Annual Report of the Federal Reserve Board, 1951

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

LETTER OF TRANSMITTAL BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Washington, June 30, 1952. 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-eighth Annual Report, prepared by direction of the Board of Governors of the Federal Reserve System, covering operations during the calendar year 1951. Yours respectfully, WM. MCC. MARTIN, JR., Chairman. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CONTENTS TEXT OF REPORT Page Summary 1 Federal Reserve Policy 3 The Treasury-Federal Reserve accord 3 Selective credit regulation 8 Sponsorship of voluntary credit restraint 9 Congressional inquiry into monetary policy and management of the public debt 10 Economic Factors Underlying Private Credit Demand 10 Credit and Money 14 Expansion of bank credit 16 Increase in other credit and capital 18 Rise in volume and decline in use of money 19 Bank reserves 22 Interest Rates 23 Changes in Structure and Ownership of United States Government Debt 24 International Movement of Gold and Dollars 27 Voluntary Credit Restraint by Lenders 30 Loan Guarantees for Defense Production 31 Banking Operations and Structure 33 Bank earnings and profits 33 Bank earning assets 34 Capital accounts 34 Number of banking offices 34 Changes in Federal Reserve membership 35 Par and nonpar banks 36 Designation of reserve cities 36 Check routing symbols 37 Bank Supervision by the Federal Reserve System 37 Examination of Federal Reserve Banks 37 Examination of State member banks 37 Bank holding companies 38 Trust powers of national banks 38 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Page Acceptance powers of member banks 38 Foreign branches and banking corporations 38 Changes in Regulations of the Board of Governors 40 Loans to member banks 40 Trust powers of national banks 40 Margin requirements for purchasing securities 40 Consumer credit 41 Real estate credit 42 Administrative procedure rules 44 Hearings, Enforcement, and Litigation 44 Transamerica Corporation 44 Regulation W enforcement 44 Regulation X enforcement 44 Legislation 44 Assignment of claims against the Government 44 Defense Production Act 45 Defense Housing Act 45 Real estate loans by national banks 45 Reserve Bank Operations 46 Volume of operations 46 Earnings and expenses 46 Holdings of loans and securities 48 Foreign and international accounts 49 Bank premises . 50 Board of Governors—Income and Expenses 50 Federal Reserve Meetings 51 TABLES 1. Statement of Condition of the Federal Reserve Banks (In detail), Dec. 31, 1951 54 2. Statement of Condition of Each Federal Reserve Bank at End of 1951 and 1950 56 3. Holdings of United States Government Securities by Federal Reserve Banks, End of December 1949, 1950, and 1951 60 4. Federal Reserve Bank Holdings of Special Short-Term Treasury Certificates Purchased Directly from the United States, 1943-51 61 5. Volume of Operations in Principal Departments of Federal Reserve Banks, 1947-51 61 6. Earnings and Expenses of Federal Reserve Banks during 1951 62 7. Earnings and Expenses of Federal Reserve Banks, 1914-51 64 8. Member Bank Reserves, Reserve Bank Credit, and Related Items— End of Year 1918-51 and End of Month 1951 66 iv Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Page 9. Bank Premises of Federal Reserve Banks and Branches, Dec. 3.1, 1951 68 10. Number and Salaries of Officers and Employees of Federal Reserve Banks, Dec. 31, 1951 69 11. Federal Reserve Bank Discount, Interest, and Commitment Rates, and Buying Rates on Acceptances (In effect Dec. 31, 1951) 70 12. Member Bank Reserve Requirements 71 13. Maximum Rates on Time Deposits 71 14. Margin Requirements 72 15. Fees and Rates Established under Regulation V on Loans Guaranteed Pursuant to Defense Production Act of 1950 and Executive Order No. 10161 72 16. Minimum Down Payments and Maximum Maturities on Consumer Instalment Credit Subject to Regulation W 73 17. Maximum Loan Values and Maximum Maturities on Real Estate Construction Credit Subject to Regulation X 74 18. Analysis of Changes in Number of Banking Offices during 1951 .... 76 19. Number of Banking Offices on Federal Reserve Par List and not on Par List, by Federal Reserve Districts and States, Dec. 31, 1951 77 APPENDIX Record of Policy Actions—Board of Governors 80 Record of Policy Actions—Federal Open Market Committee 95 Board of Governors of the Federal Reserve System 110 Federal Open Market Committee Ill Federal Advisory Council 112 Directors and Senior Officers of Federal Reserve Banks 113 Map of Federal Reserve Districts 128 Index 129 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM The year 1951, which is covered by this, the Thirty-eighth Annual Report of the Board of Governors of the Federal Reserve System, marked a transition from strong inflationary trends to relative economic stability at high levels of activity. The inflationary pressures dominant for an extended period following the Korean outbreak were brought under restraint during the first half of the year. Restrictive monetary policies in combination with a strengthened fiscal program played an important role in bringing about this result. Prices of basic commodities, which had advanced rapidly in the rush of buying after June 1950, declined considerably from early 1951 until midsummer and then fluctuated within a narrow range. At the year-end prices of these sensitive commodities were nearly one-sixth below the peak levels of February 1951, but were still onefourth above the level reached immediately before the Korean outbreak. Prices of all commodities at wholesale declined moderately. After the summer they were at a level some 3 per cent below the peak reached earlier in the year. Consumer prices, which had risen at an exceptionally rapid rate following the Korean outbreak, leveled off for a time after early spring and then rose again in the fall. At the end of the year they were about 6 per cent above the June 1950 level. Real property values changed little after February, except for some rise in farm land values. Common stock prices increased about 12 per cent during 1951, a somewhat smaller rise than in 1950. As the year opened, business and consumer psychology reflected the impact of the Chinese intervention in Korea in December 1950. Buying activity was intense, and upward pressure on prices was strong and was supported by active use of credit. In January, with a view to imposing additional restraint on these developments, member bank reserve requirements were increased, margin requirements on loans secured by stock market collateral were raised, and the scope of regulation of real estate credit connected with new construction was extended to cover multi-family and nonresidential properties. Fol- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Z ANNUAL REPORT OF BOARD OF GOVERNORS lowing the Treasury-Federal Reserve accord on March 4, continuous Federal Reserve support of the market for United States Government securities was withdrawn. In the same month leading financial groups inaugurated a voluntary credit restraint program under Federal Reserve auspices to cooperate in restricting nonessential credit extensions while facilitating those for essential purposes. By this time, regulation had checked growth of consumer instalment credit, and higher taxes on business and individual incomes were being reflected in substantially larger Federal revenues. Also, the military situation in Korea was improving, and direct price and wage controls had been imposed to help curb inflationary developments. Withdrawal of Federal Reserve support of the Government securities market following the Treasury-Federal Reserve accord was an important factor in changing inflationary psychology. This action, taken at a time when many lenders were more heavily committed than usual to make loans in the future, had a pervasive influence on the climate of the money market. It reduced the liquidity of lenders—indeed of all holders of marketable Government securities—and lessened their disposition to sell such securities in order to extend other credit. As a result of this change in climate, expectations of further depreciation in the value of the dollar were widely revised, search for various hedges against inflation was moderated, and willingness to accumulate liquid savings was strengthened. Foreign appraisal of prospects for the dollar also improved and this was a factor in the subsequent cessation of gold outflow from the United States. As the climate of expectations changed, distortions in the economy brought about by the earlier overbuying, overborrowing, and overpricing became potent moderating factors. Business, financial, and consumer decisions ceased to be dominated by the conviction that prices would continue to rise rapidly under the threat of general war and the impact of defense expenditures; instead, decisions became increasingly influenced by the large volume of inventories on hand and the possibility of declines in prices. Succeeding months were characterized by further moderate growth in total output but with divergent trends in important sectors of the economy, without resurgence of inflationary pressures. The monetary and credit situation reflected the interplay of market forces of demand and supply with a minimum of Federal Reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM O intervention in the money market. Further changes in prices of Government securities were moderate. Bank credit for business activities related to defense continued to expand but credit for other purposes changed little more than seasonally. While credit expansion and other factors induced a further increase in the money supply, the turnover of demand deposits slowed down. FEDERAL RESERVE POLICY Effective in January and early February, the Board of Governors raised reserve requirements against demand deposits for member banks by 2 percentage points and against time deposits by one percentage point, thereby increasing the amount of required reserves about 2 billion dollars or more than 10 per cent. These increases absorbed the additional reserves being made available at the time by a return flow of currency, a decline in Treasury deposits at Reserve Banks, and Federal Reserve purchases of long-term Treasury bonds from nonbank investors who were selling them to shift to higher yielding investments. The Federal Reserve purchased additional Government securities in the market to assist in the adjustment of some banks to the increased reserve requirements, and to cushion the effect upon prices of Government securities. As a result the System's portfolio of Government securities increased 1.1 billion dollars in the first two months of the year. Selective regulation of stock market credit and real estate credit was also strengthened in this period. Regulation of real estate credit under the Board's Regulation X and related Federal Housing Administration and Veterans Administration regulations was broadened on January 12 to include residential properties with more than two family units and on February 15 to include nonresidential properties. On January 17 the Board amended its Regulations T and U to increase the margin required in the purchase or short sale of listed stocks from 50 to 75 per cent of market value. The Treasury-Federal Reserve accord. During the early part of the year, despite the restraints applied, inflationary pressures in the private sector of the economy continued and extension of bank credit, especially to businesses, proceeded at an unusually rapid rate. In the light of these developments it became increasingly clear that antiinflationary credit and monetary measures could not be made effective—in fact, that credit and monetary developments would tend to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4 ANNUAL REPORT OF BOARD OF GOVERNORS be inflationary—as long as Government securities were given a "money quality" by support of their prices. The Federal Open Market Committee, in discussions with the Treasury, sought a way to remove a significant quantity of the Government securities pressing on the market and also to restore the discount mechanism as a restraint on inflation. As a result of these discussions, on March 4 the Treasury and the Federal Reserve made the following announcement with respect to monetary and debt management policies: The Treasury and the Federal Reserve System have reached full accord with respect to 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. The monetary and debt management policies on which agreement was reached are described on pages 98-102 of this Report. In meeting their changing problems the Federal Reserve and the Treasury have worked closely together in the spirit of the accord. The first step under the accord was the exchange early in April 1951 of marketable United States Government long-term bonds for new long-term bonds not directly marketable. Holders of the two longest term 2l/ per cent bank-restricted bonds of 1967-72, which 2 were outstanding in the amount of 19.7 billion dollars, were offered in exchange 2% per cent bonds of 1975-80, convertible at the holder's option into l!/2 Per cent five-year marketable notes. This gave holders of the longest term restricted bonds, who were selling them in large amounts in order to shift into higher yielding private investments, an opportunity to exchange their holdings for the new issue bearing a higher return. This financing operation removed from the market 13.6 billion dollars of these two issues. Some 5.6 of the 13.6 billion exchanged were held by the Federal Reserve and the Treasury. This exchange operation paved the way for discontinuance of Federal Reserve purchases of Government bonds in support of their prices. While the long-term bonds were being exchanged, support purchases were continued by the Federal Reserve and the Treasury but at declining prices. After the exchange was completed, very moderate purchases were sufficient to prevent the development of disorderly conditions in the market, and after June the Federal Re- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 5 serve bought practically no long-term bonds. Federal Reserve net purchases of restricted bonds, which had totaled 1,380 million dollars in the first four months of the year, declined to 250 million in May and June and to less than 20 million in the last half of 1951. Prices of long-term 2% per cent restricted bonds, which had been supported around 100% in January and February, fluctuated around 97 during the last half of the year when the bond market was on its own. The new market situation contrasted sharply with the situation that had prevailed throughout the postwar period, when any amount of bonds could be sold readily at relatively fixed prices. After mid-April bondholders came to realize that security prices would decline further if bonds were forced on the market but that sales could be made gradually as savings accumulated and were reflected in increased investment demand. Holders did not force bonds on the market; either they did not sell or they found buyers other than the Federal Reserve. Such liquidation of bonds as did occur was accomplished without the creation of additional money or additional bank reserves by Federal Reserve purchases. Another important step under the accord was the change in Federal Reserve operations in the market for short-term Government securities. Beginning in early March the short-term Government securities market was largely without Federal Reserve open market support. Any bank or other investor wishing to dispose of such securities had to depend on buyers in the market. The play of market forces resulted in some fluctuation as well as some rise in rates. Treasury bill rates fluctuated much more widely than previously, as is shown in the chart on the following page, but generally were somewhat below the Federal Reserve discount rate of 1% per cent. The yield on one-year certificates fluctuated around the discount rate. These short-term rates were determined by the market, without direct intervention by the Federal; Reserve, except for some support at times of Treasury refunding or of seasonal strain. The closer relationship of short-term market rates to the discount rate was an important factor in a greater use of the Federal Reserve discount window in making temporary adjustments of member bank reserve positions. When the Federal Reserve, by refraining from open market purchases of Government securities, limits the availability of reserves through the open market, a member bank that has temporary need for additional reserves has a choice of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF BOARD OF GOVERNORS MONEY RATES PER CENT WEEKLY AVERAGES OF DAILY FIGURES PER CENT U.S.GOV'T BONDS U 15 YEARS OR MORE "**"" 1946 1947 NOTE.—Rate for commercial paper is weekly prevailing rate in New York. 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. borrowing from the Federal Reserve at the discount rate or selling Treasury bills or other securities at interest rates determined in the market. Depending on the excess reserve position of other banks, the bank may also have the choice of borrowing such funds through the Federal funds market, at a rate determined in this market. The primary alternative to discounting with the Reserve Banks, however, is the sale of Treasury bills or other securities. Even when the bill rate is somewhat below the discount rate, some banks prefer to borrow for a few days rather than to shift in and out of the bill market. As the year progressed, increasing numbers of member banks elected to borrow from the Federal Reserve in meeting shortages of reserve funds. This development reflected re-establishment of the discount function as a complement to open market operations in Federal Reserve influence on monetary and credit conditions. In periods of Treasury refinancing, the Federal Reserve acted to steady the market for short-term Government securities. During such a refunding period a substantial volume of securities is shifted in the market. Some holders want to redeem the maturing securities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM FEDERAL RESERVE CREDIT BILLIONS OF DOLLARS WEDNESDAY FIGURES BILLIONS OF DOLLARS 20 20 18 F. R. FLOAT ,~A 1951 for cash, while some nonholders want to buy maturing issues at current prices in order to obtain the new issue on exchange. In several of the refunding operations in 1951, demand for the maturing securities for exchange purposes was not equal to the volume of the maturing issue for which holders wanted cash. Under these circumstances, Federal Reserve open market operations, by absorbing securities temporarily in excess of current demand, helped to assure larger exchanges and smaller cash redemptions. More than a billion dollars of securities were purchased by the Federal Reserve in June in this type of operation, and more than half a billion in September and October combined. There was only slight support of refunding operations in December but the Federal Reserve made large pur- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

8 ANNUAL REPORT OF BOARD OF GOVERNORS chases late in the month to meet seasonal needs in the money market. In all of these cases, the purchases were either concurrently or subsequently offset by sales of short-term securities from the open market account. In summary, the accord made it possible to restore the discount function as a complement to open market operations in influencing the availability of credit at member banks. Federal Reserve holdings of Government securities increased from 20.8 billion dollars at the end of 1950 to 22.7 billion at the end of April 1951. Thereafter they were increased temporarily to meet short-run needs of the Treasury and the money market. By the end of January 1952 they had returned to about the April 1951 level. Selective credit regulation. Selective regulations in the areas of consumer, real estate, and stock market credit were generally maintained in 1951. Following the increase in margin requirements in January, stock market credit declined 9 per cent from the 1.2 billion dollars outstanding at the end of that month and remained near the lower level. The regulatory limits on consumer instalment credit established under Regulation W in October 1950 continued during the first seven months of 1951. Notwithstanding some increase in the volume of new instalment credit granted, there was a reduction of more than 500 million dollars in outstanding instalment credit. On July 31, the regulation was amended to bring the regulatory limits within the range set by Congress in the Defense Production Act Amendments of 1951, which provided substantial relaxation of terms, especially on household appliances. Down payment requirements on these goods were eased not only by a reduction in the minimum percentages from 25 to 15 per cent but also by liberalization of the trade-in rules. Maximum maturities on regulated durable goods were lengthened from 15 to 18 months, and those on home improvements from 30 to 36 months. Under the relaxed terms, there was a substantial increase in the volume of new credits granted, partly for seasonal reasons, and outstanding instalment credit rose more than 600 million dollars from July to December 1951. The amount outstanding at the end of the year was about the same as a year earlier. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM y The limitation of terms on real estate construction credit established under the Board's Regulation X and related FHA and VA regulations in the autumn of 1950 operated to reduce the demand for mortgage credit, but its immediate effectiveness was limited by the large volume of loan commitments obtained just before the regulations were adopted. The change in open market policy in March 1951 had an immediate effect upon the supply of mortgage credit. Insurance companies and other institutions, still heavily committed on uncompleted loans, cut down their new commitments for several months beginning in March in order to bring their rate of lending more closely in line with their inflow of repayments and new savings. Under this combination of restraints, together with some reaction from the extraordinary conditions of 1950, the number of houses started declined from the record 1.4 million in 1950 to 1.1 million in 1951, with the consequence that the effective demand for mortgage money was more nearly in equilibrium with the supply of savings currently becoming available for investment in this credit area. On September 1, 1951 the Board amended Regulation X in accordance with the statutory changes made by the Defense Housing and Community Facilities and Services Act of 1951. The amendment increased the permissible maximum loan and extended the permitted maturities for residences priced at $12,000 or less. This easing of mortgage credit restraints applied to about two-thirds of all new houses started and came at about the time when a rise in saving increased the volume of investment funds available to the mortgage market. Sponsorship of voluntary credit restraint. Early in 1951, in an endeavor to direct the flow of credit away from nonessential to essential uses, a voluntary credit restraint program was inaugurated. Voluntary credit restraint was provided for in the Defense Production Act of September 1950 and its implementation was delegated through Executive Order of the President to the Board of Governors. Under this authority the Board sponsored a program on the basis of the voluntary cooperation of representatives of banks and other financial institutions. The Board first brought together leaders from the private lending field for the purpose of formulating a program for voluntary credit restraint, and, upon the approval of that program, appointed a National Voluntary Credit Restraint Committee which Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

10 ANNUAL REPORT OF BOARD OF GOVERNORS selected numerous regional committees and coordinated the work of these committees. The program for voluntary credit restraint developed general lending standards which undertook to distinguish between financing that contributed to essential production and distribution and financing that served merely to effect transfers of ownership, to permit speculative purchases of property or commodities, or to contribute to increased production of nonessential items. Later, the National Committee promulgated more specific lending standards in several areas in which actual or anticipated expansion of credit was substantial and statutory selective regulation was not applicable, and for which participating financial institutions were major sources of credit. The voluntary credit restraint program supplemented other measures to limit credit and monetary expansion. It also contributed to a further understanding among lending institutions and borrowers of the problems of credit restraint in a defense emergency. Additional information about the program is given on pages 30-31 of this Report. Congressional inquiry into monetary policy and management of the public debt. Important supplementary information on Federal Reserve policy in 1951 and other postwar years, as well as the role of monetary and debt management in achieving economic stability, is contained in replies of the Board of Governors to a comprehensive questionnaire sent to the Chairman of the Board in October 1951 by the Subcommittee on General Credit Control and Debt Management of the Joint Committee on the Economic Report. The Board's replies are included in Part 1 of Monetary Policy and the Management of the Public Debt; Their Role in Achieving Price Stability and High-Level Employment (82d Congress, 2d Session, Senate Document No. 123), published in February 1952. The replies of the Federal Reserve Banks to similar questions are presented in Part 2 of the same Senate Document. ECONOMIC FACTORS UNDERLYING PRIVATE CREDIT DEMAND Credit changes after February 1951 reflected shifts in consumer and business demand as well as the effect of fiscal, credit, and monetary restraints. A high level of production, less emphasis on the accumulation of business inventories after the middle of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 11 year, and prior satisfaction of many civilian demands for durable goods helped to ease inflationary pressures. Value of total output continued to rise under the stimulus of increasing defense expenditures and in the fourth quarter of 1951 gross national product was at an annual rate of 337 billion dollars, 10 per cent higher than a year earlier. About half of this rise reflected the higher level of prices. In contrast to the previous period, however, when private expenditures increased very sharply, the greater part of the increase in national product in 1951 resulted from larger purchases by the Federal Government. Federal expenditures for national defense and related purposes increased more than 20 billion dollars, as is shown in the chart. GROSS NATIONAL PRODUCT ANNUAL RATES ANNUAL RATES BILLIONS Of DOLLARS QUARTERLY BILLIONS OF DOLLARS 320 320 280 280 1948 1949 1950 1951 NOTE.—Department of Commerce estimates adjusted for seasonal variation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

12 ANNUAL REPORT OF BOARD OF GOVERNORS This broad shift in the composition of expenditures was reflected in changes in industrial production—output at factories and mines. Industrial production remained relatively steady at an advanced level as industries associated with the defense program and the closely related business capital expenditures programs expanded considerably, while output of many industries in the consumer goods field declined as demands were reduced. In non-Federal sectors of the economy, both expansive and contractive forces were at work. Changes in the business inventory situation played an important role in checking inflationary forces. Business inventory accumulation, which had been large in late 1950 and early 1951, reached an unprecedented annual rate of 16 billion dollars in the second quarter of 1951 as deliveries were made of goods ordered earlier by distributors and producers. By the last quarter of the year inventory accumulation slackened to a rate of about 6 billion dollars annually. The large inventories already available in most lines helped to provide assurance against shortages and higher prices. At the end of the year business inventories of consumer goods were still fairly large in relation to sales, despite some liquidation, especially by retailers. Expenditures for new construction increased somewhat further in 1951 as costs advanced to new record levels. Outlays for defense construction and for private industrial building, taking account of increased seasonal movements, increased sharply during most of the year, but private outlays for commercial and residential construction declined steadily during the last three quarters. These declines reflected limitations on the use of metals for building as well as credit policies. Some tightening of prevailing easy financing arrangements was brought about by open market and discount policy, which affected availability of mortgage funds, as well as by selective restraints on the demand for credit exerted by the Board's Regulation X and companion regulations of the Federal Housing Administration and Veterans Administration. Expenditures for producers' durable equipment maintained a record level during 1951 and exceeded the total for 1950 by nearly 15 per cent. This high level of expenditure reflected both the Federal program of stimulating expansion of capacity in defense and basic industries, primarily through provision for accelerated amortiza- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 13 tion for tax purposes, and continued strong business demands for capital goods in many other areas. Consumer demand moderated after the first two months of 1951, although incomes after taxes continued to rise. Consumers saved an unusually large proportion of their incomes throughout the remainder of the year, but by the final quarter they had increased their spending to about the average rate of the first quarter. Restraint in buying after February reflected a number of factors. The military situation in Korea had improved and supplies of practically all consumer goods continued to be ample for existing de- SELECTED BUSINESS INDEXES PER CENT 1947-49O00 PER CENT 140 INDUSTRIAL PRODUCTION / - 80 160 * 140 120 120 CONSUM:RS' PRICES s—^ 100 1950 1951 NOTE.—Monthly series, seasonally adjusted except for prices. Indexes for inventories, retail sales, and disposable personal income (income after taxes) based on Department of Commerce data. Price series from Bureau of Labor Statistics. Latest figures arc for December 1951. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

14 ANNUAL REPORT OF BOARD OF GOVERNORS mands. Consumer demand was also restrained by the curbs imposed on consumer instalment credit and by existing contractual obligations to repay debt. In the latter part of the year, a further increase in income taxes provided another dampening influence. Underlying the reduced urgency of consumer and business demand was growing confidence in the ability of responsible authorities to restrain prices. As indicated earlier, while consumer prices advanced somewhat further after the spring of 1951, prices in wholesale markets, especially for basic commodities, declined. CREDIT AND MONEY The change in money market conditions under the Treasury- Federal Reserve accord, together with some reaction from the inflationary expansion of credit during the period after mid-1950, helped to modify the lending and investing policies of commercial banks and other financing institutions. At banks, the sharp reduction in holdings of Government securities during 1950 and early 1951, the increase in reserve requirements in January and February, and the rapid expansion in loans to individuals and businesses over the preceding year had lowered liquidity positions somewhat. As the year progressed, higher yields made Government securities more attractive investments and their lower prices discouraged the sale of existing holdings in order to obtain funds to make loans. The decrease after April in Federal Reserve purchases of Government securities curtailed a source of additional reserve funds for banks. The net effect of these developments was to make banks less willing to expand their portfolios of private loans and investments and more interested in holding short-term Government securities for liquidity reasons. During April-December 1951 commercial bank credit to borrowers other than the Federal Government increased 4 billion dollars. This amount, although substantial, contrasted sharply with the increase of 11 billion dollars in the nine months preceding April. Through purchases of short-term issues, banks increased their holdings of Government securities almost 3 billion dollars in the April-December 1951 period, compared with a reduction of nearly 7 billion in the preceding nine months. Lenders other than commercial banks—life insurance companies, mutual savings banks, and savings and loan associations—could no Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 15 longer count on supported prices for United States Government securities when they needed funds for extending additional credit to businesses and individuals. The liquidity and risk positions of these lenders had already become less favorable as a result of the substantial postwar decrease in the proportion of their assets held in Federal Government securities, as is shown in the chart. In this situation liquidation of Government securities by these lenders de- RATIO OF US GOVERNMENT SECURITIES HOLDINGS TO TOTAL ASSETS SELECTED TYPES OF FINANCIAL INSTITUTIONS DECEMBER FIGURES PER CENT 20 10 10 1941 1943 1945 1951 NOTE.—Ratios based on following sources: mutual savings banks and commercial banks, Federal Deposit Insurance Corporation; life insurance companies, Institute of Life Insurance; and savings and loan associations, Federal Home Loan Bank Board. clined, and their financing activities, which had been very large, slackened moderately. The volume of their private financing became more nearly in line with the amount of investment funds available to them from loan repayments and new savings. Over-all credit expansion, although somewhat smaller in 1951 than in the preceding year, was larger than in any other postwar year. Slower credit expansion was associated with important shifts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

16 ANNUAL REPORT OF BOARD OF GOVERNORS in types of credit extended. The rise in real estate mortgage debt was not quite as large as the record rise in 1950, and the growth of consumer debt virtually ceased. Business indebtedness, particularly for defense and defense-related activities, continued to increase, while the Federal Government debt held by banks and other private investors declined somewhat. Expansion of bank credit. As in other recent years, commercial banks provided a larger amount of additional credit in 1951 than did any other single group of financing institutions. An increase of more than 6 billion dollars in private credit, that is loans and investments other than United States Government securities, accounted for all of the additional credit advanced by commercial banks, as is shown in the accompanying table. While commercial bank holdings of United States Government securities were about the same at the end of the year as at the beginning, they changed substantially during the year. Banks sharply reduced their holdings in the first quarter of the year, in part to meet the increase in legal reserve requirements for Federal Reserve LOANS AND INVESTMENTS OF ALL COMMERICAL BANKS [In billions of dollars] Out- Change: stand- Type of loan or investment ing Dec. 31, Fourth Third Second First Year 1951 quarter quarter quarter quarter Total loans and investments.. . 132.6 +5.9 +4.0 +2.6 +0.3 -1.0 U. S. Government securities... 61.5 -0.5 + 1.8 + 1.2 -0.3 -3.2 Other securities 1 13.3 +0.9 +0.4 +0.2 +0.1 +0.2 Loans, total2 57.7 +5.5 + 1.7 + 1.2 +0.4 +2.2 Business.. 25.9 +4.0 + 1.4 +0.8 (3) + 1.8 Real estate 14.6 + 1.0 +0.3 +0.2 +0.3 +0.3 Consumer 7.8 +0.1 (3) (3) +0.2 -0.1 All other4 10.3 +0.5 (3) +0.2 (3) +0.2 1 Mainly corporate and State and local government bonds. 2 Total loans are after, and the various types of loans are before, deductions for valuation reserves. ^ 3 Less than 50 million dollars. 4 Agricultural loans, loans on securities, loans to banks, and loans of more than $3,000 to individuals. NOTE.—Details may not add to totals because of rounding. Figures for security holdings are at book value; totals for U. S. Government securities therefore differ somewhat from the par value figures shown in the table on p. 25. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 17 member banks in January and February, and there was a further small reduction in the second quarter. In the last half of the year bank holdings of Government securities, particularly short-term issues, increased considerably, reflecting in part an effort by banks to strengthen their liquidity positions. The greater part of the expansion of bank credit in 1951 was in loans, which increased 5.5 billion dollars or about three-fifths as much as in the preceding year. The growth in all major types of loans—business, real estate, and consumer—was smaller in 1951 than in 1950, as is shown in the chart. It was also more evenly distributed BANK LOANS AND INVESTMENTS OTHER THAN U. S. GOVERNMENT SECURITIES INSURED COMMERCIAL BANKS - BILLIONS OF DOLLARS JUNE AND DECEMBER BILLIONS OF DOLL LOANS-PR!NC PAL nPES 25 f~ 25 - / 20 20 / j V - - BUSINEss / 15 *y - / - 10 J - / > ****** / ^ REAL ESTATE *— ^CON SUMER 0 1943 1945 1947 1949 1951 NOTE.—All insured commercial banks in the United States. Business loans include commercial and industrial loans, open market commercial paper, and acceptances. Municipal securities include State and local government obligations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

18 ANNUAL REPORT OF BOARD OF GOVERNORS throughout the year than was true of other postwar years. In part this reflected the fact that restraints on the availability of credit were made much more effective after the first quarter of the year so that loan expansion in the last quarter—usually the season of peak loan demand—was smaller than in the first quarter, which is normally a period of seasonally slack demand for credit. Bank credit expansion was most marked in the business loan sector. In the first quarter, when bank loans to business normally show a slight decline, business loans expanded almost 2 billion dollars, reflecting heavy business use of bank credit for expanding inventories in anticipation of continuing inflationary pressures. This was followed by little change in the second quarter as credit became less readily available and further price increases seemed less imminent. During the second half of the year, business loans rose again in response to both defense and seasonal needs. Defense and defenserelated businesses like metal and metal products manufacturers and public utility companies were important borrowers during this period, as were also concerns in nondefense lines that customarily borrow in the fall to help move and process the crops, such as commodity dealers and food, liquor, and tobacco manufacturers. The increase in loans for defense purposes was much larger in the latter half of 1951 than in the same period of 1950, while increases for other purposes were smaller. Increase in other credit and capital. Long-term business financing through corporate securities by private placements with life insurance companies as well as public sales was considerably larger in 1951 than in 1950. Corporate security issues for new capital exceeded 7 billion dollars in 1951 as compared with about 5 billion in the preceding year. Life insurance company holdings of business securities rose nearly 3 billion dollars in 1951 compared with about 2 billion in 1950. The proceeds from the year's large volume of corporate security financing were used mainly to finance expansion of plant and equipment and were largely concentrated in defense and defense-related industries. Outstanding real estate mortgage debt held by all principal types of lenders increased about 7.5 billion dollars in 1951, appreciably less than the record growth of about 9.0 billion in 1950. The slackened growth was most apparent at commercial banks, where real estate loans rose 1 billion dollars or half the expansion in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 19 preceding year. Since 1948 growth in real estate credit has been less rapid at commercial banks than at other major types of mortgage lending institutions, including life insurance companies, mutual savings banks, and savings and loan associations. The amount of consumer credit outstanding increased about half a billion dollars last year as compared with 3.3 billion in 1950. The 1951 increase was in charge accounts and other forms of noninstalment credit, which were not subject to regulation. Consumer instalment credit outstanding, which had risen sharply and accounted for most of the increase in total consumer credit in 1950, remained practically unchanged in 1951. Commercial banks, which accounted for about half of the increase in total consumer credit in 1950, expanded these loans very slightly in 1951. The volume of new financing by State and local governments declined slightly in 1951, reflecting largely the virtual disappearance of veterans' bonus issues. An increased proportion of the financing served such essential purposes as the building of schools and various health facilities such as sewer and water systems. Commercial banks continued to provide a substantial part of the new funds borrowed by State and local governments to finance their development programs. Rise in volume and decline in use of money. The 9 billion dollar increase in the privately held money supply in 1951 was the largest increase since 1946. After a largely seasonal decline of nearly 4.5 billion dollars in the first quarter of 1951, the money supply in the hands of individuals and businesses rose at an accelerating rate. This rise represented in part expansion of balances needed for current transactions and in part increased savings temporarily awaiting investment or spending. Factors providing for the increase in the money supply in 1951 differed considerably from those underlying the rise a year earlier. In 1950 a significant reduction in banking system holdings of United States Government securities and a sizable outflow of gold from the United States offset in part the expansionary effect of the large increase in bank loans. In 1951, as is shown in the table on the following page, an increase in banking system holdings of Government securities and some gain from foreign operations reinforced the growth in loans in expanding the money supply. As a result, the money supply rose more in 1951 than in 1950 notwithstanding less expansion of bank loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

20 ANNUAL REPORT OF BOARD OF GOVERNORS As is usual when the money supply rises sharply, the increase was concentrated in demand deposits, but time deposits and currency in the hands of the public also rose significantly. As is shown in the chart on page 21, time deposits began to rise in the second quarter of 1951, following a decline which had continued since the outbreak of hostilities in Korea. In 1951 individuals also increased their savings in other liquid forms, particularly savings and loan association shares. Holdings of savings bonds at current redemption values declined somewhat. After a moderate but fairly steady decline since the end of 1946, currency in the hands of the public rose fairly sharply in 1951. The growth reflected a variety of factors, including the enlargement and increased movement of the armed forces and civilian personnel CHANGES IN THE MONEY SUPPLY, WITH RELEVANT FACTORS [In billions of dollars] Change: Item Fourth Third Second First Year quarter quarter quarter quarter Money supply Total1 +9.3 +6.0 +2.5 1.4 -0.7 U. S. Government deposits +0.2 -2.1 -0.7 -0.8 +3.7 +9.1 +8.1 +3.2 -4.4 Private +2.2 Demand deposits +6.0 +6.2 +3.0 () -3.3 Time deposits +2.2 +0.9 +0.6 +0.8 -0.1 Currency outside banks +0.9 +0.9 -0.4 + 1.4 -1.0 Relevant factors affecting (Sign indicates effect on the money supply money supply) Bank holdings of U. S. Government securities + 1.2 + 1.9 + 1.5 -0.3 -2.0 Bank loans and investments other than U. S. securities 3 +8.4 +3.1 + 1.4 + 1.6 +2.3 Gold and foreign accounts +0.4 +0.9 +0.4 -0.1 -0.9 Bank capital -0.8 -0.2 -0.2 -0.3 -0.2 Other factors +0.1 +0.3 -0.6 +0.5 +0.1 1 Excludes interbank deposits, items in process of collection, and bank vault cash. 2 Less than 50 million dollars. 3 Excludes interbank loans. NOTE.—Consolidated statement for commercial and mutual savings banks, Federal Reserve Banks, the Postal Savings System, and Treasury currency funds. Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

21 FEDERAL RESERVE SYSTEM engaged in defense production as well as increased business activity, incomes, and savings. The inflationary effect of the substantial increase in the money supply after the first quarter of 1951 was largely neutralized by less active use or turnover of its principal component—demand deposits —as well as by the large part of the growth that was accounted for by time deposits—the least active component of the money supply. Both developments reflected increased confidence in deposits as a store of value. MONEY SUPPLY AND DEPOSIT TURNOVER BILLIONS OF DOLLARS BILLIONS OF DOLLARS i 190 110 100 TOTAL DEPOSITS ADJUSTED A^D CURRENCY J V / V V / / 150 60 50 r 30 CURRENCY OUTSIDE BANKS 20 1947 1949 1951 1947 1949 1951 NOTE.—Figures are partly estimated. Deposits are for all banks in the United States, adjusted to 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. Currency excludes bank vault cash. Figures are for end of month, 1946; last Wednesday of month, 1947-51, except for June and December call dates. Turnover data are on a monthly basis, seasonally adjusted, as compiled by the Federal Reserve Bank of New York. Deposits used to compute turnover are averages of demand deposits, except U. S. Government and interbank deposits, as reported weekly by member banks in leading cities outside New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

22 ANNUAL REPORT OF BOARD OF GOVERNORS Bank reserves. Reserve positions of commercial banks were under greater pressure in 1951 than in other postwar years. The higher reserve requirements imposed on member banks early in the year increased their need for reserves by about 2 billion dollars or more than 10 per cent. This increase more than absorbed the additional reserves made available by the post-Christmas return flow of currency and a decline in Treasury deposits at Reserve Banks, as well as those supplied by Federal Reserve purchases in support of Government bond prices. The Federal Reserve purchased Government securities from banks in the early part of the year, thereby supplying additional reserves needed for the adjustment of individual banks to the increased reserve requirements and for meeting the expansion in bank loans. Over the remainder of the year, demands for reserve funds arose from an increase in the volume of currency in circulation, as well as from deposit growth resulting from the increase in bank credit. On the other hand, the cessation of the gold outflow in the spring of 1951 removed a previous drain on reserves which had been operat- CHANGES IN MEMBER BANK RESERVES, WITH RELEVANT FACTORS [In billions of dollars] Year Fourth Third Second First Item 1951 quarter quarter quarter quarter Member bank reserves Total +2.4 +0.7 +0.3 0) + 1.3 Required +3.2 +0.8 +0.2 +0.1 2+2.1 Excess -0.8 -0.1 +0.1 -0.1 -0.7 Principal factors affecting reserves (Signs indicate effect on reserves) Currency in circulation -1.5 -1.1 -0.3 -0.8 +0.7 Treasury operations +0.5 +0.6 -0.5 +0.8 -0.4 Gold stock and foreign accounts.. +0.4 +0.9 +0.4 -0.1 -0.9 Federal Reserve Bank credit.. +2.8 +0.3 +0.6 +0.2 + 1.6 Float ..... -0.2 +0. C) +0.2 -0.6 U. S. Government securities. +0. +0.5 +0.4 + 1.8 Discounts and advances +3.0 -0.2 +0.2 -0.4 +0.4 C) Other factors P) C) -0.1 +0.2 +0.2 1 Less than 50 million dollars. 2 Includes 2.0 billion due to increase in legal percentages required. NOTE;.—Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 23 ing since the Korean outbreak. Gold was flowing back into the United States in the third quarter, after little change in the second quarter, and the inflow, as well as the reduction in foreign balances at the Federal Reserve Banks, tended to increase bank reserves, as is shown in the table. Reduced Federal Reserve buying of Government securities after April was an important factor limiting bank reserve expansion. As bank reserves became less readily available than they had been previously, the level of excess reserves was reduced somewhat and there was a greater amount of interbank transfers of excess reserves through the Federal funds market. Also, a larger number of banks relied on short-term borrowing from the Federal Reserve Banks to meet temporary shortages in reserves, and average daily holdings of discounts and advances at the Federal Reserve Banks totaled 293 million dollars in 1951 as compared with 129 million in the preceding year. Because of the reluctance of banks to remain in debt for long periods of time, indebted banks were under some pressure to use new funds coming to them to pay off their indebtedness as soon as possible rather than to lend or invest. INTEREST RATES Continued demand for credit and the reduced availability of bank reserves were reflected in a rise in money rates and bond yields in 1951, as was shown in the chart on page 6. Yields on short-term Government securities increased about one-third of a percentage point on the average, following a similar increase in 1950, and showed wider fluctuations than in previous years in response to money market developments. Rates charged by the larger banks on prime loans to customers rose from about 2 per cent in mid-1950 to 3 per cent at the end of 1951. Yields on the longest term Government bonds and on outstanding high-grade corporate bonds rose about onethird of a percentage point to approximately the levels of 1939. At times during the year a concentration of demand, reflecting tax payments and other factors, resulted in somewhat tighter money market conditions than at other times. In these instances, member bank borrowing at Reserve Banks increased and some funds were supplied by Federal Reserve open market purchases. The Federal Reserve also bought Government securities in order to assure success of Treasury refunding. Federal Reserve purchases for these pur- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

24 ANNUAL REPORT OF BOARD OF GOVERNORS poses, made in June, September, and October, were subsequently offset by sales. In the latter part of December a combination of corporate tax and dividend payments, holiday currency demand, and other endof-year needs brought considerable pressure on the money market. Notwithstanding some Federal Reserve purchases of Government securities to relieve the pressure, open market yields on short-term paper and bonds, both private and public, rose sharply and bank borrowing from the Federal Reserve increased substantially. The rate on new Treasury bills rose to 1.865 per cent, the highest since 1933, and the yield on long-term Treasury bonds to 2.74 per cent. Money market conditions eased considerably after the turn of the year, reflecting the return flow of currency from holiday circulation and a seasonal contraction in outstanding bank credit. Yields on securities and some types of short-term paper declined. Member bank borrowings were largely paid off and the Federal Reserve portfolio of Government securities was substantially reduced. CHANGES IN STRUCTURE AND OWNERSHIP OF UNITED STATES GOVERNMENT DEBT The United States Government debt increased 2.7 billion dollars in 1951. Federal agencies and trust funds added 3.1 billion dollars to their holdings, in large part by acquiring special issues but to some extent by purchasing securities in the market. The debt held by the public, including the Federal Reserve Banks, declined slightly. Considerable change in the portfolios of different investor groups reflected individual preferences as well as the type of securities offered by the Treasury. One of the changes in types of securities available resulted from the exchange by the Treasury of 10.7 billion dollars of bank-restricted marketable bonds held by the public into the convertible investment bonds described on page 4. New money was raised in the second half of the year by issues of Treasury bills totaling 4.5 billion dollars. These included 2.0 billion of regular 91-day bills and 2.5 billion of March 15 and June 15, 1952 tax anticipation bills designed to encourage corporate investment in anticipation of the heavy tax payments on these dates. The increase in bills held by the public was partly offset by cash redemptions of maturing marketable securities. Except for a five- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

25 FEDERAL RESERVE SYSTEM OWNERSHIP OF UNITED STATES GOVERNMENT DEBT [In billions of dollars, par value, partly estimated] Change: Dec. 31, Item 1951 Year Second First 1951 half half Total debt outstanding 259.5 + 2.7 4.2 - 1.5 Debt held by Federal agencies and trust funds, total 42.3 + 3.1 + 1.3 + 1.8 Marketable 3.3 - 2.0 - 2.1 Convertible 2.9 + 2.9 + 0.1 + 2.9 Nonmarketable 36.0 + 2.2 + 1.3 + 0.9 Debt held by public, total 217.2 - 0.4 + 2.9 - 3.2 Marketable 139.4 - 7.7 + 4.7 -12.4 Convertible 9.2 + 9.2 - 1.5 + 10.7 Nonmarketable 6S.6 - 1.8 - 0.3 - 1.5 Distribution of debt held by public: Federal Reserve Banks, total 23.8 + 3.0 + 0.8 + 2.2 Marketable securities: Bills 0.6 - 0.7 + 0.1 - 0.8 Certificates and notes 17.9 + 3.0 + 2.2 + 0.8 Bank-eligible bonds 1.7 + 0.6 0) + 0.6 Restricted bonds 2.4 - 1 - 1.1 Convertible bonds 1.2 + 1 C) + 2.7 - 1.5 Commercial banks, total 61.6 - 0.2 + 3.2 - 3.4 Marketable securities: Bills. 7.4 + 3.1 + 3.4 - 0.3 Certificates and notes 19.1 + 0.9 - 0.9 P) Bank-eligible bonds 31.5 - 1.2 - 2.3 Restricted bonds 0.9 - 3.5 o - 0.2 Convertible bonds 0.2 + - 0 0 . . 2 1 0) + 0.2 Nonmarketable securities 2.5 + 0.1 C) + 0.1 Investors other than Federal Reserve and commercial banks, total 131.8 - 3.1 - 1.1 - 2.0 Marketable securities: Bills 10.0 + 2.0 + l.o + 1.0 Certificates and notes 10.5 - 0.2 - l.o + 0.8 Bank-eligible bonds 7.6 - 0.5 - 0.6 + 0.2 Restricted bonds 29.8 -10.4 - 0.2 -10.3 Convertible bonds 7.8 + 7.8 C) + 7.8 Nonmarketable securities 66.1 - 1.9 - 1.5 - 0.3 1 Less than 50 million dollars. NOTE.—Includes matured and noninterest-bearing debt as well as guaranteed securities. Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

26 ANNUAL REPORT OF BOARD OF GOVERNORS year note offered to holders of certificates maturing January 1, 1951, all refunding issues during the year were certificates of indebtedness maturing in slightly less than one year. However, 8.5 billion dollars of bonds reaching their first call date in 1951 were retained in the debt structure as a result of the passing of call dates for the first time since 1935. During the year outstanding savings notes declined 1.1 billion dollars, reflecting a shift by nonfinancial corporations into short-term marketable securities, and the current redemption value of savings bonds declined 400 million, reflecting in large part a considerable decline in purchases of Series F and G bonds and the larger denominations of Series E bonds. The Federal Reserve Banks increased their holdings of Government securities 3 billion dollars in 1951 while other investors reduced their holdings by 3.4 billion. The net addition reflected purchases in the first quarter of the year to facilitate individual member bank adjustments to reserve requirements and to support the market for restricted bonds, and purchases in the latter part of December to relieve a seasonally tight money market. The Federal Reserve exchanged about 2.7 billion dollars of its restricted bonds for investment bonds and converted about 1.5 billion of the latter into notes, and also made net purchases of certificates and notes and of bank eligible bonds. Bill holdings were reduced further and at the end of the year the System held only 600 million dollars of bills compared with a peak of 15.7 billion in early 1947. In the early months of 1951 commercial banks continued to sell Government securities, as they had during 1950, and their holdings declined to a new postwar low. These sales were largely offset by purchases later in the year, and by the year-end commercial bank holdings were only slightly smaller than a year earlier. The major factor underlying sales in the early months of the year was the pressure on reserves when legal requirements were increased and the gold outflow was heavy, but banks also continued to shift from Government securities into higher yielding private loans and investments. In the spring banks became increasingly concerned about improving their liquidity positions and, as yields on short-term issues rose, expanded their purchases of Treasury bills considerably, including both regular and, in the last quarter, tax anticipation issues. Mutual savings banks and life insurance companies continued to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 27 liquidate holdings of Government securities in order to invest in real estate mortgages and, in the case of life insurance companies, in business securities. About two-thirds of the 3.5 billion dollar reduction came in the first half of the year. These two investor groups together exchanged more than 4 billion dollars of restricted bonds for the new issue of investment bonds. Among investor groups other than banks and insurance companies, further reduction in holdings by individuals was more than offset by increases in holdings by nonfinancial corporations, State and local governments, and miscellaneous investors. Individual investors, including personal trusts and unincorporated business enterprises, reduced their holdings for the second consecutive year. Holdings of both savings bonds and marketable securities were reduced. Nonfinancial corporations added somewhat to their portfolios but the amount was smaller than in the two preceding years. Treasury bill holdings were increased while savings notes were reduced. The growth in State and local government holdings of Federal securities, which had been in process for some years, continued and reflected further investment of pension and retirement funds. INTERNATIONAL MOVEMENT OF GOLD AND DOLLARS The gold stock of the United States at the end of 1951 amounted to 22.9 billion dollars, approximately the same amount as at the beginning of the year. A gold outflow of 0.9 billion dollars in the first half of the year, largely in the early months, was followed by an inflow of 1.0 billion in the last half. Gold movements accounted for practically all changes in the combined gold and dollar holdings of foreign countries, as aggregate foreign dollar balances fluctuated only moderately during the year. There were significant fluctuations in the distribution of foreign gold and dollar holdings as between countries and types of holders. Foreign purchases of gold from the United States were largely in the first quarter when foreign monetary authorities continued, as in late 1950, to acquire dollars and to convert them into gold and also in some cases to draw down for that purpose previously accumulated dollar balances. The desire to hold reserves in gold rather than dollars largely reflected foreign concern over inflationary tendencies in the United States. This development came to a halt in March, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

28 ANNUAL REPORT OF BOARD OF GOVERNORS following the change in Federal Reserve open market policies. The marked change in foreign expectations regarding price movements in the United States was reflected in the sharp contraction of foreign gold purchases from the United States in the second quarter of the year. Net foreign sales of gold to the United States took place entirely in the second half of the year, which was characterized by a sharp increase in United States exports of goods and services, a decline in imports, and a moderate contraction of foreign economic assistance. NET FOREIGN PURCHASES'OF GOLD FROM THEJUNITED STATES, 1951 [In millions of dollars] Fourth Third Second First Area and country Year quarter quarter quarter quarter United Kingdom -470 -630 -320 80 400 Continental Europe. 185 -66 20 24 201 Western Hemisphere 136 -26 -12 -63 237 Other countries 81 7 16 16 42 Total -68 -715 -290 57 880 NOTE.—Minus sign indicates net sale to the United States. The rise in the export surplus, to the extent that it was not offset by United States Government aid or by an outflow of private capital and donations, was currently reflected in the inflow of foreign gold and the decline in dollar balances, as the lower section of the chart shows. Transactions of the United Kingdom dominated changes in foreign monetary reserves throughout the year; the large gold inflow to the United States in the second half reflected a sharp deterioration in the external position of the sterling area. By the end of the year this area had lost about half of the gold that had been added to its reserves in the period from the devaluation of 1949 to the spring of 1951. Offsetting these losses by the sterling area, and further gold and dollar losses by the Latin American countries, were increases for continental European countries, Canada, and Asia. The combined gold and dollar holdings of foreign countries (excluding holdings by the U.S.S.R.) totaled 19.2 billion dollars at year-end 1951, slightly more than at the end of 1950. There were significant movements of gold and dollars among Western European countries, mainly reflected in settlements effected through the Euro- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 29 BALANCE OF PAYMENTS OF THE UNITED STATES SELECTED COMPONENTS eiUIONS OF DOLLARS QUARTERLY._ __ BILLIONS OF DOLLARS NET TRANSFERS OF GOLD AND DOLLAR BALANCES TO FOREIGN COUNTRIES 1.0 NOTE.—Net transfers of gold and dollar balances include net foreign purchases of gold from United States plus net increase in foreign dollar balances; Federal Reserve data. Other data from Department of Commerce. Exports of goods and services are net after deduction of military aid. U. S. Government economic grants and loans exclude miscellaneous unilateral transfers and short-term capital. pean Payments Union. This institution, established in 1950, provides for the clearing of intra-European payments and for settlement each month in gold and dollars of a portion of each country's net deficit or surplus with the Union. Over the year as a whole Belgium, Germany, and Italy received the largest sums of gold and dollars from EPU, while the United Kingdom and France made the largest net gold and dollar payments. There was also a shift of some 600 million dollars in dollar holdings from official foreign accounts to private foreign accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

30 ANNUAL REPORT OF BOARD OF GOVERNORS This was partly the result of heavy movement of investment capital from the United States to Canada throughout the year. Speculation against the pound sterling and the French franc in the summer and autumn also probably contributed to the accumulation of dollar balances in private foreign accounts. The decline in official balances was partly reflected in the withdrawal of 370 million dollars from foreign deposits held with Federal Reserve Banks, but in addition there was some sale by foreign monetary authorities of United States Government securities. Net additions to private balances were in large part held in deposits with the commercial banks and to some extent invested in United States Government securities. VOLUNTARY CREDIT RESTRAINT BY LENDERS Under Section 708 of the Defense Production Act of 1950 the President was authorized to consult with representatives of industry, business, finance, agriculture, labor, and other groups with a view to encouraging the making by such persons of voluntary agreements which would further the objectives of the Act. Section 708 further provided that, after such agreements had been approved by designated public officials, actions taken by participants in accordance with them would be exempt from the provisions of the anti-trust laws. The authority granted to the President, so far as it related to the field of financing, was delegated to the Board of Governors by Executive Order No. 10161, dated September 9, 1950, and the Board thereafter cooperated actively with representatives of banks, investment banking houses, and life insurance companies in the preparation of a program for voluntary credit restraint. The Board then consulted with the Attorney General and the Chairman of the Federal Trade Commission, as prescribed by the Act, following which the Attorney General approved a request by the Board to all financing institutions in the United States to act and refrain from acting pursuant to the provisions of the program. This request was issued by the Board on March 9, 1951, and together with the program was published in the March 1951 issue of the Federal Reserve Bulletin. Certain minor amendments to the program, relating principally to procedural matters, were approved in the manner prescribed by law, effective April 20, 1951. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 31 In accordance with the provisions of the program the Board appointed a National Voluntary Credit Restraint Committee consisting of representatives of the lending groups which had participated in the preliminary discussions, with a member of the Board as chairman. The Committee, which later was expanded to include representatives of mutual savings banks and savings and loan associations, met periodically throughout the year following its initial meeting on March 14-15, 1951. Its principal functions included the general direction of the program, appointment of the subcommittees referred to below, and interpretation of the principles of the program in their application to particular credit areas. Six interpretive bulletins were issued by the Committee. These consisted of Committee recommendations as to standards for lending in the fields of inventory loans, financing of business capital expenditures, borrowing by State and local governments, loans on real estate, international financing, and loans on securities. In addition, for the guidance of participating institutions, the Committee distributed numerous informal memoranda containing its views on problems which arose in the course of the program. A total of 43 regional subcommittees, consisting of representatives of the various groups of lending institutions represented on the National Committee, were established to consider inquiries from financing institutions as to whether particular applications for credit were in accordance with the standards set forth in the program. LOAN GUARANTEES FOR DEFENSE PRODUCTION The Defense Production Act of 1950 provided for the guarantee of loans made by commercial banks and other private financing institutions to contractors, subcontractors, and others engaged in the performance of Government defense contracts for the purpose of expediting production and deliveries or services for the defense program. The original Executive Order No. 10161, issued September 9,1950, named as guaranteeing agencies the Departments of the Army, Navy, Air Force, Commerce, Agriculture, Interior, and the General Services Administration. During 1951 the Atomic Energy Commission and the Defense Materials Procurement Agency were designated by Executive Order to act as guaranteeing agencies. The Federal Reserve Banks act as fiscal agents of the guaranteeing agencies in these transactions and the procedure is governed by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

32 ANNUAL REPORT OF BOARD OF GOVERNORS Regulation V of the Board of Governors, as revised September 27, 1950. During the early part of 1951 some defense contractors were unable to obtain necessary financing for the performance of their defense contracts because of the reluctance of banks to make loans on the security of the assignment of proceeds under Government contracts. The reluctance of banks to provide such financing arose from the fact that certain rulings of the Comptroller General of the United States under the Assignment of Claims Act of 1940 made it hazardous for private financing institutions to accept assigned contracts as collateral for loans. This situation created a serious impediment to the success of the guaranteed loan program, and in order to meet this problem the Board of Governors, together with other interested Government agencies, recommended an amendment to the Assignment of Claims Act of 1940 designed to remove the deterrent to participation by banks in the financing of defense contractors. By Act of Congress dated May 15, 1951, the recommended amendment was approved, and following the passage of this Act there was a substantial increase in the number of applications for guaranteed loans. Pursuant to the Board's Regulation V, and after consultation with the guaranteeing agencies, the Board announced a schedule of guarantee fees and the establishment of a maximum rate of interest of 5 per cent on guaranteed loans and a maximum commitment fee of l/ of one per cent per annum. The matter of rates and fees has 2 been under constant review by the Board and the guaranteeing agencies but developments in 1951 did not indicate the need for any changes. During 1951 the Federal Reserve Banks received 879 applications for guarantees of loans aggregating 1,411 million dollars. The guaranteeing agencies authorized the issuance of guarantee agreements covering loans amounting to 1,364 million. On December 31, 1951, credit available, including loans outstanding, to borrowers under guarantee agreements in force amounted to 1,148 million dollars. On the same date there were outstanding loans aggregating 675 million. Approximately 75 per cent of the number of loans authorized involved concerns employing fewer than 500 people each and approximately 60 per cent involved concerns employing fewer than 250 people. Only about 5 per cent of the loans authorized were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 33 for concerns employing more than 2,500 people, but these generally involved larger contracts and greater amounts of credit. They accounted for approximately half of the total funds involved. It is estimated that loans authorized to the end of 1951 were to defense contractors holding contracts aggregating between 8 and 9 billion dollars. BANKING OPERATIONS AND STRUCTURE Bank earnings and profits. Net current earnings of member banks, before income and excess profits taxes, increased during 1951. The increase was, however, more than offset by an increase in provision for income and excess profits taxes and an increase in net losses, charge-oflfs, and transfers to valuation reserves. Net profits after profit and loss adjustments and taxes amounted to 756 million dollars, about 3 per cent lower than in 1950. Net current earnings before income taxes advanced to 1,437 million dollars, an increase of 192 million. The most important factor in the increase was earnings on loans, resulting from both larger average holdings and a somewhat higher average rate of return. This increase of 369 million dollars in earnings on loans more than offset somewhat lower earnings on United States Government securities and an increase of 212 million dollars in total expenses before income taxes. Net losses, charge-oflfs, and transfers to valuation reserves were 95 million dollars higher in 1951 and provision for taxes was 122 million higher, with the result that net profits after taxes and profit and loss adjustments, despite higher net current earnings, declined from 781 to 756 million dollars. Net profits were 7.6 per cent of average capital accounts as compared with 8.3 per cent in 1950. The upward trend of the ratio of net current earnings before income taxes to total capital accounts continued, and the ratio reached 14.4 per cent. About 49 per cent, or 371 million dollars, of 1951 profits were distributed as dividends, representing a return equal to 3.7 per cent on average total capital accounts; this ratio was unchanged from 1950, but the amount distributed and the proportion of net profits were higher. Profits retained to strengthen capital accounts amounted to 385 million dollars as compared with 435 million in 1950. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

34 ANNUAL REPORT OF BOARD OF GOVERNORS Bank earning assets. Earning assets of member banks amounted to 112 billion dollars at the end of the year, 5 billion more than at the end of 1950. The increase in loans was also about 5 billion dollars, and an increase in holdings of State and local government securities of about 900 million dollars was offset by decreases of about 750 million in holdings of United States Government obligations and about 150 million in holdings of other securities. About three-fourths of the loan increase was in commercial loans. Statistics gathered since April 1951 from a sample of the larger member banks indicate that about half of the increase was for defense purposes. By industry group, the most substantial increase was in loans to manufacturers of metals and metal products (including machinery and transportation equipment); net decreases were reported for only two groups—manufacturers of textiles, apparel, and leather, and the construction industry. Capital accounts. Capital accounts of member banks amounted to 10.2 billion dollars at the end of 1951, an increase of about half a billion during the year. Retention of profits accounted for about three-fourths of the increase; proceeds from sales of common stock amounting to 186 million dollars were offset to the extent of 47 million dollars by the retirement of preferred stock and reductions in capital accounts incident to mergers and changes in Federal Reserve membership. The ratio of average total capital accounts to average total assets for all member banks was 6.9 per cent, somewhat lower than the 7.0 per cent for 1949 and 1950. The ratio of average total capital accounts to average so-called "risk" assets (total assets less United States Government securities and cash assets) continued to decline and dropped to 16.7 per cent, as compared with 18.9 for 1950. This reflected the increased proportion of earning assets held in the form of loans and securities other than those of the United States Government. Number of banking offices. The number of banking offices in the United States continued to increase during 1951, for the eighth consecutive year. There were 19,842 offices at the end of the year, as compared with 19,584 the preceding year. There was a decrease of 32 in the number of banks to 14,618, but the number of branches increased by 290 to 5,224. All of these figures exclude banking facilities at military and other Government establishments, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 35 of which there were 159 at the end of 1951, an increase of 37 during the year. The number of banks (head offices) continued to decline, following the pattern of the three preceding years. During the year 63 new banks opened for business. This increase was more than offset, however, by a decrease of 97 banks as a result principally of the conversion of 59 banks into branches and the consolidation or absorption of 24 other banks. Table 18 on page 76 shows increases and decreases in the number of banks by class of bank. The increase of 290 in the number of branches and additional offices, exclusive of banking facilities at military and other Government establishments, was the largest since the early twenties; the next largest annual increase was 250 during 1950. Most of the increase in 1951 was represented by the 251 de novo branches. New York had the largest branch increase with 51, and increases occurred in practically all branch banking States. Over half of the increase in branches during the year was in head-office cities; such offices constitute about 45 per cent of the total. Changes in Federal Reserve membership. As a result principally of consolidations and conversions of banks into branches, the number of member banks in the Federal Reserve System continued to decrease during 1951. The number of offices of member banks continued to increase, however, due to the establishment of branches and additional offices. On December 31, 1951, there were 6,840 member banks, of which 4,939 were national and 1,901 were State member banks, a decline of 33 for the year. Eleven newly organized banks became members, of which 9 were national banks and 2 State members. Ten nonmember banks, with deposits of about 105 million dollars, were admitted to membership; 8 of these were operating as insured banks prior to admission to membership. Table 18 shows all increases and decreases in the number of member banks and their branches. The 6,840 member banks in operation at the end of 1951 accounted for 49 per cent of the number and held 86 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 66 per cent of the deposits of all State commercial banks. These relationships have remained practically unchanged during recent years. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

36 ANNUAL REPORT OF BOARD OF GOVERNORS Par and nonpar banks.1 During 1951 a total of 83 banks were added to the Federal Reserve Par List, 1 withdrew, and 86 banks formerly on the list terminated existence. Of these 86 banks, 76 were absorbed by other par banks (including 55 that were converted into branches), 7 were liquidated, and 3 (noninsured banks) suspended. At the end of 1951 there were 12,158 par-remitting and 1,829 nonpar banks, as compared with 12,162 and 1,853 respectively at the beginning of the year. The nonpar banks represent 13 per cent of the banks on which checks are drawn, but they hold a much smaller proportion of the deposits of all commercial banks in the country. There were 4,843 par-remitting and 302 nonpar branches and offices (including banking facilities) of commercial banks as compared with 4,534 and 290 respectively at the beginning of the year. All banks in 29 States and the District of Columbia were on the Federal Reserve Par List at the end of the year. In each of 5 other States the number of nonpar banks was less than 10. Practically all of the banks not on the Par List were in the following 14 States: Minnesota 411; Georgia 285; Mississippi 161; Arkansas 121; North Carolina 109; Louisiana 104; South Dakota 98; Alabama 97; North Dakota 88; Tennessee 84; South Carolina 82; Missouri 64; Florida 56; and Texas 52. Table 19 on page 77 shows these statistics by States and Federal Reserve districts. Designation of reserve cities. Acting in accordance with the rule regarding classification of central reserve and reserve cities which was adopted by the Board on December 19, 1947,2 on February 20, 1951, the Board of Governors of the Federal Reserve System took action as follows with respect to the classification of Reserve cities, effective March 1, 1952: (1) The City of Washington, D.C., and every city except New York and Chicago in which there is situated a Federal Reserve Bank or Branch of a Federal Reserve Bank were continued as reserve cities. 1This section refers only to banks on which checks are drawn and their branches and offices, including "banking facilities" at military posts and other Government establishments. 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. 2 The rule appears in the Board's Annual Report for 1947, pp. 86-87. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 37 (2) On the basis of official call reports of condition in the two-year period ending on June 30, 1950, the following cities met the standard prescribed in paragraph (2) of subsection (b) of the Board's rule, and, therefore, such cities also were continued as reserve cities: Columbus, Ohio; Des Moines, Iowa; Indianapolis, Indiana; Milwaukee, Wisconsin; National City (National Stock Yards), Illinois; St. Paul, Minnesota; Tulsa, Oklahoma; Wichita, Kansas; and Fort Worth, Texas. (3) On the basis of written requests from the member banks in such cities, in accordance with paragraph (3) of subsection (b) of the Board's rule, the following cities also were continued as reserve cities: Toledo, Ohio; Cedar Rapids, Iowa; Dubuque, Iowa; Sioux City, Iowa; Kansas City, Kansas; Lincoln, Nebraska; Pueblo, Colorado; St. Joseph, Missouri; and Topeka, Kansas. (4) The following cities did not meet the requirements of either paragraph (2) or (3) of subsection (b) of the Board's rule, and, consequently, the designation of such cities as reserve cities was terminated: Peoria, Illinois; Galveston, Texas; and Waco, Texas. Check routing symbols. Pursuant to the program inaugurated by the American Bankers Association and the Federal Reserve System in June 1945, further progress was made during 1951 in the use of routing symbols on checks to facilitate their sorting and routing, and thus speed up their collection. A survey made late in the year revealed that 85 per cent of the checks handled at the Reserve Banks had the check routing symbol printed in the approved location, the upper right-hand corner. This compares with 76 per cent in 1950 and 67 per cent in 1949. BANK SUPERVISION BY THE FEDERAL RESERVE SYSTEM Examination of Federal Reserve Banks. The Board's Division of Examinations examined each of the 12 Federal Reserve Banks and their 24 branches during the year as required by law. Examination of State member banks. State member banks are subject to examinations made by direction of the Board of Governors or of the Federal Reserve Banks by examiners selected or approved by the Board of Governors. The established policy is to conduct at least one regular examination of each State member bank, including its trust department, during each calendar year, by examiners for the Reserve Bank of the district in which the bank is situated, with additional examinations if considered desirable. In order to avoid duplication and to minimize inconven- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

38 ANNUAL REPORT OF BOARD OF GOVERNORS ience 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 1951 program for the examination of State member banks was practically completed. Bank holding companies. During 1951 the Board authorized the issuance of three voting permits for general purposes and four permits for limited purposes to holding company affiliates of member banks. 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. Trust powers of national banks. During 1951, 18 national banks were granted authority by the Board to exercise one or more trust powers under the provisions of Section 11 (k) of the Federal Reserve Act. This number includes the grant of additional powers to 5 banks which previously had been granted certain trust powers. Trust powers of 14 national banks were terminated, 12 by voluntary liquidation or merger and 2 by voluntary surrender. At the end of 1951, there were 1,772 national banks holding permits to exercise trust powers. Acceptance powers of member banks. One application by a member bank for increased acceptance powers, made pursuant to the provisions of Section 13 of the Federal Reserve Act, was received during the year and approved by the Board. Foreign branches and banking corporations. Under the provisions of Section 25 of the Federal Reserve Act, the Board approved during 1951 three applications made by member banks for permission to establish branches in foreign countries or in dependencies or insular possessions of the United States. Member banks opened six such branches in 1951: three in Cuba, one in Japan, and two in Puerto Rico. Four of the six branches so established had been authorized in 1950. One branch in China discontinued active operations during the year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 39 At the end of 1951, seven member banks had in active operation a total of 100 branches in 23 foreign countries and possessions of the United States. Of the 100 branches, four national banks were operating 94 and three State member banks were operating 6. The foreign branches in active operation were distributed geographically as follows: Latin America 52 England 10 Argentina 10 Far East 19 Brazil 9 Chile 2 Hong KonS l Colombia 3 India 2 Cuba 19 Japan 9 Mexico 2 Philippines 5 Panama 4 Singapore 1 Peru 1 TU.\ 1 lhai landA 1 TUTr uguay 11 Venezuela 1 United States Possessions 14 Continental Europe 5 Canal Zone 4 Belgium 1 Guam 1 France 1 Puerto Rico 9 Germany 3 Total 100 There was no change in 1951 in the list of 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. At the end of 1951 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 in France and has a fiduciary affiliate in England; a branch formerly operated in Hong Kong was closed during the year. During 1951 the other foreign banking corporation opened a branch in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

40 ANNUAL REPORT OF BOARD OF GOVERNORS Germany, after having obtained the Board's approval for the establishment of such branch. In 1951, examiners for the Board of Governors examined two European branches of a foreign banking corporation operating under agreement with the Board of Governors pursuant to the provisions of Section 25, the Paris branch of a foreign banking corporation organized and operating under the provisions of Section 25(a), and, jointly and in cooperation with examiners for the Banking Department of the State of New York, the six European branches of the three State member banks operating foreign branches and the Paris branch of another foreign banking corporation operating under agreement with the Board of Governors. CHANGES IN REGULATIONS OF THE BOARD OF GOVERNORS Loans to member banks. In order to facilitate operations under the program of guaranteed loans authorized by the Defense Production Act of 1950, the Board, effective March 21, 1951, amended its Regulation A, relating to discounts for and advances to member banks by Federal Reserve Banks, so as to exempt paper representing such guaranteed loans, ordinarily referred to as V-loan paper, from the negotiability requirements of the regulation. Trust powers of national banks. The Board's Regulation F, relating to trust powers of national banks, was amended effective February 5, 1951, so as to increase from $50,000 to $100,000 the amount of funds of an individual trust which a national bank may invest in a common trust fund. At the same time, certain footnotes to the regulation were amended so as to eliminate the applicability of the requirements of Section 24 of the Federal Reserve Act to a single real estate loan in which the funds of two or more trusts may be invested collectively. Margin requirements for purchasing securities. The Board's Regulation T, relating to the extension and maintenance of credit by brokers, dealers, and members of national securities exchanges, and Regulation U, relating to loans by banks for the purpose of purchasing or carrying stocks registered on a national securities exchange, were amended effective January 17, 1951, to increase the margin requirements from 50 per cent to 75 per cent, for credit extended by brokers and banks to finance purchases of stock Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 41 exchange securities. The increased margins also apply to short sales. Effective September 3, 1951, two minor technical changes in Regulation T were adopted so as to excuse brokers from obtaining margin in margin accounts when the amount to be obtained for transactions on a given day does not exceed $100, and so as to broaden the exemption already contained in the regulation for certain capital contribution loans to members of securities exchanges. Also, an amendment to Regulation T, effective September 17, 1951, clarified and strengthened the rules regarding the withdrawal of dividends that are received on securities in undermargined accounts. Consumer credit. The Board's Regulation W, relating to consumer credit, was amended effective February 26, 1951, so as to exempt from the down payment and amortization requirements, certain short-term, nonrenewable leases which neither extended beyond three months nor involved a delivery in connection with subsequent leasing or sale arrangements. Effective May 15, 1951, two technical changes were made in the exemption provisions of Regulation W. One related to the method to be used by a Federal Reserve Bank in designating disaster areas, and the other, dealing with rental agreements, permitted the continuation of certain rental arrangements in effect during 1950. Effective July 31, 1951, Regulation W was amended in accordance with the Defense Production Act Amendments of 1951 to lengthen the maximum maturity applicable to instalment credit for automobiles, household appliances, radio and television sets, and furniture from 15 to 18 months, and for home repair and improvements from 30 to 36 months. Longer maximum maturities also were provided for consumer instalment loans for other purposes. Also, in accordance with the new legislation, down payment requirements for household appliances and radio and television sets were reduced from 25 per cent to 15 per cent. The down payments could be made in cash, trade-in, or combination of cash and trade-in and the 10 per cent down payment formerly required prior to completion of home repair and improvements could be made upon completion of the work. In addition, the Board exempted any instalment credit required for the installation of sewerage and other related facilities, including plumbing and plumb- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

42 ANNUAL REPORT OF BOARD OF GOVERNORS ing fixtures, where a householder was required to make such installations by local State or Federal health and sanitary regulations. Effective December 31, 1951, Regulation W was amended to provide in substance that the maximum amount of money that could be loaned for the purchase of a listed article could not be more than the specified percentage of the cash price, but in no event more than that percentage of the maximum retail price established by Federal authorities. The amendment was designed to conform the provisions of the regulation to certain regulations of the Office of Price Stabilization, including Ceiling Price Regulation 94, which established maximum retail prices for used automobiles. Real estate credit. The Board's Regulation X, relating to real estate credit, was amended and reissued, effective January 12, 1951, so as to make it applicable to credit in connection with three- and four-unit residences and multi-unit residential property. The value used in determining the maximum amount of credit permitted by the regulation was shifted from a structure to a family-unit basis. The provisions of the regulation relating to one- and twofamily residences also were amended in some respects. Effective February 15, 1951, Regulation X was again amended and reissued so as to make it applicable to credit in connection with nonresidential property. Maximum loans were limited to 50 per cent of the value of the nonresidential property, and maturities were limited to 25 years with amortization requirements. Several minor clarifying changes covering residential property also were made. Effective March 5, 1951, Regulation X was amended to permit terms different from those prescribed by the regulation to apply to specific new construction necessary to the national defense. Effective March 21, 1951, Regulation X was amended to permit builders or other persons who had made substantial commitments or undertakings with respect to certain contemplated multi-unit and nonresidential construction to apply before April 15, 1951, to a Federal Reserve Bank for a hardship exemption from the regulation. Credit extended with respect to certain new construction begun before the regulation applied to the construction was exempted if extended prior to a date 32 days after the construction is completed. Effective April 4, 1951, credit extensions by State and local gov- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 43 ernments were exempted from Regulation X if in connection with the construction of nonresidential facilities. Effective April 16, 1951, Regulation X was amended so as to exempt credit extended solely to finance the purchase or construction of a structure to be used in substitution for a similar structure of which the borrower had been deprived by eminent domain or condemnation proceedings. Effective May 11, 1951, Regulation X was amended so as to require every person engaged in the business of extending real estate credit to register with a Federal Reserve Bank or branch thereof. Effective September 1, 1951, the restrictions of Regulation X on housing credit affecting one- to four-family housing were revised in conformity with provisions of the Defense Housing and Community Facilities and Services Act of 1951. Provision was made for the suspension of real estate credit restrictions on certain new sale and rental housing in critical defense housing areas included in programs to be announced and supervised by the Housing and Home Finance Agency. An exemption also was provided for certain essential nonresidential defense construction. Effective November 19, 1951, Regulation X was amended so as to authorize the Federal Reserve Banks to grant six months' exemption for secondary borrowing in connection with the purchase of a new house when a person moving from one part of the country to another is temporarily delayed in obtaining the proceeds of the sale of his old home. Also, the maximum period specified in connection with exempt loans for materials, articles, and services used in new construction was changed from 30 to 36 months. Effective December 31, 1951, Regulation X was amended so as to exempt leases of nonresidential properties, with certain exceptions, from the down payment and maturity requirements of the regulation. Concurrently, the National Voluntary Credit Restraint Committee amended Bulletin No. 4 so as to include leasing arrangements involving new construction of commercial and industrial property as well as leasing arrangements involving existing construction of all types. Leases on new residential construction continued to be subject to Regulation X. As required by law, the various amendments to Regulation X affecting residential properties were made with the concurrence of the Housing and Home Finance Administrator. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

44 ANNUAL REPORT OF BOARD OF GOVERNORS Administrative procedure rules. In order to make certain clarifying changes with respect to the issuance of subpoenas and the payment of fees to witnesses, the Board's Rules of Practice for Formal Hearings were amended effective June 28, 1951. HEARINGS, ENFORCEMENT, AND LITIGATION Transamerica Corporation. Requested findings and briefs were filed with the Hearing Officer in the Transamerica Clayton Act proceeding on April 2, 1951. On June 13, 1951 the Hearing Officer filed his recommended decision. Thereafter briefs were filed, and the matter was argued orally before the Board on December 10 and 11, 1951. Regulation W enforcement. Pursuant to authority contained in Section 604 of the Defense Production Act of 1950, the Board up to December 31, 1951 had obtained 13 injunctions in United States District Courts enjoining further violations of Regulation W. Up to that date the Board had suspended for temporary periods the licenses of two registrants to extend instalment credit subject to the Regulation. The Board had also issued orders for investigation pursuant to which subpoenas were issued in 19 cases. By December 31, 1951 the Board had referred 24 cases to the Department of Justice for such criminal proceedings as the Department might deem appropriate. Regulation X enforcement. Four orders for investigation were issued to obtain access to the books and records of persons subject to Regulation X. In three of these cases subpoenas were issued. In all cases access to the books and records was thereafter granted without the necessity for court action. LEGISLATION Assignment of claims against the Government. The Assignment of Claims Act of 1940 was amended by an Act approved May 15, 1951, so as to clarify the rights of financing institutions taking assignments of Government contracts as security for loans to defense contractors. Financing institutions had been reluctant to make loans secured by assignments of Government contracts either with or without guarantees of such loans under the V-loan program and, consequently, many contractors had been unable Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 45 to obtain the necessary financing for the performance of their defense contracts. Defense Production Act. The Defense Production Act of 1950 which, among other things, contains authority for the guarantee of defense production loans, the regulation of consumer credit, the regulation of real estate credit, and the Voluntary Credit Restraint Program, would have expired June 30, 1951, but was extended for an additional month by an Act approved June 30, 1951. By Act approved July 31, 1951, the Defense Production Act of 1950 was extended until July 1, 1952. The amendatory Act restricted the Board's authority with respect to the control of consumer credit by specifying certain limits on the down payments and maturities which might be prescribed by the Board with respect to various types of instalment financing and by providing that down payments might be by trade-in or exchange of property, as well as cash, in most cases. In addition, the Act of July 31, 1951, made certain amendments to the Housing and Rent Act of 1947, one of which authorized the President to establish rent controls in critical defense housing areas and provided for the relaxation of real estate construction credit controls in such areas. Defense Housing Act. The Defense Housing and Community Facilities and Services Act of 1951, approved September 1, 1951, among other things, altered the residential credit restrictions of the Defense Production Act of 1950, as amended, by providing for (1) the suspension and relaxation of real estate credit restrictions in critical defense housing areas for housing programmed by the Housing and Home Finance Agency, (2) limitations on maximum down payment requirements for veterans' loans on houses having a sales price of $12,000 or less, and (3) limitations on minimum down payment requirements in connection with the financing of houses for all other purchasers where the transaction price was $12,000 or less. The law also provided that the maturity of any such loans for houses priced at $12,000 or less might not be required to be less than 25 years. Real estate loans by national banks. The Act approved September 1, 1951, also amended Section 24 of the Federal Reserve Act relating to real estate loans by national banks, so as to make certain limitations and restrictions upon such loans inapplicable to mortgage loans insured by the Federal Housing Administration under Title IX Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

46 ANNUAL REPORT OF BOARD OF GOVERNORS of the National Housing Act with respect to certain new units in critical defense housing areas. This Act also amended Section 24 of the Federal Reserve Act so as to provide that the restrictions and limitations of this section shall not apply to loans by national banks for the construction of prefabricated houses in which the Housing and Home Finance Administrator cooperates or purchases a participation. RESERVE BANK OPERATIONS Volume of operations. Table 5 on page 61 discloses pronounced changes in some of the principal Reserve Bank operations during the year. Discounts and advances in 1951 were larger in number than in any year since 1938; Federal Reserve discount facilities were used by 1,168 banks as compared with 899 in 1950. Industrial loans, although in the relatively small amount of 5 million dollars at the end of the year, were at an all-time high in number and the largest in amount since 1943. Commitments to make industrial loans, both in number and amount, were the largest since 1943. The increase in loan activity under the provisions of Section 13b of the Federal Reserve Act reflects increased production under the national defense program. The number of pieces of paper currency received and counted and the aggregate dollar value thereof established new highs during 1951. On the other hand, the number of coins received and counted and their aggregate value declined substantially and reflected the acute coin shortage during the last half of the year. A new peak also was established in checks handled. The number and amount of issues, redemptions, and exchanges of Government securities were approximately the same as in 1950. The number of transfers of funds continued the upward trend begun in 1941 and the amount of such transfers set an all-time high, with an increase of 29 per cent over 1950. Acting in their capacity as fiscal agents of the United States, on July 1, 1951 the Reserve Banks began processing punch card postal money orders, using specially designed equipment. They handled approximately 175 million money orders during the last six months of the year. Earnings and expenses. Current earnings, current expenses, and the distribution of net earnings of each Federal Reserve Bank during Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 47 1951 are shown in detail in Table 6 on pages 62-63, and a condensed historical statement for all Reserve Banks is shown in Table 7 on pages 64-65. The table below summarizes the earnings and expenses and the distribution of net earnings for 1951, as compared with 1950. EARNINGS, EXPENSES, AND DISTRIBUTION OF NET EARNINGS OF FEDERAL RESERVE BANKS, 1951 AND 1950 [In thousands of dollars] Item 1951 1950 Current earnings 394,656 275,839 Current expenses 95,469 80,572 Current net earnings 299,187 195,267 Additions to current net earnings 388 1 36,969 Deductions from current net earnings ^,516 675 Net deductions (—) or net additions -2,128 36,294 Net earnings before payments to U. S. Treasury 297,059 231,561 Paid U. S. Treasury (interest on outstanding F. R. notes). 254,874 196,629 Dividends 13,865 13,083 Transferred to surplus (Sec. 7) 28,320 21,849 1 Includes $36,896,000 net profits (1950) and $1,586,000 net losses (1951) on sales of U. S. Government securities. Current earnings amounted to 394 million dollars in 1951, 43 per cent more than in 1950, largely because of a substantial increase in the average daily holdings of United States Government securities and a higher average rate of interest received. Current expenses amounted to 95 million dollars and were 15 million or 18 per cent larger than in 1950, reflecting the cost of a larger operating staff combined with the full effect of late 1950 upward adjustments in wage structures, increased postal and express rates, increased public demands for currency, and growth of operations in general. As a result of the foregoing changes, current net earnings in 1951 amounted to 299 million dollars, an increase of 104 million or 53 per cent. After allowing for profit and loss additions and deductions from current net earnings, net earnings amounted to 297 million dollars, an increase of 65 million over 1950. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

48 ANNUAL REPORT OF BOARD OF GOVERNORS Payments to the United States Treasury as interest on outstanding Federal Reserve notes amounted to 255 million dollars in 1951 and surpassed any previous distribution of earnings to the Treasury, either in this form or in the form of a franchise tax. A total of 887 million dollars has been paid to the Treasury as interest on Federal Reserve notes since the policy of making such payments was begun in 1947. Dividends to member banks amounted to 14 million dollars in 1951, an increase of nearly 1 million over 1950. The remaining net earnings of 28 million dollars were added to surplus account. Holdings of loans and securities. Federal Reserve Bank holdings of United States Government securities averaged 22,748 million dollars in 1951, 4,343 million more than in 1950. The average rate of interest received from holdings of United States Government securities rose to 1.71 per cent, the highest in 10 years. Holdings of discounts and advances, and the earnings thereon, were more than twice those in 1950. The table below shows a comparison of average daily holdings, earnings, and average interest rates on loans RESERVE BANK EARNINGS ON LOANS AND SECURITIES, 1947-51 [Dollar amounts in thousands] Dis- Accept- U.S. Incounts ances Govern- dus- Item and year Total and pur- ment trial advances chased securities loans 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 1951 . 23,045,707 292,770 81 22,748,210 4,646 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 1951 394,473 5,139 1 389,125 208 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 1951 1.71 1.75 1.75 1.71 4.49 1 Based on holdings at opening of business Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 49 and securities held by the Reserve Banks during each of the past five years. Foreign and international accounts. Continuing the rise which had been in evidence since the latter part of 1947, total dollar and gold holdings held by the Federal Reserve Banks for foreign account increased to an all-time high of 7.5 billion dollars in March 1951. By the end of the year, however, the total had declined to about 6 billion dollars, or 1.2 billion below the level of a year earlier. This net decrease occurred largely in holdings of earmarked gold and dollar deposits, which declined by 685 million and 369 million dollars respectively. Total dollar and gold holdings by the Federal Reserve Bank of New York for the International Bank for Reconstruction and Development and the International Monetary Fund increased slightly. Combined holdings for foreign and international accounts amounted to about 9.2 billion dollars at the end of the year. Demand for loans on gold by foreign central banks was very small. While new credits to two central banks were arranged, only one found it necessary to request advances. All of the 11 million dollars actually advanced was repaid during the year and for the second consecutive time there were no foreign loans on gold outstanding at year-end. The policy with respect to loans on gold has remained unchanged, that is, in general, this type of short-term accommodation is made available to foreign central banks to meet temporary dollar requirements of the borrower, subject to such conditions as may be appropriate. Four regular accounts for foreign central banks were opened during the year, one of which was for the successor of a bank whose account was closed simultaneously. One other regular account was closed. The Federal Reserve Bank of New York handled a variety of operations 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 and 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

50 ANNUAL REPORT OF BOARD OF GOVERNORS Bank premises. There was no change in the Board's policy, mentioned in the Annual Report for 1950, of approving the preparation of plans for needed building construction but authorizing only construction of an emergency nature. The Federal Reserve Bank of Philadelphia, late in 1951, was authorized to proceed with its program for a small addition to its building and for certain improvements including installation of air-conditioning equipment. The new buildings of the Seattle and Portland Branches of the Federal Reserve Bank of San Francisco were occupied on January 2 and April 27,1951, respectively. It is hoped that the construction programs at the Federal Reserve Banks of Boston and Richmond and the Jacksonville Branch of the Federal Reserve Bank of Atlanta (all authorized in 1950), as well as that at the Detroit Branch of the Federal Reserve Bank of Chicago (authorized in 1949), will be completed before the close of 1952. The need for larger quarters at many of the other head offices and branches should be met when conditions permit. In 1951 the Federal Reserve Bank of Atlanta acquired a building site adjoining the head-office building for possible future expansion. Cost and net book value of Federal Reserve Bank premises are presented in Table 9 on page 68. BOARD OF GOVERNORS—INCOME AND EXPENSES The following table shows the income and expenses of the Board for the year 1951: OPERATING SURPLUS, January 1, 1951 $ 220,554.99 Adjustment in 1951 applicable to preceding years. . 1,069.48 $ 221,624.47 INCOME: Assessments on Federal Reserve Banks 4,095,500.00 Sale of Federal Reserve Bulletin 12,248.83 Sale of other publications 14,520.15 Miscellaneous 4,325.15 4,126,594.13 4,348,218.60 EXPENSES: Salaries 2,715,538.53 Retirement contributions—regular 216,152.36 Retirement contributions—supplemental death benefit 29,810.23 Traveling expenses 208,643.64 Postage and expressage 10,229.67 Telephone and telegraph 85,296.55 Printing and binding. 176,927.65 Stationery and supplies 34,959.43 Furniture and equipment, including rental 64,018.55 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 51 EXPENSES OF BOARD OF GOVERNORS—Cont. EXPENSES—Cont. Books and subscriptions 14,551.42 Heat, light, and power 34,506.50 Repairs and alterations (building and grounds). . 36,612.40 Repairs and maintenance (furniture and equipment) . ... 8,170.82 Medical service and supplies 1,637.56 Insurance 4,230.14 All other: Surveys of Consumer Finances and of House Purchases $208,120.70 Cafeteria (net) 39,480.99 Legal and consultant fees and expenses 23,539.60 Borrowed Federal Reserve Bank personnel 33,953.31 Official dinners, receptions, etc.. . 6,846.68* Miscellaneous 23,780.03 335,721.31 3,977,006.76 OPERATING SURPLUS, December 31, 1951 $ 371,211.84 * Includes expenditures of $3,754.25, contributed by Board of Governors for dinner and luncheons at meetings of Treasury Department savings bond program workers. In addition to the foregoing, the Board made certain expenditures on a reimbursable basis for which it received reimbursements in 1951 as follows: Printing Federal Reserve notes $7,137,592.97 Leased wire service (telegraph) 101,257.11 Leased telephone lines 9,681.17 Federal Reserve Issue and Redemption Division (Comptroller of the Currency). . 126,794.78 Miscellaneous 17,915.70 The accounts of the Board for the year 1951 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 January 31, February 6-8, March 1-2, March 8, May 17, October 4, and November 14, 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 95-109 of this Report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

52 ANNUAL REPORT OF BOARD OF GOVERNORS Conferences of the Chairmen of the Federal Reserve Banks were held on May 7-8 and December 3-4, and were attended by members of the Board of Governors. The Conference of Presidents of the Federal Reserve Banks held meetings on March 7-8, May 16, and September 27-29, and the Board of Governors met with the Presidents on March 9, May 18, and October 4. Meetings of the Federal Advisory Council were held on February 18-20, May 13-15, September 16-18, and November 18-20. The Board of Governors met with the Council on February 20, May 15, September 18, and November 20. 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

54 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 1—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) DECEMBER 31, 1951 [Amounts in boldface type are those shown in the Board's weekly statement. In thousands of dollars.] ASSETS Gold certificates: Interdistrict settlement fund 7,254,397 Gold certificates on hand 1,015,555 Gold certificates with Federal Reserve Agents 12,484,000 20,753,952 Redemption fund for Federal Reserve notes 714,115 Total gold certificate reserves 21,468,067 Other cash: United States notes 29,622 Silver certificates 272,999 Standard silver dollars 2,622 National and Federal Reserve Bank notes 3,701 Subsidiary silver, nickels, and cents 14,231 Total other cash 323,175 Discounts and advances secured by U. S. Government securities: Discounted for member banks 19,306 Discounted for others 19,306 Other discounts and advances: Discounted for member banks 41 Foreign loans on gold 41 Total discounts and advances 19,347 Acceptances purchased Industrial loans 4,637 U. S. Government securities in System Open Market Account: Bills 467,860 Certificates 12,724,598 Notes 5,068,073 Bonds 5,344,127 Other U. S. Government securities 196,700 Total U. S. Government securities 23,801,358 Total loans and securities 23,825,342 Due from foreign banks 28 Federal Reserve notes of other Federal Reserve Banks 201,141 Uncollected cash items: Transit items 3,468,161 Exchanges for clearing house 229,770 Other cash items 207,396 Total uncollected cash items 3,905,327 Bank premises: Land 14,123 Buildings (including vaults) 56,568 Fixed machinery and equipment 21,029 Total buildings 77,597 Lessldepreciation allowances 48,121 29,476 Total bank premises 43,599 Other assets: Industrial loans past due 52 Miscellaneous assets acquired account industrial loans.. 101 Miscellaneous assets acquired account closed banks.... 39 Total 192 Less valuation allowances 116 Net 76 Fiscal Agency and other expenses, reimbursable 2,855 Interest accrued 106,905 Premium on securities 15,343 Deferred charges 1,672 Sundry items receivable 2,455 Real estate acquired for banking house purposes 1,834 Suspense account 1,810 All other 207 Total other assets 133,157 Total assets 49,899,836 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

fEDERAL RESERVE SYSTEM 55 NO. 1—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) —Continued LIABILITIES Federal Reserve notes: Outstanding (issued to Federal Reserve Banks) 26,130,543 Less: Held by issuing Federal Reserve Banks 985,066 Forwarded for redemption 81,368 1,066,434 Federal Reserve notes, net (includes notes held by U. S. Treasury and by Federal Reserve Banks other than issuing Bank) 25,064,109 Deposits: Member bank—reserve accounts 20,055,716 U. S. Treasurer—general account 246,687 Foreign 526,375 Other deposits: Nonmember bank—clearing accounts 98,595 Officers' and certified checks 11,850 Federal Reserve exchange drafts 417 International organizations * 36,285 Allother 215,651 Total other deposits 362,798 Total deposits 21,191,576 Deferred availability cash items 2,721,490 Other liabilities: Accrued dividends unpaid Unearned discount 15 Discount on securities 9,165 Sundry items payable 3,999 Suspense account 573 All other liabilities 57 Total other liabilities 13,809 Total liabilities 48,990,984 CAPITAL ACCOUNTS Capital paid in 236,613 Surplus (Sec. 7) 538,342 Surplus (Sec. 13b) 27,543 Other capital accounts: Reserves for contingencies: Reserve for registered mail losses 8,354 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 106,354 Total liabilities and capital accounts 49,899,836 Contingent liability on acceptances purchased for foreign correspondents 20,913 Industrial loan commitments 6,036 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 1951 AND 1950 [In thousands of dollars] Total Boston New York Philadelphia Cleveland Richmond Item 1951 1950 1951 1950 1951 1951 1950 1951 1950 1951 1950 ASSETS Gold certificates 20,753,952 20,880,403 654,638 792,128 6,788,866 6,532,687 1,145,047 1,130,280 1,519,769 1,476,814 928,621 950,138 Redemption fund for Federal Reserve notes 714,115 577,229 62,778 53,981 78,065 50,911 56,306 50,563 75,408 67,289 66,214 53,788 Total gold certificate reserves 21,468,06721,457,632 717,416 846,109 6,866,931 6,583,598 1,201,353 1,180,843 1,595,177 1,544,103 994,835 1,003,926 Other cash 323,175 266,716 20,638 28,089 69,693 47,616 17,513 19,125 19,113 22,754 23,885 22,026 8 Discounts and advances: Secured by U. S. Govt. securities.. 19,306 67,240 2,510 125 2,595 61,960 3,440 3,640 670 100 2,340 575 Other 41 155 49 Total discounts and advances. . . 19,347 67,395 2,510 125 2,595 61,960 3,440 3,640 670 149 2,340 575 ? Industrial loans 4,637 2,556 23 27 3,763 2,204 1 94 132 U. S. Government securities: Bills 596,360 1,296,071 85,759 265,677 342,060 29,438 82,725 43,703 115,311 31,110 80,368 Certificates 12,792,798 2,334,195 902,366 160,919 2,914,088 544,082 800,631 155,2281,188,604 216,370 846,097 150,804 Notes 5,068,073 12,527,226 359,397 863,558 1,133,490 2,920,763 318,883 833,007 473,4091,161,131 336,991 809,269 Bonds 5,344,127 4,620,075 378,973 318,509 1,195,230 1,076,903 336,253 307,238 499,195 428,263 355,347 298,484 8 Total U. S. Govt. securities 23,801,358 20,777,567 1,640,7361,428,745 5,508,485 4,883,808 1,485,205 1,378,1982,204,911 1,921,075 1,569,545 ,338,925 Total loans and securities 23,825,342 20,847,518 1,643,246 1,428,870 5,511,103 4,945,795 1,492,408 1,384,0422,205,581 1,921,225 1,571,979 1,339,632 I Due from foreign banks 28 24 2 2 18 17 2 2 3 2 1 1 Federal Reserve notes of other Banks. . 201,141 170,088 4,136 6,501 22,622 23,337 11,682 11,382 11,121 11,177 48,796 32,260 Uncollected cash items 3,905,327 4,270,008 414,090 324,107 769,587 806,762 267,200 268,232 383,721 457,757 287,820 340,963 Bank premises 43,599 39,972 1,017 1,073 7,464 7,657 2,854 2,920 4,764 4,794 4,111 2,870 Other assets 133,157 120,356 10,981 8,365 28,934 27,839 8,298 7,759 12,769 11,247 8,841 7,940 Total assets 49,899,836 47,172,314 2,811,526 2,643,116 13,276,342 12,442,6113,001,3102,874,3054,232,249 3,973,059 2,940,2682,749,618 i After deducting $20,000 participations of other Federal Reserve Banks on Dec. 31, 1951, and $17,000 on Dec. 31, 1950. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes 25,064,109 23,587,018 1,525,8171,423,788 5,588,434 5,342,9411,769,8881,665,8492,286,8362,112,367 1,785,1531,616,465 Deposits: Member bank—reserve accounts. 20,055,71617,680,744 873,756 783,608 6,368,672 5,665,077 912,100 822,286 1,471,6701,323,910 848,054 750,834 U. S. Treasurer—general account. 246,687 668,454 3,864 78,288 202,462 115,722 4,285 58,227 3,733 81,648 539 36,831 Foreign 526,375 895,442 32,271 55,925 1165,651 1286,468 41,120 71,016 48,407 80,781 26,025 44,385 Other 362,798 564,913 9,070 7,235 220,194 256,007 7,411 5,142 12,471 14,159 6,570 28,995 Total deposits 21,191,576 19,809,553 918,961 925,056 6,956,979 6,323,274 964,916 956,6711,536,2811,500,498 881,188 861,045 Deferred availability cash items 2,721,490 2,901,599 307,828 238,367 461,363 518,345 195,198 183,799 323,938 278,953 225,184 226,242 Other liabilities and accrued dividends. 13,809 5,600 1,063 813 4,642 1,732 659 239 1,289 504 661 234 Total liabilities 48,990,984 46,303,770 2,753,669 2,588,02413,011,41812,186,292 2,930,661 2,806,558 4,148,344 3,892,3222,892,186 2,703,986 CAPITAL ACCOUNTS Capital paid in 236,613 225,102 12,986 12,223 75,472 73,383 16,765 15,675 22,498 22,001 10,383 9,845 Surplus (Sec. 7) 538,342 510,022 34,192 32,246 159,743 153,290 41,493 39,710 50,648 48,014 27,025 25,167 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 106,354 105,877 7,668 7,612 22,390 22,327 7,902 7,873 9,753 9,716 7,325 7,271 Total liabilities and capital accounts 49,899,836 47,172,314 2,811,526 2,643,11613,276,342 12,442,6113,001,310 2,874,305 4,232,249 3,973,059 2,940,2682,749,618 Ratio of gold certificate reserves to deposit and F. R. note liabilities combined 46.4% 49.4% 29.3% 36.0% 54.7% 56.4% 43.9% 45.0% 41.7% 42.7% 37.3% 40.5% Contingent liability on acceptances purchased for foreign correspondents.. 20,913 21,430 1,326 1,364 26,096 26,580 1,689 1,732 1,988 1,970 1,069 1,082 Industrial loan commitments 6,036 3,754 1,319 593 902 458 64 54 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve Agent 26,130,54324,548,029 ,576,869 1,497,261 5,872,195 5,512,262 1,835,5651,726,0122,374,/ !, 205,8951,864,2841,695,077 Held by Federal Reserve Bank and forwarded for redemption 1,066,434 961,011 51,052 73,473 283,761 169,321 65,677 60,163 87,904 93,528 79,131 78,612 Federal Reserve notes, net3 25,064,109 23,587,018 1,525,8171,423,788 5,588,434 5,342,9411,769,8881,665,849 2,286,8362,112,367 1,785,1531,616,465 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificates 12,484,00013,604,000 350,000 440,000 4,470,000 4,570,000 750,000 750,000 885,000 865,000 580,000 700,000 Eligible paper 17,936 73,065 2,510 125 2,595 61,910 3,440 3,640 2,240 575 U. S. Government securities 14,050,00011,665,000 1,300,0001,100,000 1,500,000 1,100,0001,100,0001,000,0001,500,0001,350,0001,300,0001,015,000 Total collateral 26,551,936 25,342,065 1,652,5101,540,125 5,972,595 5,731,9101,853,4401,753,640 2,385,0002,215,000 1,882,2401,715,575 i After deducting $360,707,000 participations of other Federal Reserve Banks on Dec. 31, 1951, and $608,962,000 on Dec. 31, 1950. * After deducting $14,817,000 participations of other Federal Reserve Banks on Dec. 31, 1951, and $14,850,000 on Dec. 31, 1950. * 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

QO NO. 2—STATEMENT OF CONDITION OF EACH FEDERAL RESERVE BANK AT END OF 1951 AND 1950—Continued Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San'Francisco Item 1951 1950 1951 1950 1951 1950 1951 1950 1951 1950 1951 1950 1951 1950 ASSETS Gold certificates 923,550 890,800 4,221,264 4,160,182 554,750 590,355 325,261 366,114 737,998 833,420 553,765 622,6152,400,4232,534,870 Redemption fund for Federal Reserve notes 49,808 39,541 122,653 100,276 49,274 40,725 25,018 21,467 37,123 35,034 28,152 25,463 63,316 38,191 Total gold certificate reserves.. 973,358 930,3414,343,9174,260,458 604,024 631,080 350,279 387,581 775,121 868,454 581,917 648,0782,463,739 2,573,061 Other cash 26,579 18,763 53,922 33,633 18,944 15,013 7,056 6,060 13,128 11,232 19,218 11,513 33,486 30,892 Discounts and advances: Secured by U. S. Govt. securities. 300 25 300 55 500 7,096 315 Other 41 106 Total discounts and advances. 300 341 106 55 500 7,096 315 o Industrial loans 584 134 185 39 U. S. Government securities: Bills 25,245 66,632 70,434 188,646 25,507 63,050 14,852 38,487 22,029 57,724 22,388 56,470 45,977 118,839 Certificates 686,607 125,0281,898,249 353,976 693,733 128,757 403,955 72,218 599,125 108,313 608,897 105,961 1,250,446 212,539 Notes 273,468 670,955 756,0551,899,577 276,306 690,959 160,891 387,549 238,625 581,254 242,518 568,628 498,0401,140,576 Bonds 288,364 247,470 797,237 700,625 291,356 254,847 169,655 142,940 251,623 214,387 255,727 209,728 525,167 420,681 Total U. S. Govt. securities... 1,273,6841,110,085 3,521,9753,142,8241,286,9021,137,613 749,353 641,194 1,111,402 961,678 1,129,530 940,7872,319,6301,892,635 w Total loans and securities.... 1,274,5681,110,1173,522,316 3,142,9301,286,9571,138,113 749,487 641,379 1,118,498 961,993 1,129,569 940,7872,319,6301,892,635 Due from foreign banks 1 1 4 3 1 1 1 1 1 1 1 1 3 2 § Federal Reserve notes of other Banks. 21,262 20,312 22,180 17,542 10,530 9,788 7,728 5,613 8,116 6,596 12,528 8,363 20,440 17,217 Uncollected cash items 234,021 277,132 652,609 716,750 136,889 212,192 96,789 113,210 202,755 217,071 168,648 192,457 291,198 343,375 Bank premises 2,882 1,720 6,342 5,062 3,264 3,509 1,083 1,114 2,454 2,639 651 677 6,713 5,937 Other assets 7,312 6,327 19,333 18,403 6,982 6,468 4,036 3,645 6,533 5,836 6,259 5,376 12,879 11,151 Total assets. 2,539,9832,364,713 8,620,6238,194,7812,067,5912,016,1641,216,4591,158,6032,126,6062,073,822 1,918.7911,807,2525,148,088 4,874,270 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes 1,382,1551,276,0914,764,0814,559,9601,167,1601,097,441 632,029 610,643 972,743 919,844 702,162 639,3222,487,6512,322,307 Deposits: Member bank—reserve accounts 915,858 740,4223,227,710 2,797,828 740,738 651,163 464,389 391,855 952,309 837,3991,011,045 891,2152,269,415 2,025,147 U. S. Treasurer—general account 4,030 38,559 6,863 102,305 3,561 24,659 8,309 22,614 3,055 43,903 548 24,311 5,438 41,387 Foreign 21,861 37,283 71,829 122,503 19,259 31,957 13,013 22,193 19,259 32,845 19,259 31,069 48,421 79,017 Other 6,020 42,762 30,784 9,140 12,079 32,296 4,434 4,909 3,851 32,430 4,559 43,543 45,355 88,295 Total deposits 947,769 859,0263,337,1863,031,776 775,637 740,075 490,145 441,571 978,474 946,5771,035,411 990,1382,368,629 2,233,846 Deferred availability cash items 168,835 191,070 392,025 482,691 87,485 144,199 69,118 82,741 138,927 173,186 145,138 144,546 206,451 237,460 Other liabilities and accrued dividends 591 200 1,835 856 605 228 491 171 500 175 474 126 999 322 Total liabilities 2,499,350 2,326,3878,495,1278,075,2832,030,8871,981,9431,191,7831,135,126 2,090,6442,039,7821,883,1851,774,132 5,063,730 4,793,935 CAPITAL ACCOUNTS Capital paid in 9,711 8,954 30,375 28,698 8,366 7,398 5,363 5,073 8,886 8,306 10,712 9,610 25,096 23,936 Surplus (Sec. 7) 23,871 22,369 79,601 75,345 21,788 20,295 14,063 13,168 20,367 19,047 18,210 16,852 47,341 44,519 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. 6,289 6,241 14,091 14,026 6,029 6,007 4,177 4,163 5,572 5,550 5,377 5,351 9,781 9,740 Total liabilities and capital accounts 2,539,9832,364,7138,620,6238,194,7812,067,5912,016,1641,216,4591,158,6032,126,606 2,073,8221,918,7911,807,252 5,148,088 4,874,270 Ratio of gold certificate reserves to deposit and F. R. note liabilities combined 41.8 43.6 53.6 56.1 31.1 34.3 31.2 36.8 39.7 46.5 33.5 39.8 50.7 56.5 Contingent liability on acceptances purchased for foreign correspondents 898 909 2,951 2,987 791 779 535 541 791 801 791 758 1,988 1,927 Industrial loan commitments 2,473 242 500 835 500 443 1,407 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve Agent 1,445,648 1,364,198 4,887,938 4,664,2271,220,180 1,141,989 646,856 623,5631,010,117 957,158 751,772 686,6872,644,3792,473,700 Held by Federal Reserve Bank and forwarded for redemption. 63,493 88,107 123,857 104,267 53,020 44,548 14,827 12,920 37,374 37,314 49,610 47,365 156,728 151,393 Federal Reserve notes, netx. . 1,382,155 1,276,0914,764,0814,559,9601,167,1601,097,441 632,029 610,643 972,743 919,844 702,162 639,3222,487,6512,322,307 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificates 510,000 625,000 2,520,000 2,700,000 270,000 350,000 150,000 210,000 280,000 280,000 219,000 214,0001,500,000 1,900,000 Eligible paper 55 500 7,096 6,315 U. S. Government securities 950,000 750,000 2,400,000 2,000,0001,000,000 900,000 505,000 450,000 750,000 700,000 545,000 500,0001,200,000 800,000 Total collateral. 1,460,000 1,375,000 4,920,000 4,700,0001,270,0551,250,500 655,000 660,0001,037,096 986,315 764,000 714,000 2,700,0002,700,000 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

60 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 3—HOLDINGS OF UNITED STATES GOVERNMENT SECURITIES BY FEDERAL RESERVE BANKS, END OF DECEMBER 1949, 1950, AND 1951 [In thousands of dollars] Rate of December 31 Change during Type of issue interest (Per cent) 1951 1950 1949 1951 1950 Treasury bonds: 1950-52*, Mar.. . 116,700 -116,700 1950-52*, Sept.. . 400,000 -400,000 1950-52, Sept.. . 63,200 -63,200 1951-54 41,500 -41,500 1951-55 11,900 -11,900 1951-53*1 755,825 508,825 695,600 +247,000 -186,775 1951-55*2, Dec... 8,200 7,200 9,300 + 1,000 -2,100 1952-54*, Mar... 47,400 47,400 65,200 -17,800 1952-54*, June.. 461,900 278,850 443,900 +183,050 -165,050 1952-55*. June.. 96,700 96,700 110,100 -13,400 1952-54*, Dec... 297,600 191,700 280,100 "+i05i966' -88,400 1953-55 1954-56 1955-60 1956-58* 12,493 1,000 36,700 + 11,493 -35,700 1956-59* 21,690 59,700 +21,690 -59,700 1956-59 1958-63 1959-62*3, June.. 319,849 292,600 483,800 +27,249 -191,200 1959-62*3, Dec... 693,765 688,100 807,300 +5,665 -119,200 1960-65 1962-67*3 56,610 51,400 28,100 +5,210 +23,300 1963-68*3 122,585 109,000 119,300 +13,585 -10,300 1964-69*3, June.. 201,390 53,500 29,000 +147,890 +24,500 1964-69*3, Dec. . 266,999 185,600 220,100 +81,399 -34,500 1965-70*3 521,490 341,400 368,700 +180,090 -27,300 1966-71*3 132,707 37,200 34,700 +95,507 +2,500 1967-72*3, June.. 49,266 818,400 969,000 -769,134 -150,600 1967-72*, Sept.. 2,552 15,300 +2,552 -15,300 1967-72*3, Dec. . 61,258 911,200 1,808,500 -849,942 -897,300 1975-80** 1,213,848 +1,213,848 Total Treasury bonds 5,344,127 4,620,075 7,217,700 +724,052 -2,597,625 Treasury notes :* Apr. 1, 1950.... 298,100 -298,100 July 1, 1951-B.. 788,470 -788,470 +788,470 July 1, 1951-C. 82,250 -82,250 +82,250 July 1, 1951-D 723,075 -723,075 +723,075 Aug. 1, 1951-E.. 1,665,783 -1,665,783 +1,665,783 Oct. 1, 1951-A.. 9,800 -9,800 +9,800 Oct. 15, 1951-F.. 4,817,370 -4,817,370 +4,817,370 Nov. 1,1951-G.. 3,770,400 -3,770,400 +3,770,400 Mar.15, 1954-A.. 244,650 205,750 264,100 +38,900 -58,350 Mar.15, 1955-A.. 89,800 44,500 +45,300 +44,500 Dec. 15, 1955-B.. 3,233,623 419,828 +2,813,795 +419,828 Apr. 1, 1956-EA 1,000,000 +1,000,000 Oct. 1, 1956-EO 500,000 +500,000 Total Treasury notes 5,068,073 12,527,226 562,200 -7,459,153 +11,965,026 Certificates*. 2,334,195 1,803,000 -2,334,195 +531,195 4,472,450 -4,472,450 12,792,798 +i 2,'792,798 Total certificates. 12,792,798 2,334,195 6,275,450 -3,941,255 Treasury bills* 596,360 1,296,071 4,829,247 -3,533,176 Total holdings. 23,801,358 20,777,567 18,884,597 +3,023,791 +1,892,970 •Taxable. 1 Callable on 4 months notice on Sept. 15, 1952. 2 Callable on 4 months notice ©n June 15, 1952. 8 Restricted as to commercial bank ownership. 4 Nonmarketable issue. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

61 FEDERAL RESERVE SYSTEM NO. 4—FEDERAL RESERVE BANK HOLDINGS OF SPECIAL SHORT-TERM TREASURY CERTIFICATES PURCHASED DIRECTLY FROM THE UNITED STATES, 1943-51 * [In millions of dollars] Date Amount Date Amount Date Amount 1943—jan 29 115 1943—Mar 21* 768 1943—Sept. 13 214 30 202 22 . 603 14 179 31* 202 23 700 15.. 424 Mar. 2 3 24 512 16 258 4 174 25 ... . 432 1945—M.ar 15 4 5 354 26 384 Dec. 4. 107 6 543 27 304 5 318 7* 543 28* . 304 6 374 8 591 29 104 7 484 9 648 30 40 8 484 10 632 June 15 805 9*.. 484 11 790 16 659 10 202 12 940 17 ... . 350 1949—june 15 220 13 1,043 18 256 16 127 14* 1,043 19 212 1950—Mar. 15 108 15 1,302 20* 212 June 15. 105 16 1,250 Sept. 8 11 1951—June 1 100 17 981 9 126 2 100 18 836 10 243 3*... . 100 19 778 11 . 246 Dec. 17 320 20 768 12* 246 i There were no issues during the years 1944, 1946, 1947, and 1948. Interest rate M per cent throughout. *Sunday or holiday. NO. 5—VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS OF FEDERAL RESERVE BANKS, 1947-51 [Number in thousands; amounts in thousands of dollars] 1947 1948 1949 1950 1951 NUMBER OF PIECES HANDLED1 Discounts and advances: Notes discounted and advances made 10 11 Industrial loans: Loans made .3 1.4 Commitments to make industrial loans () () () () () Currency received and counted. 3,491,962 3,754,584 3,809,865 3,846,397 4,066,619 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.. . . 6,159,697 6,531,128 7,294,363 7,190,498 5,889,223 U. S. Govt. checks 331,914 331,866 357,044 365,812 412,865 Allother 1,668,651 1,780,185 1,847,807 1,955,232 '2,122,147 Collection items handled: U. S. Govt. coupons paid. 19,003 17,417 16,334 15,323 14,510 All other 7,135 4 11,373 11,451 12,793 13,428 Issues, redemptions, and exchanges of U. S. Govt. securities 177,351 164,556 151,103 153,886 154,335 Transfers of funds 1,148 1,220 1,232 1,343 1,525 AMOUNTS HANDLED Discounts and advances 17,234,926 19,138,175 20,216,071 17,050,334 43,422,106 Industrial loans: Loans made 9,296 15,994 4,005 6,530 27,656 Commitments to make industrial loans 6,069 2,187 4,130 4,019 9,078 Currency received and counted. 22,099,562 24,307,644 23,841,612 24,039,335 26,175,324 Coin received and counted.... 622,054 578,857 623,678 622,620 592,664 Checks handled: U. S. Govt. checks 72,577,329 69,605,341 64,379,607 64,569,739 89,648,061 All other 719,630,054 799,771,839 758,342,771 856,952,849 3 799,891,846 Collection items handled: U. S. Govt. coupons paid. 2,491,424 2,379,155 2,303,038 2,173,589 2,020,560 All other 6,455,968 4,965,273 4,175,169 4,758,483 5,121,274 Issues, redemptions, and exchanges of U. S. Govt. securities 254,060,950 321,953,221 289,312,802 346,224,112 344,771,945 Transfers of funds 316,459,625 393,459,807 415,887,444 509,167,912 656,771,175 1 Two or more checks, coupons, etc., handled as a single item are counted as one "piece." 2 Less than 50. 3 Excludes checks drawn on the Federal Reserve Banks, which were included in prior years. In 1950 there were 1,785,000 of these items amounting to $178,120,377,000. * Increase reflects change during 1947 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 1951 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 $5,139,059 $147,272 $1,742,006 $209,461 $252,016 $165,421 $130,934 $642,988 $225,904 $190,320 $335,639 $47,671$1,049,427 Industrial loans 208,454 403 152,657 4,975 7,367 9,281 7,784 1,266 24,721 Commitments to make industrial loans 20,650 1,416 5,342 490 5,639 60 4,645 3,058 Acceptances purchased 1,445 1,445 U. S. Government securities.. 389,125,363 27,040,160 88,24477,,227799 24,444,088 36,284,438 25,827,615 20,959,99758,031,398 20,992,08312,258,37018,289,18018,583,47438,167,281 Allother 161,101 9,385 28,190 9,559 19,841 9,544 10,927 19,400 7,376 8,425 17,036 9,549 11,869 Total current earnings... 394,656,072 27,196,817 90,019,32324,817,18136,566,61226,010,437 21,111,139 58,699,425 21,225,42312,464,89918,646,50018,641,960 39,256,356 CURRENT EXPENSES Salaries: Officers 3,989,310 225,100 801,602 207,751 335,910 282,195 291,752 454,843 262,129 233,206 280,749 264,963 349,110 Employees 58,036,564 3,900,791 13,738,794 3,474,283 5,172,234 3,485,214 2,688,285 8,918,661 3,389,087 1,863,498 3,025,338 2,623,037 5,757,342 Directors' and other fees 288,366 18,544 43,856 22,614 20,201 17,899 31,350 16,550 20,369 15,465 19,165 19,585 42,768 Retirement contributions.... 6,093,128 401,060 1,364,146 350,386 542,343 377,971 345,803 920,226 362,196 185,001 337,912 300,355 605,729 Traveling expenses 1,235,437 74,499 143,882 47,213 109,522 111,527 83,948 174,292 92,189 85,926 88,601 84,033 139,805 Postage and expressage 12,902,966 1,070,028 2,010,544 791,630 1,076,454 1,151,932 1,087,995 1,857,224 675,578 408,569 685,636 651,370 1,436,006 Telephone and telegraph 707,885 38,478 161,851 41,752 54,165 41,873 61,673 54,122 50,637 31,117 47,237 44,626 80,354 Printing, stationery, and supplies 5,433,944 423,389 1,060,157 300,161 508,698 327,065 336,908 917,134 369,956 139,912 271,001 244,284 535,279 Insurance 769,522 55,630 160,568 36,543 73,710 62,278 52,508 97,292 51,211 20,576 52,143 34,851 72,212 Taxes on real estate 2,071,841 250,384 526,372 94,617 232,214 85,865 84,156 288,378 88,774 97,164 113,739 49,923 160,255 Depreciation (building) 2,196,377 55,832 472,112 66,351 302,285 170,604 43,302 315,671 261,626 31,406 192,511 44,122 240,555 Light, heat, power, and water. 871,140 47,908 167,413 48,097 95,825 64,035 41,809 122,320 71,466 27,125 74,724 44,009 66,409 Repairs and alterations 736,391 24,158 18,902 37,028 120,063 71,182 69,943 61,365 137,141 93,391 50,126 21,742 31,350 Rent 385,637 55,756 5,086 27,745 11,971 5,609 27,010 84,327 23,553 50,135 14,226 9,821 70,398 Furniture and equipment: Purchases 1,832,857 172,980 298,634 95,737 138,318 151,370 140,101 387,931 137,229 29,507 76,251 66,020 138,779 Rentals 2,907,177 184,765 508,463 242,607 260,343 236,558 152,509 505,996 125,877 88,173 161,004 161,712 279,170 Assessment for expenses of Board of Governors 4,095,497 254,300 1,255,300 321,999 380,400 206,000 172,800 566,300 151,698 103,700 153,400 150,700 378,900 Federal Reserve currency.... 7,580,913 379,839 1,633,240 552,183 697,858 711,160 592,003 1,198,015 400,400 135,245 303,544 268,338 709,088 All other 1,640,929 97,613 179,862 106,603 345,198 90,145 82,594 216,497 99,101 82,266 109,377 73,539 158,134 Total 113,775,881 7,731,054 24,550,784 6,865,300 10,477,7127,650,482 6,386,44917,157,144 6,770,217 3,721,382 6,056,684 5,157,03011,251,643 Less reimbursement for certain fiscal agency and other expenses 18,306,795 1,016,165 3,951,250 990,535 1,746,086 994,508 1,001,750 3,056,221 1,047,945 583,337 1,227,931 809,009 1,882,058 Net expenses 95,469,086 6,714,889 20,599,534 5,874,765 8,731,626 6,655,974 5,384,69914,100,923 5,722,272 3,138,045 4,828,753 4,348,021 9,369,585 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PROFIT AND LOSS Current net earnings 299,186,98620,481,928 69,419,78918,942,41627,834,98619,354,46315,726,44044,598,50215,503,151 9,326,85413,817,74714,293,93929,886,771 Additions to current net earnings 387,875 301,388 21,526 2,547 30,189 1,255 50 18,330 6,244 71 991 337 4,947 Deductions from current net earnings: 1 Losses on U. S. Government securities sold (net) 1,586,123 115,977 371,595 112,256 148,481 101,555 83,639 222,407 86,872 51,867 75,621 70,894 Charge-offs and special 144,959 gj depreciation on bank r premises 299,939 299,939 Reserves for contingencies 489,452 56,014 64,603 29,349 37,072 54,664 48.003 64,863 22,607 14,131 22,727 24,160 51.259 S Allother 140,250 105,633 1,946 1,353 9,904 10,488 744 3,736 417 1,270 885 331 3,543 W Total deductions 2,515,764 577,563 438,144 142,958 195,457 166,707 132,386 291,006 109,896 67,268 99,233 95,385 199,761 gj Net deductions 2,127,889 276,175 416,618 140,411 165,268 165,452 132,336 272,676 103,652 67,197 98,242 95,048 194,814 eg Net earnings before payments (A. to U. S. Treasury 297,059,09720,205,753 69,003,17118,802,00527,669,71819,189,01115,594,10444,325,82615,399,499 9,259,65713,719,50514,198,89129,691,957 £ Paid U. S. Treasury (interest on outstanding F. R. notes).254,873,58817,513,810 58,083,91016,041,52023,708,41416,720,82313,524,30438,297,50613,435,403 8,050,16711,879,03012,220,82125,397,880 ^ Dividends 13,864,750 745,812 4,465,288 978,022 1,327,030 610,304 567,001 1,772,557 471,210 314,934 520,513 620,109 1,471,970 Transferred to surplus (Sec. 7) 28,320,759 1,946,131 6,453,973 1,782,463 2,634,274 1,857,884 1,502,799 4,255,763 1,492,886 894,556 1,319,962 1,357,961 2,822,107 Surplus (Sec. 7), January 1. .510,022,38732,245,671153,289,61139,710,46748,014,19525,166,80322,368,59875,345,44320,295,33413,168,05219,046,59216,852,18044,519,441 Surplus (Sec. 7), December 31.538,343,14634.191,802159,743,58441,492,93050.648,46927,024,68723,871,39779,601,20621,788,22014,062,60820,366,55418,210,14147,341.548 ON Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 7—EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS, 1914-51 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 s i t a n o u y g r - y s l Div p i a d i e d nds F p r a T a i r d n e c a t h o s i u s U e ry . t 2 a S x . Pa ( T i S d 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 t e e . t r a o e n s s u o U t r t e y . o s S n ) . T t ( r o S a e n s c s u . f r e 1 p r 3 l r u b e s ) d T t r o ( a S n s e s u c f r e . p r 7 l r u ) e s d All Federal Reserve Banks, by years: 1914-15 $ 2,173,252 $ 2,320,586 $ -141,459 $ 217,463 1916 5,217,998 2,273,999 2,750,998 1,742,774 1917 16,128,339 5,159,727 9 582 067 6 804 186 $ 1 134 234 $ 1,134,234 1918 67 584,417 10 959 533 52 716 310 5 540 684 48 334,341 1919 102,380,583 19,339,633 78 367 504 5 Oil 832 2 703 894 70,651,778 1920 181,296,711 28,258,030 149,294,774 5,654,018 60,724,742 82,916,014 1921 122,865,866 34,463,845 82,087 225 6,119 673 59,974,466 15,993,086 1922 50,498,699 29 559 049 16 497 736 6 307 035 10 850 605 —659 904 1923 50,708,566 29,764,173 12,711 286 6,552 717 3,613,056 2,545,513 1924 . 38,340,449 28,431,126 3,718,180 6,682,496 113,646 -3,077,962 I 1925 41,800,706 27,528,163 9,449,066 6,915,958 59,300 2,473,808 1926 47,599,595 27,350,182 16,611 745 7,329,169 818,150 8,464,426 1927 43,024,484 27,518,443 13,048,249 7,754,539 249,591 5,044,119 1928 64,052,860 26,904,810 32,122 021 8,458,463 2,584,659 21,078,899 1929 70 955 496 29 691 113 36 402 741 9 583 913 4 283 231 22 535,597 1930 36 424,044 28 342 726 7 988 182 10 268 598 17 308 —2,297 724 w 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 2 011 418 11 020 582 1933 . . 49,487,318 29,222,837 7,957,407 8,874,262 -916,855 1934 48,902,813 29,241,396 15,231,409 8,781,661 $ -60,323 6,510,071 1935 42,751,959 31,577,443 9,437,758 8,504,974 $ 297,667 27,695 607,422 1936 37,900,639 29,874,023 8,512,433 7,829,581 227,448 102,880 352,524 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 I 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 1 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 1951 394,656,072 95,469,086 297,059,097 13,864,750 254,873,588 28,320,759 Total—1914-51. . . 3,369,531,225 1,308,520,189 2,010,804,681 305,906,998 149,138,300 2,188,893 886,562,457 -3,658 2667,011,691 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Aggregate for each Federal Reserve Bank, 1914-51: Boston 227,771,852 93,090,989 132,364,087 20,710,798 7,111,395 280,843 59,703,600 +135,412 44,422,039 New York 888,754,163 308,331,467 577,688,699 104,487,173 68,006,262 369,116 208,692,819 -433,413 196,566,742 Philadelphia 245,460,705 94,674,148 150,461,309 26,828,115 5,558,901 722,406 60,947,413 +290,661 56,113,813 Cleveland 310,432,436 121,346,129 182,632,302 30,552,807 4,842,447 82,930 83,291,669 -9,907 63,872,356 Richmond 192,458,705 79,854,922 109,225,574 12,957,470 6,200,189 172,493 57,133,959 -71,516 32,832,979 Atlanta 167,045,104 65,193,345 96,209,634 11,157,476 8,950,561 79,264 46,873,414 +5,491 29,143,428 Chicago 475,441,939 177,820,992 287,250,256 36,137,112 25,313,526 151,045 130,695,249 +11,681 94,941,643 St. Louis 163,135,001 70,722,555 87,089,991 10,579,131 2,755,629 7,464 46,892,948 -26,514 26,881,333 Minneapolis 104,228,359 44,178,587 58,230,274 7,310,163 5,202,900 55,615 27,592,026 +64,875 18,004,695 Kansas City 161,143,866 74,259,397 83,601,411 10,385,947 6,939,100 64,213 41,722,993 -8,674 24,497,832 Dallas 135,498,487 58,583,963 73,549,232 10,392,508 560,049 102,083 39,896,301 +55,336 22,542,955 San Francisco 298,160,608 120,463,695 172,501,912 24,408,298 7,697,341 101,421 83,120,066 -17,090 57,191,876 Total 3,369,531,225 1,308,520,189 2,010,804,681 305,906,998 149,138,300 2,188,893 886,562,457 -3,658 667,011,691 1 Current earnings less current expenses, plus other additions and less other deductions. 2 On Dec. 31, 1951, surplus (Sec. 7)—accumulated pursuant to Section 7 of the Federal Reserve Act—amounted to $538,343,146 ($667,011,691 retained net earnings, shown here, minus $139,299,557, charge-off of cost of Federal Deposit Insurance Corporation stock—amount paid to U. S. Treasury by F. D. I. C. upon cancellation of stock, and $500,000, charge-off on bank premises, plus $11,131,012 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 1918-51 AND END OF MONTH 1951 [In millions of dollars] Reserve Bank credit outstanding Member bai Treas- Treas- reserve balances U. S. Government ury Treas- ury de- Other End m o o f n y t e h ar or c v o a D a a n u n d i c n s d - - e ts s Total se B cu o r n it d i s es c c B e a r i t t l e i l f s s i , , - ot A he ll r * Total s G to o c l k d 2 s r t i o c e n a u n u g n r c t d - - y - c M i u n l o a c n ti i e r o y - n i h c n u o a g r l s y s d h 4 - R F B p e e w o a d s i s n e e t i r h k r t v s a s e l d m e N p em o o s n b i - t e s r 6 c R F o e e u a d s n c e e - t r r s v a e l 8 Total qu R i e re - d Excess 7 r and notes 1918 1,766 239 28 211 493 2,498 2,873 1,795 4,951 288 51 121 118 1.636 1,585 51 1919 2,215 300 27 273 777 3,292 2,707 1,707 5,091 385 31 101 208 1,890 1,822 68 1920 2 687 287 26 261 380 3 355 2 639 1,709 5 325 218 57 23 298 1,781 1921 1,144 234 32 202 185 1,563 3,373 1,842 4,403 214 96 27 285 1,753 1,654 99 1922 618 436 29 407 351 1,405 3,642 1,958 4,530 225 11 29 276 1,934 1923 723 134 30 104 382 1,238 3,957 2,009 4,757 213 38 23 275 L.898 1,884 14 o 1924 320 540 75 465 441 1,302 4,212 2,025 4,760 211 51 39 258 2,220 2,161 59 1925 643 375 61 314 441 1,459 4,112 1,977 4,817 203 16 29 272 2,212 2,256 -44 1926 637 315 48 267 430 1,381 4,205 1,991 4,808 201 17 65 293 2,194 2,250 -56 1927 582 617 291 326 456 1,655 4,092 2,006 4,716 208 18 26 301 2,487 2,424 63 o 1928 1,056 228 54 174 524 1,809 3,854 2,012 4,686 202 23 27 348 2,389 2,430 -41 1929 632 511 77 434 440 1,583 3,997 2,022 4,578 216 29 30 393 2,355 2,428 -73 8 1930 251 729 164 565 393 1,373 4,306 2,027 4,603 211 19 28 375 2,471 2,375 96 1931 638 817 360 457 398 1,853 4,173 2,035 5,360 222 54 110 354 1,961 1,994 —33 1932 235 1,855 422 1,433 55 2,145 4,226 2,204 5,388 272 8 43 355 2,509 1,933 576 1933 98 2,437 443 1,994 153 2,688 4,036 2,303 5,519 284 3 132 360 2,729 1,870 859 8 1934 7 2,430 396 2,034 26 2,463 8,238 2,511 5,536 3,029 121 189 241 4,096 2,282 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 2,743 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 4,622 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 5,815 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 5,519 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 6,444 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 7,411 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 9,365 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 1,278 256 13,117 11,129 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 11,650 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 12,748 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 14,457 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 15,577 562 1947 85 22,559 2,853 19,706 536 23,181 22,754 4,562 28,868 1,336 870 961 563 17,899 16,400 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 19,277 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 15,550 1,018 1950 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 16,509 1,172 1951— January 798 21,484 4,965 16,519 769 23,051 22,392 4,638 27,048 1,297 807 1,206 737 18,984 18,047 937 February 397 21,881 5,393 16,488 909 23,188 22,086 4,640 27,188 1,293 465 1,172 729 19,066 18,366 700 March 275 22,910 6,187 16,723 964 24,150 21,806 4,640 27,119 1,293 1,114 1,322 734 19,014 18,367 647 April 283 22,742 6,570 16,172 535 23,560 21,805 4,643 27,278 1,284 611 1,236 698 18,901 18,449 452 May 529 22,509 6,803 15,706 443 23,481 21,755 4,646 27,519 1,293 666 1,179 690 18,536 18,206 330 June 53 22,982 6,822 16,160 1,007 24,043 21,756 4,655 27,809 1,281 317 1,262 765 19,020 18,604 416 July 277 23,078 5,822 17,256 679 24,033 21,759 4,666 27,851 1,302 584 1,159 700 18,863 18,396 467 August 552 23,127 5,822 17,305 630 24,309 21,854 4,673 28,155 L.287 459 1,038 716 19,181 18,464 717 September 190 23,734 5,822 17,912 1,134 25,058 22,013 4,681 28,288 L.285 936 1,127 727 19,391 18,822 569 October 186 23,552 5.325 18,227 690 24,427 22,233 4,688 28,417 1,283 493 818 780 19,557 19,060 497 November 624 23,239 5,334 17,905 871 24,734 22,382 4,700 28,809 1,288 481 794 772 19,670 19,180 490 December 19 23,801 5,344 18,457 1,189 25,009 22,695 4,709 29,206 1,270 247 889 746 20,056 19,667 389 » Includes Government overdrafts in 1918, 1919, and 1920. 2 Prior to Jan. 30, 1934, included gold held by Federal Reserve Banks and in circulation. 8 The stock of money, other than gold, for which the Treasury is primarily responsible—silver bullion at monetary value and standard silver dollars, subsidiary silver and minor coin, and United States notes; also, Federal Reserve bank notes and National bank notes for the retirement of which lawful money has been deposited with the Treasurer of the United States. Includes money of these kinds held in the Treasury and the Federal Reserve Banks as well as that in circulation. 4 Gold other than that held against gold certificates and gold certificate credits and as the reserve against United States notes and Treasury notes of 1890, monetary silver other than that held against silver certificates and Treasury notes of 1890, and the following coin and paper money held in the Treasury: subsidiary silver and minor coin, United States notes, Federal Reserve notes, Federal Reserve bank notes, and National bank notes. • Includes all deposits in Federal Reserve Banks except member bank reserve accounts and the U. S. Treasurer's general account. • The total of Federal Reserve Bank capital paid in, surplus, other capital accounts, and other liabilities and accrued dividends, less the sum of bank premises and other assets. 7 Figures available only on call dates prior to 1929. NOTE.—For description of figures and discussion of their significance, see Banking and Monetary Statistics, Sec. 10, pp. 360-66. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

68 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 9—BANK PREMISES OF FEDERAL RESERVE BANKS AND BRANCHES DECEMBER 31, 1951 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 $ 1,017,452 New York 5,215,656 12,183,528 4,837,234 22,236,418 6,289,879 Annex 592,679 1,451,570 215,418 2,259,667 794,911 Buffalo 255,000 465,707 720,707 379,501 Philadelphia. . . 1,884,357 4,463,369 920,743 7,268,469 2,853,883 Cleveland 1,295,490 6,522,287 1,665,428 9,483,205 2,155,877 Cincinnati 380,744 1,038,384 200,131 1,619,259 1,133,731 Pittsburgh 1,189,941 1,103,922 379,694 2,673,557 1,474,252 Richmond 387,411 1 3,660,606 663,667 4,711,684 2,622,051 Annex 80,333 482,482 109,132 671,947 125,199 Baltimore 250,487 1,247,262 479,367 1,977,116 974,745 Charlotte 105,701 308,749 154,449 568,899 388,789 Atlanta 283,000 1,461,474 308,082 2,052,556 670,374 Birmingham. . . 124,137 330,680 65,491 520,308 142,255 Jacksonville. . . 173,114 i1,536,638 39,669 1,749,421 1,503,111 Nashville 48,000 211,616 35,091 294,707 90,542 New Orleans... 277,078 762,455 212,281 1,251,814 476,008 Chicago 2,963,548 6,499,682 2,685,745 12,148,975 2,539,982 Detroit 1,022,064 '3,965,981 160,241 5,148,286 3,802,507 St. Louis 1,496,060 2,136,438 1,321,042 4,953,540 1,365,374 Annex 179,720 1,035,281 518,774 1,733,775 1,288,444 Little Rock 85,007 264,604 158,320 507,931 200,585 Louisville 131,177 226,259 72,463 429,899 159,664 Memphis 128,542 287,468 105,662 521,672 251,480 Minneapolis. . . 600,521 2,316,746 660,969 3,578,236 990,831 Helena 15,710 126,401 44,142 186,253 91,985 Kansas City... 495,300 3,391,101 1,222,530 5,108,931 1,661,431 Denver 101,512 449,876 79,268 630,656 254,021 Oklahoma City 65,021 415,571 95,480 576,072 208,359 Omaha 176,427 397,938 94,548 668,913 329,793 Dallas 189,831 1,350,945 451,242 1,992,018 367,740 El Paso 39,004 119,739 32,134 190,877 43,636 Houston 78,812 317,336 112,111 508,259 139,547 San Antonio. . . 75,002 163,360 55,859 294,221 99,596 San Francisco.. 412,996 3,360,069 784,102 4,557,167 998,765 Los Angeles 443,488 988,109 323,195 1,754,792 427,090 Portland 161,238 1,666,174 625,090 2,452,502 2,388,614 Salt Lake City. 114,075 341,449 84,814 540,338 203,552 Seattle 274,772 1,879,446 642,240 2,796,458 2,694,645 Total 23,039,681 72,473,305 21,278,005 116,790,991 43,600,201 OTHER REAL ESTATE ACQUIRED FOR BANKING HOUSE PURPOSES Boston 381,406 i 772,592 1,153,998 893,296 New York 45,000 125,864 170,864 60,400 Richmond 146,550 146,550 146,550 Charlotte 10 868 10 868 10 868 Atlanta 336,489 336,489 336 489 Jacksonville 30,000 30,000 30,000 258 007 258 007 258 007 San Francisco 63,000 63,000 63,000 Los Angeles 35,000 35,000 35,000 Total .... 1,306,320 898,456 2,204,776 1,833,610 1 Includes cost of addition or building under construction. 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, 1951] President Other officers Employees 1 Total Federal Reserve Bank (Including branches) Annual salary Number Annual salaries Number Annual salaries Number Annual salaries Boston . . $25,000 16 $196,000 1,444 $3,973,018 1,461 $4,194,018 New York 50,000 54 776,200 3,983 14,199,477 4,038 15,025,677 Philadelphia 25,000 16 188,000 1,221 3,646,532 1,238 3,859,532 Cleveland 25,000 30 323,500 1,784 5,289,274 1,815 5,637,774 Richmond . . 25,000 25 258,300 1,290 3,424,593 1,316 3,707,893 Atlanta 25,000 29 270,600 1,064 2,825,984 1,094 3,121,584 Chicago 35,000 35 416,600 2 ,888 8,904,969 2,924 9,356,569 St. Louis 25,000 25 224,100 1,237 3,362,097 1,263 3,611,197 Minneapolis 25,000 22 213,500 691 1,874,456 714 2,112,956 Kansas City 25,000 27 255,800 1,074 2,975,822 1,102 3,256,622 Dallas 25,000 25 237,900 923 2,667,786 949 2,930,686 San Francisco 25,000 33 325,900 1,884 5,710,363 1,918 6,061,263 Total $335,000 337 $3,686,400 19,483 $58,854,371 19,832 $62,875,771 i Includes 823 part-time employees. NOTE.—During the year 1951, the Banks were reimbursed $9,900,576 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 [Per cent per annum] In effect December 31, 1951 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 c S i r s a a c n n o - Discounts for and advances to member banks under Sees. 13 and 13a of the Federal Reserve Act IX > Advances to member banks under Sec. 10(b) of the Federal Reserve Act 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) 2X I Loans to industrial or commercial businesses under Sec. 13b of the Federal Reserve Act, direct or in participation with financing institutions 2M-S 3-5 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) 0) o On remaining portion () <•) (8) (3) Commitments to make loans under Sec. 13b of the Federal Reserve Act: <m To industrial or commercial businesses 4-1X 4-1} £tf -1M K-1X 4-iX O To financingi nstitutions iiX 4-1} -IX *}4-iH 4-iH i Effective minimum buying rates on prime bankers' acceptances payable in dollars (6) 1-90 days 91-120 days I 121-180 days 1 Rate charged borrower by financing institution less commitment rate. 2 Rate charged borrower but not to exceed 1 per cent above the discount rate. » Rate charged borrower. * Financing institution is charged H per cent per annum on undisbursed portion of loan. 8 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

71 FEDERAL RESERVE SYSTEM NO. 12—MEMBER BANK RESERVE REQUIREMENTS [Per cent of deposits] Net demand deposits 1 Time deposits Effective date of change (All member Central reserve Reserve Country banks) city banks city banks banks 1917—June21 13 10 1936—Aug.16 15 1937—Mar. 1 22% 1734 May 1 26 20 14 1938—Apr. 16 12 22H 1941—Nov. 1 26 20 14 1942—Aug.20 24 Sept.14 22 Oct. 3 20 1948—Feb. 27 22 June11 24 Sept.16 16 271, Sept.24 26 1949—May 1 15 27 May 5 24 21 37 June 30 20 July 1 14 26 Aug. 1 13 Aug. 11 35 Aug. 16 12 25 Aug.18 23 19 Aug 25 223 18 Sept. 1 22 18 1951—Jan. 11 23 19 36 Jan. 16 13 36 Jan. 25 24 20 Feb. 1 In effect Jan. 1, 1952 «. 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-June 30, 1947). 2 Requirement became effective at country banks. 3 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 2H 2X Postal Savings deposits 3 2H 2H Other time deposits payable: In 6 months or more 3 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

72 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 14—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, 1951] Fees Payable to Guaranteeing Agency by Financing Institution on Guaranteed Portion of Loan Guarantee fee Percentage of Percentage of loan guaranteed (Percentage of any commitment interest payable fee charged 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

73 FEDERAL RESERVE SYSTEM 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 and July 31, 1951, under authority of the Defense Production Act of 1950, approved September 8, 1950 Se O p c te to m b b e e r r 1 1 5 8 , , 1 1 9 9 5 5 0 0- Oc J t u o l b y e r 3 0 1 , 6 , 1 9 1 5 9 1 50- July 31, 1951- Type of credit Minimum Maximum Minimum Maximum Minimum Maximum p (P a e y d r o m w c e e n n n t t x ) ( m M a o tu n r th it s y ) p (P a e y d r o m w c e e n n n t t * ) ( m M a o tu n r th it s y ) p (P a e y d r o m w c e e n n n t t ) l ( m M a o tu n r th it s y ) Instalment sales: Group A 33 H 21 15 33 H 18 Automobiles Group B 15 18 25 15 15 18 Major appliances 2 Group C 10 18 15 15 15 18 Furniture and floor coverings (soft-surface) Group D 10 30 10 30 10 36 Home improvement materials, articles, and services Instalment loans: To purchase listed articles () () () Other (unclassified) 18 15 18 1 For automobiles, payable in cash, trade-in, or both; for other listed articles, payable in cash from Sept. 18, 1950, to July 30, 1951, and in cash, trade-in, or both from July 31, 1951. Exempted from down payment requirements: Sept. 18-Oct. 15, 1950, listed articles costing less than $100; beginning Oct. 16, 1950, those costing less than $50. 2 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. 8 Where credit is to purchase listed articles, requirements are same as on instalment sales of the respective articles. NOTE.—The regulation, amendments, and supplements 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

74 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 17—MAXIMUM LOAN VALUES AND MAXIMUM MATURITIES ON REAL ESTATE CONSTRUCTION CREDIT SUBJECT TO REGULATION X iui uumcisiuciiiicu piupauca unuci auuiuiaj ux LUC JUCICUSC HI approved September 8, 1950, and amended September 1, 1951 Value per family unit Maximum loan value 1 Maximum maturity One- to four-family unit residential properties and farm residences October 12, 1950 to September 1, 1951 [3- to 4-family units not included until Jan. 12, 1951] Not more than $5,000 90 per cent of value per family 25 years for properties valued unit at $7,000 or less 2 More than $5,000 but not more than $4,500 plus 65 per cent of ex- $9,000 cess of value per family unit over $5,000 More than $9,000 but not more than $7,100 plus 60 per cent of ex- 20 years for properties valued $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 September 1, 1951- Not more than $7,000 90 per cent of value per family unit More than $7,000 but not more than 85 per cent of value per family $10,000 unit More than $10,000 but not more 80 per cent of value per family 25 years for properties valued than $12,000 unit at $12,000 or less 2 More than $12,000 but not more $9,600 plus 40 per cent of ex- 20 years for properties valued than $15,000 cess of value per family unit at more than $12,000 3 over $12,000 More than $15,000 but not more $10,800 plus 20 per cent of exthan $20,000 | cess of value per family unit over $15,000 More than $20,000 butfnot morel £11,800 plus 10 per cent of exthan $24,500 cess of value per family unit over $20,000 Over $24,500 50 per cent of value per family unit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

75 FEDERAL RESERVE SYSTEM NO. 17—MAXIMUM LOAN VALUES AND MAXIMUM MATURITIES ON REAL ESTATE CONSTRUCTION CREDIT SUBJECT TO REGULATION X—Continued Value per family unit Maximum loan value* Maximum maturity Multi-unit residential properties January 12, 1951— Not more than $7,000 83 per cent of value per family None unit More than $7,000 but not more than $5,810 plus 53 per cent of ex- None $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 Value of property 4 Nonresidential properties February 15, 1951— All values 50 per cent of value of prop- 25 years 2 erty 1 If the total amount of credit extended does not exceed $2,500, the loan is not subject to Regulation X. 8 If amortized through substantially equal monthly, quarterly, semiannual, or annual payments which fully liquidate the original principal amount in the prescribed period. 1 An alternative to the method of amortization described in footnote 2 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. Not applicable to nonresidential properties. * In the case of credit extended with respect to nonresidential property involving more than one nonresidential structure, the maximum loan value may be applied separately with respect to each such structure, or with respect to the entire property, at the election of the registrant. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 18—ANALYSIS OF CHANGES IN NUMBER OF BANKING OFFICES DURING 1951 Commercial and stock savings banks and nondeposit trust companies Mutual savings All Member Nonmember banks banks banks banks Total ti N on a a - l m S b t e e a m r t i e - su I r n ed - 1 s N u i o n re n - d - su I r n e - d1 s N u i o n re n - d - Number of banks, Dec. 31, 1950. 14,650 14,121 4,958 1,915 6,562 689 194 335 Changes during 1951 New banks 2 +63 +62 +9 +2 +42 +9 +1 3 Consolidations and absorptions: Banks converted into branches.. -59 -58 -22 -11 -22 -3 -1 Other -24 -24 -5 -2 -11 -6 Voluntary liquidations * — 11 — 11 —2 „. 7 — 7 +2 +2 +2 Interclass bank changes: Conversions— — 1 + 1 State into national +2 Federal Reserve membership: « -2 Admissions of State banks ... +8 -6 -2 Withdrawals of State banks... -11 + 11 Federal deposit insurance: 6 +29 -29 +7 -7 Net increase or decrease -32 -32 -19 -14 +40 -39 +8 -8 Number of banks, Dec. 31, 1951 14,618 14,C89 4,939 1,901 6,602 650 202 327 Number of branches and additional offices,7 Dec. 31, 1950... 4,934 4,721 2,136 1,343 1,190 52 152 61 Changes during 1951 De novo branches +251 +234 + 108 +69 +56 +1 + 11 +6 Banks converted into branches.... +59 +58 +23 +25 + 10 + 1 -23 -22 -15 -6 -1 Other changes ® • +3 +3 + 1 + 1 +1 Interclass branch changes: National to State member -20 +20 _3 +3 State member to national .. + 12 -12 State member to nonmember -2 +2 +2 Nonmember to State member . + 11 — 11 Noninsured to insured +2 -2 +2 -2 Net increase or decrease +290 +273 + 108 + 106 +70 -11 + 13 +4 Number of branches and additional offices,7 Dec. 31, 1951... 5,224 4,994 2,244 1,449 1,260 41 165 65 Number of banking facilities,9 on Dec 31 1950 122 122 94 16 12 Changes during 1951 Kstablished +37 +37 +33 +2 +2 + 1 Npt increase +37 +37 +32 +2 +3 Number of banking facilities,9 on D«»c 31 1951 159 159 126 18 15 1 The State member bank figures and the insured mutual savings bank figures both include three member mutual savings banks. These banks are not included in the total for "commercial banks" and are included only once in "all banks." 2 Exclusive of new banks organized to succeed operating banks. 3 Exclusive of liquidations incident to the succession, conversion, and absorption of banks. 4 Two institutions restored to series, previously eliminated because reported as not engaged in deposit or fiduciary banking. * Exclusive of conversions if any of national banks into State member banks, or vice versa. Such changes do not affect Federal Reserve membership; theyare 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 other 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 which are shown separately. 8 Three de novo branches opened prior to 1951 but not previously reported. • Banking facilities are provided at military and other Government establishments through arrangements made by the Treasury Department with banks designated as depositaries and financial agents of the Government. These figures do not include branches that have also been designated by Digitized fort hFeR TArSeaEsuRry Department as banking facilities. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

77 FEDERAL RESERVE SYSTEM NO. 19—NUMBER OF BANKING OFFICES ON FEDERAL RESERVE PAR LIST AND NOT ON PAR LIST, BY FEDERAL RESERVE DISTRICTS AND STATES, DECEMBER 31, 1951 i Total banks on On par list which checks are Not on par list drawn, ind their (Nonmember) Federal Reservebranches & offices Total Member Nonmember 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 471 368 471 368 323 289 148 79 New York 858 1 000 858 1,000 737 922 121 78 Philadelphia. . 8?9 184 829 184 632 142 197 42 Cleveland I 106 339 1,106 339 685 296 421 43 Richmond I 008 590 812 442 477 275 335 167 196 148 Atlanta .... 1.217 240 618 198 355 168 263 30 599 42 Chicago '.483 641 2.483 641 1.009 283 1,474 358 St. Louis L.464 162 1.139 100 495 59 644 41 "325' 62 Minneapolis 1.274 112 677 71 476 28 201 43 597 41 Kansas City 1.752 24 1.743 24 751 13 992 11 9 Dall is 034 69 931 60 633 41 298 19 103 9 San Francisco. . 491 1.416 491 1.416 262 1,321 229 95 Total 13,987 5,145 12,158 4,843 6,835 3,837 5,323 1,006 1,829 302 STATE Alabama 226 28 129 28 93 28 36 97 Arizona . . . 12 67 12 67 5 50 7 17 Arkansas 230 21 109 5 68 2 41 3 121 16 California 191 1 004 191 1,004 118 950 73 54 Colorado 150 4 150 4 93 3 57 1 Connecticut 104 60 104 60 63 53 41 7 Delaware 36 24 36 24 15 10 21 14 Dist. of Col 19 47 19 47 15 37 4 10 Florida 200 8 144 7 74 7 70 56 1 Georgia 403 48 118 45 66 41 52 4 285 3 Idaho 42 58 42 58 23 53 19 5 Illinois 892 2 890 2 512 2 378 2 Indiana 481 121 481 121 237 64 244 57 Iowa 662 163 662 163 160 502 163 Kansas 607 2 605 2 215 2 390 2 Kentucky 380 51 380 51 114 33 266 18 Louisiana . .. 166 83 62 60 47 52 15 8 104 23 Main0 62 75 62 75 38 39 24 36 Maryland 160 134 160 134 75 79 85 55 Massachusetts.. 175 189 175 189 139 168 36 21 Michigan . .. 431 257 431 257 231 200 200 57 Minnesota 678 6 267 6 206 6 61 411 Mississippi .... 202 71 41 15 31 7 10 8 161 56 ^Missouri ... 594 1 530 1 178 1 352 64 Montana 110 no 84 26 Nebraska 410 2 2 139 2 271 Nevada g 21 4108 21 6 19 2 2 New Hampshire 74 2 74 2 52 1 22 1 New Jersey. . . . 315 176 315 176 272 156 43 20 New Mexico. . . 51 23 51 23 34 6 17 17 New York 617 827 617 827 536 769 81 58 North Carolina. 209 235 100 93 54 52 46 41 109 142 North Dakota.. 150 22 62 6 42 20 6 88 16 Ohio 6*56 246 656 246 419 216 237 30 Oklahoma 383 1 375 1 223 1 152 8 Oregon . 69 104 69 104 30 90 39 14 Pennsylvania... 954 220 954 220 725 192 229 28 Rhode Island... 14 54 14 54 8 42 6 12 South Carolina. 149 54 67 48 32 40 35 8 82 6 South Dakota. . 169 50 71 25 62 22 9 3 98 25 Tennessee 296 103 212 89 84 65 128 24 84 14 Texas 911 12 859 12 581 12 278 52 Utah 54 30 54 30 30 28 24 2 Vermont 68 11 68 11 39 2 29 9 Virginia 315 120 311 120 204 67 107 53 4 Washington.. .. 117 156 117 156 51 146 66 10 West Virginia. . 181 180 109 71 1 Wisconsin 552 152 552 i52 164 22 388 130 Wyoming 52 52 39 13 1 Does not include mutual savings banks, on a few of which some checks are drawn, but does include 159 banking facilities (see footnote 9, Table 18). The difference in the number of member banks on Dec. 31, 1951 shown in this table and in Table 18 is due to the fact that this table excludes 2 nondeposit trust companies and 3 mutual savings banks on which no checks are drawn. The difference between Digitized fothr eF nRuAmSbEerR o f nonmember commercial banks is due to the fact that this table excludes 100 banks and trust companies on which no checks are drawn. http://fraser.stlouisfed.org/ Back Heures.—See Bankim and Monetary Statistics. Table 15. and Drevious Annual Redorts. Federal Reserve Bank of St. Louis

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RECORD OF POLICY ACTIONS BOARD OF GOVERNORS JANUARY 5, 1951 Amendment to Regulation X, Residential Real Estate Credit. Regulation X was amended, effective January 12, 1951, with the concurrence of the Housing and Home Finance Administrator, so as to bring within its purview non-Government-aided real estate construction credit in connection with multi-unit residences, threeand four-family residences, and major additions or improvements to such structures; to shift the value or transaction price used in determining the maximum permissible amount of loan or mortgage from a structure to a unit basis; and to accomplish a number of clarifications of the provisions of the regulation. Votes for this action: Messrs. McCabe, 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, provided that before prescribing, changing, or suspending the 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. Regulation X, as adopted by the Board effective October 12, 1950, applied only to credit in connection with one- and two-family houses and major additions and major improvements thereto; however, the Board, in announcing the regulation, indicated that consideration was being given to the issuance of restrictions applicable to other kinds of real estate construction credit as soon as the necessary studies of the various segments of real estate construction credit could be accomplished in order to permit determination of the type and extent of restraint desirable in each instance. The amendments now adopted, restricting the extension of credit in connection with additional types of construction, reflected, therefore, the plan originally contemplated. Their purposes were further to restrain prevailing inflationary pressures by limiting the credit available for the financing of residential construction and to bring about a decrease in building to assure 80 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 81 that materials and labor required for the defense program would be available when needed. Concurrently, credit restrictions of the Federal Housing Administration and the Veterans Administration with respect to Governmentaided loans were revised to bring them into general conformity with the amended regulation of the Board of Governors, The broadened scope of Regulation X required a different type of measurement of value in determining the permissible amount of credit which might be extended, and therefore provision was made for a shift from a structure to a "family unit" basis. Other amendments to the regulation were for administrative purposes and to take care of matters which experience with the administration of the regulation showed to be in need of clarification. JANUARY 16, 1951 Amendments to Regulation T, Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges, and Regulation U, Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange. Regulations T and U were amended, effective January 17, 1951, to increase the margin requirements from 50 per cent to 75 per cent, these requirements to be applicable both to purchases of securities and to short sales. Votes for this action: Messrs. McCabe, Eccles, Szymczak, Evans, Vardaman, and Powell. Votes against this action: none. Although the total amount of credit in use in the stock market had not assumed heavy proportions, there had been some increase during the preceding several months, together with increases in the volume of trading and in prices of securities. The expanding business and economic situation appeared to be encouraging stock market activity and speculation, and the Board of Governors believed that in the existing circumstances a further substantial price advance supported by a rapid expansion of stock market credit was a distinct possibility. The increase in margin requirements was effected as a preventive measure and as a supplement to the steps previously taken in the credit and monetary area to lessen inflationary pressures. FEBRUARY 5, 1951 Amendment to Regulation F, Trust Powers of National Banks, Regulation F was amended, effective February 5, 1951, (a) to increase from $50,000 to $100,000 the maximum amount that may be invested by a national bank for any one trust in a common trust fund; and (b) to eliminate the applicability of the requirements of section 24 of the Federal Reserve Act to real estate loans in which the funds of two or more trusts may be invested. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 ANNUAL REPORT OF BOARD OF GOVERNORS Votes for this action: Messrs. McCabe, Szymczak, Evans, Vardaman, Norton, and Powell. Votes against this action: none. The action of the Board in authorizing an increase in the limit of participation of funds of any one trust in a common trust fund from $50,000 to $100,000 was taken in recognition of the substantial increase in the use of common trust funds in the past decade and the favorable experience of such funds during that period. As media for the investment of fiduciary funds, particularly those of small and medium-sized trusts, common trust funds have demonstrated their usefulness in permitting improved investment diversification and enhanced income stability for participating accounts. Footnotes 11 and 14 of Regulation F, pertaining to sections 10(c) and 12, respectively, had provided before this amendment that a single real estate loan in which the funds of several trusts were invested must be of the kind which a national bank might make under the provisions of section 24 of the Federal Reserve Act. It appeared to the Board that there was no reason why a real estate loan in which the funds of several trusts of a national bank are invested collectively should be subject to restrictions different from those applicable to a real estate loan in which the bank is permitted to invest the funds of a single trust. FEBRUARY 9, 1951 Amendment to Regulation X, Real Estate Credit. Regulation X was amended, effective February 15, 1951, with the concurrence of the Housing and Home Finance Administrator in so far as the amendments related to residential construction, to extend its coverage to credit in connection with nonresidential properties, with certain exceptions, and to make certain other changes with a view to providing a more workable and effective regulation. Votes for this action: Messrs. McCabe, Szymczak, Evans, Norton, and Powell. Votes against this action: none. The amended regulation, which left substantially unchanged the restrictions previously issued with respect to residential credit, provided for a limitation on maximum loans to finance most classes of nonresidential construction to 50 per cent of the value of the property, "value" being defined as the bona fide sale price in case of a sale or, in respect to any other extension of credit, the appraised value as determined in good faith by the lender extending credit. Maturities were limited to 25 years, and amortization was required. Major additions and improvements to a nonresidential property also were covered by the amended regulation if the cost exceeded 15 per cent of the appraised value of the structure, and supplemental borrowing continued to be within the scope of the regulation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 83 The amendments, which were issued after consultation with the National Production Authority, were designed to aid in the effective administration of the regulations issued by that Authority in the real estate construction field, FEBRUARY 21, 1951 Amendment to Regulation W, Consumer Credit. Regulation W was amended, effective February 26, 1951, by adding to section 7 a new subsection providing that any contract or similar arrangement for the rental, leasing, or bailment of a listed article for a specified period of not more than three months should be exempt from the down payment and monthly payment requirements of the regulation if (1) the transaction was to be terminated, and the article returned to the registrant, on or before the expiration of the specified period, and (2) the transaction was not renewable and did not directly or indirectly relate to or involve any subsequent lease, use of, or other interest in, the article or any similar article. Votes for this action: Messrs. Eccles, Szymczak, Norton, and Powell. Votes against this action: Mr. Evans. Following the adoption of Regulation W in October 1950 it had come to the attention of the Board that certain registrants were using, or actively considering plans for using, leasing arrangements as a means of providing lower monthly payments than would be required for instalment sale credit under the regulation. In the circumstances, the Board published a statement on November 14, 1950 that coverage of the regulation extended to many kinds of transactions other than sales, and issued a further statement on December 11, 1950 to the effect that leasing arrangements other than those limited to a single payment were in general subject to the regulation. The latter statement was incorporated in a notice in the Federal Register which stated, however, that the Board was studying the problem of leasing arrangements and would be glad to receive comments or suggestions on the subject. The above amendment was designed to reduce uncertainty among registrants by specifying a type of leasing arrangement exempt from the regulation, that is, bona fide short-term rentals that are nonrenewable and usually serve a seasonal or other temporary purpose. FEBRUARY 27, 1951 Amendment to Regulation X, Real Estate Credit. Section 6 of Regulation X was amended, effective March 5, 1951, with the concurrence of the Housing and Home Finance Adminis- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 ANNUAL REPORT OF BOARD OF GOVERNORS trator, to provide that terms different from those otherwise prescribed in the regulation might be authorized by the Board to apply to specific new construction necessary to the national defense in areas designated by the Housing and Home Finance Administrator with the concurrence of the Board. Votes for this action: Messrs. McCabe, Eccles, Szymczak, Evans, Vardaman, Norton, and Powell. Votes against this action: none. This action was taken by the Board in order to provide for some relaxation of the terms of the regulation with respect to specified construction necessary for the national defense in certain areas. It was provided that the application of the relaxed terms would be confined to new construction specified by the Housing and Home Finance Administrator in areas designated by him, with the concurrence of the Board of Governors, after surveys by the Administrator with respect to the needs for such construction within such areas, MARCH 2, 1951 Understanding between the Department of the Treasury and the Federal Reserve System with Respect to Debt Management and Monetary Policies. The agreement with the Treasury contemplated (1) a commitment by the Board that it would approve no change during the rest of calendar year 1951 in the discount rates of the Federal Reserve Banks without prior consultation with the Treasury and unless very impelling circumstances existed, (2) a request by the Board for the cooperation of the Treasury in seeking from the Congress early supplemental legislation to restrict the expansion of bank credit, and (3) approval by the Board of a joint statement for the press reading as follows: "Joint Announcement by the Secretary of the Treasury and the Chairman of the Board of Governors, and of the Federal Open Market Committee, of the Federal Reserve System. "The Treasury and the Federal Reserve System have reached full accord with respect to 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." Votes for this action: Messrs. McCabe, Eccles, Szymczak, Evans, Vardaman, Norton, and Powell. Votes against this action: none. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 85 Discussion of the reasons underlying this action will be found in the record of policy actions taken by the Federal Open Market Committee, beginning on page 98 of this Report. MARCH 9, 1951 Approval of Voluntary Credit Restraint Program. The Board approved the Voluntary Credit Restraint Program, issued a Request to financing institutions to act pursuant to the Program, and issued a Finding that the Program was in the public interest as contributing to the national defense. Votes for this action: Messrs. McCabe, Eccles, Szymczak, Evans, Vardaman, Norton, and Powell. Votes against this action: none. Section 708(a) of the Defense Production Act of 1950 authorized the President to consult with representatives of industry, business, financing, agriculture, labor, and other interests, with a view to encouraging the making by such persons of voluntary agreements and programs to further the objectives of that Act. The President delegated to the Board of Governors by section 701 (a)(2) of Executive Order No. 10161 his authority with respect to agreements in the field of financing. A program for Voluntary Credit Restraint was developed by representatives of financing institutions in collaboration with the Board, and the Board consulted with the Attorney General and the Chairman of the Federal Trade Commission with respect to the Program. The Attorney General having approved a Request by the Board to all financing institutions in the United States to act or refrain from acting in accordance with the Program, the Board approved the Program, the Request to financing institutions, and a Finding that the Program was in the national interest as contributing to national defense. The purpose of the Program was to encourage lending institutions to extend credit in such a way as to help maintain and increase the strength of the domestic economy through the restraint of inflationary tendencies and at the same time to help finance the defense program and the essential needs of agriculture, industry, and commerce. There were set forth in the Program certain lending standards for the guidance of participating institutions. The Program also provided for the appointment by the Board of a national Voluntary Credit Restraint Committee, and for the appointment by that Committee of regional subcommittees to be available for consultation with financing institutions with reference to the application of the principles of the Program to specific loan inquiries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 ANNUAL REPORT OF BOARD OF GOVERNORS MARCH 15, 1951 Amendment to Regulation X, Real Estate Credit. The Board amended Regulation X, effective March 21, 1951, with the concurrence of the Housing and Home Finance Administrator, by revising subsection (g) of section 5 so as to authorize any Federal Reserve Bank, upon application before April 15, 1951, to issue, after appropriate consideration, an exemption from the regulation for new construction of multi-unit residences and nonresidential structures if the applicant had made substantial commitments or undertakings before January 12, 1951, in the case of multi-unit residences, or before February 15, 1951, in the case of nonresidential structures; and by revising subsection (k) of section 5 to permit an exemption with respect to credit for certain new construction if extended prior to a date 32 days after completion of such construction, rather than May 1, 1951. Votes for this action: Messrs. McCabe, Szymczak, Vardaman, and Norton. Votes against this action: none. In certain cases builders or other persons had made substantial commitments or undertakings before January 12, 1951, in connection with contemplated construction of multi-unit residences or major additions or improvements thereto, or before February 15, 1951, in connection with contemplated construction of nonresidential structures or major additions or improvements thereto, without either a start or a written commitment from a lender. The amendment to subsection (g) of section 5 was adopted in order to allow an exemption in a limited number of cases where it could be shown that inability to obtain credit to finance the construction on a basis previously contemplated with a lender would result in a clear and substantial financial hardship. The amendment was similar in nature to a provision previously included in Regulation X with respect to residential construction of one- to four-family units. MARCH 21, 1951 Amendment to Regulation A, Discounts for and Advances to Member Banks by Federal Reserve Banks. The Board amended subsection (h) of section 1 of Regulation A, effective March 21, 1951, to provide that the requirement of section 1 that a note be negotiable before it would be eligible for discount by a Federal Reserve Bank or as security for an advance by a Federal Reserve Bank to a member bank would not be applicable with re- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 87 spect to any note evidencing a loan which was in whole or in part the subject of a guarantee or commitment made pursuant to section 301 of the Defense Production Act of 1950. Votes for this action: Messrs. McCabe, Szymczak, Vardaman, and Powell. Votes against this action: none. The purpose of this amendment was to facilitate the program of guaranteed loans authorized by section 301 of the Defense Production Act of 1950. Similar language exempting notes of the type described above from the negotiability requirement of Regulation A was incorporated in the regulation in 1942, when the World War II guaranteed loan program was in effect, but was eliminated by an amendment to the regulation in 1949 following the termination of that program. MARCH 29, 1951 Amendment to Regulation X, Real Estate Credit. The Board amended Regulation X, effective April 4, 1951, to provide for an exemption under subsection (g) of section 6 with respect to extensions of credit by States and municipalities in connection with the financing of nonresidential construction. Votes for this action: Messrs. McCabe, Szymczak, Evans, Vardaman, and Norton. Votes against this action: none. This action was taken for the purpose of exempting State and local governments from the terms of Regulation X, where an extension of credit was contemplated on a basis which did not conform to the regulation, in connection with the construction of nonresidential facilities. The Board's information indicated that such credit extensions were uncommon, and the amendment was adopted to eliminate the possibility that the regulation might impede the construction of needed nonresidential community facilities. APRIL 10, 1951 Amendment to Regulation X, Real Estate Credit. Regulation X was amended, effective April 16, 1951, with the concurrence of the Housing and Home Finance Administrator, by adding a clause to subsection (e) of section 5 to exempt from the regulation extensions of credit to finance the purchase or construction of a residence, multi-unit residence, or nonresidential structure to be used in substitution for a similar structure of which the borrower had been deprived through or by reason of eminent domain or condemnation proceedings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 ANNUAL REPORT OF BOARD OF GOVERNORS Votes for this action: Messrs. Martin, Szymczak, Evans, Vardaman, Norton, and Powell. Votes against this action: none. The Board had been informed of certain cases where persons had been deprived of their properties through condemnation proceedings and the equity of the owner was less than the down payment needed to acquire a similar property under Regulation X. In order to avoid hardship in such instances, and also generally to allow persons deprived of their properties through condemnation to obtain a similar replacement thereof, the Board adopted this amendment. APRIL 20, 1951 Amendment to the Voluntary Credit Restraint Program. The Board approved certain amendments to the Program which had been recommended by the Voluntary Credit Restraint Committee, including one change in the statement of principles which had the effect of removing from the scope of the Program any credit extension subject to the Board's Regulation T or Regulation U; issued a Request to financing institutions to act pursuant to the Program, as amended; and issued a Finding that the amended Program was in the public interest as contributing to the national defense. Votes for this action: Messrs. Martin, Szymczak, Evans, Vardaman, Norton, and Powell. Votes against this action: none. The amendment removing from the scope of the Voluntary Credit Restraint Program loans on securities subject to the Board's Regulation T or its Regulation U was made pursuant to the general policy that the Program should not be applied to extensions of credit already subject to regulation by a Government agency. The other amendments were concerned with facilitating administrative procedures. Following consultation with the Attorney General and the Chairman of the Federal Trade Commission and receipt of advice from the Attorney General that he approved a Request to financing institutions to act in accordance with the amended Program, the Board issued such a Request and a Finding that the amended Program was in the public interest as contributing to the national defense. MAY 3, 1951 Amendment to Regulation X, Real Estate Credit. The Board amended Regulation X, effective May 11, 1951, with the concurrence of the Housing and Home Finance Administrator, by adding a requirement that any person engaged on May 31, 1951 in the business of extending real estate credit, as defined in section 1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 89 of the regulation, must file a registration statement with the Federal Reserve Bank of his district on or before June 30, 1951, and that any person becoming so engaged thereafter must file such a statement within 30 days. Votes for this action: Messrs. Martin, Eccles, Szymczak, Evans, Vardaman, and Norton. Votes against this action: none. The Board took action to require the filing of registration statements in order to secure information to be used as a basis for assessing the adequacy and effectiveness of the provisions of the regulation, to help in considering possible changes, and to aid in the enforcement program. The requirement was put in the form of an amendment to Regulation X in order to give constructive notice of the announcement concerning the necessity for filing the statements. MAY 15, 1951 Amendment to Regulation W, Consumer Credit. Regulation W was amended, effective May 15, 1951, by redefining the procedure for granting exemptions for disaster credits and by providing for the continuation of certain rental arrangements which were in effect during the year 1950. Votes for this action: Messrs. Martin, Eccles, Szymczak, Evans, Vardaman, Norton, and Powell. Votes against this action: none. The Board adopted the amendment relating to exemptions for disaster credits in order to provide the Federal Reserve Banks with greater discretionary powers for both limiting and extending the scope of the exemption. Under the new provision, the Reserve Banks could specify the time during which an exemption would operate, the amount of credit to which an exemption would apply, the type of transactions which might qualify, the type of loan purpose for which the exemption was available, etc. The amendment relating to rental arrangements was adopted as a further adaptation of Regulation W to certain special problems in the leasing field. In view of the nature of leasing arrangements and the fact that they often are comparable in practice to binding commitments in other instalment credit fields, it seemed appropriate to make suitable provision for the continuation of the arrangements that were in effect during 1950. JULY 31, 1951 Amendment to Regulation W, Consumer Credit. Regulation W was amended, effective July 31, 1951, to extend the maximum maturity on instalment credits from 15 to 18 months for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

90 ANNUAL REPORT OF BOARD OF GOVERNORS automobiles, appliances, and furniture, and for home repairs and improvements from 30 to 36 months; to reduce the required down payment on appliances from 25 to 15 per cent; to permit the down payment on appliances to be obtained in the form of cash, trade-in, or a combination of both; and to permit making the required down payment for home repairs and improvements at the time of completion of the work. The Board also amended the regulation to extend the maximum maturity for unclassified loans from 15 to 18 months; to extend from 18 to 21 months the maturity term of credit permissible upon acceptance by a registrant in good faith of a statement of changed conditions; and to exempt from the provisions of the regulation any instalment credit required for the installation of sewerage and other related facilities, where such installation is required by health and sanitary regulations. Votes for this action: Messrs. Martin, Szymczak, Evans, and Norton. Votes against this action: none. Not voting: Mr. Vardaman. The amendments described in the first paragraph above were adopted primarily to conform the regulation to applicable provisions of the 1951 amendments to the Defense Production Act of 1950. The other changes were made by the Board in order to maintain balance within the various segments of credit covered by the regulation and, in regard to credit to finance installations of sewerage and related facilities, to exempt such credit in cases where such installations were necessary in order to comply with Government regulations in regard to health and sanitation. AUGUST 28, 1951 Amendment to Regulation T, Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges. Regulation T was amended, (a) effective September 3, 1951, by adding to section 3(g) language excusing brokers from obtaining margin in margin accounts when the amount to be obtained for transactions on a given day does not exceed $100; (b) effective September 3, 1951, by broadening somewhat the exemption already contained in section 4(f)(2) of the regulation for certain capital contribution loans to members of securities exchanges; and (c) effective September 17, 1951, by clarifying and strengthening the rules in section 6(g) regarding the withdrawal of dividends received on securities in under-margined accounts. Votes for this action: Messrs. Martin, Szymczak, Evans, and Vardaman. Votes against this action: none. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 91 The first of the amendments described was adopted in order to reduce the clerical problems involved in obtaining nominal amounts of margin in margin accounts. A similar provision for cash accounts was already contained in the regulation. The second amendment was adopted in order to simplify operations in those cases in which the principal stockholders of a closely-held corporation engaged in the securities business wished to transfer capital from the corporation to a partnership composed of the principal stockholders. Such transfers were necessary in some cases because the rules of particular stock exchanges denied membership to corporations. The third amendment was adopted in order to clarify and strengthen the provisions which permit the withdrawal in some instances of dividends received on securities in under-margined accounts. Arrearages may in fact represent a large part of the market value of the securities on which they are issued, and the amendment excluded arrearages from the privilege of withdrawal from an under-margined account. AUGUST 28, 1951 Amendment to Regulation X, Real Estate Credit. Regulation X was amended, effective September 1, 1951, with the concurrence of the Housing and Home Finance Administrator, for the purpose of revising the restrictions on housing credit affecting oneto four-family housing so as to bring the regulation into conformity with the provisions of the Defense Housing and Community Facilities and Services Act of 1951, approved by the President on September 1, 1951. With respect to conventional and FHA-insured home loans the Act provided that no more than 10 per cent down payment should be required where the transaction price did not exceed $7,000; no more than 15 per cent where the transaction price did not exceed $10,000; and no more than 20 per cent where the transaction price did not exceed $12,000. The Act also provided that credit restrictions should not require the term or maturity of any such loan not exceeding $12,000 to be less than 25 years. The Act further provided for the suspension or relaxation, within certain prescribed limitations, of credit restrictions in critical defense housing areas for housing programmed for defense workers and military personnel. The Board also amended Regulation X by making adjustments in the schedule of maximum loan values for properties having a value Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

92 ANNUAL REPORT OF BOARD OF GOVERNORS per family unit of more than $12,000; and by exempting from the regulation certain essential nonresidential defense construction. Votes for this action: Messrs. Martin, Szymczak, Evans, Vardaman, and Norton. Votes against this action: none. As indicated, most of the changes were adopted in order to bring the regulation into conformity with the applicable provisions of the Defense Housing and Community Facilities and Services Act of 1951. The other adjustments made by the Board in the schedule of maximum loan values were adopted for the purpose of bringing about balance in the schedule as a whole. The exemption of nonresidential construction certified by an appropriate agency or department of the United States Government to be essential to the national defense was provided in order to facilitate the defense program. NOVEMBER 13, 1951 Amendment to Regulation X, Real Estate Credit. Regulation X was amended, effective November 19, 1951, with the concurrence of the Housing and Home Finance Administrator, by adding to section 5 a new subsection permitting short-term secondary financing under certain conditions in cases involving unavoidable delay in the sale of a residential property; and by extending from 30 to 36 months the maximum period specified in section 5(1) in connection with exempt credits for materials, articles, and services used in new construction. Votes for this action: Messrs. Martin, Szymczak, Vardaman, and Norton. Votes against this action: none. The amendment permitting short-term secondary borrowing in certain cases was adopted by the Board in order to assist persons moving from one section of the country to another to purchase a new home should the sale of presently-occupied residential property be delayed for some unavoidable reason and the proceeds from the sale therefore be temporarily unavailable to apply on the purchase of a similar property in the new location. The amendment to section 5(1) was adopted in order to make that provision conform to a related provision in the Board's Regulation W, Consumer Credit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 93 DECEMBER 20, 1951 Amendment to Regulation W, Consumer Credit. Regulation W was amended, effective December 31, 1951, to provide that the amount of credit extended in connection with any article for which a maximum retail price is prescribed by Federal price authorities shall in no event exceed the amount which would have been permitted if the article had been sold at the maximum retail price. Votes for this action: Messrs. Martin, Szymczak, Evans, Vardaman, Norton, and Powell. Votes against this action: none. This amendment was adopted in order to bring the provisions of Regulation W into conformity with certain regulations of the Office of Price Stabilization, including Ceiling Price Regulation 94, also effective December 31, 1951, which established dollar and cent ceilings on used automobile prices. The amendment restored the form of the provisions of the regulation relating to maximum loan values that were in effect during the latter part of World War II, when similar price regulations were established. DECEMBER 20, 1951 Amendment to Regulation X, Real Estate Credit. Regulation X was amended, effective December 31, 1951, by adding to section 5 a new subsection exempting from the down payment and maturity requirements of the regulation any extension of real estate construction credit representing a contract for the leasing of nonresidential property. Votes for this action: Messrs. Martin, Szymczak, Evans, Vardaman, Norton, and Powell. Votes against this action: none. The Board had found that it was difficult under the provisions of Regulation X to distinguish clearly nonresidential leases which were and which were not covered by the regulation, and that it would also be difficult satisfactorily to amend the regulation in this respect because of the great variety and complexity of nonresidential leasing arrangements, some of which were only partly or not at all substitutes for mortgage or other credit extensions. Effective the same date as the above amendment to Regulation X and pursuant to previous agreement with the Board, the Voluntary Credit Restraint Committee amended the last paragraph of its Bulletin No. 4, dealing with loans on real estate, so as to bring within the purview of such bulletin leasing arrangements involving new construction of commercial and industrial property as well as leasing arrangements involving Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 ANNUAL REPORT OF BOARD OF GOVERNORS existing construction of all types. Leases on new residential construction were not affected by either the amendment to Regulation X or the revision in the Voluntary Credit Restraint Committee bulletin. In exempting nonresidential leases on new construction from Regulation X, the Board gave consideration to the fact that transactions of this particular kind tend to be specialized in character and to represent but a relatively small portion of aggregate financing. It was believed that such leasing arrangements, particularly sale-lease-back arrangements, could be effectively restricted through the Voluntary Credit Restraint Program, which called for a screening as to the purpose of any such contemplated credit extensions. It was understood, however, that if subsequently it became evident that an excessive increase in new nonresidential construction had occurred through abnormal employment of nonresidential leasing arrangements of the above type, consideration would be given to restoring nonresidential leases to coverage by Regulation X. As described in a footnote to the nonresidential leasing amendment, credit extended in connection with certain types of nonresidential leases continued to be affected by the regulation, including cases where there is borrowing to finance nonresidential construction on leased land and cases where nonresidential leases are used as collateral for loans. DECEMBER 27, 1951 Amendment to Regulation W, Consumer Credit. Regulation W was amended, effective January 2, 1952, by removing from the list of articles subject to the instalment sale provisions of the regulation all automobiles of year-model 1942 and earlier; and by adding to section 6(j) a provision that any credit outstanding in connection with the purchase of any property used as a trade-in must be deemed to be credit for financing the purchase of the article with respect to which the trade-in was made. Votes for this action: Messrs. Martin, Szymczak, Evans, Vardaman, and Powell. Votes against this action: none. Although about 40 per cent of all passenger automobiles in use were prewar models, the delisting of such models was not expected to have any appreciable effect on the general credit situation. Greater risk is involved in financing these models and as a result terms actually made available by sellers and lenders had in general been more stringent than those required under Regulation W. The additional provision in section 6(j) was inserted to make it clear that any credit outstanding in connection with a trade-in must be considered a part of the credit extended in the transaction involving the trade-in. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

RECORD OF POLICY ACTIONS FEDERAL OPEN MARKET COMMITTEE JANUARY 31, 1951 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 November 27, 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 shortterm 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, Eccles, Erickson, Evans, Norton, Peyton, Powell, Szymczak, Vardaman, Young, and Gilbert. Votes against this action: none. At the meeting of the Federal Open Market Committee on August 18, 1950, the Committee and the Board of Governors announced a policy of using 95 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 ANNUAL REPORT OF BOARD OF GOVERNORS 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. Within the limits of this policy, it had been found necessary to give substantial support in the market for Government securities, particularly for maturing issues to aid Treasury refunding operations and also for long-term bonds which were being sold by institutional investors in large amounts. Endeavors to absorb bank reserves and to restrain credit expansion had been made through the sale of other securities from the System account, principally short-term issues, and a rise in yields on short-term securities had been permitted to occur in the market, but these operations also had to be moderated at the end of October. At its meeting on November 27, 1950, the Committee took the position that, since there had been no general abatement of inflationary pressures, and in the light of prospective developments, available measures of restraint on credit should be continued and reinforced wherever possible to the extent consistent with the maintenance of orderly conditions in the Government securities market. However, holders of Government securities continued to offer them in the market in large volume and, in order to prevent declines in their prices, Federal Reserve purchases during December 1950 and January 1951 were substantial, thus adding to bank reserves and providing funds for continued expansion in commercial bank loans, which, by the end of January 1951, had risen by approximately 7 billion dollars since August of 1950. In January, some of the additional reserves were absorbed by increases in reserve requirements. The approval of the above direction was for the purpose of continuing in effect, for the reasons previously stated, the existing policy of restraint on further expansion of bank credit wherever possible consistent with the policy of maintaining orderly conditions in the Government securities market. In taking this action, however, it was realized that in maintaining orderly conditions in the Government securities market it probably would be necessary to purchase substantial additional amounts of Government securities and it was agreed that another meeting should be held shortly for the purpose of considering what the over-all policy of the Committee should be. FEBRUARY 6-8, 1951 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 January 31, 1951, 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 97 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 shortterm 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, Eccles, Erickson, Evans, Norton, Peyton, Powell, Szymczak, Young, and Gilbert. Votes against this action: none. In the period following the meeting on January 31, 1951, the Federal Reserve continued to purchase Government securities, particularly long-term restricted bonds which private investors were offering in the market in large volume, and such purchases made additional reserves available to banks upon the basis of which there could be multiple expansion of bank credit. At this meeting of the Committee consideration was given to the whole problem of System credit and Treasury debt management policy and to the action that might be taken by the System and the Treasury to develop a coordinated program which, while providing for the maintenance of orderly market conditions, would remove the necessity for the System to purchase sub^ stantial amounts of Government securities which if continued would add to the already excessive money supply and might thereby seriously weaken the financial stability of the country. It was agreed that, pending further discussion with the Treasury of steps that might be taken to develop such a coordinated program of credit policy and debt management to assist in the fight against inflation, no change should be made in the existing general direction of the Committee of restraint of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 ANNUAL REPORT OF BOARD OF GOVERNORS further expansion of bank credit consistent with the maintenance of orderly conditions in the Government securities market. MARCH 1-2, 1951 1. Treasury-Federal Reserve Accord. At this meeting the Committee voted to approve a statement to be released by the Secretary of the Treasury and the Chairman of the Board of Governors and of the Federal Open Market Committee of the Federal Reserve System on March 4, 1951 reading as follows: The Treasury and the Federal Reserve System have reached full accord with respect to 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. Votes for this action: Messrs. McCabe, Chairman, Sproul, Vice Chairman, Eccles, Evans, Gidney, Gilbert, Leedy, Norton, Powell, Szymczak, Vardaman, and Williams. Votes against this action: none. Since the meeting of the Committee on February 6-8, 1951, there had been intensive discussions with representatives of the Treasury on System credit and Treasury debt management policies. These discussions continued during this meeting of the Committee and resulted in agreement on the program referred to in the above press statement. The fundamental problem which both the Treasury and the Federal Reserve faced in the postwar period developed out of the serious issue created by the existence of a huge public debt in a period of growing private demands for goods and services. Liquidation of Government securities on the part of holders was an important source of funds for current spending and for credit expansion. In order to give some assurance to investors that their securities would not be subject to severe declines in prices and to encourage the holding of such securities and to aid Treasury refunding operations, the Federal Reserve had been following a policy of supporting the market for Government securities. In view of the recurrent heavy demands for funds during the period, these purchases had the effect of monetizing substantial amounts of Government securities, creating bank reserves, and laying the basis for excessive credit expansion. Both the Federal Reserve and the Treasury recognized the dilemma presented by the conflicting problems of debt management and credit restraint in the inflationary situation which developed. Various measures were adopted through credit, fiscal, and debt management policies in an en- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 99 deavor to restrict credit and monetary expansion, to retire debt, especially that held by banks, and to attract the investment of savings into Government securities, while at the same time maintaining stability in the Government securities market. In general, the Treasury and the Federal Reserve were in agreement as to the main objectives, i.e., the maintenance of a broad and healthy market for Treasury securities, and restraint of further inflationary expansion of bank credit. The interrelated problems of exercising credit and monetary restraint, of endeavoring to maintain stable markets for Government securities, and of debt management became most acute with the recurrence of inflationary pressures following the outbreak of hostilities in Korea. There developed a growing volume of sales of Government securities by holders wishing to obtain funds to extend other credits. This selling later was augmented by sales, particularly of long-term bonds, on the part of some holders influenced by uncertainties as to the future of prices of the securities and by others wishing to protect themselves against declines in the purchasing power of money resulting from rising commodity prices. Large-scale purchases of securities by the Federal Reserve to maintain a stable market resulted in monetization of the public debt and creation of bank reserves, which in turn helped to finance the inflation. Confidence in Government securities, as well as in the value of the dollar, was in danger of being impaired, and this fear was augmented by public discussion of disagreement between the Treasury and the Federal Reserve. Throughout the period from August 1950 to February 1951, there were frequent consultations between Federal Reserve and Treasury officials, and on some occasions with the President, concerning the coordination of monetary and debt management policies. The policy actions taken at the meetings on January 31, 1951, and February 6-8, 1951, were adopted in the light of these discussions, precedent to working out of the accord between the Treasury and the Federal Reserve. The Treasury and Federal Reserve felt that everything possible should be done to terminate the unwholesome situation that had developed and to coordinate the debt management responsibility of the Treasury with the Federal Reserve responsibility for restraining credit expansion. It was the immediate object of the Treasury to restore conditions in the market that would be favorable to refinancing the large volume of maturing obligations, as well as financing several billions of new money required during the remainder of the year. It was the immediate object of the Federal Reserve to endeavor to curb the unprecedented inflationary loan expansion that had continued uninterruptedly since Korea by minimizing the monetization of the public debt and by making it necessary for member banks to borrow from the Federal Reserve in order to obtain additional reserves. It was agreed that there were both immediate and long-run factors which had to be taken Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

100 ANNUAL REPORT OF BOARD OF GOVERNORS into account in arriving at an accord,.and that the purpose of the negotiation was to reach agreement upon policies that would reduce to a minimum the monetization of the public debt without creating an adverse market psychology with reference to Government securities. First, consideration was given to the matter of long-term bonds overhanging the market and at the time being offered for sale daily in large amounts. It was agreed that a substantial portion of these bonds could be taken off the market by a Treasury offer to exchange for them a nonmarketable 2/4 per cent, 29-year bond, redeemable at the holder's option before maturity only by conversion into a 5-year marketable Treasury note. The purpose of offering this new security, as announced by the Treasury, was to encourage long-term investors to retain their holdings of Government securities, in order to minimize the monetization of the public debt through liquidation of outstanding holdings of the Treasury bonds of 1967-72. Second, there was the problem of the long-term Government securities which private holders might try to sell on the market after the terms of the exchange offering became public. It was agreed that a limited volume of open market purchases would be made after the exchange offering was announced; and that if sales on the market were excessive, the situation would be assessed daily, the market would be kept orderly, and open market purchases, if any, would be made on a scale-down of prices. Third, the pending task of refunding the large volume of short-term securities maturing or callable in the near future presented difficult problems both for the Treasury and for the Federal Reserve. It was agreed that the Committee, in order to minimize monetization of the debt, would immediately reduce or discontinue purchases of short-term securities and permit the short-term market to adjust to a position at which banks would depend upon borrowing at the Federal Reserve to make needed adjustments in their reserves. This contemplated a level of short-term interest rates which, in response to market forces, would fluctuate around the Federal Reserve discount rate. It was expected that during the remainder of the year the Federal Reserve discount rate, in the absence of compelling circumstances not then foreseen, would remain at 1% per cent and that the Federal Reserve would operate to assure a satisfactory volume of exchanges in the refunding of maturing Treasury issues. Fourth, the raising of new funds by the Treasury to finance the defense mobilization program presented other problems. It was recognized that there were no substantial amounts of nonbank funds seeking investment, and that it would be some time before such funds would accumulate. It was agreed that more frequent conferences between the Treasury and Federal Reserve officials and staff should be held so that the Treasury and the Federal Reserve might work together more closely on a joint program of Govern- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 101 ment financing as well as in maintaining orderly markets for Government securities. 2. Authority to Execute 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 February 6-8, 1951, was approved. The change in policy described above did not require any change in the direction for the reason that the direction issued at the meeting on August 18, 1950, was changed in the light of the policy adopted at that time, to provide that 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. 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 shortterm certificates of indebtedness purchased from time to time for the temporary accommodation of the Treasury shall not be increased or decreased by more than 3 billion dollars. The executive committee is further directed, until otherwise directed by the Federal Open Market Committee, to arrange for the purchase for the System open market account direct from the Treasury of such amounts of special short-term certificates of indebtedness as may be necessary from time to time for the temporary accommodation of the Treasury; provided that the total amount of such certificates held in the account at any one time shall not exceed 1 billion dollars. Votes for this action: Messrs. McCabe, Chairman, Sproul, Vice Chairman, Evans, Gidney, Gilbert, Leedy, Norton, Powell, Szymczak, Vardaman, and Williams. Votes against this action: none. This direction was approved for the purpose of carrying into effect the credit policy agreed upon earlier at this meeting. While the form of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

102 ANNUAL REPORT OF BOARD OF GOVERNORS direction was unchanged from that issued on February 6-8, the limitation in the first paragraph was increased from 2 billion to 3 billion dollars in anticipation of the possibility of an increased volume of transactions which might be necessary over the period immediately ahead in carrying out the policy. MARCH 8, 1951 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 March 1-2, 1951, 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 shortterm 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, Eccles, Evans, Gidney, Gilbert, Leedy, Norton, Powell, Szymczak, Vardaman, and Williams. Votes against this action: none. In adopting the above direction, it was understood that the Committee would continue to carry out the policy approved at the meeting on March 1-2, 1951, but it was felt that the limitation in the first paragraph could Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 103 be reduced from 3 billion to 2 billion dollars without interfering with the execution of that policy. MAY 17, 1951 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 March 8, 1951, 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 shortterm 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. Martin, Chairman, Sproul, Vice Chairman, Eccles, Evans, Gidney, Gilbert, Leedy, Norton, Powell, Szymczak, and Williams. Votes against this action: none. The period March 8 to May 17, 1951, was one of basic readjustment to the new debt management and credit policies introduced immediately following the announcement on March 4, 1951, that the Treasury and the Federal Reserve had reached full accord with respect to debt management and monetary policies to be pursued in furthering their common purpose to assure the successful financing of the Government's requirements and, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 ANNUAL REPORT OF BOARD OF GOVERNORS at the same time, to minimize monetization of the public debt. That announcement was accompanied by an announcement by the Treasury of a conversion issue to be offered in late March and early April in the form of a new type of nonmarketable security available on an exchange basis only to holders of outstanding bank-restricted marketable bonds callable in 1967. The detailed features of the Treasury-Federal Reserve agreement had not been announced, but it was generally understood to mean the start of a new phase in postwar open market policy with greater flexibility in the market. Although the Federal Reserve withdrew immediately from the market for bank-eligible Treasury obligations following the March 4 announcement referred to above, it continued to purchase long-term restricted 2J4 per cent Treasury bonds in large volume with a view to facilitating the Treasury exchange offering. At the outset such purchases of restricted bonds were at fixed support prices but after a few days System purchases were reduced and prices of these bonds adjusted downward rapidly. During this period, longer term Treasury bonds were offered in the market by insurance companies and other investors who wished to shift out of Government securities for various reasons, including the need to obtain funds to meet other commitments for loans or investments, the necessity of pursuing a more prudent investment policy on the part of investors who had been getting a long-term rate on short-term funds, and the desire to get into cash or shortterm Treasury obligations temporarily in the hope that the funds could be placed later in long-term Treasury bonds on a more favorable basis. The conversion offering was generally well accepted by investors and 13.5 billion dollars of the 2% per cent Treasury bonds callable in 1967 were exchanged for the new 2% per cent nonmarketable bonds of 1975-80, including purchases by Treasury accounts and the System Open Market Account of 5.6 billion dollars. Although fixed support for long-term Treasury bonds was abandoned following the close of the books on the conversion offering on April 6, 1951, and there were further declines in prices, the bulk of the bonds that had been overhanging the market was removed by the conversion operation and by Treasury and Federal Reserve purchases, and subsequent Federal Reserve purchases of long-term Government securities were reduced to amounts needed for maintaining orderly market conditions. System purchases of short-term securities had been discontinued after March and thereafter the System was able to sell short-term securities in the market and to redeem maturing bills without replacement. The short-term market had thus operated without Federal Reserve support. The foregoing direction was adopted in the light of the transition from a program of fixed support of Treasury securities to a period in which the market was left to react more completely to the natural forces of demand and supply, thus making it possible for the System to minimize the creation Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 105 of bank reserves that had been resulting from the earlier rigid support given to long-term Treasury issues and thus to pursue an anti-inflationary policy. OCTOBER 4, 1951 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 May 17, 1951, 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 shortterm 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. Martin, Chairman, Sproul, Vice Chairman, Gidney, Gilbert, Leedy, Norton, Powell, Szymczak, and Williams. Votes against this action: none. At the time of this meeting the economic climate was markedly different from that existing when the Treasury-Federal Reserve accord was announced on March 4, 1951. In March, inflationary pressures were strong and it was anticipated that unless effective anti-inflation measures were taken such pressures would grow as the defense program took an increasing proportion of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 ANNUAL REPORT OF BOARD OF GOVERNORS the available materials and labor. As it turned out, the reduced availability of credit caused considerable tightness in money markets during the intervening months, consumer and defense buying was not as large as had been anticipated, and prices had not increased as had been feared. Sensitive commodity prices declined markedly, wholesale prices leveled off and later declined somewhat, and retail consumer prices showed a less rapid advance than previously. These developments were accompanied by (a) a change in the attitude of nonbank investors toward Government bonds and re-establishment of a normally functioning bond market and (b) a decline in Federal Reserve operations in Government securities, together with increased resort to borrowing by banks to make necessary reserve adjustments. Developments in both these areas indicated that the credit policies followed between March and October had made an effective anti-inflationary contribution. Since the meeting of the Federal Open Market Committee on May 17, 1951, public debt operations had exercised a primary influence on the Government securities market, over 18 billion dollars of maturing notes and bonds had been refunded in four financing operations, and 2 billion dollars of new money had been raised by means of increases in the weekly Treasury bill offerings. The Federal Reserve continued to purchase restricted Treasury bonds in May and June but in greatly reduced amounts from preceding months, and subsequently there were no Federal Reserve purchases of such bonds. Further moderate sales by insurance companies and others were absorbed by small purchases by pension funds and by other nonbank investor groups, but the amount of shifts in securities was greatly reduced from that of the first few months of the year. Federal Reserve purchases of short-term securities also were sharply reduced during this period. Although the System bought substantial amounts of maturing Treasury issues in June to aid in the Treasury refunding, these additions approximately counterbalanced reductions in the System's holdings in April and May. Subsequent to June, Federal Reserve operations in the short-term market, as in the long-term market, were negligible until September when again substantial purchases were made to aid Treasury refunding. With Federal Reserve purchases of both short-term and long-term Government securities reduced to amounts needed at times to aid Treasury refunding operations plus occasional small amounts for orderly market purchases, which purchases were largely offset by sales or redemptions at other times, monetization of the public debt and the resulting creation of bank reserves was minimized. At the same time Treasury refunding operations were successfully accomplished and the Treasury was able to meet its new money needs by borrowing in the short-term market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 107 Important anti-inflation effects of the policies pursued since the Treasury- Federal Reserve accord early in March included a firming of the mortgage market which helped curtail inflationary financing of home construction and injected an important element of caution in the market for securities of corporations and of State and local governments. Higher returns on securities and improved confidence in the value of the dollar were reflected in increased savings by individuals. The discontinuance of widespread selling of Government bonds and consequent reductions in their purchase by the Federal Reserve meant that additional reserves were not being made freely available to banks for use in expanding bank credit. On occasion member banks had to borrow to obtain reserves, there having been some pressure in this direction because of increased currency demands, as well as because of temporary variations in other factors affecting reserves. The reduced availability of reserves and the necessity for borrowing at the Federal Reserve resulted in placing banks under restraint as to further credit expansion, and growth in bank credit extended to private borrowers during this period was smaller than in the corresponding period of any postwar year excepting 1949. Commercial bank loans in the four months, May-August, increased only about % of a billion dollars compared with 3.1 billion in the comparable period of 1950 and 2.1 billion in the first four months of 1951. The foregoing direction, which was in the same form and with the same limitations as that approved in May, was adopted with a view to the pursuit of a neutral policy by the System, which would permit market forces of demand and supply to operate with a minimum of Federal Reserve intervention. In the light of the reduced inflationary pressures of recent months and the prospect that developments during the remainder of the year might call for some expansion in credit to meet seasonal business demands, a seasonal increase in currency in circulation, and substantial borrowing needs on the part of the Treasury, a more restrictive policy seemed unnecessary. It was felt, however, that necessary credit demands should be met without making funds so easy that private borrowing and lending beyond minimum requirements would be stimulated. Thus, the System would be in a position to move again against inflation should such action prove necessary, or to respond to stem undue downward adjustment should that develop. 2. Repurchase Agreements. At this meeting the Committee authorized each Federal Reserve Bank to enter into repurchase agreements with nonbank dealers in United States Government securities who are qualified to transact business with the System open market account, with the understanding that such agreements should cover only short-term Treasury obligations, be for periods of 15 days or less, be made at rates close to the average issuing rate on the most recent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 ANNUAL REPORT OF BOARD OF GOVERNORS issue of 3-month Treasury bills, and be for the purpose of aiding temporary money market adjustments. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Gidney, Gilbert, Leedy, Norton, Powell, Szymczak, and Williams. Votes against this action: none. This authority had been granted to the Federal Reserve Banks prior to this date, but it had been used relatively infrequently and had not been regarded as a matter of important policy. It appeared, however, that the use of repurchase agreements was becoming increasingly important as one of the mechanisms available to the System in executing open market policy and that the authority within the limits set forth above should be available to each Federal Reserve Bank so that it could be used in the interest of orderly conditions in the Government securities market. It was considered that such authority would enable dealers to absorb as much of the buying and selling in the market as possible and to carry the necessary inventory of securities to provide a market, leaving the System as only a residual buyer. NOVEMBER 14, 1951 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 October 4, 1951, 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 shortterm 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 109 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. Martin, Chairman, Sproul, Vice Chairman, Gidney, Gilbert, Leedy, Norton, Powell, Szymczak, Vardaman, and Williams. Votes against this action: none. There had been no basic change in the underlying conditions with respect to inflationary pressures or money rates since the meeting on October 4. The System had reduced its holdings of short-term securities by approximately the additional amounts acquired in September in aiding Treasury refunding. The above direction was adopted in the same form and with the same limitations as the earlier direction since it was felt that no change in existing objectives of credit policy was needed. It was agreed that in maintaining orderly market conditions the System would permit prices of securities to reflect market forces so long as the market was an orderly one. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM [December 31, 1951] Term Expires WM. MCC. MARTIN, JR., of New York, Chairman January 31, 1956 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 WINFIELD W. RIEFLER, Assistant to the Chairman WOODLIEF THOMAS, Economic Adviser to the Board S. R. CARPENTER, Secretary MERRITT SHERMAN, Assistant Secretary G. R. MURFF, Assistant Secretary KENNETH A. KENYON, Assistant Secretary GEORGE B. VEST, General Counsel FREDERIC SOLOMON, Assistant General Counsel HOWARD H. HACKLEY, 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, Assistant Director, Division of Research and Statistics SUSAN S. BURR, Assistant Director, Division of Research and Statistics ARTHUR W. MARGET, Director, Division of International Finance LEWIS N. DEMBITZ, Assistant Director, Division of International Finance GEORGE S. SLOAN, Director, Division of Examinations C. C. HOSTRUP, Assistant Director, Division of Examinations FRED A. NELSON, Assistant Director, Division of Examinations ARTHUR H. LANG, Chief Federal Reserve Examiner, Division of Examinations ROBERT C. MASTERS, 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 DWIGHT L. ALLEN, Director, Division of Personnel Administration H. FRANKLIN SPRECHER, JR., Assistant Director, Division of Personnel Administration LISTON P. BETHEA, Director, Division of Administrative Services JOSEPH E. KELLEHER, Assistant Director, Division of Administrative Services EDWIN J. JOHNSON, Assistant Director, Division of Administrative Services GUY E. NOYES, Director, Division of Selective Credit Regulation GARDNER L. BOOTHE, II, Assistant Director, Division of Selective Credit Regulation HENRY BENNER, Assistant Director, Division of Selective Credit Regulation CLARKE L. FAUVER, Assistant Director, Division of Selective Credit Regulation no Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL OPEN MARKET COMMITTEE [December 31, 1951] MEMBERS WM. MCC. MARTIN, JR., Chairman (Board of Governors) ALLAN SPROUL, Vice Chairman (Elected by Federal Reserve Bank of New York) R. M. EVANS (Board of Governors) RAY M. GIDNEY (Elected by Federal Reserve Banks of Cleveland and Chicago) R. R. GILBERT (Elected by Federal Reserve Banks of Atlanta, St. Louis and Dallas) H. G. LEEDY (Elected by Federal Reserve Banks of Minneapolis, Kansas City and San Francisco) EDWARD L. NORTON (Board of Governors) OLIVER S. POWELL (Board of Governors) M. S. SZYMCZAK (Board of Governors) JAMES K. VARDAMAN, JR. (Board of Governors) ALFRED H. WILLIAMS (Elected by Federal Reserve Banks of Boston, Philadelphia and Richmond) EXECUTIVE COMMITTEE OFFICERS WM. MCC. MARTIN, JR., Chairman S. R. CARPENTER, Secretary ALLAN SPROUL, Vice Chairman MERRITT SHERMAN, Assistant Secretary M. S. SZYMCZAK GEORGE B. VEST, General Counsel ALFRED H. WILLIAMS WOODLIEF THOMAS, Economist KARL R. BOPP, Associate Economist AGENT WATROUS H. IRONS, Associate Economist FEDERAL RESERVE BANK OF NEW YORK DONALD S. THOMPSON, Associate Economist ROBERT G. ROUSE, Manager of System CLARENCE W. TOW, Associate Economist Open Market Account JOHN H. WILLIAMS, Associate Economist ill Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL ADVISORY COUNCIL [December 31, 1951] MEMBERS District No. 1—WALTER S. BUCKLIN, President, 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, 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—PAUL M. DAVIS, Chairman, First American National Bank, Nashville, Tennessee. 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 & 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—DEWITT T. RAY, President, National City Bank of Dallas, Dallas, 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 112 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS [December 31, 1951] CHAIRMEN AND DEPUTY CHAIRMEN OF BOARDS OF DIRECTORS Chairman and Federal Reserve Bank of— Deputy Chairman Federal Reserve Agent Boston Harold D. Hodgkinson Ames Stevens New York Robert T. Stevens William I. Myers Philadelphia Warren F. Whittier C. Canby Balderston Cleveland George C. Brainard John C Virden 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 (Vacancy) Kansas City Robert B. Caldwell (Vacancy) Dallas J. R. Parten R. B. Anderson San Francisco Brayton Wilbur Harry R. Wellman CONFERENCE OF CHAIRMEN The Chairmen of the Federal Reserve Banks are organized into a Conference of Chairmen which meets from time to time to consider matters of common interest and to consult with and advise the Board of Governors. Mr. 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 as such until May 1951. 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 until May 1951. At the meeting held in May 1951, Mr. Wilbur, Chairman of the Federal Reserve Bank of San Francisco, was elected Chairman of the Conference and of the Executive Committee. Mr. Lunding was re-elected as a member of the Executive Committee and Mr. Whittier, Chairman of the Federal Reserve Bank of Philadelphia, was elected as the other member of the Executive Committee. 113 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, 1951-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 DIRECTORS Dec. 31 Class A: 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 Lloyd D. Brace President, The First National Bank of Boston, Boston, Mass 1953 Class B.- 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 Harvey P. Hood President, H. P. Hood & Sons, Inc., Boston, Mass 1953 Class C.- 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 Karl T. Compton Chairman of the Corporation, Massachusetts Institute of Technology, Cambridge, Mass 1953 District No. 2—New York Class A: Roger B. Prescott President, The Keeseville National Bank, Keeseville, N. Y 1951 John C. Traphagan Chairman of the Board, Bank of New York and Fifth Avenue Bank, New York, N. Y 1952 Burr P. Cleveland President, First National Bank of Cortland, Cortland, N. Y 1953 Class B: Jay E. Crane Vice President, Standard Oil Company (New Jersey), New York, N. Y 1951 Clarence Francis Chairman of the Board, General Foods Corporation, New York, N. Y 1952 Marion B. Folsom Treasurer and Director, Eastman Kodak Company, Rnrh^ter. N Y. 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, 1951-Cont. Term Expires Dec. 31 DIRECTORS Cont. Class C.- 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 & Webb, Attorneys at Law, New York, N. Y 1952 Robert T. Stevens Chairman of the Board, J. P. Stevens & Company, Inc., New York, N. Y 1953 Buffalo Branch Appointed by Federal Reserve Ban\: George G. Kleindinst President, Liberty Bank of Buffalo, Buffalo, N. Y.. . . 1951 George F. Bates Vice President, Marine Trust Company of Western New York, Power City Trust Office, Niagara Falls, N. Y 1952 Bernard E. Finucane President, Security Trust Company of Rochester, Rochester, N. Y 1952 C. Elmer Olson President, The First National Bank of Falconer, Falconer, N. Y 1953 Appointed by Board of Governors: Carl G. Wooster President, Wooster Fruit Farms, Inc., Union Hill, N. Y 1951 Edgar F. Wendt President, Buffalo Forge Company, Buffalo, N. Y.. . 1952 Robert C. Tait President, Stromberg-Carlson Company, Rochester, N. Y 1953 District No. 3—Philadelphia Class A: George W. Reily President, Harrisburg National Bank, Harrisburg, Pa. 1951 J. Nyce Patterson President, Watsontown National Bank, Watsontown, Pa 1952 Archie D. Swift Chairman of Board, Central-Penn National Bank, Philadelphia, Pa 1953 Class B.- Albert G. Frost Chairman of Board, The Esterbrook Pen Company, Camden, N. J 1951 Charles E. Oakes President and Director, Pennsylvania Power and Light Company, Allentown, Pa 1952 Warren C. Newton President, O. A. Newton and Son Company, Bridgeville, Del 1953 Class C.- William J. Meinel Chairman and President, Heintz Manufacturing Company, Philadelphia, Pa 1951 Warren F. Whittier Agricultural Consultant, Chester Springs, Pa 1952 C. Canby Balderston Dean, Wharton School of Finance and Commerce, University of Pennsylvania, Philadelphia, Pa 1953 District No. 4—Cleveland Class A: 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 Lawrence N. Murray President, Mellon National Bank and Trust Company, Pittsburgh, Pa 1953 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Deo. 31, 1951-Ont. Term Expires Dec. 31 DIRECTORS Cont. Class B.- Joel M. Bowlby Chairman of the Board, The Eagle-Picher Company, Cincinnati, Ohio 1951 Edward C. Doll President, Lovell Manufacturing Company, Erie, Pa. 1952 Charles J. Stilwell President, The Warner and Swasey Company, Cleveland, Ohio 1953 Class C.- Leo L. Rummell Dean, College of Agriculture, The Ohio State University, Columbus, Ohio 1951 George C. Brainard President, Addressograph-Multigraph Corporation, Cleveland, Ohio 1952 John C. Virden Chairman of the Board, John C. Virden Company, Cleveland, Ohio 1953 Cincinnati Branch Appointed by Federal Reserve Ban\: 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 L. M. Campbell President, Second National Bank, Ashland, Ky 1953 Appointed by Board of Governors: Ernest H. Hahne President, Miami University, Oxford, Ohio 1951 H. C. Besuden Farmer, Winchester, Ky 1952 Granville R. Lohnes Treasurer, National Cash Register Company, Dayton, Ohio 1953 Pittsburgh Branch Appointed by Federal Reserve Ban\: 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 Hugo E. Laupp President, Wheeling Dollar Savings and Trust Company, Wheeling, W. Va 1953 Appointed by Board of Governors: A. H. Burchfield President and General Manager, Joseph Home Company, Pittsburgh, Pa 1951 Sidney A. Swensrud President, Gulf Oil Corporation, Pittsburgh, Pa 1952 Henry A. Roemer, Jr President, Sharon Steel Corporation, Sharon, Pa 1953 District No. 5—Richmond Class A: 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 John A. Sydenstricker Executive Vice President and Cashier, First National Bank in Marlinton, Marlinton, W. Va 1953 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 117 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1951-Cont. Term Expires Dec. 31 DIRECTORS Cont. Class B: Edwin Hyde Executive Vice President, Miller & Rhoads, Inc., Richmond, Va 1951 H. L. Rust, Jr President, H. L. Rust Company, Washington, D. C. 1952 Cary L. Page President and Treasurer, Jackson Mills, Wellford, S. C. 1953 Class C: W. G. Wysor Management Counsel, Southern States Cooperative, Inc., Richmond, Va 1951 John B. Woodward, Jr President, Newport News Shipbuilding and Dry Dock Company, Newport News, Va 1952 Charles P. McCormick President and Chairman of Board, McCormick & Company, Inc., Baltimore, Md 1953 Baltimore Branch Appointed by Federal Reserve Banhji Charles A. Piper President, The Liberty Trust Company, Cumberland, Md 1951 Eugene G. Grady President, The Western National Bank, Baltimore, Md. 1952 Lacy I. Rice President, The Old National Bank, Martinsburg, W. Va 1952 Charles W. Hoff President, Union Trust Company of Maryland, Baltimore, Md 1953 Appointed by Board of Governors: 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 James M. Shriver President, The B. F. Shriver Company, Westminster, Md 1953 Charlotte Branch Appointed by Federal Reserve Ban\: Thomas J. Robertson President, 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 A. K. Davis Senior Vice President, Wachovia Bank and Trust Company, Winston-Salem, N. C 1953 Appointed by Board of Governors: 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 R. E. Ebert President, Dixie Home Stores, Inc., Greenville, S. C. 1953 District No. 6—Atlanta Class A: 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 Roland L. Adams President, Bank of York, York, Ala 1953 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1951-Cont. Term Expires Dec. 31 DIRECTORS Cont. Class B: J. A. McCrary Vice President and Treasurer, J. B. McCrary Company, Inc., Atlanta, Ga 1951 Donaid Comer Chairman of the Board, Avondale Mills, Birmingham, Ala 1952 A. B. Freeman Chairman of the Board, Louisiana Coca-Cola Bottling Company, Ltd., New Orleans, La 1953 Class C.- Paul E. Reinhold .President, Foremost Dairies, Inc., Jacksonville, Fla.. . 1951 Rufus C. Harris President, The Tulane University of Louisiana, New Orleans, La 1952 Frank H. Neely Chairman of the Board, Rich's, Inc., Atlanta, Ga.. .. 1953 Birmingham Branch Appointed by Federal Reserve Ban\: D. C. Wadsworth President, The American National Bank of Gadsden, Gadsden, Ala 1951 J. B. Barnett President, The First National Bank of Monroevillc, Monroeville, Ala 1952 A. M. Shook President, Security Commercial Bank, Birmingham, Ala 1952 T. J. Cottingham President, State National Bank of Decatur, Decatur, Ala 1953 Appointed by Board of Governors: Wm. Howard Smith President, McQueen-Smith Farms, Prattville, Ala.. . . . 1951 Thad Holt President and Treasurer, Voice of Alabama, Inc., Birmingham, Ala 1952 John M. Gallalee President, University of Alabama, Tuscaloosa, Ala.. . 1953 Jacksonville Branch Appointed by Federal Reserve Ban\: 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 Clement B. Chinn President, The First National Bank of Miami, Miami, Fla 1953 Appointed by Board of Governors: J. Hillis Miller President, University of Florida, Gainesville, Fla 1951 Howard Phillips Vice President and General Manager, Dr. P. Phillips Company, Orlando, Fla 1952 Marshall F. Howell Vice President, Bond-Howell Lumber Company, Jacksonville, Fla 1953 Nashville Branch Appointed by Federal Reserve Ban\: Parkes Armistead President, First American National Bank of Nashville, Nashville, Tenn 1951 T. L. Cathey President, Peoples and Union Bank, Lewisburg, Tenn. 1952 Thos. D. Brabson President, The First National Bank of Greeneville, Greeneville, Tenn 1952 G. C. Graves President, The First National Bank of Athens, Athens, Tenn 1953 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 119 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1951-Cont. Term Expires Dec. 31 DIRECTORS Cont. Appointed by Board of Governors: H. C. Meacham Agriculture and livestock, Franklin, Tenn 1951 W. Bratten Evans President, Tennessee Enamel Manufacturing Company, Nashville, Tenn 1952 C. E. Brehm President, University of Tennessee, Knoxville, Tenn. 1953 New Orleans Branch Appointed by Federal Reserve Ban\: James C. Bolton President, Rapids Bank & 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 William C. Carter President, Gulf National Bank of Gulfport, Gulfport, Miss 1953 Appointed by Board of Governors: John J. Shaffer, Jr Agriculture and farm machinery, Ellendale, La 1951 E. O. Batson President, Batson-McGehee Company, Inc., Millard, Miss 1952 H. G. Chalkley, Jr President, Sweet Lake Land & Oil Company, Inc., Lake Charles, La 1953 District No. 7—Chicago Class A: 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 Vivian W. Johnson President, First National Bank, Cedar Falls, Iowa 1953 Class B: Wm. C. Heath Chief Executive Officer, A. O. Smith Corporation, Milwaukee, Wis 1951 William J. Grede President, Grede Foundries, Inc., Milwaukee, Wis 1952 Nicholas H. Noyes Chairman, Finance Committee, Eli Lilly and Company, Indianapolis, Ind 1953 Class C: F. J. Lunding Chairman of the Executive Committee, Jewel Tea Company, Inc., Chicago, 111 1951 John S. Coleman President, Burroughs Adding Machine Company, Detroit, Mich 1952 Allan B. Kline President, American Farm Bureau Federation, Chicago, 111 1953 Detroit Branch Appointed by Federal Reserve Ban\: Chas. T. Fisher, Jr President, The National Bank of Detroit, Detroit, Mich 1951 John A. Stewart Vice President and Cashier, Second National Bank & Trust Company, Saginaw, Mich 1952 Howard P. Parshall President, Commonwealth Bank, Detroit, Mich 1952 Appointed by Board of Governors: William M. Day Vice President and General Manager, Michigan Bell Telephone Company, Detroit, Mich 1951 John A. Hannah President, Michigan State College, East Lansing, Mich. 1952 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1951-Cont. Term Expires Dec. 31 DIRECTORS Cont. District No. 8—St. Louis Class A: Phil E. Chappell President, Planters Bank & Trust Company, Hopkinsville, Ky 1951 J. E. Etherton President, Carbondale National Bank, Carbondale, 111. 1952 William A. McDonnell President, First National Bank in St. Louis, St. Louis, Mo 1953 Class B: M. Moss Alexander President, Missouri Portland Cement Company, St. Louis, Mo 1951 Ralph E. Plunkett President, Plunkett-Jarrell Grocer Company, Little Rock, Ark 1952 Louis Ruthenburg Chairman of Board, Servel, Inc., Evansville, Ind 1953 Class C.- Joseph H. Moore Farming, Charleston, Mo 1951 Russell L. Dearmont Chief Counsel for Trustee, Missouri-Pacific Lines, St. Louis, Mo 1952 Wm. H. Brycc Vice President and Director, Dixie Wax Paper Company, Memphis, Tenn 1953 Little Rock Branch Appointed by Federal Reserve Ban\: 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 Gaither C. Johnston President, First National Bank, Newport, Ark 1953 Appointed by Board of Governors: Cecil C. Cox Farmer, Stuttgart, Ark 1951 Stonewall J. Beauchamp.... President, Terminal Warehouse Company, Little Rock, Ark 1952 Sam B. Strauss President, Pfeifers of Arkansas, Little Rock, Ark 1953 Louisville Branch Appointed by Federal Reserve Ban\: H. Lee Cooper President, Ohio Valley National Bank, Henderson, Ky 1951 Ira F. Wilcox Vice President and Cashier, The Union National Bank, New Albany, Ind 1951 A. C. Voris President, Citizens National Bank, Bedford, Ind 1952 Noel Rush President, Lincoln Bank and Trust Company, Louisville, Ky 1953 Appointed by Board of Governors: Pierre B. McBride President, Porcelain Metals Corporation, Louisville, Ky 1951 Smith D. Broadbent, Jr Farmer, Cadiz, Ky 1952 Alvin A. Voit President, Mengel Company, Louisville, Ky 1953 Memphis Branch Appointed by Federal Reserve Ban\: Norfleet Turner President, First National Bank, Memphis, Tenn 1951 H. W. Hicks President, First National Bank, Jackson, Tenn 1951 Ben L. Ross Chairman of Board, Phillips National Bank, Helena, Ark 1952 C. Haley Reeves President, Merchants and Farmers Bank, Columbus, Miss 1953 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 121 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1951-Cont. Term Expires Dec. 31 DIRECTORS Cont. Appointed by Board of Governors: Leslie M. Stratton, Jr President, Stratton-Warren Hardware Company, Memphis, Tenn 1951 Hugh M. Brinkley Farmer, Hughes, Ark 1952 M. P. Moore Owner, Circle M Ranch, Senatobia, Miss 1953 District No. 9—Minneapolis Class A: C. W. Burges Vice President and Cashier, Security National Bank, Edgeley, N. D 1951 Vacancy 1952 H. N. Thomson Vice President, Farmers and Merchants Bank, Presho, S. D 1953 Class B: Ray C. Lange President, Chippewa Canning Company, Chippewa Falls, Wis 1951 Homer P. Clark Honorary Chairman of the Board, West Publishing Company, St. Paul, Minn 1952 W. A. Denecke Livestock rancher, Bozeman, Mont 1953 Class C.- Paul E. Miller Director, Agricultural Extension Division, University of Minnesota, St. Paul, Minn 1951 F. A. Flodin President, Lake Shore Engineering Company, Iron Mountain, Mich 1952 Roger B. Shepard St. Paul, Minn 1953 Helena Branch Appointed by Federal Reserve Ban\: B. M. Harris President, Yellowstone Bank, Columbus, Mont 1951 Theodore Jacobs President, First National Bank, Missoula, Mont 1952 E. D. MacHaffie Investments, Helena, Mont 1952 Appointed by Board of Governors: G. R. Milburn Livestock rancher, Grass Range, Mont 1951 John E. Corette, Jr Vice President, Montana Power Company, Butte, Mont 1952 District No. 10—Kansas City Class A: T. A. Dines Chairman of the Board, The United States National Bank of Denver, Denver, Colo 1951 W.S.Kennedy President and Chairman of the Board, The First National Bank, Junction City, Kan 1952 W. L. Bunten Executive Vice President, Goodland State Bank, Goodland, Kan 1953 Class B: Vacancy 1951 E. M. Dodds President, United States Cold Storage Corporation, Kansas City, Mo 1952 L. C. Hutson Director, Chickasha Cotton Oil Company, Chickasha, Okla 1953 Class C: Lyle L. Hague Farmer and stockman, Cherokee, Okla 1951 Robert B. Caldwell Caldwell, Downing, Noble and Garrity, Kansas City, Mo 1952 Vacancy 1953 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1951-Cont. Term Expires Dec. 31 DIRECTORS Cont. Denver Branch Appointed by Federal Reserve Bank: P. K. Alexander Vice President, The First National Bank of Denver, Denver, Colo 1951 Ramon B. Handy Executive Vice President, The First National Bank of Greeley, Greeley, Colo 1952 Albert K. Mitchell Rancher, Albert, N. M 1952 Appointed by Board of Governors: Cecil Puckett Dean, College of Business Administration, University of Denver, Denver, Colo. 1951 G. Norman Winder Rancher, Craig, Colo 1952 Oklahoma City Branch Appointed by Federal Reserve Ban\: S. A. Bryant President, The Farmers National Bank of Cushing, Cushing, Okla 1951 F. M. Overstreet President, First National Bank at Ponca City, Ponca City, Okla 1952 Frank A. Sewell Chairman of the Board and President, The Liberty National Bank and Trust Company of Oklahoma City, Oklahoma City, Okla 1952 Appointed by Board of Governors: Cecil W. Cotton President, C. W. Cotton Supply Company, Tulsa, Okla 1951 Rufus J. Green Rancher and farmer, Duncan, Okla 1952 Omaha Branch Appointed by Federal Reserve Ban\: I. R. Alter President, The First National Bank of Grand Island, Grand Island, Neb 1951 Ellsworth Moser President, The United States National Bank of Omaha, Omaha, Neb 1951 Fred W. Marble President, The Stock Growers National Bank of Cheyenne, Cheyenne, Wyo 1952 Appointed by Board of Governors: Joseph W. Seacrest Co-Publisher, Lincoln State Journal, Lincoln, Neb. 1951 Fred S. Wallace Farmer, Gibbon, Neb 1952 District No. 11—Dallas Class A: P. P. Butler President, First National Bank in Houston, Houston, Tex. 1951 J. Edd McLaughlin Vice President, Security State Bank and Trust Company, Rails, Tex 1952 W. L. Peterson President, The State National Bank, Denison, Tex.. . 1953 Class B.- George H. Zimmerman .... Chairman of the Board and President, Wm. Cameron & Company, Waco, Tex 1951 George L. MacGregor Chairman of the Board, President and General Manager, Dallas Power and Light Company, Dallas, Tex 1952 W. F. Beall President and General Manager, 3 Beall Brothers 3, Department Stores, Jacksonville, Tex 1953 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 123 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1951-Cont. Term Expires Dec. 31 DIRECTORS Cont. Class C: R. B. Anderson General Manager, W. T. Waggoner Estate, Vernon, Tex 1951 J. R. Parten President, Woodley Petroleum Company, Houston, Tex 1952 G. A. Frierson G. A. Frierson & Son, Merchants and Planters, Shreveport, La 1953 El Paso Branch Appointed by Federal Reserve Ban\: W. S. Warnock Vice President, El Paso National Bank, El Paso, Tex. 1951 W. Henry Wooldridge President, Lone Star Motor Company, El Paso, Tex. 1951 George G. Matkin President, State National Bank, El Paso, Tex 1952 W. H. Holcombe Executive Vice President, Security State Bank, Pecos, Tex 1953 Appointed by Board of Governors: Dorrance D. Roderick President, Newspaper Printing Corporation (El Paso Times and Herald Post), El Paso, Tex 1951 Hiram S. Corbett President, J. Knox Corbett Lumber Company, Tucson, Ariz 1952 Hal Bogle Livestock feeding, farming and ranching, Dexter, N. M 1953 Houston Branch Appointed by Federal Reserve Ban\: O. R. Weyrich President, Houston Bank & Trust Company, Houston, Tex 1951 P. R. Hamill President, Bay City Bank & Trust Company, Bay City, Tex 1951 Melvin R®uff President, Houston National Bank, Houston, Tex 1952 R. Lee Kempner President, United States National Bank, Galveston, Tex 1953 Appointed by Board of Governors: Ross Stewart President, C. Jim Stewart & Stevenson, Inc., Houston, Tex 1951 Charles N. Shepardson Dean of Agriculture, A. & M. College of Texas, College Station, Tex 1952 Herbert G. Sutton T. O. Sutton and Sons, Colmesneil, Tex 1953 San Antonio Branch Appointed by Federal Reserve Ban\: C. L. Skaggs President, The First National Bank of Weslaco, Weslaco, Tex 1951 E. A. Baetz President, Bexar County National Bank, San Antonio, Tex 1951 Riley Peters President, First State Bank, Kerrville, Tex 1952 E. R. L. Wroe President, American National Bank, Austin, Tex 1953 Appointed by Board of Governors: Henry P. Drought Attorney at Law, San Antonio, Tex 1951 D. Hayden Perry Livestock farming, Robstown, Tex 1952 Edward E. Hale Chairman of the Department and Professor of Economics, The University of Texas, Austin, Tex 1953 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1951-Cont. Term Expires Dec. 31 DIRECTORS Cont. District No. 12—San Francisco Class A: 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 Chas. H. Stewart Chairman of the Board, Portland Trust and Savings Bank, Portland, Ore 1953 Class B: Reese H. Taylor President, Union Oil Company of California, Los Angeles, Calif 1951 Walter S. Johnson President, American Forest Products Corporation, San Francisco, Calif 1952 Alden G. Roach President, Columbia Steel Company, San Francisco, Calif 1953 Class C.- 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 William R. Wallace, Jr Member of the firm of Wallace, Garrison, Norton & Ray, Attorneys at Law, San Francisco, Calif 1953 Los Angeles Branch Appointed by Federal Reserve Ban\: W. R. Bimson President, The Valley National Bank of Phoenix, Phoenix', Ariz 1951 M. Vilas Hubbard President, Citizens Commercial Trust and Savings Bank of Pasadena, Pasadena, Calif 1952 Frank L. King President, California Bank, Los Angeles, Calif 1952 Appointed by Board of Governors: Paul H. Helms President, Helms Bakeries, Los Angeles, Calif 1951 Fred G. Sherrill Vice President, J. G. Boswell Company, Los Angeles, Calif 1952 Portland Branch Appointed by Federal Reserve Ban\: E. B. MacNaughton Chairman of the Board, The First National Bank of Portland, Portland, Ore 1951 W. W. Flint President, The First National Bank of Cottonwood, Cottonwood, Idaho 1952 Frank Wortman President, The First National Bank of McMinnville, McMinnville, Ore 1952 Appointed by Board of Governors: Aaron M. Frank President, Meier & Frank Company, Inc., Portland, Ore 1951 R. B. Taylor Livestock and farming, Adams, Ore 1952 Salt Lake City Branch Appointed by Federal Reserve Ban\: D. F. Richards President, American National Bank of Idaho, Idaho Falls, Idaho Falls, Idaho 1951 Chas. L. Smith Chairman of the Board, First Security Bank of Utah, National Association, Salt Lake City, Utah 1952 John A. Schoonover President, The Idaho First National Bank, Boise, Idaho 1952 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 125 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1951-Cont. Term Expires Dec. 31 DIRECTORS Coilt. Appointed by Board of Governors: Frank M. Browning President, Ogden Buick Sales Company, Ogden, Utah 1951 Merle G. Hyer Livestock and farming, Lewiston, Utah 1952 Seattle Branch Appointed by Federal Reserve Ban\: Lawrence M. Arnold Chairman of the Board, Seattle-First National Bank, Seattle, Wash 1951 Fred C. Forrest Chairman of the Board and President, The First National Bank of Pullman, Pullman, Wash 1952 Benj. N. Phillips Chairman of the Board, First National Bank in Port Angeles, Port Angeles, Wash 1952 Appointed by Board of Governors: Howard H. Preston Professor of Money and Banking, College of Business Administration, University of Washington, Seattle, Wash 1951 Ralph Sundquist Fruit Grower and Cold Storage Operator, Yakima, Wash 1952 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1951—Cont. SENIOR OFFICERS OF FEDERAL RESERVE BANKS [December 31, 1951] Federal Reserve President Bank of— First Vice President VicePresidents Boston J. A. Erickson John J. Fogg E. O. Latham Alfred C. Neal Robert B. Harvey2 Carl B. Pitman E. G. Hult O. A. Schlaikjer 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 Wm. G. McCreedy W. J. Davis Robert N. Hilkert P. M. Poorman E. C. Hill J. V. Vergari3 Richard G. Wilgus1 Cleveland Ray M. Gidney Wilbur T. Blair A. H. Laning2 Wm. H. Fletcher Roger R. Clouse Martin Morrison W. D. Fulton Paul C. Stetzelberger J. W. Kossin Donald S. Thompson Richmond Hugh Leach N. L. Armistead C. B. Strathy J. S. Walden, Jr. R. L. Cherry K. Brantley Watson D. F. Hagner Edw. A. Wayne R. W. Mercer2 Chas. W. Williams Atlanta Malcolm Bryan P. L. T. Beavers T. A. Lanford L. M. Clark V. K. Bowman R. E. Moody, Jr. J. E. Denmark E. P. Paris S. P. Schuessler Chicago C. S. Young Allan M. Black L. H. Jones1 E. C. Harris H. J. Chalfont George W. Mitchell Neil B. Dawes A. L. Olson W. R. Diercks Alfred T. Sihler W. A. Hopkins W. W. Turner St. Louis Delos C. Johns Frederick L. Deming Paul E. Schroeder O. M. Attebery Dale M. Lewis C. M. Stewart Wm. E. Peterson H. H. Weigel C. A. Schacht J. C. Wotawa Minneapolis J. N. Peyton H. C. Core H. G. McConnell A. W. Mills C. W. Groth Otis R. Preston E. B. Larson M. H. Strothman, Jr. Sigurd Ueland Kansas City H. G. Leedy L. H. Earhart G. H. Pipkin Henry 0. Koppang R. L. Mathes C. E. Sandy1 John Phillips, Jr. D. W. Woolley Dallas R. R. Gilbert E. B. Austin Watrous H. Irons W. D. Gentry R. B. Coleman L. G. Pondrom J. L. Cook2 CM. Rowland W. E. Eagle Mac C. Smyth W. H. Holloway 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 * Cashier. 3 Also Cashier. 8 Counsel. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 127 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1951—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 D. F. Hagner Charlotte R. L. Cherry Atlanta Birmingham P. L. T. Beavers Jacksonville T. A. Lanford Nashville R. E. Moody, Jr. New Orleans E. P. Paris Chicago Detroit H. J. Chalfont St. Louis Little Rock C. M. Stewart Louisville C. A. Schacht Memphis Paul E. Schroeder Minneapolis., Helena C. W. Groth Kansas City. Denver G. H. Pipkin Oklahoma City R. L. Mathes Omaha L. H. Earhart Dallas El Paso CM. Rowland Houston W. H. Holloway San Antonio W. E. Eagle San Francisco Los Angeles W. F. Volberg Portland S. A. MacEachron 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. Peyton, President of the Federal Reserve Bank of Minneapolis, and Mr. Leach, President of the Federal Reserve Bank of Richmond, who were elected Chairman of the Conference and Vice Chairman, respectively, in February 1950, were re-elected as such in March 1951 and continued to serve during the year 1951. Mr. Clement A. Van Nice, Assistant Vice President of the Federal Reserve Bank of Minneapolis, who was appointed Secretary of the Conference in June 1950, continued to serve as such during 1951. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM BOUNDARIES OF FEDERAL RESERVE DISTRICTS OO AND THEIR BRANCH TERRITORIES s S 8 i =r=a BOUNDARIES OF FEDERAL RESERVE DISTRICTS BOUNDARIES OF FEDERAL RESERVE BRANCH TERRITORIES ft BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM © FEDERAL RESERVE BANK CITIES • FEDERAL RESERVE BRANCH CITIES NOTE—There has been no change in district or branch territory boundaries since the publication of the description in the Annual Report of the Board of Governors for 1942, pp. 138-45. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX Page Acceptances, bankers, buying rates on 70 Acceptances to 100 per cent of capital and surplus, application approved 38 Administrative procedure rules, amendment to 44 Amendments to Federal Reserve Act: (See Federal Reserve Act) American Bankers Association: Check routing symbols, progress in program .... 37 Annual reports, bank holding company affiliates 38 Assets, earning, of member banks 34 Assets and liabilities of Federal Reserve Banks 54, 56 Assignment of claims against the Government, amendment to Act 44 Audit of accounts of Board of Governors by Federal Reserve Bank of Boston 51 Bank credit: (See Credit) Bank holding companies: Annual reports obtained from 38 Voting permits authorized 38 Bank premises, Federal Reserve Banks and branches 50, 68 Bank supervision by Federal Reserve System 37 Banking offices: Analysis of changes 76 Number of 34 Banks: Earning assets 34 Earnings and profits during year 33 Board of Governors: Audit of accounts by Federal Reserve Bank of Boston 51 Income and expenses 50 Members 110 Officers 110 Reimbursement expenditures 51 Bonds, Government: (See Government securities) Branch banks: Domestic: Number of 34 Number and analysis of changes 76 Federal Reserve System: Bank premises 50, 68 Directors, list of 115 Examination of 37 Portland, new building occupied 50 Seattle, new building occupied 50 Vice Presidents in charge of 127 Foreign: Applications approved 38 Location of 39 Buildings of Federal Reserve Banks and branches, construction and improvements 50 Buying rates on acceptances 70 Capital, long-term business financing 18 129 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 INDEX Page Capital accounts: Federal Reserve Banks 55, 57, 59 Member banks 34 Chairmen of Federal Reserve Banks: Executive committee 113 List of 113 Meetings of 52 Charts: Balance of payments of the United States 29 Bank loans and investments other than U. S. Government securities 17 Federal Reserve credit 7 Gross national product . 11 Money rates 6 Money supply and deposit turnover 21 Ratio of U. S. Government securities holdings to total assets 15 Selected business indexes 13 Check routing symbols, progress of program 37 Clayton Antitrust Act, findings and briefs in Transamerica Corporation case 44 Clearing and collection: Check routing symbols, progress of program 37 Par list: Changes in par and nonpar banks during year 36 Number of banks on list and number not on list, by States 77 Commercial banks: Holdings of Government securities 16, 25 Loans and investments 16 Ownership of Government debt 25 Commitment fees under Regulation V 72 Committees: Executive, of Chairmen's Conference 113 Executive, of Federal Advisory Council 112 Executive, of Federal Open Market Committee Ill General credit control and debt management of the Joint Committee on the Economic Report, replies of Board to questionnaire 10 National Voluntary Credit Restraint, appointment of 31 Condition reports of Federal Reserve Banks: All banks combined 54 Each bank 56 Conferences: (See Meetings) Construction, expenditures during the year . 12 Consumer, credit, Regulation W: Amendments to 8, 41, 83, 89, 93, 94 Enforcement program 44 Minimum down payments and maximum maturities under 73 Credit: Commercial banks to borrowers 14 Consumer: (See Consumer credit) Discussion of situation during year 2 Economic factors underlying private demand 10 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 131 Credit—Continued PaSe Expansion of bank 16 Voluntary Credit Restraint Program 9, 30, 85, 88 Credit and money 14 Defense Housing and Community Facilities and Services Act of 1951.... 45 Defense Production Act, extension of 45 Defense production: Applications and amount of loans 32 Loan guarantees for , 31 Deposits: Federal Reserve Banks 55, 57 Time, maximum rates on 71 Deputy Chairmen of Federal Reserve Banks, list of 113 Directors, Federal Reserve Banks: Classes of 114 List of 114 Directors, Federal Reserve branch banks: List of 114 Directory: Board of Governors of the Federal Reserve System 110 Federal Advisory Council 112 Federal Open Market Committee Ill Federal Reserve Banks. . 113 Discount rates of Federal Reserve Banks 5, 70 Dividends: Federal Reserve Banks 47 Member banks 33 Earning assets of member banks 34 Earnings and expenses, Federal Reserve Banks: 1951 46, 62 1914-1951 64 Earnings and profits of banks during year 33 Economic factors underlying private credit demand 10 Employees, Federal Reserve Banks, number and salaries 69 Examinations: Branches of foreign banking corporations 40 Federal Reserve Banks 37 Federal Reserve branch banks 37 Holding company affiliates 38 State member banks 37 Executive orders: Atomic Energy Commission and Defense Materials Procurement Agency designated as guaranteeing agencies 31 10161, authority delegated to Board over Voluntary Credit Restraint Program 30 Expenditures, review for year 12 Expenses: Board of Governors 50 Federal Reserve Banks .... 62 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 INDEX Federal Advisory Council: Executive committee 112 Meetings of 52 Members and officers 112 Federal Open Market Committee: Executive committee Ill Meetings 51 Members and officers Ill Policy actions *. . 95 Treasury-Federal Reserve accord 4, 98 Federal Reserve Act: Section 24, amendment relating to real estate loans by national banks 45 Federal Reserve Bank of Atlanta: Building site acquired for expansion 50 Federal Reserve Bank of Boston: Audit of accounts of Board 51 Federal Reserve Bank of New York: Foreign operations of 49 Federal Reserve Bank of Philadelphia: Addition to building and improvements approved 50 Federal Reserve Banks: Assets and liabilities ... 54, 56 Bank premises 50, 68 Branches: (See Branch banks, Federal Reserve System) Chairmen: (See Chairmen, Federal Reserve Banks) Condition of 54, 56 Directors 114 Discount rates 5, 70 Dividends 47 Earnings and expenses 46, 62, 64 Employees 69 Examination of 37 First Vice Presidents 126 Foreign and international accounts 49 Holdings of Government securities 26, 48, 60 Holdings of loans and securities 48 Holdings of short-term Treasury certificates 61 Officers, list of 113 Officers and employees, number and salaries . 69 Operations of 46 Ownership of Government securities , 25 Presidents 126 Profit and loss 63 Vice Presidents 126 Volume of operations 46, 61 Federal Reserve notes: Cost of printing 51 Issued to and held by Federal Reserve Banks 55, 57, 59 Payments to United States Treasury as interest on outstanding 48 Federal Reserve policy 3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 133 Federal Reserve System: Changes in membership 35 Map . 128 Fiduciary powers, applications granted 38 First Vice Presidents of Federal Reserve Banks, list of 126 Foreign accounts of Federal Reserve Banks , 49 Foreign banking corporations: Branches authorized during year , 38 Branches of 39 Examinations of branches 40 Gold: Foreign purchases from United States 28 International movement of 27 Government debt, ownership of 24 Government securities: Commercial bank holdings 16, 25 Holdings of banks during year 14, 26 Holdings of Federal Reserve Banks 26, 48, 60 Ownership of Government debt *. 24 Treasury-Federal Reserve accord with respect to monetary and debt management policies 4, 84, 98 Guarantee fees under Regulation V 72 Hearings: Rules of Practice for formal hearings amended 44 Transamerica Corporation, findings and briefs filed 44 Holding company affiliates: Examination of 38 Voting permits granted 38 Income and expenses of Board of Governors 50 Interest rates 23, 70 Joint statement: Treasury-Federal Reserve accord on monetary and debt management policies 4, 84, 98 Legislation: Assignment of claims against the Government, amendment to Act. . 44 Defense Housing Act, amendment to 45 Defense Production Act, extended 45 Federal Reserve Act, amendment to section 24 relating to real estate loans by national banks 45 Loans: Business, expansion 18 Earnings of Federal Reserve Banks on 48 Real estate, by national banks, amendment to section 24 of Federal Reserve Act 45 Regulation V, guarantee fees and commitment rates 72 Regulation X, maximum loan values and maximum maturities 74 Loans and investments of commercial banks 16 Map of Federal Reserve System 128 Margin requirements: Amendments to Regulations T and U to increase from 50 to 75 per cent 8, 40, 81 Table 72 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 INDEX Meetings: Chairmen of Federal Reserve Banks 52 Federal Advisory Council 52 Federal Open Market Committee 51 Presidents of Federal Reserve Banks 52 Member banks: Analysis of changes 76 Capital accounts 34 Earnings assets of 34 Earnings and profits 33 Reserve requirements 71 Reserves, changes with relevant factors 22 Reserves, Reserve bank credit, and related items 66 Membership in Federal Reserve System, changes in 35 Monetary policy and management of the public debt, Congressional inquiry into 10 Money: Rise in volume and decline in use 19 Supply and relevant factors 20 Mutual savings banks, analysis of changes 76 National banks: Analysis of changes 16 Real estate loans by, amendment to section 24 of Federal Reserve Act 45 Trust powers granted during year 38 Nonmember banks: Analysis of changes 76 Par list, number on list and number not on list 77 Number of banking offices in United States 34, 76 Open market operations during year 7 Operations of Federal Reserve Banks, volume of 46, 61 Ownership of United States Government debt 24 Par list: Changes during year 36 Number of banks on list and not on list by Federal Reserve districts and States 77 Policy actions, Board of Governors: Regulation A, discounts for and advances to member banks by Federal Reserve Banks, amendment to 86 Regulation F, trust powers of national banks, amendment to 81 Regulation T, extension and maintenance of credit by brokers, dealers, and members of national securities exchanges, amendments to. .81, 90 Regulation U, loans by banks for the purpose of purchasing or carrying stocks registered on a national securities exchange, amendment to 81 Regulation W, consumer credit, amendments to 83, 89, 93, 94 Regulation X, real estate credit, amendments to 80, 82, 83, 86, 87, 88, 91, 92, 93 Understanding between Department of the Treasury and the Federal Reserve System with respect to debt management and monetary policies 84 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 135 Policy actions, Board of Governors—Continued Page Voluntary Credit Restraint Program, approval of 85 Amendment to 88 Policy actions, Federal Open Market Committee: Authority to effect transactions in System account: Meeting of January 31 95 Meeting of February 6-8 96 Meeting of March 1-2 101 Meeting of March 8 102 Meeting of May 17 103 Meeting of October 4 105 Meeting of November 14 108 Repurchase agreements 107 Treasury-Federal Reserve System accord 98 Postal savings deposits, interest rate on 71 Presidents of Federal Reserve Banks: Conference of 127 List of 126 Meetings of 52 Press statements: Treasury-Federal Reserve accord with respect to monetary and debt management policies 4, 84, 98 Prices, trend during year 2 Profits, member banks during 1951 33 Rates: Buying on acceptances 70 Commitment to make loans under section 13b of Federal Reserve Act 70 Discount at Federal Reserve Banks 5, 70 Interest 23, 70 Loans guaranteed under Defense Production Act 72 Postal savings deposits 71 Savings deposits 71 Time deposits 71 Real estate credit: Maximum loan payments and maximum maturities under Regulation X 74 Regulation X, amendments to 9, 42, 80, 82, 83, 86, 87, 88, 91, 92, 93 Regulation X, enforcement program 44 Regulations, Board of Governors: A, discounts for and advances to member banks by Federal Reserve Banks, amendment to exempt paper representing loans under V-loan program 40, 86 F, trust powers of national banks, amendment to increase amount of individual trust in common trust fund 40, 81 T, extension and maintenance of credit by brokers, dealers, and members of national securities exchanges: Amendment to increase margin requirements from 50 to 75 per cent 40, 81 Amendment to make minor technical changes 41, 90 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 INDEX Regulations, Board of Governors—Continued Page U, loans by banks for the purpose of purchasing or carrying stocks registered on a national securities exchange: Amendment to increase margin requirements to 75 per cent. .. .40, 81 V, loan guarantees for defense production 31 W, consumer credit: Amendments to 41, 83, 89, 93, 94 Changes during year 8 Enforcement program 44 X, real estate credit: Amendments to 9, 42, 80, 82, 83, 86, 87, 88, 91, 92, 93 Changes during year 3 Enforcement program 44 Repurchase agreements authorized by Federal Open Market Committee 107 Reserve cities, designation of 36 Reserve requirements: Changes during year 3 Member banks 71 Reserves: Changes in member bank during year 22 Commercial banks during year 22 Member banks, 1918-1951 66 Rules of Practice for Formal Hearings, amendment to 44 Salaries: Board of Governors 50 Officers and employees of Federal Reserve Banks 69 Selective credit regulation 8 State member banks: Analysis of changes 76 Changes during year 35 Examination of 37 Transamerica Corporation, findings and briefs filed 44 Treasury certificates, holdings of short-term by Federal Reserve Banks. . 61 Treasury-Federal Reserve accord as to monetary and debt management policies 3, 84, 98 Trust powers of national banks: Amendment to Regulation F to increase amount of individual trust in common trust fund 40 Permits granted and terminated during year 38 Violations: Regulations W and X, actions under 44 Volume of operations by Federal Reserve Banks .46, 61 Voluntary Credit Restraint Program: Adoption of 30, 85 Amendment to 88 National and regional committees appointed 31 Review of 9 Voting permits: Bank holding companies, general and limited authorized 38 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis