per cent January 16, 1951 Votes for this action: Messrs. McCabe, Eccles, Szymczak, Evans, Vardaman, Norton, and Powell. Votes against this action: none. This action was taken as a further step toward restraining inflationary expansion of bank credit, in accordance with the statement issued by the Board August 18, 1950, that the Board and the Federal Open Market Committee "are prepared to use all the means at their command to restrain further expansion of bank credit consistent with the policy of maintaining orderly conditions in the Government securities market." The volume of bank credit and the money supply had continued to increase despite previous actions by the Federal Reserve and other supervisory agencies, and efforts of individual banks to be restrictive in granting credit. Loans of member banks had increased by about 7 billion dollars since June, reflecting in part seasonal influences and in part accumulation of inventories at rising prices. This unprecedented rate of expansion had contributed to an excessive rise in the money supply. Moreover, with the end of usual seasonal demands for credit and currency, it was apparent that shortly after the end of the year banks would have additional funds available for lending. The purpose of the increase in reserve requirements at this time was to absorb such funds and generally to reduce the ability of banks further to expand credit that would add to inflationary pressures. The increase was timed so as to absorb reserves coming into the banks from the post-holiday return flow of currency. The increase raised the required reserves of member banks by a total of approximately 2 billion dollars which, under our fractional reserve banking Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 79 system, could otherwise have been the basis for about a sixfold increase in bank credit in the banking system as a whole. After the increase, reserve requirements at banks other than central reserve city banks were at the maximum legal limits which prevailed during the war period. Requirements on net demand deposits at central reserve city banks were two percentage points less than the maximum under existing authority but above requirements that prevailed for these banks during most of World War II. Other background information regarding this increase in member bank reserve requirements will be found in the record of policy actions of the Federal Open Market Committee (see pages 80-94 of this Report). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

RECORD OF POLICY ACTIONS FEDERAL OPEN MARKET COMMITTEE MARCH 1, 1950 (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 a term of one year beginning March 1, 1950— was held on February 28, 1950, for the purpose of ratifying actions which had been taken under existing policies and of discussing developments in the monetary and credit situation since the last meeting of the Committee. No policy actions were taken at that meeting.) 1. Authority to Effect Transactions in System Account. The following direction to the executive committee, which was in the same form as the direction issued at the meeting on December 13, 1949, 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 changing economic conditions and the general credit situation of the country, for the practical administration of the account, for the maintenance of 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 80 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 81 Treasury; provided that the total amount of such certificates held in the account at any one time shall not exceed 1 billion dollars. Votes for this action: Messrs. Sproul, Vice Chairman, Davis, Draper, Eccles, Erickson, Peyton, Szymczak, and Young. Votes against this action: none. During most of the period since the previous meeting of the Committee there was a persistent tendency by holders of short-term securities, particularly banks, to sell such securities and acquire other assets, and, at the same time, there was a strong investor demand for long-term bonds. In view of the further improvement in the economic situation, the Federal Open Market Committee had continued to follow the policy adopted in November 1949 of mildly restricting the availability of bank reserves by purchasing short-term securities only at rising rates and by selling long-term bonds in response to active investor demands. The sales of long-term bonds largely absorbed additional reserves made available through seasonal monetary factors, as well as those provided by Federal Reserve purchases of short-term securities. The new Treasury financing scheduled for refunding issues maturing March 15 with a 5-year 1J4 per cent note, by reducing somewhat the large volume of short-term securities in the market and held by banks, was tending to lessen bank selling of such issues and thus aiding the Federal Open Market Committee in continuing a policy of permitting greater flexibility in interest rates in response to changes in the demands for credit. It was expected that there would continue to be a strong demand by investors for long-term bonds, which might be met through an offering by the Treasury of a new issue of bonds to cover some of its prospective needs for new money. In the absence of such an offering, the Federal Open Market Committee would supply bonds from the System account in order to absorb available investment funds and discourage overexpansion financed through long-term credit. It was further felt that, in view of the very low level that had been reached in long-term yields, some rise in those yields would help to place Government securities with nonbank investors in the event of new financing by the Government, which it then appeared would be needed later in the year. Sales of bonds by the System would also help to absorb reserves that would be supplied by any System purchases of short-term securities that might be sold by banks to obtain funds for extending other types of credit. It was the view of the Committee that absorption of savings through sales of bonds to nonbank investors and discouragement of bank sales of shortterm securities to the Federal Reserve would help to moderate forces making Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 ANNUAL REPORT OF BOARD OF GOVERNORS for undue monetary expansion and increase the likelihood of maintaining production and employment at high levels. JUNE 13-14, 1950 1. Authority to Effect Transactions in System Account. The following direction to the executive committee which, except for one change, was in the same form as the direction issued at the meeting on March 1, 1950, 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 changing economic conditions and the general credit situation of the country, for the practical administration of the account, for the maintenance of 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 billion dollars. The direction in this paragraph will terminate on June 30, 1950, unless the authority of the Federal Reserve Banks to purchase securities directly from the Treasury is extended by the Congress. Votes for this action: Messrs. McCabe, Chairman, Sproul, Vice Chairman, Davis, Draper, Eccles, Erickson, Evans, Peyton, Szymczak, and Young. Votes against this action: none. The only change was the addition of a sentence at the end of the second paragraph of the direction to provide for the termination on June 30, 1950, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 83 of the authorization for action covered by the paragraph in the event the authority to make direct advances to the Treasury was allowed by Congress to terminate on June 30. (This authority was subsequently extended until July 1, 1952, by an Act of Congress approved June 30, 1950.) The intent of this direction and of actions expected to be taken under it was to continue the general line of previously adopted policies and to adapt them to the developing economic situation. In the weeks immediately before this meeting, Treasury refunding of June 1 and July 1 maturities with offerings of 13-month notes at 1% per cent required substantial Federal Reserve purchases of the maturing issues in order to assure a satisfactory exchange. The Committee felt that the developing economic situation with strong demands for housing and durable goods, growing capital expenditures, expanding credit, and rising prices presented dangers of imbalance in the economy and called for a credit policy that would try to restrain a too-rapid increase. It was felt that as one means of carrying out this policy, after the Treasury's July 1 financing was completed, the System should revise its recent policy of purchasing short-term securities. It was believed that substantial changes in interest rates were unnecessary, as well as impracticable, in the prevailing situation, but that the System's policies should be directed toward restricting increases in bank reserves in a timely and flexible, though modest, manner. The Committee felt that an increase in Federal Reserve Bank discount rates might be considered as an appropriate part of this program, particularly as an indication of Federal Reserve views as to the need for restraint in the developing situation. It was also expected as a part of the program that, in the absence of a long-term Treasury offering or a change in the business and credit situation, Federal Reserve sales of long-term bonds in response to market demands would be continued. AUGUST 18, 1950 1. Authority to Effect Transactions in System Account. The following direction to the executive committee, which, except for the changes noted below, was in the same form as the direction issued at the meeting on June 13-14, 1950, 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 current Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 ANNUAL REPORT OF BOARD OF GOVERNORS and prospective economic conditions and the general credit situation of the country, with a view to exercising restraint upon inflationary developments, to maintaining orderly conditions in the Government security market, to relating the supply of funds in the market to the needs of commerce and business, and to the practical administration of the account; 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 billion dollars. Votes for this action: Messrs. McCabe, Chairman, Sproul, Vice Chairman, Davis, Draper, Eccles, Erickson, Evans, Peyton, Szymczak, Vardaman, and Young. Votes against this action: none. The direction was changed from that approved at the meeting on June 13-14, 1950, to provide that in the light of current and prospective economic conditions and the general credit situation of the country, open market operations should be carried on with a view to exercising restraint upon inflationary developments, as well as for the other purposes stated in the previous direction. Also, the last sentence of the second paragraph of the direction approved on June 13-14, which provided for termination of the authority on June 30, 1950, was deleted since the authority for the System to purchase securities direct from the Treasury has been extended until July 1, 1952, by Act of Congress approved June 30, 1950. This meeting of the Committee was called to consider Federal Reserve policies that might be needed in view of the drastic change in economic developments and prospects resulting from the sudden outbreak of war in Korea and this country's participation in international efforts to deal with it. Because of this sudden development, some of the actions decided upon at the meeting of the Committee on June 13-14 had been held in abeyance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 85 Injection of prospective large increases of Government expenditures into an economy that was already close to capacity output and was showing signs of price inflation seemed to the Committee to call for more vigorous policies of credit restraint than had been contemplated. There were evidences of substantial increases in individual and business expenditures for consumer goods, housing, inventories, and other capital purposes, and that further expansion was to be expected. Credit extensions by banks and others had increased to excessive amounts, and commodity prices were rising sharply. It was felt by the Committee that immediate action to restrain credit expansion should be taken as an essential part of the broad anti-inflationary program of the Government. The immediate problem, the Committee believed, was to curtail over-all civilian spending and to restrain speculative commitments in order to curb the development of an inflationary spiral. Assurance of an increasing demand for goods and services by the Government and of rising incomes, the prospect of possible shortages in some lines, and the recent memories of wartime shortages and of postwar price rises, as well as the abundance of readily available funds, were all conducive to increased spending and investment to a point beyond the productive capacity of the economy. This would cause advancing prices and costs with the danger of an inflationary spiral. It was the conclusion of the Committee that the prevention of inflation was a matter of critical importance and urgency. Spending and speculative ventures could be readily financed either by liquidating some of the existing large holdings of liquid assets or by borrowing from banks and other lending institutions. Sales of Government securities to the Federal Reserve could be an important source of funds for these purposes. Under the circumstances, the Committee felt that a broad-scale and firmly administered program of credit restraints was needed immediately and that in the longer run further credit restrictions would have to be an essential part of a broad program of economic policy that should be adopted by the Government. The Committee was of the view that without a broad program covering fiscal and other areas, credit restrictions alone would be inadequate and that, on the other hand, other measures could not succeed without appropriate credit restraints. The objectives of economic policy would be (1) to assure that the military program would obtain the goods and manpower needed to accomplish the task assumed; (2) to finance the increased Government expenditures in a way which would avoid or diminish the possibilities of inflation both during and after the emergency; (3) to curtail or restrain private spending and investing, as well as nonmilitary expenditures of Federal, State, and local Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 ANNUAL REPORT OF BOARD OF GOVERNORS governments, to the extent necessary not only to assure essential supplies to the military but also to reduce the current and future possibilities of inflation; and (4) to do these things in such ways as would interfere, as little as possible, with increased production and increased productivity. This program would need to include appropriate fiscal and debt-management policies and measures to control the supplies and uses of essential resources in limited supply, as well as credit restraints. Such measures would be needed to restrict buying, check price rises, and provide a firm basis for confidence in the maintenance of the value of the dollar. Such a program, it was believed, would help to reduce the need for direct measures on a broad scale to fix prices and wages and to allocate goods, which would impair the operation of the price system as a guide to and regulator of consumption and production. The required program in areas of credit, fiscal, and debt-management policies, the Committee believed, should include the following measures: (1) Taxes should be increased and Government expenditures reduced so as to keep the Government's budget in balance and to restrict demand for scarce goods. (2) Treasury borrowing, both for refunding and for any new funds needed, should be as much as possible from savings and as little as possible from banks. This would require maximum issuance of securities that would attract funds of nonbank investors who would hold them after, as well as during, the emergency period; minimum offerings of securities that would be purchased largely by banks; and maintenance of a balanced distribution of bank eligible issues so as to avoid excessive liquidity at banks. (3) Selective regulation of credit terms should be imposed in appropriate areas, particularly consumer instalment credit and real estate credit, and more restrictive measures should be applied as needed to stock market credit. (4) Bank reserve requirements should be increased at appropriate times. (5) Federal Reserve Bank discount rates should be raised. (6) Open market policies should be made more flexible so as to limit sales of Government securities by banks and others to the Federal Reserve for the purpose of expanding other types of credit. Since the statutory responsibility of the Federal Open Market Committee provides that the time, character, and volume of open market operations shall be governed with a view to accommodating commerce and business and with regard to their bearing upon the general credit situation of the country, the Committee took into consideration current and prospective credit developments in reaching a conclusion as to its own immediate policies. Since midyear, bank loans to businesses, home owners, and consumers had been Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 87 expanding at an excessive rate, and it was evident that the increased use of credit was contributing to the rise in commodity prices. This expansion was made possible chiefly by sales of short-term Government securities to the Federal Reserve, which was providing relatively rigid support to the Government securities market at the low level of rates required for the success of periodic Treasury refunding offerings. Thus, Federal Reserve operations were supplying banks with cheap funds for credit expansion that was excessive in amount. The Committee reached the conclusion, therefore, that the situation called for the immediate adoption of a more flexible policy in order to restrain credit expansion to the extent possible within the powers of the Federal Reserve System and consistent with the maintenance of an orderly market for Government securities. Accordingly, in issuing the above direction, the Committee had in mind that open market operations should be conducted primarily with the view to restraining further increases in bank reserves. At the same time, they should, to the extent necessary, carry out the existing policy of maintaining an orderly market for Government securities. It was recognized that the endeavor to prevent additions to bank reserves in the face of growing demands for bank loans would result in higher short-term rates in the money market. The higher rates would not only be an inevitable result of more restrained buying by the Federal Reserve but would also help to discourage sales and encourage holding and buying of short-term securities by banks and others. It was also felt that under the circumstances active selling of long-term bonds by the Federal Reserve should probably be discontinued, as the higher shortterm rates might have the effect of reducing somewhat the demand for longterm securities, which had been stimulated by the wide spread between short-term and long-term rates. Also, other demands for funds might lessen investor buying of such securities, although a substantial demand from pension funds and other investor groups might continue. On the same day the Board of Governors of the Federal Reserve System approved the action of the Board of Directors of the Federal Reserve Bank of New York to raise its rediscount rate. The New York Bank had acted to increase this rate on July 21 and again on July 27 and August 3, but approval of the increase was deferred by the Board of Governors pending further discussions of System monetary and credit policy and Treasury financing policies. Immediately after the meeting of the Committee, the following statement for publication was issued jointly by the Board of Governors and the Federal Open Market Committee in explanation of the decisions that had been reached: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 ANNUAL REPORT OF BOARD OF GOVERNORS "The Board of Governors of the Federal Reserve System today approved an increase in the discount rate of the Federal Reserve Bank of New York from ll/ per cent to 1% per cent effective at the 2 opening of business Monday, August 21. "Within the past six weeks loans and holdings of corporate and municipal securities have expanded by 1.5 billion dollars at banks in leading cities alone. Such an expansion under present conditions is clearly excessive. In view of this development and to support the Government's decision to rely in major degree for the immediate future upon fiscal and credit measures to curb inflation, the Board of Governors of the Federal Reserve System and the Federal Open Market Committee are prepared to use all the means at their command to restrain further expansion of bank credit consistent with the policy of maintaining orderly conditions in the Government securities market. "The Board is also prepared to request the Congress for additional authority should that prove necessary. "Effective restraint of inflation must depend ultimately on the willingness of the American people to tax themselves adequately to meet the Government's needs on a pay-as-you-go basis. Taxation alone, however, will not do the job. Parallel and prompt restraint in the area of monetary and credit policy is essential." SEPTEMBER 28, 1950 1. Increase in Authority to Effect Transactions in System Account. The members of the Federal Open Market Committee on August 22, 1950, approved an increase from 2 billion dollars to 4 billion dollars in the limitation in the first paragraph of the direction issued at the meeting on August 18, 1950, within which the total amount of securities in the System account could be increased or decreased. At this meeting of the Federal Open Market Committee that action of the members of the Committee was approved, ratified, and confirmed. Votes for this action: Messrs. McCabe, Chairman, Sproul, Vice Chairman, Davis, Eccles, Erickson, Evans, Norton, Peyton, Powell, Szymczak, Vardaman, and Young. Votes against this action: none. Immediately following the meeting on August 18, 1950, the Treasury announced that the September 15 and October 1 refunding would be through Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 89 the medium of a 13-month \lA per cent note. This issue required substantial support in the market and in order to carry out its policy of maintaining orderly conditions in the Government securities market as agreed upon at the meeting of the Federal Open Market Committee on August 18, 1950, the full Committee increased the authority of the executive committee to purchase securities for the System account so that the necessary market support could be given to the new offering. 2. Authority to Effect Transactions in System Account—Further Measures to Restrain Credit Expansion. With respect to future policy, the Committee issued the following direction to the executive committee, which was in the same form as that adopted at the meeting on August 18, 1950: 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 current and prospective economic conditions and the general credit situation of the country, with a view to exercising restraint upon inflationary developments, to maintaining orderly conditions in the Government security market, to relating the supply of funds in the market to the needs of commerce and business, and to the practical administration of the account; 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 4 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 billion dollars. Votes for this action: Messrs. McCabe, Chairman, Sproul, Vice Chairman, Davis, Eccles, Erickson, Evans, Norton, Peyton, Powell, Szymczak, Vardaman, and Young. Votes against this action: none. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

90 ANNUAL REPORT OF BOARD OF GOVERNORS In this period, open market operations had been conducted in part for the purpose of assuring a substantial exchange of Treasury securities maturing on September 15 and October 1 for new 13-month I1/* per cent notes. At the same time endeavors to absorb bank reserves and to restrain credit expansion had been made through the sale of other securities from the System account. In order to accomplish the latter policy, a rise in yields on short-term securities had been permitted to occur in the market. In these operations purchases for System account included 8 billion dollars of the 13.6 billion of issues which were retired on September 15 and October 1, and these purchases, together with 2.4 billion previously held in the account, were exchanged for the new issues. Purchases by the System were made at prices designed to discourage cash redemption by the holders of the maturing issues and thus to aid in obtaining maximum exchanges for the new issue. At the same time, sales were made from the System account at relatively higher yield rates (lower prices) than were purchases of the maturing issues. The System's total holdings increased by a little over 1 billion dollars in the period, largely to replace reserves lost from an outflow of gold and an increased currency demand. Member bank reserves expanded by 300 million dollars in reflection of the over-all credit expansion. Market yields on short-term Government securities rose by about % of a point. At this meeting of the Committee, continuation of the previously adopted policy was decided upon because of the Committee's grave responsibility in the light of the continued rapid expansion of credit and the belief that a further effort should be made to restrain the selling of Government securities to the System and the resultant creation of bank reserves. This decision was based upon the continuation of dangerous inflationary elements in current and prospective economic developments, with pressures exerted by private spending and investment prior to an actual increase in Government spending. Measures that had been adopted to combat inflation, such as the increase in income taxes, limited allocations and inventory controls, consumer credit regulation, and a tightening of terms on Federal insurance and guarantee of mortgages, had not had time to become effective and prospective further measures would also require time to have an effect. Under the circumstances, it was felt that, in order to limit the creation of additional bank reserves, the System should endeavor to hold down purchase of securities to the minimum consistent with maintenance of an orderly market. It was recognized that this policy, in the face of continued credit expansion and a resulting demand for bank reserves, would bring about a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 91 rise in short-term interest rates. Such a rise in rates and the corresponding decline in prices of short-term Government securities would make it more costly for banks to sell Government securities to make loans and more attractive to hold them rather than shift to other assets. It would also encourage other buyers, such as corporations, to purchase short-term securities, thus relieving pressure on the Federal Reserve and avoiding an increase in bank reserves. It was agreed that any rise in short-term interest rates should not be permitted to go to a point where market selling of long-term bonds would be encouraged, that an orderly market would be maintained, and that the timing and amount of any changes would be made with consideration to Treasury financing operations, such as the opening of Series F and G bonds to purchase by investment institutions during the first 10 days of October, November, and December. The Committee also considered the timing of its operations with reference to possible action by the Board of Governors to increase reserve requirements of member banks. It was the consensus that money rates should be permitted to rise before, rather than along with, such an increase in order to avoid putting too much strain on the Government securities market. OCTOBER 11, 1950 1. Authority to Effect Transactions in System Account. The following direction to the executive committee, which was in the same form as the direction issued at the meeting on September 28, 1950, 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 current and prospective economic conditions and the general credit situation of the country, with a view to exercising restraint upon inflationary developments, to maintaining orderly conditions in the Government security market, to relating the supply of funds in the market to the needs of commerce and business, and to the practical administration of the account; 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

92 ANNUAL REPORT OF BOARD OF GOVERNORS for the temporary accommodation of the Treasury shall not be increased or decreased by more than 4 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 in the account at any one time shall not exceed 1 billion dollars. Votes for this action: Messrs. McCabe, Chairman, Sproul, Vice Chairman, Davis, Eccles, Erickson, Evans, Norton, Peyton, Powell, Szymczak, Vardaman, and Young. Votes against this action: none. The purpose of this meeting was to consider further the timing of actions to be taken under the general policies agreed upon at the meeting of September 28, 1950. Appraisal of economic developments showed that credit expansion had continued at a rapid rate and that although there were some signs or prospects of moderate abatement of inflationary pressures which might be detected in certain fields, the underlying forces in the economy were still strongly inflationary and would be accelerated by increasing Government expenditures as the rearmament program began to bring its huge demands upon the economy, unless stern fiscal policies such as had been advocated and further credit restraints were adopted. In the light of these prospects, in accordance with the need for restrictive credit measures to support the Government's anti-inflation program, and in view of the statutory responsibilities of the Federal Open Market Committee, it was decided to proceed with policies decided upon. Accordingly, the direction quoted above was identical with that issued on September 28, 1950. OCTOBER 30, 1950 1. Extension of Policy for Restraining Inflationary Credit Expansion. At this meeting, the Federal Open Market Committee gave consideration to further extension of the policy determined at previous meetings for restraining inflationary credit expansion. It was agreed that continued flexibility in the short-term money market was essential to carrying out effective credit policy, but that operations under this policy must be carried out in a manner that would not induce holders of long-term bonds to sell securities and thus necessitate Federal Reserve purchases to maintain an orderly market, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 93 which would interfere with the System policy of credit restraint, the main purpose of which was to avoid putting funds into the market. For this reason, it was felt, yields on short-term issues should not be permitted to rise above a point which, under existing conditions, might be considered as endangering the 2% per cent rate on outstanding issues of long-term restricted bonds. At this meeting it appeared from current market developments that this point might have been reached, at least temporarily. Accordingly, it was agreed that for the present, pursuant to the policy adopted at the meeting of the Committee on October 11, 1950, the rate on short-term issues should not be permitted to rise further, but that if further inflationary or market forces should develop which would make it necessary to reconsider this decision, another meeting of the Committee would be held. No change was made in the form or limitations in the authorization to effect transactions in the System account which was approved on October 11, 1950. Votes for this action: Messrs. McCabe, Chairman, Sproul, Vice Chairman, Davis, Erickson, Evans, Norton, Peyton, Powell, Szymczak, Vardaman, and Young. Votes against this action: none. NOVEMBER 27, 1950 1. Authority to Effect Transactions in System Account. Consideration was given at this meeting to continuation of the general line of policy previously adopted, and the Committee approved the following direction to the executive committee, which was in the same form as the direction issued at the meeting on October 11, 1950: 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 current and prospective economic conditions and the general credit situation of the country, with a view to exercising restraint upon inflationary developments, to maintaining orderly conditions in the Government security market, to relating the supply of funds in the market to the needs of commerce and business, and to the practical administration of the account; 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 ANNUAL REPORT OF BOARD OF GOVERNORS LETTER OF THE CHAIRMAN OF THE BOARD OF GOVERNORS November 17, 1950 To the Chief Executive Officers of All Member Banks: The success of the battle against inflationary dangers depends in large measure upon maintaining a reasonable balance between available goods and services and the supply of dollars bidding in the market place. Since early summer the persistent and unprecedented rise in bank loans has been the major factor in the country's increasing money supply. From midyear to mid-November total loans at all commercial banks rose well over 5 billion dollars. This was a much greater expansion than occurred in the corresponding period of any previous year on record. Continued growth of bank credit, not balanced by increases in production of civilian goods, would put additional upward pressure on prices, impairing the buying power of the dollar and adding to the cost of the Nation's defense program. The Board of Governors of the Federal Reserve System therefore again wishes to call to the attention of every member bank the loan policy announcement of August 4, 1950 which was unanimously approved by the Board of Governors, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Home Loan Bank Board, and the National Association of Supervisors of State Banks. As you will recall, that joint statement stressed the importance of sensible and restrained action by businessmen, laborers, farmers, and consumers, as well as governmental agencies, national and State, to curb excessive credit expansion. The joint declaration concluded: "A continuation of the rapid growth of credit resulting from consumer demand for houses and other goods and speculative accumulation of inventories by business would add to inflationary pressures and seriously handicap the necessary expansion of military production. Therefore, lenders should carefully analyze all loan applications and avoid making loans which would have these adverse effects." The purpose of this letter is to request your utmost cooperation in helping to achieve the objectives of the foregoing appeal. Every bank has it within its power to make an important contribution to sound money by limiting loan extensions, and by advising would-be borrowers to hold their borrowing requirements to the lowest limits consistent with their rock-bottom needs. We realize that bankers have been exercising selection in the kind of credit they are extending. The point we wish to emphasize is that in a period like this even sound individual credits are inflationary if, in the aggregate, they add unduly to a growing supply of money. With full employment, high level Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 97 production, and rising wages and prices, almost everyone's credit appears to be good. Further expansion in bank credit means more dollars competing for limited supplies of labor and materials. Unless such expansion of credit is checked it is bound to raise prices. Defense dollars will soon be added to civilian dollars in competition for available goods. The Nation's defense needs must be adequately met without runaway prices. To meet its statutory responsibilities and to play its part in restraining overexpansion of bank credit, the Federal Reserve System has adopted an antiinflationary program. As integral parts of this program, the Federal Reserve, under the authorization of the Defense Production Act of 1950, has instituted consumer credit regulations. With the concurrence of the Housing and Home Finance Agency, it has also adopted curbs on residential construction credit. Commercial banks can also do their part in bringing about restraint of credit by advising borrowers to avoid overstocking of inventories and to postpone unnecessary business expansion and by discouraging various types of loans that do not make a definite contribution to the defense effort. The sacrifice of some earnings at this time is a small price to pay for the defense of the dollar which is of paramount importance. The Federal Reserve people are eager to know what the commercial bankers are thinking about the trend in bank loans. It would be greatly appreciated if you would care to write a letter to the President of the Federal Reserve Bank of your District so that we may have the benefit of your views with regard to the following questions or any other information that you would care to communicate: What types or classes of borrowers occasioned most of the new loans in your bank since midyear? Can you say whether their borrowing is or is not largely seasonal? If not seasonal can you identify a principal purpose? Do you expect the large demand for credit to taper off, continue, or increase in the next three months? Such other information and views as you would care to express on our mutual problem of curbing inflation would also be most welcome to the Federal Reserve System. Sincerely yours, THOMAS B. MCCABE, Chairman, Board of Governors of the Federal Reserve System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM [December 31, 1950] 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 R. M. EVANS of Virginia January 31, 1954 JAMES K. VARDAMAN, JR. of Missouri January 31, 1960 EDWARD L. NORTON of Alabama January 31, 1964 OLIVER S. POWELL of Minnesota January 31, 1952 ELLIOTT THURSTON, Assistant to the Board CHESTER MORRILL, Special Adviser to the Board WINFIELD W. RIEFLER, Assistant to the Chairman WOODLIEF THOMAS, Economic Adviser to the Board S. R. CARPENTER, Secretary MERRITT SHERMAN, Assistant Secretary KENNETH A. KENYON, Assistant Secretary GEORGE B. VEST, General Counsel FREDERIC SOLOMON, Assistant General Counsel JOHN C. BAUMANN, Assistant General Counsel J. LEONARD TOWNSEND, Solicitor G. HOWLAND CHASE, Assistant Solicitor RALPH A. YOUNG, Director, Division of Research and Statistics FRANK R. GARFIELD, Adviser on Economic Research, Division of Research and Statistics KENNETH B. WILLIAMS, Acting Assistant Director, Division of Research and Statistics ARTHUR W. MARGET, Director, Division of International Finance LEWIS N. DEMBITZ, Assistant Director, Division of International Finance EDWARD A. WAYNE, Acting Director, Division of Examinations GEORGE S. SLOAN, Assistant Director, Division of Examinations C. C. HOSTRUP, Assistant Director, Division of Examinations FRED A. NELSON, Assistant Director, Division of Examinations ROBERT F. LEONARD, Director, Division of Ban\ Operations J. E. HORBETT, Assistant Director, Division of Ban\ Operations LOWELL MYRICK, Assistant Director, Division of Ban\ Operations ROBERT N. HILKERT, Acting Director, Division of Personnel Administration LISTON P. BETHEA, Director, Division of Administrative Services ARTHUR PHELAN, Acting Director, Division of Selective Credit Regulation GUY E. NOYES, Assistant Director, Division of Selective Credit Regulation GARDNER L. BOOTHE, II, Assistant Director, Division of Selective Credit Regulation 98 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL OPEN MARKET COMMITTEE [December 31, 1950] MEMBERS THOMAS B. MCCABE, Chairman (Board of Governors) ALLAN SPROUL, Vice Chairman (Elected by Federal Reserve Bank of New York) CHESTER C. DAVIS (Elected by Federal Reserve Banks of Atlanta, St. Louis, and Dallas) MARRINER S. ECCLES (Board of Governors) JOSEPH A. ERICKSON (Elected by Federal Reserve Banks of Boston, Philadelphia, and Richmond) R. M. EVANS (Board of Governors) EDWARD L. NORTON (Board of Governors) J. N. PEYTON (Elected by Federal Reserve Banks of Minneapolis, Kansas City, and San Francisco) OLIVER S. POWELL (Board of Governors) M. S. SZYMCZAK (Board of Governors) JAMES K. VARDAMAN, JR. (Board of Governors) 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 R. M. EVANS WOODLIEF THOMAS, Economist C. S. YOUNG JOHN K. LANGUM, Associate Economist ALFRED C. NEAL, Associate Economist AGENT J. MARVIN PETERSON, Associate Economist FEDERAL RESERVE BANK OF NEW YORK WILLIAM H. STEAD, Associate Economist ROBERT G. ROUSE, Manager of System JOHN H. WILLIAMS, Associate Economist Open Market Account 99 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL ADVISORY COUNCIL [December 31, 1950] MEMBERS District No. 1—WALTER S. BUCKLIN, President, The National Shawmut Bank of Boston, Boston, Massachusetts. District No. 2—N. BAXTER JACKSON, Chairman, Chemical Bank & Trust Company, New York, New York. District No. 3—FREDERIC A. POTTS, President, The Philadelphia National Bank, Philadelphia, Pennsylvania. District No. 4—SIDNEY B. CONGDON, President, The National City Bank of Cleveland, Cleveland, Ohio. District No. 5—ROBERT V. FLEMING, President and Chairman, The Riggs National Bank, Washington, D. C. District No. 6—J. T. BROWN, President, The First National Bank of Jackson, Jackson, Mississippi. District No. 7—EDWARD E. BROWN, Chairman, The First National Bank of Chicago, Chicago, Illinois. District No. 8—W. L. HEMINGWAY, Chairman, Mercantile-Commerce Bank and Trust Company, St. Louis, Missouri. District No. 9—JOSEPH F. RINGLAND, President, Northwestern National Bank of Minneapolis, Minneapolis, Minnesota. District No. 10—DAVID T. BEALS, President, The Inter-State National Bank, Kansas City, Missouri. District No. 11—J. E. WOODS, Chairman, Temple National Bank, Temple, Texas. District No. 12—JAMES K. LOCHEAD, President, American Trust Company, San Francisco, California. EXECUTIVE COMMITTEE EDWARD E. BROWN, ex officio ROBERT V. FLEMING, ex officio N. BAXTER JACKSON FREDERIC A. POTTS SIDNEY B. CONGDON OFFICERS President, EDWARD E. BROWN Vice President, ROBERT V. FLEMING Secretary, HERBERT V. PROCHNOW 100 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

101 FEDERAL RESERVE SYSTEM DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS [December 31, 1950] 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 Warren F. Whittier C. Canby Balderston Cleveland ,, George C. Brainard A. Z, Baker Richmond Charles P, McCormick John B. Woodward, Jr. Atlanta Frank H.Neely Rufus C. Harris Chicago F. J. Lunding John S. Coleman 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 Bray ton Wilbur Harry R. Wellman CONFERENCE OF CHAIRMEN The Chairmen of the Federal Reserve Banks are organized into a Conference of Chairmen which meets from time to time to consider matters of common interest, and to consult with and advise the Board of Governors. Mr. Stevens, Chairman of the Federal Reserve Bank of New York, was elected Chairman of the Conference and of the Executive Committee in January 1950 and served during the year 1950. The other members of the Executive Committee, Mr. McCormick, Chairman of the Federal Reserve Bank of Richmond, and Mr. Lunding, Chairman of the Federal Reserve Bank of Chicago, also were elected in January 1950 and served during the year 1950. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

102 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Deo. 31, 1950-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 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 DIRECTORS Class A: Allan Forbes Chairman of the Board, State Street Trust Company, Boston, Mass 1950 Russell H. Britton Executive Vice President and Cashier, First National Bank of Rochester, Rochester, N. H 1951 Earle W. Stamm President, The National Bank of Commerce of New London, New London, Conn 1952 Class B: Philip R. Allen Director, Bird & Son, inc., E. Walpole, Mass 1950 Frederick S. Blackall, jr President and Treasurer, The Taft-Peirce Manufacturing Company, Woonsocket, R. 1 1951 Roy L. Patrick President, Rock of Ages Corporation, Burlington, Vt. 1952 Class C.- Albert M. Creighton Chairman of the Board 1950 Ames Stevens President, Ames Worsted Company, Lowell, Mass.. . 1951 Harold D. Hodgkinson Vice President, General Manager and Chairman of Management Board, Wm. Filene's Sons Company, Boston, Mass 1952 District No. 2—New York Class A: Frederic E. Worden Chairman of the Board, and President, The National Bank of Auburn, Auburn, N. Y 1950 Roger B. Prescott President, The Keeseville National Bank, Keeseville, N.Y 1951 John C. Traphagen Chairman of the Board, Bank of New York and Fifth Avenue Bank, New York, N. Y 1952 Class B.- Marion B. Folsom Treasurer and Director, Eastman Kodak Company, Rochester, N. Y 1950 Jay E. Crane Director, Standard Oil Company (New Jersey), New York, N. Y 1951 Lewis H. Brown Chairman of the Board, Johns-Manville Corporation, New York, N. Y 1952 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 103 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1950-Cont. Term Expires Dec. 31 DIRECTORS Cont. Class C.- Robert T. Stevens Chairman of the Board, J. P. Stevens and Company, Inc., New York, N. Y 1950 William I. Myers Dean, New York State College of Agriculture, Cornell University, Ithaca, N. Y 1951 Robert P. Patterson Member of the firm of Patterson, Belknap and Webb, Attorneys at Law, New York, N. Y 1952 Buffalo Branch Appointed by Federal Reserve Ban\: Clyde C. Brown President, The Cuba National Bank, Cuba, N. Y 1950 George G. Kleindinst President, Liberty Bank of Buffalo, Buffalo, N. Y 1951 George F. Bates President, Power City Trust Company, Niagara Falls, N. Y 1952 Bernard E. Finucane President, Security Trust Company of Rochester, Rochester, N. Y 1952 Appointed by Board of Governors: Lewis B. Swift President, Taylor Instrument Companies, Rochester, N. Y 1950 Carl G. Wooster Farmer, Union Hill, N. Y 1951 Edgar F. Wendt President, Buffalo Forge Company, Buffalo, N. Y 1952 District No. 3—Philadelphia Class A: Archie D. Swift Chairman of the Board, Central-Penn National Bank, Philadelphia, Pa 1950 George W. Reily President, Harrisburg National Bank, Harrisburg, Pa. 1951 J. Nyce Patterson President, Watson town National Bank, Watsontown, Pa 1952 Class B.- Walter H. Lippincott President and Director, Lobdell Company, Wilmington, Del 1950 Albert G. Frost Chairman of the Board, The Esterbrook Pen Company, Camden, N. J 1951 William J. Meinel President and General Manager, Heintz Manufacturing Company, Philadelphia, Pa 1952 Class C: C. Canby Balderston Dean, Wharton School of Finance and Commerce, University of Pennsylvania, Philadelphia, Pa 1950 Vacancy 1951 Warren F. Whittier Agricultural Consultant, Chester Springs, Pa 1952 District No. 4—Cleveland Class A: John T. Rohr President, The Toledo Trust Company, Toledo, Ohio 1950 Ben R. Conner President, The First National Bank of Ada, Ada, Ohio 1951 John D. Bainer President, The Merchants National Bank and Trust Company of Meadville, Meadville, Pa 1952 Class B: C.L.Austin Executive Vice President, Jones & Laughlin Steel Corporation, Pittsburgh, Pa 1950 Joel M. Bowlby Chairman of the Board, The Eagle-Picher Company, Cincinnati, Ohio 1951 Edward C. Doll President, Lovell Manufacturing Company, Erie, Pa... 1952 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Deo. 31, 1950-Cent. Term Expires Dec. 31 DIRECTORS—Cont. Class C: A. Z, Baker Chairman of the Board, The Cleveland Union Stock Yards Company, Cleveland, Ohio 1950 Leo L. Rummell Dean, College of Agriculture, The Ohio State University, Columbus, Ohio 1951 George C. Brainard President and General Manager, Addressograph-Multigraph Corporation, Cleveland, Ohio 1952 Cincinnati Branch Appointed by Federal Reserve Ban\: Walter H. J. Behm President, The Winters National Bank and Trust Company of Dayton, Dayton, Ohio 1950 Spears Turley Vice President and Trust Officer, State Bank and Trust Company of Richmond, Kentucky, Richmond, Ky. 1951 Joseph B. Hall President, Kroger Company, Cincinnati, Ohio 1951 Sterling B. Cramer First Vice President, The Fifth Third Union Trust Company, Cincinnati, Ohio 1952 Appointed by Board of Governors: Paul G. Blazer Chairman of the Board, Ashland Oil & Refining Company, Ashland, Ky 1950 Ernest H. Hahne President, Miami University, Oxford, Ohio 1951 H. C. Besuden Farmer, Winchester, Ky 1952 Pittsburgh Branch Appointed by Federal Reserve Ban\: T. C. Swarts Executive Vice President, Woodlawn Trust Company, Aliquippa, Pa 1950 Laurence S. Bell Executive Vice President, The Union National Bank of Pittsburgh, Pittsburgh, Pa 1951 Montfort Jones Professor of Finance, The University of Pittsburgh, Pittsburgh, Pa 1951 John Barclay, Jr President, Barclay-Westmoreland Trust Company, Greensburg, Pa 1952 Appointed by Board of Governors: Josiah M. Koch Vice President, Quaker State Oil Refining Corporation, Oil City, Pa 1950 A. H. Burchfield President and General Manager, Joseph Home Company, Pittsburgh, Pa 1951 Sidney A. Swensrud President, Gulf Oil Corporation, Pittsburgh, Pa 1952 District No. 5—Richmond Class A: John A. Sydenstricker Cashier, First National Bank in Marlinton, Marlinton, W. Va 1950 James D. Harrison President, First National Bank of Baltimore, Baltimore, Md 1951 Warren S. Johnson. ....... .President, Peoples Savings Bank & Trust Company, Wilmington, N. C 1952 Class B: Cary L. Page President and Treasurer, Jackson Mills, Wellford, S. C 1950 Vacancy 1951 H. L. Rust, Jr President, H. L. Rust Company, Washington, D. C,, 1952 f t Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 105 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dee, 31, 1950-Cont. Term Expires Dec. 31 DIRECTORS Cont. Class C.- Charles P. McCormick President and Chairman of Board, McCormick & Company, Inc., Baltimore, Md 1950 W. G. Wysor Management Counsel, Southern States Cooperative, Inc., Richmond, Va 1951 John B. Woodward, Jr President and General Manager, Newport News Shipbuilding and Dry Dock Company, Newport News, Va 1952 Baltimore Branch Appointed by Federal Reserve Ban\: W. Bladen Lowndes President, Fidelity Trust Company, Baltimore, Md.. . 1950 Charles A. Piper President, Liberty Trust Company, Cumberland, Md. 1951 Eugene G. Grady President, The Western National Bank of Baltimore, Baltimore, Md 1952 Lacy I. Rice President, The Old National Bank, Martinsburg, W. Va 1952 Appointed by Board of Governors: James M. Shriver President, The B. F. Shriver Company, Westminster, Md. 1950 James E. Hooper Vice President, William E. Hooper & Sons Company, Baltimore, Md 1951 L. Vinton Hershey President and General Manager, Hagerstown Shoe Company, Hagerstown, Md 1952 Charlotte Branch Appointed by Federal Reserve Ban\: N. S. Calhoun President, Security National Bank, Greensboro, N. C. 1950 Thomas J. Robertson President, The First National Bank of South Carolina, Columbia, S. C 1951 George S. Crouch President, Union National Bank, Charlotte, N. C 1952 Jonathan Woody President, First National Bank, Waynesville, N. C. .. 1952 Appointed by Board of Governors: R. E. Ebert President, Dixie Home Stores, Inc., Greenville S. C.. . 1950 R. Flake Shaw Executive Vice President, North Carolina Farm Bureau Federation, Greensboro, N. C 1951 W. A. L. Sibley Vice President and Treasurer, Monarch Mills, Union, S. C 1952 District No. 6—Atlanta Class A: George J. White President, The First National Bank of Mount Dora, Mount Dora, Fla 1950 R. C. Williams President, The First National Bank of Atlanta, Atlanta, Ga 1951 Leslie R. Driver President, The First National Bank in Bristol, Bristol, Tenn 1952 Class B: A. B. Freeman Chairman of the Board, Louisiana Coca-Cola Bottling Company, Ltd., New Orleans, La 1950 J. A. McCrary Vice President and Treasurer, J. B. McCrary Company, Inc., Atlanta, Ga 1951 Donald Comer Chairman of the Board, Avondale Mills, Birmingham, Ala 1952 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Deo. 31, 1950-Cont. Term Expires Dec. 31 DIRECTORS—Cont. Class C.- Frank H. Necly Chairman of the Board, Rich's, Inc., Atlanta, Ga 1950 Paul E. Reinhold President, Foremost Dairies, Inc., Jacksonville, Fla.. . . 1951 Rufus C. Harris President, The Tulane University of Louisiana, New Orleans, La 1952 Birmingham Branch Appointed by Federal Reserve Ban\: W. C. Bowman Chairman of the Board, The First National Bank of Montgomery, Montgomery, Ala 1950 D. C. Wadsworth President, The American National Bank of Gadsden, Gadsden, Ala 1951 J. B. Barnett President, The First National Bank of Monroeville, Monroeville, Ala 1952 A. M. Shook President, Security Commercial Bank, Birmingham, Ala 1952 Appointed by Board of Governors: John M. Gallalee President, University of Alabama, Tuscaloosa, Ala.. . 1950 Wm. Howard Smith President, McQueen-Smith Farms, Prattville, Ala 1951 Thad Holt President and Treasurer, Voice of Alabama, Inc., Birmingham, Ala 1952 Jacksonville Branch Appointed by Federal Reserve Ban\: J. W. Shands President, The Atlantic National Bank of Jacksonville, Jacksonville, Fla 1950 J. D. Camp President, Broward National Bank of Fort Lauderdale, Fort Lauderdale, Fla 1951 N. Ray Carroll President, The First National Bank of Kissimmee, Kissimmee, Fla 1952 J. E. Bryan President, Union Trust Company, St. Petersburg, Fla. 1952 Appointed by Board of Governors: Marshall F. Howell Vice President, Bond-Howell Lumber Co., Jacksonville, Fla 1950 J. Hillis Miller President, University of Florida, Gainesville, Fla 1951 Howard Phillips Vice President and General Manager, Dr. P. Phillips Company, Orlando, Fla 1952 Nashville Branch Appointed by Federal Reserve Ban\: W. H. Hitchcock President, First and Peoples National Bank, Gallatin, Tenn 1950 Parkes Armistead President, The American National Bank of Nashville, Nashville, Tenn 1951 T. L. Cathey President, Peoples and Union Bank, Lewisburg, Tenn. 1952 Thomas D. Brabson President, The First National Bank of Greeneville, Greeneville, Tenn 1952 Appointed by Board of Governors: C. E. Brehm President, University of Tennessee, Knoxville, Tenn. 1950 H. C. Meacham Agriculture and livestock, Franklin, Tenn 1951 W. Bratten Evans President, Tennessee Enamel Manufacturing Company, Nashville, Tenn 1952 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 107 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1950-Cont. Term Expires Dec. 31 DIRECTORS Cont. New Orleans Branch Appointed by Federal Reserve Ban\: T. J. Eddins President, Bank of Slidell, Slidell, La 1950 James C. Bolton President, Rapides Bank and Trust Company in Alexandria, Alexandria, La 1951 Elbert E. Moore President, Louisiana National Bank of Baton Rouge, Baton Rouge, La 1952 Percy H. Sitges President, Louisiana Savings Bank & Trust Company, New Orleans, La 1952 Appointed by Board of Governors: H. G, Chalkley, Jr President, Sweet Lake Land & Oil Company, Inc., Lake Charles, La 1950 John J. Shaffer, Jr Agriculture and farm machinery, Ellendale, La 1951 E. O. Batson President, Batson-McGehee Company, Inc., Millard, Miss 1952 District No. 7—Chicago Class A: Vivian W. Johnson President, First National Bank, Cedar Falls, Iowa 1950 Walter J. Cummings Chairman, Continental Illinois National Bank and Trust Company of Chicago, Chicago, 111 1951 Horace S. French President, The Manufacturers National Bank of Chicago, Chicago, 111 1952 Class B: Nicholas H. Noyes Chairman, Finance Committee, Eli Lilly and Company, Indianapolis, Ind 1950 Wm. C. Heath President, A. O. Smith Corporation, Milwaukee, Wis. 1951 William J. Grede President, Grede Foundries, Inc., Milwaukee, Wis 1952 Class C.- Allan B. Kline President, American Farm Bureau Federation, Chicago, 111 1950 F. J. Lunding Chairman of the Executive Committee, Jewel Tea Company, Inc., Barrington, 111 1951 John S. Coleman President, Burroughs Adding Machine Company, Detroit, Mich 1952 Detroit Branch Appointed by Federal Reserve Ban\: Chas. A. Kanter Chairman, The Manufacturers National Bank of Detroit, Detroit, Mich 1950 John A. Stewart Vice President and Cashier, Second National Bank & Trust Company, Saginaw, Mich 1950 Chas. T. Fisher, Jr President, The National Bank of Detroit, Detroit, Mich 1951 Appointed by Board of Governors: Ernest Gilbert Farmer, Waldron, Mich 1950 Ben R. Marsh Chairman of the Board, Michigan Bell Telephone Company, Detroit, Mich 1951 District No. 8—St. Louis Class A: Tom K. Smith Chairman of Board, Boatmen's National Bank, St. Louis, Mo 1950 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1950-Cont. Term Expires Dec. 31 DIRECTORS Cont. Phil E. Chappell President, Planters Bank & Trust Company, Hopkinsvillc, Ky 1951 J. E. Etherton President, Carbondale National Bank, Carbondale, 111. 1952 Class B.- Louis Ruthenburg Chairman of Board and Chief Executive Officer, Servel, Inc., Evansville, Ind 1950 M. Moss Alexander President, Missouri Portland Cement Company, St. Louis, Mo 1951 Ralph E. Plunkett President, Plunkett-Jarrell Grocer Company, Little Rock, Ark 1952 Class C: Wm. H. Bryce Vice President and Director, Dixie Wax Paper Company, Memphis, Tenn 1950 Joseph H. Moore Farming, Charleston, Mo 1951 Russell L. Dearmont Chief Counsel for Trustee, Missouri-Pacific Lines, St. Louis, Mo 1952 Little Rock Branch Appointed by Federal Reserve Ban\: Geo. S. Neal President, Bank of Russellville, Russellville, Ark 1950 Lloyd Spencer President, First National Bank, Hope, Ark 1951 Thos. W. Stone Executive Vice President, The Arkansas National Bank, Hot Springs, Ark 1951 Harvey C. Couch, Jr President, Union National Bank, Little Rock, Ark.. . 1952 Appointed by Board of Governors: A. Howard Stebbins, Sr Chairman of Board, Stebbins and Roberts, Inc., Little Rock, Ark 1950 Cecil C. Cox Farmer, Stuttgart, Ark 1951 Stonewall J. Beauchamp President, Terminal Warehouse Company, Little Rock, Ark 1952 Louisville Branch Appointed by Federal Reserve Ban\: Noel Rush President, Lincoln Bank and Trust Company, Louisville, Ky 1950 H. Lee Cooper President, Ohio Valley National Bank, Henderson, Ky. 1951 Ira F. Wilcox Cashier and Director, The Union National Bank, New Albany, Ind 1951 A. C. Voris President, Citizens National Bank, Bedford, Ind 1952 Appointed by Board of Governors: Alvin A. Voit President, Mengel Company, Louisville, Ky 1950 Vacancy 1951 Smith D. Broadbent, Jr Farmer, Cadiz, Ky 1952 Memphis Branch Appointed by Federal Reserve Ban\: W. P. Kretschmar Chairman of Board, Commercial National Bank, Greenville, Miss 1950 Norfleet Turner President, First National Bank, Memphis, Tenn 1951 H. W. Hicks President, First National Bank, Jackson, Tenn 1951 Ben L. Ross Chairman of the Board, Phillips National Bank, Helena, Ark 1952 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 109 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1950-Cont. Term Expires Dec. 31 DIRECTORS Coilt. Appointed by Board of Governors: M. P. Moore Owner, Circle M Ranch, Senatobia, Miss 1950 Leslie M. Stratton, Jr President, Stratton-Warren Hardware Company, Memphis, Tenn 1951 Hugh M. Brinkley Farmer, Hughes, Ark 1952 District No. 9—Minneapolis Class A: J. R. McKnight Chairman of the Board, Pierre National Bank, Pierre, S. D 1950 C. W. Burges Vice President and Cashier, Security National Bank, Edgeley, N. D 1951 Arthur H. Quay. President, First National Bank, Minneapolis, Minn.. . 1952 Class B.- Walter H. McLeod President, Missoula Mercantile Company, Missoula, Mont 1950 Ray C. Lange President, Chippewa Canning Company, Chippewa Falls, Wis 1951 Homer P. Clark Chairman of the Board, West Publishing Company, St. Paul, Minn 1952 Class C.- Roger B. Shepard St. Paul, Minn 1950 Paul E. Miller Director of Agricultural Extension Division, University of Minnesota, St. Paul, Minn. 1951 W. D. Cochran G. M. C. Truck Distributor, Iron Mountain, Mich 1952 Helena Branch Appointed by Federal Reserve Ban\: Theodore Jacobs President, First National Bank, Missoula, Mont 1950 E. D. MacHaffie Investments, Helena, Mont 1950 B. M. Harris President, Yellowstone Bank, Columbus, Mont 1951 Appointed by Board of Governors: John E. Corette, Jr Vice President and Assistant General Manager, Montana Power Company, Butte, Mont 1950 W. A. Denecke Livestock rancher, Bozeman, Mont 1951 District No. 10—Kansas City Class A: W. L. Bunten Executive Vice President, Goodland State Bank, Goodland, Kan 1950 T. A. Dines Chairman of the Board, United States National Bank, Denver, Colo 1951 M. A. Limbocker Chairman of the Board and President, Citizens National Bank, Emporia, Kan 1952 Class B: L. C. Hutson Chairman of the Board, Chickasha Cotton Oil Company, Chickasha, Okla 1950 Willard D. Hosford Vice President, John Deere Plow Company, Omaha, Neb 1951 E. M. Dodds President, United States Cold Storage Corporation, Kansas City, Mo 1952 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1950-Cont. Term Expires Dec. 31 DIRECTORS Cont. Class C.- Robert L. Mehornay President, Mehornay Furniture Company, Kansas City, Mo 1950 Lyle L. Hague Farmer and stockman, Cherokee, Okla 1951 Robert B. Caldwell Caldwell, Downing, Noble and Garrity, Kansas City, Mo 1952 Denver Branch Appointed by Federal Reserve Ban\: J. D. Allen President, The First National Bank of Eagle County, Eagle, Colo 1950 Albert K. Mitchell Rancher, Albert, N. M 1950 P. K. Alexander Vice President, The First National Bank of Denver, Denver, Colo 1951 Appointed by Board of Governors: G. Norman Winder Rancher, Craig, Colo 1950 Cecil Puckett Dean, College of Business Administration, University of Denver, Denver, Colo 1951 Oklahoma City Branch Appointed by Federal Reserve Ban%: F. M. Overstreet President, First National Bank at Ponca City, Ponca City, Okla 1950 Frank A. Sewell Chairman of the Board and President, Liberty National Bank, Oklahoma City, Okla 1950 S. A. Bryant President, The Farmers National Bank, Cushing, Okla 1951 Appointed by Board of Governors: Rufus J. Green Rancher and farmer, Duncan, Okla 1950 Cecil W. Cotton President, C. W. Cotton Supply Company, Tulsa, Okla 1951 Omaha Branch Appointed by Federal Reserve Ban\: Fred W. Marble President, Stock Growers National Bank, Cheyenne, Wyo 1950 I. R. Alter President, First National Bank, Grand Island, Neb.. . 1951 Ellsworth Moser President, The United States National Bank of Omaha, Omaha, Neb 1951 Appointed by Board of Governors: Fred S. Wallace Farmer, Gibbon, Neb 1950 Joseph W. Seacrest Co-Publisher and Co-Editor in Chief, The Journal Newspapers, Lincoln, Neb 1951 District No. 11—Dallas Class A: W. L. Peterson President, The State National Bank, Denison, Texas. . 1950 P. P. Butler President, First National Bank in Houston, Houston, Texas 1951 J. Edd McLaughlin Vice President, Security State Bank and Trust Company, Rails, Texas 1952 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 111 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1950-Cont. Term Expires Dec. 31 DIRECTORS Coilt. Class B: W. F. Bcall President and General Manager, 3 Beall Brothers 3, Department Stores, Jacksonville, Texas 1950 J. R. Milam President, The Cooper Company, Inc., Waco, Texas. . 1951 George L. MacGregor Chairman of the Board, President and General Manager, Dallas Power and Light Company, Dallas, Texas 1952 Class C: G. A. Fricrson G. A. Frierson & Son, Merchants & Planters, Shreveport, La 1950 R. B. Anderson General Manager, W. T. Waggoner Estate, Vernon, Texas 1951 J. R. Parten President, Woodley Petroleum Company, Houston, Texas 1952 El Paso Branch Appointed by Federal Reserve Ban\: W. H. Holcombe Executive Vice President, Security State Bank, Pccos, Texas 1950 W. S. Warnock Vice President, El Paso National Bank, El Paso, Texas 1951 W. Henry Wooldridge President, Lone Star Motor Company, El Paso, Texas 1951 George G. Matkin President, State National Bank, El Paso, Texas 1952 Appointed by Board of Governors: Hal Bogle Livestock feeding, farming and ranching, Dexter, N. M 1950 Dorrance D. Roderick President, Newspaper Printing Corporation (El Paso Times and Herald Post), El Paso, Texas 1951 Hiram S. Corbett President, I. Knox Corbett Lumber Company, Tucson, Ariz. . ." 1952 Houston Branch Appointed by Federal Reserve Ban\: R. Lee Kempner Chairman of the Executive Committee, United States National Bank, Galveston, Texas 1950 O. R. Weyrich President, Houston Bank & Trust Company, Houston, Texas 1951 P. R. Hamill President, Bay City Bank & Trust Company, Bay City, Texas 1951 Melvin Rouff President, Houston National Bank, Houston, Texas.. 1952 Appointed by Board of Governors: Herbert G. Sutton T. O. Sutton and Sons, Colmesneil, Texas 1950 Ross Stewart President, C. Jim Stewart & Stevenson, Inc., Houston, Texas 1951 Charles N. Shepardson Dean of Agriculture, A. & M. College of Texas, College Station, Texas 1952 San Antonio Branch Appointed by Federal Reserve Ban\: E. R. L. Wroe President, American National Bank, Austin, Texas. .. 1950 C. L. Skaggs President, The First National Bank of Weslaco, Weslaco, Texas 1951 E. A. Baetz President, Bexar County National Bank, San Antonio, Texas ... 1951 Riley Peters Executive Vice President, First State Bank, Kerrvillc, Texas 1952 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, 1950-Cont. Term Expires Dec. 31 DIRECTORS Cont. Appointed by Board of Governors: Edward E. Hale Chairman of the Department and Professor of Economics, The University of Texas, Austin, Texas. . . 1950 Henry P. Drought Attorney at Law, San Antonio, Texas 1951 D. Hayden Perry Livestock farming, Robstown, Texas 1952 District No. 12—San Francisco Class A: Chas. H. Stewart President, Portland Trust and Savings Bank, Portland, Ore 1950 Carroll F. Byrd President, The First National Bank of Willows, Willows, Calif 1951 William W. Crocker Chairman of the Board, Crocker First National Bank of San Francisco, San Francisco, Calif 1952 Class B: St. George Holden St. George Holden Realty Company, San Francisco, Calif 1950 Reese H. Taylor President, Union Oil Company of California, Los Angeles, Calif. 1951 Walter S. Johnson President, American Box Corporation, San Francisco, Calif 1952 Class C: Wm. R. Wallace, Jr Member of the firm of Wallace, Garrison, Norton & Ray, Attorneys at Law, San Francisco, Calif 1950 Harry R. Wellman Director, Giannini Foundation of Agricultural Economics, University of California, Berkeley, Calif.. . 1951 Brayton Wilbur President, Wilbur-Ellis Company, San Francisco, Calif. 1952 Los Angeles Branch Appointed by Federal Reserve Ban\: M. Vilas Hubbard President, Citizens Commercial Trust and Savings Bank of Pasadena, Pasadena, Calif 1950 Frank L. King President, California Bank, Los Angeles, Calif 1950 W. R. Bimson President, The Valley National Bank of Phoenix, Phoenix, Ariz 1951 Appointed by Board of Governors: Fred G. Sherrill Vice President, J. G. Boswell Company, Los Angeles, Calif 1950 Paul H. Helms President, Helms Bakeries, Los Angeles, Calif 1951 Portland Branch Appointed by Federal Reserve Ban\: W. W. Flint President, The First National Bank of Cottonwood, Cottonwood, Idaho 1950 Frank Wortman President, The First National Bank of McMinnville, McMinnville, Ore 1950 E. B. MacNaughton Chairman of the Board, The First National Bank of Portland, Portland, Ore 1951 Appointed by Board of Governors: R. B. Taylor Livestock and farming, Adams, Ore 1950 Aaron M. Frank President, Meier & Frank Company, Inc., Portland, Ore 1951 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 113 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1950-Cont. Term Expires Dec. 31 DIRECTORS Cpnt. Salt Lake City Branch Appointed by Federal Reserve Ban\: Chas. L. Smith Chairman of the Board, First Security Bank of Utah, National Association, Salt Lake City, Utah 1950 John A. Schoonover President, The Idaho First National Bank, Boise, Idaho 1950 D. F. Richards President, American National Bank of Idaho, Idaho Falls, Idaho 1951 Appointed by Board of Governors: Merle G. Hyer Livestock and farming, Lewiston, Utah. 1950 Frank M. Browning President, Ogden Buick Sales Company, Ogden, Utah 1951 Seattle Branch Appointed by Federal Reserve Ban\: Fred C. Forrest, Chairman of the Board and President, The First National Bank of Pullman, Pullman, Wash 1950 Benj. N. Phillips Chairman of the Board, First National Bank in Port Angeles, Port Angeles, Wash 1950 Lawrence M. Arnold Chairman of the Board, Seattle-First National Bank, Seattle, Wash 1951 Appointed by Board of Governors: John M. McGregor President, McGregor Land & Livestock Company, Hooper, Wash 1950 Howard H. Preston Professor of Money and Banking, College of Business Administration, University of Washington, Seattle, Wash 1951 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, 1950—Cont. SENIOR OFFICERS OF FEDERAL RESERVE BANKS [December 31, 1950] Federal Reserve President VicePresidents Bank of— First Vice President Boston Joseph A. Erickson John J. Fogg Alfred C. Neal William Willett Robert B. Harvey1 Carl B. Pitman E. G. Hult O. A. Schlaikjer E. O. Latham R. F. Van Amringe New York Allan Sproul H. A. Bilby H. V. Roelse L. R. Rounds H. H. Kimball Robert G. Rouse L. W. Knoke William F. Treiber Walter S. Logan V. Willis A. Phelan R. B. Wiltse Philadelphia Alfred H. Williams Karl R. Bopp E. C. Hill W. J. Davis L. E. Donaldson Wm. G. McCreedy Robert N. Hilkert P. M. Poorman2 Cleveland Ray M. Gidney Roger R. Clouse A. H. Laning2 Wm. H. Fletcher W. D. Fulton Martin Morrison J. W. Kossin Paul C. Stetzelberger Donald S. Thompson Richmond Hugh Leach N. L. Armistead C. B. Strathy J. S. Waldenjr. R. L. Cherry K. Brantley Watson R. W. Mercer2 Edw. A. Wayne W. R. Milford Chas. W. Williams Atlanta W. S. McLarinJr. P. L. T. Beavers Joel B. Fort, Jr. L. M. Clark V. K. Bowman T. A. Lanford J. E. Denmark E. P. Paris S. P. Schuessler Chicago C. S. Young Allan M. Black1 John K. Langum E. C. Harris H. J. Chalfont A. L. Olson Neil B. Dawes Alfred T. Sihler W. R. Diercks 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. C. Core H. G. McConnell A. W. Mills C. W. Groth Otis R. Preston E. B. Larson Sigurd Ueland Kansas City H. G. Leedy L. H. Earhart John Phillips, Jr. 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 W. D. Gentry R. B. Coleman Watrous H. Irons H. R. DeMoss L. G. Pondrom2 W. E. Eagle C. M. Rowland Mac C. Smyth San Francisco C. E. Earhart J. M. Leisner H. F. Slade H. N. Mangels S. A. MacEachron Ronald T. Symms2 E. R. Millard W. F. Volberg W. L. Partner O. P. Wheeler 1 Cashier. a Also Cashier. 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, 1950—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 W. D. Fulton 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 H. J. Chalfont C. M. Stewart St. Louis Little Rock Louisville C. A. Schacht Memphis Paul E. Schroeder C. W. Groth Minneapolis.. Helena G. H. Pipkin Kansas City.. Denver R. L. Mathes Oklahoma City L. H. Earhart Omaha C. M. Rowland Dallas El Paso W. H. Holloway Houston San Antonio W. E. Eagle W. F. Volberg San Francisco Los Angeles S. A. MacEachron Portland Salt Lake City W. L. Partner Seattle J. M. Leisner 1 General Manager. CONFERENCE OF PRESIDENTS The Presidents of the Federal Reserve Banks are organized into a Conference of Presidents which meets from time to time to consider matters of common interest, and to consult with and advise the Board of Governors. Mr. Davis, President of the Federal Reserve Bank of St. Louis, and Mr. Peyton, President of the Federal Reserve Bank of Minneapolis, were elected as Chairman of the Conference and Vice Chairman, respectively, at the meeting held in February 1948 and served as such through the meeting held in February 1950 when Mr. Peyton was elected Chairman of the Conference and Mr. Leach, President of the Federal Reserve Bank of Richmond, was elected Vice Chairman. Mr. Charles G. Young, Jr., Counsel of the Federal Reserve Bank of St. Louis, who had been serving as Secretary of the Conference since May 1948, resigned effective January 1, 1950, and was succeeded by Mr. Frederick L. Deming, Assistant Vice President of the Federal Reserve Bank of St. Louis. Mr. Deming served until the meeting in June 1950 at which time Mr. Clement Van Nice, Assistant Cashier of the Federal Reserve Bank of Minneapolis, was appointed Secretary of the Conference. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM o\ BOUNDARIES OF FEDERAL RESERVE DISTRICTS AND THEIR BRANCH TERRITORIES n 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 oc roee» i. t»«e BOARD OF eOVEKNOHS Or THE FtDfRAL HCSERVe SYSTEM NOTE—There has been no change in district or branch territory boundaries since the publication of the description in the Annual Report of the Board of Governors for 1942, pp. 138-45. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX Page Acceptances, bankers, buying rates on 62 Amendments to Federal Reserve Act: (See Federal Reserve Act) American Bankers Association: Check routing symbols program extended 31 Annual reports, bank holding company affiliates 32 Assets and liabilities of Federal Reserve Banks 46, 48 Assets, earning, of member banks 28 Audit of accounts of Board by Federal Reserve Bank of Boston 44 Bank credit: (See Credit) Bank holding companies: Annual reports obtained from 32 Examination of 32 Voting permits issued during year 31 Bank premises, Federal Reserve Banks and branches 41, 60 Bank supervision by the Federal Reserve System 31 Banking offices: Analysis of changes 67 Number of 28 Banking operations and structure 27 Board of Governors: Audit of accounts by Federal Reserve Bank of Boston 44 Income and expenses 43 Letter of Chairman to all member banks on credit restraint 96 Members 98 Officers of ,.. 98 Reimbursable expenditures 43 Bonds: Government: (See Government securities) Yields on corporate, State, and local government bonds 9 Branch banks: Domestic: Number of 29 Number, and analysis of changes 67 Federal Reserve System: Bank premises 41, 60 Directors, list of 103 Examination of 31 Portland, building under construction 42 Seattle, building under construction 42 Vice Presidents in charge of 115 Foreign: Applications approved during year 32 Number in active operation 33 Buildings of Federal Reserve Banks and branches, construction and improvements on ,, , , 42 Business conditions during 1950 , , , 1 Buying rates on acceptances , ., 62 117 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 INDEX Page Capital accounts: Federal Reserve Banks 47, 51 Member banks 28 Chairmen of Federal Reserve Banks: Executive committee 101 List of 101 Meetings of 44 Changes in banking structure 29 Charts: Bank deposits and currency 23 Bank loans and investments other than United States Government securities 24 Consumer instalment credit outstanding 15 Member bank reserves, Reserve bank credit, and related items 13 Money rates 11 Nonfarm mortgage debt 18 Selected business indexes 6 Check routing symbols, use of 31 Circulars: Restraint of credit by member banks 19, 96 Clayton Antitrust Act, hearing of complaint against Transamerica Corporation for violation of 36 Clearing and collection: Check routing symbols, use of 31 Par List: Changes in par and nonpar banks during year 30 Number of banks on list and number not on list, by States 68 Committees: Executive, of Chairmen's Conference 101 Executive, of Federal Advisory Council 100 Executive, of Federal Open Market Committee 99 Condition reports of Federal Reserve Banks: All banks combined 46 Each bank 48 Conferences: (See Meetings) Consumer credit: Regulation W: Amendment to 33, 75 Minimum down payments and maximum maturities under 65 Reissued 14, 33, 71 Credit: Commercial banks 23 Consumer: (See Consumer credit) Federal Reserve policy and action 7 Measures to aid restraint of 2 Program for voluntary restraint 19 Stock market, regulation of 18 Credit and monetary expansion 21 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 119 Page Currency: Increased volume and use of 21 Major factors affecting supply of 22 Defense loan policy, joint announcement of National and State Supervisors of Banks 95 Defense Production Act of 1950, authority of Board under 38 Defense production loans, issuance of Regulation V 20, 35, 72 Deposits: Demand, increase in 22 Federal Reserve Banks 47, 49 Time, maximum rates on 63 Deputy Chairmen of Federal Reserve Banks: List of 101 Directors, Federal Reserve Banks: Classes of 102 List of 102 Directors, Federal Reserve branch banks: List of 103 Directory: Board of Governors of the Federal Reserve System 98 Federal Advisory Council 100 Federal Open Market Committee 99 Federal Reserve Banks 101 Discount rates at Federal Reserve Banks 2, 9, 62, 70 Dividends: Federal Reserve Banks 39 Member banks 28 Earning assets of member banks 28 Earnings and expenses, Federal Reserve Banks: 1950 39, 54 1914-1950 56 Earnings and profits of member banks 27 Employees, Federal Reserve Banks, number and salaries of 61 Examinations: Bank holding companies 32 Federal Reserve Banks 31 Federal Reserve branch banks 31 State member banks 31 Executive order: 10161, issued pursuant to Defense Production Act and delegating authority to Board 38 Expenses: Board of Governors, for 1950 43 Board of Governors, reimbursable for 1950 43 Federal Reserve Banks 39, 54 Federal Advisory Council: Executive Committee 100 Meetings 44 Members and officers 100 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 INDEX Page Federal Deposit Insurance: Deposit coverage increased 38 Section 12B of Federal Reserve Act withdrawn and separate act enacted 38 Federal Open Market Committee: Executive committee 99 Joint statement with Board on restraining expansion of bank credit.. 2 Meetings 44 Members and officers 99 Open market operations in second half of 1950 9 Policy actions 80 Federal Reserve Act: Section 9, technical amendments to 37 Section 12(b), technical amendments to 37 Section 14(b), amendment on purchase of Government obligations by Federal Reserve Banks extended 37 Section 24, amendment as to real estate loans by national banks 37 Federal Reserve Bank of Boston: Audit of accounts of Board of Governors 44 Remodeling and extension of banking quarters 42 Federal Reserve Bank of New York: Foreign accounts of 41 Federal Reserve Banks: Assets and liabilities 46, 48 Bank premises 41, 60 Branches: (See Branch banks, Federal Reserve System) Chairmen: (See Chairmen, Federal Reserve Banks) Condition of ,46, 48 Directors 102 Discount rates 2, 9, 62, 70 Earnings and expenses ,... 39, 54 Earnings on loans and securities , 40 Employees , 61 Examination of 31 First Vice Presidents 114 Foreign transactions 41 Holdings of Government securities , 52 Holdings of short-term treasury certificates 53 Officers, list of 101 Officers and employees, number and salaries 61 Operations of 38 Presidents ,.. 114 Vice Presidents 114 Volume of operations 38, 53 Federal Reserve credit policy 7 Federal Reserve notes: Cost of printing 43 Issued to and held by Federal Reserve Banks 47, 49 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 121 Page Federal Reserve System: Changes in membership 29 Map 116 First Vice Presidents of Federal Reserve Banks, list of .. .., .,. 114 Foreign and international accounts 41 Foreign banking corporations: Branches of 33 Operations of 32 Government securities: Changes in ownership of 25 Holdings by Federal Reserve Banks 40, 52 Ownership of 26 Purchase by Federal Reserve Banks, authority extended by amendment to Section 14(b) of Federal Reserve Act 37 Purchase by Federal Reserve to aid in refunding of maturing securities 3 Hearings: Transamerica Corporation under Clayton Antitrust Act 36 Income and expenses of Board of Governors 43 Industrial production, increase in physical volume 6 Inflation, pressures during 1950 , 1 Interest rates, rise in 10 Joint statements: Federal and State supervisory agencies, requesting cooperation of banks and other lenders in restricting lending activities 4 Restraint on expansion of bank credit, issued by Board and Federal Open Market Committee 2 Voluntary credit restraint, issued by National and State Supervisors of Banks 95 Korea: Defense production as result of conflict in , , 6 Legislation: Authority to purchase Government obligations by Federal Reserve Banks, amendment to Section 14(b) of Federal Reserve Act 37 Capital or surplus of banks, consent to reduction of 37 Defense Production Act of 1950 38 Federal Deposit Insurance, Section 12 (b) of Federal Reserve Act withdrawn and separate act enacted 38 Real estate loans, amendment to Section 24, Federal Reserve Act.... 37 Loans: Earnings of Federal Reserve Banks on 40 Guarantees for defense production 19 Real estate, amendment to Section 24 of Federal Reserve Act restricting 37 Map of Federal Reserve System , 116 Margin requirements: Amendments to Regulations T and U, increasing 3, 18 Table , 64 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 INDEX Page Meetings: Chairmen of Federal Reserve Banks 44 Federal Advisory Council 44 Federal Open Market Committee 44 Presidents of Federal Reserve Banks 44 Member banks: Analysis of changes 67 Capital accounts 28 Earning assets of 28 Earnings and profits of 27 Factors affecting reserves 12 Reserve position of 11 Reserve requirements 63, 78 Reserves, Reserve Bank credit, and related items 58 Membership in Federal Reserve System, changes during year 29 Money: Increased volume and use of 21 Major factors affecting supply 22 Mutual savings banks, analysis of changes 67 National banks: Analysis of changes 67 Trust power permits issued during year 32 Nonmember banks: Analysis of changes 67 Par list, number on list and number not on list 68 Number of banking offices in United States 28 Open market operations: Effort to conduct to aid in restraining bank credit 2 Second half of 1950 9 Ownership of Government securities, changes in 25 Par list: Changes during year 30 Number of banks on list and not on list by Federal Reserve districts and States 68 Policy actions, Board of Governors: Discount rates, increase in 70 Regulation V, loan guarantees for defense production, adoption of. ... 72 Regulation W, consumer credit: Adoption of 71 Amendment to 75 Regulation X, residential real estate credit: Adoption of 74 Amendment to 77 Reserve requirements, increase in 78 Policy actions, Federal Open Market Committee: Authority to affect transactions in System account: Meeting of March 1 80 Meeting of June 13-14 82 Meeting of August 18 83 Meeting of September 28 88 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 123 Page Policy actions, Federal Open Market Committee—Continued Authority to affect transactions in System account—Continued Meeting of October 11 91 Meeting of October 30 92 Meeting of November 27 93 Extension of policy for restraining inflationary credit expansion 92 Increase in authority to affect transactions in System account 89 Postal savings deposits, interest rate on 63 Presidents of Federal Reserve Banks: Conference of 115 List of 114 Meetings 44 Press statements: Joint statement issued by Board and Federal Open Market Committee to restrain expansion of bank credit 2 Voluntary credit restraint, joint announcement by National and State Supervisors of Banks 95 Prices, rise in, trend during 1950 5 Production, expansion during 1950 4 Profits, member banks during 1950 27 Rates: Buying on acceptances 62 Discount at Federal Reserve Banks 2, 9, 62, 70 Interest, changes in 9, 10 Loans guaranteed under Defense Production Act 64 Long-term market investment funds 8 Postal savings deposits 63 Rediscount, increase by Federal Reserve Banks 2, 9, 62, 70 Savings deposits 63 Time deposits 63 Real estate credit: Maximum loan values and maximum maturities under Regulation X. . 66 Regulation X issued 16, 34, 74 Regulation X, amended 34, 77 Regulations, Board of Governors: D, reserves of member banks, increase in reserve requirements 35, 78 T, extension and maintenance of credit by brokers, dealers, and members of national securities exchanges: Amendment to increase margin requirements 18 Margin requirements, table 64 U, loans by banks for the purpose of purchasing or carrying stocks registered on a national securities exchange: Amendment 18 Margin requirements, table 64 V, loan guarantees for defense production: Issuance of 20, 35, 72 Revision of 35, 72 W, consumer credit: Amended 75 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 INDEX Page Regulations, Board of Governors—Continued W, consumer credit—Continued Minimum down payments and maximum maturities 65 Reissuance of 3, 14, 33, 71 X, residential real estate credit: Amended 34, 77 Issuance of 3, 16, 34, 74 Maximum loan values and maximum maturities under 66 Reserve position of member banks / 11 Reserve requirements: Factors affecting member bank reserves 12 Increase in 3, 12, 35, 78 Member banks 63 Reserves of member banks: 1918-1950 58 Salaries: Board of Governors 43 Officers and employees of Federal Reserve Banks 61 Securities exchange administration, increase in margin requirements.... 18 State member banks: Analysis of changes 67 Changes during year 29 Examination of 31 Transamerica Corporation, hearings under Clayton Antitrust Act 36 Treasury certificates, holdings of short-term by Federal Reserve Banks... 53 Trust powers of national banks, permits issued during year 32 Volume of operations of Federal Reserve Banks 38, 53 Voluntary credit restraint: Program under Defense Production Act 4, 19 Statement issued jointly by National and State Supervisors of Banks 95, 96 Voting permits, issued to bank holding companies during year 31 Yields: Corporate bonds 9 State and local government issues , 9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis