Annual Report of the Federal Reserve Board, 1954

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

LETTER OF TRANSMITTAL BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Washington, March 15, 1955. 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 Forty-first Annual Report of the Board of Governors of the Federal Reserve System. This report covers operations for the year 1954. 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 4 Open market operations 6 Changes in discount rate 7 Change in reserve requirements 7 Economic Conditions 8 Demand and production 8 Industrial production 11 Agriculture 13 Labor market 13 Prices 14 Income and saving 15 Debt and equity financing 17 Interest rates 20 Bank Credit and Money 22 Bank loans and investments 22 Deposits and currency 26 Bank reserve positions 27 World Economic and Financial Developments 30 United States balance of payments 31 World commodity prices 34 Countries outside Europe and the Western Hemisphere 34 Western Hemisphere 35 Western Europe 37 Summary 40 Loan Guarantees for Defense Production 40 Banking Operations and Structure 41 Bank earnings and profits 41 Bank earning assets 43 Capital accounts 43 Number of banking offices 44 Federal Reserve membership 44 Par and nonpar banks 45 Designation of reserve cities 46 Bank Supervision by the Federal Reserve System 46 Examination of Federal Reserve Banks 46 Examination of State member banks 46 iii Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Page Bank holding companies 47 Trust powers of national banks 47 Acceptance powers of member banks 47 Foreign branches and banking corporations 48 Inter-Agency Bank Examination School 49 Changes in Regulations of the Board of Governors 49 Reserves of member banks 49 Clearing and collection 50 Foreign banking 50 Legislation 50 Direct purchase and sale of Government obligations 50 Investment in bank premises 50 Paying out Federal Reserve notes 51 Real estate loans by national banks 51 Housing Act of 1954 51 Member banks dealing in obligations of banks for cooperatives 52 Reserve Bank Operations 53 Volume of operations 53 Earnings and expenses 53 Holdings of loans and securities 54 Foreign and international accounts 55 Bank premises 56 Intradistrict territorial changes 57 Board of Governors—Income and Expenses 57 Federal Reserve Meetings 60 Meeting of Central Bank Technicians 60 TABLES 1. Statement of Condition of the Federal Reserve Banks (in detail), Dec. 31, 1954 62 2. Statement of Condition of Each Federal Reserve Bank at: End of 1954 and 1953 64 3. Holdings of United States Government Securities by Federal Reserve Banks, End of December 1952, 1953, and 1954 68 4. Federal Reserve Bank Holdings of Special Short-Term Treasury Certificates Purchased Directly from the United States, 1953-54.. 69 5. Volume of Operations in Principal Departments of Federal Reserve Banks, 1950-54 69 6. Earnings and Expenses of Federal Reserve Banks during 1954 70 7. Earnings and Expenses of Federal Reserve Banks, 1914-54 72 8. Member Bank Reserves, Reserve Bank Credit, and Related Items—End of Year 1918-54 and End of Month 1954 74 iv Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Page 9. Bank Premises of Federal Reserve Banks and Branches, Dec. 31, 1954 76 10. Number and Salaries of Officers and Employees of Federal Reserve Banks, Dec. 31, 1954 77 11. Federal Reserve Bank Discount, Interest, and Commitment Rates, and Buying Rates on Acceptances (in effect Dec. 31, 1954) 78 12. Member Bank Reserve Requirements 79 13. Maximum Interest Rates Payable on Time Deposits 79 14. Margin Requirements 80 15. Fees and Rates Established under Regulation V on Loans Guaranteed Pursuant to Defense Production Act of 1950 80 16. All Banks in the United States, by Classes, Dec. 31, 1954 and 1953, Principal Assets and Liabilities, and Number of Banks 81 17. Member Bank Earnings, by Class of Bank, 1954 and 1953 82 18. Analysis of Changes in Number of Banking Offices during 1954 83 19. Number of Banking Offices on Federal Reserve Par List and not on Par List, by Federal Reserve Districts and States, Dec. 31, 1954 84 APPENDIX Record of Policy Actions—Board of Governors 86 Record of Policy Actions—Federal Open Market Committee 92 Board of Governors of the Federal Reserve System 99 Federal Open Market Committee 100 Federal Advisory Council 101 Directors and Senior Officers of Federal Reserve Banks 102 Map of Federal Reserve Districts 117 Index 118 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ANNUAL REPORT OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Broad recovery in economic activity was under way in the United States as the year 1954 closed, following the period of moderate contraction which began in mid-1953. Total output for the year as a whole was exceeded only in 1953. Abroad, activity increased throughout the year to a record level. In most industrial countries, general averages of commodity prices changed little. Prices of some agricultural and mineral products declined in international trade, and prices of others advanced. Economic readjustment within this country reflected mainly reduced expenditures for national defense and reduction of excessive business inventories. Renewal of economic expansion in the closing months of the year reflected an upswing in private demand. Throughout 1954 credit was readily available on terms attractive to borrowers and demand for many types of credit continued to grow. Nonbank sources supplied a large amount of funds and bank credit expanded appreciably. Interest rates, which by summer had declined to comparatively low levels, showed some firming tendencies over the balance of the year, mainly in response to a strengthening in credit demand. Privately held demand deposits and currency, which changed little in the early part of the year, after allowing for seasonal movements, increased substantially after midyear. At the year-end, they were 4 billion dollars or 3 per cent larger than at the end of 1953. Other liquid assets, such as time and savings deposits, savings and loan shares, and shares in credit unions, also continued to be accumulated. Security flotations and mortgage underwriting were in record volume and investor demand for common stocks was active. Prices of common stocks rose rapidly throughout the year and trading activity increased considerably. Developments in credit markets and interest rates reflected in part the effects of Federal Reserve policy. In order to cushion defense and inventory readjustments and to foster business revival 1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Z ANNUAL REPORT OF BOARD OF GOVERNORS and sustained economic growth, the Federal Reserve until late 1954 followed a policy of actively promoting credit ease. By that time recovery was sufficiently advanced to require modification of this aggressive policy. Debt management operations of the Treasury during the year had objectives parallel with System policy. Following a decline of about one-tenth from mid-1953 to the spring of 1954 and a period of little change from spring to early autumn, this country's industrial activity increased. By December output at factories and mines had recovered half of the decline. The rise reflected expanding production of automobiles and other finished consumer goods as well as gains in output of steel and other materials. The increase in industrial output also reflected the high and rising levels of construction activity. Activity in producers' and military equipment industries, which had declined from mid-1953 through the third quarter of 1954, changed little in the closing months of the year. Gross national product was 357 billion dollars for the year 1954, 8 billion less than the record level for 1953. With price averages fairly stable, the physical volume of product was correspondingly smaller than in the preceding year. Employment was lower than in 1953, and the labor force increased further. Unemployment, although somewhat less severe than in the 1949 recession period, was above the low levels of 1953, both in terms of the number of workers affected and as a percentage of the labor force. Gross national product, which was at an annual rate of 356 billion dollars during the first three quarters of the year, rose to 362 billion in the fourth quarter. Stability through the third quarter reflected important offsetting changes among major sectors of the economy. Major factors in the rise during the fourth quarter were a marked slowing down in inventory liquidation and further increases in consumer buying. Federal outlays for national security purposes were further curtailed in 1954. Business outlays for fixed capital purposes declined moderately. Liquidation of business inventories continued on a large scale in the first three quarters and at a greatly reduced rate in the fourth quarter. Consumer spending for goods and services rose steadily in 1954 to new high levels. Residential construction advanced strongly from already high levels, facilitated by the ready availability of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 3 mortgage funds on downpayment and maturity terms exceptionally attractive to borrowers. Expenditures of State and local governments increased further for roads, schools, other public improvements, and services. Foreign purchases of American goods increased. The sustained rise in consumer expenditures during the year reflected further growth in personal income after taxes. Reductions in tax rates effective at the beginning of the year and increased unemployment compensation and old-age pension payments more than offset reductions in wage and farm incomes. Lower corporate tax rates helped to sustain business profits after taxes. Dividend income and interest payments increased. Farm output continued large in 1954. Markets for important agricultural commodities also were affected by large carryovers from earlier harvests. Domestic demand for farm products was relatively strong, and exports expanded toward the end of the year. Prices of crops under Federal price support programs changed little, but prices of livestock and products declined further. Net farm income was lower than in other postwar years. Unlike some economic adjustments in the past, the business decline from mid-1953 to early 1954 did not become cumulative. Reasons for this are many but special weight must be given to the underlying strength and general resilience of our market economy in making essential adjustments flexibly. Public policy measures which contributed to recovery included prompt actions by the Federal Reserve System to ease credit conditions and reduction of Federal personal and corporate income taxes. Unemployment payments and Federal price supports for basic farm products helped to sustain the incomes of workers and farmers. The further gains in industrial production abroad provided an element of strength in world markets for industrial materials and, by enlarging buying power abroad, made possible an important rise during the year in United States exports. For Western Europe the year was one of rising prosperity, with industrial output greater than a year earlier and about one-fourth larger than in 1950. European activity rose steadily over the year in the durable goods and construction industries and continued at relatively high levels in the textile industries. In most Western European countries the balance of international payments was favorable in 1954 and gold and dollar reserves con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4 ANNUAL REPORT OF BOARD OF GOVERNORS tinued to increase. Under these circumstances, central banks and governments continued to move toward reestablishment of international convertibility of currencies. Restrictions on imports of dollar goods were greatly relaxed in some countries. Sterling held outside the sterling area was made freely transferable except to the dollar area, and Great Britain abolished most governmental controls on prices and internal trade. Financial stability was maintained in other sterling-area countries, where additional progress was made in industrial and agricultural development. In Japan, inflationary tendencies were checked and the international payments position improved. Progress toward establishing conditions appropriate to convertibility was evidenced in the gains in production and international trade in 1954 and in the measures taken to make markets more responsive to changing demand and supply forces. In some countries, however, restrictive controls continued to limit the play of market forces, and in a few of these unchecked inflation hampered sound economic growth and made it difficult to balance external payments with receipts. FEDERAL RESERVE CREDIT POLICY During most of 1954, Federal Reserve policy continued to be directed toward "promoting growth and stability in the economy by actively maintaining a condition of ease in the money market." This directive had been adopted in the latter part of 1953 after gradual relaxation of the policy of restraint followed until May 1953. The policy of restraint had had the purpose of keeping the growing use of credit within the limits set by the resources of the economy, thus avoiding developments of an inflationary arid unsustainable nature. Under that policy Federal Reserve open market operations had supplied only part of the increasing demand for bank reserves. This had made it necessary for banks to borrow frequently in substantial amounts to cover their reserve needs. The restrictive effect of such borrowing was reenforced by an increase in the Federal Reserve Bank discount rate. The new policy of actively maintaining a condition of ease in the money market enabled member banks to reduce their indebtedness to the Federal Reserve Banks and also lowered the cost to in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 5 dividual member banks of such borrowing as was necessary from time to time. Reserves made available by the usual seasonal contraction in monetary needs in the early months of 1954 were not entirely absorbed by Federal Reserve action. Sufficient reserves were thus available not only to relieve most banks of the need to borrow in order to meet temporary reserve adjustments but also to supply the basis for additional bank credit expansion. The Federal Reserve Bank discount rate was reduced twice, in February and again in midspring. Further steps were taken in the spring to support forces favorable to renewed economic growth. First, open market purchases supplied bank reserves in the late spring, to counteract seasonal pressures on bank reserve positions. Second, member bank reserve requirements were reduced around midyear. This action was taken primarily to foster bank credit expansion and provide the reserves that would normally be needed over the remainder of the year. Since more reserves were supplied than were needed initially, open market sales were made to absorb temporarily excess amounts. Over the fall of the year, when demand for credit and currency rose in response to seasonal forces and to expansion in private spending, open market purchases returned reserves to the market. After midyear, as a result of Treasury borrowing and an increase in private borrowing, demand deposits and currency began to expand. As the second half-year progressed, banks made use of available funds to increase their holdings of United States Government securities as well as of other loans and investments. Over the fall, demand deposits and currency grew at a rate of about 500 million dollars a month, after allowance for the usual seasonal increase. Meanwhile, the chief indexes of economic activity were moving to higher levels and by the end of the year it was evident that a recovery movement had taken form. In this situation, Federal Reserve policy became less active in promoting credit and monetary expansion. Member banks found it necessary to borrow at the Federal Reserve Banks to meet December needs for reserves. Credit ease during the year was reflected in an extension of the interest rate declines which had characterized credit markets during the second half of 1953. The declines in rates from their 1953 peaks were greater for issues of intermediate and longer-term securities than in comparable readjustment periods since World War I, and about Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

6 ANNUAL REPORT OF BOARD OF GOVERNORS as much as in the other periods for prime short-term market paper. Market yields on intermediate and longer-term securities tended to stabilize after the first quarter, while yields on short-term paper continued to decline irregularly into the summer. Yields on nearly all types of obligations, particularly short-term paper, showed firming tendencies during the second half of the year. All classes of credit market yields participated in the interest rate decline from mid-1953 to the second quarter of 1954, but differences in adjustment were marked. In general, short-term rates declined more than long-term rates; market rates more than customer rates; United States Government security yields more than those on private securities, and yields on high-grade securities more than those on lower-grade issues. The easy credit situation was also accompanied by increased availability of credit, reflected both in greater willingness of lenders to make loans to credit-worthy risks and in more attractive downpayment and maturity terms for consumer instalment credit and for mortgage borrowers. In response to greater availability of credit, lower interest costs, and other factors, lending activity expanded in some areas and maintained relatively high levels in others. The lower levels of interest rates established between mid-1953 and the second quarter of 1954 were reflected in higher prices for United States Government bonds, State and municipal bonds, and corporate bonds. The higher prices on securities, as well as higher dollar values for other long-lived capital assets, were due in part to the recapitalization of future income at reduced interest rates. The fact of higher prices on these assets tended to enhance the liquidity of the economy by increasing the proportion of assets held by individuals and businesses, especially financial institutions, that could be sold in markets at cost or profit. Greater liquidity for the economy encouraged more active spending and investing on the part of holders of capital assets. Open market operations. As in 1953, System open market operations were coordinated with discount policy and changes in reserve requirements. In January and February 1954, the Federal Reserve made open market sales to absorb only in part the redundancy of bank reserves that appears at that season. Receding credit demands in these and early spring months also contributed to easier bank reserve positions. Over this period, member bank bor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 7 rowing tended to decline and excess reserves to rise. During the second half of May and in June, the Federal Reserve purchased about 300 million dollars of Government securities to offset a drain on bank reserves from an outflow of currency and gold and to keep banks in an easy reserve position. Following the reduction in reserve requirements during the summer, sales of Government securities were made by the System in order temporarily to absorb reserve funds not needed until the fall period of active currency and credit demand. Beginning in September, open market purchases were geared to the maintenance of an easy member bank reserve position during the fall phase of bank credit and monetary expansion. Late in the year, as business expansion began to gather momentum, open market purchases were moderated and bank reserve positions were subject to some tightening from pressures resulting from year-end and other credit demands. Changes in discount rate. During the first half of February 1954, the discount rate was reduced from 2 to 1% per cent at all Federal Reserve Banks. A second reduction was made by the Reserve Banks during the period April 14-May 21, when this rate was changed to ll/ per cent. In both instances, the actions were 2 designed to bring the discount rate into closer alignment with short-term market rates as well as to make it less expensive for individual member banks to make temporary adjustments in their reserve positions by borrowing at the Federal Reserve Banks. Change in reserve requirements. On June 21, 1954 the Board announced a program to reduce member bank reserve requirements. The program was made effective over a period of several weeks. When completed on August 1, 1954 it included a reduction of 1 percentage point on time deposits at all member banks, a reduction of 2 percentage points on net demand deposits at central reserve city banks, and a reduction of 1 percentage point on net demand deposits at reserve city and country banks. The reserve requirement percentages in effect following this action were 5 per cent on time deposits at all member banks and 20, 18, and 12 per cent, respectively, on net demand deposits at central reserve city, reserve city, and country banks. The reductions in reserve requirements, which released about 1.6 billion dollars of reserve funds, were made in anticipation of bank reserve needs over the fall. They took into account probable ex- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

8 ANNUAL REPORT OF BOARD OF GOVERNORS pansion of financing requirements of private activities, including seasonal needs for marketing crops and for replenishing retail stocks in advance of the heavy selling season, as well as resumed economic growth. They also took account of prospective Treasury financing needs and the seasonal rise in currency circulation over the second half of the year. The major objective of the action was to make sure that banks would be supplied with reserves in amounts sufficient to encourage them to seek uses for their funds and thus to foster credit and monetary expansion. ECONOMIC CONDITIONS The second cyclical postwar downturn, which was in process at the beginning of 1954, was halted in the spring and followed by rapid expansion in economic activity late in the year. Consumer and wholesale price averages continued relatively steady in 1954. Prices of farm products declined somewhat further, but less sharply than earlier. Prices of metals and some other industrial materials advanced in the spring, and late in the year increases extended to a number of other industrial materials. Strength in world demand contributed throughout the year to the firming of prices of internationally traded commodities. Demand and production. The value of total output of goods and services in the United States was 357 billion dollars in 1954 compared to a record 365 billion in 1953. Since average prices were little changed from 1953 levels, physical volume of output, as well as dollar value, was moderately smaller. The value of aggregate output, which continued to decline through the winter of 1954, was stable from early spring to early autumn at an annual rate of 356 billion dollars and expanded vigorously late in the year. In the fourth quarter of the year, gross national product was at an annual rate of 362 billion dollars, 2 per cent above the plateau of the immediately preceding quarters and about the same percentage below the peak rate of the second quarter of 1953. Total expenditures other than for national defense and additions to business inventories were considerably above their earlier peak in mid-1953. Expansion in the final quarter of 1954 reflected the combined effect of a number of factors. Of major importance were the sharp reduction in the rate of inventory liquidation and the rise of consumer spending to a new high level. Further increases in residential Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM GROSS NATIONAL PRODUCT Billions of dollars, annual rates 240 - 400 CONSUMPTION EXPENDITURES 200 - 360 J | I 160 - 320 120 GOVT. PURCHASES - 280 80 - 240 40 PRIVATE INVESTMENT 200 1950 1952 1954 1950 1952 1954 NOTE.—Department of Commerce quarterly estimates, adjusted for seasonal variation. Private investment includes gross private domestic investment and net foreign investment. Government purchases include Federal and State and local purchases of goods and services. construction activity, in State and local government expenditures, and in net foreign investment also contributed to economic expansion late in the year, while national defense outlays and business expenditures for plant and equipment declined more slowly than earlier. Nonfarm business inventories were liquidated at an annual rate of 4 or 5 billion dollars from late 1953 through the third quarter of 1954. By last summer inventory holdings had been considerably reduced, particularly in hard goods lines where earlier reductions in demand had been concentrated. Thus a basis was laid for expansion in business ordering and termination of inventory liquidation. Manufacturers' new orders for durable goods recovered somewhat in the spring and summer months and rose to appreciably higher levels in the last four months of the year. With new orders about equal to sales, the sharp decline in outstanding orders of durable goods manufacturers came to a halt in late summer. Consumer spending for goods and services reached a record level in the fourth quarter, 3.5 per cent higher than a year earlier. Pur- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

10 ANNUAL REPORT OF BOARD OF GOVERNORS chases of new automobiles were at exceptionally high levels in December and Christmas buying in general was in record volume. For the year 1954, the rise in total consumer outlays about kept pace with the increase of 1.7 per cent in population. Spending for nondurable goods and services was in record volume while spending for durable goods was somewhat below the 1953 record level. Residential housing markets were strong throughout 1954. Some 1.2 million new dwelling units were started, compared to 1.1 million in each of the three preceding years and a record 1.4 million in 1950. During November and December 1954, the number of new private dwelling units started declined much less than seasonally. A major factor in the rapid rise in housing construction in 1954 was the increased availability of mortgage funds on terms unusually attractive to borrowers. After the beginning of the year, terms on loans guaranteed by the Veterans Administration were made substantially easier. The large increase in private units started reflected mainly expansion in units covered by arrangements for such mortgages, with a sharp increase in the proportion of such loans involving no downpayment or maturing in 30 years. Late in the year, additional stimulus to housing markets was provided by the Housing Act of 1954, effective October 1, which liberalized terms on loans insured by the Federal Housing Administration. Business outlays for new construction and durable equipment continued to decline moderately during most of 1954, and for the year were 5 per cent below the record 1953 level. A decline of 9 per cent in equipment purchases was offset in part by a further increase in business construction. Individual sectors reported diverse movements in fixed capital outlays. Spending for new commercial facilities continued to rise, and outlays by mining concerns were stable. Other industrial sectors reported reductions of varying magnitudes, including 9 per cent for manufacturing and 35 per cent for railroads. Farm investment also declined. The decline in Federal spending for national security from mid- 1953 to the end of 1954 was the largest contractive element influencing the economy. In the latter part of 1954, however, there was some slackening in the rate of decline in security spending. Federal purchases of goods and services for defense declined about onefourth from the second quarter of 1953 to the fourth quarter of 1954, from a seasonally adjusted annual rate of 54.0 billion dollars to one Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 11 of 40.5 billion. The proportion of gross national product represented by national security purchases was reduced from nearly 15 to about 11 per cent. Reduction in defense spending reflected not only declines in expenditures for weapons and military equipment and for construction, but also a cut in the size of the armed forces and diminished outlays for operation of facilities. GNP SELECTED COMPONENTS Billions of dollars, annual rates 30 60 PRIVATE INVESTMENT GOVERNMENT PURCHASES FEDERAL NATIONAL SECURITY 20 50 10 NEW RESIDENTIAL CONSTRUCTION 0 _ 30 CHANGE IN NONFARM BUSINESS INVENTORIES STATE AND LOCAL ill 111 0 - OTHER FEDERAL I -10 1950 1952 1954 1950 1952 1954 NOTE.—Department of Commerce quarterly estimates, adjusted for seasonal variation. Industrial production. The impact on production of the mid- 1953 to early 1954 decline and of the more recent resurgence in demand was largely concentrated at factories and mines. In early 1954 the Board's seasonally adjusted index of industrial production was still declining from its mid-1953 record level of 137 per cent of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

12 ANNUAL REPORT OF BOARD OF GOVERNORS the 1947-49 average. The decline ended in March, when the index was 123, and during the spring and summer output was relatively stable at about that level. Industrial production then rose appreciably in the autumn and in December the index reached 130. For the year output was 125 per cent of the 1947-49 average as compared to 134 in 1953 and 124 in 1952. Production in consumer goods lines began to recover early in 1954, following sharp cutbacks in the latter half of 1953. Retail sales of most goods were maintained at relatively high levels and business stocks in most lines except automobiles were reduced. With recovery in consumer goods output, the decline in total industrial production—which had been rapid in late 1953—came to a halt in the early spring of 1954 despite continued curtailment in defense and producers' equipment lines. In the summer and early fall the rise in over-all output of consumer goods was interrupted. Auto output declined sharply during the most extensive model change-over of the postwar period. The imminence of this change-over also had considerable effects during the summer on output and inventory changes in the steel and other supplying industries. In July and August, steel output reached a low of 63 per cent of capacity. The rise in industrial output in the latter part of 1954 reflected widespread advances in industrial materials and consumer goods lines. Moreover, over-all activity in producers' and military equipment industries was showing little further change following earlier reductions. Following the model change-over, auto assemblies rose to an exceptionally high rate in December and production of other consumer metal goods remained at high levels. Output of building materials advanced, reflecting strength in construction. Steel output recovered rapidly and in November and December steel mills operated at close to 80 per cent of capacity. Production of nondurable goods, which had recovered moderately in the spring, increased further in the latter part of the year to a level about 6 per cent above the December 1953 low. Textile output rose considerably in the autumn, following a period of sustained inventory liquidation during which activity in apparel and most other major textile-consuming industries continued at relatively high levels. Output of paper and chemicals was at advanced levels during most of the year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 13 In late 1954, minerals production was also showing substantial improvement, reflecting recovery in output of petroleum following a period of curtailment to reduce stocks, and moderate gains in other mining industries. Output of electric and gas utilities continued to advance throughout the year. Agriculture. Agricultural developments during 1954 continued to be influenced by large carryovers of commodities from previous harvests and by a further marked increase in supplies of livestock and livestock products, especially after midyear. Federal acreage restrictions and drought in some areas reduced crops in which carryovers were largest—wheat, cotton, and corn. There were partly offsetting increases in other crops. Total farm production, including livestock as well as crop marketings, was about the same as in 1953. Domestic demand for farm products generally remained strong throughout the year, while exports expanded towards the end of the year. Farm incomes declined somewhat further during 1954. Farmers' liquid asset holdings were well maintained, however, and their debts rose little. Farm real estate values firmed during the year and in November were 2 per cent higher than a year earlier and one-fifth above the 1950 level. Labor market. Further growth in the population of working age brought the civilian labor force to 64.5 million persons in 1954, about 650,000 above the previous year. Employment declined 1 million, or almost 2 per cent. Unemployment increased from an average of 1.6 million in 1953 to an average of 3.2 million. Declines in nonfarm employment, which had begun after mid- 1953, tapered off after the first quarter of 1954. The low point in seasonally adjusted nonfarm employment was reached in July and August, after which employment began to rise. By the end of the year employment at 48.4 million was 400,000 above the low but still about 1.5 million below the 1953 peak. Much of the change in employment after mid-1953 was concentrated in manufacturing industries, especially in metals and metal fabricating lines. Employment also was reduced in mining and in transportation. Changes in employment in most other nonmanufacturing activities were small. Average employment on farms was almost the same in 1954 as in 1953. In December 1954, unemployment was 2.8 million, or 4.5 per cent of the civilian labor force—about one-half million above a year Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

14 ANNUAL REPORT OF BOARD OF GOVERNORS SELECTED BUSINESS INDEXES Per cent, 1947-49 • 100 170 - 150 - 130 - 110 90 150 A' j FARM PRODUCTS K^ V\ ^^ 90 1950 1952 1954 1950 195? 1954 N —Monthly series, seasonally adjusted except for prices. Indexes for retail sales OTE> and disposable personal income based on Department of Commerce data. Indexes for prices and employment based on Bureau of Labor Statistics data. Index for construction activity based on Commerce and Labor data representing work put in place. earlier., Unemployment (after adjustment for seasonal influences) reached its high point in the early part of 1954, leveled off during the summer months, and declined moderately after early fall. Prices. Consumer and wholesale prices were relatively stable in 1954 as in 1953, although changes for a number of commodities were substantial. During the contraction in industrial activity from mid-1953 to early 1954, average prices changed little as final demands Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 15 for goods—except for defense and business inventories—were generally well maintained, industrial activity and demands abroad were rising, and a considerable readjustment in prices from the high post-Korean levels of early 1951 had already taken place. Supplies of foods expanded further in 1954 and prices of farm products and foods declined further. Reductions in prices were most marked for livestock products, reflecting considerable expansion in supplies in the latter part of the year, while prices of wheat and corn showed mainly seasonal changes. Following sharp increases in late 1953 and early 1954, prices of coffee and cocoa fell off substantially after midyear as buying moderated and the supply outlook improved. The over-all increase in average prices of industrial materials and products was small, amounting to about 1 per cent from the firstquarter low to the end of the year. Wholesale prices of finished products for the most part were stable, as during the earlier contraction in output. Average prices of industrial materials advanced in 1954, particularly in the latter part of the year. Prices of scrap metals and of lead and zinc rose toward the end of the first quarter, in part reflecting expansion in foreign demands for metals and revision in Federal stockpiling policies. During the recovery in industrial output later in the year, prices of basic metals rose further and prices of cotton and synthetic textiles, and some other industrial materials, also advanced. Rubber prices rose fairly steadily through the year, recovering all of the substantial decline which had occurred in 1953. Average consumer prices fluctuated within a narrow range and in December were only slightly lower than a year earlier. Food prices declined somewhat after midyear, reflecting largely increased supplies of livestock products. Prices of many other commodities, such as television, appliances, and textile housefurnishings, also declined. Discounts and other concessions from list prices, which are not fully reflected in the price indexes, were more prevalent than in 1953. Rents and charges for public transportation and a variety of personal services advanced more slowly than in other postwar years. Income and saving. Further growth in spendable incomes helped to limit the decline in activity and to set the stage for recovery. Mainly because of the reduction in Federal individual income tax Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

16 ANNUAL REPORT OF BOARD OF GOVERNORS rates effective at the beginning of the year, disposable personal income was at a record rate, more than 3 billion dollars larger than in 1953. Personal income in 1954 amounted to 286 billion dollars, equalling the record 1953 volume. After declining somewhat in late 1953 and early 1954, total personal income changed little during the spring and summer, and then expanded appreciably late in the year. The November and December figures exceeded the previous record high of July 1953. Wage and salary payments, particularly in durable goods manufacturing industries, advanced considerably in the autumn and accounted for most of the rise in total income. Wage rates generally continued to rise, although at a less rapid rate than in earlier postwar years. Average weekly earnings in manufacturing industries advanced moderately and were at a record level at the end of the year. Unemployment compensation payments continued to rise rapidly to the spring of 1954, but declined somewhat after midyear. Payments under the old-age and survivors insurance program expanded throughout the year. Income of nonfarm proprietors rose slowly during most of the year and in December, when retail trade advanced sharply, exceeded the high level of early 1953. Dividend and interest income expanded further in 1954, with a marked rise in December reflecting large special dividends. Income of farm proprietors declined somewhat further in 1954. Personal saving was in somewhat smaller dollar amount in 1954 than in 1953, but was larger than in any other peacetime year. For the year 1954 as a whole, the ratio of personal saving to disposable personal income was close to the relatively high rate prevailing in the preceding three years. During the course of the year, however, the ratio declined appreciably, as consumption expenditures increased more rapidly than disposable income. Corporate profits before tax, which had declined substantially in the latter part of 1953, leveled off during most of 1954 and increased in the closing months of the year. Before-tax profits for the year 1954 were at the lowest level since 1949. Tax liabilities on corporate profits, however, also declined markedly, in part reflecting repeal of the excess profits tax, and after-tax profits were only moderately smaller than in the preceding year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 17 Debt and equity financing. Funds for debt and equity financing were available to borrowers on favorable terms in 1954 and found a large market. With reserve positions easy, commercial banks aggressively sought loans and investments. Financing institutions other than banks were active lenders of the continuing large supply of individual savings. The nature of credit demand changed considerably from the preceding year, however, with demand for long-term credit heavier and that for short-term credit lighter. Growth in outstanding real estate mortgage credit was about one-fifth larger in 1954 than in 1953, and State and local governments also increased their borrowing. The Federal Government, although sharply reducing its net cash borrowing, offered a larger amount of intermediate-term securities, especially for refunding purposes. Increases in outstanding corporate stocks and bonds, excluding those of investment and consumer finance companies, were larger than in the preceding year. Outstanding short-term bank loans to commerce and industry declined appreciably more in 1954 than in 1953. Short- and intermediateterm debt of consumers, which had increased very rapidly in earlier years, changed little. A major part of the increase in total credit and capital in 1954 was in real estate mortgages. Demand for new homes and commercial facilities was large and, with an ample supply of funds available on very favorable terms, mortgage loans were in record volume. Commercial banks increased their holdings of mortgages 1.8 billion dollars or about 10 per cent, considerably more than in the preceding year. Expansion was even greater at savings institutions; savings and loan associations alone increased their holdings 4.2 billion dollars or about 20 per cent. The outstanding volume of consumer financing, an important form of short-term credit demand, increased 0.6 billion dollars over the year as compared to 3.7 billion in 1953. Extensions of instalment credit (adjusted for seasonal variation), which had declined from March 1953 through January 1954 and then leveled off, rose during the last half of the year as a greater proportion of sales of autos and other consumer durable goods was financed with instalment credit. At the year-end, the sharp increase in sales of new-model autos was accompanied by a marked rise in instalment loan extensions. Repayments continued at a high level all year and limited Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

18 ANNUAL REPORT OF BOARD OF GOVERNORS GROWTH IN MAJOR TYPES OF DEBT AND EQUITY FINANCING [Net increase in amounts outstanding, in billions of dollars] Distribution of growth by— 1954* 1953 1952 1951 Major types: Federal cash borrowing 0.9 4.6 3.4 -1.2 State and local government issues (net)... 5.2 4.6 3.1 2.2 Real estate mortgages 12.0 9.8 9.0 9.4 Corporate bond and stock issues (net)1. .. . 6.1 5.4 7.1 5.7 Bank loans to business2 -0.7 -0.1 1.5 3.8 Consumer credit by banks and other lenders 0.6 3.7 4.4 0.7 Bank loans not included above 2.5 1.3 1.6 0.8 Selected holders: Federal Reserve Banks -0 1.2 0.9 3.0 Commercial banks 10, 4.0 8.9 5.8 Nonbank holders— Mutual savings banks 2.0 1.8 1.7 0.8 Savings and loan associations 4.3 3.S 3.0 2.0 Life insurance companies 4.6 4.5 4.4 3.4 ^Preliminary. 1 Excludes funds obtained by consumer finance companies and investment companies. 2 Excludes funds obtained by consumer finance companies. NOTE.—Includes only selected types of loan extensions and of 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 financing 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. Holders exclude Federal, State, and local governments, individuals, corporations, foreign investors, nonlife insurance companies, and other investor groups not shown separately. U. S. Government security holdings of excluded groups are shown in the table on p. 24. Owing; to differences in coverage, most of which are indicated above, the figures for bank credit in this table differ from those used elsewhere in this Report. the growth in outstanding instalment credit. The proportion of consumer credit extended by commercial banks remained about the same as in the preceding year. Business demand for bank credit was light in 1954. Reduction in inventories provided funds for repayment of bank loans in many businesses, particularly in metal goods lines. Some corporations chose to increase their working capital by security flotations and did not borrow from banks. Funds from operations were well maintained, the small decline in retained earnings having been largely offset by increases in depreciation allowances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 19 The net increase in outstanding corporate bonds and equities, excluding investment and consumer finance companies, was substantially larger in 1954 than in 1953. New offerings exceeded retirements by about 6.1 billion dollars as compared to 5.4 billion in 1953. New issues of consumer finance companies were down substantially, and those of investment companies were off slightly. State and local governments added 5.2 billion dollars to their outstanding debt in 1954 as compared to 4.6 billion in 1953. Flotations of revenue issues continued to grow in importance. Highway construction was the most important use of borrowed funds, but amounts for educational and miscellaneous purposes also grew substantially. Financing institutions, especially commercial banks, insurance companies, and mutual savings banks, increased their holdings of State and local securities, supplying a larger proportion of the new funds than in other recent years. The proportion supplied by individual investors declined. The Federal Government virtually balanced its cash budget in the calendar year 1954 with cash outgo of 68.9 billion dollars and receipts of 68.6 billion. The small deficit of 0.3 billion dollars contrasts with a 6.1 billion deficit in the preceding year. Net cash borrowing totaled 0.9 billion dollars and the Treasury's cash balance increased slightly. The smaller deficit in 1954 reflected declines from 1953 of 7.7 billion dollars in cash outgo and only 1.9 billion in cash income. The sharp reductions in national security spending from the mid- 1953 peak continued in 1954. They were partly offset by increased outlays for unemployment compensation, social security programs, veterans' benefits, and farm price support programs. The decline in cash income reflected primarily reduced receipts from individual income and excise taxes, as a result of lower rates, which were partly offset by increases in corporate tax collections on the nearrecord 1953 profits and in employment tax receipts resulting from higher old-age insurance tax rates. Federal receipts continued to follow a sharp seasonal pattern, with heavy concentration in the first half of the year of both individual and corporate income tax payments. The result was a cash surplus of 7.9 billion dollars in the first half, which allowed net cash repayment of debt of 5.7 billion, and a deficit of 8.2 billion in the last half, which necessitated net cash borrowing of 6.6 billion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

20 ANNUAL REPORT OF BOARD OF GOVERNORS During 1954 the Treasury refunded a record total of more than 50 billion dollars of maturing securities—nearly 15 billion more than in 1953. This included the two largest individual refundings on record in February and December. By providing advance exchange offerings on some maturities the number of refundings was reduced to one in each quarter. Net cash offerings totaled 12.6 billion dollars, slightly less than in 1953. They provided funds for redemption of maturing tax-anticipation issues, net redemptions of nonmarketable savings bonds and notes, and attrition on refundings, in addition to 0.9 billion dollars for the cash deficit and the increase in the cash balance combined. Net redemptions of savings bonds totaled less than 0.2 billion dollars, but redemption of savings notes, no longer on sale, reached nearly 1.5 billion. Lengthening of Federal debt maturities continued during 1954, but because of the reduced level of business activity, new securities offered both in refundings and for cash were restricted to intermediate or shorter maturities that would not impinge on the flow of funds into long-term private investment. Altogether five new Treasury offerings with maturities ranging from three to nine years were issued. From December 1953 to December 1954 the average length of the total marketable Federal debt computed to the first call date was extended from three years and nine months to four years and three months; the proportion of the marketable debt maturing within one year was reduced from 47 to 40 per cent. Interest rates. Interest rates declined sharply in the early part of 1954, continuing the downward trend that began in mid-1953. The decline reflected the large volume of funds available as well as some diminution of credit demand, particularly for short-term funds. The supply of funds reflected easy bank reserve positions and also a flow of savings into life insurance, savings and loan shares, and other institutional channels in unprecedented volume for the postwar period. During the closing months of the year, most rates moved somewhat higher. Demand for both long-term and short-term credit strengthened and the increase in savings became somewhat slower. The Treasury, which had retired debt in the first half of the year, again borrowed extensively. In late November bank reserve positions became less easy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

21 FEDERAL RESERVE SYSTEM MONEY RATES Per cent per annum CORPORATE Aaa HIGH-GRADE MUNICIPAL - - 3 r COMMERCIAL PAPER y r' DISCOUNT RATE . / p 7 L i i - 2 F — _ — — — _/.. r- 1 TREASURY BILLS \f I ! 1 1 1950 1951 1952 1953 1954 NOTE.—Treasury bill rates are market rates on longest bills. Before April 1, 1952, yields on long-term U. S. Governments include 2/4 per cent bonds first callable after 15 years; thereafter they include 2K per cent bonds first callable after 12 years. Corporate Aaa rates are from Moody's Investors Service; high-grade municipals, from Standard and Poor's Corporation. Discount rate is for Federal Reserve Bank of New York. The Treasury bill rate showed the sharpest decline during the first half of the year and the sharpest rise during the last half. At its June low, 0.61 per cent, the rate was only about one-fourth of the mid-1953 high and the lowest since mid-1947, when the Federal Reserve Banks discontinued buying bills at a posted rate of % of 1 per cent. The sharp advance during midsummer reflected in part a technical market reaction from the previous sharp drop and in part some tightening in the money centers as a result of a temporary maldistribution of bank reserves. Thereafter, the bill yield Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

22 ANNUAL REPORT OF BOARD OF GOVERNORS remained around 1.00 per cent until late November and December. During the last half of December, the rate averaged about the same as in early January, but almost l/ per cent below the yield 2 a year earlier. Yields on corporate and United States Government bonds declined steadily during the first quarter to a level of 2.85 per cent for high-grade corporate issues and just under 2.50 per cent for Government bonds. Increases were slight during the latter part of the year for high-grade corporate bonds but somewhat greater for Government bonds. High-grade municipal yields also declined steadily during the first quarter, then rose in the second quarter as new offerings reached an unprecedented volume and inventories of unsold issues accumulated at investment banking houses,, Municipal yields declined again during the summer, but at their low in August were still substantially above early 1952 levels. During the remainder of the year, yields on municipal securities generally moved upward, reflecting the continuing large supply of new offerings. BANK CREDIT AND MONEY Total loans and investments of commercial banks increased more in 1954 than in any other postwar year. Most of the expansion was in government securities—Federal, State, and local—and real estate mortgages. Deposits expanded sharply in the second half of the year. Bank reserve positions remained generally easy until late in the year. Bank loans and investments. The rise in total bank credit outstanding was close to 11 billion dollars in 1954, and exceeded 7 per cent. More than half the increase was in holdings of United States Government securities—as shown in the accompanying table. The remainder was distributed among holdings of State and local government securities, real estate mortgages, and agricultural, security, and other loans. Available reserve funds continued to be in excess of requirements to support private needs for credit, and banks increased their United States Government security portfolios 6 billion dollars or about 10 per cent. The largest percentage increases occurred in New York City banks, where outstanding loans declined, and the smallest at Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 23 LOANS AND INVESTMENTS OF COMMERCIAL BANKS [In billions of dollars] Out- Increase, or decrease (—) standing, Type of loan or investment Dec. 31, 1954 1 1954 1953 1952 Loans and investments, total 156.2 + 10.7 + 4.1 + 9.0 U. S. Government securities. 69.4 + 6.0 + 0.1 + 1.8 Other securities 16.3 + 1.6 + 0.8 + 0.5 Loans, total 70.6 + 3.2 + 6.4 + 3.4 Business 26.8 - 0.4 + 2.0 Real estate 18.4 + 1.7 - 0.7 A Se g c r u ic ri u t l y tural 4 5 . . 5 3 + + 0 0 . . 9 3 + + 0 1 . . 4 0 + + 0 1 . . 5 1 Consumer 10.7 - 0.2 + 1.5 + 0.6 Other 5.9 + 0.8 + 0.2 + 1.9 + 0.3 1 Data for Dec. 31, 1954 are preliminary. 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. Details may not add to totals because of rounding. banks outside leading cities, where loan demands were well sustained during most of the year. Banks began to acquire additional United States Government securities in April and continued such acquisitions through October. Holdings declined about 3 billion dollars during the first quarter, in part reflecting the retirement of tax-anticipation certificates by the Treasury. Acquisitions were particularly heavy in May, August, and October when the Treasury sold new securities for cash. As private credit demand strengthened in November and December, banks reduced their holdings somewhat. The United States Government securities acquired by banks over the year, directly or indirectly, came largely from nonfinancial corporations, life insurance companies, mutual savings banks, and individuals. Net cash borrowing by the Treasury amounted to less than 1 billion dollars and holdings of the Federal Reserve Banks decreased by about the same amount. Thus commercial bank purchases of Government securities indirectly provided part of the large supply of funds made available to private borrowers by other lending institutions in 1954, and thereby contributed to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

24 ANNUAL REPORT OF BOARD OF GOVERNORS OWNERSHIP OF THE UNITED STATES GOVERNMENT DEBT [In billions of dollars, par value, partly estimated] Net change End of Item 1954 1954 1953 1952 Total debt outstanding 278.8 +3.6 +7.8 +7.9 Debt held by: Federal agencies and trust funds 49.6 + 1.3 +2.4 +3.6 Federal Reserve Banks 24.9 -1.0 + 1.2 +0.9 Commercial banks 69.2 +5.5 +0.3 +1.8 Other investors, total 135.1 -2.2 +3.9 + 1.6 Insurance companies 15.0 -0.8 -0.3 -0.4 Mutual savings banks 8.8 -0.4 -0.3 -0.3 Other corporations 19.3 -2.2 + 1.1 -0.3 State and local govts 14.6 + 1.7 + 1.8 + 1.5 Miscellaneous investors 13.7 +0.8 + 1.2 + 1.1 Individuals, total 63.7 -1.3 +0.4 P) Savings bonds 49.7 +0.4 +0.2 +0.1 Other 14.0 -1.6 +0.1 P) 1 Less than 50 million dollars. NOTE.—Includes matured and noninterest-bearing debt, guaranteed securities, special issues to Government accounts, and also increases in debt reflecting the crediting of interest on savings bonds. Changes in total debt differ from net cash borrowing, quoted in the text, which amounted to 0.9 billion dollars in 1954, 4.6 billion in 1953, and 3.4 billion in 1952. Details may not add to totals because of rounding. Differences in figures for commercial banks compared to those in table on p. 23 result largely from the use here of par value data. Changes for Federal Reserve differ from those in the table on p. 29 because changes here are based on end-ofyear figures. the expansion in investment activity that figured so prominently in economic recovery. The maturity distribution of bank portfolios of United States Government securities lengthened substantially in 1954, reflecting in large part intermediate-term Treasury offerings during the year. Holdings of certificates declined about 5 billion dollars, reflecting net retirements of issues held outside the Federal Reserve System. In major refundings during February, August, and December, banks exchanged about 16 billion dollars of maturing issues for bonds with six-to-nine year maturities. Bank holdings of Treasury notes, particularly in three-to-five year maturities, were also increased substantially over the year through refundings and cash purchases. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 25 Holdings of Treasury bills rose only slightly, but there was some shifting among classes of banks; central reserve city banks reduced their bill portfolios while reserve city and country banks increased theirs. Commercial banks also supplied a substantial volume of investment funds through purchases of State and local government securities. The increase in their holdings exceeded 1.5 billion dollars— about three times the increase during 1953—and accounted for about one-third of the net increase in the outstanding volume of such securities over the year. Total loans at commercial banks rose more than 3 billion dollars in 1954, about the same as in 1953. A sharp expansion in the final quarter more than offset an earlier cumulative decline. Active demand for most types of bank loans was evident late in the year. Business loans rose substantially in late 1954 whereas in the same period of 1953 they had declined. Nevertheless the increase did not offset earlier reductions and these loans declined slightly over the year. The strength of business loan demand late in the year varied with the type of borrower. New borrowing by some industries with rising seasonal requirements during this period, such as commodity dealers, was larger in 1954 than in 1953. Construction loans also rose, although usually they decline during the fall and winter. The prolonged liquidation of outstanding loans by metals manufacturers tapered oflf and that by sales finance companies was reversed. Although outstanding public utility loans declined more in late 1954 than in late 1953, the reduction probably represented a substitution of long-term borrowing for bank loans and not a decline in total demand for funds from this industry. Real estate loans of commercial banks increased 1.7 billion dollars in 1954. They rose rapidly in the last half of the year, at more than twice the rate earlier in the year and throughout 1953. Consumer loans declined slightly over the year, with reductions in the first and third quarters partly offset by advances in the spring and late in the year. Loans for carrying Government and other securities increased almost a billion dollars, more than twice as much as in 1953. Agricultural loans increased much less than in 1953. Less credit was extended for the price support activities of the Commodity Credit Corporation. Short-term agricultural production loans changed little after declining in 1953. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

26 ANNUAL REPORT OF BOARD OF GOVERNORS Deposits and currency. Monetary expansion was substantially greater in 1954 than in 1953. Demand deposits and currency held by businesses and individuals increased about 4 billion dollars compared to 1.5 billion in 1953 and a decline of 0.5 billion in the 1949 recession year. Expansion in 1954 was concentrated in the last half of the year, as shown by the chart. It reflected a marked increase in demand deposits offset in part by a decline in currency outside banks. DEPOSITS AND CURRENCY Billions of dollars 1952 1953 1954 1952 1953 1954 NOTE.—Figures are partly estimated. Demand and time deposits are for all banks in the United States and are adjusted to exclude U. S. Government and interbank deposits. Demand deposits are 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 Tune and December call dates. Figures for last half of 1954 are preliminary. Demand deposits adjusted declined slightly more than the usual seasonal amount early in the year and then rose slightly more than seasonally in the second quarter. A 9 billion dollar increase in the last half of the year exceeded seasonal expansion by about 3 billion dollars. The annual rate of growth in this period was about 6 per cent compared to 4 per cent for the year and 1 per cent for 1953. The post-holiday return of currency to the banks early in 1954 exceeded the usual seasonal inflow, and followed a smaller than usual Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 27 outflow late in 1953. This downward trend of currency outside banks, after allowance for seasonal movements, continued until the closing months of the year when it apparently was reversed as economic activity and consumer spending increased. Time deposits of businesses and individuals continued their rapid growth of recent years, increasing almost 5 billion dollars or somewhat more than in 1953. Expansion was generally substantially ahead of that in 1953 until autumn, but in the last quarter it tended to slow down. Turnover of demand deposits was generally slightly faster in 1954 than in the previous year, rising from 18.9 times to 19.2 times for banks outside financial centers. Turnover in New York City was up substantially, reflecting in large part increased activity in the securities markets. Bank reserve positions. For the year as a whole, the reserves needed by member banks to back the deposit expansion amounted to about 900 million dollars, which was more than covered by the 1.6 billion dollar reduction in reserve requirements during the summer. Thus total required reserves were reduced about 700 million dollars. A decrease in currency supplied reserves approximately sufficient to cover the drain resulting from a decrease in the country's gold stock. Reflecting the net reduction in required reserves, Reserve Bank holdings of Government securities declined 700 million dollars and banks were able to meet credit and monetary demands from both private and Government borrowers without increasing their debt to the Reserve Banks. In December free reserves —that is, excess reserves less discounts and advances to member banks—though smaller than in summer and fall months, were somewhat larger than a year earlier. Bank reserve positions eased through April 1954, as shown in the table on page 29. A large seasonal currency inflow, together with a seasonal decline in deposits and required reserves, released substantially more reserve funds than were absorbed, largely by Federal Reserve sales and redemptions of Treasury bills and some reduction in float. Member banks reduced their borrowing from Reserve Banks 300 million dollars and increased their excess reserves 100 million. Free reserves rose to an average of more than 600 million dollars in April. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

28 ANNUAL REPORT OF BOARD OF GOVERNORS MEMBER BANK RESERVES AND RELATED ITEMS Billions of dollars, monthly averages of daily figures 22 - 20 - 18 BORROWINGS; 1952 1953 1954 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 29 The reserve position continued to ease through August. Reserves were made available through open market purchases by the Federal Reserve in May and early June, and through a reduction in reserve requirements on demand and time deposits during the period June 16-August 1. In order to prevent excess reserves from becoming unduly large temporarily in July and August, the Federal Reserve sold in the open market or redeemed Treasury bills. Thereafter it supplied reserves through open market purchases in order to meet fall needs for growth in required reserves and currency as well as to facilitate business recovery. Free reserves reached about 700 million dollars in June and fluctuated around that level until late in the year. Member bank borrowing remained small until late in the year. CHANGES IN MEMBER BANK RESERVES WITH RELATED FACTORS [Based on monthly averages of daily figures; in billions of dollars] Dec. Dec. 1953- 1953- Apr.- Aug.- Item Dec. Apr. Aug. Dec. 1954 1954 1954 1954 Member bank reserves Total reserves - 0.6 - 0.5 - 0.9 0.8 Excess reserves . C) -f 0.1 + 0.1 - 0.1 Required reserves - 0.7 - 0.6 - 1.0 + 0.9 Effect of: Reduction in reserve requirement percentages - 1.6 - 1.6 Change in deposits + 0.9 - 0.6 + 0.6 0.9 Principal factors affecting reserves (Signs indicate effect on reserves) Currency in circulation + 0.2 + 1.2 - 0.1 - 0.9 Treasury operations + 0.2 P) P) + 0.2 Gold stock and foreign accounts - 0.3 - 0.1 - 0.2 - 0.1 Federal Reserve float P) - 0.3 P) -f 0.3 Other factors - 0.1 P) + 0.1 o Federal Reserve loans and investments: U. S. Govt. securities, total - 0.7 - 1.0 - 0.6 0.9 Bought outright - 0.3 - 0.6 - 0.7 + 1.0 Held under repurchase agreements., - 0.4 - 0.4 + 0.1 p) Discounts and advances: To member banks - 0.2 - 0.3 P) + o.i To others + 0.2 P) + 0.1 + o.i 1 Less than 50 million dollars. NOTE.—Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

30 ANNUAL REPORT OF BOARD OF GOVERNORS Bank reserve positions became somewhat less easy in late November and December. Reserve funds from System purchases of Treasury bills in the market and under repurchase agreements with dealers, and from the year-end expansion of float, fell somewhat short of the amounts needed for a larger-than-usual growth in required reserves and currency in circulation. Banks found it necessary to reduce excess reserves somewhat and to increase their borrowing from Reserve Banks. Free reserves declined to below 500 million dollars on the average. WORLD ECONOMIC AND FINANCIAL DEVELOPMENTS The movement of recent years toward flexibility and freedom in markets continued in 1954 without interruption. The financial stability achieved in 1952 and 1953 was maintained in all leading countries of Western Europe and in the great majority of other countries. The volume of world trade expanded. Reduced demand for primary materials in the United States was in large measure counterbalanced by steadily rising demand in Europe, where industrial production reached record levels in every major nation. Important new steps were taken toward convertibility of currencies, which is now recognized by governments throughout Western Europe and the sterling area as a major goal of policy along with the maintenance of economic growth and stability in individual countries. Steps toward convertibility taken in 1954 included significant relaxations of European restrictions upon expenditures of dollars. In Great Britain, exchange controls affecting the use of sterling by residents of nonsterling countries outside the dollar area were simplified and lightened. Similar action was taken in Germany. New evidence of the current flexibility of central bank monetary policies under changing conditions was given toward the end of the year, when there was a moderate rise in rates of interest in London and some other European centers. In the short-run view, the margin of unutilized resources available in Europe to meet increasing demands appeared to have narrowed sharply. Nevertheless, scope for further advance was promised by the growth of capital resources and productivity in Europe and by the expanding trend of world production of basic materials traded internationally. One of the conditions necessary for steady advance in world production and trade is the avoidance of severe disturbances of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

££t>ERAL RESERVE SYSTEM 31 balance of international payments. Although payments to other countries from the United States in commodity trade and under Government grant and loan programs were smaller in 1954 than in 1953, the decline in these payments produced no general disturbance. In 1953 foreign countries, in the aggregate, had been adding very rapidly to their holdings of gold and dollars. Adjustment to the reduction in United States payments involved only a moderate slowing down in the rate of growth of gold and dollar reserves. Inflationary developments in a few countries and declines in world prices of some commodities were not widespread enough to have serious repercussions in the world economy. United States balance of payments. In the network of international payments, payments to and from the United States have been of special importance in recent years both because of their size and because the United States is still the only large industrial nation, except Canada, whose currency is freely convertible for use anywhere in settlement of international transactions. The maintenance U. S. BALANCE OF PAYMENTS Billions of dollars PAYMENTS FROM _\ V EXPORTS OF GOODS AND SERVICES NET TRANSFERS OF GOLD AND DOLLARS ll_ l l . l l l a l . lB T TT •IT -1 1948 1950 1952 1954 NOTE.—Department of Commerce data for payments and exports; Federal Reserve data for net transfers of gold and dollars. Payments shown include civilian and military payments for goods and services, plus the net outflow of remittances, Government nonmilitary grants and loans, and private U. S. direct investment. Other capital movements are not included. Exports exclude military transfers under aid programs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

32 ANNUAL REPORT OF BOARD OF GOVERNORS of a large volume of payments from the United States has contributed to establishment of financial stability and stimulation of economic growth in other countries. In turn, rising foreign demand led to a rise in United States exports in 1954. Total payments from the United States to other countries for current transactions (including civilian and military purchases of goods and services, and also gifts other than Government aid) totaled about 16.5 billion dollars in 1954, as compared to 17 billion in 1953. Merchandise imports, which had been at a peak in the second quarter of 1953, fell until the first quarter of 1954 and then rose somewhat; for the year they totaled 10.3 billion, or 6 per cent less than in 1953. United States military purchases of goods and services for the use of our own forces abroad also decreased. Under the offshore procurement program, however, purchases of equipment to be transferred to other countries increased. Total United States military expenditures abroad were thus close to the 1953 amount of 2.5 billion dollars. United States Government grants and loans to other countries, other than aid given in the form of military supplies and services, amounted in 1954 to less than 1.5 billion dollars (net after repayments), considerably below the 2.0 billion total in 1953. The outflow of private American direct investment capital continued at close to the 1948-53 average rate of 700 million dollars. As in most recent years with the exception of 1953, the outward movement of private American portfolio and short-term capital exceeded the inward flow of foreign funds into long-term investments other than United States Government securities. Despite the declines in import payments and in Government grants and loans, total payments from the United States to other countries were still amply sufficient to support growth in world trade. Foreign countries and international institutions, which in 1953 had added 2.2 billion dollars to their holdings of short-term dollar balances, United States Government securities, and gold purchased from the United States, added a further amount of 1.6 billion in 1954. Including gold from new production and from other sources, total gold reserves and dollar holdings of foreign countries (other than the U.S.S.R.) and of international institutions increased by 2.2 billion dollars in 1954. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

33 FEDERAL RESERVE SYSTEM The further additions to foreign monetary reserves were especially large among continental Western European nations, and provided direct support for the continued advance in European production and trade. In consequence of rising demand abroad and the reduction of barriers to trade, foreign countries increased their purchases of goods and services from the United States to about 17.5 billion dollars in 1954 from 17.0 billion in 1953. Merchandise exports of the United States (excluding military-aid transfers) totaled 12.8 billion dollars in 1954. In the fourth quarter, with some allowance for seasonal variation, they were at an annual rate of about 13.5 billion dollars, or about 10 per cent above the 1953 level. Exports to Canada, which had declined after the second quarter of 1953, were still slightly below the average level of 1953. On the other hand, exports to Western Europe in the second half of 1954 were more than 20 per cent above the 1953 average. There were also significant increases in exports to most other areas. EXTERNAL TRADE — WESTERN EUROPE AND UNITED STATES Billions of U. S. dollars, annual rates 25 25 IMPORTS EXPORTS "A / WESTERN EUROPE ~ 20 20 WESTERN EUROPE 15 *- 10 UNITED STATES _ 10 / UNITED STATES J - 5 i ! I I 1950 1952 1954 1950 1952 1954 NOTE.—Western European trade shown is trade of members of the Organization for European Economic Cooperation (OEEC) with all others, including dependencies—that is, intra-OEEC trade is excluded. All data are on f.o.b. basis except OEEC imports, which include transportation costs probably of the order of magnitude of 10-15 per cent. U. S. exports and OEEC imports exclude military-aid shipments from U. S. Sources: Department of Commerce and OEEC; fourth quarter 1954 OEEC trade partly estimated by Federal Reserve. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

34 ANNUAL REPORT OF BOARD OF GOVERNORS World commodity prices. Outside Europe and the United States, economic developments in 1954 were diverse but generally more favorable than they would have been if the potential impact of reduced American demand upon prices of primary commodities had not been offset, in considerable degree, by the rise in European demand during 1953 and 1954. This rise in foreign industrial demand was most evident during 1954 in world markets for such commodities as metals, rubber, and lumber. World prices of these and other industrial raw materials showed an upward tendency, on the average, in 1954. Advances were very large for rubber and copper. Prices of wool and hides declined, however, reflecting lower world demand in the first case and greatly increased United States supplies in the second. World market prices for wheat and rice continued to decline in the first half of the year. The prices of the beverage commodities—coffee, cocoa, and tea—rose sharply in the first half of 1954; thereafter the price of tea continued upward but the other two dropped back in consequence of reduced buying and improvement in supply prospects. Countries outside Europe and the Western Hemisphere. While world price developments had important influences on business activity and on the balance of payments for particular countries, the course of events in each country was greatly affected by the nature of its own financial policies. In most sterling-area countries the internal financial stability earlier achieved was consolidated in 1954. Industrial production continued to rise in South Africa and Australia, and in these countries, as also in New Zealand, commercial bank loans expanded rapidly and import purchases rose through most of the year. The export receipts of Australia and New Zealand were affected by the fall in prices of wool and wheat, and in the second half of 1954 their sterling reserves declined somewhat. South Africa's reserves rose in consequence of expanded gold production and a large inflow of capital. Gradually accelerating progress was made in India's program for agricultural and public utility development, and a further advance was recorded in industrial production. There was relatively little change in India's gold and sterling reserves over the year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 35 Ceylon's exports of rubber and tea were in strong demand. Budgetary and credit policies put into effect the previous year served to hold down imports, and the country's foreign exchange reserves recovered rapidly. Burma, on the other hand, suffered a sharp drop in reserves in consequence of rising imports and a fall in demand for its exports of rice. Pakistan continued to maintain severe restrictions on imports of consumer goods, and its exports of raw cotton declined as domestic utilization rose. Sterling reserves of British dependencies continued to increase, partly reflecting unspent earnings from exports to the Western Hemisphere and to Europe. During 1954 Japan employed a vigorous tightening of credit to check a new inflation of prices that had started in 1953. Industrial production, which had been increasing very rapidly, receded for several months but near the end of the year was advancing again. In the latter part of the year imports were considerably smaller than the year before, and the balance-of-payments deficit was converted into a surplus with the help of a steady rise of exports, supplemented by continuing sales of military supplies and services to the United States. After midyear there was a marked recovery in Japan's reserves of both dollars and sterling. In Thailand the decline in rice exports adversely affected the balance of payments and Government revenue. In Indonesia, financing of the Government deficit produced an expansion of one-third in the money supply, but imports were held in check by direct controls. The rise in rubber prices contributed to a gain in Indonesian foreign exchange reserves during the latter half of the year, and helped to check the decline in Thailand's reserves. The total value of Philippine exports was well maintained in 1954, despite lower prices for coconut oil and manila hemp. Western Hemisphere. Some South American countries continued to experience difficulty with their balance of payments not only in dollars but also in sterling and other currencies. In Brazil these difficulties became especially acute after the break in the previously rising trend of coffee and cocoa prices. The underlying problem in Brazil, however, as in Chile, Bolivia, and Paraguay, was domestic inflation. Markets in these countries were imperfectly linked to world markets through the numerous exchange rates applied to various transactions, and in some cases exports were de- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

36 ANNUAL REPORT OF BOARD OF GOVERNORS pressed while mounting difficulties in maintaining effective import and exchange controls were only temporarily relieved by extensions of credit from abroad. Argentina's grain exports, though large in volume, produced smaller foreign exchange earnings than in 1953. Rapid expansion of bank credit continued. Industrial activity, which in 1952 and 1953 had been below the 1947-49 average, increased after midyear, and money incomes and prices, which for two years had been relatively stable, moved up again. Some of the countries in North and Central America and in northern South America whose currencies are either fully or substantially convertible suffered slight recessions in business activity in the latter part of 1953 and the early part of 1954; these included Canada, Mexico, and Cuba. Pressures on central bank foreign exchange reserves in Mexico, and on free market exchange rates in Peru, when demand for foreign exchange tended for a time to outrun the supply, were checked after credit controls were tightened and stand-by credits obtained from the International Monetary Fund. The par value of the Mexican peso was changed in April from 11.56 cents to 8 cents. Colombia and Venezuela continued to experience rapid economic development. Both exports and imports increased. In December Colombia made a drawing on the International Monetary Fund to supplement the reserves of its central bank, which had stopped rising after the weakening of the coffee market; taxes on imports were increased and importers were required to make larger downpayments when applying for foreign exchange. In Canada, the largest single trading partner of the United States, output of minerals expanded continuously in 1953 and 1954. Manufacturing production, when some allowance is made for seasonal variation, appears to have been about 5 per cent lower during most of 1954 than at its peak in 1953. While inflow of capital continued on a large scale, both imports and exports were smaller than in 1953. The exchange rate for the Canadian dollar averaged $1.02 in the first half-year and $1.03 in the second half. With a shift in the credit policies of the Canadian authorities, yields on long-term Government bonds declined sharply from 3.7 per cent in 1953 to 3.0 per cent in the latter half of 1954. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

37 FEDERAL RESERVE SYSTEM Canadian imports from the United States during 1954 averaged 13 per cent below the peak level of the second and third quarters of 1953. The corresponding decline in Canadian exports to the United States was only 6 per cent. The value of Canadian exports to other countries was depressed, however, by lower volume and prices of wheat exports. Western Europe. The balance-of-payments position of Western Europe remained extraordinarily strong in 1954. While in other parts of the world imports of many countries were roughly in line with their foreign exchange receipts—and the aggregate gold, dollar, and sterling reserves of all countries outside Europe and North America changed very little—Europe's foreign exchange receipts continued to exceed imports by a considerable margin. Under these circumstances, with production rising and domestic prices comparatively stable, the various national authorities in most Western European countries had considerable freedom to remove direct controls, lower interest rates, and provide tax incentives for investment, without fear of inflationary developments at home and adverse repercussions on reserves. They were able to relax significantly their remaining direct controls over international transactions. Gold and dollar reserves continued to increase, although at a slower rate than before, and external debts were reduced. The volume of currency and deposit money in the hands of the public continued to rise at a rate of about 4 per cent a year in several of the principal countries, and at a rate of 12 per cent in France and Germany. Toward the end of the year, the pressure of rapidly rising demand upon European resources which were virtually fully employed was reflected in rising imports, price increases for some commodities, and advances in money market rates. The expansion in Western Europe was concentrated in capital goods, consumer durable goods, and construction. Total industrial production was 9 per cent higher in 1954 than in 1953, and rose at almost this rate throughout the year. In the fourth quarter of 1954 industrial production in Western Europe was one-fourth greater than at the end of 1950. The rate of expansion varied from country to country. From the fourth quarter of 1953 to the last quarter of 1954, industrial Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

38 ANNUAL REPORT OF BOARD OF GOVERNORS GOLD RESERVES AND DOLLAR HOLDINGS-BY AREAS Billions of dollars 12 - 6 - 2 4 - - DOLLAR AREA: OTHER COUNTRIES ^ — ^^S IN LATIN AMERICA) 2 S -- 2 CANADA NON-DOLLAR LATIN AMERICA 0 1 I I 1 1 11948 1950 1952 1954 1948 1950 1952 1954 NOTE.—End-of-quarter figures; gold reserves partly estimated. Dollar holdings include principally deposits, short-term U. S. Government securities, and certain reported holdings of long-term U. S. Government securities. production rose 4 per cent in Great Britain and Italy, with most of the advance in the first half of the year. Advances over the year amounted to 10 per cent or more in France and Belgium, where activity at the end of 1953 had not yet regained previous peaks. There were sharp increases in Austria and Greece also. In Germany, a further rise of 13 per cent brought industrial output 45 per cent above its level four years earlier. At the beginning of 1954, the labor market was already tight in many European countries. Although wage rates rose somewhat faster in 1954 than in 1953, much of their impact on production costs was offset by higher productivity. Personal saving increased further, as a result not only of growth in incomes but also of growing confidence in the stability of money values. Nevertheless, with rising levels of business activity and consumer demand, wholesale prices tended to advance a little toward the end of 1954. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 39 Partly in consequence of reductions in subsidies and continuing relaxation of food rationing and rent controls in some countries, consumer prices rose moderately in 1954, especially in the first half-year. The increases over the year as a whole were less than 4 per cent in most countries. In response to higher incomes and more readily available consumer credit, the production and sale of automobiles and some other consumer durable goods rose more than 20 per cent in several European countries. Residential construction reached a new record, and at the end of the year was still advancing, although at a reduced rate. Western European countries, in the aggregate, completed about 13 per cent more dwellings in 1954 than in 1953; completions numbered more than 6 per thousand inhabitants, which may be compared to about 7.5 per thousand in the United States. The United States rate was considerably exceeded in Germany and Norway, and equaled in Sweden. Further expansion in residential construction in 1955 in France and Italy was assured by government plans already in progress. Industrial demand for new plant and equipment was also strong in most European countries. In Great Britain industrial capital expenditures apparently increased only moderately but plans for future expenditures rose, as evidenced by sharply increased approvals of new factory construction projects. The cost of capital, as reflected in interest rates, fell further in the first half of 1954, as a result of policies pursued by governments and central banks, and of larger business and personal savings. Stock prices on the important European exchanges rose 20 to 60 per cent during the year. Governments were able to obtain larger borrowings from genuine savings and tended to reduce their demands on the banking systems. In several important countries government revenues rose more than expenditures. In certain countries the available instruments of credit control were improved and diversified during the course of the year. In the Netherlands, for example, the establishment of minimum reserve requirements had the effect of restoring to the central bank a degree of influence over credit developments which had been lost when the steady growth of foreign assets made the banking system highly liquid. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

40 ANNUAL REPORT OF BOARD OF GOVERNORS In the second half of the year interest rates rose moderately in several countries. To help check a deterioration in the Danish balance of payments, the central bank raised the discount rate by 1 per cent in June and other rates of interest subsequently rose. In a number of other countries toward the end of the year the authorities permitted interest rates to rise in response to increased demands for credit and circulating cash. The most important change of this kind was the rise in short-term money rates in London beginning in November. Summary. In general, 1954 was a year of rising living standards and active investment of capital throughout the world. In Europe it was a year of high prosperity. Actions of governments and central banks indicated that in most European countries and many elsewhere the authorities were well prepared to take appropriate actions promptly, whether to guard against deflation or to prevent inflation. With continued progress in the removal of barriers to trade and investment, which was made possible by a generally satisfactory situation in international payments, the possibilities for a further period of rising world supplies in balance with rising world demand appeared brighter than they had for many years. LOAN GUARANTEES FOR DEFENSE PRODUCTION Under the provisions of the Defense Production Act of 1950 as amended and the implementing Executive Orders, certain designated procurement agencies of the Government are authorized to guarantee loans made by commercial banks and other private financing institutions to finance and expedite production for national defense, also to finance contractors and subcontractors in connection with or in contemplation of the termination of their defense contracts. The guaranteeing agencies are the Departments of the Army, Navy, Air Force, Commerce, Interior, and Agriculture, the General Services Administration, and the Atomic Energy Commission. The present program is a reactivation of the V-loan program utilized so successfully during World War II. The Federal Reserve Banks act as fiscal agents of the guaranteeing agencies in the making of such contracts of guarantee. During 1954 the guaranteeing agencies authorized the issuance of 73 guarantee agreements amounting to 141 million dollars. Loans Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

41 FEDERAL RESERVE SYSTEM outstanding on December 31, 1954 totaled 472 million dollars. On the same date an additional 273 million dollars was available to borrowers under guarantee agreements in force. During the year 1,562 million dollars was advanced on V loans, most of which are revolving credits. V LOANS AUTHORIZED, SEPT. 27, 1950-DEC. 31, 1954 [Percentage distribution, by size of loan and number of employees of borrower]1 Percentage of Cumulative perloans authorized centage distribution Size of loan Number Amount Number Amount Under $100,000 18.3 0.6 18.3 0.6 $100,000-$499,999 37.7 5.7 56.0 6.3 $500,000-$999,999 16.3 6.6 72.3 12.9 $l,000,000-$4,999,999 21.7 28.0 94.0 40.9 $5,000,000-$9,999,999 2.9 12.1 96.9 53.0 $10,000,000 and over 3.1 47.0 100.0 100.0 Number of employees 2 Under 50 18.8 1.4 18.8 1.4 50-99 15.5 2.4 34.3 3.8 100-499 38.6 16.0 72.9 19.8 500-2 499 . 17.8 25.0 90.7 44.8 2 500 and over 5.1 51.5 95.8 96.3 Not available 4.2 3.7 100.0 100.0 1 Distributions are of 1,367 loans authorized in an aggregate amount of 2,500 million dollars. 2 Includes employees of affiliated concerns under common ownership or control. From the beginning of the program in September 1950 through December 31, 1954, 1,367 loans totaling 2,500 million dollars were authorized by the procurement agencies that may guarantee loans. The accompanying table gives the percentage distribution of authorized loans classified by size of loan and number of employees of borrower. BANKING OPERATIONS AND STRUCTURE Bank earnings and profits.1 Member bank net profits after income taxes were 1,089 million dollars in 1954, an increase of 224 million from 1953. The rise resulted for the most part from increased profits on sales of securities. Because of larger net profits 1 Figures for 1954 are based on preliminary tabulations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

42 ANNUAL REPORT OF BOARD OF GOVERNORS before income taxes, provisions for income taxes rose 112 million dollars despite removal of the excess profits tax. The ratio of net profits to average total capital accounts increased from 7.8 per cent in 1953 to about 9.3 per cent in 1954. Net current earnings before income taxes rose 15 million dollars to 1,824 million, the smallest increase in several years. Average rates of return on loans and United States Government securities changed little but average holdings of both increased. Earnings on loans rose to 2,700 million dollars, 68 million above the previous year, with average holdings 2 per cent larger. Earnings on United States Government securities were 1,063 million dollars, 52 million more than in the year before, and average holdings increased 7 per cent. An 8 per cent rise in average holdings of other securities also contributed to higher net earnings. An increase of 222 million dollars in total current earnings was largely offset by a rise in expenses. The accompanying table shows selected earnings, expenses, and profits for all member banks in 1954 and 1953. EARNINGS, EXPENSES, PROFITS, AND DIVIDENDS OF ALL MEMBER BANKS, 1954 AND 1953 [In millions of dollars] Item 1954 P 1953 Earnings 4,812 4,590 On U. S. Govt. securities 1,063 1,011 On loans 2,700 2,632 All other 1,049 947 Expenses 2,988 2,782 Net current earnings before income taxes 1,824 1,809 Net losses, charge-offs, and transfers to valuation reserves +68 251 Profits before income taxes 1,893 1,558 Taxes on net income 804 692 Net profits 1,089 865 Cash dividends declared 456 419 ^Preliminary; final figures will appear in the Federal Reserve Bulletin, probably in the May issue. The increased profits on sales of securities were sufficient to change net profits, recoveries, losses, etc., from a loss of 251 million dollars in 1953 to a gain of 68 million in 1954; as a result, 60 per Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 43 cent of net current earnings was carried to net profits after taxes as compared to 48 per cent in 1953. The year 1954 was the first since the period 1942-46 in which the excess of profits and recoveries over losses and charge-offs contributed to the net profits of member banks. About 456 million dollars or 42 per cent of the 1954 profits was distributed as dividends; this was a return on average total capital accounts of 3.9 per cent compared to 3.8 in 1953. Profits retained to strengthen capital accounts amounted to 633 million dollars compared to 446 million in 1953. Bank earning assets.2 Earning assets of member banks at the end of 1954 were 132 billion dollars, an increase of 9 billion for the year. More than half of the increase was in holdings of United States Government securities. Holdings of State and local government securities rose 1.5 billion dollars, which reflected the largest percentage increase for any type of earning asset. Loans declined seasonally during the early part of the year, but showed a net increase of 2.5 billion dollars for the year. About 1.4 billion dollars or more than half of the increase in total loans was in real estate loans. Loans for purchasing or carrying securities showed the next largest dollar increase, 860 million. Agricultural loans rose 260 million dollars, largely reflecting an increase in holdings of certificates of interest of the Commodity Credit Corporation. "Other loans to individuals," which are largely consumer loans, changed little during 1954, after having been an important factor in loan growth for two years. Commercial and industrial loans declined for the second consecutive year. According to sample data by industry groups, the over-all decline of 500 million dollars resulted from a decline of more than 1 billion dollars in loans to metals and metal products manufacturers, offset in part by increases in loans to commodity dealers and the construction industry. Capital accounts,2 Capital accounts of member banks at the end of 1954 amounted to 12.3 billion dollars, an increase of nearly 1 billion for the year. Approximately 633 million dollars of this amount came from retained earnings. Proceeds from sales of common stock accounted for most of the balance; other factors were mergers and changes in Federal Reserve membership. 9 Figures for 1954 are partly estimated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

44 ANNUAL REPORT OF BOARD OF GOVERNORS The ratio of average total capital accounts to average total assets for all member banks was 7.2 per cent, slightly above the preceding three years. The ratio of average total capital accounts to average total assets less cash assets and United States Government securities was 16.1 per cent in 1954 as compared to 15.8 per cent in the preceding year. This was the second year since 1944 in which this ratio did not decline. Number of banking offices. For the eleventh consecutive year the number of banking offices in the United States increased. It was 20,782 at the end of 1954 as compared to 20,406 a year before. The number of branches rose by 519 to 6,416, while the number of banks declined by 141 to 14,366. These figures exclude banking facilities at military and other Government establishments, of which there were 198 at the end of 1954, a decrease of one during the year. The number of banks (head offices) continued the decline of the past six years. Additions of head offices resulting from the opening for business of 73 new banks were more than offset by the consolidation or absorption of 207 banks, 176 of which were converted into branches. Table 18 on page 83 shows the increases and decreases in the number of banks and branches by class of bank. The increase of 519 in the number of branches and additional banking offices exceeded the recent annual records of 377 in 1953 and 296 in 1952. There were increases in practically all States that permit branch banking, with the largest number in Pennsylvania (87) and the second largest in California (62). More than 60 per cent of the increase in branches occurred in places outside of the head-office cities, a slightly larger proportion than in 1953. Federal Reserve membership. At the end of 1954, 6,660 banks were members of the Federal Reserve System. The membership of 4,789 national banks and 1,871 State member banks reflected net declines for the year of 67 and 16, respectively. Member banks accounted for 48 per cent of the number and held 85 per cent of the deposits of all commercial banks in the United States. State member banks accounted for 21 per cent of the number of all State commercial banks and held 65 per cent of the deposits of these banks. These relationships have remained practically unchanged since 1946. The continued decline in the number of member banks was largely the result of consolidations and absorptions. A great ma- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 45 jority of the 120 member banks eliminated through consolidations and absorptions during the year continued to operate in their former locations as member bank branches. The member banks that merged or consolidated into nonmember banks were relatively small as measured by deposit size. Other declines included 4 State members that withdrew from membership and 3 national banks that converted into nonmember banks. Eighteen national banks and six State member banks were newly established during the year. Thirteen nonmember banks were admitted to membership in 1954; one of these was a national bank located in Alaska, the first member bank outside of the continental United States since 1921. Eight banks became members by conversion from nonmember to national banks; four State member banks converted into national banks. Par and nonpar banks.3 During 1954, 83 banks were added to the Federal Reserve Par List and 208 were deleted. Of the additions, 15 were nonpar banks that chose to go on the Par List, 64 were newly organized banks, 2 were former nonpar banks admitted to Federal Reserve membership, and 2 had not previously handled checking accounts. Of the deletions, only 2 withdrew from the Par List; the remainder were absorbed by other par banks and, in most cases, were converted into branches. The number of parremitting and nonpar offices at the end of 1954 is shown below: On Not on Par List Par List Banks (head offices) 11,960 1,787 Branches 5,783 315 Banking facilities at military and other Government establishments 196 2 Total 17,939 2,104 The par-remitting banks, representing 87 per cent of the banks on which checks are drawn, held about 98 per cent of the deposits of all commercial banks in the United States. 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 3 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 such nonmember banks as have agreed to do so. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

46 ANNUAL REPORT OF fidAM OF GOVERNORS number of nonpar banks was less than 10. Practically all of the banks not on the Par List were in 14 Midwestern and Southern States, with the largest numbers in Minnesota and Georgia. Table 19 on page 84 shows the number of par and nonpar banking offices by States and Federal Reserve districts. Designation of reserve cities. Acting in accordance with the rule adopted by the Board on December 19, 1947, under which the classification of reserve cities is determined every three years, on February 18, 1954 the Board of Governors of the Federal Reserve System took action as follows with respect to the classification of reserve cities, effective March 1, 1954.4 (1) The City of Washington, D. C, and every city except New York and Chicago in which there is situated a Federal Reserve Bank or Branch of a Federal Reserve Bank, were continued as reserve cities. (New York and Chicago continued as central reserve cities under the Board's rule of December 19, 1947). (2) On the basis of official reports of condition in the two-year period ended on June 30, 1953, the following cities met the standard prescribed in paragraph (2) of subsection (b) of the Board's rule, and, therefore, such cities also were continued as reserve cities: Columbus, Ohio; Des Moines, Iowa; Indianapolis, Indiana; Milwaukee, Wisconsin; National City (National Stock Yards), Illinois; St. Paul, Minnesota; Tulsa, Oklahoma; Wichita, Kansas; and Forth Worth, Texas. (3) On the basis of written requests from the member banks in such cities, in accordance with paragraph (3) of subsection (b) of the Board's rule, the following cities also were continued as reserve cities: Toledo, Ohio; Cedar Rapids, Iowa; Sioux City, Iowa; Kansas City, Kansas; Pueblo, Colorado; and Topeka, Kansas. (4) The following cities did not fall within the scope of either paragraph (2) or (3) of subsection (b) of the Board's rule, and, consequently, the designation of such cities as reserve cities was terminated: Dubuque, Iowa; Lincoln, Nebraska; and St. Joseph, Missouri. BANK SUPERVISION BY THE FEDERAL RESERVE SYSTEM Examination of Federal Reserve Banks. The Board's Division of Examinations examined each of the 12 Federal Reserve Banks and their 24 branches during the year as required by law. Examination of State member banks. State member banks are subject to examinations made by direction of the Board of Governors or of the Federal Reserve Banks by examiners selected or approved *The rule regarding classification of central reserve and reserve cities appears in the Board's Annual Report for 1947, pp. 86-87. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 47 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 1954 program for the examination of State member banks was practically completed. Bank holding companies. During 1954 the Board authorized the issuance of six voting permits for general purposes and five permits for limited purposes to holding company affiliates of member banks. To provide information with respect to such organizations, regular annual reports were obtained from holding company affiliates 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 two organizations. Trust powers of national banks. During 1954, 37 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 19 banks which previously had been granted certain trust powers. Trust powers of 26 national banks were terminated, 24 by voluntary liquidation, consolidation, or merger and 2 by voluntary surrender. At the end of 1954, there were 1,759 national banks holding permits to exercise trust powers. Acceptance powers of member banks. During the year the Board approved the application of a member bank, pursuant to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

48 ANNUAL REPORT OF BOARD OF GOVERNORS 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 1954 three applications made by member banks for permission to establish branches in foreign countries. One member bank opened a branch in England and another opened a branch in Cuba in 1954, the latter having been authorized by the Board in 1953. One branch in Germany was closed during the year. At the end of 1954, seven member banks had in active operation a total of 106 branches in 23 foreign countries and possessions of the United States. Of the 106 branches, four national banks were operating 99 and three State member banks were operating 7. The foreign branches in active operation were distributed geographically as follows: Latin America 55 England 11 Argentina 10 Brazil 10 Far East 20 Chile 2 Hong Kong 1 Colombia 4 India 2 Cuba 20 JaPan 10 Mexico 2 Philippines 5 Panama 4 ^mgfore * Peru 1 Thailand 1 Uruguay 1 Venezuela 1 Vn*ed ,St«tes Canal Zone 4 Continental Europe 6 Guam 1 Belgium 1 Puerto Rico 9 France 3 Germany 2 Total 106 There was no change in 1954 in the list of corporations organized under State laws which operate under agreements with the Board pursuant to Section 25 of the Federal Reserve Act relating to investment by member banks in the stock of corporations engaged principally in international or foreign banking. Of the four corporations in operation, one has no subsidiaries or foreign branches; one operates a branch in England (also an agency at the New York Inter- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 49 national Airport); one operates a branch in France; and one has an English fiduciary affiliate. At the end of 1954 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. During the year the Board approved the application of one of these corporations for permission to invest in the stock of an investment company proposed to be organized under the laws of a foreign country. In 1954 the Board initiated a special study of the foreign operations of American banks in financing international and foreign trade. The purpose of the study is to develop information as to changes that should be made in the Board's existing regulations, agreements, and policies regarding foreign banking corporations and foreign branches of national and State member banks, as well as changes that might be proposed in the law. Inter-Agency Bank Examination School. During 1954, three five-week sessions of the School for Assistant Examiners and two four-week sessions of the School for Examiners were held. The Inter-Agency Bank Examination School is conducted by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. Since established in 1952, the various sessions of the Inter-Agency School have been attended by 306 men, representing the three Federal bank supervisory agencies, the State Banking Departments of Indiana, Louisiana, Maine, New Hampshire, North Dakota, Oklahoma, and Virginia, the Treasury Department of the Commonwealth of Puerto Rico, and one foreign country. CHANGES IN REGULATIONS OF THE BOARD OF GOVERNORS Reserves of member banks. The Board's Regulation D was amended so as to reduce the reserves required to be maintained by member banks with Federal Reserve Banks. The percentage applicable on time deposits for all member banks was reduced from 6 to 5 per cent. The percentages on net demand deposits were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

50 ANNUAL &Ef>OftT OF BOARD 61? GOVERNORS reduced from 22 to 20 per cent for central reserve city banks, from 19 to 18 per cent for reserve city banks, and from 13 to 12 per cent for all other member banks. The reduction as to time deposits became effective on June 24, 1954 for reserve and central reserve city banks, and on June 16, 1954 for other member banks. The reduction as to demand deposits became effective one percentage point at a time on June 24,1954 and July 29, 1954 for central reserve city banks, and became effective on July 29, 1954 for reserve city banks, and on August 1, 1954 for other member banks. Clearing and collection. The Board's Regulation G relating to the collection of noncash items, and Regulation J relating to check clearing and collection, were amended, effective July 15, 1954, so as to permit the collection through Federal Reserve Banks of checks drawn on nonmember par-remitting banks located in such of the Territories, dependencies, insular possessions, and parts of the United States outside of the continental United States as the Board may designate, and the collection of noncash items payable in such areas. At the same time the Board designated Alaska and Hawaii as being in the Twelfth Federal Reserve District for the purposes of these amendments. Foreign banking. The Board's Regulation K, entitled "Banking Corporations Authorized to do Foreign Banking Business under the terms of Section 25 (a) of the Federal Reserve Act," commonly known as Edge Act Corporations, was amended effective September 29, 1954 so as to change and liberalize the conditions relating to the raising of funds by such corporations not engaged in the business of receiving deposits and to increase the limit on the amount of credit that such nondeposit corporations may extend to one borrower. LEGISLATION Direct purchase and sale of Government obligations. An Act of Congress approved June 29, 1954 extended until June 30, 1956 the existing limited authority of the Federal Reserve Banks under Section 14(b) of the Federal Reserve Act to buy and sell Government obligations directly from and to the United States. This authority would otherwise have expired on June 30, 1954. Investment in bank premises. An Act of Congress approved June 30, 1954 amended Section 23A of the Federal Reserve Act, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 51 which limits the amount which a member bank may loan to or invest in the stock or obligations of an affiliate, so as to exempt from such limitations any affiliate engaged "solely" in holding bank premises. Previously the statute had exempted only affiliates engaged in holding bank premises on June 16, 1934 (whether or not solely so engaged). The same Act also amended Section 24A of the Federal Reserve Act which provides that a national bank or a State member bank must obtain the consent of the Comptroller of the Currency or of the Board of Governors, respectively, in any case in which its investment in bank premises, either directly or through an affiliate, exceeds the amount of the bank's capital stock. The amendment made it clear that the amount of any indebtedness incurred by an affiliate of the bank engaged in holding the bank's premises should be included in determining the total investment in bank premises. Paying out Federal Reserve notes. An Act approved July 19, 1954 repealed the provision in Section 16 of the Federal Reserve Act which prohibited one Federal Reserve Bank from paying out notes issued by any other Federal Reserve Bank. Real estate loans by national banks. An Act approved July 22, 1954 amended Section 24 of the Federal Reserve Act so as to make the limitations and restrictions on real estate loans by national banks not applicable to loans in which the Small Business Administration cooperates or purchases a participation. An Act approved August 17, 1954 amended certain provisions of the Water Facilities Act of August 28, 1937 (16 U.S.C. 590r, et seq.) so as to authorize the Secretary of Agriculture to insure loans made to further the objectives of the Act, and amended Section 24 of the Federal Reserve Act so as to exempt such insured loans from the limitations and restrictions on real estate loans by national banks contained in the third sentence of the first paragraph of Section 24 (relating to the permissible amount of the loan in relation to the appraised value of the land). Housing Act of 1954. The "Housing Act of 1954," approved August 2, 1954, amended Title III of the National Housing Act relating to the Federal National Mortgage Association so as to provide in Section 303 (f) of the latter, that "Notwithstanding any other provision of law, any institution, including a national bank or State member bank of the Federal Reserve System . . . shall be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

52 ANNUAL REPORT OF BOARD OF GOVERNORS authorized ... to receive stock of the Association" evidencing capital contributions made to the Association "and to hold or dispose of such stock, subject to the provisions of this title." The effect of this provision is to modify the provision of Section 5136 of the Revised Statutes of the United States prohibiting the purchase of corporate stocks by national banks and State member banks. The Act also amended the National Housing Act so that Section 309(d) of the latter authorizes the Federal National Mortgage Association, with the consent of any Government corporation or Federal Reserve Bank, or of any board, commission, independent establishment, or executive department of the Government, to avail itself of the use of information, services, facilities, officers and employees thereof, in carrying out the provisions of the Act. By Section 309 (g) the Federal Reserve Banks are authorized and directed to act as depositaries, custodians, and fiscal agents for the Association. In addition, Section 203 of the Act specifically amended the next to the last sentence of paragraph "Seventh" of Section 5136 of the Revised Statutes so as to permit national banks to deal in and underwrite obligations of the Federal National Mortgage Association. Subject,, of course, to any applicable provision of State law, the provision also extends to State member banks of the Federal Reserve System because Section 9 of the Federal Reserve Act makes this provision of Section 5136 applicable to State member banks. Another provision of the Housing Act of 1954 (Section 603) provided for the establishment of a National Voluntary Mortgage Credit: Extension Committee and directed the Housing and Home Finance Administrator to request the Board of Governors of the Federal Reserve System to designate a representative of the Board to serve on the Committee in an advisory capacity. Member banks dealing in obligations of banks for cooperatives. An Act approved August 23,1954 amended the last sentence of paragraph "Seventh" of Section 5136 of the Revised Statutes so as to permit national banks to deal in and underwrite obligations issued by the 13 banks for cooperatives organized under the Farm Credit Act of 1933, or any of them, in lieu of the existing authority which related only to obligations issued by the Central Bank for Cooperatives. Such transactions remain subject to the limitation of 10 per cent of the national bank's capital and surplus. Subject to any applicable provisions of State law, the permission also extends to State Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 53 member banks of the Federal Reserve System because Section 9 of the Federal Reserve Act makes these provisions of Section 5136 applicable to State member banks. RESERVE BANK OPERATIONS Volume of operations. Table 5 on page 69 gives the volume of operations in the principal departments of the Federal Reserve Banks for the years 1950-54. In general, activities were somewhat greater in 1954 than in 1953. While discounts and advances declined, a new peak was reached in the number of checks handled. One new activity of significant proportions was begun in 1954. At the request of the Treasury and the Post Office Departments, the Reserve Banks undertook the receipt and proving of deposits from postmasters throughout the country, along with certain relevant accounting operations. This was for the purpose of simplifying operating procedures of the Post Office Department and of speeding up the flow of funds to the Treasury. The work began at the various Reserve Banks at different times during the year. By the end of 1954, a total of 3,460,000 deposits had been handled. Earnings and expenses. Current earnings, current expenses, and the distribution of net earnings of each Federal Reserve Bank during 1954 are shown in detail in Table 6 on pages 70-71, and a condensed historical statement for all Reserve Banks is shown in Table 7 on pages 72-73. The table on page 54 summarizes the earnings and expenses and the distribution of net earnings for 1954 and 1953. Current earnings of 438 million dollars in 1954 were 15 per cent less than in 1953 largely because of a lower average rate of interest on holdings of United States Government securities. Earnings from discounts and advances were also less in 1954 than in 1953, reflecting decreases in the discount rate during the early part of the year and a decline in the volume of discounts and advances. Current expenses were about 3 per cent below 1953, mainly because of decreases in the production of Federal Reserve currency and shipping charges thereon. Current net earnings in 1954 amounted to about 328 million dollars, a decrease of 18 per cent compared to 1953. The effect of profit and loss additions and deductions was minor, leaving net earnings before payments to the United States Treasury at about 328 million dollars. Statutory dividends to member banks amounted to 16 million Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

54 ANNUAL REPORT OF BOARD OF GOVERNORS EARNINGS, EXPENSES, AND DISTRIBUTION OF NET EARNINGS OF FEDERAL RESERVE BANKS, 1954 AND 1953 [In thousands of dollars] Item 1954 1953 Current earnings 438,486 513,037 Current expenses 109,733 113,515 Current net earnings 328,753 399,522 Additions to current net earnings '527 '2,096 Deductions from current net earnings 661 3,155 Net: deductions 134 1,059 Net earnings before payments to U. S. Treasury 328,619 398,463 Paid U. S. Treasury (interest on F. R. notes) 276,289 342,568 Dividends 16,442 15,558 Transferred to surplus (Sec. 7) 35,888 40,337 1 Includes net profits on sales of U. S. Government securities: 1954—$482,000; 1953-$1,952,000. dollars, a rise of nearly 1 million dollars over 1953, which reflected an increase in the paid-in capital of the Federal Reserve Banks resulting from increased capital and surplus of member banks. Payments to the United States Treasury as interest on Federal Reserve notes amounted to 276 million dollars in 1954, or to 90 per cent of net earnings after dividends and allowances for building up surplus to 100 per cent of subscribed capital of those Banks whose Section 7 surplus was below that amount. These allowances are consistent with the provisions of the franchise tax when it was in effect; for 1954 allowances for bringing surplus up to subscribed capital were $5,187,000 for three Banks, and for 1953 they were $2,273,000 for two Banks. Total payments to the Treasury as interest on Federal Reserve notes since the policy of making such payments was begun in 1947 have amounted to 1,797 million dollars. The 36 million dollars of net earnings remaining after dividends and payments to the United States Treasury were added to surplus account. Holdings of loans and securities. Average holdings of United States Government securities amounted to 24,649 million dollars during 1954, down slightly from the all-time high in 1953. The average rate of interest on these holdings declined substantially Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 55 from 2.02 to 1.76 per cent. Average holdings of discounts and advances were considerably less in 1954 than in 1953. The average rate of interest, which declined from 1.96 to 1.61 per cent, reflected two reductions in the discount rate, first from 2 per cent to 1% per cent and then to ll/ per cent. The table below shows 2 a comparison of average daily holdings and average interest rates on loans and securities held by the Federal Reserve Banks during each of the past three years. RESERVE BANK EARNINGS ON LOANS AND SECURITIES, 1952-54 [Dollar amounts in thousands] Dis- U.S. Incounts Govern- dus- Item and year Total« and ment trial advances securities loans Average daily holdings:x 1952 $23,933,643 $802,334 $23,126,674 $4,635 1953 25,438,684 777,595 24,657,904 3,185 1954 24,866,567 216,697 24,648,691 1,179 Earnings: 1952 455,898 14,083 441,629 186 1953 512,841 15,265 497,455 121 1954 438,359 3,479 434,837 43 Average rate of interest (per cent): 1952 1.90 1.75 1.91 4.01 1953 2.02 1.96 2.02 3.80 1954 1.76 1.61 1.76 3.65 1 Based on holdings at opening of business. 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 continued to rise during 1954 but at a slower rate than in the two preceding years. An all-time high of 9.2 billion dollars was reached in October 1954. Following a steady advance in every year except 1951 from a total of 3.4 billion at the close of 1947, a rise of 566 million during 1954 brought the year-end total to 9.1 billion. Of this amount, 5.6 billion dollars was in the form of earmarked gold, 2.9 billion in United States Government securities, principally Treasury bills held in custody, nearly 500 million in dollar deposits, and approximately 100 million in miscellaneous securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

56 ANNUAL REPORT OF BOARD OF GOVERNORS The gold and dollar assets of the International Monetary Fund and the International Bank for Reconstruction and Development held at: the Federal Reserve Bank of New York increased 310 million dollars during the year to a new year-end high of 3.7 billion. An account was opened during the year for a recently established central bank in the Far East. When this account ultimately absorbed the assets of an account in the name of the same institution which the Federal Reserve Bank of New York had maintained as fiscal agent of the United States, the latter account was closed. Loans secured by gold collateral increased in both number and amount.. The maximum amount outstanding on any one day aggregated 185 million dollars as compared to less than 32 million in 1953. At the end of the year only one loan was outstanding, in the amount of 133 million; it is scheduled for repayment in monthly instalments by October 1955. The policy of the Federal Reserve System continued to provide for the granting of gold loans to assist foreign monetary authorities in meeting their dollar requirements for temporary periods. The Federal Reserve Bank of New York, as depositary and fiscal agent, continued to perform various services for the International Bank for Reconstruction and Development and the International Monetary Fund. As fiscal agent of the United States it also continued to operate the United States Stabilization Fund, pursuant to instructions of the Treasury Department, and to administer on behalf of the Treasury Department the regulations affecting blocked assets and transactions in this country of Communist China and North Korea and their nationals. Bank premises. During the year the Board authorized the Federal Reserve Bank of Kansas City to construct an addition to the Omaha Branch building, and the Federal Reserve Bank of Dallas to construct a new building for the San Antonio Branch. The Board also authorized the Federal Reserve Bank of Cleveland to construct a security court in leased quarters adjacent to the Cincinnati Branch. During the year, with the approval of the Board, the Federal Reserve Banks of Chicago and Dallas acquired properties adjoining their present locations to provide for future expansion and the Federal Reserve Bank of St. Louis acquired a site for a new building for the Louisville Branch. The Federal Reserve Bank of Dallas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 57 was also authorized to acquire sites for new buildings for the El Paso and Houston Branches. Intradistrict territorial changes. During the year intradistrict territorial changes were made in three Federal Reserve districts. Each of these changes had the effect of enlarging the area served by Federal Reserve branches. In the Second District, the four counties of Ontario, Steuben, Wayne, and Yates in the State of New York were transferred from the New York head office to the Buffalo Branch territory, effective April 1,1954. In the Seventh District, the entire lower peninsula of Michigan was assigned to the Detroit Branch, effective January 1, 1954; previously 49 of these 68 counties had been in the headoffice territory. In the Twelfth District, four counties were transferred to the Los Angeles Branch effective December 1, 1954; Kern, San Luis Obispo, and Mono counties in California were transferred from the San Francisco head-office territory and Clark County, Nevada, from the Salt Lake City Branch territory. Several towns in the Eighth District were reassigned during the year so as to be included in the same head-office or branch territory as the other towns in their respective counties. BOARD OF GOVERNORS—INCOME AND EXPENSES The accounts of the Board for the year 1954 were audited by the public accounting firm of Arthur Andersen & Co., whose certificate follows: To the Board of Governors of the Federal Reserve System: We have examined the balance sheet of the Board of Governors of the Federal Reserve System as of December 31, 1954, and the related statement of income and expenses for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying balance sheet and statement of income and expenses present fairly the financial position of the Board of Governors of the Federal Reserve System as of December 31, 1954, and the results of its operations for the year then ended, and were prepared in conformity with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

58 ANNUAL REPORT OF BOARD OF GOVERNORS generally accepted accounting principles applied on a basis consistent with that of the preceding year. Arthur Andersen & Co. Washington, D. C. February 15, 1955. BALANCE SHEET—DECEMBER 31, 1954 ASSETS Cash in Federal Reserve Bank of Rich mond $ 738,606.91 Petty cash 800.00 Miscellaneous receivables and travel advances 9,978 85 Stockroom and cafeteria inventories, at cost 14,510.71 Property and equipment: Reserve for At cost depreciation Land $ 737,180.30 $ - Land improvements 10,939.15 Building 3,794,693.58 Furniture and equipment 453,073.17 252,784.60 Automobiles 15,388.36 12,655.97 $5,011,274.56 $265,440.57 4,745,833.99 $5,509,730.46 LIABILITIES AND FUND BALANCES Accounts payable $ 132,261.07 Employee Federal income taxes withheld 100,126.34 Accrued pay roll 120,735.19 Fund Balances: Balance, December 31, 1953. $5,172,933.27 Excess of expenses over income, per accompanying statement ( 18,813.97) Fixed assets purchased, etc. (net) 2,488.56 Balance, December 31, 1954 $5,156,607.86 Represented by— Property and Equipment Fund 4,745,833.99 Operating Fund 410,773.87 $5,509,730.46 NOTE—The Board provides for depreciation of furniture and equipment and automobiles, but depreciation of the building has not been recognized in the accounts inasmuch as the Board deems a provision for such depreciation as unnecessary since funds for replacement of the building will be obtained, when required, from outside sources. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

RESERVE SYSTEM 59 STATEMENT OF INCOME AND EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1954 INCOME: Assessments against Federal Reserve Banks $4,174,600.00 Bulletin sales 13,694. 68 Other publications sales 15,623.32 Miscellaneous receipts 2,468.59 $4,206,386.59 EXPENSES: Salaries $3,007,433.18 Retirement and insurance contributions 256,451.65 Traveling expenses 228,898.63 Postage and expressage 55,778.03 Telephone and telegraph, including leased wire operations (net).. 55,055.77 Printing and binding 208,116.46 Stationery and supplies 29,161.97 Equipment rental 22,561.79 Provision for depreciation 25,218.38 Books and subscriptions 14,370.33 Heat, light, and power 37,573.83 Repairs, maintenance, and alterations 14,720.57 Insurance 5,091.77 Consumer Finances Surveys 147,123.06 Talle Subcommittee project 5,445.47 Retail Credit Survey 13,500.00 Legal and consultant fees and expenses 6,385.93 Security clearance investigations for Board employees 13,920.00 Meeting of Technicians of Central Banks 10,773.52 Audit expenses applicable to Board's accounts 2,562.97 Loss from operation of cafeteria (net) 38,643.82 Other 26,413.43 $4,225,200.56 EXCESS OF EXPENSES OVER INCOME $ 18,813.97 NOTE—Salaries, and retirement and insurance contributions exclude approximately $65,800 and $6,900, respectively, which were charged direct to cafeteria operations. In the foregoing statement of income and expenses, "Other" expenses of $26,413.43 includes an expenditure of $425.00, contributed by the Board of Governors for cost of a luncheon at a meeting of Treasury Department savings bonds program volunteer workers. The Board received the following reimbursements in 1954 for expenditures which it makes on a reimbursable basis: Printing Federal Reserve notes $6,132,815.92 Currency Redemption Division (Office of the Treasurer of the United States) 419,574.00 Federal Reserve Issue and Redemption Division (Office of the Comptroller of the Currency) 164,538.48 Leased wire service (telegraph) 289,647.17 Leased telephone lines 9,684.00 Miscellaneous 11,943.07 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

60 ANNUAL REPORT OF BOARD OF GOVERNORS FEDERAL RESERVE MEETINGS The Federal Open Market Committee met on March 3, June 23, September 22, and December 7, 1954, 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 action taken by the Committee on questions of policy will be found on pages 92-98 of this Report. A meeting of the Conference of Chairmen of the Federal Reserve Banks was held on December 2-3, 1954, and was attended by members of the Board of Governors. The Conference of Presidents of the Federal Reserve Banks held meetings on March 1-2, June 21-22, September 20-21, and December 6, 1954, and the Board of Governors met with the Presidents on March 3, June 23, and September 22, 1954. Meetings of the Federal Advisory Council were held on February 14-16, May 1648, September 19-21, and November 14-16, 1954. The Board of Governors met with the Council on February 16, May 18, September 21, and November 16, 1954. 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. MEETING OF CENTRAL BANK TECHNICIANS The Board of Governors and the Federal Reserve Bank of New York acted as hosts for the Fourth Meeting of Central Bank Technicians of the American Continent, which was held in Washington and New York during the first two weeks of May 1954. More than 100 delegates representing 17 Latin American countries, Canada, the Federal Reserve System, the International Monetary Fund,, the International Bank for Reconstruction and Development, and other international organizations attended the meeting. The purpose, like that of previous meetings held in Mexico, Chile, and Cuba, was to engage in objective study and discussion of current monetary and economic problems, as well as to consider central banking problems of an operating and technical nature. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

62 ANNUAL REMRT OF BOARD OF NO. 1—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) DECEMBER 31, 1954 [Amounts in boldface type are those shown in the Board's weekly statement. In thousands of dollars] ASSETS Gold certificates: Interdistrict settlement fund 7,941,547 Gold certificates on hand 1,015,555 Gold certificates with Federal Reserve Agents 11,208,000 20,165,102 Redemption fund for Federal Reserve notes 867,405 Total gold certificate reserves 21,032,507 Federal Reserve notes of other Federal Reserve Banks 239,001 Other cash: United States notes 30,816 Silver certificates 271,836 Standard silver dollars 4,715 National bank notes and Federal Reserve Bank notes 1,981 Subsidiary silver, nickels, and cents 65,312 Total other cash 374,660 Discounts and advances secured by U. S. Govt. securities: Discounted for member banks 9,970 Discounted for others 9,970 Other discounts and advances: Discounted for member banks Foreign loans on gold 133,334 133,334 Total discounts and advances 143,304 Acceptances purchased Industrial loans 708 U. S. Government securities: Bought outright— Bills. ; 2,167,000 Certificates 13,882,341 Notes 6,037,271 Bonds 2,801,750 Total bought outright 24,888,362 Held under repurchase agreement 44,000 Total U. S. Government securities 24,932,362 Total loans and securities 25,076,374 Due from foreign banks 22 Uncollected cash items: Transit items 3,691,348 Exchanges for clearing house 202,323 Other cash items 64,884 Total uncollected cash items 3,958,555 Bank premises: Land 15,740 Buildings (including vaults) 64,370 Fixed machinery and equipment 27,606 Total buildings 91,976 Less depreciation allowances 52,968 39,008 Total bank premises 54,748 Other assets: Industrial loans past due .^ 10 Miscellaneous assets acquired account industrial loans.. 84 Miscellaneous assets acquired account closed banks Total 94 Less valuation allowances 35 Net .# 59 Reimbursable expenses and other items receivable. 6,254 Interest accrued 115,833 Premium on securities 6,181 Deferred charges 1,545 Real estate acquired for banking house purposes... 5,316 Suspense account 496 All other 584 Total other assets 136,268 Total assets 50,872,135 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 63 NO. 1—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) —Continued LIABILITIES Federal Reserve notes: Outstanding (issued to Federal Reserve Banks) 27,346,789 Less: Held by issuing Federal Reserve Banks 1,017,538 Forwarded for redemption 76,118 1,093,656 Federal Reserve notes, net (includes notes held by U. S. Treasury and by Federal Reserve Banks other than issuing Bank) 26,253,133 Deposits: Member bank—reserve accounts 18,876,128 U. S. Treasurer—general account 563,137 Foreign 489,960 Other deposits: Nonmember bank—clearing accounts 92 ,555 Officers' and certified checks 8,893 Federal Reserve exchange drafts 374 International organizations1 40,712 All other 298,959 Total other deposits 441,493 Total deposits 20,370,718 Deferred availability cash items 3,150,357 Other liabilities: Accrued dividends unpaid Unearned discount 6 Discount on securities 8,704 Sundry items payable 5,121 Suspense account 32 All other 82 Total other liabilities 13,945 Total liabilities 49,788,153 CAPITAL ACCOUNTS Capital paid in 287,754 Surplus (Sec. 7) 660,901 Surplus (Sec. 13b) 27,543 Other capital accounts: Reserves for contingencies: Reserve for registered mail losses 9,784 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 107,784 Total liabilities and capital accounts 50,872,135 Contingent liability on acceptances purchased for foreign correspondents 19,052 Industrial loan commitments 1,149 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 1954 AND 1953 [In thousands of dollars] Total Boston New York Philadelphia Cleveland Richmond Item 1954 1953 1954 1953 1954 1953 1954 1953 1954 1953 1954 1953 ASSETS Gold certificates 20,165,102 20,453,102 1,030,159 1,035,380 5,322,811 5,197,850 1,220,496 1,300,725 1,717,478 1,770,513 1,156,033 1,064,892 pa Redemption fund for Federal Reserve notes 867,405 900,644 53,668 54,927 184,192 183,706 58,928 61,086 76,999 82,247 74,913 76,974 Total gold certificate reserves.. . 21,032,507 21,353,746 1,083,827 1,090,307 5,507,003 5,381,556 1,279,4241,361,811 1,794,477 1,852,760 1,230,946 1,141,866 Federal Reserve notes of other Banks. . 239,001 214,128 14,846 3,972 47,323 26,487 17,291 17,104 16,882 13,707 22,852 30,147 Other cash 374,660 371,761 24,277 27,559 80,491 75,299 16,199 26,837 37,499 24,613 24,156 22,580 Discounts and advances: Secured by U. S. Govt. securities. . 9,970 12,855 550 600 450 2,625 3,900 3,430 2,370 1,275 750 1,200 Other 133,334 15,000 ,133 915 38,667 4,425 9,867 1,125 12,267 1,380 6,800 750 Industrial loans 708 1,879 612 1,380 60 U. S. Government securities: Bought outright 24,888,362 25,317,674 1,373,290 1,394,092 6,357,284 6,517,478 1,514,656 1,525,4912,133,107 2,149,192 1,465,875 1,501,338 Held under repurchase agreement. . 44,000 597,900 44,000 597,900 Total loans and securities 25,076,374 25,945,308 1,381,973 1,395,607 6,440,401 7,122,428 1,529,035 1,531,426 2,147,7442,151,847 1,473,425 1,503,348 i U D n u c e o f l r l o e m cte d fo r c e a i s g h n i b te a m nk s s 3,958,55 2 5 2 4,225,21 2 0 2 295,141 1 324,264 1 771,896 790,66 1 2 6 235,683 2 253,896 2 371,459 2 416,386 2 333,590 1 335,529 I Bank premises 54,748 52,465 5,919 6,232 7,149 7,390 5,164 4,734 5,260 5,289 4,495 4,719 Other assets 136,268 151,917 7,165 8,151 33,268 38,519 7,915 8,845 11,328 12,544 7,854 8,853 Total assets 50,872,135 52,314,557 2,813,149 2,856,093 12,887,537 13,442,347 3,090,7133,204,655 4,384,651 4,477,148 3,097,319 3,047,043 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 26,253,133 26,558,372 1,608,630 1,632,903 5,950,858 5,924,481 1,845,959 896,948 2,417,9612,463,795 1,864,245 1,849,093 Deposits: Member bank—reserve accounts... 18,876,128 20 160,435 795,449 848,626 5,482,319 6,049,923 884,622 959,879 1,467,2871,533,769 829,940 827,255 U. S. Treasurer—general account. . 563,137 345,866 47,253 8,742 95,808 70,675 39,713 30,135 42,858 38,382 44,619 11,127 Foreign 489,960 423,298 29,402 24,961 M47.721 1134,793 35,668 30,690 44,344 37,646 24,582 20,460 Other 441,493 492,815 7,609 8,744 322,038 361,474 14,135 8,688 13,025 14,503 5,627 6,762 Total deposits 20,370,718 21,422,414 879,713 891,073 6,047,886 6,616,865 974,138 1,029,392 1,567,514 1,624,300 904,768 865,604 Deferred availability cash items 3,150,357 3,290,407 258,100 267,333 575,375 605,851 190,709 201,073 299,652 293,806 270,806 277,385 Other liabilities and accrued dividends.. 13,945 18,170 619 821 5,456 6,787 684 875 1,121 1,355 556 762 Total liabilities 49,788,153 51,289,363 2,747,0622,792,130 12,579,575 13,153,984 3,011,490 3,128,288 4,286,248 4,383,256 3,040,375 2,992,844 CAPITAL ACCOUNTS Capital paid in 287,754 265,266 14,998 14,443 89,949 81,852 18,982 18,017 27,318 25,410 12,618 11,655 Surplus (Sec. 7) 660,901 625,013 40,309 38,779 188,070 176,633 47,773 45,909 60,222 57,648 33,480 31,750 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 107,784 107,372 7,769 7,730 22,624 22,559 7,979 7,952 9,857 9,828 7,497 7,445 Total liabilities and capital accounts 50,872,135 52,314,557 2,813,149 2,856,093 12,887,537 13,442,347 3,090,713 3,204,6554,384,651 4,477,148 3,097,319 3,047,043 Ratio of gold certificate reserves to deposit and F. R. note liabilities combined 45.1% 44.5% 43.6% 43.2% 45.9% 42.9% 45.4% 46.5% 45.0% 45.3% 44.5% 42.1% Contingent liability on acceptances purchased for foreign correspondents 19,052 23,940 1,171 1,460 25,420 27,068 1,421 1,795 1,766 2,202 979 1,197 Industrial loan commitments 1,149 3,569 128 1,724 598 748 39 51 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve Agent and outstanding 27,346,789 27,771,106 1,670,5891,706,340 6,183,612 6,164,619 1,916,984 1,997,552 2!,559,779 2,577,829 1,939,335 1,955,595 Held by Federal Reserve Bank and forwarded for redemption 1,093,656 1,212,734 61,959 73,437 232,754 240,138 71,025 100,604 141,818 114,034 75,090 106,502 Federal Reserve notes, net3 26,253,133 26,558,372 1,608,630 1,632,903 5,950,858 5,924,481 1,845,959 1,896,9482,417,961 2,463,795 1,864,2451,849,093 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificates 11,208,000 11,093,000 640,000 640,000 2,670,000 2,670,000 800,000 800,000 1,050,000 1,050,000 675,000 625,000 Eligible paper 7,150 10,130 550 600 2,525 3,900 3,430 750 1,200 U. S. Government securities 17,140,000 17,420,000 ,200,000 1,200,000 3', 600', 000 3,600,000 1,200,000 ,200,000 1^550',000i,'55O,b66\1,300,000 1,350,000 Total collateral 28,355,150 28,523,130 1,840,5501,840,600 6,270,000 6,272,525 2,003,900 2,003,430 2,600,000 2,600,000,1,975,750 1,976,200 lAfter deducting $342,220,000 participations of other Federal Reserve Banks on Dec. 31, 1954, and $288,486,000 on Dec. 31, 1953. 2After deducting $13,632,000 participations of other Federal Reserve Banks on Dec. 31, 1954, and $16,872,000 on Dec. 31, 1953. 3 Includes Federal Reserve notes held by the U. S. Treasury and by Federal Reserve Banks other than the issuing Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 2—STATEMENT OF CONDITION OF EACH FEDERAL RESERVE BANK AT END OF 1954 AND 1953—Continued [In thousands of dollars] Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Item 1954 1953 1954 1953 1954 1953 1954 1953 1954 1953 1954 1953 1954 1953 2 a ASSETS Gold certificates 904,578 912,2633,581,139 3,743,997 782,928 857,457 421,328 484,485 838,886 854,501 807,406 817,4422,381,860 2,413,597 w Redemption fund for Federal Reserve S notes 53,931 58,813 144,008 151,495 47,149 49,407 24,644 25,562 39,771 41,453 28,793 30,399 80,409 84,575 3 Total gold certificate reserves.. 958,509 971,0763,725,147 3,895,492 830,077 906,864 445,972 510,047 878,657 895,954 836,199 847,8412,462,269 2,4981,,172 Federal Reserve notes of other Banks. 42,243 29,747 20,411 27,164 12,393 15,376 8,567 7,847 10,673 8,901 9,212 12,737 16,308 20,939 o Other cash 33,003 32,527 62,994 62,522 24,837 24,452 8,848 7,658 14,929 15,080 14,234 15,322 33,192 37,312 Discounts and advances: W Secured by U. S. Govt. securities. 350 1,000 450 1,350 1,500 525 500 O Other 5,733 645 18,533 2,055 5,067 570 3,333 375 5,067 570 6,267 675 13,600 1,515 Industrial loans 340 96 99 U. S. Government securities: Bought outright 1,267,5891,294,9744,350,934 4,375,7041,041,4541,065,140 611,183 624,8661,073,7831,103,420 977,963 1,005,6942,721,244 2,760,285 Held under repurchase agree- 1 ment Total loans and securities. .. 1,273,3221,296,3094,369,467 4,378,7591,046,5211,065,710 615,062 626,6901,080,3501,104,515 984,230 1,006,369 2,734,844 2,762,300 M I Due from foreign banks. 1 1 3 3 1 1 1 1 1 1 1 1 2 2 Uncollected cash items. . 311,508 324,678 638,551 719,839 154,706 178,013 101,402 112,856 205,672 217,604 208,977 196,615 329,970 354,868 Bank premises 3,879 3,636 6,281 6.448 2,832 2,898 1,007 1,024 2,533 2,245 1,133 587 9,096 7,263 Other assets 7,609 8,676 25,246 25,931 5,962 6,261 3,238 3,681 6,082 7,319 5,877 6,568 14,724 16,569 Total assets. 2,630,0752,666,6508,848,100 9,116,1582,077,3292,199,575 1,184,0971,269,804 2,198,897 2,251,619 2,059,8632,086,040 5,600,405 5,697,425 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes 1,387,7281,417,107 5,064,809 5,111,4061,177,5671,214,921 583,511 644,2931,028,6141,019,799 739,472 743,749 2,583,779 2,639,877 Deposits: Member bank—reserve accounts. 866,804 890,376 2,979,096 3,250,620 670,349 764,061 443,527 468,968 912,171 965,5181,039,8141,050,684 2,504,750 2,550,756 U. S. Treasurer—general account 38,350 19,314 97,481 30,189 28,356 18,078 27,339 17,791 31,581 20,931 23,692 41,479 46,087 39,023 Foreign 20,726 17,596 66,998 56,060 18,316 15,550 12,050 10,230 18,316 15,550 22,654 18,414 49,183 41,348 Other 3,613 5,679 15,350 17,776 8,885 11,351 2,316 3,849 4,837 8,116 2,355 3,504 41,703 42,369 Total deposits 929,493 932,9653,158,9253,354,645 725,906 809,040 485,232 500,838 966,9051,010,1151,088,5151,114,0812,641,723 2,673,496 Deferred availability cash items 263,481 269,537 471,408 505,628 130,210 133,779 86,438 96,521 160,467 180,744 180,275 179,523 263,436 279,227 Other liabilities and accrued dividends 528 714 2,319 3,017 462 612 347 703 460 605 398 523 995 1,396 Total liabilities 2,581,230 2,620,3238,697,4618,974,696 2,034,1452,158,3521,155,5281,242,3552,156,446 2,211,263 2,008,660 2,037,876 5,489,933 5,593,996 CAPITAL ACCOUNTS Capp ital ppaid in. 12,203 11,158 38,354 35,001 9,935 9,150 6,360 5,952 10,912 10,139 14,457 13,279 31,668 29,210 Surplus (Sec. 7) 29,480 28,034 96,566 90,792 26,619 25,465 16,918 16,219 24,755 23,456 29,985 28,146 66,724 62,182 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. 6,400 6,373 14,290 14,240 6,109 6,087 4,218 4,205 5,647 5,624 5,454 5,432 9,940 9,897 Total liabilities and capital accounts 2,630,0752,666,650 8,848,100 9,116,158 2,077,329 2,199,575 ,184,0971,269,804 2,198,8972,251,619 2,059,8632,086,040 5,600,405 5,697,425 Ratio^of gold certificate reserves to deposit and F. R. note liabilities combined , 41.4% 41.3% 45.3% 46.0% 43.6% 44.8% 41.7% 44.5% 44.0% 44.1% 45.7% 45.6% 47.1% 47.0% Contingent liability on acceptances purchased for foreign correspondents 826 1,029 2,669 3,279 730 909 480 598 730 909 902 1,077 1,958 2,417 Industrial loan commitments 104 131 17 28 263 887 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve Agent and outstanding 1,467,6711,501,548 5;,,185,2535,274,0781,227,5571,277,506 622,837 663,2251,063,3571,057,504 789,675 787,6942,720,140 2,807,616 Held by Federal Reserve Bank and forwarded for redemption. 79,943 84,441 120,444 162,672 49,990 62,585 39,326 18,932 34,743 37,705 50,203 43,945 136,361 167,739 Federal Reserve notes, net1. . . 1,387,7281,417,1075,064,8095,111,4061,177,5671,214,921 583,511 644,2931,028,6141,019,799 739,472 743,749 2,583,7792,639,877 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificates 500,000 435,0002,400,0002,400,000 355,000 355,000 175,000 175,000 280,000 280,000 283,000 283,0001,380,000 1,380,000 Eligible paper 450 1,350 1,500 525 500 U. S. Government securities 1,000,000 ,100,0002,900,0003,000,000 945,000 '975,606 500,000 500,000 800,000 800,000 '5*2*5,666 525,0001,620,0001,620,000 Total collateral. 1,500,000 ,535,0005,300,0005,400,000 ,300,000 1,330,000 675,450 676,3501,081,5001,080,525 808,000 808,000 3,000,000 3,000,500 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

68 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 3—HOLDINGS OF UNITED STATES GOVERNMENT SECURITIES BY FEDERAL RESERVE BANKS, END OF DECEMBER 1952, 1953, AND 1954 [In thousands of dollars] Rate of December 31 Change during Type of issue interest (Per cent) 1954 1953 1952 1954 1953 Treasury bonds: 1951-53 2 855,825 -855,825 1952-54, June.... 2 476,900 461,900 -476,900 + 15,000 1952-54, Dec 2 283,100 297,600 -283,100 -14,500 1952-55 2M 96,700 96,700 —96,700 1951-55 .. 2 8,200 8,200 -8,200 1955-601 2% 1956-58... 12,493 12,493 12,493 1958, June 2% 1958, Dec 1957-59 2% 339,096 339,096 339,096 1956-59 2M 21,690 21,690 21,690 1956-592 1960, Nov 2% 1961, Sept 1961, Nov 2Y2 1959-62, June3.. . 2M 319,849 319,849 319,849 1959-62, Dec.3... 2U 693,765 693,765 693,765 1958-632 2% 1963, Aug 1960-652 2% 1962-673 56,610 56,610 56 610 1963-683 2 V?, 122,585 122,585 122,585 1964-69, June4.. . 2Y2 203,890 203,890 203,890 1964-69. Dec.4... 2H 266,999 266,999 266,999 1965-705 2)4 521 490 521,490 521 490 1966-715 132,707 132,707 132,707 1967-72, June6.. . 49,266 49,266 49,266 1 1 9 9 6 6 7 7 - - 7 7 2 2 , , S D e e p c t. . . 6 .. . . . 2 2} j A | , 58 2 .5 7 5 5 2 8 5 2 8 , , 5 7 5 5 2 8 58 2 5 7 5 5 2 8 1978-83 SH Total Treasury bonds 2,801,750 3,666,650 4,521,975 -864,900 -855,325 Treasury notes: Dec. 1 1953-A 2H 7 491 750 — 7 491 750 Mar. 15, 1954-A.. 1*A 257,450 244,650 -257,450 +12,800 Dec. 15, 1954-B.. 6,994.050 -6,994,050 +6,994,050 Mar. 15, 1955-A.. * 95^300 89,800 89,800 +5,500 Dec. 15, 1955-B.. 3,235,123 3,233,623 3 ,233,623 + 1 ,500 Apr. 1, 1956-EA 1,000,000 1,000,000 1,000,000 Oct. 1, 1956-EO 500,000 500,000 500,000 Mar. 15, 1957-A.. Apr. 1, 1957-EA 500,000 500,000 500,000 May 15, 1957-B.. Oct. 1, 1957-EO lil 713,848 713,848 713,848 Apr. 1, 1958-EA Oct. 1, 1958-EO 1 *'2 Feb. 15, 1959-A.. 17A Apr. 1,1959-EA IB Oct. 1, 1959-EO Total Treasury notes 6,044,271 13,288,771 13,773,671 -7,244,500 -484,900 Certificates i| *7,440,065 +7,440,065 2,520,076 +2,520,076 3,922,200 +3,922,200 4,857,816 -4,857,816 2 202 800 —202,800 3,704,750 -3,704,750 +3,704,750 128,900 -128,900 +128,900 2% 2,133,491 -2,133,491 +2,133,491 Total certificates 13,882,341 5,967,141 5,060,616 +7,915,200 +906,525 Treasury bills 2,204,000 2,993,012 1,340,750 -789,012 +1,652,262 Total holdings. 24,932,362 25,915,574 24,697,012 -983,212 +1,218,562 1 Partly tax-exempt, called for redemption. 2Partly tax-exempt. 3Became bank-eligible during 1952. 4Became bank-eligible during 1953. 6Became bank-eligible during 1954. 6Restricted as to commercial bank ownership. To become bank-eligible Jan. 1, 1955. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

69 FEDERAL RESERVE SYSTEM NO. 4.—FEDERAL RESERVE BANK HOLDINGS OF SPECIAL SHORT-TERM TREASURY CERTIFICATES PURCHASED DIRECTLY FROM THE UNITED STATES, 1953-541 [In millions of dollars] Date Amount Date Amount Date Amount Date Amount 1953—Mar. 18 110 1953—June *7 196 1953—June 18 364 1954—Jan. 18 323 19 104 8 374 19 992 19 424 20 189 9 491 20 992 20 323 21 189 10 451 *21 992 21 306 *22 189 11 358 22 908 22 283 23 333 12 506 23 608 23 283 24 186 13 506 24 296 *24 283 25 63 *14 506 1954—Jan. 14 22 25 203 26 49 15 999 15 169 26 3 June 5 196 16 1,172 16 169 Mar. 15 134 6 196 17 823 *17 169 16 190 * Sunday or holiday. JOn 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 K 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, 1950-54 [Number in thousands; amounts in thousands of dollars] 1954 1953 1952 1951 1950 NUMBER OF PIECES HANDLED1 Discounts and advances: Notes discounted and advances made 11 8 Industrial loans: Loans made 1.4 .7 Commitments to make industrial loans () () () () () Currency received and counted.. 4,384,270 4,405,255 4,183,063 4,066,619 3,846,397 Coin received and counted 7,001,838 5,889,238 5,716,379 5,889,223 7,190,498 Checks handled: U. S. Govt. checks 481,408 458,607 446,084 412,865 365,812 Postal money orders 354,368 366.807 371.318 All others 2,513,966 2,415,164 2,293,061 2,122,147 1,955,232 Collection items handled: U. S. Govt. coupons paid. . . 12,753 13,703 13,599 14,510 15,323 All other 15,443 14,360 14,172 13,428 12,793 Issues, redemptions, and exchanges of U. S. Govt. securities 191,112 177,596 163,568 154,335 153,886 Transfers of funds 1,808 1,718 1,595 1,525 1,343 AMOUNTS HANDLED Discounts and advances 22,871,449 93,438,640105,549,326 43,422,106 17,050,334 Industrial loans: Loans made 7,477 22,009 31,193 27,656 6,530 Commitments to make industrial loans 520 980 3,468 9,078 4,019 Currency received and counted.. 28,482,428 29,514,663 27,001,076 26,175,324 ,039,335 Coin received and counted 761,062 607,205 558,416 592,664 622,620 Checks handled: U. S. Govt. checks 141,037,495140,739,438119,423,270 89,648,061 ,569,739 Postal money orders 5,943,178 6,091,173 5,996,899 All others 882,971,848 885,726,031840,094,629 799,891,846 856,952^849 Collection items handled: U. S. Govt. coupons paid. . . 2,209,045 2,270,606 1,923,079 2,020,560 ,173,589 All other 5,085,695 4,615,970 5,103,262 5,121,274 ,758,483 Issues, redemptions, and exchanges of U. S. Govt. securities 469,247,400 381,877,330 355,234,532 344,771,945 346,224,112 Transfers of funds 1,038,100,606 876,838,475 767,974,539 656,771,175509,167,912 !Two or more checks, coupons, etc., handled as a single item are counted as one "piece." 2Less than 50. 3Figures beginning with 1951 exclude checks drawn on the Federal Reserve Banks; the 1950 data include 1,785,000 of such items amounting to $178,120,377,000. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 6—EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS DURING 1954 Phila- Cleve- Rich- Minne- Kansas San Item Roston New York delphia land mond Atlanta Chicago St. Louis apolis City Dallas Francisco CURRENT EARNINGS Discounts and advances $3,478,513 $193,855 $749,576 $217,069 $276,513 $220,540 $276,644 $632,661 $148,443 $144,803 $250,061 $131,054 $237,294 Industrial loans 42,902 34,985 304 2,479 5,134 Commitments to make industrial loans 13,784 694 6,158 448 1,178 171 5,135 U. S. Government securities. . 434,837,470 23,951,036 111,697,77326,360,236 37,127,258 25,627f,,442288 22,145,60275,691,706 18,200,38610,679,99618,789,63717,116,359 47,450,053 All other 113,371 9,885 19,690 7,181 12,211 6,532 12,090 14,749 3,559 5,482 12,851 4,263 4,878 Total current earnings... 438,486,040 24,154,776 112,467,039 26,620,165 37,422,140 25,855,252 22,437,993 76,339,287 18,352,388 10,835,415 19,057,684 17,251,676 47,692,225 CURRENT EXPENSES Salaries: Officers 4,857,821 294,686 871,985 332,345 418,618 354,800 407,039 564,316 344,340 261,667 302,200 297,951 407,874 Employees 68,456,540 4,269,294 15,427,610 4,042,966 5,852,256 4,299,586 3,980,11011,008,883 3,963,345 2,063,321 3,528,492 3,298,237 6,722,440 Directors' and other fees.... 312,044 18,356 26,301 14,860 60,426 16,390 41,177 18,552 28,328 15,239 25,159 18,597 28,659 Retirement contributions. . . 6,766,917 423,511 1,455,672 393,815 580,087 440,183 417,934 1,083,646 391,136 201,511 364,851 344,624 669,947 Traveling expenses 1,249,748 84,463 180,493 51,707 107,611 100,915 106,410 161,472 91,773 65,524 83,958 79,971 135,451 Postage and expressage 15,618,786 1,234,294 2,326,553 918,222 1,328,437 1,386,941 1,361,017 2,196,737 856,129 505,854 885,874 811,336 1,807,392 Telephone and telegraph.... 924,293 52,828 194,701 50,024 68,204 61,573 81,259 110,058 58,784 34,691 54,879 63,342 93,950 Printing, stationery, and supplies 5,162,460 372,015 923,649 290,014 400,516 360,091 398,626 925,187 356,607 128,933 306,925 230,152 469,745 Insurance. 1,028,361 70,295 200,752 48,412 95,114 88,202 64,066 124,962 70,217 33,203 78,043 47,759 107,336 Taxes on real estate 2,771,539 450,210 616,585 119,437 249,961 130,058 138,170 390,512 101,761 100,150 131,683 66,066 276,946 Depreciation (building) 2,522,722 403,814 309,931 66,352 392,616 263,665 162,812 268,506 68,052 48,684 118,067 37,469 382,754 Light, heat, power, and water 1,116,881 94,803 194,464 74,991 104,385 91,198 57,858 162,706 85,229 34,085 90,193 45,607 81,362 Repairs and alterations 647,542 33,281 32,979 111,689 216,811 36,706 29,509 42,120 73,566 14,977 15,858 12,966 27,080 Rent 499,688 1,418 3,512 37,248 64,029 2,025 105,584 85,444 23,887 52,576 13,915 51,354 58,696 Furniture and equipment: Purchases 1,556,999 71,281 135,157 149,165 281,330 164,743 207,542 187,057 137,804 37,494 53,625 50,146 81,655 Rentals 4,365,739 387,818 662,123 323,407 372,495 305,784 268,835 682,985 267,120 158,693 262,426 233,803 440,250 Assessment for expenses of Board of Governors 4,174,600 255,300 1,207,900 311,000 382,400 212,900 182,500 578,800 159,800 105,500 158,100 194,300 426,100 Federal Reserve currency. . . 6,489,895 440,377 1,311,293 500,162 579,512 531,176 491,556 1,077,102 340,930 125,569 251,012 194,090 647,116 Ail other H,665,852 127,525 283,170 118,519 415,066 120,868 108,810 281,132 113,073 104,114 127,485 84,727 170,916 Total U30,188,427 9,085,569 26,364,830 7,954,33511,969,874 8,967,804 8,610,81419,950,177 7,531,881 4,091,785 6,852,745 6,162,497 13,035,669 Less reimbursement for certain fiscal agency and other expenses 120,455,496 1,117,461 3,901,978 1,085,998 1,838,603 1,160,133 1,389,514 3,589,960 1,279,010 603,044 1,468,944 1,210,442 2,199,962 Net expenses 109,732,931 7,968.108 22,462,852 6,868,33710,131,271 7,807,671 7,221,30016,360,217 6,252,871 3,488,741 5,383,801 4,952,055 10,835,707 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PROFIT AND LOSS Current net earnings 328,753,109 16,186,668 90,004,187 19,751,828 27,290,869 18,047,581 15,216,693 59,979,070 12,099,517 7,346,674 13,673,883 12,299,621 36,856,518 Additions to current net earnings: Profits on sales of U. S. Government securities (net) 481,620 32,661 111,317 30,741 45,289 31,735 26,876 72,999 25,452 14,804 21,791 21,920 46,035 All other 45,246 538 117 83 11,556 9,213 85 11,578 5,050 3,431 2,711 545 339 Total additions. 526,866 33,199 111,434 30,824 56,845 40,948 26,961 84,577 30,502 18,235 24,502 22,465 46,374 Deductions from current net earnings: Reserves for contingencies 412,739 38,512 65,715 27,181 28,717 52,509 27,001 49,792 21,655 13,429 23,210 21,921 43,097 All other 247,768 3,768 7,080 291 1,454 637 50,700 111,432 5,524 402 57,158 2,177 7,145 Total deductions 660,507 42,280 72,795 27,472 30,171 53,146 77,701 161,224 27,179 13,831 80,368 24,098 50,242 Net deductions 133,641 9,081 +38,639 4-3,352 +26,674 12,198 50,740 76,647 +3,323 +4,404 55,866 1,633 3,868 Ne t t o e U ar . n S in . g T s r b e e a f s o u r r e y payments 328,619,468 16,177,587 90,042,82619,755,18027,317,543 18,035,38315,165,95359,902,423 12,102,840 7,351,07813,618,017 12,297,988 36,852,650 C/5 Paid U. S. Treasury (interest % on F. R. notes) 276,289,457 13,765,123 73,549,61316,779,30023,166,338 15,573,733 13,012,03851,963,902 10,380,897 6,287,23711,691,201 9,632,252 30,487,823 W Dividends paid 16,442,236 882,897 5,056,042 1,111,286 1,577,114 731,160 707,940 2,164,551 568,325 365,163 627,677 826,455 1,823,626 1C/i Transferred to surplus (Sec. 7) 35,887,775 1,529,567 11,437,171 1,864,594 2,574,091 1,730,490 1,445,975 5,773,970 1,153,618 698,678 1,299,139 1,839,281 4,541,201 Surplus (Sec. 7) January 1 625,013,743 38,779,128176,633,418 45,908,51957,647,949 31,749,51528,034,120 90,791,91725,465,369 16,219,368 23,456,04228,145,91462,182,484 Surplus (Sec. 7) December 31. 660,901,518 40,308,695188,070,589 47,773,113 60,222,040 33,480,00529,480,095 96,565,88726,618,987 16,918,046 24,755,18129,985,195 66,723,685 1 After deducting $389,553 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, 1914-54 Bank and period e C a u rn rr in en g t s e C x u p r e r n e s n e t s U N . b S e e m f t . o e T e r n a e r t r e s n p a i t a s n o u y g r - s y1 Div p i a d i e d nds F p r a a T i n d r c e t h a o i s s u U e r y . t a S x . Pa ( T S id r e e c t a . o s 1 u U 3 r b y . ) S. P F ( a I . T n id R r t e e . t a r o n e s s o u U t t r e y . o s n S ) . T t ( r o S a e n s c u s . f r e 1 p r 3 l r u b e s ) d T t r o ( a S n s e u s c f r e . p r l 7 r u e ) s d All Federal Reserve Banks, by years: 1914-15 2,173,252 2,320,586 -141,459 217,463 1916 5,217,998 2,273,999 2,750,998 1,742,774 1917 16,128,339 5,159,727 9,582,067 6,804,186 $ 1,134,234 1,134,234 1918 67,584,417 10,959,533 52,716,310 5,540,684 48,334,341 1919 102,380,583 19,339,633 78,367,504 5,011,832 2,703,894 70,651,778 1920 181,296,711 28,258,030 149,294,774 5,654,018 60,724,742 82,916,014 1921 122,865,866 34,463,845 82,087,225 6,119,673 59,974,466 15,993,086 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 2,6 i i! i i 8 -7,057,694 1932 50,018,817 26,291,381 22,314,244 9,282,244 11,020,582 1933 49,487,318 29,222,837 7,957,407 8,874,262 -916,855 1934 48,902,813 29,241,396 15,231,409 8,781,661 -60,323 6,510,071 1935 42,751,959 31,577,443 9,437,758 8,504,974 297,667 27,695 607,422 1936 37,900,639 29,874,023 8,512,433 7,829,581 227,448 102,880 352,524 8 1937 41,233,135 28,800,614 10,801,247 7,940,966 176,625 67,304 2,616,352 1938 36,261,428 28,911,608 9,581,954 8,019,137 119,524 -419,140 1,862,433 1939 38,500,665 28,646,855 12,243,365 8,110,462 24,579 -425,653 4,533,977 | 1940 43,537,805 29,165,477 25,860,025 8,214,971 82,152 -54,456 17,617,358 1941 41,380,095 32,963,150 9,137,581 8,429,936 141,465 -4,333 570,513 1942 52,662,704 38,624,044 12,470,451 8,669,076 197,672 49,602 3,554,101 1943 69,305,715 43,545,564 49,528,433 8,911,342 244,726 135,003 40,237,362 1944 104,391,829 49,175,921 58,437,788 9,500,126 326,717 201,150 48,409,795 1945 142,209,546 48,717,271 92,662,268 10,182,851 247,659 262,133 81,969,625 1946 150,385,033 57,235,107 92,523,935 10,962,160 67,054 27,708 81,467,013 1947 158,655,566 65,392,975 95,235,592 11,523,047 35,605 $ 75,223,818 86,772 8,366,350 1948 304,160,818 72,710,188 197,132,683 11,919,809 166,690,356 18,522,518 1949 316,536,930 77,477,676 226,936,980 12,329,373 193,145,837 21,461,770 1950 275,838,994 80,571,771 231,561,340 13,082,992 196,628,858 21,849,490 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 1954 438,486,040 109,732,931 328,619,468 16,442,236 276,289,457 35,887,775 Digitized for FTRoAtaSlE—1R9 14-54. 4,777,114,762 1,636,462,231 3,090,837,530 352,589,399 149,138,300 2,188,893 1,797,354,533 -3,658 2789,570,063 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Aggregate for each Federal Reserve Bank, 1914-54: Boston 315,727,959 117,479,523 196,043,602 23,224,408 7,111,395 280,843 114,752,611 + 135,412 50,538,933 New York 1,225,162,926 376,396,842 846,139,853 119,048,914 68,006,262 369,116 434,255,226 -433,413 224,893,748 Philadelphia 331,670,418 114,929,931 216,453,494 30,022,607 5,558,901 722,406 117,464,922 +290,661 62,393,997 Cleveland 440,209,761 151,123,932 282,830,430 35,018,425 4,842,447 82,930 169,450,608 -9,907 73,445,927 Richmond 282,739,512 103,496,327 175,822,889 15,008,272 6,200,189 172,493 115,225,155 -71,516 39,288,296 Atlanta 245,729,125 85,912,337 154,261,450 13,128,184 8,950,561 79,264 97,345,824 +5,491 34,752,126 Chicago 699,966,556 226,692,363 462,954,551 42,201,078 25,313,526 151,045 283,370,897 + 11,681 111,906,324 St. Louis 231,615,567 89,298,393 137,013,842 12,197,226 2,755,629 7,464 90,367,938 -26,514 31,712,099 Minneapolis 144,233,519 54,563,158 87,823,584 8,352,007 5,202,900 55,615 53,288,056 +64,875 20,860,131 Kansas City 222,971,084 90,282,018 129,259,684 12,160,892 6,939,100 64,213 81,217,694 -8,674 28,886,459 Dallas 196.534,628 73,483,945 119,705,829 12,704,073 560,049 102,083 71,966,279 +55,336 34,318,009 San Francisco 440 553,707 152,803,462 282,528,322 29,523,313 7,697,341 101,421 168,649,323 -17,090 76,574,014 Total 4,777,114,762 1,636,462,231 3,090,837,530 352,589,399 149,138,300 2,188,893 1,797,354,533 -3,658 789,570,063 1 Current earnings less current expenses, plus and minus profit and loss additions and deductions. 2The $789,570,063 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 $660,901,518 on December 31, 1954. 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 1918-54 AND END OF MONTH 1954 rIn 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 End m o o f n y t e h ar or Total se B c r o o u ig u u r h i t g - t t i h e t s r a u c H e g n h p r e d a u e l s e d e r e r - - v co a D a a n u n d i c n s d - - e ts s Float ot A he ll ri Total s G to o c l k d 2 s r t i c o e u a n u n u r n g y r c t d 3 - - y - M l c a i o t r i i n c n o u e n - y T h i c n u r o a e g r l s y a d s h s 4 - - d T ep u re o r 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 co s F e R e a u e r r c e n a d v - - l t - e s 5 Total qu R i e r - ed6 c E e x s - s6 > 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 o 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 W 1922 . . . 436 436 618 78 273 L,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 o 1925 375 367 8 643 63 378 I 459 4 112 1,977 4,817 203 16 8 21 272 2 212 2,256 —44 o 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 I 655 4 092 2,006 4,716 208 18 5 21 301 2 487 2,424 63 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 1929 511 488 23 632 34 405 . .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 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 1 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 2444 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 1953 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 1954— January.... 24,640 24,640 156 640 2 25,437 21,956 4,899 29,981 793 405 440 459 830 19,384 19,016 368 February 24,509 24,509 350 827 2 25,688 21,958 4,913 29,904 811 542 490 491 909 19,412 18,821 591 March.. .. 24,632 24,632 147 535 1 25,316 21,965 4,935 29,707 819 722 494 363 917 19,194 18,689 505 April 24,632 24,632 172 576 25,382 21,969 4,951 29,735 819 579 471 321 850 19,528 18,844 684 May 24,812 24,812 245 723 25,781 21,973 4,957 29,870 820 408 527 645 878 19,563 18,891 672 June 25,037 25,037 37 567 25,642 21,927 4,959 29,922 811 875 545 377 988 19,011 18,412 599 July 24,325 24,325 184 672 25,183 21,908 4,960 29,892 798 716 533 503 908 18,702 17,763 939 I August 24,023 23,894 129 200 473 24,696 21,809 4,966 29,929 811 511 477 501 925 18,316 17,572 744 September 24,270 24,270 132 779 25,183 21,810 4,972 29,985 786 704 461 422 931 18,676 17,724 952 October.. 24,381 24,381 297 721 1 25,401 21,759 4,977 30,074 806 729 426 496 884 18,722 18,251 471 November 24,888 24,888 398 657 1 25,944 21,710 4,982 30,500 800 694 397 381 880 18,985 18,467 518 JDecember.. 24,932 24,888 44 143 808 1 25,885 21,713 4,985 30,509 796 563 490 441 907 18,876 18,618 258 1C/l 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. 3 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. 4Gold 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. 5The 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. 6These 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

76 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 9—BANK PREMISES OF FEDERAL RESERVE BANKS AND BRANCHES DECEMBER 31, 1954 Cost Federal Reserve Bank or Net branch Building Fixed ma- book value Land (including chinery and Total vaults) i equipment Boston $ 1,628,132 $ 5,948,069 $ 2,866,643 $10,442,844 $ 5,918,633 New York. . . . 5,215,656 12,183,528 4,877,779 22,276,963 5,716,499 Annex 592,679 1,451,570 497,722 2,541,971 995,518 Buffalo 255,000 542,797 797,797 437,436 Philadelphia. . 1,884,357 6,972,273 920,743 9,777,373 5,163,732 Cleveland 1,295,490 6,681,971 1,688,119 9,665,580 2,036,488 Cincinnati. . . . 380,744 1,083,985 879,537 2,344,266 1,584,574 Pittsburgh 1,189,941 1,162,918 689,889 3,042,748 1,639,070 Richmond.... 389,611 3,682,181 1,648,745 5,720,537 3,256,414 Annex. .... 80,333 482,482 135,106 697,921 136,865 Baltimore .... 250,487 1,251,072 480,555 1,982,114 764,900 Charlotte 105,701 308,749 154,449 568,899 337,129 Atlanta 632,238 1,461,474 308,082 2,401,794 957,142 Birmingham. . 124,137 330,680 70,510 525,327 128,105 Jacksonville. . . 164,004 1,680,835 628,139 2,472,978 2,258,865 Nashville 48,000 211,616 35,091 294,707 81,837 New Orleans.. 277,078 762,456 265,700 1,305,234 452,963 Chicago 2,963,548 6,540,905 2,752,351 12,256,804 2,063,950 Detroit...... 1,147,542 2,815,843 1,199,616 5,163,001 4,216,597 St. Louis 1,496,060 2,136,438 1,328,426 4,960,924 1,263,051 Annex 179,720 1,035,281 524,429 1,739,430 989,880 Little Rock.. . 85,007 264,604 158,320 507,931 187,422 Louisville 131,177 231,702 72,464 435,343 156,073 Memphis 128,542 287,468 105,442 521,452 235,628 Minneapolis. . 600,521 2,316,746 629,944 3,547,211 924,729 Helena 15,710 126,401 44,142 186,253 82,090 Kansas City. . 545,764 3,514,875 1,234,369 5,295,008 1,420,440 Denver 101,512 461,823 86,910 650,245 243,498 Oklahoma City 65,021 421,252 97,588 583,861 201,016 Omaha 444,147 488,162 94,549 1,026,858 668,032 Dallas 189,831 1,362,220 466,692 2,018,743 310,576 El Paso 39,004 119,739 32,575 191,318 38,849 Houston 78,812 317,336 112,111 508,259 121,244 San Antonio. . 477,347 344,577 55,859 877,783 662,534 San Francisco. 476,768 3,419,261 1,036,864 4,932,893 1,271,640 Los Angeles... 478,603 3,709,542 325,782 4,513,927 3,124,350 Portland 161,239 1,678,511 630,920 2,470,670 2,116,242 Salt Lake City 114,075 341,449 84,814 540,338 183,065 Seattle 274,772 1,891,564 642,240 2,808,576 2,400,355 Total 24,708,310 80,024,355 27,863,216 132,595,881 54,747,431 OTHER REAL ESTATE ACQUIRED FOR BANKING HOUSE PURPOSES New York 45,000 137,490 182,490 76,662 Buffalo 353,550 353,550 353,550 Richmond 146,550 146,550 146,550 Charlotte 10,868 10,868 10,868 Birmingham 203,215 203,215 203,215 Nashville 422,110 422,110 422,110 Chicago 1,040,000 1,192,196 132,466 2,364,662 2,361,021 Louisville 458 918 26 013 484 931 484 931 Denver 405,413 405,413 405,413 Dallas 494,935 494,935 494,935 Los Angeles 290,853 29,464 320,317 320,317 Portland 37,000 37,000 37,000 Total 3,908,412 1,385,163 132,466 5,426,041 5,316,572 1 Includes expenditures incident to construction programs carried in unallocated accounts pending completion of programs and subsequent allocation of costs to appropriate accounts. 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, 1954] President Other officers Employees1 Total Federal Reserve Bank (Including branches) Annual salary Number Annual salaries Number Annual salaries Number Annual salaries Boston $30,000 24 $285,000 1,271 $4,163,791 1,296 $4,478,791 New York 60,000 51 776,950 3,731 14,949,206 3,783 15,786 156 Philadelphia 30,000 24 302,500 1,160 3,885,057 1,185 4,217,557 Cleveland 30,000 30 389,500 1,663 5,618,153 1,694 6 037 653 Richmond 30,000 27 321,600 1,310 4,151,106 1,338 4,502,706 Atlanta 30,000 32 358,000 1,293 3,916,856 1,326 4,304,856 Chicago 40,000 39 514,200 2,922 10,529,115 2,962 11,083,315 St. Louis 30,000 29 307,800 1,183 3,685,733 1 213 4,023 533 Minneapolis . . 26,500 21 228,000 654 1,994,415 676 2,248,915 Kansas City 30,000 25 272,200 1,026 3,357,987 1,052 3,660,187 Dallas 25,000 25 283,500 948 3,202,613 974 3,511,113 San Francisco 30,000 33 374,500 1,801 6,346,805 1,835 6,751,305 Total $391,500 360 $4,413,750 18,962 $65,800,837 19,334 $70,606,087 1 Includes 688 part-time 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, 1954 Type of transaction Boston Y N o ew rk | cieip l hia C la le n v d e- m Ri o c n h d - Atlanta Chicago TL S o t\ uis M ap in o n li e s - K C an il s y as Dallas F c S r is a a c n n o - Discounts for and advances to member banks: Advances secured by Government obligations and discounts of and advances secured by eligible paper (Sees. 13 and 13a of the Federal Reserve Act).... IK IK IK IK IK IK IK Other secured advances (Sec. 10b of the Federal Reserve Act) 2 2 2 2 2 Advances to individuals, partnerships, or corporations other than member banks secured by direct obligations of the United States (last paragraph of Sec. 13 of the tsr Federal Reserve Act) 2M 2% 3 3 Loans to industrial or commercial businesses under Sec. 13b of the Federal Reserve Act, direct or in participation with financing institutions 3-5 K 2K-5 25-€5 2K-5 3-5 3-5 K 3-5K 3-5K O Discounts for and purchases from financing institutions under Sec. 13b of the Federal Reserve Act: On portion for which institution is obligated 0) 0) 0) 0) 2K-5 K 0) 0) On remaining portion (3) 3) 2K-5 (3) Commitments to make loans under Sec. 13b of the Federal Reserve Act: To industrial or commercial businesses K-U i-ly 4-Vi K-i^ K-U To financingi nstitutions KD 4-i y l-i K 5KU Effective minimum buying rates on prime bankers' acceptances payable in dollars 1-90 days 91-120 days 121-180 days I 1 Rate charged borrower by financing institution less commitment rate. 2 Rate charged borrower but not to exceed 1 per cent above the discount rate. 3 Rate charged borrower. 4 Financing institution is charged K Per cent per annum on undisbursed portion of loan. 5Financing institution is charged M per cent per annum on undisbursed portion of loan. 6The 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 loai?s and commitments under Section 13b: 5 years. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

79 FEDERAL RESERVE SYSTEM NO. 12—MEMBER BANK RESERVE REQUIREMENTS [Per cent of deposits] Net demand deposits1 Time deposits Effective date of change C re e s n e t r r v a e l Reserve Country res C e e rv n e tr a a l nd Country city banks city banks banks reserve city banks banks 1917—June 21 13 10 7 3 3 1936—Aug. 16 15 1937—Mar. 1 22M May 1 26 20 2 14 4 6 4 6 4 1938—Apr. 16 22 % 12 5 5 1941—Nov. 1 26 20 14 6 6 1942—Aug. 20 24 Sept. 14 22 Oct. 3 20 1948—Feb. 27 22 June 11 24 Sept. 16 16 Sept. 24 26 22 1949—May 1 15 7 May 5 24 21 7 June 30 . . 20 6 July 1 14 6 Aug. 1 . 13 Aug. 11 23^ 19^ 5 Aug 16 12 5 Aug. 18 23 19 Aug. 25 22^ Sept. 1 22 18 2 1951—Jan. 11 23 19 6 Jan 16 13 6 Jan. 25 24 20 Feb 1 14 1953—Tulv 1 13 July 9 22 19 1954—june 15 5 June 24 21 5 July 29 20 18 Aug. 1 12 In effect Jan. 1, 19552 20 18 12 5 5 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 i [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 2K 2K Postal Savings deposits 3 2J4 2y2 Othe I I r n n t i 6 9 m 0 m e d o d a n e y p t s h o s t s o i o ts r 6 m p m a o o y r n a e t b h l s e: 3 3 2 i% y2 V4 In less than 90 days 3 iy2 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 Digitized for uFnRdeAr SthEe Rla ws of the State in which the member bank is located. Maximum rates that may be paid http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 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] July 5, Jan. 21, Feb. 1, Mar. 30, Jan. 17, Feb. 20, Effec- 1945— 1946— 1947— 1949— 1951— 1953— tive Jan. 20, Jan. 31, Mar. 29, Jan. 16, Feb. 20, Jan. 4, Jan. 4, 1946 1947 1949 1951 1953 1955 1955 Regulation T: For extensions of credit by brokers and dealers on listed securities.. . 75 100 75 50 75 50 60 For short sales 75 100 75 50 75 50 60 Regulation U: For loans by banks on stocks 75 100 75 50 75 50 60 the "margin requirements shown in this table are the diiierence between the market value (100 per cent) and the maximum loan value. Changes on Feb. 20, 1953 and Jan. 4, 1955 were effective after the close of business on these dates. NOTE.—For earlier data, see Banking and Monetary Statistics, Table 145, p. 504, and Annual Report of the Board of Governors for 1948, p. 77. NO. 15—FEES AND RATES ESTABLISHED UNDER REGULATION V ON LOANS GUARANTEED PURSUANT TO DEFENSE PRODUCTION ACT OF 1950 [In effect December 31, 1954] Fees Payable to Guaranteeing Agency by Financing Institution on Guaranteed Portion of Loan Guarantee fee Percentage of Percentage of loan guaranteed in ( t P e e r r e c s e t nt p a a g y e a b of le any fe e c o c m h m ar i g t e m d ent by borrower) borrower 70 or less 10 10 75 15 15 80 20 20 85 25 25 90 30 30 95 35 35 Over 95 40-50 40-50 Maximum Rates Financing 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 GLASSES, DECEMBER 31, 1954 AND 1953 PRINCIPAL ASSETS AND LIABILITIES, AND NUMBER OF BANKS [In millions of dollars] Commercial banks Mutual savings banks All Item banks Total Member banks no I n n m su e r m ed ber in N su o r n e - d Total i Insured1 in N su o r n e - d Total i National State1 December 31, 1954P Loans and investments, total 184,280 156,440 131,850 88,240 43,610 22,450 2,160 27,840 20,860 6,980 Loans 85,780 70 780 60,240 39,280 20,960 9,950 600 15,000 11,630 3,370 Investments 98,500 85,660 71,610 48,960 22,650 12,500 1,560 12,840 9,230 3,610 U S Govt obligations 78,140 69 410 58 100 39,330 18,770 10,120 1,200 8,730 6,160 2,570 Other securities 20,360 16,250 13,510 9,630 3,880 2,380 360 4,110 3,070 1,040 Cash assets 43,490 42,460 37,300 25,030 12,270 4,750 410 1,030 840 190 Deposits total . . . 209,920 183,580 156 200 104,730 51,470 25,350 2,050 26,340 19,850 6,490 Interbank 16 440 16 440 15 620 10 450 5 170 370 450 Other demand ... . 120,180 120,130 102 780 68,350 34,430 16,150 1,200 50 50 Other time 73,300 47,010 37,800 25,930 11,870 8,830 400 26,290 19,800 6,490 Total capital accounts 17,390 14,710 12,300 8,080 4,220 2,080 330 2,680 1,910 770 Number of banks 14,367 13,840 6,660 4,789 1,871 6,647 536 527 218 309 December 31, 1953 Loans and investments, total 171,497 145,687 122,422 81,913 40,509 21,396 1,891 25,810 19,252 6,558 Loans 80,518 67,593 57,762 37,831 19,931 9,328 511 12,925 10,016 2,910 Investments 90,979 78,094 64,660 44,082 20,578 12,069 1,380 12,885 9,236 3,649 U S Govt obligations 72,610 63,426 52,603 35,482 17,121 9,790 1,045 9,184 6,476 2,707 Other securities 18,370 14,668 12,057 8,600 3,457 2,278 335 3,701 2,760 941 Cash assets . . 45,811 44,828 39,381 26,479 12,903 5,020 430 983 799 184 Deposits total 201,100 176,702 150,164 100,654 49,510 24,555 2,005 24,398 18,383 6,015 Interbank 15,957 15,955 15,170 10,152 5,019 378 407 3 2 Other demand 116,788 116,750 99,780 66,343 33,437 15,758 1,212 38 35 2 Other time 68,354 43,997 35,213 24,160 11,054 8,419 386 24,358 18,345 6,013 Total capital accounts 16,118 13,559 11,316 7,391 3,925 1,925 320 2,559 1,819 740 Number of banks 14,509 13,981 6,743 4,856 1,887 6,672 569 528 219 309 P Figures for Dec. 31, 1954 are preliminary and based largely on data regularly collected or estimated as of the last Wednesday of the month, "published in the Federal Reserve Bulletin. Some items, particularly cash assets and demand deposits, are subject to large daily changes, and the estimates for Dec. 31,1954 may be considerably different from reported figures; the latter will be published in the Bulletin, probably in the May issue. 1 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 Digitizedb afnokr sF;"R aAndS EarRe included only once in the total for "all banks." Member bank figures for Dec. 31, 1954 include one bank in Alaska that became a member on Apr. 15, 1954. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 17—MEMBER BANK EARNINGS, BY GLASS OF BANK, 1954 AND 1953 [Dollar amounts in millions] Central reserve city banks Total ci R ty e s b e a rv n e ks C b o a u n n k t s ry Item New York Chicago 1954P 1953 1954P 1953 1954P 1953 1954P 1953 1954P 1953 Earnings $4,812 $4,590 $778 $757 $192 $188 $1,878 $1,798 $1,965 $1,847 On U. S. Govt. securities 1,063 1,011 153 137 56 53 397 376 456 445 On other securities 252 43 12 96 100 On loans 2,700 2,632 "418 434 92 95 1,059 1,045 All other 695 144 28 267 257 Expenses 2,988 2,782 428 404 106 102 1,161 1,083 1,292 1,192 Salaries and wages.. 1,371 228 48 529 566 Interest on deposits. 425 28 15 181 201 All other 985 148 39 372 426 Net current earnings before income taxes. 1,824 1,809 349 353 86 717 715 672 655 Recoveries and profits1.. 120 47 45 Losses and charge-offs2... 332 136 128 Net addition to valuation reserves 40 15 16 Profits before income taxes 1,893 1,558 374 312 745 610 681 556 Taxes on net income.. . 804 692 161 151 347 282 257 224 Net profits 1,089 865 213 161 398 328 424 333 Ga c s la h r ed d 3 ividends de- 456 419 113 103 180 167 143 129 Ratios (per cent): Net current earnings before income taxes Avers.ge total capital accounts 15.6 16.4 13.2 13.9 14.8 15.7 17.4 18.5 15.4 Average total assets.. 1.12 1.15 1.14 1.21 1.06 1.07 1.14 1.18 1.10 1.11 Net profits to— Average; total capital accounts 9.3 7.8 8.0 6.3 9.1 7.9 9.6 8.5 9.7 8.1 Avera.ge total assets.. 0.67 0.55 0.70 0.55 0.66 0.54 0.63 0.54 0.69 0.56 Average return on U. S. Govt. securities 1.95 1.98 1.79 1.91 1.91 1.94 1.94 1.99 2.02 2.00 Average return on loans. 4.69 4.69 3.55 3.55 3.57 3.61 4.72 4.75 5.45 5.49 p Data for 1954 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 83 NO. 18—ANALYSIS OF CHANGES IN NUMBER OF BANKING OFFICES DURING 19541 Commercial and stock savings banks and nondeposit trust companies Mutual savings All Member Nonmember banks banks banks banks Total tio N n a a - l l m S b t e e a r m t 2 e - su In re - d s N u i r n o e - n d - 2 su I r n e - d2 s N u i o n re n - d - Number of banks, Dec. 31, 1953. 14,509 13,981 4,856 1,887 6,672 569 219 309 Changes during 1954 New banks** +73 +73 +18 +6 +43 +6 Suspensions — 1 Consolidations and absorptions: Banks converted to branches... -176 -175 -80 -22 -71 -2 -1 Other -31 -31 -14 -4 -11 2 Voluntary liquidations4 -7 -7 -1 __1 -5 Other changes ^ + 1 +1 + 1 Conversions: National into State -3 +3 State into National + 12 -1 Federal Reserve membership:6 Admission of national bank in Alaska + 1 +1 +1 Admissions of State banks .. + 12 -11 -1 Withdrawals of State banks.. -4 Federal deposit insurance:7 +4 Admissions of State banks.. . -28 Withdrawal of State bank +28 + 1 Net increase or decrease -142 -141 -67 -16 -33 -1 -25 Number of banks, Dec. 31,1954.14,367 13,840 4,789 1,871 536 218 309 6,647 Number of branches and additional offices, Dec. 31, 19538.. 5,897 5,627 2,590 1,631 1,365 41 192 78 Changes during 1954 De novo branches +371 +341 + 172 +88 +79 +2 +21 +9 Banks converted into branches... + 176 + 174 + 101 +26 +47 +2 Discontinued -28 -28 -16 -6 -6 Interclass changes—net® -6 +53 -29 -23 -7 +6 Net increase or decrease +519 +481 +310 +79 +97 -5 +29 +9 Number of branches and additional offices, Dec. 31, 19548.. 6,416 6,108 2,900 1,710 1,462 36 221 87 Number of banking facilities, Dec. 31, 19531(> 199 199 156 21 22 Changes during 1954 Established . +8 +8 +5 +1 +2 Discontinued —9 —9 _5 —2 —2 Interclass changes + 1 -1 Net increase or decrease — 1 — 1 — 1 Number of banking facilities, Dec. 31, 1954*0 198 198 156 21 21 1 Excludes banks in United States territories and possessions except one national bank in Alaska, with no branches, that became a member of the Federal Reserve System on Apr. 15, 1954. 2State member bank figures and the insured mutual savings bank figures both include 3 member mutual savings banks, not included in the total for "commercial banks." State member bank figures also include one noninsured trust company without deposits. 3 Exclusive of new banks organized to succeed operating banks. 4 Exclusive of liquidations incident to the succession, conversion, and absorption of banks. 5One institution restored to series, previously eliminated. 6 Exclusive of conversions, if any, of national banks into State member banks, or vice versa. 7Exclusive of insured nonmember banks converted into national banks or admitted to Federal Reserve membership, or vice versa. 8 Covers all branches and other additional offices at which deposits are received, checks paid, or money lent, except banking facilities which are shown separately. 9For gross changes by class of bank see Federal Reserve Bulletin, February 1955. 1 °Banking facilities are provided at military and other Government establishments through arrangements made by the Treasury Department with banks designated as depositaries and financial agents of the Government. These figures exclude branches that have also been designated as banking facilities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 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, 19541 On par list Total1 Not on par list Federal (Nonmember) Reserve dis- Total Member Nonmember trict or State Banks B & r a o n ff c i h ce e s s Banks B & r a o n ff c i h ce e s s Banks B & r a o n ff c i h ce e s s Banks B & r a o n f c fi h ce e s s Banks B & r a o n ff c i h ce e s s DISTRICT Boston 454 456 454 456 311 357 143 99 New York.... 787 1,178 787 1,178 680 1,086 107 92 Philadelphia. . 777 318 777 318 587 247 190 71 Cleveland.... 1,029 499 1,029 499 632 436 397 63 Richmond. . . . 1,004 749 817 597 476 385 341 212 187 152 Atlanta 1,244 294 659 252 373 217 286 35 585 42 Chicago 2,485 747 2,485 747 1,017 387 1,468 360 St. Louis 1,457 199 1,142 131 490 80 652 51 '315' 68' Minneapolis. . 1,280 116 679 74 473 29 206 45 601 42 Kansas City. . 1,754 28 1,747 28 749 18 998 10 7 Dallas 1,049 85 957 72 632 49 325 23 92 13 San Francisco1 427 1,627 427 1,627 234 1,496 193 131 Total 13,747 6,296 11,960 5,979 6,654 4,787 5,306 1,192 1,787 317 STATE Alabama 234 37 138 37 96 37 42 96 Alaska1 1 1 Arizona 12 82 12 82 4 59 8 23 Arkansas 231 23 115 6 70 3 45 3 116 17 California . . . 163 1,120 163 1,120 107 1,033 56 87 Colorado 153 5 153 5 94 4 59 1 Connecticut. . 97 88 97 88 57 70 40 18 Delaware 34 33 34 33 13 13 21 20 Dist. of Col.. 17 54 17 54 13 44 4 10 Florida 219 11 169 10 87 9 82 1 50 1 Georgia 401 59 121 56 65 51 56 5 280 3 Idaho 38 65 38 65 20 60 18 5 Illinois 907 3 905 3 513 3 392 2 Indiana. ..... 473 153 473 153 234 95 239 58 Iowa... .... 664 162 664 162 166 2 498 160 Kansas 602 3 600 3 212 3 388 2 Kentucky.... 370 66 370 66 109 43 261 23 Louisiana. . . . 172 102 67 75 51 63 16 12 105 27 M!aine 60 89 60 89 37 47 23 42 IVlaryland 152 156 152 156 70 90 82 66 Massachusetts 173 232 173 232 136 205 37 27 Michigan 425 337 425 337 230 273 195 64 Minnesota.... 678 6 270 6 206 6 64 408 Mississippi. . . 197 86 43 25 32 15 11 io' 154 61 Missouri 596 1 535 1 177 1 358 61 M^ontana . 110 110 83 27 Nebraska 413 1 413 1 139 1 274 Nevada 8 24 8 24 7 21 1 3 New Hamp. „ . 75 2 75 2 52 1 23 1 New Jersey... 304 231 304 231 262 205 42 26 New Mexico 52 26 52 26 34 9 18 17 New York ... 558 960 558 960 490 899 68 61 North Carolina 210 304 106 159 55 89 51 70 104 145 North Dakota. 154 23 59 6 40 19 6 95 17 Ohio 634 333 634 333 407 295 227 38 Oklahoma. . . 383 2 376 2 222 2 154 7 Oregon 46 138 46 138 20 129 26 9 Pennsylvania. 853 396 853 396 644 335 209 61 Rhode Island. 10 63 10 63 6 48 4 15 South Carolina 151 78 72 71 34 57 38 14 79 7 South Dakota. 170 52 72 27 62 23 10 4 98 25 Tennessee.... 295 128 212 114 84 85 128 29 83 14 Texas 922 17 879 17 577 17 302 43 Utah 54 38 54 38 29 34 25 4 Vermont 64 13 64 13 38 4 26 9 Virginia 316 157 313 157 205 105 108 52 3 Washington., . 107 186 107 186 47 176 60 10 West Virginia. 183 182 111 71 1 Wisconsin.... 553 150 553 150 166 22 387 128 Wyoming. . . . 53 1 53 1 40 1 13 1 Comprises all commercial banking offices on which checks are drawn, including 198 banking facilities (see note 10, Table 18). Excludes banks in the United States territories and possessions except one member national bank in Alaska, with no branches, that became a member in 1954, included in the San Francisco District. Number of member banks is less here than in Table 18 by 3 member nondeposit trust companies and 3 mutual savings banks; number of nonmember commercial banks Digitized for iFs RleAssS bEy R9 0 banks and trust companies on which no checks are drawn. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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RECORD OF POLICY ACTIONS BOARD OF GOVERNORS FEBRUARY 4, 1954 Reduction in Rates on Discounts for and Advances to Member Banks by Federal Reserve Banks. Effective February 5, 1954, the Board approved actions taken by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, St. Louis, and San Francisco in establishing a rate of 1 % per cent (a reduction from 2 per cent) on discounts for and advances to member banks under Sections 13 and 13a of the Federal Reserve Act. Votes for this action: Messrs. Martin, Evans, Vardaman, Mills, and Robertson. Votes against this action: none. Mr. Szymczak, who was not present when this action was taken, stated that he concurred in it. Pursuant to the policy established by this action, the Board subsequently approved the same rate for the other Federal Reserve Banks, effective on the dates indicated below: Cleveland February 15, 1954 Richmond February 12, 1954 Atlanta February 9, 1954 Chicago February 11, 1954 Minneapolis February 5, 1954 Kansas City February 12, 1954 Dallas February 15, 1954 The Board also approved, for each of the Federal Reserve Banks, a rate of 2lA per cent (a reduction from 2*/2 per cent) on advances to member banks under Section 10(b) of the Federal Reserve Act. The effective dates of these approvals were those shown above. In addition, the Board approved certain changes at some of the Federal Reserve Banks in other rates, including rates on advances to individuals, partnerships, and corporations under the last paragraph of Section 13 of the Act and on industrial loans and commitments under Section 13b. In accordance with the provisions of the Federal Reserve Act, the Federal Reserve Banks establish, subject to review and determination of the Board of Governors, rates on discounts and advances to member banks at least every 14 days and submit such rates to the Board for consideration. No changes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 87 involving new policy had been made in these rates since those referred to on pages 82 and 85 of the Board's Annual Report for 1953. As evidences of receding levels of economic activity became increasingly apparent after the middle of 1953, the Federal Reserve System, as outlined in the text of this Report and the Board's Annual Report for 1953, modified its credit policies to bring about easier conditions in the money markets. When the above reductions in Federal Reserve Bank rates were approved by the Board of Governors, the System was following a policy of supplying or maintaining member bank reserves adequate to promote growth and stability in the economy with emphasis on a program of actively maintaining a condition of ease. The reduction in rates brought them more nearly in line with existing short-term money market rates, and furthered current monetary and credit policy by reducing the cost to member banks of borrowing from Reserve Banks to make temporary adjustments in reserve positions. APRIL 13, 1954 Reduction in Rates on Discounts for and Advances to Member Banks by Federal Reserve Banks. Effective April 14, 1954, the Board approved action taken by the Board of Directors of the Federal Reserve Bank of Chicago in establishing a rate of V/ per cent on discounts for and advances to mem- 2 ber banks under Sections 13 and 13a of the Federal Reserve Act. Votes for this action: Messrs. Martin, Szymczak, Evans, Vardaman, and Robertson. Votes against this action: none. Mr. Mills, who was not present when this action was taken, stated that he concurred in the action. Pursuant to the policy established by this action, the Board subsequently approved the same rate for the other Federal Reserve Banks, effective on the dates indicated below: New York April 16, 1954 San Francisco April 16, 1954 Cleveland April 23, 1954 St. Louis April 23, 1954 Kansas City April 23, 1954 Dallas April 23, 1954 Boston April 27, 1954 Minneapolis April 29, 1954 Richmond May 15, 1954 Atlanta May 15, 1954 Philadelphia May 21, 1954 The Board also approved actions taken by the Boards of Directors Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 ANNUAL REPORT OF BOARD OF GOVERNORS of all the Federal Reserve Banks except Kansas City in establishing a rate of 2 per cent on advances to member banks under Section 10(b) of the Federal Reserve Act. The effective dates of these approvals were those shown above except that the reduction at the Federal Reserve Bank of Chicago became effective on September 13, 1954. Inasmuch as market rates had continued to decline since the reductions in Federal Reserve Bank rates in February and the System was continuing the policy of actively maintaining ease in the money markets, the above reductions were approved for substantially the same reasons as prompted the earlier action. JUNE 21, 1954 Reduction in Reserve Requirements of Member Banks. The supplement to Regulation D, Reserves of Member Banks, was amended to decrease reserve requirements with respect to deposits of member banks as follows: On net demand deposits— Effective For Percentage June 24, 1954 Central reserve city banks From 22 to 21 per cent July 29, 1954 Central reserve city banks From 21 to 20 per cent July 29, 1954 Reserve city banks From 19 to 18 per cent August 1,, 1954 Banks not in central reserve or reserve cities From 13 to 12 per cent On time deposits— Effective For Percentage June 16, 19541 Banks not in central reserve or reserve cities From 6 to 5 per cent June 24, 1954 Central reserve and reserve city banks From 6 to 5 per cent Votes for this action: Messrs. Martin, Szymczak, Vardaman, and Mills. Votes against this action: Mr. Robertson The reasons for this action were stated as follows in a press statement issued by the Board on June 21, 1954: "This action was taken in conformity with the Federal Reserve System's policy of making available the reserve funds required for the essential needs of the economy and facilitating economic growth. The reduction will release a total of approximately 1,555 million dollars of reserves. It was made in anticipation of estimated 1 This reduction was made retroactive so as to apply to the average balance in each bank's account with its Federal Reserve Bank for the period June 16 through June 30, 1954. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 89 demands on bank reserves during the summer and fall, taking account of probable private financing requirements, including the marketing of crops and replenishment of retail stocks in advance of the fall and Christmas sale seasons, as well as the Treasury's financing needs. ". . . Changes in reserve requirements supply or withdraw relatively large amounts of bank reserves, even when effected on a gradual basis, as in the present action. Accordingly, such changes are comparatively infrequent. For more flexible and frequent adjustments to the credit needs of the economy the System relies chiefly upon open market operations to release or absorb reserve funds." As indicated by the above statement, it was realized that this action would supply more member bank reserves than were called for at the time. It was taken with the understanding that the increase would be partly offset by open market operations. Accordingly, during July and August System holdings of Government securities were reduced by about 1 billion dollars. Thereafter, as the needs for reserves became evident, the System again purchased securities for the open market account. Although Governor Robertson agreed with the majority of the Board with respect to the need for providing a substantial amount of reserves during the remainder of 1954, he favored a smaller reduction in reserve requirements at this time and a review of the situation later in the year to determine what, if any, further action seemed necessary in the light of developments. JULY 2, 1954 Amendments to Regulation J, Check Clearing and Collection, and Regulation G, Collection of Noncash Items. Effective July 15, 1954, Regulations J and G were amended so as to permit the collection through Federal Reserve Banks of checks drawn on nonmember par-remitting banks located in such of the Territories, dependencies, insular possessions, and parts of the United States outside the continental United States as the Board of Governors might designate, and the collection of noncash items payable in such areas. At the same time, the Board designated Alaska and Hawaii as being in or of the Twelfth Federal Reserve District for the purposes of Regulations J and G, effective on and after July 15, 1954. Votes for this action: Messrs. Mills and Robertson. Messrs. Martin, Szymczak, and Vardaman, who were absent, had previously indicated their approval. Votes against this action: none. This action was taken on this date because in the circumstances it was desirable to have the new procedures become effective as soon as possible with reasonable notice thereof. The Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

90 ANNUAL REPORT OF BOARD OF GOVERNORS action was ratified by unanimous vote at the next meeting on July 7, 1954, at which Messrs. Martin, Vardaman, Mills, and Robertson were present, and became effective on July 15, 1954. Following the admission of an Alaskan bank to membership in the Federal Reserve System in April 1954, certain nonmember banks in that Territory announced that they intended to remit for cash items at par, as member banks are required to do. Similarly, all banks in the Territory of Hawaii made known their willingness to remit at par for cash items sent to them through the facilities of the Federal Reserve System. Prior to the amendments referred to above, the two regulations technically did not permit Federal Reserve Banks to collect cash items drawn on parremitting nonmember banks located in Territories, dependencies, insular possessions, and parts of the United States outside the continental United States, nor to collect noncash items payable in such areas. The Board took the actions stated because it felt that the Federal Reserve Banks should be in a position to make available their collection services to expedite and simplify the presentation and collection of checks and other items for their depositors and for the general public. SEPTEMBER 29, 1954 Amendment of Regulation K, Banking Corporations Authorized to do Foreign Banking Business under the Terms of Section 25 (a) of the Federal Reserve Act. Effective immediately, Sections XI and XV of Regulation K were amended to broaden the powers of banking corporations authorized to do foreign banking business under the terms of Section 25(a) of the Federal Reserve Act (commonly known as Edge Act corporations) to raise funds through the sale of their unsecured notes or debentures if such corporations are not engaged in the business of receiving deposits, and to increase the amount of credit that such a nondeposit corporation may extend to a single borrower. Votes for this action: Messrs. Martin, Szymczak, Vardaman, Mills, Robertson, Miller, and Balderston. Before this amendment was adopted, Regulation K contemplated two types of Edge Act corporations. One type would finance its operations principally through the issuance of obligations secured by the pledge of collateral; such a corporation could not receive deposits in the United States except those incidental to its foreign operations and could not receive deposits abroad except those incidental to the conduct of its exchange, discount or loan operations. The other type could do a general foreign banking business; these corporations could receive in the United States only such deposits as were incidental to their foreign operations but could receive deposits of any kind outside the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 91 The amendment will permit Edge Act corporations which do not receive deposits either within the United States or abroad to finance themselves chiefly through the sale of unsecured notes. It thus provides a more flexible means of financing than was previously available, and was adopted primarily to put such nondeposit corporations in a better position to finance durable goods exports which require financing on longer terms than are usual in ordinary commercial banking transactions. It was the view of the Board that such a liberalization of its regulation within the limitations established by the amendment was desirable in promoting international and foreign trade. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

RECORD OF POLICY ACTIONS FEDERAL OPEN MARKET COMMITTEE MARCH 3, 1954 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 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, Evans, Leedy, Mills, Robertson, Szymczak, Williams, and Young. Votes against this action: none. Digitized for FRASER 92 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 93 This directive was in the same form and had the same limitations as the directive adopted by the Federal Open Market Committee at its meeting in December 1953. The December action was for the purpose of providing, 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 objective of this directive was to combat the moderate but unmistakable decline in economic conditions that had become apparent after mid-1953 and which was continuing as the year came to a close. The Committee's review of the economic situation in March 1954 showed that the recessionary tendencies which had appeared during the second half of 1953 were continuing. Industrial production had decreased by about 8 per cent from the high levels of April-August 1953, and other important measures of activity had shown similar declines, although commodity prices had been relatively stable. It was not evident whether there soon would be either an upturn in activity or a leveling out of the decline. Pursuit by the Federal Reserve in late 1953 and in the first two months of 1954 of the credit policy described as "active ease" was for the purpose of assuring that recession tendencies would not be accentuated, as at times in the past, by pressure for liquidation of bank credit, and that tendencies toward economic recovery would be encouraged by an ample volume of reserves at the banks and aggressive efforts to extend the availability of credit. The easing tendencies, both in the market and in System policy, were confirmed and reinforced in February by reductions in discount rates at the Federal Reserve Banks. In order to continue this atmosphere and to foster recovery, the Committee concluded that the policy of actively providing reserves to the money market to facilitate credit expansion should be continued during the spring of 1954. 2. Review of Continuing Authorities or Statements of Policy. The Committee reviewed and reaffirmed without change all continuing statements of operating policy and specific authorities for operations which were in effect immediately prior to this meeting on March 3, 1954, at which the newly elected members of the Federal Open Market Committee assumed their duties. In this connection, Mr. Sproul referred to the action taken by the Committee at its meeting in December 1953 in approving a statement of policy that, until superseded or modified by further 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." Mr. Sproul moved that the first clause of this statement of policy Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 ANNUAL REPORT OF BOARD OF GOVERNORS be rescinded and that the Committee rely on the policy statement which had been adopted by unanimous vote in March 1953 that "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 money markets)." In the absence of a second to Mr. Sprout's motion, it was not brought to a vote and the statement of policy set forth above was continued. 3. Minimum Buying Rate on Bankers' Acceptances. At this meeting, the action taken by the members of the Committee effective February 5, 1954, reducing the minimum buying rate on prime eligible bankers' acceptances from 2 per cent to 1% per cent, was approved, ratified,, and confirmed. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Evans, Leedy, Mills, Robertson, Szymczak, Williams, and Young. Votes against this action: none. The reduction in the minimum buying rate on bankers' acceptances was in response to a recommendation from the Manager of the System Open Market Account on February 4, 1954, that this rate be reduced as a reflection of the existing and developing pattern of interest rates in general, which had been declining in response to the Federal Reserve System's recent policy of actively maintaining a condition of ease in the money market. This pattern included reductions in the Federal Reserve Bank discount rates from 2 per cent to 1 % per cent effective at several Federal Reserve Banks on February 5 and at the remaining Reserve Banks within a few days thereafter. JUNE 23, 1954 1. Authority to Effect Transactions in System Account. At this meeting, the Committee renewed without change the directive to the executive committee which was adopted in December 1953 and renewed without change at the meeting on March 3, 1954. The directive is set forth on page 92 of this report. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Bryan, Leedy, Mills, Robertson, Szymczak, Vardaman, Williams, and Young. Votes against this action: none. The economic outlook had improved somewhat between the March and June meetings of the Committee. In March, recession was the dominant characteristic of industrial and commercial activity, and there was serious question whether the recessionary tendency might become self-feeding and cumulative, although there was also a view that an early end to the economic Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 95 decline might be anticipated. In that atmosphere, the Committee had continued a policy of actively supplying reserves to the market. By June, it was apparent that there had been a slackening of the decline in production and consumption. In fact, a slight rise had taken place in industrial output, construction activity had advanced further to record levels, and the decline in employment had slackened. Prices had continued to show little change. Production abroad had continued to rise. On the other hand, elements in the situation clouding the outlook included the continued contraction in outlays of the Federal Government for national security, a decline in farm income, and a decline in the income of industrial workers. The Committee concluded that, under the circumstances, monetary policy continued to bear a heavy countercyclical responsibility. It felt that the policy of "active ease" which had been maintained for some months had facilitated and made possible the financing of business without causing distortions in the credit and capital markets. In the Committee's opinion such revival as had occurred was insufficient to call for modification of the policy of active ease and, therefore, action was taken to renew without modification the directive calling for a policy of actively promoting ease in the money market. At the same time the Committee noted that the Board of Governors of the Federal Reserve System had acted in June to reduce the amount of reserves which member banks are required to carry against their deposits, such reductions to become effective during June, July, and August. In this connection, it was suggested that the prospective reduction in reserve requirements should be observed carefully and that, while the Committee's existing general policy of "active ease" should be continued, in the interests of avoiding undesirable redundancy in the money market it would be desirable to absorb temporarily some of the excess reserves that would be released to the market during the summer months as a result of the action taken by the Board of Governors. 2. Minimum Buying Rate on Bankers' Acceptances. The Committee approved, ratified, and confirmed the action taken by the members of the Federal Open Market Committee, effective April 16, 1954, reducing from 1% per cent to ll/ per cent the minimum buying rate on 2 prime eligible bankers' acceptances. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Bryan, Leedy, Mills, Robertson, Szymczak, Vardaman, Williams, and Young. Votes against this action: none. This further reduction in the minimum buying rate on bankers' acceptances was made at the time the discount rates of the Federal Reserve Banks of Chicago (April 14) and New York and San Francisco (April 16) were reduced from 1% per cent to 154 per cent, which reductions were followed shortly by corresponding reductions in discount rates at all other Federal Reserve Banks. As was the case with the reduction effective February 5, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 ANNUAL REPORT OF BOARD OF GOVERNORS 1954, this decrease in the minimum buying rate was in recognition of the existing market conditions and developments and was made in accordance with the Committee's general policy of actively promoting a condition of case in the money market. 3. Repurchase Agreements. The Committee modified the authority granted to the Federal Reserve Banks to enter into repurchase agreements with nonbank dealers in United States Government securities so as to provide that the rates or rate ranges on such repurchase agreements would be prescribed by the executive committee rather than by the Manager of the System Open Market Account, as had been the case since mid-1952. This action did not modify the policy with respect to the use of repurchase agreements, which remained subject to the general limitation adopted on July 22, 1952, that in no event should the effective rate be below whichever was the lower of (1) the discount rate of the purchasing Federal Reserve Bank on eligible commercial paper, or (2) the average issuing rate on the most recent issue of 3-month Treasury bills. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Bryan, Leedy, Mills, Robertson, Szymczak, Vardaman, Williams, and Young. Votes against this action: none. SEPTEMBER 22, 1954 1. Authority to Effect Transactions in System Account. The Committee again renewed without change the directive to the executive committee which was adopted in December 1953, and continued without change at the meetings on March 3 and June 23, 1954. This directive, which provided as the current credit policy of the Committee that transactions in the account should be with a view, among other things, to "promoting growth and stability in the economy by actively maintaining a condition of ease in the money market," is set forth on page 92 of this report. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Bryan, Leedy, Miller, Mills, Robertson, Szymczak, Vardaman, Williams, and Young. Votes against this action: none. The Committee gave attention to developments in the economy since its June meeting, particularly to the "sidewise" movement that had been taking place during the summer months, and to the question of how long the economy might continue such a movement before showing a definite upturn or downturn. The Committee felt that the policy of "active ease" that had been pursued since late 1953 had helped to maintain a stable economic and business situation which, in turn, had given encouragement to investors. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 97 It was the view of the Committee at this time that the ready availability and low cost of bank credit and capital funds had maintained a monetary climate favorable to business expansion and high employment. Although the economy had been on a plateau for several months, following cessation of the moderate decline that had taken place in output and employment between the summer of 1953 and late spring of 1954, there was some evidence that there might be an upturn in the autumn months. Inventory liquidation had continued, but further declines in Government defense outlays were expected to be small, private capital investment and State and local capital outlays were holding up well, and consumer spending had remained high. At the time of this meeting there had not been an upturn in economic activity which appeared to warrant any reduction in the flow of money and credit and the Committee believed that in supplying reserves to the market in the weeks ahead, any doubts should be resolved on the side of ease rather than the reverse. The Committee recognized that credit policy was only one part of the whole complex, but it felt that the economic outlook at the time warranted a continuation of the existing credit policy of actively maintaining a condition of ease in the money market, and it therefore renewed its directive in the same form that had been approved at the three preceding meetings. DECEMBER 7, 1954 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 the market to the needs of commerce and business, (b) to promoting growth and stability in the economy by 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 ANNUAL REPORT OF BOARD OF GOVERNORS 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, Balderston, Bryan, Leedy, Mills, Robertson, Szymczak, Vardaman, Williams, and Young. Votes against this action: none. This directive was changed in only one respect from the directive approved at the December 1953 and the March, June, and September 1954 meetings: the word "actively" was deleted from clause (b) of the first paragraph so as to provide that transactions in the System open market account: should be with a view, among other things, "to promoting growth and stability in the economy by maintaining a condition of ease in the money market." For a year preceding this meeting, the clause had provided that transactions 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 Committee's review of the economic situation at this meeting showed that expansion in the economy had started to take place during the fall months, following a period of relative stability during the second and third quarters of 1954. For more than a year, the Committee had been following a policy of aggressively maintaining a condition of ease in the money market as a means of facilitating economic recovery, recognizing that monetary policy was only one factor in the complex of elements on which an upward movement might be based. In evaluating the situation, the Committee took cognizance of evidences of expansion available from data on production, employment, capital expenditures, Federal defense outlays, construction, and commodity prices, and also of the sharply increased activity and price levels in securities markets as well as other less tangible manifestations of a speculative attitude in some areas. A re-examination of the policy of "active ease" in the light of this economic review led the Committee to the conclusion that the developing economic situation did not warrant continuing as active a program of supplying reserves to the market as had been followed during the preceding year, although it did not feel that a policy of credit restraint was called for at the time. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM [December 31, 1954] Term Expires WM. MCC. MARTIN, JR., of New York, Chairman January 31, 1956 M. S. SZYMCZAK of Illinois January 31, 1962 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 C. CANBY BALDERSTON of Pennsylvania January 31, 1966 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 ALBERT R. KOCH, Assistant Director, Division of Research and Statistics ARTHUR W. MARGET, Director, Division of International Finance LEWIS N. DEMBITZ, Assistant Director, Division of International Finance ROBERT F. LEONARD, Director, Division of Bank. Operations J. E. HORBETT, Assistant Director, Division of Ban\ Operations LOWELL MYRICK, Assistant Director, Division of Ban\ Operations 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 EDWIN J. JOHNSON, 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 M. B. DANIELS, Assistant Controller, Office of the Controller Special Assistants to the Board—CHARLES MOLONY and CLARKE L. FAUVER 99 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL OPEN MARKET COMMITTEE [December 31, 1954] MEMBERS WM. MCC. MARTIN, JR., Chairman (Board of Governors) ALLAN SPROUL, Vice Chairman (Elected by Federal Reserve Bank of New York) C. CANBY BALDERSTON (Board of Governors) MALCOLM BRYAN (Elected by Federal Reserve Banks of Atlanta, St. Louis, and Dallas) H. G. LEEDY (Elected by Federal Reserve Banks of Minneapolis, Kansas City, and San Francisco) A. L. MILLS, JR. (Board of Governors) J. L. ROBERTSON (Board of Governors) M. S. SZYMCZAK (Board of Governors) JAMES K. VARDAMAN, JR. (Board of Governors) ALFRED H. WILLIAMS (Elected by Federal Reserve Banks of Boston, Philadelphia, and Richmond) C. S. YOUNG (Elected by Federal Reserve Banks of Cleveland and Chicago) EXECUTIVE COMMITTEE OFFICERS WM. MCC. MARTIN, JR., Chairman WINFIELD W. RIEFLER, Secretary ALLAN SPROUL, Vice Chairman ELLIOTT THURSTON, Assistant Secretary J. L. ROBERTSON GEORGE B. VEST, General Counsel M. S. SZYMCZAK FREDERIC SOLOMON, Assistant General Counsel ALFRED H. WILLIAMS WOODLIEF THOMAS, Economist KARL R. BOPP, Associate Economist GEORGE W. MITCHELL, Associate Economist AGENT EARLE L. RAUBER, Associate Economist H. V. ROELSE, Associate Economist FEDERAL RESERVE BANK OF NEW YORK ROBERT G. ROUSE, Manager of System CLARENCE W. TOW, Associate Economist Open Market Account RALPH A. YOUNG, Associate Economist 100 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL ADVISORY COUNCIL [December 31, 1954] MEMBERS District No. 1—WILLIAM D. IRELAND, President, The Second National Bank of Boston, Boston, Massachusetts. 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, The Riggs National Bank, Washington, D. C. District No. 6—WALLACE M. DAVIS, President, Hibernia National Bank, New Orleans, Louisiana. District No. 7—EDWARD E. BROWN, Chairman, The First National Bank of Chicago, Chicago, Illinois. District No. 8—W. W. CAMPBELL, Chairman, National Bank of Eastern Arkansas, Forrest City, Arkansas. 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—GEO. G. MATKIN, President, The State National Bank of El Paso, El Paso, Texas. District No. 12—JOHN M. WALLACE, President, Walker Bank & Trust Company, Salt Lake City, Utah. EXECUTIVE COMMITTEE EDWARD E. BROWN, ex officio ROBERT 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 101 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS [December 31, 1954] CHAIRMEN AND DEPUTY CHAIRMEN OF BOARDS OF DIRECTORS Chairman and Federal Reserve Bank of— Deputy Chairman Federal Reserve Agent Boston Harold D. Hodgkinson Ames Stevens New York Jay E. Crane William I. Myers Philadelphia William J. Meinel Henderson Supplee, Jr. Cleveland John C. Virden Leo L. Rummell Richmond John B. Woodward, Jr W. G. Wysor Atlanta Rufus C. Harris Paul E. Reinhold Chicago John S. Coleman Bert R. Prall St. Louis M. Moss Alexander Caffey Robertson Minneapolis Leslie N. Perrin Vacancy Kansas City Raymond W. Hall Cecil Puckett Dallas J. R. Parten Robert J. Smith San Francisco A. H. Brawner Y. Frank Freeman CONFERENCE OF CHAIRMEN The Chairmen of the Federal Reserve Banks are organized into a Conference of Chairmen which meets from time to time to consider matters of common interest and to consult with and advise the Board of Governors. Mr. Hodgkinson, Chairman of the Federal Reserve Bank of Boston, was elected Chairman of the Conference and of the Executive Committee in April 1953 and served as such through the meeting held in December 1954. Mr. Virden, Chairman of the Federal Reserve Bank of Cleveland, and Mr. Meinel, Chairman of the Federal Reserve Bank of Philadelphia, served with Mr. Hodgkinson as members of the Executive Committee, Mr. Virden also serving as Vice Chairman of the Conference. At the meeting held in December 1954, Mr. Virden was elected Chairman of the Conference and of the Executive Committee. Mr. Woodward, Chairman of the Federal Reserve: Bank of Richmond, was elected Vice Chairman and a member of the Executive Committee, and Mr. Crane, Chairman of the Federal Reserve Bank of New York, was elected as the other member of the Executive Committee. 102 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 103 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1954—Cont. DIRECTORS Class A and Class B directors are elected by the member banks of the district. Class C directors are appointed by the Board of Governors of the Federal Reserve System. The Class A directors are chosen as representatives of member banks and, as a matter of practice, are active officers of member banks. The Class B directors may not, under the law, be officers, directors, or employees of banks. At the time of their election they must be actively engaged in their district in commerce, agriculture, or some other industrial pursuit. The Class C directors may not, under the law, be officers, directors, employees, or stockholders of banks. They are appointed by the Board of Governors as representatives not of any particular group or interest, but of the public interest as a whole. Federal Reserve Bank branches have either five or seven directors, of whom a majority arc 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: Harold I. Chandler Executive Vice President, The Keene National Bank, Keene, N. H 1954 Oliver B. Ellsworth President, Riverside Trust Company, Hartford, Conn.. 1955 Lloyd D. Brace President, The First National Bank of Boston, Boston, Mass 1956 Class B.- 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 Harvey P. Hood President, H. P. Hood & Sons, Inc., Boston Mass..... 1956 Class C: 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 James R. Killian, Jr President, Massachusetts Institute of Technology, Cambridge, Mass 1956 District No. 2—New York Class A: F. Palmer Armstrong President, The Keyport Banking Company, Keyport, N. J 1954 N. Baxter Jackson Chairman of the Board, Chemical Corn Exchange Bank, New York, N. Y 1955 John R. Evans President, The First National Bank of Poughkeepsie, Poughkeepsie, N. Y 1956 Class B: John E. Bierwirth President, National Distillers Products Corporation, New York, N. Y 1954 Clarence Francis Director and member of Executive Committee, General Foods Corporation, New York, N. Y 1955 Lansing P. Shield President, The Grand Union Company, East Paterson, N.J 1956 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1954—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class C: William I. Myers Dean, New York State College of Agriculture, Cornell University, Ithaca, N. Y 1954 Franz Schneider New York,N. Y 1955 Jay E. Crane Vice President, Standard Oil Company (New Jersey), New York, N. Y 1956 Buffalo Branch Appointed by Federal Reserve Bank: Lewis G. Harriman Chairman of the Board, 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 Robert L. Davis President, The First National Bank of Olean, Olean, N. Y 1956 Appointed by Board of Governors: Clayton G. White Dairy farmer, Stow, N. Y 1954 Edgar F. Wendt President, Buffalo Forge Company, Buffalo, N. Y 1955 Robert C. Tait President, Stromberg-Carlson Company, Rochester, N. Y 1956 District No. 3—-Philadelphia Class A: 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 of Towanda, Towanda, Pa 1955 Wm. Fulton Kurtz Chairman of the Board, The Pennsylvania Company for Banking and Trusts, Philadelphia, Pa 1956 Class B.- Andrew Kaul, III President and Director, Speer Carbon Company, St. Marys, Pa 1954 Charles E. Oakes President, Pennsylvania Power and Light Company, Allentown, Pa 1955 Warren C. Newton President, O. A. Newton and Son Company, Bridgeville, Del 1956 Class C: William J. Meinel President and Chairman of the Board, Heintz Manufacturing Company, Philadelphia, Pa 1954 Henderson Supplee, Jr President, The Atlantic Refining Company, Philadelphia, Pa .' 1955 Lester V. Chandler Professor of Economics, Princeton University, Princeton, N. J 1956 District No. 4—Cleveland Class A: 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 J. Brenner Root President, The Harter Bank & Trust Company, Canton, Ohio 1956 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 105 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1954—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class B: Joel M. Bowlby Chairman of the Board, The Eagle-Picher Company, Cincinnati, Ohio 1954 Edward C. Doll President, Lovell Manufacturing Company, Erie, Pa... 1955 Alexander E. Walker Chairman of the Board, The National Supply Company, Pittsburgh, Pa 1956 Class C: 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 John C. Virden Chairman of the Board, John C. Virden Company, Cleveland, Ohio 1956 Cincinnati Branch Appointed by Federal Reserve Bank: Joseph B. Hall President, The Kroger Company, Cincinnati, Ohio 1954 E. S. Dabney President, Security Trust Company, Lexington, Ky 1954 Fred A. Dowd President, The First National Bank of Cincinnati, Cincinnati, Ohio 1955 Leonard M. Campbell President, The Second National Bank of Ashland, Ashland, Ky 1956 Appointed by Board of Governors: John C. Baker President, Ohio University, Athens, Ohio 1954 Henry C. Besuden Farmer, Winchester, Ky 1955 Anthony Haswell President, The Dayton Malleable Iron Company, Dayton, Ohio 1956 Pittsburgh Branch Appointed by Federal Reserve Bank: William B. McFall President, Commonwealth Trust Company of Pittsburgh, Pittsburgh, Pa 1954 John C. Warner President, Carnegie Institute of Technology, Pittsburgh, Pa I954 Paul Malone President, The Second National Bank of Uniontown, Uniontown, Pa I955 Albert L. Rasmussen President, The Warren National Bank, Warren, Pa 1956 Appointed by Board of Governors: Clifford F. Hood President, United States Steel Corporation, Pittsburgh, Pa 1954 Douglas M. Moorhead Farmer, North East, Pa I955 Henry A. Roemer, Jr President, Sharon Steel Corporation, Sharon, Pa 1956 District No. 5—Richmond Class A: 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 John A. Sydenstricker Executive Vice President, First National Bank in Marlinton, Marlinton, W. Va 1956 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1954—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class B.- Edwin Hyde President, Miller & Rhoads, Inc., Richmond, Va 1954 H. L. Rust, Jr President, H. L. Rust Company, Washington, D. C... 1955 W. A. L. Sibley Vice President and Treasurer, Monarch Mills, Union, S. C 1956 Class C: W. G. Wysor Management Counsel, Southern States Cooperative, Inc., Richmond, Va 1954 John B. Woodward, Jr Chairman of the Board, Newport News Shipbuilding & Dry Dock Company, Newport News, Va 1955 Alonzo G. Decker, Jr Vice President, The Black & Decker Manufacturing Company, Towson, Md 1956 Baltimore Branch Appointed by Federal Reserve Bank: 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 Charles W. Hoff President, Union Trust Company of Maryland, Baltimore, Md 1956 Appointed by Board of Governors: Clarence R. Zarfoss Vice President, Western Maryland Railway Company, Baltimore, Md 1954 Howard M. Taylor, Jr President, International Bedding Company, Baltimore, Md 1955 Theodore E. Fletcher, Sr Senior Partner, Albert W. Sisk & Son, Preston, Md 1956 Charlotte Branch Appointed by Federal Reserve Bank: 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 Archie K. Davis Senior Vice President, Wachovia Bank and Trust Company, Winston-Salem, N. C 1956 Appointed by Board of Governors: Paul T. Taylor President, Taylor Warehouse Company, Winston- Salem, N. C 1954 T. Henry Wilson President & Treasurer, Henredon Furniture Industries, Inc., Morganton, N. C 1955 William H. Grier Executive Vice President, Rock Hill Printing & Finishing Company, Rock Hill, S. C 1956 District No. 6—Atlanta Class A: W. C. Bowman Chairman of the Board, TheFirst National Bank of Montgomery, Montgomery, Ala 1954 Leslie R. Driver President, The First National Bank in Bristol, Bristol, Tenn 1955 Roland L. Adams President, Bank of York, York, Ala 1956 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 107 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1954—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class B: Pollard Turman President, J. M. Tull Metal & Supply Company, Inc., Atlanta, Ga 1954 Donald Comer Chairman of the Board, Avondale Mills, Birmingham, Ala 1955 A. B. Freeman Chairman of the Board, Louisiana Coca-Cola Bottling Company, Ltd., New Orleans, La 1956 Class C: 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 Harllee Branch, Jr President, Georgia Power Company, Atlanta, Ga 1956 Birmingham Branch Appointed by Federal Reserve Bank: 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 John Will Gay President, The First National Bank of Scottsboro, Scottsboro, Ala 1956 Appointed by Board of Governors: Edwin C. Bottcher Farmer, Cullman, Ala 1954 Thad Holt Investments, Birmingham, Ala 1955 Adolf Weil, Sr President, Weil Brothers-Cotton, Inc., Montgomery, Ala 1956 Jacksonville Branch Appointed by Federal Reserve Bank: 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 T. A. Davis, Jr President, Pan American Bank of Miami, Miami, Fla... 1956 Appointed by Board of Governors: J. Wayne Reitz Provost for Agriculture, University of Florida, Gainesville, Fla 1954 Harry M. Smith President and Manager, Winter Garden Ornamental Nursery, Inc., Winter Garden, Fla 1955 McGregor Smith Chairman of the Board and Director, Florida Power and Light Company, Miami, Fla 1956 Nashville Branch Appointed by Federal Reserve Bank: Sam M. Fleming President, Third National Bank in Nashville, Nashville, Tenn 1954 James V. Sprouse President, The First National Bank of Springfield, Springfield, Tenn 1955 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 ANNUAL REPORT OF BOARD OF GOVERNORS DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1954—Cont. Term Expires DIRECTORS—Cont. Dec. 31 T. R. Keys President, Erwin National Bank, Erwin, Tenn 1955 W. E. Tomlinson President, The Hamilton National Bank of Johnson City, Johnson City, Tenn 1956 Appointed by Board of Governors: H. C. Meacham Farming, Franklin, Tenn 1954 Ernest J. Moench President, Tennessee Tufting Company, Nashville, Tenn 1955 Frank B. Ward Dean, College of Business Administration, University of Tennessee, Knoxville, Tenn 1956 New Orleans Branch Appointed by Federal Reserve Bank: Philip C. Williams President, Bank of Yazoo City, Yazoo City, Miss 1954 Keehn W. Berry President, Whitney National Bank of New Orleans, New Orleans, La 1955 James T. Brown Chairman of the Board, First National Bank of Jackson, Jackson, Miss 1955 Leon J. Minvielle President, The Peoples National Bank of New Iberia, New Iberia, La 1956 Appointed by Board of Governors: Joel L. Fletcher, Jr President, Southwestern Louisiana Institute, Lafayette, La 1954 E. O. Batson President, Batson-McGehee Company, Inc., Millard, Miss 1955 E. E. Wild Rice grower, Midland, La 1956 District No. 7—Chicago Class A: 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 Vivian W. Johnson President, First National Bank, Cedar Falls, Iowa.... 1956 Class B: 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 William A. Hanley Director, Eli Lilly and Company, Indianapolis, Ind 1956 Class C: Bert R. Prall President, Butler Bros., Chicago, 111 1954 John S. Coleman President, Burroughs Corporation, Detroit, Mich 1955 J. Stuart Russell Farm Editor, The Des Moines Register and Tribune, Des Moines, Iowa 1956 Detroit Branch Appointed by Federal Reserve Bank: Howard P. Parshall President, Bank of the Commonwealth, Detroit, Mich. 1954 John A. Stewart Vice President and Cashier, Second National Bank & Trust Company, Saginaw, Mich 1954 Raymond T. Perring President, The Detroit Bank, Detroit, Mich 1955 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 109 DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1954—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Ira A. Moore President, Peoples National Bank of Grand Rapids, Grand Rapids, Mich 1956 Appointed by Board of Governors: John A. Hannah President, Michigan State College, East Lansing, Mich. 1954 William M. Day Vice President and General Manager, Michigan Bell Telephone Company, Detroit, Mich 1955 Watson H. Vanderploeg President, Kellogg Company, Battle Creek, Mich 1956 District No. 8—St. Louis Class A: Phil E. Chappell President, Planters Bank & Trust Company, Hopkinsville, Ky 1954 J. E. Etherton President, The Carbondale National Bank, Carbondale, 111 1955 William A. McDonnell President, First National Bank in St. Louis, St. Louis, Mo 1956 Class B.- Leo J. Wieck Vice President and Treasurer, The May Department Stores Company, St. Louis, Mo 1954 S. J. Beauchamp, Jr President, Terminal Warehouse Company, Little Rock, Ark 1955 Louis Ruthenburg Chairman of Board, Servel, Inc., Evansville, Ind 1956 Class C: Joseph H. Moore Farmer, Charleston, Mo 1954 Caffey Robertson President, CafFey Robertson Company, Memphis, Tenn. 1955 M. Moss Alexander President, Missouri Portland Cement Company, St. Louis, Mo 1956 Little Rock Branch Appointed by Federal Reserve Bank: H. C. McKinney, Jr President, The First National Bank of El Dorado, El Dorado, Ark 1954 Thos. W. Stone President, The Arkansas National Bank of Hot Springs, Hot Springs, Ark 1954 Harvey C. Couch, Jr President, Union National Bank of Little Rock, Little Rock, Ark 1955 Donald Barger President, Peoples Exchange Bank, Russellville, Ark... 1956 Appointed by Board of Governors: Shuford R. Nichols Farmer, Ginner and Cotton Broker, Des Arc, Ark 1954 A. Howard Stebbins, Jr President, Stebbins and Roberts, Inc., Little Rock, Ark. 1955 Sam B. Strauss President, Pfeifers of Arkansas, Little Rock, Ark • • 1956 Louisville Branch Appointed by Federal Reserve Bank: M. C. Minor President, The Farmers National Bank of Danville, Danville, Ky 1954 Ira F. Wilcox President, The Union National Bank of New Albany, New Albany, Ind 1954 Magnus J. Kreisle President, The Tell City National Bank, Tell City, Ind. 1955 Noel Rush President, Lincoln Bank and Trust Company, Louisville, Ky 1956 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, 1954—Cont. Term Expires DiREcroits—Cont. Dec. 31 Appointed by Board of Governors: Pierre B. McBride President, Porcelain Metals Corporation, Louisville, Ky 1954 Smith Broadbent, Jr Farmer, Cadiz, Ky 1955 David F. Cocks Vice President and Treasurer, Standard Oil Company (Kentucky), Louisville, Ky 1956 Memphis Branch Appointed by Federal Reserve Bank: John A. McCall President, The First National Bank of Lexington, Lexington, Tenn 1954 William B. Pollard President, National Bank of Commerce in Memphis, Memphis, Tenn 1954 Ben L. Ross Chairman of Board, Phillips National Bank, Helena, Ark 1955 John K. Wilson President, The First National Bank of West Point, West Point, Miss 1956 Appointed by Board of Governors: A. E. Hohenberg President, Hohenberg Bros. Company, Memphis, Tenn. 1954 Henry Banks Farmer, Clarkedale, Ark 1955 John D. Williams Chancellor, The University of Mississippi, University, Miss 1956 District No. 9—Minneapolis Class A: John W. Scott President, The First State Bank of Gil by, Gilby, N. D.. 1954 Edgar F. Zelle Chairman of the Board, First National Bank of Minneapolis, Minneapolis, Minn 1955 Harold N. Thomson Vice President, Farmers and Merchants Bank, Presho, S. D 1956 Class B.- Ray C. Lange President, Chippewa Canning Company, Inc., Chippewa Falls, Wis 1954 Homer P. Clark Honorary Chairman of the Board, West Publishing Company, St. Paul, Minn 1955 J. E. Corette President and General Manager, Montana Power Company, Butte, Mont 1956 Class C: Vacancy 1954 F. Albae Flodin President and General Manager, Lake Shore Engineering Company, Iron Mountain, Mich 1955 Leslie N. Perrin Director, General Mills, Inc., Minneapolis, Minn 1956 Helena Branch Appointed by Federal Reserve Bank: J. Wilkrd Johnson Financial Vice President and Treasurer, Western Life Insurance Company, Helena, Mont 1954 Geo. N. Lund Chairman of the Board and President, The First National Bank of Reserve, Reserve, Mont 1954 A. W. Heidel Vice President, Powder River County Bank, Broadus, Mont 1955 Appointed by Board of Governors: Carl McFarland President, Montana State University, Missoula, Mont. 1954 George R. Milburn Manager, N Bar Ranch, Grass Range, Mont 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, 1954—Cont. Term Expires DIRECTORS—Cont. Dec. 31 District No. 10—Kansas City Class A: Harold Kountze President, The Colorado 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 W. L. Bunten President, Goodland State Bank, Goodland, Kan 1956 Class B: Max A. Miller Livestock rancher, Omaha, Neb 1954 E. M. Dodds President, United States Cold Storage Corporation, Kansas City, Mo 1955 K. S. Adams Chairman of the Board, Phillips Petroleum Company, Bartlesville, Okla 1956 Class C: Lyle L. Hague Farmer and stockman, Cherokee, Okla 1954 Raymond W. Hall Vice President and Director, Hall Brothers, Inc., Kansas City Mo 1955 Cecil Puckett Dean, College of Business Administration, University of Denver, Denver, Colo 1956 Denver Branch Appointed by Federal Reserve Bank: Ralph S. Newcomer Executive Vice President, First National Bank in Boulder, Boulder, Colo 1954 Arthur Johnson President, First National Bank in Raton, Raton, N. Mex 1954 Merriam B. Berger Vice President, The Colorado National Bank of Denver, Denver, Colo 1955 Appointed by Board of Governors: G. Norman Winder Rancher, Craig, Colo 1954 Aksel Nielsen President, The Title Guaranty Company, Denver, Colo. 1955 Oklahoma City Branch Appointed by Federal Reserve Bank: F. M. Overstreet President, The 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 George R. Gear President, The City National Bank of Guymon, Guymon, Okla 1955 Appointed by Board of Governors: Phil H. Lowery Owner, Lowery Hereford Ranch, Loco, Okla 1954 Davis D. Bovaird President, The Bovaird Supply Company, Tulsa, Okla.. 1955 Omaha Branch Appointed by Federal Reserve Bank: William N. Mitten Chairman of the Board and President, First National Bank of Fremont, Fremont, Neb 1954 Ellsworth Moser President, The United States National Bank of Omaha, Omaha, Neb 1955 George J. Forbes Executive Vice President, The First National Bank of Laramie, Laramie, Wyo 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, 1954—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Appointed by Board of Governors: Manville Kendrick Rancher, Sheridan, Wyo 1954 Gilbert C. Swanson Chairman of the Board, C. A. Swanson & Sons, Omaha, Neb 1955 District No. 11—Dallas Class A: P P. Butler President, First National Bank in Houston, Houston, Tex 1954 J. Edd McLanghlin President, Security State Bank & Trust Company, Rails, Tex 1955 W. L. Peterson President, The State National Bank of Denison, Denison, Tex 1956 Class B: 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 John R. Alford Industrialist and Farmer, Henderson, Tex 1956 Class C: Robert J. Smith President, Pioneer Air Lines, Inc., Dallas, Tex 1954 J. R. Parten President, Woodley Petroleum Company, Houston, Tex 1955 Hal Bogle Rancher and Feeder, Dexter, N. Mex 1956 El Paso Branch Appointed by Federal Reserve Bank: John P. Butler President, The First National Bank of Midland, Midland, Tex 1954 J. M. Sakrison President, Southern Arizona Bank and Trust Company, Tucson, Ariz 1954 Thomas C. Patterson Vice President, El Paso National Bank, El Paso, Tex... 1955 F. W. Barton President, The Marfa National Bank, Marfa, Tex 1956 Appointed by Board of Governors: Tames A. Dick President, James A. Dick Investment Company, El Paso, Tex 1954 E. J. Workman President, and Director of Research and Development Division, New Mexico Institute of Mining and Technology, Socorro, N. Mex 1955 D. F. Stahmann Farmer, Las Cruces, N. Mex 1956 Houston Branch Appointed by Federal Reserve Bank: 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, The City National Bank of Houston, Houston, Tex 1955 I. F. Betts President, The American National Bank of Beaumont, Beaumont, Tex 1956 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, 1954—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Appointed by Board of Governors: Ross Stewart Chairman of the Board of Directors, Stewart & Stevenson Services, Inc., Houston, Tex 1954 Charles N. Shepardson Dean of Agriculture, A. & M. College of Texas, College Station, Tex 1955 Herbert G. Sutton T. O. Sutton and Sons, Colmesneil, Tex 1956 San Antonio Branch Appointed by Federal Reserve Bank: E. A. Baetz President, Bexar County National Bank of San Antonio, San Antonio, Tex 1954 V. S. Marett President, Gonzales State Bank, Gonzales, Tex 1954 Burton Dunn President, The Corpus Christi National Bank, Corpus Christi, Tex 1955 E. C. Breedlove President, The First National Bank, Harlingen, Tex... 1956 Appointed by Board of Governors: Henry P. Drought Attorney at Law, San Antonio, Tex 1954 D. Hayden Perry Livestock farming, Robstown, Tex 1955 Clarence E. Ayres Professor of Economics, The University of Texas, Austin, Tex 1956 District No. 12—San Francisco Class A: 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 M. Vilas Hubbard President and Chairman of the Board, Citizens Commercial Trust and Savings Bank of Pasadena, Pasadena, Calif 1956 Class B: 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 Alden G. Roach President, Columbia-Geneva Steel Division and Consolidated Western Steel Division, of United States Steel Corporation, San Francisco, Calif 1956 Class C: Harry R. Wellman Vice President, Agricultural Sciences, University of California, Berkeley, Calif 1954 Y. Frank Freeman Vice President, Paramount Pictures Corporation, Hollywood, Calif 1955 A. H. Brawner President, W. P. Fuller & Company, San Francisco, Calif 1956 Los Angeles Branch Appointed by Federal Reserve Bank: Anderson Borthwick President, The First National Trust and Savings Bank of San Diego, San Diego, Calif 1954 James E. Shelton President, Security-First National Bank of Los Angeles, Los Angeles, Calif 1954 Hugh C. Gruwell President, First National Bank of Arizona, Phoenix, Ariz 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, 1954—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Appointed by Board of Governors: Bryant Essick President, Essick Manufacturing Company, Los Angeles, Calif 1954 Paul H. Helms President, Helms Bakeries, Los Angeles, Calif 1955 Portland Branch Appointed by Federal Reserve Bank: Frank Wortman President, The First National Bank of McMinnville, McMinnville, Ore 1954 John B. Rogers President, The First National Bank of Baker, Baker, Ore 1954 E. C. Sammons President, The United States National Bank of Portland, Portland, Ore 1955 Appointed by Board of Governors: William H. Steiwer, Sr Livestock and farming, Fossil, Ore 1954 Philip I. Welk President, Preston-Shaffer Milling Company, Walla Walla, Wash ' 1955 Salt Lake City Branch Appointed by Federal Reserve Bank: Russell S. Hanson Vice President and Cashier, The First National Bank of Logan, Logan, Utah 1954 George S. Eccles President, First Security Bank of Utah, National Association, Ogden, Utah. Salt Lake City, Utah 1954 Harry Eaton Executive Vice President, Twin Falls Bank and Trust Company, Twin Falls, Idaho 1955 Appointed by Board of Governors: Geo. W. Watkins President, Snake River Equipment Company, Idaho Falls, Idaho 1954 Joseph Rosenblatt President, The Eimco Corporation, Salt Lake City, Utah 1955 Seattle Branch Appointed by Federal Reserve Bank: Vacancy 1954 S. B. Lafromboise President, The First National Bank of Enumclaw, Enumclaw, Wash 1954 Charles F. Frankland President, The Pacific National Bank of Seattle, Seattle, Wash 1955 Appointed by Board of Governors: Ralph Sundquist Fruit Grower and Cold Storage Operator, Yakima, Wash 1954 D K. MacDonald Chairman of the Board, D. K. MacDonald & Company, Inc., Seattle, Wash 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, 1954—Cont. SENIOR OFFICERS OF FEDERAL RESERVE BANKS [December 31, 1954] Federal Reserve President Vice Presidents Bank of— First Vice President Boston. J. A. Erickson Robert B. Harvey2 Carl B. Pitman Alfred C. Neal E. O. Latham O. A. Schlaikjer R. F. Van Amringe New York. Allan Sproul H. A. Bilby Robert G. Rouse William F. Treiber John Exter T. G. Tiebout H. H. Kimball 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 Dwight L. Allen Martin Morrison Donald S. Thompson Roger R. Clouse H. E. J. Smith A. H. Laning2 Paul C. Stetzelberger Richmond. Hugh Leach N. L. Armistead James M. Slay Edw. A. Wayne Aubrey N. Heflin C. B. Strathy Upton S. Martin Chas. W. Williams J. M. Nowlan1 Atlanta. Malcolm Bryan V. K. Bowman L. B. Raisty Lewis M. Clark J. E. Denmark Earle L. Rauber John L. Liles, Jr.2 S. P. Schuessler Harold T. Patterson 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 Dale M. Lewis H. H. Weigel Frederick L. Deming Wm. E. Peterson J. C. Wotawa Minneapolis.. O. S. Powell E. B. Larson Otis R. Preston A. W. Mills H. G. McConnell M. H. Strothman, Jr. Sigurd Ueland Kansas City. . H. G. Leedy John T. Boysen1 E. D. Vanderhoof Henry O. Koppang Clarence W. Tow D. W. Woolley Dallas Watrous H. Irons E. B. Austin L. G. Pondrom W. D. Gentry J. L. Cook2 Morgan H. Rice T. W. Plant Harry A. Shuford San Francisco. C. E. Earhart E. R. Millard Eliot J. Swan2 H. N. Mangels H. F. Slade O. P. Wheeler 1 Cashier. 2Also Cashier. 3 Counsel. 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, 1954—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 H. C. Frazer Jacksonville T. A. Lanford Nashville R. E. Moody, Jr. New Orleans M. L. Shaw Chicago Detroit R. A. Swaney St. Louis Little Rock Fred Burton Louisville V. M. Longstreet Memphis Darryl R. Francis Minneapolis., Helena C. W. Groth Kansas City. . Denver G. A. Gregory Oklahoma City R. L. Mathes Omaha P. A. Debus Dallas El Paso C. M. Rowland Houston W. H. Holloway San Antonio \V. 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, who was elected Chairman of the Conference in February 1952, was re-elected as such in March 1953 and continued to serve until March 1954. Mr. Young, President of the Federal Reserve Bank of Chicago, was elected Vice Chairman in September 1953, to succeed Mr. Gilbert, who retired as President of the Federal Reserve Bank of Dallas. Mr. Young continued to serve as Vice Chairman until March 1954. Mr. Aubrey N. Heflin, Vice President and General Counsel, Federal Reserve Bank of Richmond, who was elected Secretary of the Conference in June 1952, was re-elected as such in March 1953, and continued to serve until March 1954. At the meeting held in March 1954, Mr. Young, President of the Federal Reserve Bank of Chicago, and Mr. Earhart, President of the Federal Reserve Bank of San Francisco, were elected Chairman of the Conference and Vice Chairman, respectively, and served as such during 1954. Mr. Robert C. Holland, an Economist at the Federal Reserve Bank of Chicago, was elected Secretary of the Conference at the meeting held in March 1954, and served as such during 1954. 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 1 = BOUNDARIES OF FEDERAL RESERVE DISTRICTS BOUNDARIES OF FEDERAL RESERVE BRANCH TERRITORIES Tfc BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM ® FEDERAL RESERVE BANK CITIES • FEDERAL RESERVE BRANCH CITIES NOTE—For a description of the Federal Reserve districts and branch territories, see the Annual Report of the Board of Governors for 1953, pp. 124-34; for recent changes in branch territory lines, see p. 57 of this Report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX Page Acceptances: Bankers', buying rates on 78, 94, 95 Drafts of bills of exchange for purpose of furnishing dollar exchange, application granted 47 Agriculture, developments during year 13 Alaska: Admission of national bank to membership in Federal Reserve System 45, 90 Amendments to Regulations G and J with respect to items in.... 50, 89 Designation as being in or of Twelfth Federal Reserve District for purposes of Regulations G and J 50, 89 Assets and liabilities: All banks in the United States, by classes 81 Federal Reserve Banks 62, 64 Balance of payments, United States 31 Bank credit and money, review for year 22 Bank holding companies 47 Bank premises: Federal Reserve Banks and branches 56, 76 Investment in, amendments to Sections 23A and 24A of Federal Reserve Act 50 Bank supervision by Federal Reserve System 46 Banking offices, number and analysis of changes 44, 83 Banks for cooperatives, authority of member banks to deal in and underwrite obligations of 52 Board of Governors: Accounts audited 57 Income and expenses 57 Members 99 Officers 99 Policy actions (See Policy actions, Board of Governors) Reimbursable expenditures 59 Branch banks: Domestic, number and analysis of changes 44, 83 Federal Reserve System: Bank premises 56, 76 Cincinnati, construction of security court authorized 56 Directors, list of 104 El Paso, acquisition of site for new building authorized 57 Houston, acquisition of site for new building authorized 57 Louisville, site for new building acquired 56 Omaha, construction of addition authorized 56 San Antonio, construction of new building authorized 56 Territory of, intradistrict changes in 57 Vice Presidents in charge of 116 Foreign, number in operation 48 Buying rates on acceptances 78, 94, 95 118 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 119 Page Capital accounts: All banks in the United States, by classes 81 Federal Reserve Banks 63, 65, 67 Member banks 43, 81 Central bank technicians, meeting of 60 Chairmen of Federal Reserve Banks: Conference of 102 Executive committee 102 List of 102 Meeting 60 Charts: Deposits and currency 26 External trade, Western Europe and United States 33 Gold and dollar holdings, by areas 38 Gross national product 9 Gross national product, selected components 11 Member bank reserves and related items 28 Money rates 21 Selected business indexes 14 United States balance of payments 31 Clearing and collection: Designation of Alaska and Hawaii as being in or of Twelfth Federal Reserve District for purposes of Regulations G and J 50, 89 Items in Territories of Alaska and Hawaii, amendments to Regulations G and J 50, 89 Par list 45, 84 Commercial banks: Assets and liabilities 81 Holdings of Government securities 23 Loans and investments 23 Condition statements of Federal Reserve Banks: All banks combined 62 Each bank 64 Conferences {See Meetings) Credit, Federal Reserve policy 4 Credit and money, review for year 22 Currency, holdings and circulation during year 26 Debt and equity financing 17 Deposits: All banks in the United States, by classes 81 Expansion during year 26 Time deposits, maximum interest rates on 79 Deputy Chairmen of Federal Reserve Banks 102 Directors: Federal Reserve Banks: Classes of 103 List of 103 Federal Reserve branch banks, list of 104 Discount rates at Federal Reserve Banks 7, 78, 86, 87 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 INDEX Page Dividends: Federal Reserve Banks 54, 71, 72 Member banks 42, 82 Dollar exchange, permission to accept drafts or bills drawn for purpose of furnishing 47 Earnings and expenses: Federal Reserve Banks: 1954 53, 70 1914-1954 72 Member banks 42, 82 Economic conditions, review for year 8 Economic and financial developments, world 30 Examinations: Federal Reserve Banks 46 Foreign banking corporations 49 Holding company affiliates 47 State member banks 46 Expenses: Board of Governors 59 Federal Reserve Banks 54, 70, 72 Federal Advisory Council: Executive committee 101 Meetings 60 Members and officers 101 Federal National Mortgage Association, provisions of Housing Act of 1954 relating to 51 Federal Open Market Committee: Executive committee 100 Meetings 60 Members and officers 100 Policy actions 92 Review of continuing authorities or statements of policy 93 Federal Reserve Act: Section 14(b), amendment extending authority of Federal Reserve Banks for direct purchase and sale of Government obligations from and to the United States 50 Section 16, amendment repealing provisions prohibiting one Federal Reserve Bank from paying out Federal Reserve notes of another Federal Reserve Bank 51 Section 23A, amendment relating to investment in bank premises.... 50 Section 24, amendments relating to real estate loans by national banks 51 Section 24A, amendment relating to investment in bank premises. ... 51 Federal Reserve Bank of Chicago, property acquired for expansion.... 56 Federal Reserve Bank of Dallas, property acquired for expansion 56 Federal Reserve Banks: Assets and liabilities 62, 64 Authority for direct purchase and sale of Government obligations from and to the United States, extension of 50 Bank premises 56, 76 Capital accounts 63, 65, 67 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 121 Page Federal Reserve Banks—Continued Chairmen (See Chairmen of Federal Reserve Banks) Condition, statement of 62, 64 Directors 103 Discount rates 7, 78, 86, 87 Dividends 54, 71, 72 Earnings and expenses 53, 70, 72 Earnings on loans and securities 55 Examination of 46 First Vice Presidents 115 Foreign and international accounts 55 Holdings of Government securities 54, 68 Holdings of special short-term Treasury certificates purchased directly from the United States 69 Officers 115 Officers and employees, number and salaries 77 Presidents 115 Profit and loss 71 Territory of, intradistrict changes in 57 Vice Presidents 115 Volume of operations 53, 69 Federal Reserve credit policy 4 Federal Reserve notes:. Cost of printing 59 Issued to and held by Federal Reserve Banks 63, 65, 67 Payments to Treasury as interest on 54, 71, 72 Repeal of provisions prohibiting one Federal Reserve Bank from paying out notes of another Federal Reserve Bank 51 Federal Reserve System: Changes in membership 44 Map 117 Fiduciary powers of national banks 47 Foreign banking corporations 48, 50, 90 Foreign countries: Economic and financial developments 30 Gold and dollar holdings, by areas 38 Foreign operations of American banks, study of 49 Government securities: Direct purchase and sale of, from and to the United States, extension of authority of Federal Reserve Banks 50 Holdings of commercial banks 23 Holdings of Federal Reserve Banks 54, 68 Open market operations 6, 29 Treasury certificates, holdings of special short-term, purchased directly from the United States, by Federal Reserve Banks 69 Hawaii: Amendments to Regulations G and } with respect to items in ...50, 89 Designation as being in or of Twelfth Federal Reserve District for purposes of Regulations G and J 50, 89 Holding company affiliates 47 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 INDEX Page Housing Act of 1954 51 Income and saving 15 Industrial production 11 Inter-Agency Bank Examination School 49 Interest rates: Changes during year 20 Federal Reserve Banks 78 Loans guaranteed under Defense Production Act 80 Time deposits, maximum rates on 79 Investments: Bank premises, amendments to Sections 23A and 24A of Federal Reserve Act 50 Labor market, developments during year 13 Legislation: Direct purchase and sale of Government obligations from and to the United States, extension of authority of Federal Reserve Banks. ... 50 Federal National Mortgage Association, provisions of Housing Act of 1954 relating to 51 Federal Reserve notes, repeal of provisions prohibiting one Federal Reserve Bank from paying out notes of another Federal Reserve Bank 51 Housing Act of 1954 51 Investment in bank premises, amendments to sections 23A and 24A of Federal Reserve Act 50 Obligations of banks for cooperatives, amendment permitting member banks to deal in and underwrite 52 Real estate loans by national banks, amendments to Section 24 of Federal Reserve Act 51 Loans: Defense production loans: Fees and rates under Regulation V 80 Guarantees of 40 Federal Reserve Banks, earnings on 55 Industrial loans under Section 13(b) of Federal Reserve Act, changes in rates approved 86 Real estate loans by national banks, amendments to Section 24 of Federal Reserve Act 51 Loans and investments: All banks in the United States, by classes 81 Commercial banks 23 Margin requirements, table 80 Meetings: Central bank technicians 60 Chairmen of Federal Reserve Banks 60 Federal Advisory Council 60 Federal Open Market Committee 60 Presidents of Federal Reserve Banks 60 Member banks: Acceptance powers 47 Analysis of changes 83 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 123 Page Member banks—Continued Assets and liabilities 81 Capital accounts 43, 81 Dividends 42, 82 Earnings and expenses 41, 42, 82 Investment in bank premises, amendments to Sections 23A and 24A of Federal Reserve Act 50 Number of 44 Obligations of banks for cooperatives, authority to permit dealings in 52 Obligations of Federal National Mortgage Association, authority to permit dealings in 52 Reserve positions 27 Reserve requirements: Reduction in 7, 49, 88 Table 79 Reserves, Reserve Bank credit, and related items 74 Stock of Federal National Mortgage Association, authority to permit purchase 51 Membership in Federal Reserve System, changes in 44 Money and bank credit, review for year 22 Mutual savings banks: Analysis of changes 83 Assets and liabilities 81 National banks: Admission of national bank in Alaska to membership in Federal Reserve System 45, 90 Analysis of changes 83 Assets and liabilities 81 Real estate loans by, amendments to Section 24 of Federal Reserve Act 51 Trust powers granted to 47 National Voluntary Mortgage Credit Extension Committee 52 Nonmember banks: Analysis of changes 83 Assets and liabilities 81 Par list, number on list and not on list 84 Open market operations 6, 29 Par list: Number of banks on, changes during year 45 Number of banks on list and not on list, by Federal Reserve Districts and States 84 Policy actions, Board of Governors: Designation of Alaska and Hawaii as being in or of Twelfth Federal Reserve District for purposes of Regulations G and J 89 Discounts for and advances to member banks, reductions in rates. . 86, 87 Regulation D, Reserves of Member Banks, amendment to 88 Regulation G, Collection of Noncash Items, amendments to 89 Regulation J, Check Clearing and Collection, amendments to 89 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 INDEX Page Policy actions, Board of Governors—Continued Regulation K, Banking Corporations Authorized to Do Foreign Banking Business under the Terms of Section 25(a) of the Federal Reserve Act:. Amendment of Sections XI and XV 90 Policy actions, Federal Open Market Committee: Authority to eflect transactions in System account: Meeting of March 3, 1954 92 Meeting of June 23, 1954 94 Meeting of September 22, 1954 96 Meeting of December 7, 1954 97 Bankers' acceptances, reductions in minimum buying rate 94, 95 Repurchase agreements 96 Review of continuing authorities or statements of policy 93 Presidents of Federal Reserve Banks: Conference of 116 List of 115 Meetings 60 Prices: Changes in 14 World commodity prices 34 Production, review for year 8 Rates: Advances to individuals, partnerships, and corporations other than member banks 78, 86 Advances to member banks under Section 10(b) of Federal Reserve Act 78, 86, 88 Buying, on acceptances 78, 94, 95 Discount rates at Federal Reserve Banks 7, 78, 86, 87 Industrial loans and commitments under Section 13(b) of Federal Reserve Act 78, 86 Interest rates 20, 78 Loans guaranteed under Defense Production Act 80 Postal Savings deposits 79 Savings deposits 79 Time deposits 79 Regulations, Board of Governors: D, Reserves of Member Banks, amendment decreasing reserve requirements 49, 88 G, Collection of Noncash Items: Amendments with respect to items payable in Territories of Alaska and Hawaii 50, 89 Designation of Alaska and Hawaii as being in or of Twelfth Federal Reserve District for purposes of 50, 89 }, Check Clearing and Collection: Amendments with respect to checks drawn on nonmember parremitting banks in Territories of Alaska and Hawaii 50, 89 Designation of Alaska and Hawaii as being in or of Twelfth Federal Reserve District for purposes of 50, 89 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 125 Page Regulations, Board of Governors—Continued K, Banking Corporations Authorized to Do Foreign Banking Business under the Terms of Section 25(a) of the Federal Reserve Act:. Amendment of Sections XI and XV 50, 90 V, Loan Guarantees for Defense Production 40 Repurchase agreements 96 Reserve cities, designation of 46 Reserve positions of member banks 27 Reserve requirements: Member banks: Reduction in 7, 49, 88 Table 79 Reserves, member banks, 1918-1954 74 Revised Statutes, Section 5136: Amendment permitting member banks to deal in and underwrite obligations of banks for cooperatives 52 Amendment permitting member banks to deal in and underwrite obligations of Federal National Mortgage Association 52 Salaries: Board of Governors 59 Officers and employees of Federal Reserve Banks 70, 77 Secretary of Agriculture, loans insured by, amendment to Section 24 of Federal Reserve Act 51 Small Business Administration: National bank loans in which Small Business Administration cooperates or purchases participation, amendment to Section 24 of Federal Reserve Act 51 State member banks: Assets and liabilities 81 Examination of 46 Number and analysis of changes 44, 83 Stock of Federal National Mortgage Association, legislation permitting purchase by member banks 51 System open market account: Authority to effect transactions in 92, 94, 96, 97 Bankers' acceptances 94, 95 Repurchase agreements 96 Review of continuing authorities or statements of policy 93 Territory of Federal Reserve Banks and branches, intradistrict changes in 57 Trust powers of national banks 47 Voting permits issued to bank holding companies 47 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis