Annual Report of the Federal Reserve Board, 1953

FORTIETH ANNUAL REPORT of the BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM ####£p3* COVERING OPERATIONS FOR THE YEAR Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LETTER OF TRANSMITTAL BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Washington, March 1, 1954. 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 Fortieth Annual Report of the Board of Governors of the Federal Reserve System. This report covers operations for the year 1953 during which, on December 23, occurred the fortieth anniversary of the approval of the original Federal Reserve Act. 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 Introduction 1 Federal Reserve Credit Policy 3 Open market operations 4 Change in discount rate 6 Change in reserve requirements 6 Regulation of stock market credit 6 Steps toward freer, more self-reliant financial markets 6 Review of the discount and discount rate mechanism 8 Economic Conditions 8 Demand and production 10 Industrial production 14 Labor market 14 Demand and production in other countries 15 Prices 17 Income and saving 18 Debt and equity financing 19 Interest rates 23 Bank Credit and Money 24 Bank loans and investments 24 Deposits and currency 28 Bank reserve positions 29 Foreign Financial Developments 31 United States balance of payments 32 Dollar area 33 Sterling area 34 Other countries outside Europe 35 Continental Western Europe 36 Loan Guarantees for Defense Production 37 Banking Operations and Structure 39 Bank earnings and profits 39 Bank earning assets 40 Capital accounts 41 Number of banking offices 41 Changes in Federal Reserve membership 42 Par and nonpar banks 42 Bank Supervision by the Federal Reserve System 43 Examination of Federal Reserve Banks 43 Examination of State member banks 43 Bank holding companies 44 Digitized for FRASER iii http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trust powers of national banks 44 Acceptance powers of member banks 45 Foreign branches and banking corporations 45 Inter-Agency Bank Examination School 46 Changes in Regulations of the Board of Governors 47 Margin requirements for purchasing securities 47 Reserves of member banks 47 Administration of the Clayton Antitrust Act with Respect to Banks 47 Legislation 48 Federal Reserve branch buildings 48 Loans on forest tracts 48 Guarantees of defense loans 48 Reserve Bank Operations , 49 Volume of operations 49 Earnings and expenses 49 Holdings of loans and securities 51 Foreign and international accounts 52 Bank premises . . . 53 Federal Reserve Meetings 53 Board of Governors—Income and Expenses . . , 54 TABLES 1. Statement of Condition of the Federal Reserve Banks (in detail), Dec. 31, 1953 . 58 2. Statement of Condition of Each Federal Reserve Bank at End of 1953 and 1952 ..... 60 3. Holdings of United States Government Securities by Federal Reserve Banks, End of December 1951, 1952, and 1953 .. 64 4. Federal Reserve Bank Holdings of Special Short-Term Treasury Certificates Purchased Directly from the United States, 1949-53. ... 65 5. Volume of Operations in Principal Departments of Federal Reserve Banks, 1949-53 65 6. Earnings and Expenses of Federal Reserve Banks during 1953 66 7. Earnings and Expenses of Federal Reserve Banks, 1914-53 68 8. Member Bank Reserves, Reserve Bank Credit, and Related Items—End of Year 1918-53 and End of Month 1953 70 9. Bank Premises of Federal Reserve Banks and Branches, Dec. 31, 1953 72 10. Number and Salaries of Officers and Employees of Federal Reserve Banks, Dec. 31, 1953. 73 11. Federal Reserve Bank Discount, Interest, and Commitment Rates, and Buying Rates on Acceptances (in effect Dec. 31, 1953) 74 iv Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

12. Member Bank Reserve Requirements 75 13. Maximum Interest Rates Payable on Time Deposits 75 14. Margin Requirements 76 15. Fees and Rates Established under Regulation V on Loans Guaranteed Pursuant to Defense Production Act of 1950 76 16. All Banks in the United States, by Classes, Dtc. 31, 1953 and 1952, Principal Assets and Liabilities, and Number of Banks 77 17. Member Bank Earnings, by Class of Bank, 1953 and 1952 78 18. Analysis of Changes in Number of Banking Offices during 1953 79 19. Number of Banking Offices on Federal Reserve Par List and not on Par List, by Federal Reserve Districts and States, Dec. 31, 1953.... 80 APPENDIX Record of Policy Actions—Board of Governors 82 Record of Policy Actions—Federal Open Market Committee 86 Board of Governors of the Federal Reserve System 106 Federal Open Market Committee 107 Federal Advisory Council 108 Directors and Senior Officers of Federal Reserve Banks 109 Description of Federal Reserve Districts 124 Federal Reserve Branch Territories 132 Map of Federal Reserve Districts 135 Index 136 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

OF THE FEDERAL RESERVE SYSTEM Nineteen fifty-three was another year of record production and price stability for the national economy, and of further advance in the economic strength of the free world. Domestic conditions during much of the year were nevertheless characterized by important realignments and adjustments in production, employment, and the credit markets. With the purpose of contributing to national stability and growth, monetary policy was promptly and flexibly adapted to these shifts of economic forces. Additional steps were taken to promote more self-reliant financial markets. Reflecting in part continuing large requirements for the defense program and more particularly expansion in private expenditures for consumption and capital investment, total demand for national output in the first half of the year established a new high level. In the second half of the year demand and output contracted moderately, and employment declined below the level of the end of 1952. Abroad, notably in the industrial nations of Western Europe, gains in productive activity and financial stability were extended throughout the year. The vigor of developments abroad helped to sustain markets for internationally traded commodities, especially in the second half of the year. The main element in the changing situation in the United States after midyear was a decline in demand for a wide variety of industrial products as producers and distributors, who had been accumulating inventories at a rapid rate, reduced their purchases in order to check further accumulation. By the year-end, excess inventory holdings were being worked off. Another important demand development was a shift from rising to gradually declining defense expenditures. Curtailment of defense demands reflected many influences, including the cessation of fighting in Korea, some easing of international tensions, and some shift in the goals and nature of the program. Capital outlays of business for new plant and equipment were at appreciably higher levels than during 1952, with reductions in some 1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Z ANNUAL REPORT OF BOARD OF GOVERNORS lines more than offset by increases in others. Although some tightness developed in the mortgage market in the late spring and summer, residential building was for the most part maintained close to earlier levels. Consumer buying of goods, which was unusually active early in the year, was reduced moderately after midyear. Reflecting a lower level of agricultural prices during 1953, farm incomes declined from the relatively high level of the preceding year and farm purchases accordingly were smaller. Despite these changes in demand and activity, domestic commodity prices, in both wholesale and retail markets, showed only selective changes during 1953. Important downward adjustments had been made earlier in prices of many agricultural and industrial materials which had been bid up to exceptional peaks after the Korean outbreak. Federal price support for cotton, wheat, and other basic farm products in large supply was a sustaining factor. Declines in demand for goods, aside from those directly associated with changes in the inventory situation and in the defense program, were generally small. Real estate values declined in some sectors; new construction prices were generally maintained. In securities markets, common stock prices fluctuated moderately—a gradual decline to the low for the year in September being followed by some recovery in the last quarter. Under the impact of first rising and then declining interest rates, debt obligations showed more price variation than in other recent years. Toward the year-end, rates on short-term Government securities and on prime open market commercial paper were lower than at any time since 1951. Most other interest rates, though down considerably from spring levels, were still somewhat higher than in 1952. Treasury financing needs were heavy in 1953, both for refunding a large volume of maturing issues and for raising new money, and the total of private credit demands continued large. Early in 1953, when increasingly heavy utilization of productive resources presented an inflationary threat, Federal Reserve policy was directed toward restraint of excessive bank credit expansion. Subsequently, as private credit demands relaxed and inflationary pressures abated, the Federal Reserve moved to expand the supply of funds available for bank lending and to ease the credit markets generally. By the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 5 year-end, the Federal Reserve was actively pursuing a policy of credit ease designed to avoid deflationary tendencies. In most countries abroad, the year 1953 was one of high and rising production and of financial equilibrium internally. Foreign trade was larger than in the second half of 1952 and marked by increasingly active competition. For many nations, problems of balance in international payments were less acute than in earlier years. The achievement and maintenance of financial stability both internally and in external payments permitted some easing of credit conditions by monetary authorities in most European countries. With world demand continuing strong, but commodity supplies generally ample, the level of world prices showed stability. Several leading countries, including the United Kingdom, Germany, and the Low Countries, reduced the scope and severity of direct restrictions on foreign payments in 1953. The considerable strengthening of monetary reserves in Europe and the sterling area laid the basis for further steps in the direction of freer trade and convertibility of currencies. FEDERAL RESERVE CREDIT POLICY Over the year the Federal Reserve System adapted its operations to the changing economic and credit situation, with the basic objective of promoting conditions favorable to sustained high employment, stable values, growth of the country, and a rising level of consumption. In the first quarter, in the presence of booming economic conditions, and recognizing the inflationary potential of strong credit demands, the Federal Reserve System continued to pursue a policy directed toward slowing the pace of bank credit expansion with a view to reducing inflationary dangers. Operations under this policy made it necessary for member banks as a group to obtain part of their needed reserve funds through borrowing. To make the policy more effective, the Federal Reserve discount rate was raised in January 1953 from 1% per cent to 2 per cent. As the spring advanced, credit demands continued active and impinged heavily on the banks despite a large volume of nonbank funds available for lending and investing. Member banks became increasingly reluctant to lend on the basis of funds borrowed from the Federal Reserve Banks. Interest rates rose sharply, especially in May, and there was some additional demand for credit in antici- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4 ANNUAL REPORT OF BOARD OF GOVERNORS pation of higher rates. At this juncture, it became apparent that Treasury financing needs would be large during the next few months. These developments further tightened credit conditions, causing deferment of some borrowing. Apprehension was widespread that the large credit demands of the economy would not be satisfied from prospective savings and bank credit. Also about this time there were signs of an abatement of the inflationary threat. In recognition of the change in the economic and credit situation, the Federal Reserve modified its credit policy with a view to avoiding deflationary tendencies without encouraging a renewal of inflationary pressures. The System began early in May to increase the availability of credit by enlarging the supply of reserve funds. Through additional open market operations in June and a reduction in reserve requirements in early July, enough funds were supplied to provide assurance that the heavy demands for credit which ordinarily develop over the second half of the year could be met without undue strain on the economy. These actions were promptly reflected in a decline in member bank borrowing, easier conditions of credit availability, a marked decline in interest rates, and an improved tone in credit markets generally. As signs of receding levels of economic activity and private credit demand appeared over ensuing months, the System in late summer and early autumn again used open market operations to supply additional reserves to the banking system and thus actively promoted credit ease with a view to avoiding deflationary tendencies. These reserves were helpful to member banks in meeting the autumn expansion of currency and credit. Interest rates declined further. By additional open market purchases near the year-end the System took further steps toward credit ease with the objective of promoting stability and growth in the economy. Open market operations. The System in 1953 coordinated its open market operations with the use of its other major credit policy instruments—discount rate policy and changes in reserve requirements. As the major instrument by which the System conditions the tone of the money market, open market operations were employed over the year to establish first a situation of credit restraint and then of ease. Early in 1953 the Federal Reserve sold Government securities to offset a seasonal easing of bank reserve positions and to maintain Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM FEDERAL RESERVE CREDIT Billions of dollars weekly averages of daily figures. HOLDINGS OF U. S. GOVT. SECURITIES 26 24 22 UNDER REPURCHASE AGREEMENT 1952 1953 * Direct purchases of special certificates from Treasury. NOTE.—Excludes Federal Reserve float, industrial loans, and acceptances. restraint on the availability of bank credit. The System resold the substantial volume of securities which had been purchased over the year-end under agreements in which nonbank dealers undertook to buy them back again in a short time. In addition, the System sold a small amount of its other Treasury bill holdings. Open market purchases of Treasury bills were begun in early May and were made on a large scale in June in order to supply reserves to banks. Purchases were made again in August and September and later in November and December in order to permit the banks to meet fully their seasonal needs for reserve funds. In November the Federal Reserve sold direct to the Treasury 500 million dollars of notes maturing December 1. The Treasury paid for these securities by issuing gold certificates against half of its holdings of free gold and immediately retired the securities. This transaction enabled the Treasury to borrow an equivalent amount in the market without exceeding the statutory debt limit. The volume of member bank reserves was not affected. Also, during March and June, in order to smooth the impact of quarterly tax payments on the money market, the Federal Reserve purchased directly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

O ANNUAL REPORT OF BOARD OF GOVERNORS from the Treasury special certificates of indebtedness in the amounts of 333 million and 1,172 million dollars respectively, which were retired in a few days. Change in discount rate. The Federal Reserve discount rate was raised from 1% to 2 per cent on January 16, 1953 at most Federal Reserve Banks and within a week at the remaining Banks. This action was designed to align the discount rate with short-term market rates and to help restrict undue expansion in bank credit by promoting greater reluctance on the part of member banks to resort to the discount privilege at the Federal Reserve Banks. Change in reserve requirements. On June 24, 1953 the Board announced a reduction in member bank reserve requirements on net demand deposits of 2 percentage points for central reserve city banks and 1 percentage point for reserve city and country banks. The new requirements, effective July 1 for country banks and July 9 for reserve city and central reserve city banks, are 13, 19, and 22 per cent, respectively. Requirements on time deposits remained unchanged at 6 per cent. This step, which released an estimated 1.2 billion dollars in reserves, was taken in anticipation of exceptionally heavy demands on bank reserves occasioned by seasonal currency and credit requirements, including Treasury financing needs, over the second half of the year. Regulation of stock market credit. The margin requirement on stock market credit was reduced to 50 per cent, effective February 20, 1953. The previous requirement of 75 per cent had been set in January 1951. Stock prices declined from mid-March to mid-September and subsequently recovered about half of the decline. Stock market credit expanded immediately following the relaxation of margin requirements and stabilized thereafter. Such credit has not been large in amount for more than two decades. Steps toward freer, more self-reliant financial markets. The System took several further steps during 1953 toward establishment of freer, more self-reliant financial markets. A free, self-reliant financial market may be defined as one in which the allocation of available funds among various uses is effected through competition in the market. Borrowers offer interest rates and other terms that enable them to obtain the funds they require, and lenders bid for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 7 loans and securities in accordance with their appraisal of risks, yields and their portfolio needs, and with their estimate of current Federal Reserve actions. In such a market Federal Reserve purchases and sales would be solely for the purpose of influencing the volume of bank reserves in order to promote economic stability and growth. Changes in bank reserves affect the supply, availability, and cost of credit. In a financial market such as is described above, the Federal Reserve would seek to have the impact of its actions as broad, general, and impersonal as possible. It would neither establish prices of particular securities or classes of securities directly, nor set up or maintain particular relationships in rate levels as between different sectors of the credit market, such as might impair the efficiency of the market in performing its allocative function. The potential buying or selling power at the disposal of the Federal Reserve when it enters the market to buy or sell securities is very large. In paying for its purchases or being paid for its sales, it increases or decreases reserve funds in the market. These factors pose an operating problem for the System in keeping the impact of its open market operations in the securities market as broad and general as possible with the least distortion of price relationships. In an effort to minimize this problem, the Federal Open Market Committee took various steps during 1953 to change its operating practices. These are shown in the policy record which appears on pages 86-105 of this Annual Report. The Committee, in effectuating its open market policies, emphasized operations in short-term securities which are the primary liquidity instruments of the credit market. In addition to this decision, the following steps were taken: (1) The Committee reworded its directive to its executive committee regarding orderly markets. The rewording of the directive emphasizes the intention of the Federal Open Market Committee to limit its operations in the Government securities market solely to those for the purpose of providing or absorbing reserves, except in the correction of disorderly markets. It was believed that this rewording would indicate to the market that it should not expect offsetting action by the System whenever fluctuations occur. Some such fluctuations are technical and self-correcting. Others reflect basic changes in the credit outlook. The directive, however, recognizes that unusual circumstances may develop such disorder as to require correction through direct Federal Reserve intervention. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

8 ANNUAL REPORT OF BOARD OF GOVERNORS (2) The Committee also changed System operating technique during periods of Treasury refunding. Prior to the Treasury-Federal Reserve accord, it was the practice to intervene in the market in support of Treasury refunding operations. Such intervention was continued for a time after the accord since it was thought that, without it, cash redemptions of maturing issues would be unduly large. Under this technique, reserve funds were injected into the money market that were not warranted by economic circumstances. This in turn had undesirable credit consequences. The development of a self-reliant private market for Government securities was deterred because investors could not tell whether the price of a new Government security offering was being established by competitive market forces or as a result of official actions. Over the two years following the Treasury-Federal Reserve accord, the Treasury and the Federal Reserve sought in various ways to minimize or eliminate injections of reserve funds into the market in connection with Treasury refunding operations. In connection with a small refunding in December 1952, the Committee decided to refrain from purchasing the maturing securities. Again in the February 1953 refinancing, no maturing securities were purchased by the System. Cash redemptions were very small on both refinancings, and the Committee continued the policy of not intervening in the market in subsequent Treasury financing operations. (3) The Committee discontinued, effective April 15, 1953, its requirement that transactions with the open market account be confined to dealers in Government securities who met certain specified qualifications. The requirement, whieh had been adopted by the Committee in 1944 to meet wartime conditions, was believed to be no longer necessary or desirable. Review of the discount and discount rate mechanism. As part of a continuing program for keeping its credit instruments adapted to the needs of a flexible monetary policy, the Federal Reserve initiated in 1953 a comprehensive re-examination of its discount function, and at the year-end these studies were still in progress. ECONOMIC CONDITIONS Output in the United States for the year 1953 was in record volume, but reached its peak rate about midyear and then declined significantly. In other countries of the free world, output generally Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM V rose throughout 1953 and there were few indications up to the end of the year that there had been any significant decline in demand. The principal declines in economic activity in the United States after midyear were in manufacturing and mining, where the immediate effects of changed inventory policies and some reduction in defense spending were concentrated. Reduction in industrial output was accompanied by some decline in imports of industrial materials. SELECTED BUSINESS INDEXES Per cent, ~1947-49 - 100 170 PRODUCTION OF MANUFACTURES 150 CONSTRUCTION ACTIVITY ^ 110 90 DISPOSABLE ^*-*~*m PERSONAL INCOME-^-T^ . - 130 A JTy^ \ / V - J T A N / *^ ^RETAIL SALES A I/' - no r 1 i i 90 130 CONSUMER PRICES FOODS ^y "TOTAL 1950 1951 1952 1953 1950 1951 1952 1953 NOTE.—Monthly series, seasonally adjusted except for prices. Indexes for retail sales and disposable personal income based on Department of Commerce data. Indexes for prices and employment based on Bureau of Labor Statistics data with employment seasonally adjusted by Federal Reserve. Index for construction activity based on Commerce and Labor data representing deflated work put in place. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

10 ANNUAL REPORT OF BOARD OF GOVERNORS In contrast to the marked shifts in production during 1953, and to similar developments in employment, changes in wholesale and consumer prices were within an unusually narrow range, during the second as well as the first half of the year. Prices of farm products declined much more moderately than in the preceding year. At the year-end total output of goods and services was slightly higher than at the end of 1952 while employment and hours of work were below the advanced levels of a year earlier. An apparent further increase in output per man-hour reflected many factors, including substantial additions of highly efficient new plants and installation of much new equipment in existing plants. Funds to finance plant expansion, to meet other private needs, and to take care of Treasury requirements were obtained in larger proportion from individual and business savings than the year before. Bank credit expanded only moderately over the year, although borrowing at banks as well as elsewhere was large for the season in the early part of the year. Demand and production. In 1953 the value of total output was about 367 billion dollars, 19 billion or 6 per cent larger than in 1952 and a record in physical volume as well as dollar amount. The substantial rise in production for the year as a whole reflected a further rise to exceptional levels of output in the first half of the year, following an upsurge in demand in the fall of 1952. During this period the productive resources of the economy were being utilized at an unusually high rate. Increased activity was based primarily on more private spending, particularly by consumers. Federal outlays for national security rose moderately, in contrast to sharp advances in the preceding two years when such outlays accounted directly for about half of the increase in national product. In the first half of 1953, as in the latter part of 1952, production of goods exceeded final takings by a substantial amount and business inventories were accumulated in large volume. After midyear the pace of economic activity slackened appreciably as business buying for inventory dropped sharply and as fresh expansive forces were lacking. At this time reductions in defense spending came to be more widely anticipated. A truce in Korea was agreed to in July, and international tensions appeared to be easing somewhat. Business concerns and the armed services reduced new ordering and, with new orders below shipments, unfilled orders Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

11 FEDERAL RESERVE SYSTEM INVENTORIES Billions of dollars, book value 50 MANUFACTURERS J DURABLE ~ 40 Jr DISTRIBUTORS ~ 30 *^ 1 i JL I I ! I 20 1950 1951 1952 1953 1950 1951 1952 1953 NOTE.—Department of Commerce book value data, adjusted for seasonal variation. declined sharply from earlier high levels. Reflecting the effect of reduced output accompanying these developments, the buildup of business inventories, which had been at a seasonally adjusted annual rate of 6 billion dollars in the second quarter, was considerably retarded in the third quarter and turned into moderate liquidation in the fourth quarter. At that time, as the chart shows, stocks were being reduced by both manufacturers and distributors. The principal reductions were in stocks of durable goods, which earlier had advanced most. Gross national product declined from a peak seasonally adjusted annual rate of 371 billion dollars in the second quarter to less than 364 billion in the fourth quarter. This was slightly above the level of a year earlier. The shift from substantial accumulation to liquidation of inventories was as large as the decline of 8 billion dollars in the annual rate of total production, with changes in other types of expenditures small and largely offsetting. At the end of 1953 expenditures of most types, except business inventory outlays, were either higher than or about the same as at the end of 1952. Government spending for goods and services changed little in the second half of 1953, despite a decline in spending for national Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

12 ANNUAL REPORT OF BOARD OF GOVERNORS security. Federal outlays for farm price supports increased and State and local government spending continued to rise. In the fourth quarter defense outlays were at an annual rate of 50 billion dollars, almost the same as a year earlier, and moderately below the peak second quarter rate. At the year-end defense outlays still accounted for about one-seventh of total product. Business outlays for fixed investment—construction of facilities and producers' durable equipment—rose somewhat during the first half of the year, and leveled off in the second half. For the full year, such outlays were 6 per cent above the record 1952 level. Farm investment, however, declined substantially, and among nonfarm industries there were diverse movements. Electric and gas utilities, for example, reported an increase of 17 per cent, while railroads reported a reduction of 5 per cent. For manufacturing as a whole there was an increase of 4 per cent, with a larger rise in nondurable than in durable goods lines. Construction of offices, stores, and other commercial facilities, which had been restricted somewhat in 1952, rose very sharply in 1953. Residential building, after allowance for seasonal influences, shared GROSS NATIONAL PRODUCT Billions of dollars,, annual rates TOTAL v ""^ - 350 . — •— - 300 PRIVATEEXPENDITURES -_ 250 200 100 _— —— GOVT. PURCHASES OF GOODS AND SERVICES - 50 1 . . . 1 . . . 1949 1950 1951 1953 NOTE.—Department of Commerce quarterly estimates at annual rates, adjusted for seasonal variation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 13 in the general expansion in the economy early in the year and then declined during the spring and summer. The seasonally adjusted volume increased somewhat toward the end of the year, however, while industrial activity was declining. The number of dwelling units started in 1953 was about 1.1 million, roughly the same number as in each of the two preceding years. Consumer purchases of goods and services in 1953 were at a new high in both dollar amount and physical volume. Following a sharp expansion in late 1952, such expenditures rose moderately in the first half of 1953, with the principal increases in autos and various services. In the second half, total consumer expenditures changed only slightly as declines in purchases of goods about offset a substantial further rise in outlays for services. Demand for autos was not quite as strong in the second half and demand for apparel showed a decline in the third quarter, followed by some recovery late in the year. In real terms, after allowing for a slight rise in consumer prices over the year, total consumption outlays in the fourth quarter were a little larger than a year earlier. With population continuing to rise rapidly—by 2.7 million persons or 1.7 per cent—per capita real takings were about the same in both years. Exports from the United States continued throughout 1953 at the rate which had prevailed in the latter part of 1952—about 12 billion dollars annually, excluding shipments under military assistance grants. This stability in export demand reflected a combination of high and generally rising world demand and the increased ability of the rest of the world to meet its own requirements on a fully competitive basis. Agricultural exports were somewhat smaller than in any other year since the war. Other exports, though smaller than in 1951 and the first half of 1952, exceeded those of the years 1948-50. United States imports reached a peak in the second quarter of 1953 at a rate of 11.4 billion dollars per annum, and thereafter fell to a rate of about 10 billion dollars in the last months of the year. Imports of foodstuffs and finished manufactures and, among materials, those of petroleum and newsprint, continued large during the latter part of 1953. Declines in imports of other materials reflected the shift, in the United States, from inventory accumulation in the first half to working down of inventories in the final quarter of the year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

14 ANNUAL REPORT OF BOARD OF GOVERNORS Industrial production. Shifts in demand arising out of changes in inventories and in the defense program had their chief impact on activity and employment at factories. Total industrial output rose from the advanced level of 133 per cent of the 1947-49 average late in 1952 to 137 in May and July 1953 and then declined during the remainder of the year to 127 in December. Reductions from previous high levels were widespread, with output of nondurable goods declining after May and durable manufactures and minerals declining from peaks reached during the summer. Within the durable goods group, primary metal and metal fabricating industries showed substantial decreases in activity after midyear, while output of building materials was for the most part maintained close to earlier high levels. Increases in output late in 1952 and early in 1953 had been particularly sharp for consumer durable goods, including autos, appliances, and television, and a considerable part of the subsequent decline in metal fabricating was in output of these and related products. The decline was not limited to consumer metal goods, however, as farm equipment output continued downward and output of some other producers' goods, including trucks and railroad equipment, declined from earlier high levels. Output of ordnance also declined. Despite some curtailment in the second half, auto production for the year was up 40 per cent from 1952 and truck production was nearly the same as in 1952. In the nondurable goods group, the textile, apparel, rubber, and leather industries reported marked declines. Activity in the food, paper, printing, chemicals, and petroleum refining industries meanwhile continued close to earlier advanced levels. Coal mining and crude petroleum output were curtailed in the latter part of the year, following earlier accumulation of stocks. Labor market. Developments in the labor market in 1953 paralleled broadly changes in economic activity. In the first half of the year civilian employment, average hourly and weekly wages, and total wage and salary receipts reached new highs. After midyear, demands for labor eased appreciably and by December many of the earlier gains had been lost. Nonagricultural employment, seasonally adjusted, rose about 500,000 to a peak of 49.5 million persons in July and subsequently declined about 1 million. Changes in employment and in hours of work, like changes in production, were chiefly in manufacturing. The average number of hours Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 15 worked in factories was down to 40 per week at the end of the year, as compared with about 41.5 hours a year earlier. Overtime work had been reduced and part-time work increased. Changes in nonagricultural employment outside of manufacturing were for the most part small. Federal employment, however, declined 240,000 over the year while State and local government employment rose almost this much. Also, toward the end of the year employment in transportation industries was reduced appreciably. On farms, employment continued to decline in 1953. The armed services were maintained at about 3.5 million. The labor force continued to expand in the early months of 1953, with increases from year-ago levels. As demands for labor were reduced, however, many youths and young married women, and some older workers, withdrew from the labor force, and by December fewer persons were reported in the civilian labor force than a year earlier. Unemployment in December, at 1,850,000 persons, was considerably above the postwar low reported in early autumn, about 450,000 higher than in December 1952, and a little higher than at the end of 1951. For the year 1953 unemployment averaged 1.5 million or 2.4 per cent of the civilian labor force. Demand and production in other countries, [n the free world outside the United States the transition from postwar recovery to peacetime growth was already well advanced at the beginning of 1953. With problems of internal financial stability and the balance of external payments much less acute than they had been in 1951 or in the first part of 1952, attention was shifting in Europe and elsewhere to long-term expansion of productive capacity and improvement in living standards. In the industrial countries of Western Europe, both demand and production rose during 1953, helping to support growth of output in primary producing countries and stability in world prices. Expenditures by consumers and also by business in Western Europe rose in the course of 1953, while expenditures by governments for defense and other purposes were maintained at the relatively high levels established in the first part of the year. Industrial production in October and November was about 5 per cent higher than a year before, despite the adverse effects on Continental steel production of the leveling off in world demand for steel. Construction activity was strong, particularly in Germany and the United Kingdom, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

16 ANNUAL REPORT OF BOARD OF GOVERNORS reflecting the continued existence of large backlogs of requirements created by war damage and obsolescence. Agricultural production in Western Europe reached a new record, about 30 per cent above 1948 and 20 per cent above prewar. Commercial imports of European countries from outside Europe increased in physical volume during 1953, the expansion being mainly in raw material imports. Although restrictions were maintained by European governments on imports from the dollar area, these restrictions were moderated by a number of countries in the course of the year. Under these circumstances, stability rather than expansion of European purchases from the United States was attributable to the increase in production in recent years which has reduced European dependence on United States foodstuffs and capital goods. Meanwhile, Western Europe's exports to the dollar area continued to rise, and there was also a recovery in exports to overseas sterling area countries. Sales of goods and services to the United States military establishment increased considerably. Important as external trade is in the European economy, the impetus to expanding production in Western Europe in 1953 came not so much from foreign trade as from growth of internal demand. Recovery in internal demand and production started in the summer of 1952, when an earlier liquidation of inventories ended. In contrast with the first years of postwar reconstruction, when large advances in industrial production were accompanied by inflationary boom conditions, financial stability was fully maintained in 1953. The absence of inflationary pressures, together with the balance-of-payments equilibrium achieved from the middle of 1952 onward, permitted some relaxation of monetary restraints in 1953, and interest rates declined somewhat in the majority of Western European countries. In Asia, Latin America, and Africa, output of primary products for world markets generally expanded in 1953. In India and Southeast Asia there was also a notable increase in production of food for local or regional markets. Industrial production rose moderately in India, and more sharply in Japan, reaching new highs in both countries. Government programs for development of agriculture, public utilities, and industry were carried forward in a number of countries. In some countries of Southeast Asia, however, the decline in export prices during the past two years threatened to cause fiscal difficulties for development programs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 17 Import purchases by the less industrialized countries were generally smaller than in 1952. In many countries, however, imports turned up in the course of the year. Canada continued to experience rapid economic development. Exports of grains and metals in the second half of the year fell somewhat below earlier high levels but other exports continued in strong demand. Employment was high and domestic demand for both Canadian and imported goods continued on a rising trend for the greater part of the year. Partly for seasonal reasons, Canadian imports from the United States declined somewhat in the second half of 1953 from the peak reached in the first half. Only in the last months of the year were there any signs of slackening in domestic trade. Despite the decline in United States interest rates in the second half of the year, money market rates in Canada remained stable for long-term maturities, and continued to rise up to October for shorter term maturities. Prices. Wholesale prices in the United States and in other countries were remarkably stable in 1953. The marked rise in demand in the latter part of 1952 and the early part of 1953, in a period when most remaining price and wage controls in the United States were being eliminated, had no appreciable effect on broad averages of prices. Nor were prices significantly affected by the truce in Korea at midyear, the easing in demands in the United States in the second half of the year, or the intensified competitive pressures developing among producers and distributors. In mid-December, the United States wholesale price index was slightly higher than a year earlier, with industrial prices up 1.5 per cent, prices of farm products down 5 per cent, and prices of processed foods unchanged. The index of basic commodity prices, which had declined very sharply in 1951 and 1952, fluctuated little during 1953 at about the pre-Korean level. In Europe, wholesale prices declined somewhat in the first half of 1953 and were generally stable in the second half. Sustained demand in Europe contributed to stability of world prices. Tin prices fell sharply in April and again in July, and rubber prices fell through October. Both of these materials had been in heavy demand for strategic stockpiles in earlier years. During the second half of the year some weakness developed in prices of certain materials, including hides and leather and steel scrap. On Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

18 ANNUAL REPORT OF BOARD OF GOVERNORS the other hand, prices of coffee and cocoa rose considerably in response to news of short crops. Abroad, soft-currency prices of raw materials obtainable alternatively from soft-currency or dollar sources were in closer alignment with dollar prices in 1953 than in earlier postwar years, in consequence mainly of adjustments that occurred in 1952. Prices of finished goods in the United States for the most part changed little during 1953 and were at a level higher in relation to material prices than in the first half of 1950 before hostilities broke out in Korea. Farm product prices in the United States declined somewhat further in 1953 to about the pre-Korean level. Total farm production was maintained at a high level, despite drought in some areas, and, with crop exports further reduced, carryovers continued to rise. The further price decline for crops was small, partly because prices of basic crops at the beginning of the year were already around Federal support levels. Prices of beef cattle declined one-fifth further during the year, and per capita beef consumption reached a record level. Cattle marketings were 30 per cent larger than in 1952. In contrast, marketings of hogs declined to the lowest level in several years and prices of pork products rose considerably. Consumer prices in the United States edged up to a new high in October, and then declined slightly. In December they were less than 1 per cent higher than in December 1952. Rents continued to rise, advancing more rapidly after July when most remaining rent controls were terminated. Costs of medical care and other consumer services also rose further. Prices of apparel and house furnishings changed little and foods declined somewhat. Used car prices declined sharply and December prices were down to about the postwar low of late 1949. In real estate markets, prices of older properties, particularly more expensive houses, tended to decline somewhat. Prices of new houses, however, were relatively stable. Reflecting reductions in farm incomes, prices of farm real estate declined 6 per cent from the peak reached in late 1952. In securities markets, common stock prices generally moved downward in the second and third quarters and increased moderately thereafter. Income and saving. Stability in prices and marked changes in production and employment during 1953 were clearly reflected in the pattern of income change. Personal income, seasonally adjusted, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 19 increased moderately further in the first half of the year, reached a peak in July, and declined moderately thereafter. December income, at an annual rate of 285 billion dollars, was 4 billion higher than a year earlier but about 3 billion below the high of July. The decline after July reflected a reduction of 5 billion dollars in the rate of wage and salary payments, partly offset in the total by an appreciable rise in unemployment benefits and by further moderate increases in rental income and interest. Business and professional income and dividends remained relatively steady. Income of farm proprietors declined somewhat further in 1953, reflecting reductions in prices which more than offset the effects on net income of a small rise in marketings and a slight decline in production expenses. Personal tax payments fluctuated more or less with income, and thus disposable income moved up until midyear and declined subsequently. In the fourth quarter, with disposable income at a somewhat higher level than a year earlier and consumption expenditures also up a little, personal saving was the same large proportion of income as before, more than 7.5 per cent. Corporate profits before taxes increased during the first half of 1953, reaching a seasonally adjusted annual rate of 46 billion dollars in the second quarter. As a result of declining sales and narrowing profit margins, however, profits decreased in the second half of the year, especially in manufacturing industries. For the year as a whole, corporate profits were about the same as in 1951, the previous all-time peak, and about 4 billion dollars larger than in 1952. Larger income tax liabilities, and a record volume of dividend payments, absorbed most of the 1952-53 increase in profits before taxes, and undistributed profits were only moderately larger in 1953 than in 1952. Debt and equity financing. Investment of funds directly or through financial institutions other than the commercial banking system increased markedly in 1953, reaching a new high for recent years. Expansion in credit from all sources, including the commercial banking system, was about as large in 1953 as in the record year 1952. Credit demands, particularly of businesses and consumers, were extremely large in the first half of 1953 but slackened somewhat after midyear. The role of commercial banks in the net extension of credit was reduced as a result of various factors, including the large amount of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

20 ANNUAL REPORT OF BOARD OF GOVERNORS funds offered by nonbank lenders, the limitations on the availability of bank reserves early in the year, and the restraint on loan expansion which banks began to exercise as their ratios of loans to liquid assets and to capital rose further. In 1953 the commercial banking system, including Federal Reserve Banks, absorbed a substantially reduced part of the increase in major types of debt and new equity instruments. Moreover, a larger proportion of the growth in bank loans and investments represented savings deposits than in earlier years. Real estate mortgage credit increased substantially further in 1953. Its outstanding volume rose 9.6 billion dollars compared with 8.8 billion in 1952, as is shown in the table. Commercial banks expanded their holdings of mortgages about 1 billion dollars or 6 per cent, somewhat less than in 1952. On the other hand, savings and loan associations increased their mortgage holdings more rapidly— by a total of 3.5 billion dollars or 19 per cent. Life insurance companies and savings banks expanded their portfolios somewhat more than in 1952. Growth in consumer instalment credit outstanding was rapid during the early months of 1953 as credit extensions based on sales of autos and household durable goods continued the expansion started in the spring of 1952, reaching a new high, after allowing for seasonal variation. Subsequently, such credit extensions declined appreciably, reflecting a decrease in the proportion of credit sales and, later, some reduction in total sales of such goods. Since repayments meanwhile continued to increase, the amount of credit outstanding showed much less marked increases after midyear. The share of instalment credit held by commercial banks rose moderately in the early part of the year but later declined. Corporate plant and equipment expenditures and inventory accumulations were larger in 1953 than in 1952, but total funds available from retained earnings and depreciation allowances were of record proportions. Corporate stock and bond issues, net of repayments, were 7.8 billion dollars in 1953 as compared to 8.1 billion in 1952. Excluding flotations by sales finance and personal loan companies, which were very large in 1953, corporate stock and bond issues were down 1.2 billion dollars or about 15 per cent from 1952. Business borrowing at banks declined 400 million dollars in 1953, as compared with an increase of 1.9 billion in 1952. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

21 FEDERAL RESERVE SYSTEM GROWTH IN MAJOR TYPES OF DEBT AND EQUITY FINANCING [Net increase in amounts outstanding, in billions of dollars] Distribution of growth by— 1951 Major types: Real estate mortgages 9.6 8.8 9.4 Consumer credit 3.1 4.4 0.7 Corporate bond and stock issues 7.8 8.1 6.3 Bank loans to business —0.4 1.9 3.7 State and local govt. issues 4.0 3.4 2.5 Federal cash borrowing 4.6 3.4 —1.2 Bank credit not included above 1.8 1.5 0.6 Selected holders: Federal Reserve Banks 1.2 0.9 3.0 Commercial banking system 4.4 8.9 5.7 Selected nonbank sources: Mutual savings banks 1.8 1.7 0.8 Savings and loan associations 3.8 3.2 2.1 Life insurance companies 4.5 4.4 3.4 Federal, State, and local govts 2.0 2.5 1.9 p Preliminary. NOTE.—Includes only selected types of loan extensions and new equity financing. Among types not included are trade credit other than consumer credit; interbank loans; security issues by foreign agencies, international organizations, nonprofit and eleemosynary institutions; nonbank loans for purchasing securities; and claims such as shares, pass books, and policies issued by financial organizations. The sum of the figures for major types of debt and equity financing does not equal the sum of the amounts shown for holders, since not all types of credit and holders are included. The figures for holders exclude purchases of the indicated types of credit and equity instruments by individuals, corporations, foreign investors, nonlife insurance companies, and other investor groups not shown separately. State and local governments expanded their borrowings to record levels. This reflected in part unusually large construction programs for highways, schools, and public housing, and in part an increased reliance on borrowed funds for financing these expenditures. Treasury demand for credit increased in 1953. Federal cash income at 70.4 billion dollars for the calendar year was 1 billion less than in 1952, while cash expenditures rose 3.5 billion to 76.5 billion. More than 1.5 billion dollars of the resulting cash deficit was financed by drawing down the Treasury cash balance and 4.6 billion was covered by net cash borrowing from the public. Government securities held by the public increased about 5.4 billion dollars, of which 4.6 billion represented the Treasury's net cash financing and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

22 ANNUAL REPORT OF BOARD OF GOVERNORS the remainder largely discount accruals on outstanding savings bonds. Additions to public holdings in 1953 amounted to 1.5 billion dollars for commercial banks and Federal Reserve Banks and about 3.9 billion for nonbank investors. The larger cash deficit in 1953 resulted primarily from a rise in expenditures. Spending for national security programs increased 1.5 billion dollars over 1952, although it leveled off during the year and turned down in the fourth quarter. Price support of farm products and social security programs accounted for the bulk of the increase of 2 billion dollars in other outlays. Cash income declined slightly despite peak or near-peak tax rates and higher incomes. Lower corporate tax collections, which reflected reduced 1952 corporate earnings, were responsible for the decline. Other tax receipts increased. The pattern of Federal receipts over the year showed continued concentration in the first half of the year, primarily as a result of the Mills plan for corporate tax payments. Cash outgo reversed the trend of the previous two years and was smaller in the second half of the year than in the first half, but this shift was not sufficient to offset the concentration of receipts in the first six months—especially in the first quarter. The result was a cash surplus of more than 2 billion dollars in the January-June period, and a deficit of more than 8 billion over the remainder of the year. During the calendar year 1953 the Treasury engaged in extensive borrowing operations to meet the cash deficit and also to retire maturing tax anticipation bills and to meet some cash attrition on refunding operations. The Treasury entered the securities market with several new issues to obtain more than 12 billion dollars in cash. Two of these offerings were tax anticipation issues totaling 6.7 billion dollars. The Treasury also sold for cash more than 1 billion dollars of long-term bonds in May and more than 2 billion of intermediate-term bonds in November. In addition, the Treasury raised 2.3 billion by increasing the weekly bill offerings. On five other occasions the Treasury entered the market to refund maturing debt in excess of 35 billion dollars. In nonmarketable issues, net sales of savings notes approximately offset small net redemptions of savings bonds. An objective in Treasury debt management operations during the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 23 year was to lengthen the maturity of the Federal debt. Over the year, five offerings were made of securities maturing in from 3l/ to 30 years, and a total of 9 billion dollars of these was issued. 2 Interest rates. During the first half of 1953 the large and growing demand for credit tended to outstrip the substantial and increasing funds available for lending and investing. Pressure of credit demand resulted in a moderate increase in interest rates through mid-April and then in a sharp advance. Most rates reached their highs for the year in May and June when borrowing demands were abnormally heavy. By that time it had become apparent that Federal financing for the remainder of the year would be heavier than had been anticipated, owing largely to the failure of Federal revenues to reach earlier expectations. There was also some tendency for borrowers to enter the market for financing in advance of their actual needs. From late 1952 to the middle of 1953, yields on most types of securities rose about l/ of 1 per cent, while interest rates 2 on short-term business loans and other short-term paper rose about % of 1 per cent. MONEY RATES Per cent per annum I /^ U. S. GOVERNMENT _ ^^^—s^ -"••^ ~" LONG-TERM "\ HIGH-GRADE »J \^ MUNICIPAL / -v J 1950 1951 1952 1953 NOTE.—Treasury bill rates are market rates on longest bills. Yields on long-term U. S. Governments exclude 314 per cent bonds of 1978-83, issued May 1, 1953. Corporate Aaa rates are from Moody's Investors Service; high-grade municipals, from Standard and Poor's Corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

24 ANNUAL REPORT OF BOARD OF GOVERNORS Beginning in June, rates declined sharply, in some cases more sharply than they previously had risen. This shift reflected both the increased availability of bank credit during the period and some slackening in credit demand. At the end of the year the market yield on Treasury bills was down to 1.5 per cent, substantially below a year earlier and as low as at any time since 1951. Yields on other Government securities and on short-term private paper were below those prevailing at the beginning of the year. Corporate and municipal bond yields were substantially below their midyear peaks but somewhat above the levels a year earlier. BANK CREDIT AND MONEY Total loans and investments of commercial banks increased 4.4 billion dollars in 1953 compared with 8.9 billion in 1952. Private demands for bank credit were strong during the first half of 1953 but slackened around midyear. Holdings of Government securities fluctuated considerably during the year. Expansion of demand deposits and currency was less than in other recent years, but time deposits continued to increase substantially. Bank reserve positions were tight during the first five months of the year and thereafter eased considerably, reflecting Federal Reserve actions and slackening credit demands. Bank loans and investments. Demand for bank credit from private borrowers strengthened considerably in late 1952 and early 1953 with the accelerated pace of economic activity. After midyear, however, private demand for bank credit weakened. The pattern of early strength and later weakness in demand for bank credit was particularly evident in consumer and business loans. Consumer loans expanded rapidly from the spring of 1952 through the second quarter of 1953, owing largely to heavy automobile financing, but growth slackened sharply in the third quarter and ceased in the fourth quarter. Nevertheless, the total outstanding increased 1.3 billion dollars or 15 per cent for the year. This was the largest growth for any major category of bank loans or investments, as shown in the table. Business demand for bank credit, which in recent years has usually declined in the January-June period, was maintained over the first quarter of 1953 and declined only moderately in the second quarter. After midyear, however, credit demand from this source did not Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

25 FEDERAL RESERVE SYSTEM LOANS AND INVESTMENTS OF COMMERCIAL BANKS [In billions of dollars] Out- Increase, or decrease ( —) stand- Type of loan or ing investment Dec. 30, 1st 2nd 3rd 4th Year 1953 qtr. qtr. qtr. qtr. Loans and investments, total 145.8 4.4 -2.1 -1.4 4.8 3.2 U. S. Govt. securities 63.6 0.3 -2.8 -1.9 3.6 1.4 14.6 0.5 0.3 P) 0.2 0.1 Other securities 67.6 3.6 0.4 0.5 1.0 1.7 Loans, total 27.5 -0.4 0) -0.5 0.3 -0.2 Business 16.7 1.0 0.3 0.3 0.2 0.2 Real estate 5.0 1.1 -0.2 0.2 1.1 Agricultural 3.5 0.3 o 0.1 0.1 0.6 Security 10.7 1.3 -0.5 0.6 0.2 C1) Consumer 5.2 0.3 0.6 0.2 0.1 0) Other C) 1 Less than 50 million dollars. NOTE.—Data exclude interbank loans. Total loans are after, and types of loans before, deductions for valuation reserves. Consumer and ''other'* loans are partly estimated for all dates, and other figures for dates other than Dec. 31, 1952 and June 30, 1953. Details may not add to totals because of rounding. rise as much as it usually does. Late in the year business loans declined slightly in contrast with the sharp rise that occurred late in 1952. For the year as a whole, such loans decreased about 400 million dollars, the first decline since 1949 and only the second in more than a decade. Slackening of business credit demands developed in varying degrees in major industries. During the first half of the year, as shown in the chart on the next page, net loan repayments by industries whose activities are highly seasonal—such as food processors and commodity dealers—followed their seasonal pattern but were smaller than in the previous year. Expansion after mid-1953, however, was substantially less than in other recent years, in part because large supplies of farm products were placed in storage under Commodity Credit Corporation price support loans instead of being marketed through commercial channels. By the end of 1953 outstanding loans in both industries were well below the year-end levels of the previous two years. Loans to manufacturers of metals and metal products generally continued their steady expansion during the first half of 1953 but declined during the last half. Borrowing by sales Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

26 ANNUAL REPORT OF BOARD OF GOVERNORS CHANGES IN BANK LOANS - SELECTED INDUSTRIES Millions of dollars, cumulative from December 1951 0 1600 y \ s* ^^ -. 1953 -400 - 1200 / 1952^ \. -800 - -•800 V METALS / --•400 COMMODITY DEALERS/* 1 0 100 800 PETROLEUM 800 a 400 •400 PUBLIC UTILITIES --400 1 1 t • 400 MAR. JUNE SEPT. DEC. MAR. JUNE SEPT DEC. NOTE.—Data reported by more than 200 of the largest weekly reporting member banks. Foods include liquor and tobacco. Metals include metal products, machinery, and transportation equipment. Petroleum includes coal, chemicals, and rubber. Public utilities include transportation. finance companies also declined in the last half of 1953, in contrast with a substantial increase in the same period of the preceding year. Expansion of bank loans to the petroleum and public utility groups, which include rapidly growing industries, appears to have stopped during 1953. Weakening of credit demand appeared somewhat earlier in the year for agricultural loans than for other loan categories, partly as a result of the sharp decline in agricultural prices during the last half of 1952. The growth of 1.3 billion dollars in the last half of 1953 did not represent an increase in demand for farm production credit but rather an increase in Federally guaranteed loans made by banks in connection with price support programs, either directly or through purchases of certificates of interest in loans on agricultural commodities held by the CCC. In contrast with these slackening tendencies in consumer and production loans, real estate loans at banks increased steadily throughout the year at about the same pace as in 1952. Security loans fluctuated considerably in the course of the year, reflecting changes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 27 in loans on Government securities in connection with Treasury financing operations and seasonal demands of dealers. Loans for purchasing and carrying other securities changed little, despite the reduction in margin requirements in February. Banks continued to add to their holdings of State and local government securities in 1953, but at a slower rate than in 1952. With the greater part of the Federal Government borrowing from the public in 1953 absorbed by nonbank investors, holdings of United States Government securities by commercial banks increased only about 0.3 billion dollars and Federal Reserve holdings expanded about 1.2 billion. Commercial banks reduced their portfolios of Government securities nearly 5 billion dollars in the first half of 1953. In this period banks were under pressure to maintain their reserve positions, and the Treasury was retiring debt by using surplus receipts and also by drawing down its balances with banks. Bank holdings of shortterm Government securities were reduced largely by sales to nonbank investors but also through cash retirement of maturing tax anticipation bills and other securities. Bill holdings of banks declined about 3.5 billion dollars from December 1952 through May 1953, and banks also sold large amounts of certificates, notes, and short-term bonds. The effect of these developments on the liquidity of commercial bank portfolios was offset in part by the closer approach to maturity of large bank holdings of short-term bonds and notes. Central reserve city and reserve city banks accounted for the greater part of the reduction in bank holdings of short-term Government securities. Bill holdings fell considerably below the levels that had been maintained at these banks since the spring of 1951. Country banks also disposed of Government securities early in 1953, but their holdings remained as large over the first five months as in the same period of 1952. With the easing in bank reserve positions that accompanied large open market operations by the Federal Reserve beginning in May and the reduction in reserve requirements at midyear, banks quickly rebuilt their Government security portfolios. Commercial banks initially acquired about 4.5 billion dollars of the large Treasury financing in mid-July. These additions, which were distributed throughout all classes of banks, fully offset the reductions in holdings of Governments that had occurred since the first of the year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

28 ANNUAL REPORT OF BOARD OF GOVERNORS Liquidation of Government securities was resumed before the end of July and holdings were reduced substantially by early September. They were increased again in November when the Treasury sold an issue of intermediate-term bonds for cash. Deposits and currency. Monetary expansion continued in 1953 but the increase was smaller than in any year since 1949. Expansion in privately held demand deposits and currency was about 2.1 billion dollars or about 1.5 per cent for the year. This growth was one-half the increase in 1952 and one-third that in each of the two preceding years. Demand deposits adjusted, after allowance for usual seasonal changes, continued to expand at a fairly rapid rate through April, but increased only slightly during the remainder of the year, as is shown in the chart. For the year as a whole these deposits increased 1.8 billion dollars or nearly 2 per cent. Currency outside banks, after allowance for usual seasonal movements, increased gradually through the third quarter of the year DEPOSITS AND CURRENCY Billion, of dollars 105 75 DEMAND DEPOSITS ADJUSTED TIME DEPOSITS 100 - 70 JUSTED FOR /*^\,^-s^ SEASO NAL VARIATION 95 - 65 90 V V 60 30 10 CURRENCY OUTSIDE BANKS u. s. OOVT. DEPOSITS ADJUSTED FOR SEASONAL VARIATION 25 / kA- 20 1952 1953 1952 1953 NOTE.—Figures are partly estimated. Deposits are for all banks in the United States. Demand and time deposits are adjusted to exclude U. S. Government and interbank deposits. Demand deposits arc also adjusted to exclude items in process of collection. Time deposits include deposits in the Postal Savings System and in mutual savings banks. Figures are for last Wednesday of month except for June and December call dates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 29 and thereafter changed little. The year's growth of 300 million dollars or 1 per cent compared with a growth of 1.2 billion dollars or 4.5 per cent in 1952. Growth in time deposits at commercial and mutual savings banks continued very large in 1953—4.6 billion dollars compared with 4.5 billion in 1952. United States Government deposits fluctuated more widely than in other recent years, reflecting primarily larger and more concentrated Treasury borrowing. In addition to fluctuations during regular tax-payments, such as in the second half of March and June, these deposits rose sharply when substantial issues of new securities were sold to the public, as in July and November. In the intervening periods they were gradually drawn down in meeting the costs of Government operations. In general, they were maintained at lower levels than in 1952. The rate of use, or turnover, of demand deposits rose somewhat in 1953, after having remained relatively stable the previous two years. Demand deposits at banks outside of the leading financial centers turned over 18.9 times in 1953, compared with 18.4 times in 1952. Bank reserve positions. During the early months of 1953 member bank reserve positions were under pressure and bank borrowing at the Federal Reserve continued at a high level. A major factor tending to exert pressure on bank reserves was an outflow of gold. After remaining relatively static for nearly a year, gold began to leave the United States late in 1952 as foreign countries, principally the United Kingdom and Western Europe, converted some of their expanding dollar balances into gold. A reserve drain during the first weeks of 1953 also resulted from a reduction in Federal Reserve holdings of Government securities, reflecting largely the resale of bills acquired under repurchase agreement near the end of 1952. A large volume of reserve funds was provided early in 1953 by a return of currency from circulation. In addition, required reserves of banks declined as the Treasury drew down its deposits at commercial banks to retire debt and as other demand deposits also declined. While banks were able to reduce their indebtedness at the Reserve Banks somewhat in January, the volume of member bank borrowing averaged around 1.2 billion dollars during the early months of the year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

30 ANNUAL REPORT OF BOARD OF GOVERNORS MEMBER BANK RESERVES AND RELATED ITEMS Billions of dollars, weekly averages of daily figures 24 MEMBER BANK RESERVES: TOTAL 20 1951 1952 1953 In early May the System began a program for supplying a substantial volume of additional reserve funds to meet the anticipated seasonal and growth needs for credit and currency during the remainder of the year. Open market purchases supplied a total of 1.2 billion dollars of reserves to member banks in the period from early May through the first week of July, and a reduction in reserve requirements on demand deposits early in July freed an additional 1.2 billion of reserve funds. Open market purchases were resumed after mid-August, and by the end of the year they had supplied a further 1.5 billion dollars of reserves, including 600 million near the close of the year under repurchase contracts. In November the Treasury issued gold certificates to the System to retire 500 million dollars of Government securities held by the Federal Reserve Banks, a transaction which did not affect member bank reserve balances. A substantial portion of the reserve funds supplied by these Federal Reserve actions was used to meet the requirements of the public for currency and to provide the additional reserves to support deposit growth. There was also some drain on bank reserves during this period owing to a continued gold outflow. The needs Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 31 for reserves were less than the amount provided, however, as private demands for bank credit did not come up to the usual seasonal volume, bank deposits increased less than anticipated, and the seasonal outflow of currency was moderate. Banks were able to reduce greatly their borrowings at the Reserve Banks and the volume of their excess reserves increased. By the last week of December, average member bank borrowing had declined to 200 million dollars and was substantially less than the prevailing volume of excess reserves. FOREIGN FINANCIAL DEVELOPMENTS The transition from postwar recovery to peacetime growth, noted earlier in this report, has been paralleled in many countries by a rise of confidence in the usefulness of free markets for bringing about adjustments to promote sound economic growth. Decreased use of direct controls affecting prices or purchases in domestic trade has involved greater reliance on general policies relating to credit and government finance. In international trade and finance, some degree of direct control still exists in many countries. Nevertheless, developments in 1951-53 have reflected a growing appreciation of the interdependence of policy in the domestic and external spheres. Most remarkable has been the widespread evidence of growing belief in the possibility of linking together the free world countries in a broadened market economy with fewer barriers to trade and investment. Problems of dollar shortage were no longer pressing heavily on Western Europe at the beginning of 1953. Europe's economic recovery, accelerated by American aid, had freed that region from abnormal needs for imports and enabled it to respond to growing demand for European goods in the United States and elsewhere. A factor widely recognized as vital for this expansion of European exports was the achievement, through a difficult period extending from 1948 to 1952, of internal financial stability at appropriate exchange rates for most currencies. Moreover, the key to financial stability was found in noninflationary fiscal and credit policies: reliance upon direct controls over costs and prices was waning. As problems of instability were surmounted, the undesirable effects of foreign trade restriction came to be more widely recognized. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

32 ANNUAL REPORT OF BOARD OF GOVERNORS Within Europe such restrictions were lessened between 1948 and 1951 through the work of the Organization for European Economic Cooperation, and bilateral bargaining for trade and credits between governments gave way in 1950 to the automatic credit and gold settlement procedures of the European Payments Union. A shift in policies was evident also in the sterling area, now linked to EPU through Britain. The sterling area since the outbreak of war in 1939 has been a grouping of countries within which capital could move freely or with negligible restrictions, but whose trade and capital transactions with the rest of the world, especially with the dollar area, were subjected to close controls. In December 1952 the Commonwealth Conference in London reached full agreement that a continuing insulation of the sterling area from the rest of the* world economy was not to be desired. Thus at the beginning of 1953, both in Europe and in the sterling area, efforts were being directed toward a new relaxation of trade and exchange controls, including the discriminatory controls on dollar transactions. United States balance of payments. To treat dollar trade like any other trade seemed in many countries an almost Utopian goal in 1948. If this is practical policy in some of the same countries now, it is partly because a remarkable shift has occurred since 1948 in the balance of payments between the United States and the rest of the world. United States merchandise imports in 1953 were over 50 per cent greater in value and 30 per cent greater in volume than in 1948, while commercial exports were approximately the same as in 1948. Total dollar payments from the United States to other countries for current transactions (including purchases of services as well as of goods, and also gifts other than Government aid) totaled about 17 billion dollars in 1953, as compared with only 11 billion in 1948. In 1953 these dollar payments were approximately equal to foreign payments to the United States for our exports of goods and services (apart from those covered by military aid). In 1948 exports of goods and services, strongly supported by economic aid, had exceeded current account dollar payments by 5.5 billion dollars. United States Government grant and loan aid to European and other countries, other than aid given in the form of military supplies Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 33 and services, had declined 2.7 billion dollars from 1948 to 1953, but the rise in dollar payments from the United States to other countries on current account had been even greater. At the end of 1953 there was little ground for doubt that these payments, taken in the aggregate, would continue large in the next few years. Of the 17 billion dollar total of current account payments in 1953, United States military expenditures in foreign countries on goods and services for use abroad or for transfer to other countries under the military assistance programs accounted for about 2.5 billion. In the last months of the year merchandise imports were about 10 per cent below those of the peak second quarter and more than 5 per cent below the average for the year. Military expenditures, however, showed a rising trend in 1953 owing to operations under the offshore procurement program. At the end of the year total payments for current transactions were still at a rate of about 16 billion dollars per annum. The outflow of private direct investment capital continued at close to the 1948-52 average rate of 700 million dollars, though temporary factors led to a return flow in 1953 of other types of private capital. Net transfers of gold and dollar holdings from the United States to foreign countries exceeded 2 billion dollars during 1953. Despite the decline in payments for imports, the gold and dollar movement was almost as large in the second half as in the first half of the year. Dollar area. The majority of Latin American countries, including Mexico, Cuba, Venezuela, Colombia, and the Central American republics, receive payment in U. S. dollars for most of their exports and have no discriminatory controls on imports from the United States. These countries have had no pressing need to enlarge their holdings of dollars, and they absorbed very little of the increase in aggregate foreign gold and dollar holdings in 1953. Canada continued to export more than it imported in trade with Europe and the sterling area, but its surplus in this trade declined in 1953. Canadian holdings of U. S. dollars were moderately reduced during the first half of 1953, when Canada's deficit in trade with the United States was at a peak. Canada continued its policy of letting fluctuations in the balance of payments be reflected in exchange rate movements. The rate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

34 ANNUAL REPORT OF BOARD OF GOVERNORS GOLD RESERVES AND DOLLAR HOLDINGS-BY AREAS Billions of dollars - 2 - 2 1946 1948 1951 1953 1946 1948 1951 1953 NOTE.—End-of-quarter figures; gold reserves partly estimated. Dollar holdings include reported holdings of short-term U. S. Government securities and also certain long-term U. S. Government securities held for foreign official accounts. declined from over $1.03 at the beginning of the year to about $1,005 in May and June, and again approached $1.03 at the end of the year. Canadian interest rates are generally higher than those in the United States and the spread serves, as a rule, to promote the movement of investment capital into Canada. In the spring of 1953, when longterm rates in the United States rose sharply, a considerable amount of foreign-owned Canadian securities was repatriated or retired, but near the end of the year new flotations in this country were again occurring in considerable volume. Sterling area. The United Kingdom's official gold and dollar reserves increased steadily during 1953. At 2.5 billion dollars at the end of the year, they were 0.8 billion higher than in the spring and summer of 1952. In addition, other gold and dollar holdings in the area increased slightly. The improvement in the sterling area reserve position reflects the stabilization since mid-1952 of sterling area imports from non-sterling sources at a level considerably lower than in 1951. Also, there has been a gradual but steady increase Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 35 during recent years in United Kingdom exports to the dollar area. Exports by overseas sterling area countries to the dollar area and to Continental countries in the European Payments Union were fairly well maintained in 1953, though in value they were much below the peak of the Korean war boom. Curtailment of imports by sterling area countries in 1952 had been facilitated by market forces, following the rebuilding and accumulation of inventories in 1951. Moreover, the sharp fall in export prices of sterling area raw materials, though leading to serious balance-ofpayments dislocations for overseas sterling area countries like Australia, had helped to stem internal inflation. Losses of export income after mid-1951, coupled with inflated import demand both overseas and in Britain, had been so serious, however, as to require fresh use of direct restrictions that previously had been lifted. In 1953 virtually all sterling area countries succeeded in maintaining financial stability internally, and a start was made in relaxing trade restrictions. The most striking progress was made in the United Kingdom, where in 1950 Government trading still accounted for 50 per cent of all imports. By the end of 1953, private importing was again permitted for virtually all commodities except meat and a few other foods, in which exclusive Government trading will cease during 1954. Markets for several internationally traded commodities were reopened in 1953 for the first time since 1939, and in most of them British importers are free to buy abroad without discrimination as to country of origin; this rule now applies to all grains and in effect to cotton, both of which are primarily dollar commodities. For several commodities, notably the nonferrous metals, re-export for sterling is permitted even if the goods were originally paid for in dollars. In 1953 the United Kingdom restored considerable freedom with respect to imports from Continental Western Europe. Other countries outside Europe. Financial developments in 1953 in a number of other countries were less encouraging than those in the sterling area. In several important cases countries experienced difficulty with their balance of payments not only in dollars but also in sterling and other currencies. Underlying these difficulties, as a rule, was continuance of inflationary pressures. In South America, a few countries, including Brazil and Chile, were still experiencing active inflation and serious balance-of-pay- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

36 ANNUAL REPORT OF BOARD OF GOVERNORS ments difficulties during 1953. Argentina, with good crops, was able to increase its exports markedly, but monetary expansion continued and imports were kept under rigid control. Although Japan's earnings from United States military expenditures continued very large, they were insufficient to bridge completely the over-all trade deficit in 1953. Imports continued to rise, and although industrial production increased by one-sixth over 1952, exports fell off and appeared to be over priced in many markets. Indonesia made some progress toward reducing inflationary pressures, but declines in the value of exports of rubber and tin created continuing difficulties for external balance. Thailand, exporting rice as well as rubber and tin, imposed new controls on imports toward the end of the year in order to conserve its foreign exchange reserves. In Israel, inflationary pressures continued to be felt, though not as strongly as in 1952. Continental Western Europe. The major improvement in gold reserves and dollar holdings in 1953 occurred in Europe. The Continental countries, like the United Kingdom, enjoyed on the whole a high and balanced level of trade and other current international transactions. Of the major countries, only France and Italy had serious balance-of-payments difficulties, and in both cases these difficulties were not confined to their trade with the dollar area but affected also their payments within Europe. France had not recovered from the after-effects of its 1951 inflation, and maintained rigid import controls in 1953. Italy, on the other hand, adhered to a liberal trade policy and waited for its trading partners, particularly those within Europe, to lower their own trade barriers in return. United States dollar aid and military expenditures enabled both countries to avoid severe declines in their reserves. The gold and dollar reserves of most other countries showed a steady rise. The rise in German and Dutch reserves was very considerable. A number of European countries took concrete steps in 1953 to relax their controls on international trade and payments. Several countries removed quota restrictions on an additional share of their private imports from other OEEC countries. Germany and the Netherlands reached the stage of 90 per cent liberalization previously achieved by four of the members. Austria moved from complete import control to 50 per cent liberalization, and significant changes were also made by Greece. There was a parallel movement with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 37 regard to intra-European service transactions, such as tourist travel and business expenses. With regard to imports from the dollar area, Germany, the Netherlands, Belgium, and Greece explicitly reduced their restrictions. Steps have been taken to broaden private foreign exchange markets in Europe. During 1953 permission was granted for authorized banks in nine European countries to engage among themselves in spot or forward arbitrage transactions in any of their respective currencies. By the end of 1953 marked progress had been made not only in building up reserves but also in improving Western Europe's ability to compete on equal terms in world markets. Discriminatory controls on imports still served to protect sheltered markets in some countries. On the other hand, several countries had already gone far in opening up competition. Some countries on the Continent seemed prepared to accept the risks that might be involved in making their currencies more fully convertible, provided there were assurance of the convertibility, when required, of their own earnings of sterling or other important currencies. 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 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, and Interior, and the General Services Administration. The United States Atomic Energy Commission and the Defense Materials Procurement Agency subsequently were designated by Executive Order to act as additional guaranteeing agencies. In accordance with the Defense Production Act amendments of 1953 the President, on August 14, 1953, issued Executive Order No. 10480 which superseded and revoked a number of executive orders, including No. 10161. The new Order did not make any substantial changes with respect to the guarantee of defense production loans, although it abolished the Defense Mate- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

38 ANNUAL REPORT OF BOARD OF GOVERNORS V LOANS AUTHORIZED, SEPT. 27, 1950-DEC. 31, 1953 [Percentage distribution, by size of loan and number of employees of borrower] .l Percentage of Cumulative perloans authorized centage distribution Size of loan Number Amount Number Amount Under $100 000 18.7 .6 18.7 .6 $100,000-$499,999 37.7 5.7 56.4 6.3 $500,000-$999,999 16.0 6.5 72.4 12.8 $l,000,000-$4,999,999 21.8 28.1 94.2 40.9 $5,000,000-$9,999,999 2.9 12.2 97.1 53.1 $10,000,000 and over 2.9 46.9 100.0 100.0 Number of employees 2 Under 50 18.7 1.4 18.7 1.4 50-99 15.4 2.5 34.1 3.9 100-499 38.8 16.0 72.9 19.9 500-2 499 17.7 25.1 90.6 45.0 2 500 and over 5.2 52.5 95.8 97.5 Not available . ... 4.2 2.5 100.0 100.0 1 Distributions are of 1,294 loans authorized in an aggregate amount of 2,358 million dollars. 2 Includes employees of affiliated concerns under common ownership or control. rials Procurement Agency, heretofore a guaranteeing agency, and transferred the functions of that agency to the General Services Administration. The Federal Reserve Banks act on behalf of the guaranteeing agencies as fiscal agents of the United States in the making of such contracts of guarantee, and the procedure is governed by Regulation V of the Board of Governors as revised September 27, 1950. Pursuant to this Regulation, and after consultation with the guaranteeing agencies, the Board established a schedule of guarantee fees, a maximum rate of interest of 5 per cent on guaranteed loans, and a maximum commitment fee of one-half of 1 per cent per annum. This schedule of rates and fees was reviewed from time to time by the Board and the guaranteeing agencies but developments during the year did not indicate the need for any changes. During 1953 the guaranteeing agencies authorized the issuance of 135 guarantee agreements. Guaranteed loans authorized under these and earlier agreements amounted to 234 million dollars. Regulation V loans outstanding on December 31, 1953 totaled 805 million dollars, of which 666 million or 82.8 per cent on the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 39 average was guaranteed. On the same date an additional 364 million dollars was available to borrowers under guarantee agreements in force. From the beginning of the program in September 1950 through December 1953, 1,294 loans totaling 2,358 million dollars were authorized by the procurement agencies that may guarantee loans. The table on page 38 gives the percentage distribution of authorizations classified by size of loan and number of employees of borrower. Nineteen per cent of the number and approximately 1 per cent of the amount of loans authorized consisted of loans of less than $100,000, while 56 per cent of the number and 6 per cent of the amount were less than $500,000. Approximately 73 per cent of the number and 20 per cent of the amount of loans authorized were to borrowers having less than 500 employees, including employees of any affiliated concerns under common ownership or control. BANKING OPERATIONS AND STRUCTURE Bank earnings and profits.1 Net current earnings of member banks, before income and excess profits taxes, increased again in 1953. Increases also occurred in net losses, charge-offs, and transfers to valuation reserves, and in provisions for taxes on income. As a result, net profits after taxes and profit and loss adjustments amounted to 865 million dollars, 36 million more than in 1952. The ratio of net profits to average capital accounts was 7.8 per cent, down fractionally from 1952. Net current earnings before income taxes amounted to 1,806 million dollars, an increase of 187 million. Earnings on both United States Government securities and loans were larger than in 1952 as a result of the larger average holdings and higher average rates of return. Earnings on Government securities amounted to 1,007 million dollars, a 78 million increase; and earnings on loans amounted to 2,630 million or 324 million more than in the preceding year. Total current earnings increased by 466 million dollars and total current expenses by 279 million. The table on the following page shows selected earnings data for all member banks in 1953 and 1952. Net losses, charge-oflfs, and transfers to valuation reserves were 244 million dollars, or about one-third more than in 1952, and 1 Figures for 1953 are based on preliminary tabulations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

40 ANNUAL REPORT OF BOARD OF GOVERNORS EARNINGS, EXPENSES, PROFITS, AND DIVIDENDS OF ALL MEMBER BANKS, 1953 AND 1952 [In millions of dollars] Item 1953 P 1952 Earnings 4,586 4,120 On U. S. Govt. securities 1,007 929 On loans 1 . 2,630 2,306 All other... 948 884 Expenses 2,780 2,501 Net current earnings before income taxes 1,806 1,619 Net losses, charge-offs, and transfers to valuation reserves2... 244 181 Profits before income taxes 1,562 1,437 Taxes on net income 698 608 Net profits 865 829 Cash dividends declared 3 421 390 * Preliminary; final figures will appear in the Federal Reserve Bulletin, probably the May issue. 1 Includes charges on loans other than interest. 2 Excludes losses charged and recoveries credited to valuation reserves. 3 Includes interest on capital notes and debentures. provisions for taxes on net income were 90 million larger. As the net increase in such charges was less than the growth in net current earnings, net profits after taxes and profit and loss adjustments increased 36 million dollars or 4 per cent to 865 million. About 49 per cent of the 1953 profits or 421 million dollars was distributed as dividends; this represented a return of 3.8 per cent on average total capital accounts. The amount distributed was larger than in the previous year, and the rate of return was slightly higher. Profits retained to strengthen capital accounts amounted to 444 million dollars as compared with 439 million dollars in 1952. Bank earning assets.2 Earning assets of member banks amounted to 123 billion dollars at the end of 1953, an increase of 3 billion during the year. Practically the entire increase was in loans; holdings of "other" securities increased 300 million dollars, and holdings of United States Government securities were practically unchanged. Total loans increased 2.8 billion dollars. Over half of the increase, or 1.5 billion, was in "other loans to individuals," which are largely consumer loans. Real estate loans and agricultural loans increased 'Figures for 1953 are partly estimated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 41 800 million dollars each, the increase in agricultural loans reflecting holdings of certificates of interest of the Commodity Credit Corporation. A decrease of 700 million dollars in commercial and industrial loans during the year was the first annual decrease in this category since 1949. According to sample data by industry groups, the larger decreases during 1953 were in loans to commodity dealers, sales finance companies, and manufacturers of food, liquor, and tobacco products; the largest net increase was for the wholesale and retail trade. Capital accounts.2 Capital accounts of member banks amounted to 11.3 billion dollars at the end of 1953, an increase of over half a billion during the year. Retention of profits accounted for most of the increase. Proceeds from sales of common stock amounting to 100 million dollars were offset slightly by other changes in capital accounts, including the retirement of preferred stock and the effects of mergers and changes in Federal Reserve membership. The ratio of average total capital accounts to average total assets for all member banks was 7.0 per cent, practically unchanged from 1952 and 1951. The ratio of average total capital accounts to total assets less cash assets and United States Government securities continued to decline, reaching 15.7 per cent as compared with 16.2 per cent in 1952 and 18.9 per cent in 1950. The decline reflected the increased proportion of earning assets held in the form of loans and investments other than United States Government securities. Number of banking offices. The number of banking offices in the United States increased to 20,406 during 1953, from 20,095 at the beginning of the year. This was the tenth consecutive year of growth. The number of branches increased by 377 to 5,897, but the number of banks declined by 66 to 14,509. All these figures exclude banking facilities at military and other Government establishments, of which there were 199 at the end of 1953, an increase of 8 during the year. The number of banks (head offices) continued to decline as they had in the five preceding years. There were 64 new banks opened for business during the year, but this increase in head offices was more than offset by the consolidation or absorption of 116 banks, 93 of which were converted into branches. Table 18 on page 79 shows the increases and decreases in the number of banks and branches by class of bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

42 ANNUAL REPORT OF BOARD OF GOVERNORS The increase of 377 in the number of branches and additional offices, exclusive of banking facilities at military and other Government establishments, was the largest annual increase on record, exceeding the recent near record highs of 296 in 1952 and 290 during 1951. As in other recent years, most of the increase was in de novo branches, of which there were 304 in 1953. Pennsylvania and New York had the largest branch increases, with 60 and 55 respectively, but smaller increases occurred in practically all other States that permit branch banking. More than half of the increase in branches during 1953 was in places outside the head-office cities, about the same proportion as in 1952. Changes in Federal Reserve membership. The number of member banks in the Federal Reserve System continued to decline in 1953 as a result of consolidations and absorptions. The total number of member bank offices continued to increase, however, owing to the establishment of de novo branches and to the conversion of most of the absorbed banks into branches. At the end of the year there were 4,856 national banks and 1,887 State member banks, reflecting declines of 53 and 2, respectively, during the year. Twenty-two newly organized banks became members, of which 12 were national banks and 10 were State chartered. Seven insured nonmember banks with deposits of about 120 million dollars were admitted to membership. Two of these, as compared with 4 in 1952, had previously withdrawn from the System in order to establish branches outside the city of the head office; they applied for membership and were readmitted under the terms of the legislation enacted in 1952. One State member bank converted into a national bank during the year. The 6,743 member banks in operation at the end of 1953 accounted for 48 per cent of the number and held 85 per cent of the deposits of all commercial banks in the country. State member banks accounted for 21 per cent of the number and held 66 per cent of the deposits of all State commercial banks. These relationships have remained practically unchanged during recent years. Par and nonpar banks.3 During 1953 there were 77 banks added 8 This section refers only to banks on which checks are drawn and their branches and offices, including "banking facilities" at military 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 43 to the Federal Reserve Par List, and 114 deleted from the list. Of the 77 additions, 17 were nonpar banks that chose to go on the Par List, 57 were newly organized banks, and 3 were banks that previously did not handle checking accounts. Of the 114 deletions, only 3 were banks that withdrew from the Par List. All of the remainder were absorbed by other par banks and most of them were converted into branches. The number of par-remitting and nonpar offices at the end of 1953 is shown below: On Not on Par List Par List Banks (head offices) 12,085 1,801 Branches 5,306 311 Banking facilities at military and other Government establishments 197 2 Total 17,588 2,114 The par-remitting banks, representing 87 per cent of the banks on which checks are drawn, held all but about 2 per cent of the deposits of all commercial banks in the country. All banks in 29 States and the District of Columbia were on the Federal Reserve Par List at the end of the year, and 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 14 States, as is indicated by the following distribution: Minnesota 408 Alabama 97 Georgia 280 North Dakota 93 Mississippi 157 Tennessee 85 Arkansas 116 South Carolina 82 North Carolina 106 Missouri 61 Louisiana 106 Florida 50 South Dakota 97 Texas 47 Table 19 on page 80 shows these statistics by States and Federal Reserve districts. 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

44 ANNUAL REPORT OF BOARD OF GOVERNORS or of the Federal Reserve Banks by examiners selected or approved by the Board of Governors. The established policy is to conduct at least one regular examination of each State member bank, including its trust department, during each calendar year, by examiners for the Reserve Bank of the district in which the bank is situated, with additional examinations if considered desirable. In order to avoid duplication and to minimize inconvenience to the banks examined, wherever practicable joint examinations are made in cooperation with the State banking authorities or alternate examinations are made by agreement with State authorities. The 1953 program for the examination of State member banks was practically completed. Bank holding companies. During 1953 the Board authorized the issuance of four voting permits for general purposes and eight 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. Section 301 of the Banking Act of 1935 provides that the term "holding company affiliate" shall not include, except for the purposes of Section 23A of the Federal Reserve Act, any organization which is determined by the Board not to be engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies. During the year the Board made such determinations with respect to 14 organizations. Trust powers of national banks. During 1953, 23 national banks were granted authority by the Board to exercise one or more trust powers under the provisions of Section ll(k) of the Federal Reserve Act. This number includes the grant of additional powers to 10 banks which previously had been granted certain trust powers. Trust powers of 27 national banks were terminated, 23 by voluntary liquidation, consolidation, merger or conversion, and 4 by voluntary surrender. At the end of 1953 there were 1,767 national banks holding permits to exercise trust powers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 45 Acceptance powers of member banks. During the year the Board approved the application of a member bank, pursuant to the provisions of Section 13 of the Federal Reserve Act, for permission to accept drafts or bills of exchange drawn for the purpose of furnishing dollar exchange as required by the usages of trade in such countries, dependencies, or insular possessions of the United States as may have been designated by the Board of Governors. Foreign branches and banking corporations. Under the provisions of Section 25 of the Federal Reserve Act, the Board approved during 1953 an application made by a member bank for permission to establish a branch in a foreign country. One member bank opened a branch in France in 1953 which had been authorized by the Board in 1952. At the end of 1952, seven member banks had in active operation a total of 105 branches in 23 foreign countries and possessions of the United States. Of the 105 branches, four national banks were operating 99 and three State member banks were operating 6. The foreign branches in active operation were distributed geographically as follows: Latin America 54 England 10 Argentina 10 Brazil 10 Far East 20 Chile 2 Hong Kong 1 Colombia 4 India 2 Cuba 19 Japan 10 Mexico 2 Philippines 5 Panama 4 Singapore 1 Peru 1 Thailand 1 Uruguay 1 Venezuela 1 United States Possessions 14 Continental Europe 7 Canal Zone 4 Belgium 1 Guam l France 3 Puert0 Rlco 9 Germany 3 Total 105 There was no change in 1953 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; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

46 ANNUAL REPORT OF BOARD OF GOVERNORS one operates a branch in England (also an agency at the New York International Airport); one operates a branch in France; and one has an English fiduciary affiliate. The head offices of these corporations and the agency at the New York International Airport were examined as of dates in 1953 by the Board's Division of Examinations. At the end of 1953 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 Germany and the other has a branch in France and a fiduciary affiliate in England. The Board approved during 1953 applications by one of the institutions for permission to establish two branches in foreign countries. Inter-Agency Bank Examination School. The Inter-Agency Bank Examination School was launched in 1952 by the Board of Governors, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency for the purpose of improving training procedures, shortening the training process, developing better examiners, and serving as a "workshop" through which to develop better bank examination procedures. The School was designed to train newly appointed assistant examiners in their basic duties. During 1953, the program was expanded to include an intensive program for training experienced assistant examiners and newly appointed examiners in the field duties of examiners. As a part of the program, a demonstration "bank" with essential bank records has been developed for training purposes. The cooperating agencies have endeavored to select, from among bankers and other experts, the most capable men in their respective fields to participate in the training program as instructors and lecturers. During 1953, two five-week sessions of the School for Assistant Examiners and one four-week session of the School for Examiners were conducted. The sessions of the Inter-Agency Bank Examination School have been attended by 151 men representing the three Federal Bank supervisory agencies, the State banking departments of Louisiana, North Dakota, Oklahoma, and Virginia, and the Treasury Department of the Commonwealth of Puerto Rico. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 47 CHANGES IN REGULATIONS OF THE BOARD OF GOVERNORS 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 February 20, 1953 to decrease the margin requirements from 75 per cent to 50 per cent. The decreased margins also apply to short sales. The Board's Regulation U was amended effective August 1, 1953 so as to make it clear that the regulation applies to loans for the purpose of purchasing or carrying certain shares issued by openend investment companies whose assets customarily include registered stocks. The shares affected give the purchaser a proportionate interest in the issuing company's assets, and carry the right to convert his interest into the company's underlying assets or their cash equivalent. Such shares are technically called "redeemable securities." Reserves of member banks. The Board's Regulation D relating to reserves required to be maintained by member banks with Federal Reserve Banks was amended, effective July 1, 1953 as to banks not in reserve or central reserve cities, and effective July 9, 1953 as to banks in reserve and central reserve cities. The amendment reduced the required reserves against demand deposits from 24 to 22 per cent for central reserve city banks, from 20 to 19 per cent for reserve city banks, and from 14 to 13 per cent for other member banks. ADMINISTRATION OF THE CLAYTON ANTITRUST ACT WITH RESPECT TO BANKS In June 1948 the Board of Governors issued a complaint against Transamerica Corporation, charging that the acquisition of certain banks in California, Oregon, Washington, Nevada, and Arizona by that corporation violated Section 7 of the Clayton Antitrust Act. That Section, enacted in 1914 and amended in certain particulars in 1950, prohibits any corporation from acquiring the stock of one or more corporations engaged in commerce where the effect may be substantially to lessen competition or to tend to create a monopoly. Authority to enforce compliance with this provision is vested in the Board of Governors where the statute is applicable to banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

48 ANNUAL REPORT OF BOARD OF GOVERNORS Hearings were held in Washington, D. C, and in San Francisco, California, over a period of several years and, after oral argument before the Board, the Board, on March 27, 1952, issued an order requiring Transamerica to divest itself of the stock of 47 of the banks named in the Board's complaint. Transamerica Corporation petitioned the United States Court of Appeals for the Third Circuit to review the Board's order, and on July 16, 1953, that court set aside the Board's order. While the court decided that banks are within the purview of Section 7, thus affirming the Board's jurisdiction in this field, it held that the Board's order was not supported by the findings which the Board had made. The court added that it may well be in the public interest to have appropriate legislative action on this subject, with which position the Board is in agreement, in view of the fact that its quantitative analysis disclosed a tremendous concentration in banking capital and thereby of economic power. On November 30, 1953, the Supreme Court of the United States denied a petition for a writ of certiorari to review the decision of the Court of Appeals. On December 4, 1953, the Board announced that it had decided that no further action would be taken in this proceeding. LEGISLATION Federal Reserve branch buildings. An Act approved May 29, 1953 amended Section 10 of the Federal Reserve Act so as to increase from 10 million dollars to 30 million the aggregate amount which may be expended with the approval of the Board of Governors for Federal Reserve Bank branch buildings, exclusive of the cost of the vaults, permanent equipment, furnishings and fixtures. Loans on forest tracts. An Act approved August 15, 1953 amended Section 24 of the Federal Reserve Act by inserting a new paragraph which authorizes national banks to make real estate loans secured by first liens upon forest tracts. Guarantees of defense loans. The provisions of the Defense Production Act of 1950 which provided for the guarantee of defense production loans and which, together with Executive Order No. 10161, were the authority for Regulation V, were amended by the Act of June 30, 1953 and continued in force until the close of June 30, 1955. In accordance with the amended law, the President, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 49 on August 14, 1953, issued Executive Order No. 10480, which superseded Executive Order No. 10161. RESERVE BANK OPERATIONS Volume of operations. Table 5 on page 65 discloses moderate increases in most of the principal Reserve Bank operations during the year. Discounts and advances, although more in number were less in amount than in 1952, reflecting the reduced demand for this form of Reserve Bank credit resulting from the lower member bank reserve requirements that became effective in July and the increase in average holdings of United States Government securities by the Federal Reserve Banks. The number of banks borrowing in 1953 was 1,463 as compared with 1,286 in 1952. Currency received and counted established new highs during 1953 both in number of pieces handled and amount, as money in circulation continued to increase. Coin received and counted showed relatively small increases in number and amount over 1952, but volume was still under the peaks established in 1949. New peaks were established in the number and amount of checks handled. The number and amount of issues, redemptions, and exchanges of Government securities increased substantially in 1953. The number and amount of transfers of funds continued their steady upward trend of recent years. Postal money orders handled by the Banks in 1953 changed little in number and amount from the preceding year. Acting on behalf of the Treasury Department in their capacity as fiscal agents of the United States, the Reserve Banks undertook, beginning July 1, 1953, the verification and destruction of silver certificates and United States notes unfit for further circulation. The number of pieces of currency destroyed in the last six months of the year was approximately 570 million. Earnings and expenses. Current earnings, current expenses, and the distribution of net earnings of each Federal Reserve Bank during 1953 are shown in detail in Table 6 on pages 66-67, and a condensed historical statement for all Reserve Banks is shown in Table 7 on pages 68-69. The table on the following page summarizes the earnings and expenses and the distribution of net earnings for 1953 and 1952. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

50 ANNUAL REPORT OF BOARD OF GOVERNORS EARNINGS, EXPENSES, AND DISTRIBUTION OF NET EARNINGS OF FEDERAL RESERVE BANKS, 1953 AND 1952 [In thousands of dollars] Item 1953 1952 Current earnings 513,037 456,060 Current expenses 113,515 104,694 Current net earnings 399,522 351,366 Additions to current net earnings 1 2,096 *2,195 Deductions from current net earnings 3,155 611 Net deductions (—) or net additions -1,059 1,584 Net earnings before payments to U. S. Treasury 398,463 352,950 Paid U. S. Treasury (interest on F. R. notes) 342,568 291,934 Dividends 15,558 14,682 Transferred to surplus (Sec. 7) 40,337 46,334 1 Includes net profits on sales of U. S. Government securities: 1953—$1,952,000; 1952—$1,992,000. Current earnings were 513 million dollars in 1953, 12 per cent more than in 1952, largely because of a higher average amount of holdings of United States Government securities and a somewhat higher average rate of interest received thereon. Earnings from discounts and advances were greater in 1953 than in 1952, reflecting the effect of the increase from 1% per cent to 2 per cent in the discount rate during January. Current expenses were about 8 per cent larger than in 1952, reflecting in large part the cost of increased production of Federal Reserve currency and shipping charges thereon. The increase in expenses also reflected the effect of changes in salary schedules and a small increase in the number of employees attendant on some growth in operations, including fiscal agency activities. Current net earnings in 1953 amounted to 399 million dollars, an increase of 14 per cent over 1952. After allowing for profit and loss additions and deductions from current net earnings, net earnings before payments to the United States Treasury amounted to 398 million dollars, an increase of 13 per cent over 1952. Payments to the United States Treasury as interest on Federal Reserve notes amounted to 343 million dollars in 1953 and surpassed any previous year's distribution of earnings to the Treasury, either Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

51 FEDERAL RESERVE SYSTEM in this form or in the form of a franchise tax. A total of 1,521 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 at the statutory rate amounted to 16 million dollars, an increase of nearly 1 million over 1952, reflecting the increased paid-in capital of the Federal Reserve Banks because of increased capital and surplus of member banks. The remaining 40 million dollars of net earnings were added to surplus account. Holdings of loans and securities. The accompanying table presents a comparison of average daily holdings of loans and securities by the Reserve Banks during the past three years, together with earnings thereon and average interest rates. A new high was established in 1953 in average holdings of United States Government securities, which amounted to 24,658 million dollars. The average rate of interest received from these holdings was 2.02 per cent, the highest since 1930. Average holdings of discounts and advances were slightly less in 1953 than in 1952. However, the average rate of interest increased in 1953 because of the January increase in the discount rate from 1% per cent to 2 per cent. RESERVE BANK EARNINGS ON LOANS AND SECURITIES, 1951-53 [Dollar amounts in thousands] Dis- U.S. Incounts Govern- dus- Item and year Total i and ment trial advances securities loans Average daily holdings:2 1951 $23,045,707 $292,770 $22,748,210 $4,646 1952 23,933,643 802,334 23,126,674 4,635 1953 25,438,684 777,595 24,657,904 3,185 Earnings: 1951 394,473 5,139 389,125 208 1952 455,898 14,083 441,629 186 1953 512,841 15,265 497,455 121 Average rate of interest (per cent): 1951 1.71 1.75 1.71 4 49 1952 1.90 1.75 1.91 4 01 1953 2.02 1.96 2.02 3.80 1 Figures for 1951 include small amounts of acceptances purchased and earnings thereon. 2 Based on holdings at opening of business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

52 ANNUAL REPORT OF BOARD OF GOVERNORS Foreign and international accounts. The total of earmarked gold, dollar deposits, United States Government securities, and miscellaneous holdings for foreign account at the Federal Reserve Banks reached a record level of 8.6 billion dollars at the end of 1953, an increase of 1.5 billion dollars over 1952 and 1.1 billion dollars higher than the previous peak level reached in March 1951. This continuation of the upward trend that began early in 1952 was featured by an increase of 1.2 billion dollars in earmarked gold. Combined deposits and other dollar assets belonging to foreign correspondents rose 324 million net to a total of 3.1 billion dollars, of which 2.6 billion were United States Government securities, principally Treasury bills, held in custody; dollar deposits amounted to 423 million. There was no noteworthy change during 1953 in the holdings by the Federal Reserve Bank of New York for the International Bank for Reconstruction and Development and the International Monetary Fund. Two foreign central bank accounts were opened during the year; one for a new bank created to take over the functions of an existing bank and the other an account for a bank with which relations had been discontinued at the beginning of the war. The demand for loans secured by gold collateral continued limited with the maximum amounts advanced aggregating 56.5 million dollars. Two of the three borrowing central banks liquidated their indebtedness during the course of the year and the other bank was indebted at the year-end in the amount of 15.0 million dollars. The policy with respect to gold loans, as has been mentioned in previous Annual Reports, provides for the granting of such loans to foreign monetary authorities for the purpose of assisting them in meeting their dollar requirements for temporary periods. The Federal Reserve Bank of New York continued to perform various services for the International Bank for Reconstruction and Development and the International Monetary Fund. Also, as fiscal agent of the United States, it continued to operate the United States Stabilization Fund, pursuant to authorization and instructions of the Treasury Department, and to administer for the Treasury Department the blocking regulations affecting assets and transactions in this country of Communist China and North Korea and their nationals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 53 Bank premises. The Board authorized the Federal Reserve Bank of San Francisco to begin construction of an addition to the Los Angeles Branch building and to purchase adjoining property for future expansion. The Federal Reserve Bank of New York acquired a site for a new building to house the Buffalo Branch, and the Federal Reserve Bank of Kansas City purchased property for an addition to the Denver Branch and property adjacent to the head-office building for improvement of its security court area and for service facilities. FEDERAL RESERVE MEETINGS The Federal Open Market Committee met on March 4-5, June 11, September 24, and December 15, 1953, and the executive committee of the full Committee met frequently during the year. Under the provisions of Section 12A of the Federal Reserve Act, the Federal Open Market Committee, which has responsibility for determining the policies under which the open market operations of the Federal Reserve Banks will be carried out, is required to meet in Washington at least four times each year. A record of the actions taken by the Committee on questions of policy will be found on pages 86-105 of this Report. Meetings of the Conference of Chairmen of the Federal Reserve Banks were held on April 28 and December 7-8, 1953, and were attended by members of the Board of Governors. The Conference of Presidents of the Federal Reserve Banks held meetings on March 2-3, June 8-9, September 22-23, and December 14, and the Board of Governors met with the Presidents on March 5, June 11, September 24, and December 15, 1953. Meetings of the Federal Advisory Council were held on February 1547, May 17-19, September 13-15, and November 15-17, 1953. The Board of Governors met with the Council on February 17, May 19, September 15, and November 17. 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

54 ANNUAL REPORT OF BOARD OF GOVERNORS BOARD OF GOVERNORS—INCOME AND EXPENSES The following table, showing the income and expenses of the Board for the year 1953, has been prepared from the Board's accounts, which are maintained on an accrual basis of accounting: OPERATING FUND, January 1, 1953 $ 557,962.86 INCOME: Assessments on Federal Reserve Banks $4,099,800.00 Sale of Federal Reserve Bulletin 13,446.12 Sale of other publications 15,707.99 Miscellaneous 7,234.72 4,136,188.83 4,694,151.69 EXPENSES: Salaries 3,033,930.61* Retirement contributions—regular 230,875.97* Retirement contributions—special 21,906.80 Retirement contributions—supplemental death benefit 14,730.22 Traveling expenses 223,213.11 Postage and expressage 26,203.67 Telephone and telegraph 60,331.76 Printing and binding. 156,342.05 Stationery and supplies 34,037.50 Furniture and equipment, including rental.. .. 44,735.14 Books and subscriptions 13,543.26 Heat, light, and power 37,039.80 Repairs and alterations (building and grounds). 76,972.20 Repairs and maintenance (furniture and equipment) 10,750.27 Medical service and supplies 1,516.02 Insurance 5,290.78 All other: Surveys of Consumer Finances $149,960.22 Other survey and research projects 15,350.00 Cafeteria (net) 41,145.27 Legal and consultant fees and expenses 16,804.52 Borrowed Federal Reserve Bank personnel 2,831.37 Official dinners, receptions, etc. 2,960.30** Miscellaneous 19,044.90 248,096.58 4,239,515.74 OPERATING FUND, December 31, 1953 $ 454,635.95 * Salaries and retirement contributions exclude approximately $81,500 and $8,240, respectively, which were charged direct to cafeteria and leased wire operations. ** Includes expenditures of $1,120.42, contributed by the Board of Governors for two luncheons and a dinner at meetings of Treasury Department savings bond program volunteer workers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 55 In addition to the foregoing, the Board received the following reimbursements in 1953 for expenditures which it makes on a reimbursable basis: Printing Federal Reserve notes $10,721,441.80 Leased wire service (telegraph) 232,541.97 Currency Redemption Division (Office of the Treasurer of the United States) 200,000.00 Federal Reserve Issue and Redemption Division (Office of the Comptroller of the Currency) 140,300.27 Leased telephone lines 9,658.79 Miscellaneous 10,666.38 The accounts of the Board for the year 1953 are being audited by the public accounting firm of Arthur Andersen & Co., whose certificate was not available in time for publication in this Annual Report. When this audit is completed, copies of the certificate will be forwarded to the Banking and Currency Committees of the Senate and of the House of Representatives, respectively. 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

58 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 1—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) DECEMBER 31, 1953 Amounts in boldface type are those shown in the Board's weekly statement. In thousands of dollars] ASSETS Gold certificates: Interdistrict settlement fund 8,344,547 Gold certificates on hand 1,015,555 Gold certificates with Federal Reserve Agents 11,093,000 20,453,102 Redemption fund for Federal Reserve notes 900,644 Total gold certificate reserves 21,353,746 Other cash: United States notes 28,513 Silver certificates 297,628 Standard silver dollars 3,492 National bank notes and Federal Reserve Bank notes 3,058 Subsidiary silver, nickels, and cents 39,070 Total other cash 371,761 Discounts and advances secured by U. S. Govt. securities: Discounted for member banks 12,855 Discounted for others 12,855 Other discounts and advances: Discounted for member banks Foreign loans on gold 15,000 15,000 Total discounts and advances 27,855 Acceptances purchased Industrial loans 1,879 U. S. Government securities: Bought outright— Bills 2,596,312 Certificates 5,816,541 Notes 13,263,671 Bonds 3,641,150 Total bought outright 25,317,674 Held under repurchase agreement 597,900 Total U. S. Government securities 25,915,574 Total loans and securities 25,945,308 Due from foreign banks 22 Federal Reserve notes of other Federal Reserve Banks 214,128 Uncollected cash items: Transit items 3,911,464 Exchanges for clearing house 256,914 Other cash items 56,832 Total uncollected cash items 4,225,210 Bank premises: Land 14,607 Buildings (including vaults) 61,448 Fixed machinery and equipment 27,080 Total buildings 88,528 Less depreciation allowances 50,670 37,858 Total bank premises 52,465 Other assets: Industrial loans past due 21 Miscellaneous assets acquired account industrial loans.. 89 Miscellaneous assets acquired account closed banks Total 110 Less valuation allowances 46 Net 64 Reimbursable expenses and other items receivable. 4,276 Interest accrued 132,969 Premium on securities 9,041 Deferred charges 1,722 Real estate acquired for banking house purposes... 2,819 Suspense account 322 All other 704 Total other assets 151,917 Total assets ,,. 52,314,557 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 59 NO. 1—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) —Continued LIABILITIES Federal Reserve notes: Outstanding (issued to Federal Reserve Banks) 27,771,106 Less: Held by issuing Federal Reserve Banks 1,116,416 Forwarded for redemption 96,318 1,212,734 Federal Reserve notes, net (includes notes held by U. S. Treasury and by Federal Reserve Banks other than issuing Bank) 26,558,372 Deposits: Member bank—reserve accounts 20,160,435 U. S. Treasurer—general account 345,866 Foreign 423,298 Other deposits: Nonmember bank—clearing accounts 94,856 Officers' and certified checks 9,476 Federal Reserve exchange drafts 452 International organizations l 49,537 All other 338,494 Total other deposits 492,815 Total deposits 21,422,414 Deferred availability cash items 3,290,407 Other liabilities: Accrued dividends unpaid Unearned discount 12 Discount on securities 13,038 Sundry items payable 4,682 Suspense account 291 All other liabilities 147 Total other liabilities 18,170 Total liabilities 51,289,363 CAPITAL ACCOUNTS Capital paid in 265,266 Surplus (Sec. 7) 625,013 Surplus (Sec. 13b) 27,543 Other capital accounts: Reserves for contingencies: Reserve for registered mail losses 9,372 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 107,372 Total liabilities and capital accounts 52,314,557 Contingent liability on acceptances purchased for foreign correspondents 23,940 Industrial loan commitments 3,569 1 Includes International Bank for Reconstruction and Development and 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 1953 AND 1952 [In thousands of dollars] Total Boston New York Philadelphia Cleveland Richmond Item 1953 1952 1953 1952 1953 1952 1953 1952 1953 1952 1953 1952 ASSETS Gold certificates 20,453,102 21 185,102 1,035,380 688,429 5,197,850 5,977,523 1,300,725 1,271,008 1,770,513 1,446,634 1,064,892 986,348 Redemption fund for Federal Reserve notes 900,644 800,603 54,927 64,891 183,706 135,378 61,086 57,278 82,247 85,475 76,974 76,732 Total gold certificate reserves. . . 21,353,746 21 985,705 1,090,307 753,320 5,381,556 6,112,901 1,361,811 1,328,2861,852,7601,532,1091,141,8661,063,080 Other cash 371,761 322,020 27,559 22,031 75,299 64,362 26,837 18,317 24,613 21,491 22,580 27,616 Discounts and advances: Secured by U. S. Govt. securities. . 12,855 126,680 600 385 2,625 106,015 3,430 3,175 1,275 1,470 1,200 4,200 Other 15,000 29,699 915 1,829 4,425 8,909 1,125 2,301 1,380 2,714 750 1,504 Industrial loans 1,879 3,892 1,380 3,469 60 56 U. S. Government securities: Bought outright 25,317,674 24,033,312 1,394,0921,693,012 6,517,478 5,549,652 1,525,4911.510,5422,149,192 2,399,101 1,501,3381,624,364 Held under repurchase agreement.. 597,900 663,700 597,900 663,700 Total loans and securities 25,945,308 24,857,283 ,395,6071,695,226 7,122,428 6,328,276 1,531,4261,519,487 2,151,8472,403,285 1,503,3481,630,124 Due from foreign banks 22 23 1 1 »6 17 2 2 2 2 1 1 Federal Reserve notes of other Banks.. 214,128 239,458 3,972 5,996 26,487 32,307 17,104 16,086 13,707 12,312 30,147 50,711 Uncollected cash items 4,225,210 ,238,779 324,264 387,995 790,662 874,505 253,896 252,296 416,386 383,177 335,529 344,449 Bank premises 52,465 48,348 6,232 4,071 7,390 7,292 4,734 3,269 5,289 4,746 4,719 4,839 Other assets 151,917 160,878 8,151 11,396 38,519 36,642 8,845 9,761 12,544 15,733 8,853 10,887 Total assets 52,314,557 51,852,494 ,856,0932,880,036 13,442,347 13,456,292 3,204,655 3,147,504 4,477,148 4,372,855 3,047,0 3,131,707 1 After deducting $16,000 participations of other Federal Reserve Banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes 26,558,37226,250,299 1,632,9031,603,208 5,924,481 5,796,489 1,896,9481,857,370 2,463,7952,410,657 1,849,093 1,887,063 Deposits: Member bank—reserve accounts.. 20,160,43519,950,372 848,626 835,721 6,049,923 6,184,727 959,879 929,318 ,533,769 ,497,699 827,255 849,025 U. S. Treasurer—general account. 345,866 388,808 8,742 44,086 70,675 44,922 30,135 33,092 38,382 15,316 11,127 28,743 Foreign 423,298 549,959 24,961 32,457 M34,793 i 184,537 30,690 40,833 37,646 48,162 20,460 26,699 Other 492,815 454,915 8,744 10,013 361,474 334,153 8,688 7,092 14,503 11,270 6,762 7,707 Total deposits 21,422,414 21,344,054 891,073 922,277 6,616,865 6,748,339 1,029,392 ,010,335 1,624,300 1,572,447 865,604 912,174 Deferred availability cash items 3,290,407 3,271,561 267,333 293,075 605,851 628,042 201,073 205,923 293,806 299,246 277,385 280,791 Other liabilities and accrued dividends. 18,170 14,923 821 713 6,787 5,996 875 702 1,355 1,431 762 689 Total liabilities 51,289,363 50,880,837 2,792,130 2,819,273 13,153,984 13,178,866 3,128,288 3,074,330 4,383,256 4,283,781 2,992,844 3,080,717 CAPITAL ACCOUNTS Capital paid in 265,266 252,634 14,443 13,612 81,852 80,139 18,017 17,186 25,410 24,215 11,655 11,013 Surplus (Sec. 7) 625,013 584,676 38,779 36,462 176,633 167,503 45,909 43,578 57,648 54,064 31,750 29,248 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. 107,372 106,804 7,730 7,678 22,559 22,465 7,952 7,921 9,828 9,789 7,445 7,380 Total liabilities and capital accounts 52,314,557 51,852,494 2,856,093 2,880,036 13,442,347 13,456,292 3,204,655 3,147,504 4,477,148 4,372 ,855 3,047,043 3,131,707 Ratio of gold certificate reserves to deposit and F. R. note liabilities combined 44.5% 46.2% 43.2% 29.8% 42.9% 48.7% 46.5% 46.3% 45.3% 38.5% 42.1% 38.0% Contingent liability on acceptances purchased for foreign correspondents 23,940 19,792 1,460 1,227 2 7,068 25,977 1,795 1,544 2,202 1,821 1,197 1,009 Industrial loan commitments 3,569 3,211 1,724 1,136 748 751 51 70 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve Agent 27,771,106 27,420,694 1,706,340 1,660,206 6,164,619 6,063,954 1,997,552 1,944,130 2,577,8292,506,864 1,955,595 1,966,222 Held by Federal Reserve Bank and forwarded for redemption 1,212,734 1,170,395 73,437 56,998 240,138 267,465 100,604 86,760 114,034 96,207 106,502 79,159 Federal Reserve notes, net« 26,558,372 26,250,299 1,632,9031,603,208 5,924,481 5,796,489 1,896,948 1,857,370 2,463,7952,410,657 1,849,0931,887,063 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificates 11,093,00012,399,000 640,000 400,000 2,670,000 3,520,000 800,000 850,000 1,050,000 820,000 625,000 600,000 Eligible paper 10,130 120,554 600 385 2,525 105,765 3,430 3,175 1,200 4,200 U. S. Government securities 17,420,00015,440,000 1,200,0001,300,000 3,600,000 2,600,000 1,200,0001,100,000 1,550,0001,700,000 1,350,0001,400,000 Total collateral. 28,523,130 27,959,554 1,840,600 1,700,385 6,272,525 6,225,765 2,003,430 1,953,175 2,600,000 2,520,000 1,976,200 2,004,200 » After deducting $288,486,000 participations of other Federal Reserve Banks on Dec. 31, 1953, and $365,403,000 on Dec. 31, 1952. •After deducting $16,872,000 participations of other Federal Reserve Banks on Dec. 31, 1953, and $13,815,000 on Dec. 31, 1952. • Includes Federal Reserve notes held by the U. S. Treasury and by Federal Reserve Banks other than the issuing Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 2—STATEMENT OF CONDITION OF EACH FEDERAL RESERVE BANK AT END OF 1953 AND 1952—Continued Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Item 1953 1952 1953 1952 1953 1952 1953 1952 1953 1952 1953 1952 1953 1952 r1 ASSETS Gold certificates 912,263 881,9013,743,997 4,430,854 857,457 636,609 484,485 327,606 854,501 896,784 817,442 715,296 2,413,5972,926,110 Redemption fund for Federal Reserve notes 58,813 54,350 151,495 119,453 49,407 51,901 25,562 25,549 41,453 41,266 30,399 29,382 84,575 58,948 Total gold certificate reserves.. 971,076 936,2513,895,4924,550,307 906,864 688,510 510,047 353,155 895,954 938,050 847,841 744,678 2,498,1722,985,058 Other cash 32,527 27,229 62,522 54,784 24,452 19,662 7,658 5,879 15,080 12,294 15,322 12,311 37,312 36,044 8 Discounts and advances: O Se t c h u e r r ed by U. S. Govt. securities. 3 6 5 4 0 5 1 1 , , 2 3 6 1 9 5 2 1 , , 0 00 5 0 5 3 4 , , 2 1 6 0 0 0 570 1, 1 12 2 1 5 1, 3 3 7 5 5 0 5 7 0 6 0 7 5 5 2 7 5 0 1 1 , , 2 3 0 2 5 0 675 1,12 3 1 0 1,5 5 1 0 5 0 2 5 , , 7 0 4 0 4 0 w o Industrial loans 340 232 99 135 U. S. Government securities: Bought outright 1,294,9741,391,024 4,375,704 3,437,0281,065,1401,302,581 624,866 764,4001,103,4201,052,0821,005,6941,101,5912,760,2852,207,935 Held under repurchase agreement 1 Total loans and securities 1,296,3091,393,840 4,378,759 3,444,3881,065,7101,303,827 626,690 765,802 1,104,5151,054,6071,006,3691,102,742 2,762,300 2,215,679 Due from foreign banks 1 1 3 3 1 1 1 1 1 1 1 1 2 2 Federal Reserve notes of other Banks. 29,747 33,771 27,164 23,133 15,376 12,218 7,847 10,298 8,901 8,503 12,737 11,220 20,939 22,903 Uncollected cash items 324,678 279,348 719,839 704,040 178,013 174,822 112,856 103,136 217,604 197,170 196,615 179,733 354,868 358,108 Bank premises 3,636 3,666 6,448 6,681 2,898 3,025 1,024 1,051 2,245i 2,288 587 629 7,263 6,791 Other assets 8,676 9,959 25,931 22,952 6,261 8,489 3,681 4,978 7,319] 7,314 6,568 7,874 16,569 14,893 Total assets. 2,666,650 2,684,065 9,116,1588,806,288 2,199,5752,210,554 1,269,8041,244,300 2,251,619 2,220,2272,086,040 2,059,188 5,697,425 5,639,478 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes 1,417,1071,445,0565,111,406 4,971,4151,214,9211,230,998 644,293 650,889 ,019,7991,022,199 743,749 759,2822,639,8772,615,673 Deposits: Member bank—reserve accounts. 890,376 895,5383,250,6203,066,258 764,061 731,518 468,968 437,867 965,518 957,9071,050,6841,051,2122,550,7562,513,582 U. S. Treasurer—general account. 19,314 34,241 30,189 28,710 18,078 31,175 17,791 26,412 20,931 28,440 41,479 25,726 39,023 47,945 Foreign 17,596 22,511 56,060 72,767 15,550 19,893 10,230 13,611 15,550 19,893 18,414 19,893 41,348 48,703 Other 5,679 5,586 17,776 13,177 11,351 14,404 3,849 4,190 8,116 4,039 3,504 1,374 42,369 41,910 Total deposits 932,965 957,8763,354,6453,180,912 809,040 796,990 500,838 482,0801,010,1151,010,2791,114,0811,098,2052,673,4962,652,140 Deferred availability cash items 269,537 237,237 505,628 519,440 133,779 142,973 96,521 84,762 180,744 149,141 179,523 156,977 279,227 273,954 Other liabilities and accrued dividends 714 592 3,017 1,963 612 589 703 455 605 475 523 395 1,396 923 Total liabilities 2,620,323 2,640,7618,974,6968,673,730 2,158,3522,171,550 1,242,3551,218,186 2,211,2632,182,0942,037,8762,014,8595,593,9965,542,690 CAPITAL ACCOUNTS Capital paid in 11,158 10,408 35,001 32,342 9,150 8,800 5,952 5,719 10,139 9,477 13,279 12,238 29,210 27,485 Surplus (Sec. 7) 28,034 25,803 90,792 84,628 25,465 23,628 16,219 15,131 23,456 21,925 28,146 25,381 62,182 57,325 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. 6,373 6,331 14,240 14,159 6,087 6,055 4,205 4,191 5,624 5,594 5,432 5,403 9,897 9,838 Total liabilities and capital accounts , 2,666,650 2,684,0659,116,158 8,806,2882,199,575 2,210,5541,269,8041,244,300 2,251,619 2,220,2272,086,0402,059,188 5,697,4255,639,478 Ratio of gold certificate reserves to deposit and F. R. note liabilities combined 41.3% 39.0% 46.0% 55.8% 44.8% 34.0% 44.5% 31.2% 44.1% 46.2% 45.6% 40.1% 47.0% 56.7% Contingent liability on acceptances purchased for foreign correspondent J 1,029 851 3,279 2,751 909 752 598 515 909 752 1,077 752 2,417 1,841 Industrial loan commitments 131 28 125 887 769 360 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve Agent 1,501,5481,519,7115,274,078 5,122,2981,277,5061,293,600 663,225 665,6431,057,5041,060,282 787,694 805,5792,807,6162,812,205 Held by Federal Reserve Bank and forwarded for redemption. 84,441 74,655 162,672 150,883 62,585 62,602 18,932 14,754 37,705 38,083 43,945 46,297 167,739 196,532 Federal Reserve notes, net1... 1,417,107 ,445,056 5,111,406 4,971,4151,214,9211,230,998 644,293 650,8891,019,7991,022,199 743,749 759,2822,639,8772,615,673 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificates 435,000 510,000 2,400,000 2,800,000 355,000 280,000 175,000 170,000 280,000 280.00C 283,000 269,0001,380,000 ,900,000 Eligible paper 125 1,350 500 525 1,404 500 5,000 U. S. Government securities 1,100,0001,050,000 3,000,0002,400,000 975,6661,025,000 500,000 505,000 800,000 800,000 525,000 '5'6O,6661,620,0001,000,000 Total collateral. 1,535,0001,560,000 5,400,0005,200,0001,330,0001,305,125 676,350 675,5001,080,5251,081,404 808,000 829,0003,000,5002,905,000 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

64 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 3—HOLDINGS OF UNITED STATES GOVERNMENT SECURITIES BY FEDERAL RESERVE BANKS, END OF DECEMBER 1951, 1952, AND 1953 [In thousands of dollars] December 31 Change during Rate of Type of issue interest (Per cent) 1953 1952 1951 1953 1952 Treasury bonds: 1951-53 . 2 855,825 755,825 -855,825 +100,000 1951-55 2 8,200 8,200 8,200 1952-54, Mar 2H 47,400 -47,400 1952-54, June. . . 2 476,900 461,900 461,900 +15,000 1952-55, June . 2H 96,700 96,700 96,700 1952-54, Dec 2 283,100 297,600 297,600 —14,500 1954-56* j¥ 1955-60* 1956-58 12,493 12 493 12,493 1956-59 . 21,690 21,690 21,690 1956-59* 2% 1957-59 1% 339,096 339,096 +339,096 1958, June 1958, Dec 1 19 9 5 5 9 8 - - 6 6 2 3 1 * , . June... 2% 319,849 319,849 319,849 1959-62\ Dec 2\A. 693,765 693,765 693,765 1960-65* 1961, Sept 1962-671 56,610 56,610 56,610 1963-68* 2 V£ 122,585 122,585 122,585 1 1 9 9 6 6 4 4 - - 6 6 9 9 2 2, , J D u e n c e .. ... 2>| 2 2 0 6 3 6 , ,9 8 9 9 9 0 2 2 0 6 3 6 , ,9 8 9 9 9 0 2 26 0 6 1 , , 9 3 9 9 9 0 +2,500 1965-70* 2L£ 521,490 521,490 521,490 1966-71* 91^ 132,707 132,707 132,707 1967-72', June... 2 V£ 49,266 49,266 49,266 1967-72, Sept.... 2)4 2,552 2,552 2,552 1967-72', Dec. 58,758 58,758 61,258 —2,500 1975-80* 2% t,213 848 —1,213 848 1978-83 Total Treasury bonds 3,666,650 4,521,975 5,344,127 -855,325 —822,152 Treasury notes: Dec. 1, 1953-A.. 2H 7,491,750 —7,491,750 +7,491,750 Mar. 15, 1954-A.. 257,450 244,650 244,650 +12,800 Dec. 15, 1954-B.. l» 6,994,050 +6,994,050 Mar 15 1955-A H 89,800 89', 800 89,800 Dec. 15, 1955-B. '4 ,233,623 ,233,623 ,233,623 Apr. 1, 1956-EA IX 1,000,000 1,000,000 1,000,000 Oct. 1, 1956-EO 500,000 500,000 500,000 Mar. 15, 1957-A.. I Apr. 1, 1957-EA 500,000 500,000 +500,000 Oct. 1, 1957-EO 713,848 713,848 +713,848 Apr. 1, 1958-EA Oct. 1, 1958-EO Total Treasury notes 13,288,771 13,773,671 5,068,073 -484,900 +8,705,598 Certificates IK 4,857,816 1?,792,798 -4,857,816 —7,934,982 2/8 202,800 -202,800 +202,800 3,704,750 +3,704,750 2}4 128,900 +128,900 2% 2,133,491 +2,133,491 Total certificates 5,967,141 5,060,616 12,792,798 +906,525 -7,732,182 Treasury bills 2,993,012 1,340,750 596,360 +1,652,262 +744,390 Total holdings. 25,915,574 24,697,012 23,801,358 +1,218,562 +895,654 * Partially tax-exempt. 1 Became commercial bank eligible during 1952. 2 Became commercial bank eligible during 1953. 3 Restricted as to commercial bank ownership. < Nonmarketable issue convertible into 5-year 1J4 per cent marketable notes. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 65 NO. 4.—-FEDERAL RESERVE BANK HOLDINGS OF SPECIAL SHORT-TERM TREASURY CERTIFICATES PURCHASED DIRECTLY FROM THE UNITED STATES, 1949-53 » [In millions of dollars] Date Amount Date Amount Date Amount Date Amount 1949—June IS. 220 1952—Mar. 24. 189 1952—Sept. 19. 134 1953—June 9. 491 16. 127 25. 170 20. 134 10. 451 1950—Mar. 15. 108 26. 14 21* 134 11. 358 June 15. 105 27. 123 22. 6 12. 506 1951—June 1. 100 June 16. 472 1953—Mar. 18. 110 13. 506 100 17. 536 19. 104 14* 506 3* 100 18. 413 20. 189 15. 999 Dec. 17. 320 19. 249 21. 189 16. 1,172 1952—Jan. 22. 55 20. 231 22* 189 17. 823 23. 22 21. 170 23. 333 18. 364 Mar. 17. 811 22* 170 24. 186 19. 992 18. 442 23. 74 25. 63 20. 992 19. 311 24. 47 26. 49 21* 992 20. 338 Sept. 15. 103 June 5. 196 22. 908 21. 338 16. 257 6. 196 23. 608 22. 338 17. 221 7* 196 24. 296 23* 338 18. 242 8. 374 * Sunday or holiday. 1 On Nov. 9,1953, the Reserve Banks sold direct to the U. S. Treasury 500 million dollars of Treasury notes. This was the first use of the authority granted by the Act of Mar. 27, 1942, to sell U. S. Government securities directly to the United States. NOTE.—Interest rate \i per cent throughout. Data for prior years beginning with 1942 are given in previous Annual Reports. There were no holdings on dates not shown. NO. 5—VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS OF FEDERAL RESERVE BANKS, 1949-53 [Number in thousands; amounts in thousands of dollars] 1953 1952 1951 1950 1949 NUMBER OF PIECES HANDLED » Discounts and advances: Notes discounted and advances made 20 18 11 8 Industrial loans: Loans made .6 1.4 .4 Commitments to make industrial loans () () C C C o u h i e r n r c e k r n s e c c y h e a i r v n e e d c d e l e iv a d n e : d d a c n o d u c n o t u e n d t . e . d .. . 4 5 , , 4 8 0 8 5 9 , , 2 2 5 3 5 8 4 5 , , 1 71 8 6 33 , ,, 3 00 7 66 9 33 4 5 , , 0 8 6 8 6 9, , 2 6 2 1 3 9 3 7 , , 8 1 4 9 6 0 , , 3 4 9 9 7 8 3 7 , , 8 2 0 9 9 4 , , 8 3 6 6 5 3 U. S. Govt. checks 458,607 446,084 412,865 365,812 357,044 Postal money orders 366,807 371,318 AH other * 2,415,164 '2,293,061 »2,122,147 1,955,232 1,847,807 Collection items handled: U. S. Govt. coupons paid. 13,703 13,599 14,510 15,323 16,334 All other 14,360 14,172 13,428 12,793 11,451 Issues, redemptions, and exchanges of U. S. Govt. securities 177,596 163,568 154,335 153,886 151,103 Transfers of funds 1,718 1,595 1,525 1,343 1,232 AMOUNTS HANDLED Discounts and advances 93,438,640 105,549,326 43,422,106 17,050,334 20,216,071 Industrial loans: Loans made 22,009 31,193 27,656 6,530 4,005 Commitments to make industrial loans 980 3,468 9,078 4,019 4,130 C C C o h u i e r n r c e U k r n s e . c c S y h e . a i r v n e G e d c d o e l e v i a v d t n . e : d d c h a c e n c o d k u s c n o t u e n d t . e . d .. 1 2 4 9 0 , ,7 5 6 1 0 3 4 7 9 , , ,4 6 2 3 6 0 8 3 5 1 2 1 7 9 , , 0 4 5 0 2 5 1 3 8 , , , 0 2 4 7 7 1 6 0 6 26,1 5 7 9 5 2 , , 3 6 2 6 4 4 6 2 4 4 , ,0 5 6 3 6 2 9 9 2 , , , 3 7 6 3 3 2 5 9 0 2 6 3 4 , , 8 3 6 4 7 2 1 9 3 , , , 6 6 6 1 0 7 2 7 8 A Po ll s t o a t l h e m r oney orders 8 6 85 ,0 ,7 9 2 1 6 ,1 ,0 7 3 3 1 * 8 5 4 , 0 9 , 9 0 6 9 , 4 8 ,6 9 2 9 9 89,648,061 856,952,849 758,342,771 Colle U ct . i o S n . G ite o m vt s . h co a u n p d o le n d s : paid. 2,270,606 1,923,079 3 799,891,846 2,173,589 2,303,038 All other 4,615,970 5,103,262 2,020,560 4,758,483 4,175,169 Issues, redemptions, and ex- 5,121,274 changes of U. S. Govt. securities 381,877,330 355,234,532 344,771,945 346,224,112 289,312,802 Transfers of funds 876,838,475 767,974,539 656,771,175 509,167,912 415,887,444 Digitized for F*R ATwSoE oRr more checks, coupons, etc., handled as a single item are counted as one "piece." http://fraser.stl*o Lueissfse tdh.aonr g50/ . Federal Resertv EeV BfiuarniAka ootfi» rS>ltr<. 2L ro1ruaxixsrn rvn ttifk TTWfornT T) (*af*r\Tf> RanVa urttiVTi txrara. inMnfinri in nri'nt- rr

NO. 6—EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS DURING 1953 Phila- Cleve- Rich- Minne- Kansas San Item Total Boston New York delphia land mond Atlanta Chicago St. Louis apolis City Dallas Francisco CURRENT EARNINGS Discounts and advances $15,276,054 $417,488 $3,282,566 $635,823 $1,364,294 $710,297 $746,702$3,564,394 $748,630 $546,742$1,202,892 $574,744 $1,481,482 Industrial loans 121,163 98,000 2,274 15,310 5,579 Commitments to make industrial loans 14,363 1,184 6,147 560 371 457! 5,449 195 U. S. Government securities.. 497,454,961 32,345,705116,423,910 30,64499,,33661146,0(8844,,661144 33,343,410066 29,3485,,44440077,107,35124,681,11814,308,61520,34466,,225566 22,427,000 50,389>,4,48855 Allother 170,696 12,421 27,906 11,937 15,872 11,128 9,435 20,140 18,569 7,971 15,174 8,623 11,520 Total current earnings... 513,037,237 32,775,614 119,734,382 31,396,305 47,470,927 34,067,365 30,120,258 80,692,342 25,448,31714,868,90721,569,77123,010,36751,882,682 CURRENT EXPENSES Salaries: Officers 4,545,557 266,659 872,390 289,362 374,176 333,423 377,596 533,874 283,777 257,032 291,531 279,901 385,836 Employees 66,618,406 4,249,157 15,300,598 3,944,678 5,788,609 4,159,913 3,541,78110,473,012 3,862,343 2,045,440 3,500,138 3,130,595 6,622,142 Directors' and other fees 293,529 15,477 31,556 16,185 24,930 27,617 40,988 16,017 28,887 14,655 24,669 18,681 33,867 Retirement contributions. . . 6,405,489 404,234 1,406,030 368,525 560,442 419,102 371,836 1,004,699 364,869 192,252 352,896 325,281 635,323 Traveling expenses 1,201,675 76,138 177,201 47,251 98,931 102,007 96,282 147,065 85,439 68,345 79,472 83,973 139,571 Postage and expressage 16,988,335 1,347,822 2,723,399 997,500 1,387,361 1,473,321 1,405,522 2,470,456 953,323 504,568 938,250 859,732 1,927,081 Telephone and telegraph 937,735 51,939 205,251 52,828 67,754 60,118 82,187 96,056 59,806 35,403 56,767 64,944 104,682 Printing, stationery, and supplies 5,311,521 443,641 941,369 288,090 438,375 358,953 381,760 922,057 373,278 159,290 267,877 226,404 510,427 Insurance 991,763 75,518 197,692 41,367 85,025 83,046 59,805 125,345 66,722 32,994 71,445 47,267 105,537 Taxes on real estate 2,581,310 382,020 580,047 101,501 263,978 129,018 131,456 369,669 96,511 99,497 123,445 62,680 241,488 Depreciation (building) 2,920,359 403,814 305,259 66,352 470,188 329,697 176,498 368,087 135,453 27,801 202,627 48,394 386,189 Light, heat, power, and water 1,042,430 69,736 190,621 59,521 101,374 87,762 53,308 154,101 80,985 33,562 86,827 45,085 79,548 Repairs and alterations 1,078,302 257,645 36,413 68,836 120,134 127,085 52,273 106,648 80,418 69,607 35,569 28,663 95,011 Rent 527,495 41,871 3,796 43,067 63,934 2,348 99,371 91,292 23,901 53,386 16,000 30,976 57,553 Furniture and equipment: Purchases 2,505,644 330,291 174,218 128,479 165,779 323,683 313,918 434,501 187,210 93,974 58,766 133,777 161,048 Rentals 4,325,905 423,893 697,586 332,258 384,701 311,731 232,062 639,715 223,617 163,340 246,242 230,272 440,488 Assessment for expenses of Board of Governors 4,099,800 251,100 1,206,500 309,600 375,500 206,400 175,900 561,000 155,900 103,700 154,700 185,800 413,700 Federal Reserve currency. .. 10,922,067 718,476 2,312,255 829,852 956,587 889,104 748,985 1,784,003 609,552 194,152 388,223 387,777 1,103,101 All other U,564,867 116,069 221,605 128,147 391,861 120,955 98,038 294,047 119,759 78,777 122,312 84,590 184,479 Total 134,862,189 9,925,500 27,583,786 8,113,39912,119,639 9,545,283 8,439,566 20,591,644 7,791,750 4,227,775 7,017,756 6,274,79213,627,071 Less reimbursement for certain fiscal agency and other expenses 121,347,169 1,161,352 4,348,623 1,150,812 1,965,221 1,272,063 1,304,258 3,635,765 1,323,217 623,501 1,515,048 1,136,577 2,306,504 Net expenses 113,515,020 8,764,148 23,235,163 6,962,58710,154,418 8,273,220 7,135,30816,955,879 6,468,533 3,604,274 5,502,708 5,138,21511,320,567 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PROFIT AND LOSS Current net earnings 399,522,217 24,011,466 96,499,219 24,433,718 37,316,509 25,794,145 22,984,950 63,736,46318,979,78411,264,63316,067,06317,872,152 40,562,115 Additions to current net earnings: Profits on sales of U. S. Government securities (net) 1,952,270 132,962 447,980 125,877 184,975 129,574 109,312 292,477 105,011 61,029 88,787 89,628 184,658 All other 143,904 116,422 4,618 62 14,693 33 4,263 123 2,226 72 763 4 625 Total additions. 2,096,174 249,384 452,598 125,939 199,668 129,607 113,575 292,600 107,237 61,101 89,550 89,632 185,283 Deductions from current net earnings: Retirement System (adjustment for revised benefits) 2,493,153 140,403 659,362 159,357 160,793 167,576 94,537 299,518 145,596 71,0521 221,937 99,799 273,223 Reserves for contingencies 567,132 51,301 93,730 31,257 39,472 64,579 42,052 81,996 32,098 13,69o| 29,746 28.834J 58,377 All other 94,882 53,756 9,370 3,681 705 2,124 617 5,343 2,050 12,375| 444 1,314' 3,103 Total deductions 3,155,167 245,460 762,462 194,295 200,970 234,279 137,206 386,857 179,744 97,117 252,127 129,947 334,703 I Net deductions — . 1,058,993 +3,924 309,864 68,356 1,302 104,672 23,631 94,257 72,507 36,016| 162,577 40,315 149,420 Net earnings before payments to U. S. Treasury 398,463,22424,015,390 96,189,355 24,365,36237,315,20725,689,47322,961,319 63,642,20618,907,27711,228,61715,904,48617,831,837 40,412,695 Paid U. S. Treasury (interest on F. R. notes) 342,567,98520,857,523 82,180,358 20,974,51232,249,47222,511,392 20,074,82455,473,06616,533,509 9,791,77213,780,96214,291,018 33,849,577 Dividends 15,558,377 840,331 4,878,435 1,060,168 1,482,436 676,502 655,703 2,005,407 536,709 348,774 592,217 775,661 1,706,034 Transferred to surplus (Sec. 7) 40,336,862 2,317,536 9,130,562 2,330,682 3,583,299 2,501,579 2,230,792 6,163,733 1,837,059 1,088,071 1,531,307 2,765,158 4,857,084 Surplus (Sec. 7), January 1... 584,676,88136,461,592167,502,856 43,577,83754,064,650 29,247,936 25,803,328 84,628,184 23,628,31015,131,29721,924,73525,380,756 57,325,400 Surplus (Sec. 7), December 31.625,013,74338,779,128176,633,418 45,908,51957,647,949 31,749,515 28,034,120 90,791,91725,465,36916,219,36823,456,04228,145,914 62,182,484 1 After deducting $395,772 of prorated inter-Bank expenses to avoid duplication in combined totals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 7—EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS, 1914-53 Net earnings Paid to U. S. 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 be m fo e r n e t s p t a o y- Div p i a d i e d nds F p r a a id n c t h o i s U e . t a S x . Pa T id re t a o s u U ry . S. (I T n r t e e a re s s u t r y on T t r o a n su sf r e p r l r u e s d T to ra n s s u f r e p r l r u e s d oONo U. S. Treasury * Treasury 2 (Sec. 13b) F. R. notes) (Sec. 13b) (Sec. 7) All Federal Reserve Banks, by years: 1914-15 $ 2,173,252 $ 2,320,586 $ -141,459 $ 217,463 1916 5 217 998 2 273 999 2 750 998 1 742 774 1917 16,128,339 5,159,727 9,582,067 6,804,186 $ 1,134,234 $ 1,134,234 1918 67,584 417 10 959 533 52 716 310 5 540 684 48,334,341 1919 102,380,583 19,339,633 78,367,504 5,011,832 2,703,894 70,651,778 1920 181,296,711 28,258,030 149 294 774 5 654 018 60 724 742 82,916,014 1921 122 865 866 34 463 845 82 087 225 6 119 673 59 974 466 15,993,086 1922 50,498,699 29,559,049 16,497,736 6,307,035 10,850,605 -659,904 1923 50 708 566 29 764 173 12 711 286 6 552 717 3 613 056 2,545,513 1924 38,340,449 28,431,126 3,718,180 6,682,496 113,646 -3,077,962 1925 41,800,706 27,528,163 9,449,066 6,915,958 59,300 2,473,808 1926 47,599,595 27,350,182 16,611,745 7 329,169 818,150 8,464,426 1927.... 43,024,484 27,518,443 13,048,249 7,754,539 249,591 5,044,119 1928 64 052 860 26 904 810 32 122 021 8 458 463 2 584 659 21,078,899 1929 70,955,496 29,691,113 36,402,741 9,583,913 4,283,231 22,535,597 1930 .... 36,424,044 28,342,726 7 988 182 10 268 598 17,308 -2,297,724 1931 29 701 279 27 040 664 2 972 066 10 029 760 —7,057,694 1932 50,018,817 26,291,381 22,314,244 9,282,244 2,011,418 11,020,582 1933 49,487,318 29,222,837 7 957 407 8 874,262 -916,855 1934.. 48,902,813 29,241,396 15,231,409 8,781,661 $ -60,323 6,510,071 1935.. . 42,751,959 31,577,443 9,437,758 8,504,974 $ 297,667 27,695 607,422 o 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 8 1938 36,261,428 28,911,608 9,581 954 8,019,137 119,524 -419,140 1,862,433 1939. 38,500 665 28 646 855 12 243 365 8 110 462 24 579 —425,653 4,533,977 1940. 43,537,805 29 165 477 25 860 025 8 214 971 82 152 -54,456 17,617,358 I 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 U 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 i9so....... ..:. 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 1952 456,060,260 104,694,091 352,950 157 14,681 788 291,934,634 46,333,735 1953 513,037,237 113,515,020 398,463,224 15,558,377 342,567,985 40,336,862 Digitized for FTRotAalS—E1R9 14-53. .. 4,338,628,722 1,526,729,300 2,762,218,062 336,147,163 149,138,300 2,188,893 1,521,065,076 -3,658 «753,682,288 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Aggregate for each Federal Reserve Bank, 1914-53: Boston 291,573,183 109,511,415 179,866,014 22,341,511 7,111,395 280,843 100,987,488 +135,412 49,009,365 New York. 1,112,695,887 353,933,990 756,097,025 113,992,872 68,006,262 369,116 360,705,612 —433,413 213,456,576 Philadelphia 305,050,253 108,061,594 196,698,313 28,911,322 5,558,901 722,406 100,685,622 +290,661 60,529,401 Cleveland ... . 402,787,621 140,992,661 255,512,887 33,441,312 4,842,447 82,930 146,284,269 —9,907 70,871,836 Richmond 256,884,260 95,688,656 157,787,507 14,277,113 6,200,189 172,493 99,651,421 -71,516 37,557,807 Atlanta 223,291,133 78,691,037 139,095,498 12,420,243 8,950,561 79,264 84,333,788 +5,491 33,306,151 Chicago 623,627,269 210,332,146 403,052,130 40,036,529 25,313,526 151,045 231,406,995 +11,681 106,132,354 St Louis 213,263,179 83,045,522 124,911,001 11,628,900 2,755,629 7,464 79,987,041 —26,514 30,558 481 Minneapolis 133,398,104 51,074,417 80,472,506 7,986,842 5,202,900 55,615 47,000,819 +64,875 20,161,455 Kansas City 203,913,400 84,898,217 115,641,667 11,533,214 6,939,100 64,213 69,526,493 —8,674 27,587,321 Dallas . 179,282,951 68,531,890 107,407,842 11,877,618 560,049 102,083 62,334,028 +55,336 32,478,728 San Francisco 392,861,482 141,967,755 245,675,672 27,699,687 7,697,341 101,421 138,161,500 -17,090 72,032,813 Total 4,338,628,722 1,526,729,300 2,762,218,062 336,147,163 149,138,300 2,188,893 1,521,065,076 -3,658 753,682,288 1 Current earnings less current expenses, plus and minus profit and loss additions and deductions. 2 The $753,682,288 transferred to surplus was reduced by direct charges of $139,299,557 for contribution to capital of the Federal Deposit Insurance Corporation and $500,000 ;for charge-off on bank premises, and was increased by $11,131,012 transferred from reserves for contingencies, leaving a balance of $625,013,743 on December 31, 1953. I 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 1918-53 AND END OF MONTH 1953 [In millions of dollars] Reserve Bank credit outstanding Deposits, other than member bank reserve Member bank balances, with reserve balances U. S. Government Treas- F. R. Banks Other securities ury Treas- Fed- I2 End m of o n y t e h ar or Total B r o o ig u u h t g - t ht r a u c H e g n h p r e a d u e l s e d e r e r - - v co a D a n a u d i c n n s - - e d ts s Float ot A he ll r * Total s G to o c l k d 2 s r i t c o e n a u n u g n r c t d - - 3 y - M l c a i o r t in i c n o u e n - y i h c n u o a g r l s y s d h - * d T e u r p e r o a y s s i - tsde F e p i o o g r s n - itsd O ep t o h s e i r ts c s o e R e a u r r c e a n v - - l e ts5 Total qu R i e re - d6 ce E s x s - 6 ment 1918 239 239 1,766 199 294 2,498 2,873 1,795 4,951 288 51 96 25 118 1,636 1,585 51 1919 300 300 2,215 201 575 3,292 2,707 1,707 5,091 385 31 73 28 208 1,890 1,822 68 1920 287 287 2 687 119 262 3 355 2 639 1 709 5 325 218 57 5 18 298 1,781 1921 234 234 1,144 40 146 1^563 3,373 1,842 4,403 214 96 12 15 285 1,753 1,654 99 1922 436 436 618 78 273 1 405 3,642 1,958 4,530 225 11 3 26 276 1,934 1923 134 80 54 723 27 355 1,238 3,957 2,009 4,757 213 38 4 19 275 1,898 1,884 14 1924. 540 536 4 320 52 390 1,302 4,212 2,025 4,760 211 51 19 20 258 2,220 2,161 59 § 1925 375 367 8 643 63 378 1 459 4,112 1,977 4,817 203 16 8 21 272 2,212 2,256 -44 1926 315 312 3 637 45 384 1,381 4,205 1,991 4,808 201 17 46 19 293 2,194 2,250 -56 1927 .... 617 560 57 582 63 393 1 655 4,092 2,006 4,716 208 18 5 21 301 2,487 2,424 63 8 1928 228 197 31 1,056 24 500 1,809 3,854 2,012 4,686 202 23 6 21 348 2,389 2,430 -41 I 1929 . . 511 488 23 632 34 405 1,583 3,997 2,022 4,578 216 29 6 24 393 2,355 2,428 -73 1930 729 686 43 251 21 372 1 373 4,306 2,027 4,603 211 19 6 22 375 2,471 2,375 96 I 1931 817 775 42 638 20 378 1,853 4,173 2,035 5,360 222 54 79 31 354 1,961 1,994 -33 1932 1,855 1,851 4 235 14 41 2 145 4,226 2,204 5,388 272 8 19 24 355 2,509 1,933 576 1933 2,437 2,435 2 98 15 137 2,688 4,036 2,303 5,519 284 3 4 128 360 2,729 1,870 859 1934 2,430 2,430 7 5 21 2,463 8,238 2,511 5,536 3,029 121 20 169 241 4,096 2,282 1,814 1935 2,431 2,430 1 5 12 38 2,486 10,125 2,476 5,882 2,566 544 29 226 253 5,587 2,743 2,844 1936 2,430 2,430 3 39 28 2,500 11,258 2,532 6,543 2,376 244 99 160 261 6,606 4,622 1,984 1937 2,564 2 564 10 19 19 2 612 12,760 2,637 6,550 3,619 142 172 235 263 7,027 5,815 1,212 1938 2,564 2,564 4 17 16 2,601 14,512 2,798 6,856 2,706 923 199 242 260 8,724 5,519 3,205 1939 2,484 2,484 7 91 11 2,593 17,644 2,963 7,598 2,409 634 397 256 251 11,653 6,444 5,209 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1940 2,184 2,184 3 80 8 2,274 21,995 3,087 8,732 2,213 368 1,133 599 284 14,026 7,411 6,615 1941 2,254 2,254 3 94 10 2,361 22,737 3,247 11,160 2,215 867 774 586 291 12,450 9,365 3,085 1942 6,189 6,189 6 471 14 6,679 22,726 3,648 15,410 2,193 799 793 485 256 13,117 11,129 1,988 1943 11,543 11,543 5 681 10 12,239 21,938 4,094 20,449 2,303 579 1,360 356 339 12,886 11,650 1,236 1944 18,846 18,846 80 815 4 19,745 20,619 4,131 25,307 2,375 440 1,204 394 402 14,373 12,748 1,625 1945 24,262 24,262 249 578 2 25,091 20,065 4,339 28,515 2,287 977 862 446 495 15,915 14,457 1,458 1946 23,350 23,350 163 580 1 24,093 20,529 4,562 28,952 2,272 393 508 314 607 16,139 15,577 562 1947 22,559 22,559 85 535 1 23,181 22,754 4,562 28,868 1,336 870 392 569 563 17,899 16,400 1,499 1948 23,333 23,333 223 541 1 24,097 24,244 4,589 28,224 1,325 1,123 642 547 590 20,479 19,277 1,202 1949 18,885 18,885 78 534 2 19,499 24,427 4,598 27,600 1,312 821 767 750 706 16,568 15,550 1,018 1950 20,778 20,725 53 67 1,368 3 22,216 22,706 4,636 27,741 1,293 668 895 565 714 17,681 16,509 1,172 1951 23,801 23,605 196 19 1,184 5 25,009 22,695 4,709 29,206 1,270 247 526 363 746 20,056 19,667 389 1952 24,697 24,034 663 156 967 4 25,825 23,187 4,812 30,433 1,270 389 550 455 777 19,950 20,520 -570 i 1953— January 23,944 23,888 56 1,735 796 4 26,478 22,986 4,820 29,691 1,308 809 586 508 770 20,611 19,997 614 February 23,876 23,853 23 1,309 1,006 4 26,194 22,662 4,824 29,793 1,284 336 511 412 833 20,511 19,796 715 March 23,806 23,806 485 632 3 24,927 22,563 4,829 29,754 1,293 222 536 342 850 19,322 19,607 -285 April 23,880 23,806 74' 1,014 649 3 25,546 22,562 4,841 29,842 1,269 393 506 416 783 19,740 19,389 351 May 24,246 24,031 215 731 607 4 25,589 22,537 4,849 29,951 1,272 221 515 171 775 20,069 19,263 806 June 24,746 24,718 28 64 601 3 25,414 22,463 4,854 30,125 1,259 132 527 176 951 19,561 19,459 102 July 24,964 24,964 644 565 3 26,176 22,277 4,859 30,120 1,263 548 566 346 862 19,607 19,017 590 August 25,063 24,989 74* 343 549 3 25,958 22,178 4,867 30,248 1,269 496 524 325 862 19,278 18,802 476 1 September 25,235 25,235 329 685 3 26,252 22,128 4,872 30,275 1,283 642 512 352 880 19,309 18,816 493 October 25,348 25 348 413 787 3 26,550 22,077 4,879 30,398 1,275 654 448 468 802 19,460 18,826 634 November 25,095 24,993 102 369 667 3 26,133 22,028 4,885 30,807 766 451 417 367 804 19,434 19,087 347 December 25,916 25,318 598 28 935 2 26,880 22,030 4,894 30,781 761 346 423 493 839 20,160 19,397 763 Si 1 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, including 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. 5 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. 6 These figures are estimated. 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

72 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 9—BANK PREMISES OF FEDERAL RESERVE BANKS AND BRANCHES DECEMBER 31, 1953 Cost Federal Reserve Bank or Net . branch Building Fixed ma- book value Land (including chinery and Total vaults) equipment Boston $ 1,628,132 P$5,773,609 '$2,866,084 P$10,267,825 $ 6,232,088 New York 5,215,656 12,183,528 4,841,194 22,240,378 5,909,703 Annex 592,679 1,451,570 217,665 2,261,914 753,291 Buffalo 606,050 474,769 1,080,819 727,358 Philadelphia... 1,884,357 16,475,852 920,743 9,280,952 4,733,662 Cleveland 1,295,490 6,534,737 1,685,765 9,515,992 2,034,310 Cincinnati 380,744 1,083,985 742,636 2,207,365 1,578,986 Pittsburgh 1,189,941 1,107,918 689,889 2,987,748 1,675,217 Richmond 389,611 3,682,181 1,643,765 5,715,557 3,417,965 Annex 80,333 482,482 117,924 680,739 122,060 Baltimore 250,487 1,251,072 480,555 1,982,114 833,829 Charlotte 105,701 308,749 154,449 568,899 345,549 Atlanta 283,000 1,461,474 308,082 2,052,556 628,728 Birmingham... 124,137 330,680 70,510 525,327 132,822 Jacksonville. . . 164,004 1,633,543 628,139 2,425,686 2,298,373 Nashville 48,000 211,616 35,091 294,707 84,739 New Orleans... 277,078 762,456 265,700 1,305,234 491,060 Chicago 2,963,548 6,515,390 2,720,927 12,199,865 2,083,372 Detroit. . , 1,147,543 2,815,843 1,177,119 5,140,505 4,364,883 St. Louis 1,496,060 2,136,438 1,328,030 4,960,528 1,297,159 Annex 179,720 1,035,281 522,129 1,737,130 1,008,444 Little Rock 85,007 264,604 158,320 507,931 191,810 Louisville 131,177 231,702 72,464 435,343 159,085 Memphis 128,542 287,468 105,662 521,672 240,912 Minneapolis. . . 600,521 2,316,746 641,025 3,558,292 939,500 Helena 15,710 126,401 44,142 186,253 84,110 Kansas City. .. 543,764 3,469,856 1,228,613 5,242,233 1,451,165 Denver 101,512 461,823 86,910 650,245 250,988 Oklahoma City 65,021 421,252 97,588 583,861 217,620 Omaha 176,427 406,867 94,549 677,843 325,585 Dallas 189,831 1,362,220 466,692 2,018,743 333,457 El Paso 39,004 119,739 32,575 191,318 44,068 Houston 78,812 317,336 112,111 508,259 127,345 San Antonio. . . 75,002 163,360 55,859 294,221 82,240 San Francisco.. 412,996 3,419,261 1,036,864 4,869,121 1,365,315 Los Angeles. . . 478,603 11,557,868 325,782 2,362,253 992,439 Portland 161,239 1,678,511 630,920 2,470,670 2,212,904 Salt Lake City. 114,075 341,449 84,814 540,338 189,894 Seattle 274,772 1,891,564 642,240 2,808,576 2,502,410 Total 23,974,286 76,551,200 27,333,526 127,859,012 52,464,445 OTHER REAL ESTATE ACQUIRED FOR BANKING HOUSE PURPOSES New York 45,000 137,490 182,490 77,994 Richmond . ... 146,550 146,550 146 550 Charlotte 10 868 10 868 10 868 Atlanta 349,113 349,113 349,113 Birmingham 173 173 173 173 173 173 Nashville 414 860 6 069 420,929 420 929 Denver 401,014 401,014 401,014 Omaha 258 007 258 007 258 007 Dallas 195 255 195,255 195 255 San Antonio 402,345 402,345 402,345 63 772 63 772 63 772 Los Angeles 320,317 320,317 320,317 Total 2,780,274 143,559 2,923,833 2,819,337 ^Preliminary. ^Includes cost of addition 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, 1953] President Other officers Employees1 Total Federal Reserve Bank (Including branches) Annual salary Number Annual salaries Number Annual salaries Number Annual salaries $30,000 21 $265,500 1,365 $4,222,905 1,387 $4,518 405 New York 60,000 56 836,200 3,985 15,225,675 4,042 16,121,875 Philadelphia 30,000 24 298,000 1,219 3,979,521 1,244 4,307 521 Cleveland 25,000 30 362,400 1,730 5,565,846 1,761 5,953,246 30,000 27 328,600 1,338 3,976,822 1,366 4,335,422 Atlanta • •. • • 30,000 35 375,250 1,297 3 776 729 1 333 4 181 979 40,000 39 503,700 3,018 10,297,964 3,058 10,841,664 St Louis 30,000 28 293,500 1,263 3,775,908 1,292 4,099,408 25,000 22 236,000 687 2,040,351 710 2 301 351 Kansas City 30,000 26 282,150 1,070 3,372,224 1,097 3,684,374 Dallas 24 260,300 968 3,216,317 992 3,476 617 San Francisco 30,000 33 376,500 1,956 6,557,987 1,990 6,964,487 Xotal $360,000 365 $4,418,100 19,896 $66,008,249 20,272 $70,786,349 1 Includes 848 part-time employees. NOTE.—During the year 1953, the Banks were reimbursed $14,315,357 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, 1953 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 r is a a c n n o - Discounts for and advances to member banks under Sees. 13 and 13a of the Federal Reserve Act 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) 2% Loans to industrial or commercial businesses under Sec. 13b of the Federal Reserve Act, direct or in participation with financing institutions 3-5H 2H-5 2H-5 2X-S 2H-5 3-5 2%-S Discounts for and purchases from financing institutions under Sec. 13b of the Federal Reserve Act: On portion for which institution is obligated 0) 0) On remaining portion (3) Commitments to make loans under Sec. 13b of the Federal Reserve Act: To industrial or commercial businesses 14-1} i-l) 4-iH 4-1 % To financing institutions iiX 4-1X 21H Effective minimum buying rates on prime bankers' acceptances payable in dollars 1-90 days 91-120 days 121-180 days 2H 1 Rate charged borrower by financing institution less commitment rate. 8 Rate'charged borrower but not to exceed 1 per cent above the discount rate. » Rate charged borrower. * Financing institution is charged ^ per cent per annum on undisbursed portion of loan. 5 Financing institution is charged \i per cent per annum on undisbursed portion of loan. • The^rates shown for the Federal Reserve Bank of New York also apply to any purchases made by the other Federal Reserve Banks. NOTE.—Maximum maturities. Discounts for and advances to member banks: 90 days for discounts and advances 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 advances secured by obligations of Federal intermediate credit banks maturing within 6 months are limited to maximum maturities of 15 days; 4 months for advances under Section 10(b). Advances to individuals, partnerships, or corporations under the last paragraph of Section 13: 90 days. Industrial loans and commitments under Section 13b: 5 years. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

75 FEDERAL RESERVE SYSTEM NO. 12—MEMBER BANK RESERVE REQUIREMENTS [Per cent of deposits] Net demand deposits x Time deposits Effective date of change ci C r t e y e s n e b r t a r v n a e k l s ci R ty e s b e a rv n e ks C b o a u n n k t s ry r re e s s C e e r r e v v n e e tr a c a l i n t d y C b o a u n nt k r s y banks 1917—June 21. 13 10 1936—Aug. 16. 15 1937—M M a a r y . 1 1 . . 2 26 2M £« 14 1938—Apr. 16. 12 22% 1941—Nov. 1. 26 17H 14 1942—Aug. 20. 24 Sept. 14. 22 20 Oct. 3. 20 1948—Feb. 27. 22 June 11. 24 Sept. 16. 16 Sept. 24. 26 1949—May 1. 15 May 5. 24 21 June 30. 20 July 1. 14 Aug. 1. 13 Aug. 11. Aug. 16. 12 Aug. 18. 23 19 Aug. 25. 22 18 Sept. 1. 22 18 1951—Jan. 11. 23 19 Jan. 16. 13 Jan. 25. 24 20 Feb. 1. 1953—July 13 July 22 19 In effect Jan. 1, 1954 * 22 19 13 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 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 INTEREST RATES PAYABLE ON TIME DEPOSITS * [Per cent per annum] Nov. 1, 1933 Feb. 1, 1935 In effect Type of deposit to to beginning Jan. 31, 1935 Dec. 31, 1935 Jan. 1, 1936 Savings deposits 3 2X 2H Postal Savings deposits 3 2H 2H Other time deposits payable: In 6 months or more 3 2^ In 90 days to 6 months 3 2 In less than 90 days 3 1 1 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

76 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, Jan. 17. Effec- 1945— 1945— 1946— 1947— 1949— 1951— tive July 4, Jan. 20, Jan. 31. Mar. 29, Jan. 16, Feb. 19, Feb. 20, 1945 1946 1947 1949 1951 1953 1953 Regulation T: For extensions of credit by brokers and dealers on listed securities 50 75 100 75 50 75 50 For short sales 50 75 100 75 50 75 50 Regulation U: For loans by banks on stocks 50 75 100 75 50 75 50 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 [In effect December 31, 1953] Fees Payable to Guaranteeing Agency by Financing Institution on Guaranteed Portion of Loan Guarantee fee Percentage of (Percentage of any commitment Percentage of loan guaranteed 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 Institution May Charge Borrower [Per cent per annum] Interest rate Commitment rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 16—ALL BANKS IN THE UNITED STATES, BY CLASSES, DECEMBER 31, 1953 AND 1952 PRINCIPAL ASSETS AND LIABILITIES, AND NUMBER OF BANKS [In millions of dollars] Commercial banks Mutual savings banks Item ba A n l k l s Total Member banks no I n n m su e r m ed ber in N su o r n e - d Total i Insured * in N su o r n e - d Total i National State * December 31, 1953 P Loans and investments, total 171,560 145,740 122,590 81,960 40,360 21,200 1,970 25,820 19,240 6,580 Loans 80,530 67,590 57,750 37,690 20,060 9,330 520 12,940 10,020 2,920 Investments . 91,030 78,150 64,840 44,260 20,580 11,870 1,450 12,880 9,230 3,650 U. S. Govt. obligations 72,790 63,600 52,790 35,690 17,100 9,690 1,130 9,190 6,500 2,690 Other securities . 18,240 14,550 12,050 8,570 3,480 2,180 320 3,690 2,740 950 Cash assets 45,140 44,160 38,630 25,780 12,850 5,090 440 980 790 190 Deposits total 200,390 175,990 149,570 100,200 49,370 24,260 2,180 24,400 18,380 6,020 Interbank 15,500 15,500 14,750 9,890 4,860 410 340 Other demand . 116,760 116,720 99,730 66,120 33,610 15,600 1,390 40 40 Other time 68,130 43,770 35,090 24,180 10,910 8,250 450 24,360 18,340 6,020 Total capital accounts 16,190 13,630 11,340 7,390 3,950 1,950 340 2,560 1,820 740 Number of banks 14,509 13,981 6,743 4,856 1,887 6,672 569 528 219 309 December 31, 1952 Loans and investments total 165 626 141,624 119,547 80,180 39,367 20,242 1,854 24,003 17,621 6,382 75,512 64,163 55,034 36,004 19,030 8,605 531 11,349 8,691 2,658 Investments 90 114 77,461 64,514 44,176 20,337 11,638 1,322 12,654 8,930 3,724 U. S. Govt. obligations 72,740 63,318 52,763 35,835 16,928 9,556 1,010 9,422 6,593 2,829 Other securities . .. . . . .. 17,374 14,143 11,751 8,341 3,409 2,081 312 3,231 2,337 895 45,584 44,666 39,255 26,333 12,922 4,970 444 918 732 187 195,552 172,931 147,527 98,974 48,553 23,464 1,960 22,621 16,785 5,836 Interbank . 15 321 15,319 14,617 9,918 4,699 373 329 2 2 Other demand 116,633 116,600 100,020 66,362 33,658 15,351 1,229 33 30 3 63,598 41,012 32,890 22,694 10,196 7,740 402 22,586 16,753 5,833 Total capital accounts 15,367 12,888 10,761 7,042 3,719 1,804 326 2,479 1,730 749 Number of banks 14,575 14,046 6,798 4,909 1,889 6,627 624 529 206 323 * Figures for Dec. 31, 1953 are preliminary and based largely on data regularly collected or estimated as of the last Wednesday of the month, published regularly in the Federal Reserve Bulletin. Some items, particularly cash assets and demand deposits, are subject to large daily changes, and the estimates for Dec. 31, 1953 may be considerably different from reported figures; the latter will be published in the Bulletin, probably in the May issue. i Member bank figures and insured mutual savings bank figures both include three member mutual savings banks. These banks are not included in the total for "commercial Digitizedba fnokrs F;"R aAndS EarRe included only once in the total for "all banks." http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 17—MEMBER BANK EARNINGS, BY CLASS OF BANK, 1953 AND 1952 [Dollar amounts in millions] Central reserve city banks Reserve Country Total city banks banks Item New York Chicago 1953? 1952 1953P 1952 1953? 1952 1953P 1952 1953* 1952 Earnings $4,586 $4,120 $757 $691 $188 $169 $1,798 $1,594 $1,842 $1,665 On. U. S. Govt. securities 1,007 929 137 134 53 376 344 442 403 On other securities 235 43 87 i 1646 93 On loans 2,630 2,306 '"434 378 "96 1,060 915 930 All other 650 248 240 Expenses 2,780 2,501 404 371 102 1,083 974 1,190 1,063 Salaries and wages.. 1,244 213 478 509 Interest on deposits. 365 18 160 173 Allother 893 140 337 381 Net current earnings before income taxes.. 1,806 1,619 353 321 86 76 715 620 652 602 Recoveries and profits *... 113 25 39 Losses and charge-offs 2. . 226 101 Net addition to valuation reserves 68 8 29 27 Profits before income taxes 1,562 1,437 312 313 616 537 555 513 Taxes on net income... 698 608 151 139 288 241 224 199 Net profits 865 829 161 175 329 295 331 314 Gash dividends declared » 421 390 103 95 166 156 132 122 Ratios (per cent): Net current earnings before income taxes to- Average total capital accounts 16.4 15.4 13.9 13.1 15.7 14.5 18.5 17.1 15.9 15.6 Average total assets.... 1.15 1.06 1.21 1.08 1.07 0.97 1.18 1.06 1.11 1.07 Net profits to— Average total capital accounts 7.8 7.9 6.3 7.1 7.8 8.6 8.5 8.1 8.1 8.1 Average total assets.... 0.55 0.55 0.55 0.59 0.54 0.58 0.54 0.51 0.56 0.56 Average return on U. S. Govt. securities 1.97 1.79 1.92 1.92 1.78 1.98 1.78 1.99 1.84 Average return on loans. . 4.68 4.51 3.54 3.32 3.65 3.39 4.76 4.53 5.46 5.42 P Data for 1953 are preliminary, and some items are not available; final figures will appear in the Federal Reserve Bulletin, probably in the May issue. 1 Includes recoveries credited to valuation reserves. 2 Includes losses charged to valuation reserves. 3 Includes interest on capital notes and debentures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 79 NO. 18—ANALYSIS OF CHANGES IN NUMBER OF BANKING OFFICES DURING 1953 Commercial and stock savings banks and nondeposit trust companies Mutual savings All Member Nonmember banks banks banks banks Total ti N on a al m S b t e e a r m t e i - su In red s N u i o n re n - d su I r n e - d * s N u i o n re n - d - Number of banks, Dec. 31,1952. 14,575 14,046 4,909 1,889 6,627 624 206 323 Changes during 1953 New banks 2 +64 +64 + 12 +10 +36 +6 4 4 2 Reopenings +3 +3 +1 +2 Consolidations and absorptions: Banks converted into branches -93 -92 -54 -14 -20 -4 -1 Other —23 —23 —9 3 —9 —2 10 10 7 Other changes 4 -3 -3 -3 Interclass bank changes: Conversions— National into State —4 +4 State into National . ... +2 -1 Federal Reserve membership: « Admissions of State banks + 10 -7 -3 Withdrawals of State banks -4 +4 Federal deposit insurance: 6 Admissions of State banks... +41 -41 + 13 -13 Net increase or decrease -66 -65 -53 -2 +45 -55 +13 -14 Number of banks, Dec. 31,1953. 14,509 13,981 4,856 1,887 6,672 569 219 309 Number of branches and additional offices, Dec. 31, 1952 7. 5,520 5,274 2,403 1,530 1,300 41 177 69 Changes during 1953 De novo branches +304 +280 +145 +69 +63 +3 + 13 +11 Banks converted into branches.. . +93 +92 +57 +24 + 10 +1 + 1 Discontinued . ... —20 — 19 —4 —8 -1 Interclass branch changes: National to State member. -11 + 11 National to nonmember .... —2 +2 State member to national +3 ^ State member to nonmember. +1 +2 -i I Nonmember to State member. +5 —5 Noninsured to insured +3 -3 +1 -1 Net increase or decrease +377 +353 +187 +101 +65 + 15 +9 Number of branches and additional offices, Dec. 31, 1953 7. 5,897 5,627 2,590 1,631 41 192 78 1,365 Number of banking facilities, Dec. 31 1952 » .... 191 191 153 20 IS Changes during 1953 Established +18 + 18 +13 +1 +4 Discontinued — 10 — 10 — 10 Net increase or decrease +8 +8 +3 +1 +4 Number of banking facilities, Dec. 31 1953 8 199 199 156 21 22 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 Three institutions, not engaged in deposit business, eliminated from series. 8 Exclusive of conversions, if any, of national banks into State member banks, or vice versa. Such changes do not affect Federal Reserve membership; they are included under "conversions." 6 Exclusive of insured nonmember banks converted into national banks or admitted to Federal Reserve membership, or vice versa. Such changes do not affect Federal Deposit Insurance Corporation membership; they are included in the appropriate 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. ' 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 Digitized foro Ff RthAeS GEoRv ernment. These figures do not include branches that have also been designated by the http://fraser.Tsrtleoausuisryfe Dd.eopragr/t ment as banking facilities. Federal Reserve Bank of St. Louis

80 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 19—NUMBER OF BANKING OFFICES ON FEDERAL RESERVE PAR LIST AND NOT ON PAR LIST, BY FEDERAL RESERVE DISTRICTS AND STATES, DECEMBER 31, 1953 i Total 13anks on which checks are On par list Not on par list drawn, and their (Nonmember) Re F se e r d v e e r a d l is- bran o c fS le e s e s and Total Member Nonmember trict or State 3ranches branches Branches Branches Branches Banks and Banks and Banks and Banks and Banks and offices offices offices offices offices DISTRICT Boston 464 416 464 416 316 326 148 90 New York.... 814 1,106 814 1,106 700 1,013 114 93 Philadelphia. . 799 265 799 265 607 205 192 60 Cleveland.... 1,065 435 1,065 435 652 378 413 57 Richmond.. .. 1,007 685 814 534 477 337 337 197 193 151 Atlanta 1,231 274 642 232 363 200 279 32 589 42 Chicago 2 480 707 2,480 707 1,011 347 1,469 360 St. Louis 1,460 186 1,144 119 493 74 651 45 316 67 Minneapolis. . 1,275 115 677 74 472 29 205 45 598 41 Kansas City. . 1,759 29 1,752 29 753 19 999 10 7 Dallas 1,045 79 947 67 635 47 312 20 98 12 San Francisco. 487 1,519 487 1,519 258 1,423 229 96 Total 13,886 5,816 12,085 5,503 6,737 4,398 5,348 1,105 1,801 313 STATE Alabama 231 31 134 31 96 31 38 97 Arizona 13 73 13 73 5 57 8 16 Arkansas 230 22 114 5 70 2 44 3 116 17 California.... 198 1,057 198 1,057 124 1,001 74 56 Colorado 154 5 154 5 94 4 60 1 Connecticut. . 101 76 101 76 59 62 42 14 Delaware 35 33 35 33 14 14 21 19 Dist. of Col.. . 19 51 19 51 15 41 4 10 Florida 209 10 159 9 77 8 82 1 50 1 Georgia 400 58 120 55 65 50 55 5 280 3 Idaho 38 65 38 65 20 60 18 5 Illinois 897 3 895 3 512 3 383 2 Indiana 477 141 477 141 236 84 241 57 Iowa 663 163 663 163 164 1 499 162 Kansas 606 3 604 3 213 3 391 2 Kentucky 376 59 376 59 110 39 266 20 Louisiana. . . . 171 95 65 69 51 60 14 9 106 26 Maine .... 62 83 62 S3 38 42 24 41 Maryland.... 154 147 154 147 72 84 82 63 Massachusetts 175 213 175 213 138 189 37 24 Michigan 427 307 427 307 227 244 200 63 ]VIinnpsota 676 6 268 6 205 6 63 408 Mississippi. . . 200 78 43 18 32 10 11 8 157 60 Missouri 594 1 533 1 177 1 356 61 IVtortana 109 109 82 27 Nebraska 413 2 413 2 140 2 273 Nevada 8 22 8 22 6 20 2 2 New Hamo.. . 74 2 74 2 52 1 22 1 New Jersey... 307 207 307 207 264 184 43 23 New Mexico.. 52 25 52 25 34 8 18 17 New York.... 581 910 581 910 507 843 74 67 North Carolina 211 272 105 127 55 74 50 53 106 145 North Dakota. 153 22 60 6 41 19 6 93 16 Ohio 644 305 644 305 412 266 232 39 Oklahoma 383 2 376 2 224 2 152 7 Oregon .... 66 116 66 116 27 106 39 10 Pennsylvania. 898 314 898 314 678 269 220 45 Rhode Island 12 57 12 57 7 44 5 13 South Carolina 150 71 68 65 33 53 35 12 82 6 South Dakota 169 52 72 27 62 23 10 4 97 25 Tennessee.... 296 124 211 110 84 83 127 27 85 14 Texfs 918 17 871 17 580 17 291 47 Utah 54 37 54 37 29 34 25 3 Vermont 66 11 66 11 38 4 28 7 Virginia 316 144 312 144 204 85 108 59 4 Washington.. . 112 173 112 173 48 161 64 12 West Virginia. 182 181 110 71 1 Wisconsin.... 553 150' 553 ""i50' 166 22 387 128' Wyoming. . . . 53 1 53 1 40 1 13 1 Does not include mutual savings banks, on a few of which some checks are drawn, but does include 199 banking facilities (see footnote 8, Table 18). The difference between the number of member Digitized for bFaRnkAsS oEn RD ec. 31, 1953 shown in this table and in Table 18 is due to the fact that this table excludes 3 member nondeposit trust companies and 3 member mutual savings banks on which no checks are http://fraser.sdtrlaowunis. feTdh.oe rgco/ rresponding difference for the number of nonmember commercial banks is due to Federal Res*eVrifv»e f WBta nfhka fo ft hSist .t nLh1ofu> isfvriiiHps 92 hanks and trust comnanies on which no checks are drawn.

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

RECORD OF POLICY ACTIONS BOARD OF GOVERNORS JANUARY 15, 1953 Changes in Rates on Discounts and Advances to Member Banks under Sections 13, 13(a), and 10(b) of the Federal Reserve Act. The Board approved for the Federal Reserve Banks of New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City, effective January 16, 1953, a rate of 2 per cent on discounts and advances to member banks under Sections 13 and 13(a), and a rate of 2x/z per cent on advances under Section 10(b). Votes for this action: Messrs. Martin, Szymczak, Evans, Vardaman, and Mills. Votes against this action: none. Mr. Robertson, who was not present when this action was taken, stated that he concurred in the action. Pursuant to the policy established by the foregoing action, the Board subsequently approved the same rates for the other Federal Reserve Banks effective on the dates indicated below: Boston January 20, 1953 San Francisco January 20, 1953 Richmond January 23, 1953 Dallas January 23, 1953 The Board also approved certain changes at some of the Federal Reserve Banks in rates on advances to individuals, partnerships, and corporations under the last paragraph of Section 13 and in rates on industrial loans and commitments under Section 13(b), these changes being deemed desirable in order to bring about an appropriate alignment of the rate structure. Throughout 1952 Federal Reserve policy was designed to limit bank credit expansion to amounts consistent with the requirements of a growing economy operating at a high level without inflation. Under this policy member banks greatly increased their discounting at the Federal Reserve Banks. The general level of borrowing rose from less than hair a billion dollars in the first half of 1952 to more than a billion dollars during the last half of the year. Average borrowing in December (1.6 billion dollars) was the largest since 1921. It also Digitized for FRASER http://fraser.stlouisfed.org/ 82 Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 83 appeared that member bank borrowing would continue at a relatively high level during the early part of the new year. In these circumstances, the Board of Governors felt that an increase in the discount rate, in recognition of conditions in the money market resulting from the active demand for bank credit, would promote greater reluctance on the part of member banks to resort to the discount privilege and would constitute an appropriate further step in the System's policy of credit restraint. FEBRUARY 20, 1953 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. The supplements to Regulations T and U were amended, effective immediately, to reduce the margin requirements from 75 per cent to 50 per cent, these requirements to be applicable both to purchases of securities and to short sales. Votes for this action: Messrs. Martin, Szymczak, Evans, Mills, and Robertson. Votes against this action: none. Mr. Vardaman, who was not present when this action was taken, stated that he concurred in the action. The margin requirements had been increased from 50 per cent to 75 per cent in January 1951 as a preventive measure and as a supplement to the steps previously taken in the credit and monetary area to lessen inflationary pressures. By February 1953 inflationary pressures had moderated and, with the margin requirements fixed at 75 per cent, there had been no substantial increase in the total amount of credit in use in the stock market. Accordingly, the Board concluded that margin requirements of 50 per cent would be adequate to prevent the excessive use of credit for the purchasing and carrying of securities and that a reduction to that level would be in harmony with the System's over-all credit and monetary policy under current conditions. MAY 28, 1953 Amendment to Regulation U, Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange. The Board amended Regulation U, effective August 1, 1953, to make it clear that the regulation applied to loans for the purpose of purchasing or carrying shares issued by open-end investment companies whose assets customarily include registered stocks. Votes for this action: Messrs. Martin, Szymczak, Evans, Vardaman, Mills, and Robertson. Votes against this action: none. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 ANNUAL REPORT OF BOARD OF GOVERNORS Shares of open-end investment companies (technically called "redeemable securities") give the purchaser a proportionate interest in the issuing company's assets and carry the right to convert his interest into the company's underlying assets or their cash equivalent. Although such investment company shares are only rarely registered on a national securities exchange, the underlying assets of the open-end investment company often consist largely of registered stocks, so that loans for the purpose of purchasing or carrying shares of the issuing company are in substance loans for the purpose of purchasing or carrying the registered stocks which are in its portfolio. The Board, after carefully considering all aspects of the problem, deemed it desirable to adopt this amendment in order that there would be no question as to the applicability of Regulation U to loans by banks for the purpose of purchasing or carrying shares of open-end investment companies whose assets customarily include registered stocks. JUNE 23, 1953 Decrease in Reserve Requirements of Member Banks The supplement to Regulation D, Reserves of Member Banks, was amended to decrease reserve requirements with respect to net demand deposits of member banks as follows: Effective July 1, 1953: from 14 per cent to 13 per cent for banks not in reserve cities or central reserve cities; Effective July 9, 1953: from 24 per cent to 22 per cent for banks in central reserve cities, and from 20 per cent to 19 per cent for banks in reserve cities. Votes for this action: Messrs. Martin, Szymczak, Vardaman, Mills, and Robertson. Votes against this action: none. Mr. Evans, who was not present when this action was taken, stated that he concurred in the action. The Board stated the reasons for this action as follows in its press release dated June 24, 1953: "This step was taken in pursuance of Federal Reserve policy, designed to make available the reserve funds necessary to meet the essential needs of the economy and to help maintain stability of the dollar. The reduction, releasing an estimated $1,156,000,000 of reserves, was made in anticipation of the exceptionally heavy demands on bank reserves which will develop in the near future when seasonal requirements of the economy will expand and Treasury financing in large volume is inescapable. The action is intended to provide assurance that these needs will be met without undue strain on the economy and is in conformity with System policy of contributing to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 85 objective of sustaining economic equilibrium at high levels of production and employment." JULY 17, 1953 Increase in Rate at the Federal Reserve Bank of Atlanta on Advances under the Last Paragraph of Section 13 of the Federal Reserve Act. The Board approved, effective July 20, 1953, a rate of 3Y per cent, 2 rather than 3 per cent, on advances by the Federal Reserve Bank of Atlanta to individuals, partnerships, or corporations other than member banks under the last paragraph of Section 13 of the Federal Reserve Act. Votes for this action: Messrs. Martin, Szymczak, Vardaman, Mills, and Robertson. Votes against this action: none. Under the last paragraph of Section 13 of the Federal Reserve Act, a Federal Reserve Bank may make advances to any individual, partnership, or corporation on the promissory notes of such individual, partnership, or corporation secured by direct obligations of the United States. Provision for such advances was inserted in the Federal Reserve Act by the Act of March 9, 1933, the emergency banking legislation which was enacted during the banking holiday then in effect. This is an inactive rate, there having been very little lending under this authority in recent years. The interest rate structure having moved upward over the course of several months to the point that the Federal Reserve Bank of Atlanta's rate for advances under the last paragraph of Section 13 was competitive with the rate for similar extensions of credit through normal and customary channels, the Reserve Bank deemed it advisable to recognize the situation by an adjustment to a higher, noncompetitive rate of interest. The Board concurred in this view. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

RECORD OF POLICY ACTIONS FEDERAL OPEN MARKET COMMITTEE MARCH 4-5, 1953 1. Authority to Effect Transactions in System Account. The following directive to the executive committee was approved: The executive committee is directed, until otherwise directed by the Federal Open Market Committee, to arrange for such transactions for the System open market account, either in the open market or directly with the Treasury (including purchases, sales, exchanges, replacement of maturing securities, and letting maturities run off without replacement), as may be necessary, in the light of current and prospective economic conditions and the general credit situation of the country, with a view to exercising restraint upon inflationary developments, to correcting a disorderly situation in the Government securities 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 System account (including commitments for the purchase or sale of securities for the account) at the close of this date, other than special short-term certificates of indebtedness purchased from time to time for the temporary accommodation of the Treasury, shall not be increased or decreased by more than 2 billion dollars. The executive committee is further directed, until otherwise directed by the Federal Open Market Committee, to arrange for the purchase direct from the Treasury for the account of the Federal Reserve Bank of New York (which Bank shall have discretion, in cases where it seems desirable, to issue participations to one or more Federal Reserve Banks) 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 at any one time by the Federal Reserve Banks shall not exceed in the aggregate 2 billion dollars. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Erickson, Evans, Johns, Mills, Powell, Robertson, Szymczak, and Young. Votes against this action: none. This directive was in the same form as the directive adopted at the preceding meeting of the Federal Open Market Committee on December 8, 1952 except Digitized for FRASER http://fraser.stlouisfed.org/ 86 Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 87 for a change to provide that the Committee should arrange for transactions in the System open market account with a view, among other things, "to correcting a disorderly situation in the Government securities market," rather than as previously, "to maintaining orderly conditions in the Government security market." The reasons for this change in wording will be given later in this record. At the time of this meeting, economic activity was continuing at a very high level. Industrial production had increased further since the meeting in December, and gross national product had continued to expand, partly on the basis of further substantial inventory accumulation. Commodity prices, generally, both on consumer goods and at wholesale, had been stable. Total employment had reached a new high and unemployment had decreased to new postwar lows, and some industries were operating on an overtime basis. Marked gains in personal incomes beginning in the late summer of 1952 had contributed to expansion in consumer buying, as had more liberal credit terms and a greater consumer willingness to incur debt. For some months, credit policy had been directed toward the general objective of keeping the supply of credit and money adjusted to the needs of a growing and high-level economy in which there was no immediate evidence of price inflation. This policy called for some expansion in the supply of reserves although, in view of the large demand for credit in excess of savings, it resulted in modest restraint on credit growth. During the preceding two years, the Federal Reserve had moved toward greater reliance on influencing the cost, availability, and supply of credit through the discount mechanism, that is, by making it necessary for member banks to borrow from the Federal Reserve Banks a portion of the additional reserves required to meet credit growth. This mechanism limits credit expansion, puts pressure on banks, and makes them more responsive to changes in the discount rate. Under the conditions that existed during 1952 when there were strong demands for credit from both private and Government sectors of the economy, this policy resulted in bank reserve positions being under pressure throughout most of the year. Bank credit expansion with its resulting monetary growth, though adequate to meet the needs of the economy, was thus kept within bounds in order to discourage inflationary developments. In these circumstances and in accordance with the policy approved by the Federal Open Market Committee on December 8, 1952, the Federal Reserve purchased substantial amounts of Government securities during December 1952 to assist the banks in meeting the sharp pre-Christmas currency outflow and an increase in required reserves. A large part of these purchases was made subject to agreements by Government securities dealers to repurchase the securities after a specified period and thus, when money market conditions permitted, to extinguish automatically the reserves that were created through the original purchases by the Federal Reserve. During the last week of December 1952, Federal Reserve purchases of Government securities under Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 ANNUAL REPORT OF BOARD OF GOVERNORS repurchase agreements rose to almost 900 million dollars, compared with just over 300 million a year earlier. After the close of the year there was the customary large return flow of currency to the banks which, along with other seasonal factors, eased their reserve position, with the result that by the third week in January of 1953, all of the securities sold to the System under these agreements had been repurchased. Member bank borrowings at the Reserve Banks, which were generally over 1.5 billion dollars during December, were also reduced somewhat in January. The discount rates of the Federal Reserve Banks were increased from 1% per cent to 2 per cent around the middle of January 1953. Nevertheless, demand for credit continued strong during February, and it was the consensus of the Committee when it met in March that there was still reason to feel concern about the possibility of inflationary developments. The Committee agreed, therefore, that it would pursue a policy which would maintain about the same degree of restraint on credit expansion that had been followed in recent preceding months, a policy consistent with a stable price level and a high level of economic activity. In adopting the above directive, the Committee did not have in mind a change in its credit policy. Thus, the change in wording of the clause to provide that the executive committee should arrange for transactions with a view, among other things, to "correcting a disorderly situation in the Government securities market" rather than for the purpose of "maintaining orderly conditions in the Government security market" represented a change, not in credit policy, but in policy as to operating techniques for the System open market account. In addition to the change in the directive, the Federal Open Market Committee also unanimously approved (Mr. Vardaman, who was not present when the foregoing directive was approved, was present when the following actions were taken) the following policies with respect to operations for the System account: (1) Under present conditions, operations for the System account should be confined to the short end of the market (not including correction of disorderly markets); (2) It is not now the policy of the Committee to support any pattern of prices and yields in the Government securities market, and intervention in the Government securities market is solely to effectuate the objectives of monetary and credit policy (including correction of disorderly markets); (3) Pending further study and further action by the Committee, it should refrain during a period of Treasury financing from purchasing (1) any maturing issues for which an exchange is being offered, (2) when-issued securities, and (3) outstanding issues of comparable maturity to those being offered for exchange. Adoption of the changed wording of the directive and of the three accom- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 89 panying statements of operating procedures, which were to be effective under the conditions then present or pending further study by the Committee, grew out of a report to the Federal Open Market Committee by a special subcommittee which had made a comprehensive inquiry into the techniques of Federal Reserve operations in the Government securities market. The subcommittee found that a disconcerting degree of uncertainty existed in the Government securities market with respect both to the occasions which the Federal Open Market Committee might consider appropriate for intervention and to the sector of the market in which such intervention might occur—an uncertainty that was detrimental to the development of depth, breadth, and resiliency of the market. The subcommittee recommended that, as a means of eliminating this uncertainty, the Committee henceforth intervene in the market, not to impose on the market any particular pattern of prices or yields, but solely to effectuate the objectives of monetary and credit policy, and that it confine such intervention to transactions in very short-term securities, preferably bills. The Federal Open Market Committee recognized that general credit policies adopted from time to time by the Committee, which would involve either putting reserves into the market or withdrawing them from the market, would affect prices and yields on Government securities. It was believed that a more self-reliant market in United States Government securities would develop if its intervention were solely to effectuate the objectives of monetary and credit policy and were carried out by making purchases and sales in the short end of the market, unless a situation developed which made it necessary for the Committee to operate in other sectors in order to correct a disorderly market. The Committee felt that, under existing conditions, a procedure of confining operations to short-term securities would allow adequate flexibility in open market operations with a minimum of disturbance to prices and yields on longer term securities. The impact of System transactions in the short end of the market, where dollar prices of securities react least in response to a change in yield and where the asset value of securities is least affected, could be considered a normal market risk. The market would still reflect natural forces of supply and demand and thus furnish a signal of the effectiveness of credit policy aimed primarily at the volume and availability of bank reserves. (Mr. Sproul voted for the actions but does not agree with the statement of reasons given in this paragraph.) In adopting the procedure of confining operations to the short end of the market, the Committee did so under existing conditions, recognizing that it could not give a contractual assurance to the Government securities market as to the framework within which it would continue to operate. For similar reasons, and with the understanding that the procedure would be effective pending further study and further action by the Committee, the Committee decided to refrain during a period of Treasury financing from the practice that had been followed on previous occasions of purchasing "rights" evidenced by maturing issues, when-issued securities, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

90 ANNUAL REPORT OF BOARD OF GOVERNORS outstanding securities of comparable maturity to those being offered for exchange. To put these operating procedures into effect under conditions then present or pending further study, the wording of the directive to the executive committee was changed, as stated above, to eliminate the provision that operations should be with a view "to maintaining orderly conditions in the Government securities market." In the past, this clause had provided the authority for intervention in other than the short-term sector of the market. It was felt that it should be changed since intervention "to maintain orderly conditions" might add to or subtract from reserve funds available to the market for purposes other than the pursuit of monetary and credit policies directed toward economic stability. Accordingly, in conjunction with the approval of the procedures with respect to operations for the System account set forth under (1), (2), and (3) above, the foregoing clause was eliminated from the Committee's directive and replaced by the authorization to intervene in the market for the purpose, among other things, of "correcting a disorderly situation in the Government securities market." 2. Minimum Buying Rate on Bankers' Acceptances. At this meeting the Committee increased the minimum buying rate on prime eligible bankers' acceptances from 1% per cent to 2 per cent, subject to change from time to time by the Committee in order to carry out its policies. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Erickson, Johns, Mills, Powell, Robertson, Szymczak, Vardaman, and Young. Votes against this action: none. This action was taken pursuant to a procedure adopted by the Committee at its meeting on June 19, 1952, under which the minimum buying rate on prime eligible bankers' acceptances is fixed by the Committee with the understanding that the effective rates shall be specified from time to time by the Manager of the System Open Market Account in the light of market conditions and developments and in accordance with directives or limitations by the full Committee or the executive committee for the purpose of carrying out current open market policy. At this meeting (March 4, 1953), the Manager of the System Open Market Account reported that the currently effective rate on the shortest term acceptances was 2 l/s per cent, and the Committee therefore increased the minimum rate from 1% per cent to 2 per cent as a means of reflecting more accurately existing market conditions and also of bringing the rate into line with the changed interest rate structure, including the increase to 2 per cent in Federal Reserve Bank discount rates in January 1953. 3. Abandonment of Statement of Terms upon which Federal Reserve Bank of New York Would Transact Business with Brokers and Dealers in United States Government Securities for the System Open Market Account. Effective as of a date to be fixed by the executive committee of the Federal Open Market Committee, the system of qualification for dealers with whom Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 91 the System open market account would transact business was abandoned, with the understanding that transactions would be carried on with any persons or firms actually engaged in the business of dealing in Government securities, and that price would be the main criterion for such transactions. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Erickson, Evans, Johns, Mills, Powell, Robertson, Szymczak, Vardaman, and Young. Votes against this action: none. In February 1944, the Federal Open Market Committee adopted a statement prescribing the terms on which the Federal Reserve Bank of New York would transact business with brokers and dealers in United States Government securities for the System open market account. To qualify for this purpose it was required that a broker or dealer meet certain standards and agree to certain conditions. This statement of terms was published in the record of policy actions of the Federal Open Market Committee contained in the Annual Report of the Board of Governors of the Federal Reserve System covering the year 1944. Pursuant to the decision reached at this meeting that the dealer qualification system was no longer needed, the following statement with respect to the action was released on April 15, 1953: The Federal Open Market Committee has discontinued, effective today, its requirement that transactions with the open market account be confined to dealers in Government securities who meet certain specified qualifications. The requirement, adopted by the Committee in 1944 to meet wartime conditions, is no longer deemed necessary or desirable now that open market operations of the Federal Reserve Banks are divorced from support of any pattern of prices or yields in the Government securities market. Discontinuance of the requirement was recommended by the Open Market Subcommittee appointed in 1952 to make a technical study of the operations of the System account. 4. Repurchase Agreements. At this meeting the Committee amended, in the respects indicated below, the authority which had been given to the Federal Reserve Banks by the Committee's action on October 4, 1951, and amended on September 25, 1952, whereby the Federal Reserve Banks were authorized under certain conditions to enter into repurchase agreements with nonbank dealers in United States Government securities for the purpose of aiding temporary money market adjustments. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Erickson, Johns, Mills, Powell, Robertson, Szymczak, Vardaman, and Young. Votes against this action: none. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

92 ANNUAL REPORT OF BOARD OF GOVERNORS Prior to this meeting, such repurchase agreements were authorized only with nonbank dealers qualified to transact business with the System open market account. In view of the decision to discontinue the system of qualifications for dealers, referred to in the preceding entry, the Committee eliminated the requirement that repurchase agreements be only with nonbank dealers so qualified. In addition, the Committee modified the condition which previously limited such repurchase agreements to "short-term Government securities selling at a yield of not more than the issuing rate for one-year Treasury obligations," and provided that such agreements "cover only shortterm Government securities maturing within 15 months." This change was made because it was felt that it would be preferable to relate the repurchase agreements to short-term Government securities of a specified maximum maturity, rather than to those bearing a certain yield. JUNE 11, 1953 1. Authority to Effect Transactions in System Account. The Committee adopted the following directive to the executive committee: 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 (a) to relating the supply of funds in the market to the needs of commerce and business, (b) to avoiding deflationary tendencies without encouraging a renewal of inflationary developments (which in the near future will require aggressive supplying of reserves to the market), (c) to correcting a disorderly situation in the Government securities market, and (d) to the practical administration of the account; provided that the aggregate amount of securities held in the System account (including commitments for the purchase or sale of securities for the account) at the close of this date, other than special short-term certificates of indebtedness purchased from time to time for the temporary accommodation of the Treasury, shall not be increased or decreased by more than 2 billion dollars. The executive committee is further directed, until otherwise directed by the Federal Open Market Committee, to arrange for the purchase direct from the Treasury for the account of the Federal Reserve Bank of New York (which Bank shall have discretion, in cases where it seems desirable, to issue participations to one or more Federal Reserve Banks) of such amounts of special short-term certifi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 93 cates 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 at any one time by the Federal Reserve Banks shall not exceed in the aggregate 2 billion dollars. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Erickson, Evans, Fulton, Johns, Mills, Powell, and Robertson. Votes against this action: none. In terms of credit policy, the foregoing directive placed emphasis on "avoiding deflationary tendencies without encouraging a renewal of inflationary developments (which in the near future will require aggressive supplying of reserves to the market)," rather than "exercising restraint upon inflationary developments," as provided in the directive issued by the Committee at the preceding meeting in March. The general objective of credit policy under both the March and June directives was one of keeping the supply of credit and money adjusted to the needs of a growing and high-level economy; the change in policy at this meeting reflected recent developments in the economic and credit situation. Commodity prices had remained fairly stable for some months, while output had continued at a very high level and had actually increased slightly further since March. Financial markets, on the other hand, had been unsettled at times during the spring months, particularly during late May, and throughout the period since March there had been an undertone of concern about potential declines in economic activity. Doubts had related to the strength of underlying conditions, concern having been expressed lest measures designed to limit credit expansion had become more restrictive than was desirable, setting in motion forces of decline which would be difficult to check. In recent weeks uncertainties had been increased by new developments in Korea. While attention was focused on the sharp advances in interest rates since mid-April, the cumulative effectiveness of monetary restraints had become evident in the financial and business community to such a degree that credit was more difficult to obtain than was considered to be desirable in terms of the Committee's policy approved at the March meeting—a policy of exercising restraint upon inflationary developments but at the same time keeping the supply of credit adjusted to the needs of a growing and high-level economy. Whereas the money supply, after adjustment for seasonal variation, had shown a rising tendency through April, there appeared to have been a greater than seasonal decline in May. In considering the credit policy to be pursued henceforth, the Committee also gave attention to recent developments in the market for United States Government securities which had been subjected to a series of pressures that had resulted in generally lower prices and higher rates. Important among these influences was the failure of Treasury cash receipts to meet earlier cxpec- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 ANNUAL REPORT OF BOARD OF GOVERNORS tations, requiring the Treasury to step up its new-money financing in the market. At the same time, the Treasury was competing for available funds with heavy private and municipal demands for new capital, which continued to exceed the supply of new long-term funds in the market, and with persistently heavy demands upon commercial bank credit facilities in the face of restrictive Federal Reserve credit policy. Treasury financing operations during the period since March had included an offering for cash of about a billion dollars of 3J4 per cent fully marketable bonds due in 1978-83, and the Treasury also had borrowed new money by increasing certain weekly bill issues and by the sale of September tax anticipation bills. Treasury refunding operations involved 4,963 million dollars of \% per cent certificates of indebtedness maturing June 1, 1953 and 725 million of partly tax-exempt 2 per cent bonds of 1953-55 called for redemption on June 15, 1953, and an exchange offer of 3!4 per cent bonds to holders of Series F and G savings bonds maturing from May through December 1953. Market operations for the System account since the March meeting included the purchase of over 450 million dollars of Treasury bills, offset in part by redemptions of about 122 million. During May and early June alone, net purchases for the System account totaled 375 million dollars for the purpose of providing sufficient funds to the market to prevent further accentuation of the credit tightness that had developed early in May and to forestall the possibility that Treasury borrowing operations would result in unwarranted pressures upon the money market. While it did not appear in June that the restraints on credit expansion had yet reduced the flow of funds to a point where resources of the economy were not being fully utilized, there had been a dampening of strength of the capital goods boom and a postponement of some capital projects, even though there had been a large increase in capital flotations during May and June, partly reflecting the fear that funds would be harder to obtain later on. There was also growing difficulty in finding takers for Government guaranteed and insured mortgages even at the higher interest rates that had been permitted. Indications were that, in order to supply normal seasonal and moderate growth demands for credit and keep the situation from getting tighter than was believed to be desirable in view of prospective needs for funds from private and Treasury sources, there would have to be put into the market something like 2.5 to 3.5 billion dollars of reserves between May and the end of 1953. It was the view of the Committee, therefore, that policy should be one of aggressively supplying reserves to the market during the near future on a sharply rising scale and, accordingly, the instruction to the executive committee was changed in the manner indicated. In connection with the discussion of current credit policy, there was a further discussion of the operating techniques adopted at the March meeting and the suggestion was made that the Committee rescind the decisions approved at that meeting instructing the executive committee that (a) under present Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 95 conditions, operations for the System account should be confined to the short end of the market (not including correction of disorderly markets) and (b) pending further study and further action by the Committee, it should refrain during a period of Treasury financing from purchasing (1) any maturing issues for which an exchange is being offered, (2) when-issued securities, and (3) any outstanding issues of comparable maturity to those being offered for exchange. This suggestion would have left these matters to the discretion of the executive committee. In a thorough exploration of the reasons for and against such action, question was raised whether the proposal to rescind the March decisions, which was regarded as a proposal for a possible important change in operating policy, was of sufficient urgency to require action in the absence of two members of the Committee. A vote was requested on the grounds that not to vote would be the equivalent of reaffirming the March action without a vote. Thereupon, Mr. Mills moved that the two understandings referred to be reaffirmed by the full Committee and that the executive committee be instructed to continue to operate accordingly. This motion was put by the Chair and lost. Votes against the motion: Messrs. Sproul, Vice Chairman, Erickson, Fulton, Johns, and Powell. Votes for the motion: Messrs. Martin, Chairman, Evans, Mills, and Robertson. Mr. Sproul then moved that the understandings relating to confining operations for the System account to the short-term sector of the market and to refraining from certain purchases during periods of Treasury financings, as approved at the meeting of the Committee on March 4-5, 1953, be rescinded, with the understanding that the executive committee would be free to determine how operations should be carried on in the respects mentioned, in the light of the current general credit policy of the Federal Open Market Committee. Mr. Sproul's motion was put by the Chair and carried. Votes for the motion: Messrs. Sproul, Vice Chairman, Erickson, Fulton, Johns, and Powell. Votes against the motion: Messrs. Martin, Chairman, Evans, Mills, and Robertson. The votes against the first motion and in favor of the second were on the grounds that conditions had changed since the meeting of the Committee in March 1953 and that the present situation and the likely situation during the next three months urgently required the removal of these prohibitions so as to restore greater freedom of action. By restoring greater freedom of action to the executive committee, those voting for the motion believed that, within the limits of the full Committee's general policy, open market operations could Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 ANNUAL REPORT OF BOARD OF GOVERNORS be directed with greater flexibility and versatility to meet any situation that might develop. While it would not necessarily be the objective to go into the long-term market (transactions for the System account since March had been confined to Treasury bills), it was felt that, in carrying out the Committee's credit policy, the executive committee should have discretion, particularly at times of Treasury financing, to make purchases in whatever areas of the market were under pressure so that there would not be unnecessary erosion of rates, affecting adversely investor and banking psychology and intensifying the restrictive effects of credit policy at the wrong time. Although it was recognized that purchases of Treasury bills would put reserves into the market, it was thought that such purchases might not be as effective as would be desirable in avoiding unwarranted changes in the Government securities market and that, since changes in that market might affect investment conditions generally, they were a factor to be considered in carrying out the aims of monetary policy. It was also believed that, so long as it was the policy of the Committee to put funds into the market, freedom to put them in where the pressures were greatest might minimize the amount the Committee would have to put in and thus help to achieve the purposes of monetary policy most effectively. The members of the Committee who voted for the first motion, by Mr. Mills, and against the second, by Mr. Sproul, felt that it was better, as a general policy, to confine System account operations to the nearest thing to money, that is, short-term Treasury securities—preferably bills—except in the case of correcting a disorderly market. Their concept of the open market operation was that a minimum burden should be put on the open market account or the Open Market Committee for determining what the market should be; and that, therefore, there should be some general rule for the guidance of the Manager of the System Account. While they recognized that conditions had changed in recent months, they did not feel that the procedures approved at the March meeting had had a test. They were opposed to changing the policy which the Committee recently had been following because they felt such a change would not benefit the Government securities market but might actually harm it through deviating from a policy toward which the Committee had been working over a period of two years, and because they believed that purchases of Treasury bills would be equally as satisfactory as purchases of longer-term securities in carrying out the monetary and credit policy approved at this meeting. SEPTEMBER 24, 1953 1. Authority to Effect Transactions in System Account. The following directive to the executive committee was approved: The executive committee is directed, until otherwise directed by the Federal Open Market Committee, to arrange for such transactions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 97 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 (a) to relating the supply of funds in the market to the needs of commerce and business, (b) to avoiding deflationary tendencies, (c) to correcting a disorderly situation in the Government securities market, and (d) to the practical administration of the account; provided that the aggregate amount of securities held in the System account (including commitments for the purchase or sale of securities for the account) at the close of this date, other than special short-term certificates of indebtedness purchased from time to time for the temporary accommodation of the Treasury, shall not be increased or decreased by more than 2 billion dollars. The executive committee is further directed, until otherwise directed by the Federal Open Market Committee, to arrange for the purchase direct from the Treasury for the account of the Federal Reserve Bank of New York (which Bank shall have discretion, in cases where it seems desirable, to issue participations to one or more Federal Reserve Banks) 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 at any one time by the Federal Reserve Banks shall not exceed in the aggregate 2 billion dollars. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Erickson, Evans, Fulton, Johns, Mills, Powell, Robertson, Szymczak, and Vardaman. Votes against this action: none. This directive provided that transactions in the System open market account should be with a view "to avoiding deflationary tendencies" rather than, as had been agreed at the meeting on June 11, 1953, "to avoiding deflationary tendencies without encouraging a renewal of inflationary developments (which in the near future will require aggressive supplying of reserves to the market)." This change in wording reflected a policy that the Committee described as "active ease" under which reserves would be supplied to the market to meet seasonal and growth needs, recognizing that open market operations should be flexible in relation to the volume and timing of supplies of reserves from other sources. At the time of the September meeting, adjustments taking place or in prospect in the economy caused the Committee to believe that the danger of further inflationary tendencies was much less than the possibility of deflationary developments. General economic activity had continued close to peak levels since the last Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 ANNUAL REPORT OF BOARD OF GOVERNORS meeting of the Committee on June 11, and average commodity prices had shown little change. Total output had been maintained at about the advanced levels of the spring, and unemployment had continued exceptionally low. Yet recent adjustments in the economy, although not supported by firm evidence in current statistics pointing to imminent decline in general activity and prices, had caused business and financial opinion to be uneasy about prospective business trends. There had been moderate declines in real estate and construction activity, in personal incomes, and in retail sales, and there was some evidence of increasing inventories. The economy appeared to be entering a new phase in which it would be called upon to absorb resources freed by reductions in defense outlays and inventory accumulation, and there was a question about the ability of other demands to expand sufficiently to maintain current record levels of activity. There was also the possibility that the softening that had developed in an increasing number of markets could be a forerunner of a more general reaction, unless offset by expansion elsewhere. With respect to bank credit, total loans and investments had declined somewhat in the period immediately preceding this meeting, reflecting partly sales of Government securities as well as less than the usual seasonal expansion in business loans. Increases in private holdings of demand deposits and currency since midyear had been below usual seasonal expectations. This reduction in bank credit had not resulted from tighter money conditions; recently there had been a much easier credit situation than had existed during the spring months, owing to both an increased availability of and a less urgent demand for credit. These easier credit conditions resulted primarily from the reduction in member bank reserve requirements which was announced by the Board of Governors of the Federal Reserve System on June 24, 1953 and which released around 1.2 billion dollars of reserves, and from the addition by the System open market account of a little over 1 billion dollars of reserves to the market through security purchases during the period June 10-September 23. The addition of these reserves was more than enough to offset drains of funds that had resulted from various factors during the period. Reflecting these conditions, yields on long-term securities of various types receded during the summer after reaching peaks in June and they continued stable at the lower yield levels during August and early September. Prices of United States Government securities advanced sharply during the three-month period. Despite the much easier credit conditions that had developed in the open market since the June meeting, it appeared in September that, in general, credit was not as readily obtainable as would be desirable and that further easing would be needed to assure ready availability of credit during the fall months when customary seasonal factors would be accentuated by additional Treasury financing. Under these circumstances, the Committee authorized the pursuit of the policy of "active ease" referred to above, and changed the wording of the directive as indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 99 Further consideration was also given to the action taken at the meeting of the Committee on June 11 rescinding the understandings approved at the March meeting that operations for the System account be confined to the short end of the market (not including correction of disorderly markets) and that during a period of Treasury financing the Committee should refrain from purchasing (1) maturing issues for which an exchange is being offered, (2) when-issued securities, and (3) outstanding issues of comparable maturities to those being offered for exchange. (Following the meeting of the full Committee on June 11, the executive committee decided by majority vote to confine operations, under the first paragraph of the directive set forth above* exclusively to Treasury bills.) At the September 24 meeting, the following action was taken by the Committee: Mr. Mills moved that the Federal Open Market Committee take the position that operations for the System account in the open market be confined to short-term securities (except in the correction of disorderly markets) and that during a period of Treasury financing there be no purchases of (1) maturing issues for which an exchange is being offered, (2) when-issued securities, or (3) outstanding issues of comparable maturity to those being offered for exchange; and that these policies be followed until such time as they may be superseded or modified by further action of the Federal Open Market Committee. After discussion, Mr. Mills' motion was put by the Chair and carried. Votes for the motion: Messrs. Martin, Chairman, Erickson, Evans, Fulton, Johns, Mills, Robertson, Szymczak, and Vardaman. Votes against the motion: Messrs. Sproul, Vice Chairman, and Powell. The reasons for the approval of this action were substantially those stated in opposition to the action taken by the Committee at the meeting on June 11 in rescinding the policies adopted in March regarding these two points—the confining of operations to short-term securities and refraining from purchases of certain securities during a period of Treasury financing. It was felt that the Committee should have some general rules for the guidance of the management of the System open market account in conducting operations to carry out the general credit policy of the Committee; these general rules should not leave too much discretion to the executive committee; and if such rules relating to broad operating procedures were to be changed, any change should be authorized by the full Committee. Specifically, it was the view of those voting for Mr. Mills' motion that, to assist in the development of a self-reliant market, it was desirable to confine operations for the System account in the open market to the nearest thing to money, such as Treasury Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

100 ANNUAL REPORT OF BOARD OF GOVERNORS bills, and that if there were to be any change from this position, such a change should be determined upon by a meeting of the entire Federal Open Market Committee, not by the executive committee. It was also the view of those voting for this motion that to assist in the development of depth, breadth, and resiliency in the Government securities market, the practice which had been followed for some months of refraining from purchases of certain Treasury securities during periods of Treasury financing was desirable. It was noted that the adoption of this practice had not been reflected in an unfavorable experience on the part of the Treasury in its refunding operations. In adopting the policies stated, which were to be followed until such time as they might be superseded or modified by further action of the Federal Open Market Committee, it was made clear that the Committee could change these policies at any time it might wish to do so in the future in the same way that it could change any other policy which it had adopted; and it was noted that a meeting of the Federal Open Market Committee could be convened on 24 hours' notice if necessary for the purpose of considering a change in these or other policies. The members of the Committee who opposed adoption of the policies embodied in this action expressed substantially the views that had been stated in favor of the action taken at the June meeting in rescinding similar policies that had been adopted in March. There was a concern that the Committee was trying to write into a "constitution" of the Open Market Committee a prohibition against actions deemed undesirable by the Committee at a particular time; that the resolution put into the form of a continuing directive a matter which should be considered, in the light of existing conditions, at each meeting of the Committee and its executive committee. They felt it preferable for the executive committee of the Federal Open Market Committee to be free to use its judgment, within the limits of the Committee's general credit policy at the time, as to the best method of achieving the objectives of credit policy, in whatever circumstances might arise between meetings of the full Committee. DECEMBER 15, 1953 1. Authority to Effect Transactions in System Account. The following directive to the executive committee was approved: The executive committee is directed, until otherwise directed by the Federal Open Market Committee, to arrange for such transactions for the System open market account, either in the open market or directly with the Treasury (including purchases, sales, exchanges, replacement of maturing securities, and letting maturities run off without replacement), as may be necessary, in the light of current and prospective economic conditions and the general credit situation of the country, with a view (a) to relating the supply of funds in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 101 the market to the needs of commerce and business, (b) to promoting growth and stability in the economy by actively maintaining a condition of ease in the money market, (c) to correcting a disorderly situation in the Government securities market, and (d) to the practical administration of the account; provided that the aggregate amount of securities held in the System account (including commitments for the purchase or sale of securities for the account) at the close of this date, other than special short-term certificates of indebtedness purchased from time to time for the temporary accommodation of the Treasury, shall not be increased or decreased by more than 2 billion dollars. The executive committee is further directed, until otherwise directed by the Federal Open Market Committee, to arrange for the purchase direct from the Treasury for the account of the Federal Reserve Bank of New York (which Bank shall have discretion, in cases where it seems desirable, to issue participations to one or more Federal Reserve Banks) 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 at any one time by the Federal Reserve Banks shall not exceed in the aggregate 2 billion dollars. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Erickson, Evans, Fulton, Johns, Mills, Powell, Robertson, and Szymczak. Votes against this action: none. This directive was changed to provide, as the central objective of current credit policy, that transactions for the System open market account should be with a view "to promoting growth and stability in the economy by actively maintaining a condition of ease in the money market." The corresponding clause of the directive issued by the Committee at its meeting on September 24, 1953, provided that transactions be with a view "to avoiding deflationary tendencies"; at the June 1953 meeting, the instruction read, "to avoiding deflationary tendencies without encouraging a renewal of inflationary developments (which in the near future will require aggressive supplying of reserves to the market)"; and in March 1953, the Committee had directed, in this respect, that transactions be with a view "to exercising restraint upon inflationary developments." These clauses in the directives issued by the Federal Open Market Committee at its meetings in 1953 indicate the adjustments made in credit policy to adapt it to the unfolding economic situation. The opening months of the year were characterized by a very high level of economic activity, a strong demand for credit, continued growth in the money supply (seasonally adjusted), and, despite fairly stable commodity prices, more reason for con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

102 ANNUAL REPORT OF BOARD OF GOVERNORS cern about the possibility of inflationary developments than of deflationary movements. By June, the situation had shifted to one of less concern with inflationary developments and, instead, growing uneasiness in many areas regarding the future, even though actual production, employment, and incomes remained at or close to record levels, total credit demands were large, and commodity prices were relatively stable. When the Committee met toward the end of September, some downward adjustments had begun to appear in the economy and a more active policy of supplying reserves was adopted. This policy did not make specific provision for avoiding inflationary tendencies since they did not appear likely to threaten. In the period since September, the decline in economic conditions, though moderate, had been unmistakable. Although wholesale prices had been steady, unemployment at a low level in the period as a whole, and nonfarm income not much below the peaks reached in the summer of 1953, declines had been experienced in industrial production, factory employment, gross national product, and farm income. In the over-all view, the decline constituted the first significant interruption of economic expansion since 1949. Inventory accumulation had been a subject of some concern early in the year, but in the third quarter the rate of accumulation dropped and in October inventories were reduced somewhat. Bank credit and the money supply had shown much less than the usual seasonal increases, even though banks had utilized additional reserves made available to them to purchase Government securities in the absence of loan demand. Studies of prospects for the months immediately ahead indicated the probability that, after the holiday and other year-end drains, reserve funds would be supplied in January by the post-holiday return flow of currency, and that in subsequent weeks the usual seasonal contraction in private credit demands, oflset only in part by a rebuilding of Treasury balances, would tend toward the maintenance of relatively easy money markets into the second quarter of the year. Under the circumstances some reduction in the System's portfolio, following a temporary increase to meet large December needs, was to be expected. Nevertheless, it was the view of the Committee that System policy should in no sense be one of restraint during the period immediately ahead, and it was in this setting that it approved a continuation of the general policy pursued in recent months of supplying or maintaining reserves adequate to promote growth and stability in the economy with, however, the understanding that in carrying out operations for the System account there would be more emphasis on a program of actively maintaining a condition of ease in the money market. At this meeting, reference also was made to the action taken by the Committee on September 24, 1953 in approving a motion that "the Federal Open Market Committee take the position that operations for the System account in the open market be confined to short-term securities (except in the correction of disorderly markets) and that during a period of Treasury financing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 103 there be no purchases of (1) maturing issues for which an exchange is being offered, (2) when-issued securities, or (3) outstanding issues of comparable maturity to those being offered for exchange; and that these policies be followed until such time as they may be superseded or modified by further action of the Federal Open Market Committee." Mr. Sproul moved that the last clause of the foregoing action taken at the meeting on September 24, 1953 be amended to read, "and that these policies be followed until the next meeting of the Federal Open Market Committee." Mr. Sproul's motion was put by the Chair and lost. Votes against the motion: Messrs. Martin, Chairman, Evans, Fulton, Johns, Mills, Powell, Robertson, Szymczak, and Vardaman. Votes for the motion: Messrs. Sproul, Vice Chairman, and Erickson. In proposing this motion, Mr. Sproul stated that he was in no way altering his opposition to the general purport of the action approved by the Committee on September 24 but that he felt the proposed language would correctly reflect the sense of that meeting, that is, that the action would be subject to review at the next meeting of the Committee. Those opposed to the motion felt that, while they would not necessarily have any objection to considering the question at the next or any other meeting of the Committee, they would prefer not to have the proposed change adopted inasmuch as it would mean that the action taken at the meeting on September 24 would automatically become ineffective after the next meeting of the Committee unless positive action were taken to renew it. 2. Transactions for the Purpose of Altering the Maturity Distribution of Securities in the System Open Market Account. Mr. Robertson moved that the Federal Open Market Committee adopt the following policy to be followed until such time as it may be superseded or modified by future action of the Committee: Transactions for the System account in the open market shall be entered into solely for the purpose of providing or absorbing reserves (except in the correction of disorderly markets), and shall not include offsetting purchases and sales of securities for the purpose of altering the maturity pattern of the System's portfolio. After discussion, Mr. Sproul, without accepting in any way the idea of a perpetual policy such as was suggested by Mr. Robertson's motion, moved that that motion be amended to provide that it would be effective until the next meeting of the Federal Open Market Committee. Mr. Sproul's motion was put by the Chair and lost. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 ANNUAL REPORT OF BOARD OF GOVERNORS Votes against Mr. Sproul's motion:. Messrs. Martin, Chairman, Evans, Fulton, Johns, Mills, Powell, Robertson, Szymczak, and Vardaman. Votes for the motion: Messrs. Sproul, Vice Chairman, and Erickson. Mr. Robertson's motion was then put by the Chair and carried. Votes for Mr. Robertson's motion: Messrs. Martin, Chairman, Evans, Fulton, Johns, Mills, Powell, Robertson, S2:ymczak, and Vardaman. Votes against the motion: Messrs. Sproul, Vice Chairman, and Erickson. This action was taken in the light of an authorization by the executive committee of the Federal Open Market Committee at its meeting on November 23, 1953 under which the Manager of the System Account made certain purchase and sale transactions in the short-term sector of the Government securities market in the amount of 70 million dollars. The full Committee had not previously specifically considered the question whether such transactions might be entered into during periods other than at a time of Treasury financing. The purpose of such "swap" transactions (under which securities having a maturity of 12% months or less were sold from the System account and replaced with a like amount of Treasury bills maturing in January 1954) was to increase the proportion of the System account in the form of Treasury bills of shortest maturity, a move which the executive committee then felt to be desirable as a means of facilitating prospective operations in carrying out credit policy after the turn of the year. The votes for Mr. Robertson's motion were on the basis that, generally speaking, "swap" transactions were not desirable in terms of the general policy approved at the meeting on March 4-5, 1953 of not now supporting any pattern of prices and yields in the Government securities market and of intervening in that market solely to effectuate the objectives of monetary and credit policy (including correction of disorderly markets). It was felt that if the System open market account were to engage in purchases and sales in the open market without altering total holdings of securities in the portfolio, the objective of such transactions would not be clearly discernible to the market and thus might cause confusion and uncertainty as to credit policy and, in so doing, militate against the depth, breadth, and resiliency sought in the Government securities market. It was understood, however, that the Committee should have no hesitancy in reversing this action in the event circumstances arose which made that seem to be desirable, and Mr. Sproul's motion was opposed for that reason. Those opposed to this action took the position that, while supplying reserve funds to the market or taking them out was the primary function of open Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 105 market operations, to say that it was the sole function would be much too narrow an interpretation; much narrower than saying that the sole purpose was to effectuate the objectives of monetary and credit policy. They felt that "swaps" for the System account which had taken place recently were an appropriate use of the System portfolio, that they had helped the banks and the whole market to readjust their short maturities as they desired and had increased the System's holdings of bills maturing in January 1954 which might be useful in carrying out credit policy. It was their view that "swaps" in the account need not interfere with market flexibility, but might in fact assist the market in adjusting to the needs of investors, and that there was no compelling reason to proscribe them. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM [December 31, 1953] 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 A. L. MILLS, JR., of Oregon January 31, 1958 J. L. ROBERTSON of Nebraska January 31, 1964 ELLIOTT THURSTON, Assistant to the Board WINFIELD W. RIEFLER, Assistant to the Chairman WOODLIEF THOMAS, Economic Adviser to the Board ALFRED K. CHERRY, Legislative Counsel S. R. CARPENTER, Secretary MERRITT SHERMAN, Assistant Secretary KENNETH A. KENYON, Assistant Secretary GEORGE B. VEST, General Counsel FREDERIC SOLOMON, Assistant General Counsel HOWARD H. HACKLEY, Assistant General Counsel DAVID B. HEXTER, Assistant General Counsel G. HOWLAND CHASE, Assistant General Counsel 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 GUY E. NOYES, Assistant Director, Division of Research and Statistics C. RICHARD YOUNGDAHL, 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 GLENN M. GOODMAN, Assistant Director, Division of Examinations HENRY BENNER, 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 GARDNER L. BOOTHE, II, Administrator, Office of Defense Loans EDWIN J. JOHNSON, Controller, Office of the Controller 106 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL OPEN MARKET COMMITTEE [December 31, 1953] MEMBERS WM. MCC. MARTIN, JR., Chairman (Board of Governors) ALLAN SPROUL, Vice Chairman (Elected by Federal Reserve Bank of New York) J. A. ERICKSON (Elected by Federal Reserve Banks of Boston, Philadelphia, and Richmond) R. M. EVANS (Board of Governors) W. D. FULTON (Elected by Federal Reserve Banks of Cleveland and Chicago) DELOS C. JOHNS (Elected by Federal Reserve Banks of Atlanta, St. Louis, and Dallas) A. L. MILLS, JR. (Board of Governors) O. S. POWELL (Elected by Federal Reserve Banks of Minneapolis, Kansas City, and San Francisco) J. L. ROBERTSON (Board of Governors) M. S. SZYMCZAK. (Board of Governors) JAMES K. VARDAMAN, JR. (Board of Governors) EXECUTIVE COMMITTEE OFFICERS WM. MCC. MARTIN, JR., Chairman WINFIELD W. RIEFLER, Secretary ALLAN SPROUL, Vice Chairman ELLIOTT THURSTON, Assistant Secretary J. A. ERICKSON GEORGE B. VEST, General Counsel R. M. EVANS FREDERIC SOLOMON, Assistant General Counsel A. L. MILLS, JR. WOODLIEF THOMAS, Economist WM. J. ABBOTT, JR., Associate Economist L. MERLE HOSTETLER, Associate Economist AGENT J. MARVIN PETERSON, Associate Economist FEDERAL RESERVE BANK OF NEW YORK H. V. ROELSE, Associate Economist ROBERT G. ROUSE, Manager of System PARKER B. WILLIS, Associate Economist Open Market Account RALPH A. YOUNG, Associate Economist Digitized for FRASER http://fraser.stlouisfed.org/ 107 Federal Reserve Bank of St. Louis

FEDERAL ADVISORY COUNCIL [December 31, 1953] MEMBERS District No. 1—ERNEST CLAYTON, Chairman, Industrial Trust Company, Providence, Rhode Island. District No. 2—HENRY C. ALEXANDER, President, J. P. Morgan & Co., Inc., New York, New York. District No. 3—GEOFFREY S. SMITH, President, Girard Trust Corn Exchange Bank, Philadelphia, Pennsylvania. District No. 4—GEORGE GUND, President, The Cleveland Trust Company, Cleveland, Ohio. District No. 5—ROBERT V. FLEMING, President and Chairman of the Board, 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 of the Board, The First National Bank of Chicago, Chicago, Illinois. District No. 8—VANCE J. ALEXANDER, Chairman of the Board, Union Planters National Bank, Memphis, Tennessee. District No. 9—JOSEPH F. RINGLAND, President, Northwestern National Bank of Minneapolis, Minneapolis, Minnesota. District No. 10—CHARLES J. CHANDLER, President, First National Bank in Wichita, Wichita, Kansas. District No. 11—DEWITT T. RAY, President, National City Bank of Dallas, Dallas, Texas. District No. 12—JOHN M. WALLACE, President, Walker Bank & Trust Company, Salt Lake City, Utah. EXECUTIVE COMMITTEE EDWARD E. BROWN, ex officio ROEERT V. FLEMING, ex officio HENRY C. ALEXANDER GEOFFREY S. SMITH GEORGE GUND OFFICERS President, EDWARD E. BROWN Vice President, ROBERT V. FLEMING Secretary, HERBERT V. PROCHNOW 108 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS [December 31, 1953] CHAIRMEN AND DEPUTY CHAIRMEN OF BOARDS OF DIRECTORS Chairman and Federal Reserve Bank of— Deputy Chairman Federal Preserve Agent Boston Harold D. Hodgkinson Ames Stevens New York Jay E. Crane William I. Myers Philadelphia William J. Meinel C. Canby Balderston Cleveland John C. Virden Leo L. Rummell Richmond Charles P. McCormick John B. Woodward, Jr. Atlanta Frank H. Neely Rufus C. Harris Chicago John S. Coleman Bert R. Prall St. Louis Russell L. Dearmont Wm. H. Bryce Minneapolis Roger B. Shepard Paul E. Miller Kansas City Raymond W. Hall Cecil Puckett Dallas J. R. Parten Robert J. Smith San Francisco Brayton Wilbur William R. Wallace, Jr. CONFERENCE OF CHAIRMEN Mr. Franklin J. Lunding, Chairman of the Federal Reserve Bank of Chicago, who had been serving as Chairman of the Conference and of the Executive Committee since May 1952, resigned as a director and Chairman of the Federal Reserve Bank of Chicago, effective December 31, 1952. Mr. Charles P. McCormick, Chairman of the Federal Reserve Bank of Richmond, succeeded Mr. Lunding as Chairman of the Conference and of the Executive Committee. Mr. McCormick previously had been Vice Chairman of the Conference. At the meeting held in April 1953, Mr. Harold D. Hodgkinson was elected Chairman of the Conference and of the Executive Committee. Mr. Virden, Chairman of the Federal Reserve Bank of Cleveland, was elected Vice Chairman and a member of the Executive Committee, and Mr. Meinel, Chairman of the Federal Reserve Bank of Philadelphia, was elected as the other member of the Executive Committee. 109 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1953—Cont. DIRECTORS Class A and Class B directors are elected by the member banks of the district. Class C directors arc 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: Lloyd D. Brace President, The First National Bank of Boston, Boston, Mass 1953 Harold I. Chandler Vice President and Cashier, The Keene National Bank, Keene, N. H 1954 Oliver B. Ellsworth President, Riverside Trust Company, Hartford, Conn. 1955 Class B.- Harvey P. Hood President, H. P. Hood & Sons, Inc., Boston, Mass 1953 Frederick S. Blackall, jr President and Treasurer, The Taft-Peirce Manufacturing Company, Woonsocket, R. 1 1954 Harry E. Umphrey President, Aroostook Potato Growers, Inc., Presque Isle, Me 1955 Class C: Karl T. Compton Chairman of the Corporation, Massachusetts Institute of Technology, Cambridge, Mass 1953 Ames Stevens President, Ames Worsted Company, Lowell, Mass.... 1954 Harold D. Hodgkinson Vice President, General Manager, and Chairman of Management Board, Wm. Filene's Sons Company, Boston, Mass 1955 District No. 2—New York Class A: Burr P. Cleveland President, First National Bank of Cortland, Cortland, N. Y 1953 F. Palmer Armstrong President, The Keyport Banking Company, Keyport, N.J 1954 N. Baxter Jackson Chairman of the Board, Chemical Bank & Trust Company, New York, N. Y 1955 Class B: Lansing P. Shield President, The Grand Union Company, East Paterson, N.J 1953 John E. Bierwirth President, National Distillers Products Corporation, New York, N. Y 1954 Clarence Francis Chairman of the Board, General Foods Corporation, New York, N. Y 1955 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 111 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31,1953—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class C: Jay E. Crane Vice President, Standard Oil Company (New Jersey), New York, N. Y 1953 William I. Myers Dean, New York State College of Agriculture, Cornell University, Ithaca, N. Y 1954 Franz Schneider Executive Vice President, Newmont Mining Corporation, New York, N. Y 1955 Buffalo Branch Appointed by Federal Reserve Bank: C. Elmer Olson President, The First National Bank of Falconer, Falconer, N. Y 1953 Lewis G. Harriman President, Manufacturers and Traders Trust Company, Buffalo, N. Y.. 1954 Bernard E. Finucane President, Security Trust Company of Rochester, Rochester, N. Y 1955 Edward P. Vreeland President, Salamanca Trust Company, Salamanca, N. Y 1955 Appointed by Board of Governors: Robert C. Tait President, Stromberg-Carlson Company, Rochester, N. Y 1953 Clayton White Dairy farmer, Stow, N. Y 1954 Edgar F. Wendt President, Buffalo Forge Company, Buffalo, N. Y 1955 District No. 3—Philadelphia Class A: Archie D. Swift Chairman of Board, Central-Penn National Bank, Philadelphia, Pa.. 1953 Wadsworth Cresse Executive Vice President and Trust Officer, The First National Bank and Trust Company, Woodbury, N. J. 1954 Bernard C. Wolfe President, The First National Bank, Towanda, Pa.... 1955 Class B: Warren C. Newton President, O. A. Newton and Son Company, Bridgeville, Del 1953 Andrew Kaul, III President and Director, Speer Carbon Company, St. Marys, Pa 1954 Charles E. Oakes President and Director, Pennsylvania Power and Light Company, Allentown, Pa 1955 Class C: C. Canby Balderston Dean, Wharton School of Finance and Commerce, University of Pennsylvania, Philadelphia, Pa 1953 William J. Meinel President and Chairman of Board, Heintz Manufacturing Company, Philadelphia, Pa 1954 Henderson Supplee, Jr President, Atlantic Refining Company, Philadelphia, Pa 1955 District No. 4—Cleveland Class A: Lawrence N. Murray President, Mellon National Bank and Trust Company, Pittsburgh, Pa 1953 Edison Hobstetter President, The Pomeroy National Bank, Pomeroy, Ohio 1954 John D. Bainer President, The Merchants National Bank and Trust Company of Meadville, Meadville, Pa 1955 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

112 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1953—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class B.- Charles J. Stilwell President, The Warner and Swasey Company, Cleveland, Ohio 1953 Joel M. Bowlby Chairman of the Board, The Eagle-Picher Company, Cincinnati, Ohio 1954 Edward C. Doll President, Lovell Manufacturing Company, Erie, Pa. 1955 Class C.- John C. Virden Chairman of the Board, John C. Virden Company, Cleveland, Ohio 1953 Leo L. Rummell Dean, College of Agriculture, The Ohio State University, Columbus, Ohio 1954 Sidney A. Swensrud Chairman of the Board, Gulf Oil Corporation, Pittsburgh, Pa 1955 Cincinnati Branch Appointed by Federal Reserve Bank: L. M. Campbell President, Second National Bank, Ashland, Ky 1953 Joseph B. Hall President, Kroger Company, Cincinnati, Ohio 1954 E. S. Dabney President, Security Trust Company, Lexington, Ky.. . 1954 Fred A. Dowd President, Atlas National Bank, Cincinnati, Ohio 1955 Appointed by Board of Governors: Granville R. Lohnes Treasurer, National Cash Register Company, Dayton, Ohio 1953 John C. Baker President, Ohio University, Athens, Ohio 1954 H. C. Besuden Farmer, Winchester, Ky 1955 Pittsburgh Branch Appointed by Federal Reserve Bank: Hugo E. Laupp President, Wheeling Dollar Savings and Trust Company, Wheeling, W. Va 1953 William B. McFall President, Commonwealth Trust Company of Pittsburgh, Pittsburgh, Pa 1954 Montfort Jones Professor of Finance, University of Pittsburgh, Pittsburgh, Pa 1954 Paul Malone President, The Second National Bank of Uniontown, Uniontown, Pa 1955 Appointed by Board of Governors: Henry A. Roemer, Jr President, Sharon Steel Corporation, Sharon, Pa 1953 Clifford F. Hood President, United States Steel Corporation, Pittsburgh, Pa 1954 Douglas M. Moorhead Farmer, North East, Pa 1955 District No. 5—Richmond Class A: John A. Sydenstricker Executive Vice President, First National Bank in Marlinton, Marlinton, W. Va 1953 James D. Harrison President, First National Bank of Baltimore, Baltimore, Md 1954 Warren S. Johnson Investment Counselor, Peoples Savings Bank & Trust Company, Wilmington, N. C 1955 Class B: Cary L. Page President and Treasurer, Jackson Mills, Wellford, S. C. 1953 Edwin Hyde Executive Vice President, Miller & Rhoads, Inc., Richmond, Va 1954 H. L. Rust, Jr President, H. L. Rust Company, Washington, D. C... 1955 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 113 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1953—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class C: Charles P. McCormick President and Chairman of Board, McCormick & Company, Inc., Baltimore, Md 1953 W. G. Wysor. Management Counsel, Southern States Cooperative, Inc., Richmond, Va 1954 Tohn B. Woodward, Jr..... .President, Newport News Shipbuilding & Dry Dock Company, Newport News, Va 1955 Baltimore Branch Anointed by Federal Reserve Bank: Charles W. HofF President, Union Trust Company of Maryland, Baltimore, Md 1953 Charles A. Piper President, The Liberty Trust Company, Cumberland, Md 1954 Lacy I. Rice President, The Old National Bank, Martinsburg, W. Va 1955 Stanley B. Trott President, Maryland Trust Company, Baltimore, Md. 1955 Appointed by Board of Governors: James M. Shriver President, The B. F. Shriver Company, Westminster, Md 1953 Alonzo G. Decker, Jr Vice President, The Black and Decker Manufacturing Company, Towson, Md 1954 Howard M. Taylor, Jr Vice President, International Bedding Company, Baltimore, Md 1955 Charlotte Branch Appointed by Federal Reserve Bank: A. K. Davis Senior Vice President, Wachovia Bank and Trust Company, Winston-Salem, N. C 1953 Thomas J. Robertson President, First National Bank of South Carolina, Columbia, S. C 1954 George S. Crouch Chairman of the Board, The Union National Bank, Charlotte, N. C 1955 Jonathan Woody President, First National Bank, Waynesville, N. C 1955 Appointed by Board of Governors: R. E. Ebert President, Dixie Home Stores, Inc., Greenville, S. C. 1953 Paul T. Taylor President, Taylor Warehouse Company, Winston- Salem, N. C 1954 Thomas H. Wilson President, Treasurer, and Advertising Manager, Henredon Furniture Industries, Inc., Morganton, N. C 1955 District No. 6—Atlanta Class A: Roland L. Adams President, Bank of York, York, Ala 1953 W. C. Bowman Chairman of Board, The First National Bank of Montgomery, Montgomery, Ala 1954 Leslie R. Driver President, The First National Bank in Bristol, Bristol, Tenn 1955 Class B: A. B. Freeman Chairman of the Board, Louisiana Coca-Cola Bottling Company, Ltd., New Orleans, La 1953 Pollard Turman President, J. M. Tull Metal & Supply Company, Inc., Atlanta, Ga 1954 Donald Comer Chairman of the Board, Avondale Mills, Birmingham, Ala 1955 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. 31,1953—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class C: Frank H. Neely Chairman of the Board, Rich's, Incorporated, Atlanta, Ga 1953 Paul E. Reinhold Chairman of the Board, Foremost Dairies, Inc., Jacksonville, Fla 1954 Rufus C. Harris President, The Tulane University of Louisiana, New Orleans, La 1955 Birmingham Branch Appointed by Federal Reserve Bank: T. J. Cottingham President, State National Bank of Decatur, Decatur, Ala 1953 Malcolm A. Smith First Vice President, Birmingham Trust National Bank, Birmingham, Ala 1954 John B. Barnett, Jr President, The Monroe County Bank, Monroeville, Ala.... 1955 Frank M. Moody Vice President, The First National Bank of Tuskaloosa, Tuscaloosa, Ala 1955 Appointed by Board of Governors: John M. Gallalee President Emeritus, University of Alabama, Tuscaloosa, Ala 1953 Edwin C. Bottcher Farmer, Cullman, Ala 1954 Thad Holt Norton and Holt, Investments, Birmingham, Ala 1955 Jacksonville Branch Appointed by Federal Reserve Dank: Vacancy 1953 G. W. Reese President, The Citizens and Peoples National Bank of Pensacola, Pensacola, Fla 1954 Frank W. Norris President, The Barnett National Bank of Jacksonville, Jacksonville, Fla 1955 J. Carlisle Rogers President, The First National Bank of Leesburg, Leesburg, Fla 1955 Appointed by Board of Governors: Marshall F. Howell Vice President, Bond-Howell Lumber Company, Jacksonville, Fla 1953 Vacancy 1954 Harry M. Smith President and Manager, Winter Garden Ornamental Nursery, Inc., Winter Garden, Fla 1955 Nashville Branch Appointed by Federal Reserve Bank: G. C. Graves President, The First National Bank of Athens, Athens, Tenn 1953 Sam M. Fleming President, Third National Bank of Nashville, Nashville, Tenn 1954 James V. Sprouse President, The First National Bank of Springfield, Springfield, Tenn 1955 T. R. Keys President, Erwin National Bank, Erwin, Tenn 1955 Appointed by Board of Governors: C. E. Brehm President, University of Tennessee, Knoxville, Tenn. 1953 H. C. Meacham Farming, Franklin, Tenn 1954 Ernest J. Moench President, Tennessee Tufting Company, Nashville, Tenn 1955 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. 31,1953—Cont. Term Expires DIRECTORS—Cont. Dec. 31 New Orleans Branch Appointed by Federal Reserve Bank: Wm. C. Carter President, Gulf National Bank of Gulfport, Gulfport, Miss 1953 G. M. McWilliams President, Citizens Bank of Hattiesburg, Hattiesburg, Miss 1954 Keehn W. Berry President, Whitney National Bank of New Orleans, New Orleans, La 1955 J. T. Brown Chairman of the Board, The First National Bank of Jackson, Jackson, Miss 1955 Appointed by Board of Governors: H. G. Chalkley, Jr President, Sweet Lake Land & Oil Company, Inc., Lake Charles, La 1953 Joel L. Fletcher, Jr President, Southwestern Louisiana Institute, Lafayette, La 1954 E. O. Batson President, Batson-McGehee Company, Inc., Millard, Miss 1955 District No. 7—Chicago Class A: Vivian W. Johnson President, First National Bank, Cedar Falls, Iowa— 1953 Walter J. Cummings Chairman, Continental Illinois National Bank and Trust Company of Chicago, Chicago, 111 1954 Nugent R. Oberwortmann.. .President, The North Shore National Bank of Chicago, Chicago, 111 1955 Class B.- William R. Sinclair Chairman of the Board, Kingan & Company, Indianapolis, Ind. 1953 Walter E. Hawkinson Vice President in Charge of Finance, and Secretary, Allis-Chalmers Manufacturing Company, Milwaukee, Wis 1954 William J. Grede President, Grede Foundries, Inc., Milwaukee, Wis 1955 Class C: Allan B. Kline President, American Farm Bureau Federation, Chicago, 111 1953 Bert R. Prall President, Butler Bros., Chicago, 111 1954 John S. Coleman President, Burroughs Corporation, Detroit, Mich 1955 Detroit Branch Appointed by Federal Reserve Bank: Raymond T. Perring President, The Detroit Bank, Detroit, Mich 1953 Howard P. Parshall President, The Bank of the Commonwealth, Detroit, Mich. 1954 John A. Stewart Vice President and Cashier, Second National Bank & Trust Company, Saginaw, Mich 1954 Appointed by Board of Governors: William M. Day Vice President and General Manager, Michigan Bell Telephone Company, Detroit, Mich 1953 C. M. Hardin Dean of Agriculture, Michigan State College, East Lansing, Mich 1954 District No. &—St. Louis Class A: William A. McDonnell President, First National Bank in St. Louis, St. Louis, Mo 1953 Phil E. Chappell President, Planters Bank & Trust Company, Hopkinsville Ky 1954 y J. E. Etherton President, Carbondale National Bank, Carbondale, 111. 1955 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, Dec. 31,1953—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class B.- Louis Ruthenburg Chairman of Board, Servel, Inc., Evansville, Ind 1953 M. Moss Alexander President, Missouri-Portland Cement Company, St. Louis, Mo 1954 Ralph E. Plunkett President, Plunkett-Jarrell Grocer Company, Little Rock, Ark 1955 Class C: Wm. H. Bryce Chairman of the Board, Dixie Wax Paper Company, Memphis, Tenn 1953 Joseph H. Moore Farming, Charleston, Mo 1954 Russell L. Dearmont Chief Counsel for Trustee, Missouri-Pacific Lines, St. Louis, Mo 1955 Little Rock Branch Appointed by Federal Reserve Bank: Gaither C. Johnston Investments, Dermott, Ark 1953 H. C. McKinney, Jr President, First National Bank, El Dorado, Ark 1954 Thos. W. Stone President, The Arkansas National Bank, Hot Springs, Ark 1954 Harvey C. Couch, Jr President, Union National Bank, Little Rock, Ark.. . 1955 Appointed by Board of Governors: Sam B. Strauss President, Pfeifers of Arkansas, Little Rock, Ark 1953 Shuford R. Nichols Farmer, ginner and cotton broker, Des Arc, Ark 1954 Stonewall J. Beauchamp . .. President, Terminal Warehouse Company, Little Rock, Ark 1955 Louisville Branch Appointed by Federal Reserve Bank: Noel Rush President, Lincoln Bank and Trust Company, Louisville, Ky 1953 M. C. Minor President, Farmers National Bank, Danville, Ky 1954 Ira F. Wilcox Vice President and Cashier, The Union National Bank, New Albany, Ind 1954 Magnus J. Kreisle President, Tell City National Bank, Tell City, Ind.... 1955 Appointed by Board of Governors: Alvin A. Voit President, Mengel Company, Louisville, Ky 1953 Pierre B. McBride President, Porcelain Metals Corporation, Louisville, Ky 1954 Smith Broadbent, Jr Farmer, Cadiz, Ky 1955 Memphis Branch Appointed by Federal Reserve Bank: C. H. Reeves President, Merchants and Farmers Bank, Columbus, Miss 1953 John A. McCall President, First National Bank, Lexington, Tenn 1954 William B. Pollard President, National Bank of Commerce, Memphis, Tenn 1954 Ben L. Ross Chairman of Board, Phillips National Bank, Helena, Ark 1955 Appointed by Board of Governors: M. P. Moore Owner, Circle M Ranch, Senatobia, Miss 1953 Caffey Robertson President, Caffey Robertson Company, Memphis, Tenn. 1954 Henry Banks Farmer, Clarkedale, Ark 1955 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. 31,1953—Cont. Term Expires DIRECTORS—Coot. Dec. 31 District No. 9—Minneapolis Class A: H. N. Thomson Vice President, Farmers and Merchants Bank, Presho, S, D 1953 C. W. Burges Vice President and Cashier, Security National Bank, Edgeley, N. D 1954 Edgar F. Zelle Chairman of the Board, First National Bank, Minneapolis, Minn 1955 Class B: W. A. Denecke Livestock rancher, Bozeman, Mont 1953 Ray C. Lange President, Chippewa Canning Company, Chippewa Falls, Wis 1954 Homer P. Clark Honorary Chairman of the Board, West Publishing Company, St. Paul, Minn 1955 Class C.- Roger B. Shepard. St. Paul, Minn 1953 Paul E. Miller Director, University of Minnesota Agricultural Extension Division, St. Paul, Minn 1954 F.rA. Flodin President, Lake Shore Engineering Company, Iron Mountain, Mich 1955 Helena Branch Appointed by Federal Reserve Bank: A. W. Heidel Vice President, Powder River County Bank, Broadus, Mont 1953 J. Willard Johnson Financial Vice President, Western Life Insurance Company, Helena, Mont 1954 George N. Lund Vice President and Cashier, First National Bank, Reserve, Mont 1954 Appointed by Board of Governors: G. R. Milburn Livestock rancher, Grass Range, Mont 1953 John E. Corette President and General Manager, Montana Power Company, Butte, Mont 1954 District No. 10—Kansas City Class A: W. L. Bunten President, Goodland State Bank, Goodland, Kan 1953 T. A. Dines Chairman of the Board, The United States National Bank of Denver, Denver, Colo 1954 W. S. Kennedy President and Chairman of the Board, The First National Bank of Junction City, Junction City, Kan. 1955 Class B: Vacancy 1953 Max A. Miller Livestock rancher, Omaha, Neb 1954 E. M. Dodds President and Director, United States Cold Storage Corporation, Kansas City, Mo 1955 Class C: Cecil Puckett Dean, College of Business Administration, University of Denver, Denver, Colo 1953 Lyle L. Hague Farmer and stockman, Cherokee, Okla 1954 Raymond W. Hall Vice President, Controller and Director, Hall Brothers, Inc., Kansas City, Mo 1955 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. 31,1953—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Denver Branch Appointed by Federal Reserve Bank: Merriam B. Berger Vice President, The Colorado National Bank of Denver, Denver, Colo 1953 Ralph S. Newcomer Executive Vice President, First National Bank in Boulder, Boulder, Colo 1954 Arthur Johnson President, First National Bank in Raton, Raton, N. M. 1954 Appointed by Board of Governors: Aksel Nielsen President, The Title Guaranty Company, Denver, Colo 1953 G. Norman Winder Rancher, Craig, Colo 1954 Oklahoma City Branch Appointed by Federal Reserve Bank: George R. Gear President, The City National Bank of Guymon, Guymon, Okla 1953 F. M. Overstreet President, First National Bank at Ponca City, Ponca City, Okla 1954 Frank A. Sewell Chairman of the Board and President, The Liberty National Bank and Trust Company of Oklahoma City, Oklahoma City, Okla 1954 Appointed by Board of Governors: Cecil W. Cotton President, C. W. Cotton Supply Company, Tulsa, Okla 1953 Phil H. Lowery Owner, Lowery Hereford Ranch, Loco, Okla 1954 Omaha Branch Appointed by Federal Reserve Bank: I. R. Alter President, The First National Bank of Grand Island, Grand Island, Nebr 1953 Ellsworth Moser President, The United States National Bank of Omaha, Omaha, Nebr 1953 William N. Mitten Chairman of the Board and President, First National Bank of Fremont, Fremont, Nebr 1954 Appointed by Board of Governors: Joe W. Seacrest President, State Journal Company, Lincoln, Nebr 1953 Manville Kendrick President, Kendrick Cattle Company, Sheridan, Wyo. 1954 District No. 1 I—Dallas Class A: W. L. Peterson President, The State National Bank, Denison, Tex 1953 P. P. Butler President, First National Bank in Houston, Houston, Tex 1954 J. Edd McLaughlin President, Security State Bank and Trust Company, Rails, Tex 1955 Class B: Vacancy 1953 D. A. Hulcy Chairman of the Board and President, Lone Star Gas Company, Dallas, Tex 1954 J. B. Thomas President and General Manager and Director, Texas Electric Service Company, Fort Worth, Tex 1955 Class C: Hal Bogle Livestock feeding, farming and ranching, Dexter, N. M 1953 Robert J. Smith President, Pioneer Air Lines, Inc., Dallas, Tex 1954 J. R. Parten President, Woodley Petroleum Company, Houston, Tex 1955 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. 31,1953—Cont. Term Expires DIRECTORS—Cont. Dec. 31 El Paso Branch Appointed by Federal Reserve Bank: W. H. Holcombe Executive Vice President, Security State Bank, Pecos, Tex 1953 John P. Butler President, First National Bank of Midland, Midland, Tex 1954 J. M. Sakrison President, Southern Arizona Bank & Trust Company, Tucson, Ariz 1954 Thomas C. Patterson Vice President, El Paso National Bank, El Paso, Tex. 1955 Appointed by Board of Governors: D. F. Stahmann Farmer, Las Cruces, N.M 1953 Jas. A. Dick, Jr President, James A. Dick Investment Company, El Paso, Tex 1954 E. J. Workman President, New Mexico Institute of Mining and Technology, Socorro, N.M 1955 Houston Branch Appointed by Federal Reserve Bank: R. Lee Kempner President, United States National Bank, Galveston, Tex 1953 O. R. Weyrich President, Houston Bank & Trust Company, Houston, Tex 1954 P. R. Hamill President, Bay City Bank & Trust Company, Bay City, Tex 1954 S. Marcus Greer Chairman of Executive Committee, City National Bank of Houston, Houston, Tex 1955 Appointed by Board of Governors: Herbert G. Sutton T. O. Sutton and Sons, Colmesneil, Tex 1953 Ross Stewart Chairman of the Board of Directors, C. Jim Stewart & Stevenson, Inc., Houston, Tex 1954 Charles N. Shepardson Dean of Agriculture, A. & M. College of Texas, College Station, Tex 1955 San Antonio Branch Appointed by Federal Reserve Bank: E. R. L. Wroe President, American National Bank, Austin, Tex 1953 E. A. Baetz President, Bexar County National Bank, San Antonio, Tex 1954 V. S. Marett President, Gonzales State Bank, Gonzales, Tex 1954 Ray M. Keck President, Stockmen's National Bank, Cotulla, Tex... 1955 Appointed by Board of Governors: Edward E. Hale Chairman of the Department and Professor of Economics, The University of Texas, Austin, Tex 1953 Henry P. Drought Attorney at Law, San Antonio, Tex 1954 D. Hayden Perry Livestock farming, Robstown, Tex 1955 District No. 12—San Francisco Class A: Chas. H. Stewart Chairman of the Board, Portland Trust Bank, Portland, Ore 1953 Carroll F. Byrd President, The First National Bank of Willows, Willows, Calif 1954 John A. Schoonover President, The Idaho First National Bank, Boise, Idaho 1955 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. 31,1953—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class B: Alden G. Roach President, Columbia-Geneva Steel Division and Consolidated Western Steel Division of United States Steel Corporation, San Francisco, Calif 1953 Reese H. Taylor President, Union Oil Company of California, Los Angeles, Calif 1954 Walter S. Johnson President, American Forest Products Corporation, San Francisco, Calif 1955 Class C: William R. Wallace, Jr Member of the firm of Wallace, Garrison, Norton & Ray, Attorneys at Law, San Francisco, Calif 1953 Harry R. Wellman Vice President, Agricultural Sciences, University of California, Berkeley, Calif 1954 Brayton Wilbur President, Wilbur-Ellis Company, San Francisco, Calif. 1955 Los Angeles Branch Appointed by Federal Reserve Bank: W. R. Bimson President, The Valley National Bank of Phoenix, Phoenix, Ariz 1953 Anderson Borthwick President, The First National Trust and Savings Bank of San Diego, San Diego, Calif 1954 fames E. Shelton President, Security-First National Bank of Los Angeles, Los Angeles, Calif 1954 Appointed by Board of Governors: Paul H. Helms President, Helms Bakeries, Los Angeles, Calif 1953 Bryant Essick President, Essick Manufacturing Company, Los Angeles, Calif 1954 Portland Branch Appointed by Federal Reserve Bank: E. C. Sammons President, The United States National Bank of Portland, Portland, Ore 1953 Frank Wortman President, The First National Bank of McMinnville, McMinnville, Ore 1954 John B. Rogers President, First National Bank of Baker, Baker, Ore. 1954 Appointed by Board of Governors: Aaron M. Frank President, Meier & Frank Company, Inc., Portland, Ore 1953 William H. Steiwer, Sr Rancher, Fossil, Ore 1954 Salt Lake City Branch Appointed by Federal Reserve Bank: Harry Eaton Executive Vice President, Twin Falls Bank and Trust Company, Twin Falls, Idaho 1953 James W. Collins President, Tracy-Collins Trust Company, Salt Lake City, Utah. 1954 George S. Eccles President, First Security Bank of Utah, National Association, Ogden, Utah 1954 Appointed by Board of Governors: Joseph Rosenblatt President, The Eimco Corporation, Salt Lake City, Utah 1953 George W. Watkins President, Snake River Equipment Company, Idaho Falls, Idaho 1954 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. 31,1953—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Seattle Branch Appointed by Federal Reserve Bank: Chas. F. Frankland President, The Pacific National Bank of Seattle, Seattle, Wash 1953 George H. Jackson President, First National Bank in Spokane, Spokane, Wash 1954 W. M. Jenkins President, First National Bank of Everett, Everett, Wash 1954 Appointed hy Board of Governors: D. K. MacDonald President, D. K. MacDonald & Company, Inc., Seattle, Wash 1953 Ralph Sundquist President and General Manager, Sundquist Fruit & Cold Storage, Inc., Yakima, Wash 1954 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, 1953—Cont. SENIOR OFFICERS OF FEDERAL RESERVE BANKS [December 31, 1953] Federal Reserve President Bank of— First Vice President Vice Presidents Boston. J. A. Erickson John J. Fogg Carl B. Pitman Alfred C. Neal Robert B. Harvey2 O. A. Schlaikjer E. O. Latham R. F. Van Amringe New York. Allan Sproul H. A. Bilby Robert G. Rouse William F. Treiber H. H. Kimball T. G. Tiebout L. W. Knoke V. Willis A. Phelan R. B. Wiltse H. V. Roelse J. H. Wurts Philadelphia Alfred H. Williams Karl R. Bopp P. M. Poorman W. J. Davis Robert N. Hilkert J. V. Vergari3 E. C. Hill Richard G. Wilgus1 Wm. G. McCreedy Cleveland. W. D. Fulton Roger R. Clouse H. E. J. Smith Donald S. Thompson A. H. Laning2 Paul C. Stetzelberger Martin Morrison Richmond. Hugh Leach N. L. Armistead C. B. Strathy Edw. A. Wayne Aubrey N. Heflin K. Brantley Watson Upton S. Martin Chas. W. Williams R. W. Mercer2 Atlanta. Malcolm Bryan V. K. Bowman L. B. Raisty Lewis M. Clark J. E. Denmark Earle L. Rauber Harold T. Patterson S. P. Schuessler Chicago. C. S. Young Neil B. Dawes L. G. Meyer E. C. Harris W. R. Diercks George W. Mitchell W. A. Hopkins A. L. Olson L. H. Jones1 Alfred T. Sihler W. W. Turner St. Louis. Delos C. Johns Darryl R. Francis H. H. Weigel Frederick L. Deming Dale M. Lewis J. C. Wotawa Wm. E. Peterson Minneapolis O. S. Powell H. C. Core J. Marvin Peterson A. W. Mills E. B. Larson Otis R. Preston H. G. McConnell M. H. Strothman, Jr. Sigurd Ueland Kansas City.... H. G. Leedy John T. Boysen1 Clarence W. Tow Henry O. Koppang M. W. E. Park E. D. Vanderhoof D. W. Woolley Dallas. E. B. Austin L. G. Pondrom W. D. Gentry J. L. Cook2 Harry A. Shuford Watrous H. Irons San Francisco C. E. Earhart E. R. Millard Ronald T. Symms2 H. N. Mangels H. F. Slade O. P. Wheeler 1 Cashier. a Also Cashier. • Counsel. 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, 1953—Cont. VICE PRESIDENTS IN CHARGE OF BRANCHES OF FEDERAL RESERVE BANKS Federal Reserve Bank of— Branch Chief Officer New York... Buffalo I. B. Smith Cleveland Cincinnati R. G. Johnson Pittsburgh J. W. Kossin Richmond Baltimore D. F. Hagner Charlotte R. L. Cherry Atlanta Birmingham John L. Liles, Jr. Jacksonville T. A. Lanford Nashville R. E. Moody, Jr. New Orleans E. P. Paris Chicago , Detroit R. A. Swaney St. Louis Little Rock C. M. Stewart Louisville C. A. Schacht Memphis Paul E. Schroeder Minneapolis., Helena C. W. Groth Kansas City. , Denver G. A. Gregory Oklahoma City R. L. Mathes Omaha L. H. Earhart Dallas El Paso C. M. Rowland Houston W. H. Holloway San Antonio W. E. Eagle San Francisco Los Angeles W. F. Volberg Portland J. A. Randall Salt Lake City W. L. Partner Seattle J. M. Leisner 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. Leach, President of the Federal Reserve Bank of Richmond, and Mr. Gilbert, President of the Federal Reserve Bank of Dallas, who were elected Chairman of the Conference and Vice Chairman, respectively, in February 1952, were re-elected as such in March 1953, and continued to serve during 1953, except that Mr. Gilbert retired as President of the Federal Reserve Bank of Dallas, effective September 1, 1953. At the meeting in September 1953, Mr. Young, President of the Federal Reserve Bank of Chicago, was elected Vice Chairman to succeed Mr. Gilbert. Mr. Aubrey N. Heflin, Vice President and General Counsel, Federal Reserve Bank of Richmond, who was appointed Secretary of the Conference in June 1952, was re-elected as such in March 1953, and continued to serve during 1953. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 ANNUAL REPORT OF BOARD OF GOVERNORS DESCRIPTION OF FEDERAL RESERVE DISTRICTS Land area Popula- Federal Reserve district (square tion, 1950 miles) No. 1—Bos ton 62,526 8,810,111 No. 2—New York 52,168 19,047,445 No. 3—Philadelphia 37,023 8,437,034 No. 4—Cleveland 73,844 13,032,470 No. 5—Richmond 152,115 14,447,821 No. 6—Atlanta 247,589 14,653,406 No. 7—Chicago 190,524 22,176,090 No. 8—St. Louis 195,431 10,472,721 No. 9—Minneapolis 411,867 5,730,909 No. 10—Kansas City 480,362 8,309,576 No. 11—Dallas 386,184 9,113,920 No. 12—San Francisco 685,093 16,465,858 Total 2,974,726 150,697,361 FEDERAL RESERVE DISTRICTS DISTRICT NO. I—BOSTON 62,526 8,810,111 Connecticut (excluding Fairfield County) 4,266 1,502,938 Maine . . 31,040 913,774 Massachusetts 7,867 4,690,514 New Hampshire 9,017 533,242 Rhode Island 1,058 791,896 Vermont . . 9,278 377,747 DISTRICT NO. 2—NEW YORK 52,168 19,047,445 Connecticut (Fairfield County) 633 504,342 New Jersey (northern part) 3,591 3,712,911 Counties of— Bergen Hunterdon Morris Sussex Essex Middlesex Passaic Union Hudson Monmouth Somerset Warren New York 47,944 14,830,192 DISTRICT NO. 3—PHILADELPHIA 37,023 8,437,034 Delaware 1,978 318,085 New Jersey (southern part) 3,931 1,122,418 Counties of— Atlantic Cape May Gloucester Ocean Burlington Cumberland Mercer Salem Camden Pennsylvania (eastern part) 31,114 6,996,531 Co unties of— Adams Clinton Lebanon Philadelphia Bedford Columbia Lehigh Pike Berk:; Cumberland Luzerne Potter Blair Dauphin Lycoming Schuylkiil Bradford Delaware McKean Snyder Bucks Elk Miffiin Sullivan Cambria Franklin Monroe Susquehanna Cameron Fulton Montgomery Tioga Carbon Huntingdon Montour Union Centre Juniata Northampton Wayne Chester Lackawanna Northumberland Wyoming Clearfield Lancaster Perry York Digitized for FRASER http://fraser.s L t loAurmisfeedd f.oorrcge/s personnel overseas are not included. Federal Reserve Bank of St. Louis

125 FEDERAL RESERVE SYSTEM DESCRIPTION OF FEDERAL RESERVE DISTRICTS—Cont. Land area Popula- Federal Reserve district (square tion, 1950 miles) census1 DISTRICT NO. 4—CLEVELAND 73,844 13,032,470 Kentucky (eastern nart^ 17,711 1,383,816 Counties of— Bath Fleming Lawrence Nicholas Bell Floyd Lee Owsley Boone Garrard Leslie Pendleton Bourbon Grant Letcher Perry Boyd Greenup Lewis Pike Bracken Harlan Lincoln Powell Breathitt Harrison Madison Pulaski Campbell Jackson MagofFm Robertson Carter Jessamine Martin Rockcastle Clark Johnson Mason Rowan Clay Kenton McCreary Scott Elliott Knott Menifee Whitley Estill Knox Montgomery Wolfe Fayette Laurel Morgan Woodford Ohio 41,000 7,946,627 Pennsylvania (western nart^).... 13,931 3,501,481 Counties of— Allegheny Crawford Indiana Venango Armstrong Erie Jefferson Warren Beaver Fayette Lawrence Washington Butler Forest Mercer Westmoreland Clarion Greene Somerset West Virginia (northern narf) 1,202 200,546 Counties of— Brooke Marshall Tyler Hancock Ohio Wetzel DISTRICT NO. 5—RICHMOND 152,115 14,447,821 District of Columbia 61 802,178 Maryland 9,881 2,343,001 North Carolina 49,097 4,061,929 South Carolina. 30,305 2,117,027 Virginia 39,893 3,318,680 West Virginia (southern nart^ .. 22,878 1,805,006 Counties of— Barbour Hardy Mingo Roane Berkeley Harrison Monongalia Summers Boone Jackson Monroe Taylor Braxton Jefferson Morgan Tucker Cabell Kanawha Nicholas Upshur Calhoun Lewis Pendleton Wayne Clay Lincoln Pleasants Webster Doddridge Logan Pocahontas Wirt Fayette Marion Preston Wood Gilmer Mason Putnam Wyoming Grant McDowell Raleigh Greenbrier Mercer Randolph Hampshire Mineral Ritchie DISTRICT NO. 6—ATLANTA 247,589 14,653,406 Alabama 51,078 3,061,743 Florida 54,262 2,771,305 Georgia 58,483 3,444,^578 Digitized for FRASER http://fraser.sLtl oAurimsfeedd .foorrgce/ s personnel overseas are not included. Federal Reserve Bank of St. Louis

126 ANNUAL REPORT OF BOARD OF GOVERNORS DESCRIPTION OF FEDERAL RESERVE DISTRICTS—Cont. Land area Popula- Federal Reserve district (square tion, 1950 miles) census1 DISTRICT NO. 6—ATLANTA—Continued Louisiana (southern nart*} 26,630 i Q24 4^ Parishes of— Acadia Evangeline Rapides Tangipahoa Allen Iberia St. Bernard Terrebonne Ascension Iberville St. Charles Vermilion Assumption Jefferson St. Helena Vernon Avoyelles Jefferson Davis St. James Washington Beauregard Lafayette St. John the West Baton Calcasieu La Fourche Baptist Rouge Cameron Livingston St. Landry West Feliciana East Baton Orleans St. Martin Rouge Plaquemines St. Mary East Feliciana Pointe Coupee St. Tammany Mississippi (southern nart^ 26,092 1,137,877 Counties of— Adams Harrison Lawrence Scott Amite Hinds Leake Sharkey Claiborne Issaquena Lincoln Simpson Clarke Jackson Madison Smith Copiah Jasper Marion Stone Covington Jefferson Neshoba Walthall Forrest Jefferson Davis Newton Warren Franklin Jones Pearl River Wayne George Kemper Perry Wilkinson Greene Lamar Pike Yazoo Hancock Lauderdale Rankin Tennessee (easternpart) 31,044 2,313,470 Counties of— Anderson Giles Macon Scott Bedford Grainger Marion Sequatchie Bledsoe Greene Marshall Sevier Blount Grundy Maury Smith Bradley Hamblen McMinn Stewart Campbell Hamilton Meigs Sullivan Cannon Hancock Monroe Sumner Carter Hawkins Montgomery Trousdale Cheatham Hickman Moore Unicoi Claiborne Houston Morgan Union Clay Humphreys Overton Van Buren Cocke Jackson Perry Warren Coffee Jefferson Pickett Washington Cumberland Johnson Polk Wayne Davidson Knox Putnam White De Kalb Lawrence Rhea Williamson Dickson Lewis Roane Wilson Fentress Lincoln Robertson Franklin Loudon Rutherford DISTRICT NO. 7—CHICAGO 190,524 22,176,090 Illinois (northern part) 35,333 7,392,839 Counties of— Boone Champaign Cook Douglas Bureau Christian Cumberland Du Page Carroll Clark De Kalb Edgar Cass Coles De Witt Ford Digitized for FRASER 1 Armed forces personnel overseas are not included. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 127 DESCRIPTION OF FEDERAL RESERVE DISTRICTS—Cont. Land area Popula- Federal Reserve district (square tion, 1950 miles) census1 DISTRICT NO. 7—CHICAGO—Continued Illinois (northern part) Counties of—Continued Fulton Lake Menard Stark Grundy La Salle Mercer Stephenson Hancock Lee Moultrie Tazewell Henderson Livingston Ogle Vermilion Henry Logan Peoria Warren Iroquois Macon Piatt Whiteside Jo Daviess Marshall Putnam Will Kane Mason Rock Island Winnebago Kankakee McDonough Sangamon Woodford Kendall McHenry Schuyler Knox McLean Shelby Indiana (northern DarO 26,806 3,240,863 Counties of— Adams Fountain La Porte Ripley Allen Franklin Madison Rush Bartholomew Fulton Marion St. Joseph Benton Grant Marshall Shelby Blackford Hamilton Miami Starke Boone Hancock Monroe Steuben Brown Hendricks Montgomery Tippecanoe Carroll Henry Morgan Tipton Cass Howard Newton Union Clay Huntington Noble Vermillion Clinton Jasper Ohio Vigo Dearborn Jav Owen Wabash Decatur Jennings Parke Warren De Kalb Johnson Porter Wayne Delaware Kosciusko Pulaski Wells Elkhart Lagrange Putnam White Fayette Lake Randolph Whitley Iowa 56,045 2,621,073 Michigan (souther*1 narr^ 40,484 6,069,508 Counties of— Alcona Eaton Lapeer Ogemaw Allegan Emmet Leelanau Osceola Alpena Genesee Lenawee Oscoda Antrim Gladwin Livingston Otsego Arenac Grand Traverse Macomb Ottawa Barry Gratiot Manistee Presque Isle Bay Hillsdale Mason Roscommon Benzie Huron Mecosta Saginaw Berrien Ingham Midland St. Clair Branch Ionia Missaukee St. Joseph Calhoun Iosco Monroe Sanilac Cass Isabella Montcalm Shiawassee Charlevoix Jackson Montmorency Tuscola Cheboygan Kalamazoo Muskegon Van Buren Clare Kalkaska Newaygo Washtenaw Clinton Kent Oakland Wayne Crawford Lake Oceana Wexford Wisconsin (southern nart^ 31,856 2,851,807 Counties of— Adams Clark Dane Fond du Lac Brown Columbia Dodge Grant Calumet Crawford Door Green Digitized for F1 RAArmSeEdR f orces personnel overseas are not included. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 ANNUAL REPORT OF BOARD OF GOVERNORS DESCRIPTION OF FEDERAL RESERVE DISTRICTS—Cont. Land area Popula- Federal Reserve district (square tion 1950 miles) census1 DISTRICT NO. 7—CHICAGO—Continued Wisconsin (southern part) Counties of—Continued Green: Lake Manitowoc Portage Washington Iowa Marathon Racine Waukesha Jackson Marinette Richland Waupaca Jefferson Marquette Rock Waushara Juneau Milwaukee Sauk Winnebago Kenosha Monroe Shawano Wood Kewa.unee Oconto Sheboygan Lafayette Outagamie Vernon Langlade Ozaukee Wai worth DISTRICT NO. 8—ST. LOUIS... 195,431 10,472,721 Arkansas 52,675 1,909,511 Illinois (southern part) 20^602 1,319,337 Counties of— Adams Franklin Macoupin Randolph Alexander Gallatin Madison Richland Bond Greene Marion St. Clair Brown Hamilton Massac Saline Calhoun Hardin Monroe Scott Clay Jackson Montgomery Union Clinton Jasper Morgan Wabash Crawford Jefferson Perry Washington Edwards Jersey Pike Wayne Effingham Johnson Pope White Fayette Lawrence Pulaski Williamson Indiana (southern narO 9,399 693,361 Counties of— Clark Greene Martin Spencer Crawford Harrison Orange Sullivan Daviess Jackson Perry Switzerland Dubois Jefferson Pike Vanderburgh Floyd Knox Posey Warrick Gibson Lawrence Scott Washington Kentucky ("western n^rt^ . . 22,153 1,560 990 Counties of— •*• J ^ v^v^ y j ^ v Adaiir Crittenden Hopkins Ohio Allen Cumberland Jefferson Oldham Anderson Daviess Larue Owen Ballird Edmonson Livingston Russell Barren Franklin Logan Shelby Boyle Fulton Lyon Simpson Breckinridge Gallatin Marion Spencer Bullitt Graves Marshall Taylor Butler Grayson McCracken Todd Caldwell Green McLean Calloway Hancock Meade Trimble Carlisle Hardin Mercer Union Carroll Hart Metcalfe Warren Casey Henderson Monroe Washington Christian Henry Muhlenberg Wayne Clinton Hickman Nelson Webster 1 Armed forces personnel overseas are not included. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 129 DESCRIPTION OF FEDERAL RESERVE DISTRICTS—Cont. Land area Popula- Federal Reserve district (square tion, 1950 miles) census1 DISTRICT NO 8—ST LOUIS—Cnntinn«1 Mississippi (northpf*n nart^ 21,156 1,041,037 Counties of— Alcorn De Soto Monroe Tate Attala Grenada Montgomery Tippah Benton Holmes Noxubee Tishomingo Bolivar Humphreys Oktibbeha Tunica Calhoun Itawamba Panola Union Carroll Lafayette Pontotoc Washington Chickasaw Lee Prentiss Webster Choctaw Leflore Quitman Winston Clay Lowndes Sunflower Yalobusha Coahoma Marshall Tallahatchie Missouri (eastern aarO 58,693 2,970,237 Counties of— Adair Douglas Maries Reynolds Audraifl Dunklin Marion Ripley Barry Franklin Mercer St. Charles Benton Gasconade Miller St. Clair Bollinger Greene Mississippi St. Francois Boone Grundy Moniteau St. Louis Butler Harrison Monroe St. Louis City Caldwell Henry Montgomery Ste. Gene vie ve Call away Hickory Morgan Saline Camden Howard New Madrid Schuyler Cape Girardeau Howell Oregon Scotland Carroll Iron Osage Scott Carter Jefferson Ozark Shannon Cedar Johnson Pemiscot Shelby Chariton Knox Perry Stoddard Christian Laclede Pettis Stone Clark Lafayette Phelps Sullivan Cole Lawrence Pike Taney Cooper Lewis Polk Texas Crawford Lincoln Pulaski Warren Dade Linn Putnam Washington Dallas Livingston Rails Wayne Daviess Macon Randolph Webster Dent Madison Ray Wright Tennessee (westenI DarO 10,753 978,248 Counties of— Benton Fayette Henry Shelby Carroll Gibson Lake Tipton Chester Hardeman Lauderdale Weakley Crockett Hardin Madison Decatur Haywood McNairy Dyer Henderson Obion DISTRICT NO. 9—MINNEAPOLIS 411,867 5,730,909 Michigan (northern nart^ 16,538 302,258 Counties of— Alger Dickinson Ke ween aw Menominee Baraga Gogebic Luce Ontonagon Chippewa Houghton Mackinac Schooler aft Delta Iron Marquette 1 Armed forces personnel overseas are not included. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 ANNUAL REPORT OF BOARD OF GOVERNORS DESCRIPTION OF FEDERAL RESERVE DISTRICTS—Cont. Land area Popula- Federal Reserve district (square tion, 1950 miles) census1 DISTRICT NO. 9—MINNEAPOLIS—Continued Minnesora 80,009 2,982,483 Montana 145^878 591^024 North Dakota . 70,057 619^636 South Dakota.... 76,536 652,740 Wisconsin (northern nart^ 22,849 582,768 Counties of— Ashland Dunn Oneida Sawyer Barrort Eau Claire Pepin Taylor Bayfield Florence Pierce Trempealeau Buffalo Forest Polk Vilas Burnett Iron Price Washburn Chippewa La Crosse Rusk Douglas Lincoln St. Croix DISTRICT NO. 1O-KANSAS CITY 480,362 8,309,576 Colorado 103,922 1,325,089 Kansas 82,108 1,905,299 Missouri (western oarO 10,533 984,416 Counties of—r * ^ Andrew Cass Holt Nod away Atchison Clay Jackson Platte Barton Clinton Vernon Bates De Kalb McDonald Worth Buchanan Gentry Newton 76,663 1,325,510 New M(*xico (northern nart^ 48,065 379,485 Counties of— Bernalillo McKinley San Juan Union Colfax * Mora San Miguel Valencia Harding Rio Arriba Santa Fe Los Alamos Sandoval Taos Oklahoma f northswestern Dart*) 61,565 2099,248 Counties of— Ad air Ellis Logan Pontotoc Alfalfa Garfield Love Pottawatomie Beaver Garvin Major Roger Mills Beckham Grady Mayes Rogers Blaine Grant McClain Seminole Caddo Greer Mclntosh Sequoyah Canadian Harmon Murray Stephens Carter Harper Muskogee Texas Cherokee Haskell Noble Tillman Cimarron Hughes Nowata Tulsa Cleveland Jackson Okfuskee Wagoner Comstnche Jefferson Oklahoma Washington Cotton Kay Okmulgee Washita Craig Kingfisher Osage Woods Creek Kiowa Ottawa Woodward Custer Latimer Pawnee Delaware Le Flore Payne Dewey Lincoln Pittsburg Wyoming 97,506 290,529 1 Armed forces personnel overseas are not included. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 131 DESCRIPTION OF FEDERAL RESERVE DISTRICTS—Cont. Land area Popula- Federal Reserve district (square tion, 1950 miles) DISTRICT NO. 11—DALLAS 386,184 9,113,920 Arizona (southeastern part) , 23,227 207,838 Counties of— Cochise Greenlee Pima Santa Cruz Graham Louisiana (northern part) 18,532 759,083 Parishes of— Bienville De Soto Madison Tensas Bossier East Carroll Morehouse Union Caddo Franklin Natchitoches Webster Caldwell Grant Ouachita West Carroll Catahoula Jackson Red River Winn Claiborne La Salle Richland Concordia Lincoln Sabine New Mexico (southern part) 73,446 301,702 Counties of— Catron Eddy Lincoln Sierra Chaves Grant Luna Socorro Curry Guadalupe Otero Torrance De Baca Hidalgo Quay Dona Ana Lea Roosevelt Oklahoma (southeastern part) 7,466 134,103 Counties of— Atoka Choctaw Johnston McCurtain Bryan Coal Marshall Pushmataha Texas , 263,513 7,711,194 DISTRICT NO. 12—SAN FRANCISCO 685,093 16,465,858 Arizona (northwestern part) 90,348 541,749 Counties of— Apache Maricopa Navajo Yavapai Coconino Mohave Pinal Yuma Gila California 156,740 10,586,223 Idaho 82,769 588,637 Nevada 109,789 160,083 Oregon 96,315 1,521,341 Utah. 82,346 688,862 Washington 66,786 2,378,963 1 Armed forces personnel overseas are not included. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 ANNUAL REPORT OF BOARD OF GOVERNORS FEDERAL RESERVE BRANCH TERRITORIES [December 31,1953] BUFFALO BRANCH (District No. 2).—The 10 most westerly counties in the State of New York, as follows: Allegany Chautauqua Genesee Monroe Orleans Cattaraugus Erie Livingston Niagara Wyoming CINCINNATI BRANCH (District No. 4).—That part of the State of Kentucky in Federal Reserve District No. 4, and the following counties in southern Ohio: Adams Clermont Greene Meigs Ross Athens Clinton Hamilton Miami Scioto Brown Darke Highland Montgomery Vinton Butler Fayette Jackson Pike Warren Clark Gallia Lawrence Preble Washington PITTSBURGH BRANCH (District No. 4).—Those parts of the States of Pennsylvania and West Virginia included in Federal Reserve District No. 4. BALTIMORE BRANCH (IJjjStrict No. 5).—The State of Maryland and the following counties in the State of West Virginia: Barbour Grant Lewis Pendleton Taylor Berkeley Hampshire Marion Pleasants Tucker Braxton Hardy Mineral Preston Upshur Calhoun Harrison Monongalia Randolph Webster Doddridge Jackson Morgan Ritchie Wirt Gilmer Jefferson Nicholas Roane Wood CHARLOTTK BRANCH (District No. 5).—The following counties in the States of North Carolina and South Carolina: NORTH CAROLINA Aiamance Catawba Guilford Mecklenburg Stanly Alexander Chatham Haywood Mitchell Stokes Alleghany Cherokee Henderson Montgomery Surry Anson Clay Iredell Moore Swain Ashe Cleveland Jackson Polk Transylvania Avery Davidson Lee Randolph Union Buncombe Davie Lincoln Richmond Watauga Burke Forsyth Macon Rockingham Wilkes Cabarrus Gaston Madison Rowan Yadkin Caldwell Graham McDowell Rutherford Yancey SOUTH CAROLINA Abbeville Edgefield Lancaster Newberry Saluda Aikeo Fairfield Laurens Oconee Spartanburg Anderson Greenville Lexington Pickens union Cherokee Greenwood McCormick Richland York Chester BIRMINGHAM BRANCH (District No. 6).—The State of Alabama except the following counties: Baldwin Covington Geneva Houston Pike Barbour Dale Henry Mobile Russell Coffee? and towns and cities in Lee and Chambers counties located on or south of the Atlanta & West Point Rail Road and the Western Railway of Alabama. JACKSONVILLE BRANCH (District No. 6).—The entire State of Florida. NASHVILLK BRANCH (District No. 6).—That part of the State of Tennessee included in Federal Reserve District No. 6 with the exception of the city of Chattanooga. NEW ORLEANS BRANCH (District No. 6).—Those parts of the States of Louisiana and Mississippi located in Federal Reserve District No. 6, and the counties of Baldwin and Mobile in the State of Alabama. DETROIT BRANCH1 (District No. 7).—The following counties in the State of Michigan: Bay Ingham Livingston Saginaw Tuscola Genesee Jackson Macomb St. Clair Washtenaw Hillsdale Lapeer Monroe Sanilac Wayne Huron Lenawee Oakland Shiawassee 1 Territory increased effective Jan. 1, 1954 to include all that part of the State of Michigan in Federal Reserve District No. 7. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 133 FEDERAL RESERVE BRANCH TERRITORIES—Cont, LITTLE ROCK BRANCH (District No. 8).—The State of Arkansas except the following counties: Baxter Craighead Greene Mississippi Sebastian Benton Crawford Lawrence Phillips Sharp Boone Crittenden Lee Poinsett Washington Carroll Cross Madison Randolph Woodruff Clay Fulton Marion St. Francis and except also the town of Mena (Polk County). LOUISVILLE BRANCH (District No. 8).—That part of the State of Kentucky included in Federal Reserve District No. 8, with the exception of the town of Morganfield (Union County), and the following counties in the State of Indiana: Clark Floyd Jefferson Orange Switzerland Crawford Harrison Lawrence Perry Washington Dubois2 Jackson Martin8 Scott MEMPHIS BRANCH (District No. 8).—Those parts of the States of Mississippi and Tennessee included in Federal Reserve District No. 8, with the exception of Union City (Obion County), Tennessee, and the following counties in the State of Arkansas: Craighead4 Cross Lee Phillips St. Francis Crittenden Lawrence Mississippi Poinsett Woodruff HELENA BRANCH (District No. 9).—The entire State of Montana. DENVER BRANCH (District No. 10).—The entire State of Colorado and that part of the State of New Mexico included in Federal Reserve District No. 10. OKLAHOMA CITY BRANCH (District No. 10).—That part of the State of Oklahoma located in Federal Reserve District No. 10. OMAHA BRANCH (District No. 10).—The entire States of Nebraska and Wyoming. EL PASO BRANCH (District No. 11).—That part of the States of Arizona and New Mexico located in Federal Reserve District No. 11, and the following counties in the State of Texas: AAdn drews EE ctor JJfeff f DDia vis MMiiddlaldnd RReeves Brewster El Paso Loving Pecos Ward Crane Hudspeth Martin Presidio Winkler Culberson HOUSTON BRANCH (District No. 11).—The following counties in the southeastern part of the otate 01 lexas. Cherokee Jackson Nacogdoches Shelby Anderson Angelina Colorado Jasper Newton Trinity Austin Fayette Jefferson Orange Tyler Bastrop Fort Bend Lavaca Polk Victoria Brazoria Galveston Lee Refugio Walker Brazos Grimes Liberty Sabine Waller Burleson Hardin Madison San Augustine Washington Calhoun Harris Matagorda San Jacinto Wharton Chambers Houston Montgomery SAN ANTONIO BRANCH (District No. 11).—The following counties in the State of Texas: Aransas De Witt Hidalgo La Salle Starr Atascosa Dimmit Jim Hogg Live Oak Terrell Bandera Duval Jim Wells Llano Travis Bee Edwards Karnes Mason Uvalde Bexar Frio Kendall Maverick Val Verde Blanco Gillespie Kenedy McMullen Webb Brooks Goliad Kerr Medina Willacy Caldwell Gonzales Kimble Nueces Wilson Cameron Guadalupe Kinney Real Zapata Comal Hays Kleberg San Patricio Zavalla Los ANGELES BRANCH (District No. 12).—That part of the State of Arizona located in Federal Reserve District No. 12, and the following counties in the State of California: Imperial Los Angeles Riverside San Diego Ventura Inyo Orange San Bernardino Santa Barbara 2 Except the town of Holland. 1 Except the town of Loogootec. 4 Except the town of Jonesboro. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 ANNUAL REPORT OF BOARD OF GOVERNORS FEDERAL RESERVE BRANCH TERRITORIES—Cont. PORTLAND BRANCH (District No. 12).—The entire State of Oregon, and the town of Ilwaco and the following counties in the State of Washington: Asotin Columbia Garfield Skamania Walla Walla Clark Cowlitz Klickitat Wahkiakum Also, the following counties in the State of Idaho: Benewah Boundary Idaho Latah Nez Perce Bonner Clearwater Kootenai Lewis Shoshone SALT LAKE CITY BRANCH (District No. 12).—The entire State of Utah and the following counties in the States of Idaho and Nevada: IDAHO Ada Bonneville Custer Jerome Payette Adams Butte Elmore Lemhi Power Bannock Camas Franklin Lincoln Teton Bear Lake Canyon Fremont Madison Twin Falls Bingham Caribou Gem Minidoka Valley Blaine Cassia Gooding Oneida Washington Boise Clark Jefferson Owyhee NEVADA Clark Elko Lincoln White Pine SEATTLE BRANCH (District No. 12).—The entire State of Washington except the town of Ilwaco and the following counties which are affiliated with the Portland Branch: Asotin Columbia Garfield Skamania Walla Walla Clark Cowlitz Klickitat Wahkiakum Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM BOUNDARIES OF FEDERAL RESERVE DISTRICTS AND THEIR BRANCH TERRITORIES I C/5 33=3 BOUNDARIES OF FEDERAL RESERVE DISTRICTS — BOUNDARIES OF FEDERAL RESERVE BRANCH TERRITORIES iC BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM ® FEDERAL RESERVE BANK CITIES • FEDERAL RESERVE BRANCH CITIES JANUARY L 1954 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM NOTE: For a description of the Federal Reserve districts and branch territories, see pp. 124-134 of this Report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX Acceptances: Page Bankers, buying rates on 74, 90 Drafts or bills of exchange for purpose of furnishing dollar exchange, application granted 45 Assets and liabilities: All banks in the United States, by classes 77 Federal Reserve Banks 58, 60 Balance of payments, United States 32 Bank credit (See Credit) Bank holding companies 44 Bank premises, Federal Reserve Banks and branches 53, 72 Bank supervision by Federal Reserve System 43 Banking offices: Analysis of changes 79 Number of 41 Board of Governors: Accounts audited 55 Income and expenses 54 Members 106 Officers 106 Policy actions (See Policy actions) Reimbursable expenditures 55 Branch banks: Domestic, number and analysis of changes 41, 79 Federal Reserve System: Bank premises 53, 72 Buffalo, site for new building acquired 53 Buildings, amendment to Section 10 of Federal Reserve Act increasing amount which may be expended for 48 Denver, property for addition acquired 53 Directors, list of Ill Los Angeles, construction of addition and purchase of property authorized 53 Territory of 132 Vice Presidents in charge of 123 Foreign, number in operation 45 Buying rates on acceptances 74, 90 Capital accounts: Federal Reserve Banks 59, 61, 63 Member banks 41, 77 Chairmen of Federal Reserve Banks: Conference of 109 Executive committee 109 List of 109 Meetings 53 Charts: Changes in bank loans, selected industries 26 Deposits and currency 28 Federal Reserve credit 5 Gold reserves and dollar holdings of foreign countries 34 Digitized for FRASER 136 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 137 Charts—Continued Page Gross national product 12 Inventories 11 Member bank reserves and related items 30 Money rates 23 Selected business indexes 9 Clayton Antitrust Act, termination of proceeding against Transamerica Corporation 47 Commercial banks: Assets and liabilities 77 Holdings of Government securities 25 Loans and investments 25 Condition statements of Federal Reserve Banks: All banks combined 58 Each bank 60 Conferences {See Meetings) Court cases: Transamerica Corporation, termination of proceeding 47 Credit: Federal Reserve policy 3 Stock market credit, regulation of 6 Credit and money, review for year 24 Currency, growth during year 28 Debt and equity financing 19 Defense Production Act, amendments 48 Deposits: All banks in the United States, by classes 77 Growth during year 28 Time, maximum rates on 75 Deputy Chairmen of Federal Reserve Banks 109 Directors: Federal Reserve Banks: Classes of 110 List of 110 Federal Reserve branch banks: List of Ill Discount and discount rate mechanism, review of 8 Discount rates at Federal Reserve Banks 3, 6, 74, 82 Dividends: Federal Reserve Banks 50 Member banks 40, 78 Dollar exchange, permission to accept drafts or bills drawn for purpose of furnishing 45 Earnings and expenses: Federal Reserve Banks: 1953 50, 66 1914-1953 68 Member banks 40, 78 Economic conditions, review for year 8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 INDEX Page Examinations: Federal Reserve Banks 43 Foreign banking corporations 46 Holding company affiliates 44 State; member banks 43 Expenses: Board of Governors 54 Federal Reserve Banks 50, 66, 68 Federal Advisory Council: Executive committee 108 Meetings 53 Members and officers 108 Federal Open Market Committee: Executive committee 107 Meetings 53 Members and officers 107 Policy actions 86 Report of special subcommittee appointed to study techniques and operations of Government securities market 89 Federal Reserve Act: Section 10, amendment increasing amount which may be expended for Federal Reserve branch buildings 48 Section 24, amendment authorizing national banks to make loans on forest tracts 48 Federal Reserve Banks: Assets and liabilities 58, 60 Bank premises 53, 72 Chairmen (See Chairmen of Federal Reserve Banks) Condition, statement of 58, 60 Directors 110 Discount rates 3, 6, 74, 82 Districts, description of 124 Dividends 50 Earnings and expenses 50, 66, 68 Earnings on loans and securities 51 Examination of 43 First Vice Presidents 122 Foreign and international accounts 52 Holdings of Government securities 51, 64 Holdings of short-term Treasury certificates 65 Officers 122 Officers and employees, number and salaries 73 Presidents 122 Profit and loss 67 Sale direct to Treasury of Treasury notes 5, 30 65 Vice Presidents 122 Volume of operations 49, 65 Federal Reserve credit policy 3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 139 Page Federal Reserve notes: Cost of printing 55 Issued to and held by Federal Reserve Banks 59, 61, 63 Payments to Treasury as interest 50 Federal Reserve System: Changes in membership 42 Map 135 Foreign banking corporations 45 Foreign countries: Financial developments 31 Gold reserves and dollar holdings 34 Production 15 Government securities: Holdings of commercial banks 25 Holdings of Federal Reserve Banks 51, 64 Open market operations 4 Report of special subcommittee appointed to study techniques and operations of market 89 Treasury certificates, holdings of short-term by Federal Reserve Banks 65 Treasury notes, sale direct to Treasury by Federal Reserve Banks. . 5, 30, 65 Holding company affiliates 44 Income and saving 18 Industrial production 14 Inter-Agency Bank Examination School 46 Interest rates: Changes during year 23 Federal Reserve Banks 74 Loans guaranteed under Defense Production Act 38, 76 Labor market, developments during year 14 Legislation: Federal Reserve branch buildings, amendment to Section 10 of Federal Reserve Act 48 Guarantees of defense production loans 48 Loans on forest tracts, by national banks, amendment to Section 24 of Federal Reserve Act 48 Loans: Defense production: Fees and rates under Regulation V 38, 76 Guarantees of 37, 48 Federal Reserve Banks, earnings on 51 Industrial, under Section 13(b) of Federal Reserve Act, changes in rates approved 82 Real estate loans on forest tracts, by national banks, amendment to Section 24 of Federal Reserve Act 48 Loans and investments: All banks in the United States 77 Commercial banks 25 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 INDEX Page Margin requirements: Reduction from 75 to 50 per cent 6, 47, 83 Table 76 Meetings: Chairmen of Federal Reserve Banks 53 Federal Advisory Council 53 Federal Open Market Committee 53 Presidents of Federal Reserve Banks 53 Member banks: Acceptance powers 45 Analysis of changes 79 Assets and liabilities 77 Capital accounts 41, 77 Dividends 40, 78 Earnings and expenses 39, 40, 78 Number of 42 Reserve positions 29 Reserve requirements: Reduction in 6, 47, 84 Table 75 Reserves, Reserve Bank credit, and related items 70 Membership in Federal Reserve System, changes in 42 Money and bank credit, review for year 24 Mutual savings banks: Analysis of changes 79 Assets and liabilities 77 National banks: Analysis of changes 79 Assets and liabilities 77 Loans on forest tracts by, amendment to Section 24 of Federal Reserve Act 48 Trust powers granted to 44 Nonmember banks: Analysis of changes 79 Assets and liabilities 77 Par list, number on list and not on list 80 Open market operations 4 Open-end investment shares, amendment to Regulation U with respect to bank financing of 83 Par list: Number of banks on, changes during year 43 Number of banks on list and not on list, by Federal Reserve districts and States 80 Policy actions, Board of Governors: Advances to individuals, partnerships, or corporations other than member banks, increase in rate at Federal Reserve Bank of Atlanta 85 Discounts and advances to member banks under Sections 13, 13(a), and 10(b) of Federal Reserve Act, changes in rates. . 82 Regulation D, Reserves of member banks, amendment to 84 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 141 Policy actions, Board of Governors—Continued Page Regulation T, Extension and maintenance of credit by brokers, dealers, and members of national securities exchanges, amendment to. . 83 Regulation U, Loans by banks for the purpose of purchasing or carrying stocks registered on a national securities exchange, amendments to 83 Policy actions, Federal Open Market Committee: Authority to effect transactions in System account: Meeting of March 4-5 86 Meeting of June 11 92 Meeting of September 24 96 Meeting of December 15 100 Bankers' acceptances, increase in minimum buying rate 90 Repurchase agreements 91 Statement of terms upon which Federal Reserve Bank of New York would transact business with brokers and dealers in Government securities for System account, abandonment of 90 Transactions for purpose of altering maturity distribution of securities in System account 103 Presidents of Federal Reserve Banks: Conference of 123 List of 122 Meetings 53 Prices, changes in 17 Production: Foreign countries 15 Review for year 10 Rates: Advances to individuals, partnerships, and corporations other than member banks 74, 82, 85 Advances to member banks under Section 10(b) of Federal Reserve Act 74, 82 Buying, on acceptances 74, 90 Discount, at Federal Reserve Banks 3, 6, 74, 82 Industrial loans and commitments under Section 13(b) of Federal Reserve Act 74, 82 Interest 23, 74 Loans guaranteed under Defense Production Act 38, 76 Postal Savings deposits 75 Savings deposits 75 Time deposits 75 Regulations, Board of Governors: D, Reserves of member banks, Amendment decreasing reserve requirements 47, 84 T, Extension and maintenance of credit by brokers, dealers, and members of national securities exchanges: Amendment decreasing margin requirements 47, 83 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 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 decreasing margin requirements 47, 83 Amendment with respect to certain shares of open-end investment companies 47, 83 V, Loan guarantees for defense production 38 Repurchase agreements 91 Reserve positions of member banks 29 Reserve requirements: Member banks: Reduction in 6, 47, 84 Table 75 Reserves: Member banks, 1918-1953 70 Salaries: Board of Governors 54 Officers and employees of Federal Reserve Banks 73 State member banks: Analysis of changes 79 Assets and liabilities 77 Changes in membership 42 Examination of 43 System open market account: Authority to effect transactions in 86, 92, 96, 100 Bankers acceptances 90 Repurchase agreements 91 Statement of terms upon which Federal Reserve Bank of New York would transact business with brokers and dealers in Government securities for, abandonment of 8, 90 Transactions for purpose of altering maturity distribution of securities in 103 Transamerica Corporation, termination of proceeding 47 Trust powers of national banks 44 Voting permits issued to bank holding companies 44 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis