Annual Report of the Federal Reserve Board, 1955

FORTY-SECOND 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, April 5, 1956. 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-second Annual Report of the Board of Governors of the Federal Reserve System. This report covers operations for the year 1955. 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 Credit and Economic Review 2 Federal Reserve Credit Policy 5 Economic Conditions 8 Demand and production 9 Industrial production 11 Agriculture 14 Labor market 14 Prices 15 Income and saving 16 Debt and equity financing 16 Treasury finance 19 Interest rates 21 Bank Credit and Money 23 Bank loans and investments 23 Bank reserve positions 26 Deposits and currency 29 Economic and Financial Developments Abroad 31 Western Europe 32 Other areas 35 International trade and the balance of payments 37 United States balance of payments 37 Foreign reserves 39 Loan Guarantees for Defense Production 39 Banking Operations and Structure 40 Bank earnings and profits 40 Bank earning assets 41 Capital accounts 42 Number of banking offices 42 Federal Reserve membership 43 Par and nonpar banks 43 Bank Supervision by the Federal Reserve System 44 Examination of Federal Reserve Banks 44 Examination of State member banks 44 Bank holding companies 44 Trust powers of national banks 45 iii Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Page Foreign branches and banking corporations 45 Inter-Agency Bank Examination School 46 Changes in Regulations of the Board of Governors 47 Advances and discounts by Federal Reserve Banks 47 Savings deposits 47 Collective investment of trust funds 47 Margin requirements for purchasing securities 48 Changes in Regulation of the Federal Open Market Committee.... 48 Executive Committee discontinued 48 Legislation 48 Defense Production Act of 1950 48 Real estate loans by national banks 49 Reserve Bank Operations 49 Volume of operations 49 Earnings and expenses 49 Holdings of loans and securities 51 Foreign and international accounts 51 Bank premises 52 Federal Reserve Meetings 52 Board of Governors—Income and Expenses 53 TABLES 1. Statement of Condition of the Federal Reserve Banks (In detail), Dec. 31, 1955 58 2. Statement of Condition of Each Federal Reserve Bank at End of 1955 and 1954 60 3. Holdings of United States Government Securities by Federal Reserve Banks, End of December 1953, 1954, and 1955 64 4. Federal Reserve Bank Holdings of Special Short-Term Treasury Certificates Purchased Directly from the United States, 1953-55 65 5. Volume of Operations in Principal Departments of Federal Reserve Banks, 1951-55 65 6. Earnings and Expenses of Federal Reserve Banks during 1955.. 66 7. Earnings and Expenses of Federal Reserve Banks, 1914-55 68 8. Member Bank Reserves, Reserve Bank Credit, and Related Items—End of Year 1918-55 and End of Month 1955 70 9. Bank Premises of Federal Reserve Banks and Branches, Dec. 31, 1955 72 10. Number and Salaries of Officers and Employees of Federal Reserve Banks, Dec. 31, 1955 73 iv Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Page 11. Federal Reserve Bank Discount, Interest, and Commitment Rates (In effect Dec. 31, 1955) 74 12. Member Bank Reserve Requirements 75 13. Maximum Interest Rates Payable on Time Deposits 75 14. Margin Requirements 16 15. Fees and Rates Established under Regulation V on Loans Guaranteed Pursuant to Defense Production Act of 1950 16 16. Principal Assets and Liabilities, and Number of all Banks, by Classes, Dec. 31, 1955 and 1954 77 17. Member Bank Earnings, by Class of Bank, 1955 and 1954 78 18. Analysis of Changes in Number of Banking Offices during 1955.. 79 19. Number of Banking Offices on Federal Reserve Par List and not on Par List, by Federal Reserve Districts and States, Dec. 31, 1955 80 APPENDIX Record of Policy Actions—Board of Governors 82 Record of Policy Actions—Federal Open Market Committee 89 Board of Governors of the Federal Reserve System 112 Federal Open Market Committee 113 Federal Advisory Council 114 Federal Reserve Banks and Branches 115 Map of Federal Reserve Districts 133 Index 134 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 High levels of output and employment, with demands pressing on resources, characterized the year 1955. At the beginning of the year, industrial capacity and manpower in the United States were ample for further expansion, and during the year resources and productivity grew further. By the year-end, however, many important industries were operating at or close to capacity, employment and weekly hours of work were at advanced levels, while a number of key materials were in short supply. Economic resources were being intensively utilized both here and abroad. As the year progressed, growth in demand arising from consumption and investment pressed against available supplies in almost all areas except agriculture. These pressures were reflected in wage advances and in rising prices for industrial materials and products. At the same time, there were price weaknesses in agriculture. Growing over-all demands for goods and services generated expansion of credit here and abroad. Accordingly, additional measures of restraint were adopted by the monetary and fiscal authorities of many countries. These measures were designed to keep demands within the limits of capacity to produce, to restrain price advances and, in some countries, to prevent or moderate drains on monetary reserves. In conformance with the broad objective of fostering growth and stability in the economy, Federal Reserve policy during 1955 responded to changes in the economic climate. As recovery turned into vigorous expansion, emphasis shifted gradually from facilitating recovery to restraining inflationary developments. The additional reserves needed to support monetary expansion during the year were obtained by member banks through borrowing at the Federal Reserve Banks. Federal Reserve open market operations were used in the main to adjust the supply of bank reserves to the ebb and flow of seasonal requirements. This had the effect of restraining the over-all growth of bank credit and induced banks to sell Govern- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 ANNUAL REPORT OF BOARD OF GOVERNORS ment securities from their portfolios to nonbank buyers in order to provide themselves with the funds to meet the exceptionally heavy loan demands. Federal Reserve Bank discount rates were advanced four times during the year, from IV2 per cent to 2x/i per cent. Margin requirements on stock market credit were raised twice in the first half of the year, from 50 per cent to 70 per cent. CREDIT AND ECONOMIC REVIEW Total growth in private debt and equity financing was larger in 1955 than in any previous year, with strong demands in nearly all sectors of the financial markets. The bulk of the funds came from nonbank sources through direct investment or indirectly through the purchase of Government securities sold by banks. The impact of increased demand was particularly marked in the short-term area, not only in business borrowing for working capital and in consumer credit but also in temporary financing of long-term needs, as exemplified by borrowing at banks by mortgage lenders and utilities. Notwithstanding unprecedented expansion in bank loans, growth in the total of loans and investments at banks was less than half as large as in 1954. The active money supply, measured by the volume of demand deposits and currency held by individuals and businesses, increased slightly less than in 1954. Turnover of demand deposits was at a more rapid rate. With credit demands strong, interest rates rose during the year, particularly in the short-term area. Short-term rates rose above 1953 peaks to the highest levels since 1933. Long-term rates increased, but more moderately, and remained below the peaks reached in the spring of 1953. The interplay of various forces in the credit markets reduced the spread between short- and long-term interest rates to the narrowest margin since 1930. Gross national product in the United States totaled $387 billion in 1955, a rise of $27 billion or 7 per cent from 1954. By the fourth quarter of 1955 total product, at an annual rate of $397 billion, was up 11 per cent from the low second quarter of 1954 and 8 per cent from the peak of mid-1953. For the most part these increases represented gains in physical output, although after mid- 1955 price advances became a factor. The initial impulse to economic recovery in 1954 came largely from expansion in consumer demands for automobiles, household Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 3 durable equipment, and new houses, together with a shift from liquidation to accumulation of business inventories. Beginning early in 1955 outlays for business capital expansion became an influence of growing importance, as did consumer outlays for nondurable goods and services. Federal Government outlays changed little during 1955 while State and local spending continued to rise. Levels of output in the United States were at new highs during 1955 in all major sectors of the economy. Industrial production in December, at 144 per cent of the 1947-49 average, was 11 per cent above the level of a year earlier and 5 per cent above the earlier high of mid-1953. Increases were most striking for durable goods, but output of nondurables and minerals also rose to record levels. Output of electric power expanded at a rapid pace. Construction activity, although showing some decline in the residential sector from the exceedingly high level reached in the spring and summer of 1955, was at a record total for the year. Despite acreage restrictions, crop production almost equaled the 1948 peak and output of livestock products was in record volume. Expansion in demand and output was accompanied by increases in prices of industrial materials and finished products, particularly in the second half of the year. Meanwhile, with increased output of farm products and lower Federal support levels for some crops, there were further declines in prices of many of these commodities. The general indexes of wholesale and consumer prices were slightly higher at the end of 1955 than at the beginning of the year. Under the influence of active business and consumer demands in the United States and abroad, industrial prices were strong as the year closed. The growing volume of private spending in 1955 was financed from rising incomes and increased use of credit. In the fourth quarter, personal disposable income was at an annual rate of $277 billion, 7 per cent higher than a year earlier. This increase reflected sharp advances in wage rates, as well as a larger volume of employment and more hours of work in some industries. There were also increases in other major income components, except income from farming. Consumer spending for goods and services rose even more rapidly than personal income for the year as a whole. A major factor in the increase of consumer spending relative to income was a growing use of credit on easy terms. Outstanding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4 ANNUAL REPORT OF BOARD OF GOVERNORS consumer instalment credit and home mortgage credit increased by record amounts. Corporate profits after taxes rose about $4.5 billion and dividends $1.2 billion. Total internal funds of corporations, including both retained earnings and depreciation allowances, were higher by almost $5 billion and at a new peak level. This large volume of corporate internal funds helped to finance increased business outlays for both fixed and working capital. In addition, businesses had temporary use of large amounts set aside for future tax payments, and borrowed heavily from banks and in the long-term capital markets. The aggregate volume of security issues for new capital by corporations during 1955 was about one-fifth larger than in 1954, reflecting in part a sharp increase in flotations by sales finance companies. The volume of new common stock issues showed a substantial increase during the year both in dollar amount and as a percentage of total corporate issues, as a continued rise in stock market prices made the market more favorable for raising equity capital. The volume of new securities issued by State and local governments was about one-eighth below the 1954 total, reflecting a substantial reduction in toll-road financing. Abroad, activity continued to increase, and new records of production were achieved. In Western Europe, industrial production in the fourth quarter showed increases from a year earlier ranging from 3 per cent in the United Kingdom to 14 per cent in West Germany. Levels of national income and of imports and exports exceeded previous records. Western Europe's pace of advance— which had exerted a pervasive influence on the world economy in 1954—slowed after the spring of 1955 as domestic resources became more fully utilized. In order to prevent or limit drains on reserves of gold and foreign exchange and to maintain stability in their general price levels, credit policies directed toward restraint were pursued in many European countries—in Great Britain throughout the year and later in Germany also—and in a number of countries outside Europe. In some countries fiscal and other governmental measures were also employed to exert a stabilizing influence. British reserves of gold and dollars declined during most of the year. Germany, France, and Italy gained reserves on a considerable scale. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 5 In consequence of the continuing growth in foreign demand and rapid rise in United States purchases abroad, world trade reached a record level. By the fourth quarter, United States imports were more than a fifth larger than a year earlier. The expansion of imports was especially great for finished manufactures and for certain materials, particularly metals. Further enlargement of United States exports accompanied the expansion in imports. FEDERAL RESERVE CREDIT POLICY In 1955 Federal Reserve policy shifted from maintaining ease in the money market to restraint of inflationary developments. During January, System policy continued to be directed toward fostering recovery, while maintaining conditions in credit markets that would avoid unsustainable expansion. Beginning in February, however, and for the remainder of the year, as over-all demands mounted, as industrial output approached capacity and inflationary pressures appeared, measures were adopted to moderate the pace of credit expansion. Federal Reserve action sought to keep growth in bank credit consistent with growth in employment and production. Increased credit demands exerted increasing pressure on bank reserve positions, borrowed funds became less readily available, and interest rates rose. In pursuance of this policy of restraint on bank credit expansion, the Reserve System reduced its portfolio of United States Government securities slightly over the year. Commercial banks, in order to meet growing loan demands from their customers, had to sell a large amount of Government securities to nonbank holders. These banks also increased both the frequency and magnitude of their borrowing from the Reserve Banks. The fact that the banks found it necessary to borrow to meet loan demands in itself imposed some restraint on their lending activity. This restraint was reinforced by successive increases in the discount rates charged by Federal Reserve Banks on member bank borrowing. For the year 1955 as a whole, the rise in total loans and investments of commercial banks amounted to approximately $4.5 billion or about 3 per cent—a smaller expansion than in 1954. Loans and investments, excluding United States Government securities, rose by $12 billion or 15 per cent—the largest growth in any year since 1950. Through sales and run-offs at maturity, bank holdings of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

6 ANNUAL REPORT OF BOARD OF GOVERNORS Government securities were reduced by $7 billion, mainly in shortterm issues. This shift from Government securities to business and consumer loans caused a decline in bank liquidity, which in turn worked to restrain bank lending. Like the increase in total bank credit, the rise in the active money supply, namely, the demand deposit and currency holdings of consumers and businesses, was moderate. For the year, the money supply rose about $3.2 billion or 2.5 per cent. The turnover of demand deposits outside leading financial centers, however, rose from 19.2 times a year in 1954 to 20.4 times, or by 6 per cent, reflecting more active use of existing money. Deposit turnover in financial centers was also faster than in 1954. As compared with 1954, the increase in time deposits in 1955 was much less at commercial banks and slightly less at mutual savings banks. Growth in savings and loan shares was somewhat greater than in the preceding year. Nonbank sectors of the community, particularly business corporations, State and local governments, Federal pension and trust funds, and Individuals, added substantially to their holdings of United States Government securities, including the short-term issues sold by banks. This shift in ownership of Government securities represented a reversal of developments in 1954 when commercial banks added appreciably to their holdings of Government securities by market purchases from nonbank holders while increasing loans only moderately. Nonbank lenders also extended more credit to private borrowers in 1955 than in previous years. Especially sharp was the rise in mortgage and consumer credit. Although policy actions of the Federal Reserve in 1955 tended to produce a gradually increasing degree of restraint over much of the year, most of the System's open market operations, including occasional repurchase agreements with dealers in Government securities, sought to moderate the impact of seasonal factors on the money market. In January and February the System sold, or allowed to mature without replacement, $1.3 billion of United States Government securities. This was mainly for the purpose of absorbing reserves made available by the seasonal return of currency from circulation and the reduction in required reserves associated with the seasonal deposit decline. Because of the strong credit demand, some additional member bank borrowing from the Reserve Banks Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 7 resulted. Borrowings, which averaged about $300 million in December 1954 and January 1955, increased to $500 million in March and April 1955. This change reflected a shift in the emphasis of Federal Reserve operations from ease toward moderate restraint. During the second quarter of the year Federal Reserve operations in the Government securities market had little net effect on reserves, and there was little net change in commercial bank reserve positions. In recognition of the rise in market rates of interest that had been occurring since the summer of 1954, the Federal Reserve Banks raised their discount rates in April from IV2 to 1% per cent. In late March the Federal Reserve Bank of New York began to purchase bankers' acceptances on a small scale for its portfolio. These purchases, the first since 1951 for Federal Reserve account, were made in recognition of the increasing use of bankers' acceptances by banks and businesses and their potential importance to financing international trade. The Board of Governors raised margin requirements for purchasing and carrying listed securities from 50 to 60 per cent in early January and to 70 per cent in late April. The volume of stock market credit, which had risen sharply from early 1954 through the spring of 1955, thereafter expanded but little. In the early part of July, the System purchased Government securities to supply banks with reserves to meet temporary seasonal needs, including Treasury borrowing in the market. From late July to late September, the System's holdings of securities declined and member bank borrowing from the Reserve Banks rose in September to a daily average level of about $850 million, as compared with an average of $400 million in June. In the first half of August, discount rates were raised from 1% to 2 per cent at 11 Reserve Banks and to 2lA per cent at the Federal Reserve Bank of Cleveland. The 2lA per cent rate was established at all the Reserve Banks by mid-September. Thus in this period restraint on bank credit expansion was firmed. In late September, the System resumed purchases of Government securities. Between that time and the year-end more than $1 billion had been added to the Federal Reserve portfolio of securities, of which about $400 million were securities acquired under repurchase agreements. These operations offset seasonal drains on bank re- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

8 ANNUAL REPORT OF BOARD OF GOVERNORS serves and did not ease the money market. In mid-November, restraint on bank credit expansion was again strengthened by a further increase in discount rates to 2V2 per cent at all Federal Reserve Banks. During the year, outright purchases of Government securities by the Federal Reserve were confined almost entirely to Treasury bills. At the end of November, however, the System entered into commitments to purchase $167 million of new Treasury certificates when issued on December 8. The specific occasion for an acquisition of certificates rather than Treasury bills was to facilitate a large-scale Treasury refunding operation at a time of stringent money market conditions not foreseen when the terms of the Treasury refunding were decided upon. Another unforeseen circumstance was the need of many holders of the maturing issues for cash which made them indifferent to the terms of the exchange offering. Toward the close of the year, as is usual, additions to the System's portfolio consisted of temporary purchases of securities under repurchase agreements with dealers in Government securities. The purpose of these purchases was to moderate the effect on the money market of the exceptionally heavy volume of business and financial payments at the year-end. Reserves also became available about this time through an unusually large and sustained seasonal increase in Federal Reserve float—that is, through credits to the depositing banks" reserve accounts for checks still in process of collection through the Reserve Banks. At the year-end, the money market continued firm in tone because of the large demands for liquidity, the temporary nature of some of the reserve funds available to the market, and the effect of higher discount rates in keeping down member bank borrowings. Thus, the System's policy of restraint remained in effect. ECONOMIC CONDITIONS The expansion in economic activity that got under way after mid-1954 continued throughout 1955. At the year-end, output and employment were at new record levels. Operations in some key industries were up against capacity limitations and some materials were in short supply. Strong demands in the United States, and also abroad, led to increased prices of industrial materials and finished products, particularly after midyear. Prices of farm products, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM however, declined further under the pressure of record supplies. Average consumer prices at the year-end were only slightly higher than a year earlier. Demand and production. The value of total output of goods and services in the United States was $387 billion in 1955 as compared with $360 billion in 1954 and a previous high of $365 billion in 1953. Most of the increase represented a gain in physical volume. In the fourth quarter of 1955 the gross national product was at an annual rate of $397 billion, $30 billion or 8 per cent larger than a year earlier and $40 billion or 11 per cent larger than in mid-1954. The advance mainly reflected expansion in consumer and business demands as total government spending changed little. GROSS NATIONAL PRODUCT Billions of dollars, annual rate 260 — 420 220 - 380 CONSUMPTION EXPENDITURES 180 - - GOVT. PURCHASES — 300 — — 80 - PRIVATEINVESTMENT -— 40 1 I ! 1 1 1951 1953 1955 1951 1955 NOTE.—Department of Commerce quarterly estimates, adjusted for seasonal variation. Private investment includes expenditures for residential and other construction, producers' durable equipment, inventory change, and net foreign investment. Government purchases include Federal and State and local purchases of goods and services, but exclude government interest and transfer payments. Initially, the major stimuli to recovery after mid-1954 were sharp expansion in consumer outlays for automobiles and other durable goods, continued advances in purchases of new homes, and a shift from liquidation to moderate accumulation in business inventories. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

10 ANNUAL REPORT OF BOARD OF GOVERNORS These accounted for $13 billion of a total rise of $16 billion in gross national product from the third quarter of 1954 to the first quarter of 1955. After early 1955 the upward impetus came principally from a turnaround in business spending for fixed capital and from a rise in consumer spending for nondurable goods and services. State and local outlays for goods and services continued to rise. Inventory accumulation increased. Spending for consumer durable goods and new houses continued to rise through the third quarter and then declined. On the whole, the types of spending that were responsible for most of the initial expansion in gross national product accounted for only a small part of the subsequent gains. For the year, consumer expenditures were up 7 per cent from 1954, with outlays for durable goods, nondurable goods, and services all at record levels. Population increased by 2.8 million persons or 1.7 per cent, about the same rapid rate as in most postwar years. With average consumer prices little changed, growth in per capita real takings of goods and services in 1955 was large. Dramatic features of the year's developments were the increase in outlays for consumer durable goods, particularly automobiles, and the associated record expansion in outstanding consumer instalment credit. Markets for residential real estate were active throughout 1955. The number of private nonfarm dwelling units started was slightly in excess of 1.3 million, as compared with 1.2 million in 1954 and a record 1.4 million in 1950. After allowance for seasonal influences, the number of units started fell off after midyear, and at the year-end was at an annual rate of 1.2 million. The value of residential construction activity, after rising by almost 50 per cent from early 1954 to the summer of 1955, subsequently declined. With residential and other construction activity in record volume and important materials in short supply, prices of building materials rose further in 1955. The rapid expansion in home building that began early in 1954 was stimulated in part by relaxation in mortgage terms. After the spring of 1955, the availability and terms of mortgage credit, particularly for new commitments, became somewhat less easy. Also, permissible terms on Federally underwritten loans were made less easy in the spring and summer and shortly thereafter some limita- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 11 tion was placed on borrowing by savings and loan associations from Federal home loan banks. Although the rate of mortgage extensions leveled off late in the year, mortgage lending on new and old homes was in unprecedented volume for the year as a whole. Outstanding mortgage debt on 1- to 4-family housing units increased by $13 billion as against $9.6 billion in 1954. Accumulation of nonf arm business inventories amounted to about $3 billion in 1955, after a liquidation of like amount in 1954. A greater rise in book value of inventories represented in large part the effects of rising prices. The bulk of both the expansion and the earlier contraction was in durable goods lines. Business sales advanced more rapidly than book value of inventories, and ratios of inventories to sales during most of the year were around the lowest levels since early 1951. In the fourth quarter, accumulation of inventories increased to a seasonally adjusted annual rate of $5 billion, partly reflecting a more than seasonal build-up in dealers' stocks of 1956 model automobiles. New orders received by manufacturers in the closing months of 1955 were maintained on an unusually high plateau and unfilled orders continued to increase. Business expenditures for fixed investment were an important expansive factor after early 1955. For the year, such outlays were 8 per cent larger than in the preceding year and 2 per cent larger than the record amount of 1953. All major nonfarm industry groups spent more on plant and equipment in 1955 than in 1954, with outlays by commercial enterprises showing an exceptionally great increase. Late in the year, expanded investment programs were announced in a number of important industries. In contrast with private expenditures, Federal purchases of goods and services were relatively stable in 1955. Federal outlays for national security programs were close to an annual rate of $41 billion as compared with a peak rate of $53 billion in mid-1953. At the end of 1955, the proportion of total output taken by national security programs was about 10 per cent as compared with 14.5 per cent in mid-1953. State and local outlays continued their steady postwar growth, with increases in both construction expenditures and compensation of employees. Industrial production. Output at factories and mines for the year 1955 exceeded the earlier high of 1953. By spring industrial output had recovered to the mid-1953 high of 137 per cent of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

12 ANNUAL REPORT OF BOARD OF GOVERNORS 1947.49 average—a rise of 11 per cent from the mid-1954 recession low. With output in a number of lines approaching capacity and with some materials in short supply, expansion in industrial production after the spring was more moderate. In December the Board's seasonally adjusted production index, at 144, was at a record high. Expanding production of autos and household appliances in late 1954 and early 1955 was a major factor in the rise in total output. Following the fall changeover to 1956 models, auto output recovered to earlier record rates, and dealers' stocks were built up rapidly. After mid-December, curtailment of auto assemblies brought output somewhat below the level at the beginning of the year. Auto output for the year totaled almost 8 million—1.2 million above the previous high in 1950—and domestic sales amounted to 7.4 million units. Production of household durable goods advanced to a peak in September and subsequently declined. Altogether, seasonally adjusted production of consumer durable goods in December was 147 per cent of the 1947-49 average as compared with an autumn high of 154 and a 1954 monthly low of 110. Pressure on supplies of metals and some other materials developed when business outlays for new plant and equipment turned up sharply in the spring of 1955, after a period of decline, and production of building materials reached capacity levels. Output of steel and some nonferrous metals was limited in the summer by work stoppages and other factors. It rose to new highs in the autumn, and steel ingot output for the year totaled 117 million tons, 5 per cent above the previous record of 1953. Activity in producers' equipment industries was generally rising through the summer and autumn. At the year-end, despite marked recovery in output, order backlogs were substantial for freight cars, machine tools, generating equipment, and other business equipment. Total durable goods production was at a new high of 161 per cent of the 1947-49 average toward the end of 1955. Despite sharply reduced defense production, this was somewhat above the mid-1953 level. Strength in consumer markets and rising business demands led to further expansion in nondurable goods production in 1955. Increases were sharp for paper, chemicals, and rubber products until capacity limitations were approached. Increases in textiles, apparel, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 13 SELECTED BUSINESS INDEXES Per cent, 1947-49=100 180 PRODUCTION OF MANUFACTURES 160 CONSTRUCTION ,/V ACTIVITY / 120 100 160 NONAGRICULTURAL EMPLOYMENT DISPOSABLE PERSONAL INCOME 140 RETAIL SALES 120 OTHER 100 WHOLESALE PRICES CONSUMER PRICES INDUSTRIAL TOTAL 120 FOODS - 100 •/' FARM PRODUCTS 1 1 ! 1 V 80 1951 1953 —19^5r^5 1951 1953 1955 NOTE.—Monthly series, seasonally adjusted except for prices. Indexes for retail sales and disposable personal income based on Department of Commerce data. Indexes for prices and employment based on Bureau of Labor Statistics data. Index for construction activity in constant prices based on Commerce and Labor data. Index for industrial production is Federal Reserve series. and leather products were more moderate. At year-end, over-all output of nondurable goods was at a new high of 130 per cent of the 1947-49 average. Output of minerals also reached a new peak, partly in response to strong demands from manufacturers of metal products and building materials. Fuels were also in strong demand during the year, with severe weather at the year-end further heightening demands and stimulating output of coal and petroleum. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

14 ANNUAL REPORT OF BOARD OF GOVERNORS Agriculture. Agricultural developments in 1955 continued to be dominated by large supplies and downward pressures on prices and income. Prices of farm products declined 7 per cent from December 1954 to December 1955 and, with farm costs at advanced levels, net income from farming for the year was off 10 per cent from 1954. Farm land values, however, rose somewhat to a new high. Commodity Credit Corporation holdings of commodities under the price-support program increased further in 1955. Agricultural exports were a little larger than in 1954. Total farm output was in record volume in 1955. Production of livestock products was 3 per cent larger than in 1954 and crop output was up 4 per cent, notwithstanding acreage limitations and large carryovers of major crops. Increases in marketings were pronounced for meat animals, feed crops (where acreages were expanded), and cotton (where further restrictions in acreage were more than offset by sharply higher yields). Production of wheat and rice was reduced somewhat. Price-support levels for a number of crops were reduced in 1955. In the last quarter of the year, meat production was about 10 per cent above the corresponding quarter of 1954. Output of dairy products and eggs increased little during the year, although prices were up somewhat and feed costs much lower. A moderate increase in farm land values, reflecting in part purchases by established farmers to enlarge their operations, was accompanied by a 10 per cent rise in farm mortgage debt. Production loans to farmers also rose by about 10 per cent. Price-support loans declined. Labor market. The labor market strengthened during 1955. Nonfarm employment rose to a new high, unemployment was reduced, and overtime work was widespread in manufacturing industries. Growth in the labor force was large. Nonfarm employment rose sharply in the first half of the year and less rapidly thereafter. It exceeded 50 million in December, a new high and 1.8 million more than a year earlier. In most nonmanufacturing activities employment was at record levels, but manufacturing employment had not reattained its mid-1953 peak. The workweek in manufacturing tended to lengthen throughout the year and in December, at more than 41 hours, was about as long as at any time in the postwar period. Employment on farms Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 15 averaged 6.7 million in 1955, slightly more than in either of the preceding two years. Unemployment, after allowance for seasonal influences, declined during the first half of 1955 and then remained relatively stable. The number unemployed in December, 2.4 million, was 400,000 below a year earlier. For the year, unemployment averaged 2.7 million persons or 4 per cent of the civilian labor force, and was moderately below the 1954 average. The labor force (including the armed forces), however, was 1 million larger than in 1954. Wage rates rose throughout the year, but more rapidly after midyear following collective bargaining agreements in major industries. Gains were largest in the manufacturing industries, particularly in the metal producing sectors, but substantial wage increases also were granted to Federal Government workers, bituminous coal miners, railroad workers, and others. Average weekly earnings in manufacturing in December amounted to almost $80, a record sum and 8 per cent higher than a year earlier, while hourly earnings were up 5 per cent. In addition to wage increases, many workers gained liberalized health, welfare, and pension programs. Supplementary unemployment benefits were negotiated for the first time in the automobile and some other industries. Prices. Reflecting strong demands and a high degree of resource utilization, upward price pressures predominated in industrial markets; in contrast, large supplies resulted in further price declines in agricultural markets. Consumer prices, reflecting both of these major influences, were slightly higher after midyear. Average prices of industrial commodities, including finished products, changed little in the first half of 1955 and advanced considerably in the second. Industrial materials as a group rose 4 per cent in the last six months of the year. Steel mill products were raised 7 per cent at midyear and some further advance occurred toward the year-end. Prices of lumber, other building materials, paper products, and fuels increased during the year, while prices of textiles and chemicals changed little. With the increase in prices of materials and other costs, further expansion of demands in the second half of 1955 was accompanied by a rise of 3 per cent in average wholesale prices of finished industrial products. Advances were general for business equipment, which rose 5 per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

16 ANNUAL REPORT OF BOARD OF GOVERNORS Prices of farm commodities declined further after the spring and at the year-end were 7 per cent below a year earlier. With marketings of livestock, particularly hogs, considerably expanded, average farm prices of meat animals declined about one-fourth during the year. Consumer prices were stable in the first half of 1955 and rose slightly in the second half of the year. Retail meat prices declined but other foods generally changed little. Retail prices of many other commodities tended higher after midyear, but competitive pressures remained strong and effective prices of some durable goods declined. Prices of consumer services rose further. Income and saving. Expansion in 1955 was supported by further growth in consumers' spendable income. In the fourth quarter, disposable income was at an annual rate of $277 billion, an increase of 7 per cent from late 1954. Real disposable income per capita also rose to a new high. Consumer spending increased even more than incomes and outstanding consumer debt expanded rapidly. Net personal saving, both in dollar amount and as a percentage of disposable income, declined further in 1955 and was lower than for any year since 1950. In the fourth quarter, however, personal saving increased. Personal income advanced without interruption in 1955 and in the fourth quarter was at a seasonally adjusted annual rate of $312 billion, 7 per cent higher than a year earlier. All major types of income participated in the advance, except for farm proprietors' income, which declined for the fourth successive year. Total wage and salary income rose substantially, reflecting increases in employment, average weekly hours, and wage rates. Government transfer payments changed little during the year as payments under the old-age and survivors insurance program continued to rise while unemployment compensation benefits fell off. Dividend and interest income rose considerably further in 1955. Extra dividends at the year-end were large. Rental income leveled off. Reflecting recovery in retail trade and continued growth in services, income of nonfarm proprietors advanced appreciably. Corporate profits before tax increased sharply to a new high, and after-tax profits also rose. Debt and equity financing. Consumer and business demands for credit pressed on the supply of available funds in 1955. Record volume Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 17 of expenditures for home construction and automobiles was accompanied by sharp increases in demands for mortgages and instalment loans, while rising business activity and plant and equipment outlays resulted in greater business needs for bank credit and in a larger volume of corporate security offerings. With the flow of new savings into major financial institutions increasing at a slower rate than in 1954, and with monetary restraint limiting the expansion of bank reserves, lenders were under pressure to allocate available funds among competing demands. Most financing institutions found it necessary to borrow or reduce liquid asset holdings in order to meet commitments to customers. Insurance companies, heavily committed to mortgage lending throughout the year, met their obligations in part through curtailment of other lending activities and to some extent through temporary financing arrangements with commercial banks. Savings and loan associations expanded the volume of their real estate lending by more than the net inflow of new share purchases; the excess was financed through advances from Federal home loan banks and through drawing down of deposits at these banks by member associations. Mutual savings banks, with a somewhat smaller deposit increase than in 1954, reduced their holdings of other types of investments in order to increase their mortgage portfolios. Financing of real estate activity, which absorbed such a large part of institutional funds in 1955, added $16.7 billion to private debt, as compared with an expansion of $12.5 billion in 1954. Most of the increase was in mortgages on smaller residential properties, but there was also a substantial rise in loans on commercial properties, apartment houses, and similar structures. About half of the housing units started in 1955 were financed through Federally underwritten loans, which rose more rapidly than conventional loans for most of the year. The less easy terms applied to Government guarantee of home mortgage debt were followed by some slackening in demand for Government aided financing. At year-end well over two-fifths of the home mortgage debt outstanding was guaranteed or insured by the Federal Government. Consumer credit rose by more than $6 billion for the year, as compared with an increase of less than $1 billion in 1954 and an average of about $3 billion in earlier postwar years. Instalment loans, particularly for automobile purchases, accounted for most Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

18 ANNUAL REPORT OF BOARD OF GOVERNORS of the increase. Lengthening of maturities, smaller down payments, increased size of notes, and a growth in the proportion of sales involving credit all contributed to the rise in automobile credit. Most of the rise occurred before autumn; by then repayments began to approach the volume of new credit extensions. At the same time, increased lender caution was reflected in some stabilization of credit terms and more careful screening of loan applicants. Some* $4 billion of the expansion in consumer credit came from lenders other than commercial banks, particularly sales finance companies that borrowed substantial amounts from banks as well as through capital markets. Business requirements for short- and intermediate-term funds increased in 1955. Net borrowing from commercial banks by domestic businesses other than sales finance companies totaled $4.6 billion as compared with net repayment of $700 million in 1954. Business needs for long-term funds to finance capital outlays also increased in 1955. Flotations of corporate securities for new capital by industrial corporations and public utilities were some 8 per cent greater than in 1954. However, retirement of securities was unusually large, and as a result the net change in outstanding corporate issues (other than those of sales finance and investment companies) was one-seventh less than in 1954. For most industries, internal sources continued to provide the bulk of long-term funds. Corporate profits for the year were about a quarter larger than in 1954. Depreciation and related charges were at record levels in 1955. Dividend payments also rose but outlays for tax payments declined, and the amount paid out for these two purposes was about the same as in 1954. The increase in funds available from operations, together with new borrowing, exceeded the rise in outlays for fixed capital and inventories. There was a very large accumulation of corporate liquid assets, in part to provide for larger tax payments in 1956. In some areas, private demands for credit were more moderate in 1955 than the year before. The expansion in stock market credit was limited by two Board actions early in the year raising margin requirements. Bank loans to finance the purchase or carrying of securities rose $500 million for the year as compared with an increase of $900 million in 1954. Bank loans to farmers declined in 1955. A reduction of $1.3 billion in price-support loans held by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 19 GROWTH IN MAJOR TYPES OF DEBT AND EQUITY FINANCING [Net increase in amounts outstanding, in billions of dollars] Distribution of growth by— 1955* 1954 1953 1952 Major types: Federal cash borrowing 0.2 0.9 4.6 3.4 State and local government issues («*et) 5.1 5.4 3.9 3.2 Real estate mortgages 16.7 12.5 9.8 9.0 Corporate bond and stock issues (net)1 4.8 5.6 5.4 7.1 Bank loans to business2 4.6 -0.7 -0.1 1.5 Consumer credit by banks and other lenders 6.1 0.6 3.7 4.4 Bank loans not included above2.... 1.7 2.4 1.3 1.6 Selected holders: Federal Reserve Banks - .3 -0.9 1.2 0.9 Commercial banks 4.6 10.1 4.0 8.9 Nonbank holders— Mutual savings banks. 2.0 2.0 1.8 1.7 Savings and loan associations.... 5.8 4.3 3.8 3.0 Life insurance companies 5.5 5.1 4.5 4.4 9 Preliminary. 1 Excludes funds obtained by consumer finance companies and investment companies. 2 Excludes funds obtained by sales 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. 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. commercial banks more than offset a rise in bank holdings of farm mortgages and farm production loans. Loan demands from Federal, State, and local governments did not add greatly to pressures in credit markets. Net borrowing by State and local governments was slightly less than in 1954. New security offerings declined, particularly for toll-road financing. Borrowing for school construction and other local needs continued in about the same large volume as in the previous year. Treasury finance. Increasing tax revenues permitted the Federal Government to come within $1 billion of balancing the cash budget Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

20 ANNUAL REPORT OF BOARD OF GOVERNORS in the calendar year. Federal cash income from the public in 1955 was $71.3 billion, and cash payments to the public $72.1 billion. By drawing down deposits at commercial and Federal Reserve banks, net Treasury cash borrowing requirements were reduced from $900 million in 1954 to only $200 million in 1955. Reduction of the cash deficit was accomplished despite an increase in cash expenditures of nearly $3.2 billion. The higher level of expenditures resulted from substantial increases in certain nondefense expenditures over 1954, with the largest increases occurring in the farm price-support and the social security programs. These increases were partly offset by a further decline in national security outlays. The increase in Federal tax receipts in 1955 was most pronounced in individual income taxes. There were also substantial increases in excise and social security taxes, the latter due in part to expanded coverage and a higher wage base under the 1954 law first effective in 1955. Corporate tax collections were lower, reflecting the lower level of profits the year before. Federal receipts continued to be largely concentrated in the first half of the year, owing largely to the timing of corporate tax payments. A cash surplus of $6.1 billion during the January-June period permitted $5.0 billion of net cash debt repayment, while the second half-year cash deficit of $6.9 billion led to $5.2 billion of net cash borrowing. During 1955 the Treasury refunded nearly $40 billion of maturing securities, a total exceeded only by the 1954 record of more than $50 billion. As in 1954, refundings were limited to one each quarter, with the two largest occurring in February and December. Total Treasury cash offerings in 1955 were $14.5 billion, including a $1.3 billion increase in Treasury bills. More than two-thirds of this new cash financing was in the form of tax-anticipation securities of which $8 billion were outstanding at the year-end. Cash borrowing was undertaken to cover the calendar-year deficit, to repay maturing tax anticipation securities, to meet attrition on refundings, and to provide for net redemptions of nonmarketable securities. Additional funds were also obtained by drawing down the Treasury's cash balance. Net redemptions of savings bonds remained small. About $4.5 billion of savings notes matured and were redeemed in 1955; there has been no new issue of such notes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 21 since 1953. Reflecting competing demands from other borrowers and restraint on the availability of bank reserves, the rate of attrition on total Treasury refundings increased to more than 10 per cent of maturing issues held outside the Federal Reserve System. In absolute terms attrition was more than $1 billion larger than it had been on 1954's greater volume of maturities. With business moving to new high levels in 1955, the Treasury again sought to extend the maturity structure of the Federal debt through the flotation of a new 40-year bond. In several refundings and cash offerings the Treasury offered securities with intermediate maturities. As a result of these actions, the volume of marketable debt maturing within one year continued to decline in 1955, reducing the proportion of such debt from 40 to 37 per cent; the share of maturities exceeding 20 years was raised from 1 to 3 per cent. In general, however, intermediate offerings were of shorter maturity than they had been in 1954. The proportion of debt in the 1- to 5-year maturity category rose, while that in the 5- to 20-year range declined. Interest rates. Interest rates, which had risen somewhat late in 1954, continued to rise in 1955 in response to the strong demand for credit relative to the available supply of savings and the limited growth of bank reserves. The largest increase was in yields on shortterm securities, which were particularly affected by the vigorous demand for short-term credit and the growing pressure on bank reserve positions. At the end of the year, most short-term rates were at the highest levels in more than 20 years. Yields on long-term securities were only slightly above short-term rates at the end of 1955, as shown by the chart on the following page. Yields on short-term Treasury securities, after increasing about Vi percentage point in the second half of 1954, increased about IV2 percentage points during 1955. In the first half of the year the rise in the Treasury bill rate was moderated by strong demand on the part of nonbank investors, particularly nonfinancial corporations and State and local governments. The demand was intensified by maturities of nonmarketable savings notes and seasonal retirements of marketable tax anticipation securities. In the second half of the year, however, rates on Treasury bills advanced sharply, despite continued nonbank demand, as reserve pressure continued and the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

22 ANNUAL REPORT OF BOARD OF GOVERNORS INTEREST RATES Per cent per annum COMMERCIAL PAPER TREASURY BILLS 1952 1953 1954 1955 NOTE.—Discount rate is for Federal Reserve Bank of New York. Market yield data are weekly averages of daily figures. Treasury bill rates are market yields on longest bills. Long-term U. S. Government yields are on long-term 2V2 per cent bonds. Commercial paper rate is on prime 4- to 6-month open market paper. Yields on corporate and State and local Aaa bonds are from Moody's Investors Service. Treasury increased its issues of bills and tax anticipation securities. At the end of 1955 market yields on both 3-month Treasury bills and 9- to 12-month certificates of indebtedness exceeded the Federal Reserve Bank discount rates. The average yield of 2.58 per cent on bills for the week ending December 31 compared with 1.08 per cent a year earlier and a low of 0.61 per cent in mid-1954. The peak in mid-1953 had been 2.29 per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 23 Yields on intermediate-term Treasury bonds and notes also rose sharply prior to mid-1955 in response to pressure on bank reserve positions, but after midyear they rose at a slower rate than yields on shorter term securities. Rates on other short-term open market paper, which had remained unchanged or declined slightly in the second half of 1954, followed the increase in yields on Treasury securities closely during 1955. Rate increases totaled more than IV2 percentage points on prime commercial paper and privately placed finance company paper, and somewhat less on bankers' acceptances. At the end of the year these rates were at new highs for recent years. Yields on long-term securities generally increased about lA percentage point during 1955. Those on United States Government and State and local government bonds had increased somewhat late in 1954, while those on corporate bonds had changed little. After an increase in the first quarter of 1955, long-term yields were generally stable in the second quarter. They increased further after midyear and, after declining in September and October, rose at the year-end to levels near or above their summer peaks. At the close of 1955 yields on long-term securities were close to those prevailing in late 1953 and early 1954, but were generally lA to Vi percentage point below their mid-1953 highs. Over the year the differential between yields on Treasury bills and long-term United States Government bonds declined from more than IV2 per cent to less than Vi per cent, the smallest differential since 1930. Interest rates charged customers by commercial banks and other lenders increased during 1955. The average rate charged by commercial banks on short-term business loans rose almost V2 percentage point. Rates charged by lenders on conventional mortgages also increased and discounts deepened on Federally underwritten mortgages. BANK CREDIT AND MONEY A declining rate of growth in total bank credit and deposits in 1955 reflected growing pressure on bank reserve positions. Bank loans and investments. Aggregate loans and investments of commercial banks increased $4.5 billion or 3 per cent during 1955. A record loan expansion of $11.6 billion was offset in large part by a decline in bank holdings of United States Government securities, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

24 ANNUAL REPORT OF BOARD OF GOVERNORS as the accompanying table shows. The rate of growth of total loans and investments was about equal to that in 1953 but less than half as high as in 1954. In 1954 loans had increased only $3 billion but holdings of United States Government and other securities had increased more than $7 billion. LOANS AND INVESTMENTS OF COMMERCIAL BANKS [In billions of dollars] Out- Increase, or decrease (—) Type of loan or investment standing, Dec. 31, 1955* 1955* 1954 1953 Loans and investments, total 160.2 4.5 10.2 4.1 U. S. Government securities 61.7 - 7.3 5.6 0.1 Other securities 16.5 0.2 1.6 0.5 Loans, total 82.0 11.6 2.9 3.4 Business 33.1 6.2 - 0.3 - 0.7 Real estate 20.8 2.4 1.7 1.0 Agricultural 4.4 - 0.8 0.2 1.0 Security 5.0 0.5 0.9 0.4 Consumer 12.7 2.0 - 0.2 1.5 Other 7.2 1.4 0.7 0.2 9 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. An expansion of more than 20 per cent or $6 billion in business loans accounted for about half of the growth in total bank loans in 1955. This expansion, the largest percentagewise since 1950, contrasted with declines in 1953 and 1954. About $1.3 billion of the growth during 1955 was in loans by city banks to sales finance companies, which were borrowing mainly to finance consumers and dealers in consumer durable goods. Banks also increased their loans to most other business groups, including the petroleum and chemical industries, public utilities, and the metal, textile, trade, and construction groups. Business loans of commercial banks increased $2 billion in the first half of 1955, compared with declines in the corresponding period of the preceding three years. Seasonal repayments of bank loans by food processors and commodity dealers totaling $1 billion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 25 were more than offset by increases in loans to most other groups of businesses. In the second half of the year the increase in business loans totaled about $4 billion as seasonal borrowers added their demands to the continued heavy demands of other groups. Real estate loans of commercial banks expanded $2.4 billion during 1955. The 13 per cent rate of growth for the year was about the same as in the second half of 1954 and the highest for a full year since 1950. Expansion in 1955 reflected the purchase of mortgages on a temporary basis from insurance companies and other nonbank investors as well as substantial direct lending by banks. Late in the year real estate loans at city banks decreased somewhat, probably in part as a result of the resale of some mortgages previously acquired from nonbank investors under repurchase agreements. In addition to lending a large amount to sales finance companies, commercial banks increased their own holdings of consumer loans $2 billion or almost 20 per cent. Such loans had changed little during 1954. A decline in agricultural loans of banks during 1955 reflected redemption of publicly issued Commodity Credit Corporation certificates of interest. Other agricultural loans increased. Security loans increased considerably less in 1955 than in the preceding year. About two-thirds of the increase in commercial bank loans in 1955 was offset by sales of United States Government securities totaling $7.3 billion. The 10 per cent decline in holdings was the largest for a calendar year since 1946. About $5.7 billion of the reduction was in the first six months of the year, when the Treasury used a seasonal surplus to retire more than $5 billion of publicly held debt. During this period the Federal Reserve Banks were also selling securities, while nonbank investors were increasing their portfolios. Commercial banks reduced their Government security portfolios further in the second half of the year despite the seasonal increase in the public debt. Bank holdings of Government securities had changed little in the first half of 1954 and increased $5.5 billion in the second half. Most of the reduction in bank holdings of United States Government securities was in short-term issues. Securities maturing within one year, which had been reduced from 45 to 25 per cent of bank portfolios during 1954 largely as the result of Treasury refunding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

26 ANNUAL REPORT OF BOARD OF GOVERNORS operations, had declined to about 15 per cent of their portfolios by the end of 1955. The decrease in holdings of short-term securities reduced bank liquidity and thus tended to discourage further bank sales of securities in order to expand loans. Commercial bank holdings of corporate and State and local government securities changed little in 1955. During 1954 banks had made net purchases of tax-exempt State and local government securities totaling nearly $2 billion. Although all classes of banks sold securities during the year, the reduction in holdings was particularly great on the part of New York City banks, which lost deposits to reserve city and country banks and also met a heavy loan demand. New York central reserve city banks reduced their holdings of United States Government securities almost 30 per cent during 1955, compared with an increase of 20 per cent in 1954. The reduction in holdings of Government securities by country banks was moderate. New York banks also reduced their holdings of securities other than United States Government securities, while country banks purchased such securities on balance. Bank reserve positions. Sales of securities by commercial banks during 1955 were in response to the growing pressure on bank reserve positions associated with the change from ease to restraint in Federal Reserve policy. Reserve positions, which had become less easy late in 1954, were under gradually increasing pressure in the first quarter of 1955. They changed little in the second quarter. Free reserves of member banks—that is, excess reserves less indebtedness to the Federal Reserve Banks—declined from an average of $600 million in the fourth quarter of 1954 to $150 million in the second quarter of 1955. After midyear reserve positions came under further restraint, and in the fourth quarter borrowings exceeded excess reserves by about $350 million. The growing pressure on bank reserves was reflected primarily in an increase in member bank borrowing but also in some reduction in excess reserves, as shown in the accompanying chart. Member bank indebtedness to the Federal Reserve Banks, which had averaged somewhat more than $150 million in the fourth quarter of 1954, exceeded $400 million in the second quarter of 1955. The bulk of the borrowing at this time was on the part of reserve city and country banks. In November average indebtedness to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 27 EXCESS RESERVES AND BORROWINGS Billions of dollars 2.0 1.6 1.2 V\ 1950 1951 1952 1954 1955 NOTE.—Data are monthly averages of daily figures of reserve balances held in excess of requirements and of borrowings at Federal Reserve Banks by all member banks. Federal Reserve Banks reached a total of more than $1 billion, the largest volume since the spring of 1953. Although borrowing declined in December, the average for the fourth quarter exceeded $900 million. Increases in aggregate indebtedness after midyear reflected mainly borrowing by central reserve city banks and reserve city banks. Excess reserves declined from $750 million in the fourth quarter of 1954 to $550 million in the corresponding period of 1955. Changes in bank reserve positions reflected the effects of Federal Reserve open market operations in United States Government securities together with other factors affecting reserves, as shown in the table on page 28. In general, open market operations offset the effects of major seasonal changes in currency in circulation and in required reserves, although reserve positions were permitted to come under increasing pressure over the year. Federal Reserve security purchases at the year-end, largely under repurchase agreements with dealers and brokers, were primarily for the purpose of relieving money market pressures at that time. The Federal Reserve portfolio of United States Government securities declined somewhat over the year, but the increase in cur- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

28 ANNUAL REPORT OF BOARD OF GOVERNORS CHANGES IN MEMBER BANK RESERVES WITH RELATED FACTORS [Based on monthly averages of daily figures; in billions of dollars] 6 months Year Item June Dec. Dec. Dec. 1955— 1954— 1954— 1953— Dec. June Dec. Dec. 1955 1955 1955 1954 Member bank reserves Total reserves. 0.5 - O.t - 0.6 Excess reserves... C1) - 0.1 - 0.1 Required reserves. 0.5 - 0.4 + 0.1 - 0.7 Effect of: Reduction in reserve requirement percentages - 1.6 Change in deposits 0.5 - 0.4 + 0.1 + 0.9 Principal factors affecting reserves (Signs indicate effect on reserves) Currency in circulation - 1.2 + 0.7 - 0.5 + 0.2 Treasury operations - 0.1 + 0.1 + 0.1 + 0.2 Gold stock and foreign accounts. <l) - 0.3 Federal Reserve float + 0.5 - 0.1 •f 0.4 P) Other factors - 0.1 - 0.1 P) Federal Reserve loans and investments: U. S. Govt. securities, total 1.0 - 1.3 - 0.3 - 0.7 Bought outright + 0.7 - 1.3 0.6 - 0.3 Held under repurchase agreements. + 0.3 0) 0.3 - 0.4 Discounts and advances: To member banks + 0.4 + 0.2 0.6 - 0.2 Toothers - 0.1 - 0.1 0.2 + 0.2 Acceptances 0) (2) 1 Less than $50 million. 2 No acceptances held. NOTE.—Details may not add to totals because of rounding. rency in circulation was the largest drain on reserves. Required reserves increased only slightly, as the effect of an expansion of demand and time deposits held by consumers and businesses was offset in part by a decline in United States Government deposits and a shift of deposits from banks with higher reserve requirements to those with lower reserve requirements. Federal Reserve float was somewhat larger during 1955 than a year earlier, and an unusually large seasonal increase in December temporarily supplied a substantial volume of reserves near the year-end. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 29 Deposits and currency. The growth of deposits and currency declined in 1955 from the rapid rate reached in the second half of 1954, when banks were using available reserve funds to expand holdings of securities. During 1955 demand deposits and currency held by consumers and businesses, which together constitute the active part of the money supply, increased $3.2 billion or 2.5 per cent. The expansion was somewhat less than that for 1954 as a whole, and the rate of growth was only about half the annual rate reached in the second half of that year, after allowance for usual seasonal developments. The active money supply had also increased about 2.5 per cent in the period of strong credit demand from mid- 1952 to mid-1953, as shown in the chart. DEMAND DEPOSITS AND CURRENCY Billions of dollars 140 130 ADJUSTED FOR 120 SEASONAL VARIATION 110 100 1950 1951 1952 1953 1954 1955 NOTE.—Figures are for last Wednesday of month and are partly estimated. Demand deposits are for all banks in the United States and exclude U. S. Government and interbank deposits and items in process of collection. Currency excludes bank vault cash. Data for second half of 1955 are preliminary. Demand deposits held by consumers and businesses increased $2.6 billion and currency expanded $0.6 billion during 1955. In 1954 the increase in demand deposits had been greater, but currency holdings of consumers and businesses had declined. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

30 ANNUAL REPORT OF BOARD OF GOVERNORS While expansion of the active money supply was moderate, an increase in its turnover contributed to the rising level of expenditures. The annual rate of turnover of demand deposits outside New York City rose from 21.1 in the last quarter of 1954 to 22.5 in the last quarter of 1955, an increase of almost 7 per cent. Most of the increase was in the first half of the year. Expansion of time and savings deposits in commercial and mutual savings banks and the Postal Savings System in 1955 was $3 billion, CHANGES IN DEPOSITS AND CURRENCY WITH RELATED FACTORS [In billions of dollars] Item 1954 Deposits and currency Demand deposits adjusted1. Currency outside banks2... Total. Time deposits adjusted3. U. S. Govt. deposits Total. + 5.5 + 9.0 (Signs indicate Factors affecting deposits and currency effect on deposits and currency) Bank loans and investments other than U. S. Govt. securities. Commercial.... Mutual savings. Bank holdings of U. S. Govt. securities Federal Reserve Commercial Mutual savings and other Gold stock and foreign deposits at Federal Reserve Banks. Foreign bank deposits, net, at commercial banks Other factors6 1 Excludes interbank and U. S. Government deposits and items in process of collection. 2 Excludes bank vault cash. 3 Commercial and mutual savings banks and the Postal Savings System. Excludes interbank and U. S. Government deposits. 4 Less than $50 million. 6 Includes bank capital, miscellaneous bank assets and liabilities, and differences between deposits due to and from banks. NOTE.—Changes are based on data for Dec. 31,1953 and 1954, and on preliminary data for Dec. 31, 1955. Figures may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 31 only about three-fifths as much as a year earlier. Reduction in the rate of growth was associated in part with less personal saving and more security purchases by individuals. The reduction was concentrated at commercial banks, where savings deposits increased less than half as much as in 1954. Deposit growth at mutual savings banks was almost as large as in the preceding year, probably in part because of increases in interest rates paid by savings banks in some areas. United States Government deposits declined $700 million during 1955, compared with a small increase in 1954. These deposits fluctuated sharply over the year in accordance with the pattern of Treasury receipts and expenditures. ECONOMIC AND FINANCIAL DEVELOPMENTS ABROAD Worldwide increases in economic activity in 1955 brought world production to record levels. In the industrial countries heavy demands were made on manpower resources, and in many lines of manufacturing and mining the rate of output required virtually full use of existing plant capacity. Credit restraints were needed to keep the growth of demand within the limits of productive capacity, to restrain the rise of prices, and to protect monetary reserves. Steady advances since 1953 in European employment and productivity, and in consumer income and demand, had led to rising expenditures for enlargement of European industrial capacity. Such expenditures were apparently still increasing in the second half of 1955, when capital expenditure plans and outlays in the United States were rapidly mounting. In response to enlarged investment demands, European production of steel and of capital goods continued to grow throughout 1955, within the limits set by the available productive resources. Most European countries experienced an exceptional spillover of domestic demand into buying of imports for several months at the end of 1954 and the beginning of 1955. United States exports responded vigorously to this rise in trade activity, with especially large increases in sales of steel, steel scrap, and coal. Subsequently, world trade remained at a record level, but expanded little through the summer. By the autumn of 1955, broadened pressure of world demand led to a further expansion of United States exports and at the same time United States imports rose very strongly. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

32 ANNUAL REPORT OF BOARD OF GOVERNORS European prices of scrap steel, copper, and rubber reacted somewhat by April or May from earlier peaks. In June and July, however, and also toward the end of the year, world prices of various industrial materials increased sharply again. Prices of industrial products as well as materials tended to rise in 1955, but further advances in prices of industrial products after midyear were smaller on the average in Europe than in the United States. On both sides of the Atlantic consumer prices tended to rise, though only slowly in most countries. Wage rates, however, continued to rise rapidly in many European countries, and in some countries appeared to be outrunning the gains in manhour productivity. In other parts of the world domestic price levels rose a little in many countries, but increases of more than a few per cent were uncommon. Moderation in the expansion of business and consumer credit, especially of credit provided through bank loans and investments, was the object of central bank and government action in many countries. Strong restraints were being enforced in several leading countries in Europe and elsewhere by autumn. Despite the difficulties that Great Britain and some other countries experienced with their external payment balances in 1955, the degree of freedom of international trade from direct controls was generally greater at the end of the year than at the beginning. In the course of the year a number of important steps toward convertibility of currencies were taken by the Organization for European Economic Cooperation and by individual countries in Western Europe. At the same time, the expansion of United States imports, which percentagewise was even more marked for manufactured goods than for most materials, demonstrated anew that the structure of international payments has remained favorable for further advances toward convertibility. Western Europe. Total industrial production advanced continuously through the year, but as the margin of unutilized manpower and industrial capacity diminished, the rate of increase in output slowed. The year-to-year increase narrowed from 10 per cent in the first quarter of 1955 to 7 per cent in the fourth quarter. Seasonally adjusted indexes show that from May to the end of the year no significant enlargement of total industrial production occurred Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 33 in Great Britain, while Continental output advanced at a reduced average rate under 5 per cent per annum. The most rapid gains in output, both of capital goods and of consumer goods, were those of West Germany. Production increased rapidly also in France and Italy. INDUSTRIAL PRODUCTION 1953-55=100 RRaattiioo scale 1 i 1 1 1 120 - - •- no WESTERN EUROPE^ UNITED STATES^*-* / - IOO ~\ / / -- 90 - V - 1 1 1 ! 70 1950 1951 1952 1953 1954 1955 NOTE.—Seasonally adjusted figures for physical volume of production. Federal Reserve data for United States, monthly. Organization for European Economic Cooperation index for Western Europe, covering member countries, quarterly through 1951 and monthly thereafter, shifted to 1953-55 base; October and November 1955 partly estimated by Federal Reserve. Consumer prices increased 2 per cent over the year in Germany, 1 per cent in France, and 6 per cent in Britain. These increases were due less to advances in prices of nonfood manufactured goods than to rising prices of services and of domestically produced foods; in Britain upward adjustments of fuel prices were also significant. An effective brake on internal price advances was provided by the relatively liberal exchange control policies of all leading European countries in 1955. Belgium, the Netherlands, Switzerland, and Greece had few direct restrictions on imports. Restrictions in other countries on imports from the dollar area and other sources were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

34 ANNUAL REPORT OF BOARD OF GOVERNORS further relaxed in a number of cases, including cuts in German restrictions on dollar imports and in British restrictions on imports from the rest of Europe. Positive measures to resist inflationary pressures, and to obtain relief from balance-of-payments difficulties by restraining the growth of demand, were taken in a number of countries. The Bank of England's discount rate was raised in January and February from 3 per cent to AlA per cent. Loans of British commercial banks continued to rise until midyear. In July credit restrictions were intensified and banks were asked to reduce their loans. An extraordinary budget was adopted in the autumn; certain taxes were increased, more than offsetting the tax reductions made in the spring, and actions were taken to reduce Government subsidies for public housing and Government loans to local authorities. By the year-end, although industrial prices had risen about 5 per cent, bank loans including nonindustrial credit were reduced to about the endof-1954 level. In May the German central bank was enabled to undertake restrictive open market operations by obtaining a large issue of marketable Government securities in exchange for previously nonnegotiable obligations. In August the discount rate was raised, and reserve requirements for commercial banks were increased as of the first of September. German tax revenues continued greatly to exceed governmental expenditures in 1955, despite tax reductions at the beginning of the year. In Austria, the discount rate was raised in May and again in November. In Sweden and Norway, discount rates were raised early in the year and new Government bond issues at higher interest rates absorbed liquid funds of banks and other lenders; subsequently, the banks agreed to limit their loans. Taxes on investment were increased. In Denmark, where measures to reduce consumer demand and credit expansion had already been taken in 1954, consumption taxes were further increased in 1955 and the rediscount rate was raised again in May. Besides these financial measures, in each Scandinavian country the licensing of building was made more restrictive. In France, Italy, and the Netherlands, it was not considered necessary to take formal measures to restrain credit expansion. The Netherlands, like Germany, reduced consumption taxes to hold Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 35 down the cost of living. In these countries, as in most other countries on the Continent, general stability of prices was maintained. Important steps toward currency convertibility in 1955 included simplification of Belgian and Italian exchange controls affecting accounts of nonresidents. The Organization for European Economic Cooperation reached agreement on a European Fund to be brought into being when formal convertibility is established, meanwhile extending the European Payments Union for another year with a larger gold-payment requirement for monthly settlements. Other areas. Canadian manufacturing activity, which had turned up near the end of 1954 after a mild recession in 1953-54 like that in the United States, increased 10 per cent in the course of the year. Canadian output of minerals continued its rapid growth, uninterrupted since 1949. In Japan, where a brief recession in 1954 had been reversed by rising exports before the end of that year, industrial production rose more than 10 per cent further during 1955. Japanese food prices were reduced toward the end of the year, after a harvest of exceptionally large crops. In both countries exports rose during 1955. Central bank and budgetary policies in Canada were expansionary in the first half of the year, but shifted thereafter to restraint. Bank loans expanded rapidly and banks had to sell Government securities to nonbank holders. In Japan, on the other hand, commercial bank liquidity increased as a result of a large balance-ofpayments surplus. Developments in India followed a significantly different pattern from those in Canada and Japan. Following bumper crops in 1953, heavy Government importation of rice in 1954, and large gains in the 1954 crops of nonfood agricultural products, Indian wholesale prices of foods and raw materials fell sharply throughout 1954 and the first half of 1955. Industrial output, which had risen 14 per cent in the course of 1954, leveled off for several months in the first half of the year, when textile inventories were reduced. In consequence of growing Government expenditures for economic development and an increase in the budgetary deficit, the central bank enlarged its holdings of Government securities. Business activity and prices turned up again in the second half of the year. In countries producing raw materials and foodstuffs for export, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

36 ANNUAL REPORT OF BOARD OF GOVERNORS developments depended partly on the degree of strength of world demand for the commodities produced. Large increases in metal prices in 1955, reflecting strength in demand from many sources, stimulated plans for further enlargement of output in later years. Prices of natural rubber nearly doubled. On the other hand, coffee and tea prices declined in the first part of the year, and cocoa throughout the year. Export prices for wheat and sugar continued relatively stable, despite large world supplies. Export prices for rice in Southeast Asia, after declining sharply throughout 1954, tended to level off in the first half of 1955. Cotton prices declined in some countries. While demand for United States price-supported cotton was depressed by anticipations of export sales at lower prices in 1956, there were increases in the cotton exports of some producers. For wool and for fats and oils, both supply and demand grew moderately and prices weakened partly in consequence of the competition of synthetic substitutes. Internal inflationary pressures were present in many countries, even where export prices declined, but in many cases such pressures were successfully resisted. To help maintain price stability and check a rise in imports, New Zealand, for example, increased reserve requirements for commercial banks and raised the discount rate sharply in three steps from 4 to 7 per cent. Australia, however, faced with similar problems in its balance of payments, relied mainly on regulation of imports by quotas; despite some slackening in the expansion of bank credit, Australian prices rose several per cent. In Latin America, increases in Governmental development expenditures occurred in many countries, including Mexico, Venezuela, Cuba, Colombia, and Peru. In the first two of these surplus revenues were anticipated, but many countries had Government deficits financed through the banking system. The extensive rise in Mexican prices following the 1954 devaluation of the peso appeared to be somewhat slower in 1955. In most other countries with convertible currencies a fair degree of price stability was maintained. On the other hand, efforts to check inflation in Brazil, which had some degree of success in the first part of the year, later appeared to have been relaxed. Depreciation of the Argentine peso was recognized in an official adjustment of exchange rates. In Chile and Bolivia, virtually the only countries in the world experiencing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 37 continuous rapid inflation over the past few years, internal and external depreciation in currency values continued. International trade and the balance of payments. In world trade, as in production, expansion was most rapid in the latter part of 1954 and the first months of 1955, and more gradual thereafter. This change reflected mainly a tendency toward stabilization of European purchases of imports at a high level, while imports of the United States and Canada continued to rise rapidly. Similar mixed tendencies appeared in other areas. After a two-year rise, imports of Australia and New Zealand leveled off in 1955. In a number of other countries producing and exporting raw materials, imports turned gradually up after earlier declines. In Europe several countries experienced steady gains in exports, and, after the summer, trade deficits shrank in Scandinavia while Germany's export surplus widened again. France's trade balance improved in 1955. Great Britain's trade deficit was larger throughout the year than in 1954; although exports increased, imports remained relatively high, except for a brief period in the spring. United States balance of payments. United States imports and exports both showed great strength in 1955. The current account surplus on transactions in goods and services was relatively steady. In the second half of the year, exports of goods and services (excluding military-aid transfers) were at a seasonally adjusted annual rate of about $20 billion, while imports of goods and services exceeded a rate of $18 billion. For the whole year 1955, exports of goods and services totaled about $19.5 billion and imports more than $17.5 billion. The current account surplus, after deduction of $600 million in payments for remittances and pensions, was about equal to the 1954 surplus of $1.3 billion. Exports and imports each exceeded the 1954 totals by more than $1.5 billion. Payments for goods and services in 1955 included military expenditures abroad a little larger than the $2.6 billion spent in 1954. Most types of United States military expenditures abroad continued roughly proportional to the strength of United States forces abroad. Expenditures in Europe for offshore procurement of military equipment for transfer to other countries under aid programs increased, and constituted about one-fourth of the total in 1955. At the year- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

38 ANNUAL REPORT OF BOARD OF GOVERNORS U.S. BALANCE OF PAYMENTS Billions of dollars 1 i • 1 1 J 12 IMPORT AND OTHER PAYMENTS FROM U S.^" "*" > •••— —•"•*«w S ***** - ~ 10 EXPORTS OF GOODS AND SERVICES ^ > IMPORTS OF GOODS AND SERVICES / / - 6 1 1 I 1 1 ^ 1 - -- 2 NET TRANSFERS OF GOLD AND DOLLARS I I I I I • • •• • 1 1 1 1 1 1950 1951 1952 1953 1954 1955 NOTE.—Semi-annual aggregates; Department of Commerce data; second half 1955 partly estimated by Federal Reserve. 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. Net transfers cover gold sales or purchases by United States and changes in foreign short-term assets in United States and in holdings of U. S. Government securities; positive figures represent transfers to foreigners. end outstanding contracts for offshore procurement in Europe were due to be entirely fulfilled in about two more years. United States Government grants and credits to other countries, other than aid given in the form of military supplies and services, exceeded $2 billion in 1955, compared with $1.5 billion in 1954. This outflow included moderate increases in the Government's holdings of foreign currencies arising from sales of surplus agricultural commodities. Payments on grants to Europe declined after the first quarter of the year. The outflow of private American direct investment capital continued at close to the 1948-54 average rate of $700 million. The net outward movement of private American portfolio and shortterm capital was much smaller than in 1954. Interest rate differen- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 39 tials until near the end of the year continued to encourage Canadian repayment of indebtedness in the United States. Foreign reserves. Foreign holdings of United States Government securities and of short-term dollar balances again increased substantially. The rise, together with small purchases of gold from the United States, was approximately $1.3 billion, compared with $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 about $1.9 billion in 1955. Increases in gold reserves and foreign exchange holdings were especially large in France, Germany, Italy, Mexico, and Venezuela. In many countries changes either upward or downward were relatively small. A few South American countries, however, experienced heavy drains on their reserves, and large declines in holdings of sterling reserves occurred in Australia, South Africa, and New Zealand. In Europe the only large fall in gold and dollar holdings was that of Great Britain. This drain resulted partly from the deficit in British trade transactions and partly from adverse capital movements, which were halted in the autumn. 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 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 during World War II. The Federal Reserve Banks act as fiscal agents of the guaranteeing agencies in receiving applications and in the making of such contracts of guarantee. During 1955 the guaranteeing agencies authorized the issuance of 44 guarantee agreements amounting to $75 million. On December 31, 1955, guarantee agreements outstanding covered credits Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

40 ANNUAL REPORT OF BOARD OF GOVERNORS totaling $464 million, of which amount $294 million represented loans actually outstanding and $170 million was available to borrowers under guarantee agreements in force. During the year more than $931 million was advanced on V-loans, most of which are revolving credits. Of the total number of loans authorized more than 56 per cent were for amounts under $500,000 and more than 72 per cent were for amounts under $1 million. More than 72 per cent of the number of guarantees authorized are to concerns employing under 500 persons. From the beginning of the program in September 1950 through December 31, 1955, 1,411 loans totaling $2,575 million were authorized by the guaranteeing agencies. The net income received by the guaranteeing agencies to the end of 1955 represented by guarantee fees, commitment fees, and interest on purchased loans amounted to approximately $23 million after deducting the expenses of the Federal Reserve Banks as fiscal agents and providing reserves to cover estimated losses. BANKING OPERATIONS AND STRUCTURE Bank earnings and profits.1 For the year 1955 member banks reported $2,075 million of net current earnings before income taxes, $247 million more than in 1954. Net profits after taxes, however, were $112 million lower than in the previous year because of a substantial decline in profits on sales of securities. The ratio of net profits to average total capital accounts decreased from 9.3 to 7.9 per cent. Gross current earnings were $509 million larger than in 1954, and expenses were up $262 million. Earnings on loans rose $364 million and on United States Government securities $51 million. The average rate of return on loans advanced from 4.71 to 4.76 per cent and on United States Government securities from 1.96 to 2.09 per cent. Average total holdings of loans increased $7 billion, holdings of obligations of States and political subdivisions increased $1 billion, and holdings of United States Government obligations declined about $1 billion. Taxes on net income declined $113 million. The accompanying table gives a summary of earnings, expenses, and profits of member banks for 1955 and 1954. 1 Figures for 1955 are based on preliminary tabulations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 41 EARNINGS, EXPENSES, PROFITS, AND DIVIDENDS OF ALL MEMBER BANKS, 1955 AND 1954 [In millions of dollars] Item 1955* 1954 Earnings. 5,335 4,826 On U. S. Govt. securities. 1,117 1,066 On loans 3,075 2,711 All other 1,143 1,048 Expenses. 3,261 2,999 Net current earnings before income taxes 2,075 1,828 Net losses, charge-offs, and transfers to valuation reserves.... 400 +73 Profits before income taxes 1,165 1,900 Taxes on net income 691 804 Net profits 984 1,096 Cash dividends declared. 501 456 * Preliminary; final figures will appear in the Federal Reserve Bulletin, probably in the May issue. Approximately $501 million or 51 per cent of 1955 net profits was paid out as dividends to stockholders; this amounted to a return on average total capital accounts of 4.0 per cent compared with 3.9 per cent in 1954. Earnings retained in capital accounts were $483 million, in contrast with $640 million in 1954 when unusually large profits on sales of securities contributed heavily to net profits. Bank earning assets.2 Earning assets of member banks at the year-end were $135 billion, $4 billion larger than the year before. An increase of $11 billion in loans was partly offset by a decline of $7 billion in holdings of United States Government securities; obligations of States and political subdivisions continued to increase but by a lesser amount than in 1954.3 Commercial and industrial loans, after declining for two consecutive years, increased $6 billion and accounted for over half the total increase in loans by member banks. The next largest increase, $2 billion, was in loans to individuals for household, family, and other personal expenditures, which had changed relatively little 2 Figures for 1955 are partly estimated. 3 These year-end comparisons of holdings of earning assets differ considerably from the changes in average holdings during the year given under bank earnings and profits. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

42 ANNUAL REPORT OF BOARD OF GOVERNORS during 1954. According to sample data by industry groups, the large increase in commercial and industrial loans resulted from increased borrowing by all major classifications of business, but sales finance companies accounted for about one-quarter of the increase. Capital accounts.8 Capital accounts of member banks amounted to $12,700 million, an increase of $500 million during the year. Retained earnings accounted for approximately $483 million of the increased capital and proceeds from sales of common stock accounted for most of the balance; lesser factors were mergers and changes in Federal Reserve membership. The ratio of average total capital accounts to average total assets for all member banks was 7.3 per cent, a slight increase from 1954. The ratio of average total capital accounts to average total assets less cash assets and United States Government securities was 15.4 per cent as compared with 16.1 per cent for 1954; this decline reflected the increased holdings of loans and substantial decreases in holdings of United States Government securities during the year. Number of banking offices. For the twelfth consecutive year the number of banking offices increased. The number of banks (head offices) continued the decline of recent years, reflecting bank consolidations and absorptions. The number of branches continued to increase, both by conversion of merged banks into branches and by establishment of de novo branches. There was a net decline of 124 banks during the year. New banks opened for business numbered 117, but this increase was more than offset by consolidations or absorptions of 232 banks, 205 of which were converted into branches. Table 18 on page 79 gives a statistical analysis of the changes in the number of banks and branches. The number of branches and additional banking offices increased by a net of 624; this was 105 more than the record increase reported in 1954. As in other recent years, most of the increase was in de novo branches, of which 462 were established in 1955. Approximately 70 per cent of the increase in branches occurred in places outside the cities in which the parent banks are located. California and Pennsylvania had the largest branch increases, with 3 Figures for 1955 are partly estimated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 43 89 and 78, respectively. (The figures for branches exclude 213 banking facilities at military and other Government establishments, an increase of 15 during the year.) Federal Reserve membership. The 6,543 banks that were members of the Federal Reserve System at the end of 1955 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 68 per cent of the deposits of these banks. The membership of 4,692 national banks and 1,851 State member banks reflected net declines for the year of 97 and 20, respectively. The continued decline in the number of member banks was largely the result of consolidations and absorptions; branch offices were opened in the former locations of most of these banks. Other declines included two State members that withdrew from membership and three national banks that converted into nonmember banks. Newly established banks included 28 national and 4 State members. Sixteen nonmember banks were admitted to membership and 6 banks became members by conversion from nonmember to national banks. Par and nonpar banks.4 During 1955, 124 banks were added to the Federal Reserve Par List, 3 withdrew from the Par List, and 219 par banks were consolidated with or absorbed by other par banks. Of the additions, 19 were formerly nonpar banks that chose to remit at par, 101 were newly organized banks, and 2 were formerly nonpar banks admitted to membership in the Federal Reserve System. The number of par-remitting and nonpar offices at the end of 1955 is shown below: On Not on Par List Par List Banks (head offices) 11,855 1,770 Branches 6,375 325 Banking facilities at military and other Government establishments 212 1 Total 18,442 2,096 4 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

44 ANNUAL REPORT OF BOARD OF GOVERNORS 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 number of nonpar banks was less than 10. Table 19 on page 80 shows the number of par and nonpar banking offices by States and Federal Reserve Districts. BANK SUPERVISION BY THE FEDERAL RESERVE SYSTEM Examination of Federal Reserve Banks. The Board's Division of Examinations examined each of the 12 Federal Reserve Banks and their 24 branches during the year as required by law. Examination of State member banks. State member banks are subject to examinations made by direction of the Board of Governors or of the Federal Reserve Banks by examiners selected or approved by the Board of Governors. The established policy is to conduct at least one regular examination of each State member bank, including its trust department, during each calendar year, by examiners for the Reserve Bank of the district in which the bank is situated, with additional examinations if considered desirable. In order to avoid duplication and to minimize inconvenience to the banks examined, wherever practicable joint examinations are made in cooperation with the State banking authorities or alternate examinations are made by agreement with State authorities. The 1955 program for the examination of State member banks was practically completed. Bank holding companies. During 1955 the Board authorized the issuance of five voting permits for general purposes and eight 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 45 Section 301 of the Banking Act of 1935 provides that the term f'holding company affiliate" shall not include, except for the purposes of Section 23A of the Federal Reserve Act, any organization which is determined by the Board not to be engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies. During the year the Board made such determinations with respect to 14 organizations. Trust powers of national banks. During 1955, 46 national banks were granted authority by the Board to exercise one or more trust powers under the provisions of Section H(k) of the Federal Reserve Act. This number includes the grant of additional powers to 28 banks which previously had been granted certain trust powers. One additional national bank acquired trust powers as a result of consolidation. Trust powers of 51 national banks were terminated by voluntary liquidation, consolidation, or merger. At the end of 1955, there were 1,727 national banks holding permits to exercise trust powers. Foreign branches and banking corporations. Under the provisions of Section 25 of the Federal Reserve Act, the Board approved during 1955 seven applications made by member banks for permission to establish branches in foreign countries. One member bank opened a branch in Beirut, Lebanon; another opened branches in Beirut, Lebanon; Jeddah, Saudi Arabia; Cairo, Egypt; and Caracas, Venezuela. The latter two branches had been authorized by the Board in 1954. At the end of 1955, seven member banks had in active operation a total of 111 branches in 26 foreign countries and overseas areas of the United States. Of the 111 branches, three national banks were operating 85 and four State member banks were operating 26. The foreign branches were distributed geographically as follows: Latin America 56 Continental Europe 6 Argentina 10 Belgium 1 Brazil 10 France 3 Chile 2 Germany 2 Colombia 4 Cuba 20 England 11 Mexico 2 Panama 4 Near East 4 Peru 1 Egypt 1 Uruguay 1 Lebanon 2 Venezuela 2 Saudi Arabia 1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

46 ANNUAL REPORT OF BOARD OF GOVERNORS Far East 20 United States areas 14 Hong Kong 1 Canal Zone 4 India 2 Japan 10 Guam 1 Philippines 5 Puerto Rico 9 Singapore 1 Thailand 1 Total Ill There was no change in 1955 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 France; one has an English fiduciary affiliate; and one operates an agency at the New York International Airport, has a branch in England, and during 1955, pursuant to authorization by the Board, acquired the stock of a bank which was organized under the laws of Liberia. During 1955 one corporation was chartered by the Board, under the provisions of Section 25 (a) of the Federal Reserve Act, to engage in international or foreign banking, making a total of three such corporations in active operation at the end of the year. The head offices of these corporations are located in New York City; two of them were examined during the year by the Board's Division of Examinations. One such institution has no subsidiaries or foreign branches; one has a branch in France and an English fiduciary affiliate; and one operates branches in Germany, France (authorized by the Board and opened in 1955), and Singapore (authorized by the Board in 1953 and opened in 1955). The Board approved during 1955 an application by one of the institutions for permission to establish a branch in Lebanon. In 1955, examiners for the Board of Governors examined the two European branches of the foreign banking corporations operating under agreement with the Board of Governors pursuant to the provisions of Section 25, the two European branches of the foreign banking corporations organized and operating under the provisions of Section 25(a), and seven European branches of three State member banks. Inter-Agency Bank Examination School. During 1955, three five-week sessions of the School for Assistant Examiners and one Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 47 four-week session 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 the Inter-Agency School was established in 1952, the various sessions have been attended by 465 men, representing the three Federal bank supervisory agencies, the State Banking Departments of Connecticut, Indiana, Louisiana, Maine, Michigan, Mississippi, Montana, New Hampshire, North Dakota, Ohio, Oklahoma, Oregon, and Virginia, the Treasury Department of the Commonwealth of Puerto Rico, and one foreign country. CHANGES IN REGULATIONS OF THE BOARD OF GOVERNORS Advances and discounts by Federal Reserve Banks. The Board's Regulation A, relating to advances and discounts by Federal Reserve Banks, was revised effective February 15, 1955. Although the revision made certain changes in the language of the Regulation itself, the most important change was a revision of the foreword to the Regulation, entitled "General Principles," so as to restate and clarify certain guiding principles which are observed by Federal Reserve Banks in making advances and discounts. The Board stated that the revision was not intended further to restrict or restrain access by member banks to the credit facilities of the Federal Reserve Banks. Savings deposits. The Board's Regulation D, relating to reserves of member banks, and Regulation Q, relating to payment of interest on deposits, were amended effective May 16, 1955 so as to permit deposits to be classified as "savings deposits" in certain circumstances even though not evidenced by a passbook. A passbook continues to be necessary for all savings deposits except those covered by the amendments. Collective investment of trust funds. Section 10 (c) of the Board's Regulation F, relating to trust powers of national banks, was amended effective June 13, 1955 so as to permit the collective investment of funds of trusts which are established under employers' pension, profit-sharing, or stock bonus plans, without compliance with the provisions of Section 17 of the Regulation, provided each such trust is exempt from Federal income taxes and collective investment is specifically authorized by the trust instru- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

48 ANNUAL REPORT OF BOARD OF GOVERNORS merit or by court order. The funds of pensions and similar trusts may, as previously, be invested in participations in common trust funds operated pursuant to Section 17. Margin requirements for purchasing securities. The Supplement to the Board's Regulation T, entitled "Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges," and the Supplement to Regulation U, entitled "Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange," were amended effective January 4, 1955 so as to increase margin requirements from 50 per cent to 60 per cent for credit extended by brokers and by banks to finance purchases of stock exchange securities. Effective April 23, 1955 the two Supplements were again amended so as to increase the margin requirements from 60 per cent to 70 per cent. The increased margins applied also to short sales. CHANGES IN REGULATION OF THE FEDERAL OPEN MARKET COMMITTEE Executive committee discontinued. The Federal Open Market Committee, comprising the seven members of the Board of Governors and five of the presidents of the Federal Reserve Banks, amended its regulation relating to open market operations of Federal Reserve Banks, effective June 22, 1955, so as to discontinue its executive committee, which was a standing committee consisting of three members of the Board and two Reserve Bank presidents. The executive committee, which was established following the Banking Act of 1935, was discontinued in view of the availability of more swift and certain travel facilities that facilitate the attendance of the members of the Federal Open Market Committee at regular meetings and make it possible to gather members for special meetings on short notice when necessary. LEGISLATION Defense Production Act of 1950. The Defense Production Act of 1950, which would have expired June 30, 1955, was extended one month by Joint Resolution, and was amended and continued in force until the close of June 30, 1956, by the Act of August 9, 1955. Section 301 of the Act is the basis for guarantees of loans for defense production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 49 Real estate loans by national banks. Section 24 of the Federal Reserve Act was amended by the Act of August 11, 1955 so as to permit national banks to make "conventional" real estate loans (not insured or guaranteed by the Federal Government) for periods up to a maximum of 20 years (instead of 10 years as previously) and so as to permit loans up to 662A per cent of the value of the real estate instead of 60 per cent as previously. The new law requires loans with maturities in excess of 10 years to be amortized at a rate which would be sufficient to pay off the entire loan in 20 years. The new law also increased from six months to nine months the permissible maturity of "construction loans" by national banks (that is, loans to finance the construction of residential and farm buildings which are not subject to the limitations applicable to real estate loans). RESERVE BANK OPERATIONS Volume of operations. Table 5 on page 65 gives the volume of operations in the principal departments of the Federal Reserve Banks for the years 1951-55. Checks handled continued their upward trend, exceeding the all-time high reached the previous year; discounts and advances were also substantially greater than last year. On the other hand, the volume of currency received and counted was slightly smaller than in 1954. Earnings and expenses. Current earnings, current expenses, and the distribution of net earnings of each Federal Reserve Bank during 1955 are shown in detail in Table 6 on pages 66-67, and a condensed historical statement is shown in Table 7 on pages 68-69. The table on page 50 summarizes the earnings and expenses and the distribution of net earnings for 1955 and 1954. Current earnings of $412 million in 1955 were 6 per cent less than in 1954, largely because of a lower average rate of interest and a smaller volume of holdings of United States Government securities. Earnings from discounts and advances were greater in 1955 than the year before, reflecting increases in the discount rate and a rise in the volume of discounts and advances. Current expenses of $110 million were about the same as in 1954. Current net earnings amounted to $302 million, a decrease of 8 per cent compared with 1954. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

50 ANNUAL REPORT OF BOARD OF GOVERNORS EARNINGS, EXPENSES, AND DISTRIBUTION OF NET EARNINGS OF FEDERAL RESERVE BANKS, 1955 AND 1954 [In thousands of dollars] Item 1955 1954 Current earnings 412,488 438,486 Current expenses 110,060 109,733 Current net earnings 302,428 328,753 Additions to current net earnings 178 *527 Deductions from current net earnings X443 661 Net deductions 265 134 Net earnings before payments to U. S. Treasury 302,163 328,619 Paid U. S Treasury (interest on F. R. notes) 251,741 276,289 Dividends 17,712 16,442 Transferred to surplus (Sec. 7) 32,710 35,888 1 Includes $482,000 of net profits in 1954 and $506 of net losses in 1955 on sales of U. S. Government securities. Profit and loss additions and deductions were relatively small, leaving net earnings before payments to the United States Treasury at $302 million. Statutory dividends to member banks amounted to $18 million, a rise of about $1 million over 1954 that reflected an increase in the capital and surplus of member banks and a consequent increase in the paid-in capital of the Federal Reserve Banks. Payments to the United States Treasury as interest on Federal Reserve notes amounted to $251 million in 1955. This was 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 1955 allowances for bringing surplus up to subscribed capital were $4,739,000 for two Banks, and for 1954 they were $5,187,000 for three 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 $2,049 million. The $33 million of net earnings remaining after dividends and payments to the United States Treasury were added to surplus account. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 51 Holdings of loans and securities. Average holdings of United States Government securities during 1955 amounted to $23,891 million, $758 million less than during 1954. The average rate of interest on these holdings decreased slightly from 1.76 to 1.67 per cent. Average holdings of discounts and advances during 1955 were $666 million and approached the 1953 level; this was a reversal of the sharp decline in 1954. The average rate of interest on discounts and advances rose from 1.61 to 1.96 per cent, reflecting four increases in the discount rate to 2x/2 per cent. As mentioned elsewhere in this report, a change in System open market policy resulted in holdings of acceptances beginning March 31, 1955; these were the first acceptances purchased since 1951. The table below shows a comparison of average daily holdings and average interest rates on loans and securities held by the Federal Reserve Banks during the past three years. RESERVE BANK EARNINGS ON LOANS AND SECURITIES, 1953-55 [Dollar amounts in thousands] Dis- In- U.S. Item and year Total1 counts dus- Accept- Governand trial ances ment advances loans securities Average daily holdings:1 1953 . $25,438,684 $777,595 $3,185 $24,657,904 1954 24,866,567 216,697 1,179 24,648,691 1955 24,570,401 666,152 607 $12,422 23,891,220 Earnings: 1953 r512,852 15,276 121 497,455 1954 438,359 3,479 43 434,837 1955 412,303 13,085 24 216 398,978 Average rate of interest (per cent): 1953 2.02 1.96 3.80 2.02 1954 1.76 1.61 3.65 1.76 1955 1.68 1.96 3.95 1.74 1.67 r Revised. 1 Based on holdings at opening of business. Foreign and international accounts. A further rise of $666 million occurred during the year in the Federal Reserve Banks' holdings of gold and dollar assets for foreign account. The rising tendency of recent years began early in 1952 and has continued since that time, with little interruption. Year-end holdings of $9.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

52 ANNUAL REPORT OF BOARD OF GOVERNORS billion consisted of $5.7 billion of earmarked gold, $3.5 billion of United States Government securities, largely Treasury bills, approximately $400 million in dollar deposits, and about $125 million of miscellaneous securities. 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, registered a comparatively slight gain, $66 million, to reach a total of $3.8 billion. Accounts were opened by the central banks of two of the new independent Indochinese states. New advances against gold were of relatively minor importance, this type of accommodation having declined substantially in recent years. One loan of $133 million outstanding at the beginning of the year was liquidated by October and new credit arrangements involved only a total of $28 million, of which $1 million was outstanding at the year-end. Loans on gold and commitments for such loans are ordinarily made to foreign monetary authorities to assist them in meeting seasonal dollar shortages or other shortages of a clearly temporary nature. The Federal Reserve Bank of New York continued, in its capacity of depositary and fiscal agent, to extend various services to the International Bank for Reconstruction and Development and the International Monetary Fund. Also, as fiscal agent of the United States, it operated the United States Stabilization Fund pursuant to authorization and instructions of the Treasury Department. On behalf of the Treasury Department it continued the administration of the foreign assets control regulations pertaining to assets in the United States of Communist China and North Korea and their nationals, including transactions with those countries. Bank premises. During the year the Board authorized the construction of new buildings for the Buffalo and Louisville Branches; the construction of additions to the Bank buildings at Baltimore, Charlotte, Minneapolis, Pittsburgh, and San Francisco; and the construction of a parking garage and security court adjacent to the Bank building at Atlanta. FEDERAL RESERVE MEETINGS The Federal Open Market Committee met on January 11, March 2, May 10, June 22, July 12, August 2, August 23, September 14, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 53 September 26, October 4, October 25, November 16, November 30, December 8, and December 13, 1955, and the executive committee of the full Committee met frequently until it was abolished by action of the full Committee on June 22, 1955. Under the provisions of Section 12A of the Federal Reserve Act, the Federal Open Market Committee, which has responsibility for determining the policies under which the open market operations of the Federal Reserve Banks will be carried out, is required to meet in Washington at least four times each year. A record of the actions taken by the Committee on questions of policy will be found on pages 89-111 of this report. A meeting of the Conference of Chairmen of the Federal Reserve Banks was held on December 1-2, 1955, and was attended by members of the Board of Governors. The Conference of Presidents of the Federal Reserve Banks held meetings on February 28-March 1, June 20-21, and October 3, 1955, and the Board of Governors met with the Presidents on March 3, June 22, and October 4, 1955. Meetings of the Federal Advisory Council were held on February 13-15, May 15-17, September 18-20, and November 13-15, 1955. The Board of Governors met with the Council on February 15, May 17, September 20, and November 15, 1955. 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. BOARD OF GOVERNORS—INCOME AND EXPENSES The accounts of the Board for the year 1955 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, 1955, 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

54 ANNUAL REPORT OF BOARD OF GOVERNORS 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, 1955, and the results of its operations for the year then ended, and were prepared in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Arthur Andersen & Co. Washington, D. C, January 30, 1956. BALANCE SHEET—DECEMBER 31, 1955 ASSETS Cash in Federal Reserve Bank of Richmond $ 529,189.69 Petty cash 800.00 Miscellaneous receivables and travel advances 13,878.87 Stockroom and cafeteria inventories, at cost 18,255.15 Property and equipment: Reserve for At cost depreciation Land and improvements $ 792,852.42 $ — Building 3,770,175.61 — Furniture and equipment 458,120.16 276,276.94 Automobiles 15,388.36 15,220.59 $5,036,536.55 $291,497.53 4,745,039.02 $5,307,162.73 LIABILITIES AND FUND BALANCES Accounts payable $ 175,531.18 Employee Federal income taxes withheld 110,270.87 Accrued payroll 134,942.12 Fund Balances: Balance, December 31, 1954 $5,156,607.86 Excess of expenses over income, per accompanying statement (268,641.85) Fixed assets purchased, etc. (net) (1,547.45) Balance, December 31, 1955 $4,886,418.56 Represented by— Property and Equipment Fund 4,745,039.02 Operating Fund 141,379.54 $5,307,162.73 ========= 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

FEDERAL RESERVE SYSTEM 55 STATEMENT OF INCOME AND EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1955 INCOME: Assessments against Federal Reserve Banks $4,194,100.00 Bulletin sales 18,296.91 Other publications sales 16,368.34 Miscellaneous income 2,802.92 $4,231,568.17 EXPENSES: Salaries $3,192,745.93 Retirement and insurance contributions 330,234.46 Traveling expenses 233,088.05 Postage and expressage 53,437.06 Telephone and telegraph, including leased wire operations (net). . 64,749.90 Printing and binding 183,629.36 Stationery and supplies 31,511.68 Equipment rental 22,888.95 Provision for depreciation 26,394.92 Books and subscriptions 13,239.92 Heat, light, and power 38,956.25 Repairs, maintenance, and alterations 15,529.32 Insurance 6,283.15 Consumer Finances Surveys 135,560.78 Talle Subcommittee project 52,374.30 Other survey and research projects 15,132.00 Legal and consultant fees and expenses 14,710.17 Security clearance investigations for Board employees 5,374.40 Audit expenses applicable to Board's accounts 2,500.00 Loss from operation of cafeteria (net) 46,829.88 Other 15,039.54 $4,500,210.02 EXCESS OF EXPENSES OVER INCOME $ 268,641.85 NOTE—Salaries, and retirement and insurance contributions exclude approximately $71,600 and $7,600, respectively, which were charged direct to cafeteria operations. In the foregoing statement of income and expenses, as reported on by Arthur Andersen & Co., "Other" expenses of $15,039.54 include an expenditure of $66.50 by the Board of Governors for cost of a luncheon at a meeting in connection with the Treasury Department's savings bond program. The Board received the following reimbursements in 1955 for expenditures which it makes on a reimbursable basis: Printing Federal Reserve notes $4,224,898.88 Currency Redemption Division (Office of the Treasurer of the United States) 384,759.00 Federal Reserve Issue and Redemption Division (Office of the Comptroller of the Currency) 150,940.86 Leased wire service (telegraph) 276,786.44 Leased telephone lines 9,684.00 Miscellaneous 17,331.31 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

58 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 1—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) DECEMBER 31, 1955 [Amounts in boldface type are those shown in the Board's weekly statement. In thousands of dollars.] ASSETS Gold certificates on hand: Held by Federal Reserve Banks 1,015,555 Held by Federal Reserve Agents 1,800,000 Gold certificates due from U. S. Treasury: Interdistrict Settlement Fund 7,412,798 Federal Reserve Agents' Fund 9,913,000 20,141,353 Redemption fund for Federal Reserve notes 867,842 Total gold certificate reserves 21,009,195 Federal Reserve notes of other Federal Reserve Banks 344,535 Other cash: United States notes 29,942 Silver certificates 262,545 Standard silver dollars 4,260 National bank notes and Federal Reserve Bank notes 1,508 Subsidiary silver, nickels, and cents 42,643 Total other cash 340,898 Discounts and advances secured by U. S. Govt. securities: Discounted for member banks 106,762 Discounted for others 106,762 Other discounts and advances: Discounted for member banks Foreign loans on gold 1,000 1,000 Total discounts and advances 107,762 Industrial loans 702 Acceptances: Bought outright 23,802 Held under repurchase agreement 4,403 U. S. Government securities: Bought outright— Bills 1,502,696 Certificates 5,920,699 Notes 14,165,913 Bonds 2,801,750 Total bought outright 24,391,058 Held under repurchase agreement 393,575 Total U. S. Government securities 24,784,633 Total loans and securities 24,921,302 Due from foreign banks 22 Uncollected cash items: Transit items 5,034,610 Exchanges for clearing house 313,956 Other cash items 154,097 Total uncollected cash items 5,502,663 Bank premises: Land 17,347 Buildings (including vaults) 69,213 Fixed machinery and equipment 29,006 Total buildings 98,219 Less depreciation allowances 54,402 43,817 Total bank premises 61,164 Other assets: Miscellaneous assets acquired account industrial loans.. 79 Less valuation allowances 25 Net 54 Reimbursable expenses and other items receivable. 4,639 Interest accrued 144,219 Premium on securities 3,713 Deferred charges 1,896 Real estate acquired for banking house purposes... 4,580 Suspense account 567 All other 559 Total other assets 160,227 Total assets 52,340,006 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 59 NO. I—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL) —Continued LIABILITIES Federal Reserve notes: Outstanding (issued to Federal Reserve Banks) 27,989,142 Less: Held by issuing Federal Reserve Banks 988,208 Forwarded for redemption 79,993 1,068,201 Federal Reserve notes, net (includes notes held by U. S. Treasury and by Federal Reserve Banks other than issuing Bank) 26,920,941 Deposits: Member bank reserves 19,004,930 U. S. Treasurer—general account 393,863 Foreign 401,986 Other deposits: Nonmember bank—clearing accounts 95,274 Officers' and certified checks 10,106 Federal Reserve exchange drafts 421 International organizations1 67,382 All other 381,089 Total other deposits 554,272 Total deposits 20,355,051 Deferred availability cash items 3,917,294 Other liabilities: Accrued dividends unpaid Unearned discount 106 Discount on securities 11,112 Sundry items payable 3,301 Suspense account 84 All other 84 Total other liabilities 14,687 Total liabilities 51,207,973 CAPITAL ACCOUNTS Capital paid in 302,739 Surplus (Sec. 7) 693,612 Surplus (Sec. 13b) 27,543 Other capital accounts: Reserves for contingencies: Reserve for registered mail losses 10,139 All other 98,000 Total other capital accounts2 108,139 Total liabilities and capital accounts 52,340,006 Contingent liability on acceptances purchased for foreign correspondents 33,461 Industrial loan commitments 2,294 1 Includes International Bank for Reconstruction and Development and International Monetary Fund. 2 During the year this item includes the net of earnings, expenses, profits, etc., which are closed out on December 31; see Table No. 6 on pp. 66-67. 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 1955 AND 1954 [In thousands of dollars] Total Boston New York Philadelphia Cleveland Richmond Item 1955 1954 1955 1954 1955 1954 1955 1954 1955 1954 1955 1954 ASSETS Gold certificate account 20,141,35320,165,102 962,8561,030,159 5,189,433 5,322,8111,105,7261,220,4961,702,3711,717,4781,275,460 1,156,033 Redemption fund for Federal Reserve notes 867,842 867,405 53,542 53,668 180,781 184,192 61,738 58,928 78,193 76,999 72,427 74,913 5 Total gold certificate reserves... 21,009,19521,032,507 1,016,3981,083,827 5,370,214 5,507,003 1,167,4641,279,4241,780,5641,794,477 1,347,887 1,230,946 Federal Reserve notes of other Banks.. 344,535 239,001 24,368 14,846 55,855 47,323 37,672 17,291 17,923 16,882 38,250 22,852 Other cash 340,898 374,660 23,567 24,277 65,444 80,491 16,770 16,199 27,270 37,499 23,788 24,156 Discounts and advances: Secured by U. S. Govt. securities.. 106,762 9,970 1,300 550 18,950 450 26,855 3,900 525 2,370 4,125 750 o Other 1,000 133,334 60 ,133 292 38,667 73 9,867 91 12,267 50 6,800 Industrial loans 702 708 642 612 Acceptances: H Bo el u d g h u t n d o e u r t r r i e g p h u t rchase agreement. . 2 4 3 , , 4 80 0 2 3 2 4 3 , ,8 4 0 0 2 3 o U. S. Government securities: Bought outright 24,391,05824,888,362 1,346,9721,373,290 6,198,865 6,357,2841,484,4881,514,656 2,096,2412,133,107 1,436,975 1,465,875 Held under repurchase agreement.. 393,575 44,000 393,575 44,000 Total loans and securities 24,921,302 25,076,374 1,348,3321,381,973 6,639,887 6,440,401 1,512,0581,529,0352,096,8572,147,7441,441,150 1,473,425 Due from foreign banks. 22 22 1 6 16 2 2 2 2 1 Uncollected cash items.. 5,502,663 3,958,555 485,280 295,141 1,025,230 771,896 327,844 235,683 653,563 371,459 437,745 333,590 § Bank premises 61,164 54,748 5,642 5,919 7,766 7,149 5,050 5,164 5,905 5,260 5,218 4,495 Other assets 160,227 136,268 8,412 7,165 39,165 33,268 9,264 7,915 13,551 11,328 9,161 7,854 Total assets. 52,340,006 50,872,135 2,912,000 2,813,149 13,203,567 12,887,5373,076,124 3,090,713 4,595,635 4,384,6513,303,200 3,097,319 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 26,920,94126,253,133 1,613,946 1,608,630 6,120,412 5,950,858 1,839,8891,845,959 2,492,709 2,417,9612,024,917 1,864,245 Deposits: Member bank reserves 19,004,930 18,876,128 861,914 795,449 5,552,721 5,482,319 868,455 884,6221,492,8111,467,287 833,907 829,940 U Fo .S r . e i T gn reasurer—general account. 4 3 0 9 1 3 , , 9 8 8 6 6 3 4 5 8 6 9 3, , 1 9 3 6 7 0 2 2 3 9, , 3 1 7 6 7 0 4 29 7 , , 4 2 0 5 2 3 212 6 8 8 , , 6 6 7 1 3 4 21 9 4 5 7 , , 8 7 0 2 8 1 2 2 2 8 , , 0 1 0 7 8 8 3 3 9 5 , , 7 6 1 6 3 8 2 3 6 5 , , 0 1 3 2 6 6 4 4 2 4 , , 8 3 5 4 8 4 1 1 7 9 , , 7 3 7 0 7 0 4 2 4 4 , , 6 5 1 8 9 2 Other 554,272 441,493 6,115 7,609 369,765 322,038 15,458 14,135 12,884 13,025 21,225 5,627 Total deposits 20,355,05120,370,718 920,566 879,713 6,119,773 6,047,886 934,099 974,1381,566,8571,567,514 892,209 904,768 Deferred availability cash items. 3,917,294 3,150,357 308,187 258,100 642,671 575,375 219,651 190,709 432,141 299,652 325,780 270,806 Other liabilities 14,687 13,945 658 619 5,414 5,456 751 684 1,185 1,121 612 556 Total liabilities 51,207,973 49,788,153 2,843,3572,747,062 12,888,270 12,579,575 2,994,390 3,011,490 4,492,892 4,286,248 3,243,518 3,040,375 CAPITAL ACCOUNTS Capital paid in 302,739 287,754 16,161 14,998 89,473 89,949 19,757 18,982 29,296 27,318 13,772 12,618 Surplus (Sec. 7) 693,612 660,901 41,667 40,309 195,827 188,070 49,491 47,773 62,563 60,222 35,012 33,480 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. 108,139 107,784 7,804 7,769 22,678 22,624 7,997 7,979 9,878 9,857 7,549 7,497 Total liabilities and capital accounts 52,340,006 50,872,135 2,912,000 2,813,149 13,203,567 12,887,537 3,076,124 3,090,713 4,595,6354,384,651 3,303,200 3,097,319 Ratio of gold certificate reserves to deposit and F. R. note liabilities combined 44.4% 45.1% 40.1% 43.6% 43.9% 45.9% 42.1% 45.4% 43.9% 45.0% 46.2% 44.5% Contingent liability on acceptances purchased for foreign correspondents, 33,461 19,052 2,010 1,171 39,743 35,420 2,445 1,421 3,048 1,766 1,675 979 Industrial loan commitments 2,294 1,149 41 128 32: 598 11 39 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve Agent and outstanding 27,989,14227,346,789 1,673,6871,670,589 6,347,837 6,183,6121,920,7481,916,984 2,613,5182,559,779 2:, 107,7421,939,335 Held by Federal Reserve Bank and forwarded for redemption.. 1,068,201 1,093,656 59,741 61,959 227,425 232,754 80,859 71,025 120,809 141,818 82,825 75,090 Federal Reserve notes, net4 26,920,94126,253,133 1,613,9461,608,630 6,120,412 5,950,858 1,839,8891,845,959 2,492,7092,417,961 2,024,917 1,864,245 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificate account 11,713,000 11,208,000 640,000 640,000 2,870,000 2,670,000 725,000 800,000 1,070,0001,050,000 845,000 675,000 Eligible paper 52,387 7,150 1,300 550 26,855 3,900 4,125 750 U. S. Government securities 17,185,000 17,140,000 1,200,0001,200,000 3,600,000 3,600,000 1,200,000 1 200,000 1,600,0001,550,0001,300,000 1,300,000 Total collateral. 28,950,387 28,355,150 1,841,3001,840,550 6,470,000 6,270,000 1,951,855 2,003,900 2,670,000 2,600,000 2,149,125 1,975,750 * After deducting $273,288,000 participations of other Federal Reserve Banks on Dec. 31, 1955, and $342,220,000 on Dec. 31, 1954. 3 After deducting $23,718,000 participations of other Federal Reserve Banks on Dec. 31, 1955, and $13,632,000 on Dec. 31, 1954. * 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 1955 AND 1954—Continued [In thousands of dollars] Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Item >z z 1955 1954 1955 1954 1955 1954 1955 1954 1955 1954 1955 1954 1955 1954 c ASSETS Gold certificate account 889,111 904,5783,657,3073,581,139 895,248 782,928 339,279 421,328 832,999 838,886 785,592 807,4062,505,9712,381,860 Redemption fund for Federal Reserve notes 53,717 53,931 155,100 144,008 44,502 47.149 23,729 24,644 41,731 39,771 26,921 28,793 75,461 80,409 o Total gold certificate reserves. 942,828 958,5093,812,4073,725,147 939,750 830,077 363,008 445,972 874,730 878,657 812,513 836,1992,581,4322,462,269 Federal Reserve notes of other Banks. 48,161 42,243 32,502 20,411 14,289 12,393 9,587 8,567 8,868 10,673 23,316 9,212 33,744 16,308 Other cash 27,113 33,004 50,521 62,994 20,063 24,837 7,908 8,848 15,129 14,929 16,879 14,234 46,446 33,192 Discounts and advances: Secured by U.S. Govt. securities. 19,700 3.200 1,800 1,355 450 16,952 1,500 2,000 10,000 Other 43 5,733 140 18,533 38 5,067 25 3,333 38 5,067 47 6,267 103 13,600 o Industrial loans 60 96 £ Acceptances: Bought outright Held under repurchase agreement U. S. Government securities: i Bought outright 1,259,0181,267.5894,254,4594,350,9341,012,1801,041.454 591,068 611,1831,060,7671,073,783 978,033 977,9632,671,9922,721,244 Held under repurchase agree- Total loans and securities.... 1,278,7611,273,3224,257,7994,369,4671,014,0181,046,521 592,508 615,0621,077,7571,080.350 980,080 984,2302,682,0952,734,844 Due from foreign banks 1 1 3 3 1 1 1 1 1 1 1 1 2 2 Uncollected cash items 376,499 311,508 900,964 638,551 225,904 154,706 137,663 101,402 222,454 205.672 227,375 208,977 482,142 329,970 Bank premises . ... 4,045 3,879 6,071 6,281 3,399 2,832 2,194 1,007 3,490 2,533 2,146 1,133 10,238 9.096 Other assets 9,001 7,609 29,088 25,246 6,455 5,962 3,805 3,238 6,816 6,082 7,767 5,877 17,742 14,724 Total assets 2,686,4092,630,0759,089,3558,848,1002,223,8792,077,3291,116,6741,184,0972,209,2452,198,8972,070,0772,059,8635,853,8415,600,405 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LIABILITIES Federal Reserve notes 1,398,4431,387,728 5,190,3305,064,809 1,248,229 1,177,567 531,709 583,5111,051,4291,028,614 720,021 739,4722,688,907 2,583,77^ Deposits: Member bank reserves 851,420 866,804 2,987,410 2,979,096 716,406 670,349 405,586 443,527 884,226 912,1711,019,815 1,039,814 2,530,259 2,504,750 U.S. Treasurer—general account 39,760 38,350 40,009 97,481 7,888 28,356 25,108 27,339 34,666 31,581 47,589 23,692 35,031 46,087 Foreign 16,598 20,726 54,040 66,998 14,668 18,316 9,650 12,050 14,668 18,316 18,142 22,654 39,783 49.18S Other 5,766 3,613 16,540 15,350 26,322 8,885 5,693 2,316 4,835 4,837 2,590 2,355 67,079 41,703 Total deposits 913,544 929,493 3,097,999 3,158,925 765,284 725,906 446,037 485,232 938,395 966,9051,088,136 1,088,5152,672,152 2,641.723 Deferred availability cash items 322,119 263,481 640,401 471,408 164,959 130,210 108,768 86,438 174,184 160,467 204,329 180,275 374,104 263,436 Other liabilities 591 528 2,480 2,319 545 462 411 347 521 460 401 398 1,118 995 Total liabilities 2,634,697 2,581,230 8,931,210 8,697,4612,179,017 2,034,145 1,086,9251,155,5282,164,529 2,156,446 2,012,8872,008,660 5,736,2815,489,933 CAPITAL ACCOUNTS Capital paid in 13,693 12,203 40,487 38,354 10,564 9,935 6,861 6,360 11,951 10,912 16,563 14,457 34,161 31,668 Surplus (Sec. 7) 30,841 29,480 101,894 96,566 27,649 26,619 17,586 16,918 25,960 24,755 33,847 29,985 71,275 66,724 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. 6,416 6,400 14,335 14,290 6,128 6,109 4,229 4,218 5,668 5,647 5,473 5,454 9,984 9,940 Total liabilities and capital accounts 2,686,409 2,630,075 9,089,355 8,848,100 2,223,879 2,077,329 1,116,674 1,184,0972,209,2452,198,8972,070,077 2,059,8635,853,841 5,600,405 Ratio of gold certificate reserves to deposit and F. R. note liabilities combined 40.8% 41.4% 46.0% 45.3% 46.7% 43.6% 37.1% 41.7% 44.0% 44.0% 44.9% 45.7% 48.2% 47.1% Contingent liability on acceptances purchased for foreign correspondents 1,440 826 4,690 2,669 1,273 730 838 480 1,273 730 1,575 902 3,451 1,958 Industrial loan commitments 104 17 1,920 263 FEDERAL RESERVE NOTE STATEMENT Federal Reserve notes: Issued to Federal Reserve Bank by Federal Reserve Agent and outstanding 1,461,8191,467,6715,314,915 5,185,2531,299,6931,227,557 583,154 622,837 1,088,386 1,063,357 761,419 789,675 2,816,224 2,720,140 Held by Federal Reserve Bank and forwarded for redemption. 63,376 79,943 124,585 120,444 51,464 49,990 51,445 39,326 36,957 34,743 41,398 50,203 127,317 136,361 Federal Reserve notes, net4... 1,398,4431,387,728 5,190,330 5,064,8091,248,2291,177,567 531,709 583,511 1,051,4291,028,614 720,021 739,472 2,688,9072,583,779 Collateral held by Federal Reserve Agent for notes issued to Bank: Gold certificate account 500,000 500,000 2,400,000 2,400,000 450,000 355,000 150,000 175,000 280,000 280,000 283,000 283,000 1,500,0001,380,000 Eligible paper 1,800 1,355 450 16,952 1,500 U. S. Government securities.... 1,000,000 1,000,000 3,000,000 2,900,000 910,000 945,000 500,000 500,000 850,000 800,000 525,000 525,0001,500,0001,620,000 Total collateral. 1,500,000 1,500,000 5,400,000 5,300,0001,361,800 1,300,000 651,355 675,4501,146,9521,081,500 808,000 808,000 3,000,000 3,000,000 4 Includes Federal Reserve notes held by the U. S. Treasury and by Federal Reserve Banks other than the issuing Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

64 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 3—HOLDINGS OF UNITED STATES GOVERNMENT SECURITIES BY FEDERAL RESERVE BANKS, END OF DECEMBER 1953, 1954, AND 1955 [In thousands of dollars] Rate of December 31 Change during Type of issue interest (Per cent) 1955 1954 1953 1955 1954 Treasury bonds: 1952-54 June.... 2 476,900 -476 900 1952-54 Dec 2 283,100 -283 100 1952-55 96,700 -96 700 1951-55 2 4 8,200 -8 200 1956-58 1?,493 12,493 12,493 1958 June 2% 1958 Dec 1957-59 2% 339,096 339,096 339,096 1956-59 .. . 2% 21,690 21 690 21 690 1956-591 2% 1960 Nov 1961 Sept 2 §/ 1961 Nov 1959-62 June.... 319,849 319,849 319,849 1959-62 Dec 2H 693,765 693,765 69 S,765 1958-631 2% 1963 Aug 2% 1960-651 2% 1962-67 2lA 56,610 56,610 56,610 1963-68 19?,585 122,585 122,585 1964-69 June.... 203,890 203,890 203,890 1964-69 Dec 2 \4> 266,999 266,999 266,999 1965-70 . . .. 521,490 521,490 521,490 1966-71 \M ,707 132,707 n?,707 1967-72 June 2 V 49,266 49,266 49,266 1967-72 Sept Vy 2,552 2,552 2,552 1967-72 Dec 58,758 58,758 58,758 1978-83 1995 Feb 3 4 Total Treasury bonds 2,801,750 2,801,750 3,666,650 -864,900 Treasury notes: Mar. 15, 1954-A.. \'i 257,450 —257,450 D M e a c r . . 1 1 5 5 , , 1 1 9 95 5 5 4 - - A B . . . . 95,300 6,99 8 4 9 , , 0 8 5 0 0 0 -95 ,300 -6,9 + 94 5 , ,o 50 so 0 Dec. 15, 1955-B.. 3,235,123 3,233,623 -3 ,235,123 +1,500 Mar 15 1956-A /\ 066 000 +4 066 900 Apr. 1, 1956-EA IK 1,000,000 1,000,000 1,000,000 Aug. 15, 1956-B.. 7,451,415 +7,451,415 Oct. 1, 1956-EO 500.000 566,666 son"666" Mar. 15, 1957-A.. 26,600 +26,600 Apr. 1, 1957-EA 500,000 500,000 500,000 May 15, 1957-B.. Aug. 15, 1957-C. 2 Oct. 1, 1957-EO 713,848 713,848 713,848 Apr. 1, 1958-EA June 1, 1958-A. % Oct. 1, 1958-EO Feb. 15, 1959-A.. Apr. 1, 1959-EA Oct. 1, 1959-EO 1 V^ Apr. 1, 1960-EA Oct. 1, 1960-EA Total Treasury notes 14,258,763 6,044,271 13,288,771 +8,214,492 -7,244,500 Certificates 7,440,065 -7 440,065 +7,440,06 S 1VL 2,520,076 —? ,076 +2,520,076 3,922,200 -3 ,922,200 +3,922,200 IV 2 12,700 +12,700 26,200 3,704,750 +26,200 -3,704,750 128,900 -128,900 5,962,899 2,133,491 +5,962,899 -2,133,491 Total certifi- 6,001 799 13,882,341 5,967 141 -7 ,880,542 +7,915,200 = : Treasury bills 1,722 321 2,204,000 2,993 ,012 -481 ,679 -789,012 Total holdings. 24,784 633 24,932,362 25,915 574 -147 ,729 -983, 212 iPartly tax-exempt. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 65 . 4—FEDERAL RESERVE BANK HOLDINGS OF SPECIAL SHORT-TERM TREASURY CERTIFICATES PURCHASED DIRECTLY FROM THE UNITED STATES, 1953-551 [In millions of dollars] Date Amount Date Amount Date Amount Date Amount 1953—Mar. 18 110 1953—June 8 374 1953—June 20 992 1954—Jan. 21 306 19 104 9 491 *21 992 22 283 20 189 10 451 22 908 23 283 21 189 11 358 23 608 *24 283 *22 189 12 506 24 296 25 203 23 333 13 506 1954—Jan. 14 22 26 3 24 186 *14 506 15 169 Mar. 15 134 25 63 15 999 16 169 16 190 26 49 16 1,172 *17 169 June 5 196 17 823 18 323 1955—no transactions 6 196 18 364 19 424 *7 196 19 992 20 323 •Sunday or holiday. i On Nov. 9, 1953, the Reserve Banks sold direct to the U. S. Treasury $500 million of Treasury notes. This was the first use of the authority granted by the Act of Mar. 27, 1942 to sell U. S. Government securities directly to the United States. NOTE.—Interest rate }/i per cent throughout. Data for prior years beginning with 1942 are given in previous Annual Reports. There were no holdings on dates not shown. NO. 5—VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS OF FEDERAL RESERVE BANKS, 1951-55 [Number in thousands; amounts in thousands of dollars] 1955 1954 1953 1952 1951 NUMBER OF PIECES HANDLED1 Discounts and advances: Notes discounted and advances made 10 20 18 11 Industrial loans: Loans made 1.4 Commitments to make industrial loans () () () () C C o u i r n r e r n e c c y e i r v e e c d e i a v n ed d a c n o d u n c t o e u d nted. 4 7 , , 2 0 8 0 2 8 , , 5 7 6 7 2 7 ' 4 7 , , 3 0 8 6 4 4 , , 2 0 7 8 0 2 4 5 , , 4 8 0 8 5 9 , , 2 2 5 3 5 8 4 5 , , 1 7 8 1 3 6 , , 0 3 6 7 3 9 4 5, , 8 0 8 6 9 6 , , 2 6 2 1 3 9 Checks handled: U. S. Govt. checks 503,516 481,408 458,607 446,084 412,865 Postal money orders 347,351 354,368 366,807 371,318 All others 2,644,525 2,513,966 2,415,164 2,293,061 2,122,147 Collection items handled: U. S. Govt. coupons paid.. 12,301 12,753 13,703 13,599 14,510 All other 16,368 15,443 14,360 14,172 13,428 Issues, redemptions, and exchanges of U. S. Govt. securities 191,922 191,112 177,596 163,568 154,335 Transfers of funds 1,960 1,808 1,718 1,595 1,525 AMOUNTS HANDLED Discounts and advances.. 88,436,422 22,871,449 93,438,640 105,,549,326 43,422,106 Industrial loans: Loans made 2,901 7,477 22,009 31,193 27,656 Commitments to make industrial loans 2,412 520 980 3,468 9,078 Currency received and counted. 27,461,048 28,482,428 29,514,663 27,001,076 26,,175,324 Coin received and counted 752,345 '698,819 607,205 558,416 592,664 Checks handled: U. S. Govt. checks 123,215,681 141,037,495140,739,438119423,270 89,648,061 Postal money orders 5,814,754 5,943,178 6,091,173 5,996,899 All others 965,189,633 882,971,848 885,726,031840;094,629 799,891,846 Collection items handled: U. S. Govt. coupons paid.. 2,595,305 2,209,045 2,270,606 923,079 020,560 All other 5,354,604 5,085,695 4,615,970 103,262 121,274 Issues, redemptions, and exchanges of U. S. Govt. securities 429,701,960 469,247,400 381,877,330355,234,532344,771,945 Transfers of funds 1,091,608,891 1,038,100,606 876,838,475767,974,539656,771,175 ' Revised. 1 Two or more checks, coupons, etc., handled as a single item are counted as one "piece." 2 Less than 50. 3 Exclusive of checks drawn on the Federal Reserve Banks, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NO. 6—EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS DURING 1955 Phila- Cleve- Rich- Minne- Kansas San Item Total Boston New York- delphia land mond Atlanta Chicago St. Louis apolis City Dallas Francisco CURRENT EARNINGS Discount and advances $13,084,632 $498,376 $3,055,322 $958,778 $863,074 $567,773 $1,015,249 $2,640,046 $474,372 $840,861 $908,481 $467,157 $795,143 Industrial loans 24,199 20,202 3,997 Commitments to make industrial loans 17,842 884 5,398 210 818 80 10,452 Acceptances 215,641 215,641 U. S. Government securities.. 398,977,919 21,965,707102,368,356 24,212,406 34,169,78323,436,369 20,474,183 69,427,12516,540,000 9,669,41217,270,91315,880,780 43,562,885 All other 167,698 14,095 26,472 10,332 16,943 8,490 13,210 23,908 6,150 12,007 17,556 9,887 8,648 Total current earnings. . 412,487,931 22,478,178 105,665,791 25,202,602 35,055,198 24,012,842 21,503,460 72,091,159 17,020,522 10,526,27718,207,40216,357,824 44,366,676 CURRENT EXPENSES Salaries: Officers 5,171,135 330,919 917,538 339,630 436,648 383,418 418,857 586,401 361,077 294,342 330,175 348,013 424,117 Employees 68,548,252 4,164,103 15,364,153 4,069,829 6,025,265 4,408,395 4,063,35510,932,346 3,828,916 2,058,279 3,513,649 3,267,435 6,852,527 Directors' and other fees.... 265,015 15,370 38,874 21,744 16,023 18,910 33,92 16,136 24,362 16,066 16,157 19,709 27,739 Retirement contributions.... 6,782,212 420,815 1,445,476 396,657 594,286 451,018 423,366 1,086,488 380,116 203,437 363,893 345,219 671,441 Traveling expenses 1,335,055 86,205 197,592 65,788 129,664 113,259 98,794 162,752 90,219 69,270 82,931 94,657 143,924 Postage and expressage 15,179,071 1,203,292 2,253,381 819,797 1,241,272 1,395,090 1,290,106 2,165,054 822,955 492,849 863,713 779,745 1,851,817 Telephone and telegraph.... 981,293 52,172 205,494 50,642 74,515 68,590 90,644 114,380 59,814 36,630 56,814 65,728 105,870 Printing, stationery, and supplies 5,217,321 374,234 934,369 291,246 413,884 345,829 408,539 938,952 359,279 134,634 298,425 235,858 482,072 Insurance 1,041,464 75,687 182,520 52,750 102,317 90,657 71,007 142,954 74,518 28,691 73,839 49,941 96,583 Taxes on real estate 2,939,567 450,210 646,271 123,384 259,740 124,051 147,833 451,020 102,866 105,213 130,981 74,443 323,555 Depreciation (building) 2,620,474 403,814 273,241 268,149 357,446 243,496 162,231 283,321 72,916 56,111 81,688 35,307 382,754 Light, heat, power, and water 1,187,842 101,577 206,729 86,107 118,644 94,033 59,493 161,340 88,628 38,156 93,503 47,328 92,304 Repairs and alterations 770,697 25,822 141,768 86,346 224,402 44,362 52,882 46,383 39,990 22,862 20,337 21,380 44,163 Rent 458,188 2,891 4,082 14,115 84,669 2,386 111,308 86,316 1,462 60,253 595 49,485 40,626 Furniture and equipment: Purchases 1,346,909 99,477 74,878 73,501 192,143 152,546 136,443 228,334 174,552 28,585 67,797 38,446 80,207 Rentals 4,316,821 370,326 629,793 310,145 389,761 297,036 271,167 701,938 243,320 161,263 258,521 227,148 456,403 Assessment for expenses of Board of Governors 4,194,100 251,100 1,218,800 306,000 380,500 213,100 183,800 585,600 159,500 105,000 158,800 198,000 433,900 Federal Reserve currency.... 4,707,002 343,777 1,250,134 309,484 252,424 369,113 281,381 810,535 238,654 62,047 201,580 149,728 438,145 All other 11,594,099 120,130 275,420 118,003 393,814 109,352 105,343 281,455 108,193 86,559 126,188 88,395 172,356 Total l128,656,517 8,891,921 26,260,513 7,803,31711,687,417 8,924,641 8,410,47419,781,705 7,231,337 4,060,247 6,739,586 6,135,96513,120,503 Less reimbursement for certain fiscal agency and other expenses 118,596,494 965,649 3,546,921 962,242 1,734,062 1,082,467 1,323,144 3,381,061 1,158,036 541,484 1,288,118 1,079,300 1,925,119 Net expenses 110,060,023 7.926.272J 22,713,592 6,841,075 9,953,355j7,842,174 7,087,330 16,400,644 6,073,301 3,518,763 5,451,468 5,056,66511,195,384 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PROFIT AND LOSS Current net earnings 302,427,908 14,551,906 82,952,19918,361,52725,101,843 16,170,668 14,416,130 55,690,51510,947,221 7,007,51412,755,93411,301,159 33,171,292 Additions to current net earnings 178,313 270 59,877 485 16,315 482 122 9,049 636 86,471 1,825 2,631 150 De e d a u rn ct i i n o g n s s : from current net s Losses on sales of U. S. Government securities (net) 506 83 34 50 74 55 40 4-7 73 39 33 46 Reserves for contingencies 356,669 35,397 54,159 18,266 20,806 51,955 16,181 44,972 18,662 11,536 21,333 18,945 44,457 s Allother 86,594 6,953 33,221 224 1,380 995 5,285 20,908 6,998 1,971 131 342 8,186 Total deductions 443,769 42,433 87,414 18,540 22,260 53,005 21,506 65,873 25,733 13,546 21,497 19,333 52,629 w Net deductions 265,456 42,163 27,537 18,055 5,945 52,523 21,384 56,824 25,097 +72,925 19,672 16,702 52,479 Net earnings before payments to U. S. Treasury... 302,162,452 14,509,743 82,924,66218,343,472 25,095,898 16,118,14514,394,746 55,633,69110,922,124 7,080,439 12,736,262 11,284,457 33,118,813 Si Paid U. S. Treasury (interest on F. R. notes) 251,740,721 12,221,591 69,806,74715,456,865 21,070,509 13,786,64712,249,151 47,949,747 9,274,574 6,013,073 10,843,0536,491,49426,577,270 Dividends paid 17,711,937 930,218 5,361,648 1,169,206 1,684,251 799,651 784,588 2,356,233 617,044 399,257 688,430 931,086 1,990,325 3 Transferred to surplus(Sec. 7) 32,709,794 1,357,934 7,756,267 1,717,401 2,341,138 1,531,847 1,361,007 5,327,711 1,030,506 668,109 1,204,779 3,861,877 4,551,218 Surplus (Sec. 7) January 1... 660,901,518 40,308,695188,070,589 47,773,113 60,222,040 33,480,005 29,480,095 96,565,88726,618,98716,918,046 24,755,181 29,985,195 66,723,685 Surplus (Sec. 7) December 31 693,611,312 41,666,629 195,826,856 49,490,514 62,563,178 35,011,852 30,841,102101,893,59827,649,49317,586,155 25,959,96033,847,072 71,274,903 1 After deducting $391,109 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, 1914-55 Bank and period e C a u rn rr in en g t s e C x u p r e r n e s n e t s U N . b S e e m t f . o e e T r n a e r t r s e n p a i t a s n o y u g - r s y1 Div p i a d i e d nds F p r a a T id n r c e t h a o s i 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 te e . t r a o e n s s o u U t t r e y . o s S n ) . 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 o 1930 36,424,044 28 342 726 7 988 182 10 268 598 17 308 —2 297,724 1931 29,701,279 27,040,664 2 972,066 10 029 760 —7,057,694 1932 50,018,817 26,291,381 22,314,244 9 282,244 2,011,418 11,020,582 1933 49,487,318 29 222,837 7 957 407 8 874 262 —916,855 1934 48,902,813 29,241,396 15,231,409 8,781,661 $ -60,323 6,510,071 1935 42,751,959 31,577,443 9,437,758 8,504,974 $ 297,667 27,695 607,422 1936 37,900,639 29,874,023 8,512,433 7,829,581 227,448 102,880 352,524 1937 41,233,135 28,800,614 10,801,247 7,940,966 176,625 67,304 2,616,352 1938 36,261,428 28,911,608 9,581,954 8,019,137 119,524 —419,140 1,862,433 1939 38,500,665 28,646,855 12 243 365 8 110 462 24 579 —425,653 4,533,977 I 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 C/i 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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 1955 412,487,931 110,060,023 302,162,452 17,711,937 251,740,721 32,709,794 Total—1914-55... 5,189,602,693 1,746,522,254 3,392,999,982 370,301,336 149,138,300 2,188,893 2,049,095,254 —3,658 2822,279,857 s Aggregate for each Federal Reserve Bank, 2 1914-1955: Boston 338,206,137 125,405,795 210,553,345 24,154,626 7,111,395 280,843 126,974,202 +135,412 51,896,867 New York 1,330,828,717 399,110,434 929,064,515 124,410,562 68,006,262 369,116 504,061,973 -433,413 232,650,015 Philadelphia 356,873,020 121,771,006 234,796,966 31,191,813 5,558,901 722,406 132,921,787 +290,661 64,111,398 Cleveland 475,264,959 161,077,287 307,926,328 36,702,676 4,842,447 82,930 190,521,117 —9,907 75,787,065 Richmond 306,752,354 111,338,501 191,941,034 15,807,923 6,200,189 172,493 129,011,802 -71,516 40,820,143 1 W Atlanta 267,232,585 92,999,667 168,656,196 13,912,772 8,950,561 79,264 109,594,975 +5,491 36,113,133 Chicago 772,057,715 243,093,007 518,588,242 44,557,311 25,313,526 151,045 331,320,644 +11,681 117,234,035 St. Louis 248,636,089 95,371,694 147,935,966 12,814,270 2,755,629 7,464 99,642,512 -26,514 32,742,605 Minneapolis 154,759,796 58,081,921 94,904,023 8,751,264 5,202,900 55,615 59,301,129 +64,875 21,528,240 Kansas City 241,178,486 95,733,486 141,995,946 12,849,322 6,939,100 64,213 92,060,747 -8,674 30,091,238 Dallas 212,892,452 78,540,610 130,990,286 13,635,159 560,049 102,083 78,457,773 +55,336 38,179,886 i San Francisco 484,920,383 163,998,846 315,647,135 31,513,638 7,697,341 101,421 195,226,593 -17,090 81,125,232 Total 5,189,602,693 1,746,522,254 3,392,999,982 370,301,336 149,138,300 2,188,893 2,049,095,254 -3,658 822,279,857 1 Current earnings less current expenses, plus and minus profit and loss additions and deductions. 2 The $822,279,857 transferred to surplus was reduced by direct charges of $139,299,557 for contributions 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 $693,611,312 on Dec. 31, 1955. 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 1918-55 AND END OF MONTH 1955 [In millions of dollars] Reserve Bank credit outstanding m D em ep b o e s r i t b s, a n o k th r e e r se th rv a e n s, Member baink with F. R. Banks reserves U. S. Government Treas- Other securities Dis- ury Cur- Treas- Fed- End of year or Gold cur- rency ury eral month Total B o o u u t g - ht r u c H e n h p e d a u l s e d r e r - v c a o a a n u n d c n d - e ts s Float ot A he ll r* Total stock2 s r t o e i a n u n n g c t d - 3 y - l c a ir t i i c n o u n - h i c n o a g l s d s h * - d T ep u re o ry a s s i - tsde F e p i o o g r s n - itsd O ep t o h s e i r tsc s o R e a u r c n e v - - t e s5 Total qu R ir e e - d6 c E e x ss - 6 right agree- s 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 3 1919 300 300 2,215 201 575 3,292 2,707 1,707 5,091 385 31 73 28 208 1,890 1,822 68 1920 ... 287 287 2,687 119 262 3.3.S55 2,639 1,709 5,325 218 57 5 18 298 1,781 1921 234 234 1,144 40 146 L,563 3,373 1,842 4,403 214 96 12 15 285 1,753 1,654 99 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 L,238 3,957 2,009 4,757 213 38 4 19 275 1,898 1,884 14 1924 540 536 4 320 52 390 L,302 4,212 2,025 4,760 211 51 19 20 258 2,220 2,161 59 1925 375 367 8 643 63 378 1,459 4,112 1,977 4,817 203 16 8 21 272 2,212 2,256 —44 1926 315 312 3 637 45 384 L,381 4,205 1,991 4,808 201 17 46 19 293 2,194 2,250 -56 o 1927 ... 617 560 57 582 63 393 L,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 .809 3,854 2,012 4,686 202 23 6 21 348 2,389 2,430 —41 1929 511 488 23 632 34 405 1,583 3,997 2,022 4,578 216 29 6 24 393 2,355 2,428 -73 a 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 w 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 o 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 5 1935 2,431 2,430 1 5 12 38 2,486 10,125 2,476 5,882 2,566 544 29 226 253 5,587 2,743 2,844 1936 ... 2,430 2,430 3 39 28 2,500 11,258 2,532 6,543 2,376 244 99 160 261 6,606 4,622 1,984 1937 2,564 2,564 10 19 19 2,612 12,760 2,637 6,550 3,619 142 172 235 263 7,027 5,815 1,212 1938 2,564 2,564 4 17 16 2,601 14,512 2,798 6 856 2,706 923 199 242 260 8 724 5,519 3,205 1939 2,484 2,484 7 91 11 2,593 17,644 2,963 7,598 2,409 634 397 256 251 11,653 6,444 5,209 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1940 2,184 2,184 3 80 8 2,274 21,995 3,087 8,732 2,213 368 1,133 599 284 14,026 7,411 6,615 1941 2 254 2 254 3 94 10 2,361 22,737 3,247 11,160 2,215 867 774 586 291 12,450 9,365 3 085 1942 6,189 6,189 6 471 14 6,679 22,726 3,648 15,410 2,193 799 793 485 256 13,117 11,129 1,988 1943 11,543 11,543 5 681 10 12,239 21,938 4,094 20,449 2,303 579 1,360 356 339 12,886 11,650 1,236 1944 18,846 18,846 80 815 4 19,745 20,619 4,131 25,307 2,375 440 1,204 394 402 14,373 12,748 1,625 1945 .... 24,262 24,262 249 578 2 25,091 20,065 4,339 28,515 2,287 977 862 446 495 15,915 14,457 1,458 1946 23,350 23,350 163 580 1 24,093 20,529 4,562 28,952 2,272 393 508 314 607 16,139 15,577 562 1947 22 559 22,559 85 535 1 23,181 22,754 4,562 28 868 1,336 870 392 569 563 17,899 16,400 1 499 1948 .... 23,333 23,333 223 541 1 24,097 24,244 4,589 28,224 1,325 1,123 642 547 590 20,479 19,277 1,202 1949 18,885 18,885 78 534 2 19,499 24,427 4,598 27,600 1,312 821 767 750 706 16,568 15,550 1,018 1950 20,778 20,725 53 67 1,368 3 22,216 22,706 4,636 27,741 1,293 668 895 565 714 17,681 16,509 1,172 1951 23,801 23,605 196 19 1,184 5 25,009 22,695 4,709 29,206 1,270 247 526 363 746 20,056 19,667 389 1952 24,697 24,034 663 156 967 4 25,825 23,187 4,812 30,433 1,270 389 550 455 777 19,950 20,520 -570 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 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 1955— January 23,885 23,882 3 475 600 1 24,960 21,714 4,989 29,789 837 360 441 419 899 18,918 18,337 581 February 23,605 23,605 485 678 1 24,769 21,716 4,996 29,817 828 564 320 433 957 18,562 18,091 471 March. 23,612 23,604 8 391 659 4 24,667 21,719 4,998 29,800 819 724 351 448 959 18,283 17,871 412 April 23,612 23,604 8 560 799 18 124,988 21,671 4,999 29,769 809 812 360 490 923 18,495 18,161 334 May 23,662 23,662 460 643 15 24,780 21,674 5,002 30,009 828 649 402 413 936 18,221 18,029 192 June 23,607 23,554 53 128 850 16 24,601 21,678 5,002 30,229 812 380 374 448 972 18,066 18,139 —73 A Ju u l g y ust 2 2 3 4 , , 7 0 6 9 1 0 2 2 3 3 , , 7 9 6 8 1 2 108 4 7 7 5 0 4 6 8 6 6 5 4 1 1 5 1 • 2 2 4 5 , , 9 7 1 1 1 9 2 2 1 1 , , 6 6 8 8 2 2 5 5 , , 0 0 0 0 5 3 3 3 0 0 , , 3 2 1 4 7 4 8 7 0 9 4 8 6 3 2 93 3 4 38 1 7 0 3 4 8 1 3 9 9 9 4 1 5 0 1 1 8 8 , , 3 9 6 9 8 9 1 1 8 8 , , 1 3 5 1 1 1 6 21 8 7 8 to September......23,834 23,729 105 603 792 22 25,250 21,684 5,006 30,422 787 554 385 379 990 18,423 18,212 211 October 24,024 24,024 706 683 17 25,430 21,686 5,008 30,559 776 484 402 396 941 18,565 18,393 172 November 24,256 23,991 265 618 883 18 25,776 21,688 5,008 30,993 778 477 408 412 931 18,474 18,417 57 3 December 24,785 24,391 394 108 1,585 29 26,507 21,690 5,008 31,158 767 394 402 554 925 19,005 18,903 102 w 1 Comprises acceptances and industrial loans; also 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 currency, 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 currency of these kinds held in the Treasury and the Federal Reserve Banks as well as that in circulation. * Gold other than that held against gold certificates and gold certificate credits, including the reserve against United States notes and Treasury notes of 1890, monetary silver other than that held against silver certificates and Treasury notes of 1890, and the following coin and paper currency held in the Treasury: subsidiary silver and minor coin, United States notes, Federal Reserve notes, Federal Reserve Bank notes, and national bank notes. 6 The total of Federal Reserve Bank capital paid in, surplus, other capital accounts, and other liabilities and accrued dividends, less the sum of bank premises and other assets. 6 These figures are estimated. Available only on call dates prior to 1929 (in 1920 and 1922, the call dates were December 29). NOTE.—For description of figures and discussion of their significance, see Banking and Monetary Statistics, Sec. 10, pp. 360-66. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 9—BANK PREMISES OF FEDERAL RESERVE BANKS AND BRANCHES DECEMBER 31, 1955 Cost Federal Reserve Bank or Net branch Building Fixed ma- book value Land (including chinery and Total vaults)i equipment Boston $ 1,628,132 $ 6,039,077 $ 2,866,643 $10,533,852 $ 5,641,951 New York 5,215,656 12,183,528 4,877,779 22,276,963 5,525,372 Annex 592,679 1,493,949 520,596 2,607,224 986,778 Buffalo 607,776 1,012,683 1,620,459 1,253,883 Philadelphia... 1,884,357 4,839,506 2,130,560 8,854,423 5,049,780 Cleveland 1,295,491 7,360,677 1,705,240 10,361,408 2,621,774 Cincinnati 380,744 1,170,116 934,352 2,485,212 1,584,529 Pittsburgh 1,189,941 1,314,065 689,889 3,193,895 1,699,070 Richmond 389,611 3,682,181 1,760,634 5,832,426 3,143,498 Annex 80,333 482,482 177,455 740,270 167,871 Baltimore 250,487 1,517,956 480,555 2,248,998 1,006,763 Charlotte 116,569 867,201 154,449 1,138,219 900,275 Atlanta 632,403 1,722,115 362,731 2,717,249 1,243,249 Birmingham... 124,137 330,680 70,510 525,327 123,388 Jacksonville... 164,004 1,686,118 629,539 2,479,661 2,169,097 Nashville 48,000 211,617 35,090 294,707 78,935 New Orleans. . 277,078 762,456 265,700 1,305,234 429,900 Chicago 2,963,548 6,543,261 2,752,827 12,259,636 2,009,784 Detroit 1,147,734 2,818,661 1,214,162 5,180,557 4,061,492 St. Louis 1,496,060 2,136,438 1,328,886 4,961,384 1,228,943 Annex 179,720 1,035,281 524,429 1,739,430 971,316 Little Rock.... 85,007 264,604 161,837 511,448 183,034 Louisville 590,095 405,922 72,464 1,068,481 786,200 Memphis 128,542 287,469 105,441 521,452 230,345 Minneapolis... 600,521 3,542,852 629,944 4,773,317 2,114,275 Helena 15,709 126,401 44,142 186,252 80,070 Kansas City... 545,764 3,539,111 1,229,845 5,314,720 1,386,710 Denver 592,021 479,592 86,910 1,158,523 744,286 Oklahoma City 65,021 421,252 97,589 583,862 186,829 Omaha 444,177 998,485 94,548 1,537,210 1,171,815 Dallas 189,831 1,362,220 466,692 2,018,743 287,693 El Paso 39,003 119,739 32,575 191,317 35,792 Houston 78,812 317,336 112,111 508,259 115,143 San Antonio... 477,347 1,392,543 55,859 1,925,749 1,707,233 San Francisco. 476,768 3,495,270 1,036,864 5,008,902 1,190,201 Los Angeles. .. 736,867 4,900,170 325,782 5,962,819 4,553,481 Portland 161,239 1,678,511 630,920 2,470,670 2,019,580 Salt Lake City. 114,075 341,449 84,814 540,338 176,236 Seattle 274,772 1,891,564 642,240 2,808,576 2,298,300 Total 26,280,031 84,774,538 29,392,603 140,447,172 61,164,871 OTHER REAL ESTATE ACQUIRED FOR BANKING HOUSE PURPOSES Richmond.. 146,550 146,550 146,550 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 ,323,931 Dallas 496,412 496,412 496,412 El Paso 250,000 250,000 250,000 Houston. ... 630,068 630,068 630,068 Los Angeles. 40,747 29,464 70,211 70,211 Portland 37,000 37,000 37,000 Total... 3,266,102 1,221,660 132,466 4,620,228 4,579,497 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, 1955] President Other officers Employees1 Total Federal Reserve Bank (Including branches) Annual salary Number Annual salaries Number Annual salaries Number Annual salaries Boston $30,000 23 $279,500 1,214 $ 4,169,997 1,238 $ 4,479,497 New York 60,000 54 866,450 3,657 15,517,508 3,712 16,443,958 Philadelphia 30,000 24 310,000 1,090 3,932,906 1,115 4,272,906 Cleveland 30,000 32 409,250 1,692 5,981,196 1,725 6,420,446 30,000 30 357,700 1,262 4,242,159 1,293 4,629,859 Atlanta 30,000 34 384,600 1,292 4,056,506 1,327 4,471,106 Chicago .... 40,000 38 518,200 2,864 10,760,032 2,903 11,318,232 St. Louis 30,000 32 347,500 1,158 3,638,212 1,191 4,015,712 28,000 25 273,700 668 2,081,560 694 2,383 260 Kansas City 30,000 26 297,300 1,020 3,399,487 1,047 3,726,787 Dallas 30,000 29 327,300 945 3,246,208 975 3,603,508 35,000 32 385,000 1,881 6,740,347 1,914 7,160,347 Total $403,000 379 $4,756,500 18,743 $67,766,118 19,134 $72,925,618 includes 777 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 In effect December 31, 1955. For changes during the year, see Board "Record of Policy Actions." [Per cent per annum] San Type of transaction Boston Y N o e r w k d P e h lp il h a i - a C la le n v d e- m Ri o c n h d - Atlanta Chicago L S ou t. is M ap in o n li e s - K C an it s y as Dallas F ci r s a c n o - Z Discounts for and advances to member banks: z Advances secured by Government obligations and discounts of and advances secured by eligible paper c (Sees. 13 and 13a of the Federal Reserve Act) 2H 2M 2H Ot R he e r s er s v e e cu A re c d t) advances (Sec. 10b of the Federal 3 3 r-1 S 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 i Federal Reserve Act) 3H Lo 1 a 3 n b s o t f o th in e d F u e s d tr e ia ra l l o R r e s c e o r m ve m A er c c t i , a d l ir b e u c s t i n o e r s i s n e s p a u r n ti d c e ip r a S ti e o c n . O with financing institutions 3-5 3-5 3-5 H 3-5 H 3-5 H •xl Discounts for and purchases from financing institutions under Sec. 13b of the Federal Reserve Act: On portion for which institution is obligated 0) 8 0) C1) On remaining portion (3) 2 34-5 (3) Commitments to make loans under Sec. 13b of the Federal Reserve Act: To industrial or commercial businesses To financing institutions H-1 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 H per cent per annum on undisbursed portion of loan. 5 Financing institution is charged \i per cent per annum on undisbursed portion of loan. NOTE.—Maximum maturities. Discounts for and advances to member banks: 90 days for discounts and advances under Sections 13 and 13a of the Federal Reserve Act except that discounts of certain bankers' acceptances and of agricultural paper may have maturities not exceeding 6 months and 9 months, respectively, and advances secured by obligations of Federal intermediate credit banks maturing within 6 months are limited to maximum maturities of 15 days; 4 months for advances under Section 10(b). Advances to individuals, partnerships, or corporations under the last paragraph of Section 13: 90 days. Industrial loans and commitments under Section 13b: 5 years. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 75 NO. 12—MEMBER BANK RESERVE REQUIREMENTS [Per cent of deposits] Net demand deposits1 Time deposits Effective date of change Central Central Reserve Country reserve and Country reserve city banks banks reserve city banks city banks banks 1917—June 21 13 10 1936—Aug. 16 19^ 15 1937—Mar. 1 22% 12 J May 1 26 20 14 1938—Apr. 16 22^ 17 12 1941—Nov. 1 26 20 14 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 May 5 24 21 June 30 20 July 1 14 Aug. 1 13 Aug. 11 23 H Aug. 16 12 Aug. 18 23 19 Aug. 25 22 ^ 18* Sept. 1 22 18 1951—Jan. 11 23 19 Jan. 16 13 Jan. 25 *24" '26' Feb. 1 14 1953—July 1 13 July 9 22 19 1954—June 16 June 24 21 July 29 20 18 Aug. 1 12 In effect Jan. 1, 1956. 20 is' 12 Statutory requirements: Minimum 13 10 7 Maximum 26 20 14 1 Demand deposits subject to reserve requirements which, beginning Aug. 23, 1935, have been total demand deposits minus cash items in process of collection and demand balances due from domestic banks (also minus war loan and Series E bond accounts during the period Apr. 13,1943-June 30,1947). NO. 13—MAXIMUM INTEREST RATES PAYABLE ON TIME DEPOSITS1 [Per cent per annum] Type of deposit Nov. 1, 1933— Feb. 1, 1935— Effective Jan. 31, 1935 Dec. 31, 1935 Jan. 1, 1936 Savings deposits 3 2H 2H Postal Savings deposits 3 2H 2H Other time deposits payable: In 6 months or more 3 2H In 90 days to 6 months 3 In less than 90 days 3 2H 1 1 Maximum rates that may be paid by member banks as established by the Board of Governors under provisions of Regulation Q. Under this regulation the rate payable by a member bank may not in any event exceed the maximum rate payable by State banks or trust companies on like deposits under the laws of the State in which the member bank is located. Maximum rates that may be paid by insured nonmember banks as established by the Federal Deposit Insurance Corporation, effective Feb. 1, 1936, are the same as those in effect for member banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 14—MARGIN REQUIREMENTS* Prescribed by Board of Governors of the Federal Reserve System in accordance with Securities Exchange Act of 1934 [Per cent of market value] Jan. 21, Feb. 1, Mar. 30, Jan. 17, Feb. 20, Jan. 4, Effec- 1946— 1947— 1949— 1951— 1953— 1955— tive Jan. 31, Mar. 29, Jan. 16, Feb. 20, Jan. 4, Apr. 22, Apr. 23, 1947 1949 1951 1953 1955 1955 1955 Regulation T: For extensions of credit by brokers and dealers on listed securities... 100 75 50 75 50 60 70 For short sales 100 75 50 75 50 60 70 Regulation U: For loans by banks on stocks 100 75 50 75 50 60 70 i Regulations T and U limit the amount of credit that may be extended on a security by prescribing a maximum loan value, which is a specified percentage of its market value at the time of the extension; the "margin requirements" shown in this table are the difference between the market value (100 per cent) and the maximum loan value. 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 31,1955] Fees Payable to Guaranteeing Agency by Financing Institution on Guaranteed Portion of Loan Guarantee fee Percentage of (Percentage of any commitment Percentage of loan guaranteed interest payable fee charged by borrower) borrower 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—PRINCIPAL ASSETS AND LIABILITIES, AND NUMBER OF ALL BANKS, BY CLASSES, DECEMBER 31, 1955 AND 19541 [In millions of dollars] Commercial banks Mutual savings banks All Item banks Member banks Insured Non- Total Insured Non- Total* nonmember insured insured Total National State December31,1955* Loans and investments, total 190,740 160,850 135,350 86,080 49,270 23,680 1,840 29,890 22,350 7,540 Loans 100,100 82,630 70,980 43,150 27,830 11,130 530 17,470 13,580 3,890 Investments 90,640 78,220 64 370 42 930 21 440 12 550 1,310 12,420 8,770 3,650 U. S. Govt. obligations 70,150 61,700 50,800 33,920 16,880 9,960 950 8,450 5,840 2,610 Other securities 20,490 16,520 13 570 9 010 4 560 2 590 360 3,970 2,930 1,040 Cash assets 46,140 45,170 39,860 25,260 14,600 4,930 380 970 800 170 Deposits, total 218,680 190,490 162,170 103,410 58,760 26,470 1,870 28,190 21,250 6,940 Interbank 16,720 16,720 15,810 9 290 6 520 440 470 Other demand 125 280 125 230 107 290 67 480 39 810 16 880 1 060 50 50 Other time 76 680 48,540 39 070 26 640 12 430 9 150 340 28,140 21,200 6,940 Total capital accounts 18,090 15,270 12,740 7,880 4,860 2,190 340 2,820 2,020 800 Number of banks 14,243 13,716 6,543 4,692 1,851 6,677 499 527 220 307 December 31, 1954 Loans and investments, total 183,784 155,916 131,602 88,509 43,093 22,536 1,800 27,868 20,830 7,038 85,617 70,619 60,250 39,712 20,538 9,886 492 14,998 11,651 3,346 Investments 98,167 85,297 71,352 48,797 22,555 12,651 1,308 12,871 9,179 3,692 U. S. Govt. obligations. .. 77,728 68,981 57,809 39,392 18,417 10,215 969 8,748 6,117 2,630 Other securities 20,439 16,316 13,543 9,405 4,138 2,436 339 4,123 3,062 1,061 Cash assets 44,585 43,559 38,076 25,662 12,414 5,088 397 1,026 832 194 Deposits total 211,115 184,757 157,252 105,851 51,401 25,657 1,871 26,359 19,885 6,474 16,811 16,809 15,983 10,714 5,269 393 433 3 3 Other demand 120,793 120,739 103,319 68,934 34,384 16,318 1,103 54 51 3 r Other time 73,511 47,209 37,950 26,202 11,748 8,947 335 26,302 19,831 6,471 Total capital accounts 17,270 14,576 12,210 8,085 4,125 2,044 324 2,694 1,920 774 14,367 13,840 6,660 4,789 1,871 6,647 536 527 218 309 * Figures for Dec. 31,1955 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, 1955 may be considerably different from reported figures; the latter will be published in the Bulletin, probably in the May issue. 1 All banks in the United States and one in Alaska that became a member in 1954. 2 Total for commercial banks excludes three member mutual savings banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 17—MEMBER BANK EARNINGS, BY GLASS OF BANK, 1955 AND 1954 [Dollar amounts in millions] Central reserve city banks Reserve Country Total city banks banks Item New York Chicago 1955P 1954 1955P 1954 1955* 1954 1955P 1954 1955* 1954 Earnings $5,335 $4,826 $866 $777 $209 $192 $2,095 $1,888 $2,165 $1,969 On U. S. Govt. securities 1,117 1,066 156 153 57 421 399 484 458 On other securities 273 49 103 108 On loans 3,075 2,711 "484 417 "ios 93 1,228 1,082 1,257 1,119 Allother 776 158 30 304 284 Expenses 3,261 2,999 471 428 111 106 1,275 1,169 1,404 1,295 Salaries and wages.... 1,463 232 52 567 611 Interest on deposits 494 41 16 207 230 All other 1,042 155 38 394 454 Net current earnings before income taxes. 2,075 1,828 395 348 98 820 719 762 674 Recoveries and profits1.. . 492 87 217 166 Losses and charge-offs2... 254 110 107 Net addition to valuation 165 34 75 50 Profits before income taxes 1,675 1,900 319 374 671 751 602 683 Taxes on net income . . 691 804 132 161 279 348 245 257 Net profits 984 1,096 186 213 392 403 357 427 Gash dividends declareds 501 456 124 113 202 181 155 143 Ratios (per cent): Net current earnings before income taxes Average total capital accounts 16.6 15.6 14.4 13.1 16.0 14.9 18.3 17.4 16.3 15.5 Average total assets.. 1.22 1.12 1.26 1.14 1.19 1.07 1.23 1.14 1.19 1.10 Net profits to— Average total capital accounts 7.9 9.3 6.8 8.0 8.1 9.2 8.7 9.8 7.6 9.8 Average total assets.. 0.58 0.67 0.60 0.70 0.60 0.66 0.59 0.64 0.56 0.70 Average return on U.S. Govt. securities 2.09 1.96 2.02 1.80 2.05 1.93 2.10 1.95 2.11 2.02 Average return on loans 4.76 4.71 3.66 3.54 3.71 3.60 4.75 4.77 5.54 5.47 p Data for 1955 are preliminary, and some items are not available; final figures will appear in the Federal Reserve Bulletin, probably in the May issue. 1 Includes recoveries credited to valuation reserves. 2 Includes losses charged to valuation reserves. 3 Includes interest on capital notes and debentures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 79 NO. 18—ANALYSIS OF CHANGES IN NUMBER OF BANKING OFFICES DURING 1955* Commercial and stock savings banks and nondeposit trust companies Mutual savings All Member Nonmember banks banks banks banks Total State Non- Non- Na- mem- In- in- In- intional1 ber2 sured sured2 sured2 sured Number of banks, Dec. 31,1954 14,367 13,840 4,789 1,871 6,647 536 218 309 Changes during 1955 New banks3 +117 +116 +28 +4 +72 +12 +1 -4 -2 -2 Consolidations and absorptions: Banks converted to branches.. -205 -204 -115 -34 -51 -4 -1 Other -27 -27 -10 -4 -9 -4 Voluntary liquidations4 —5 —5 —1 —3 — 1 Other chances'* -1 +1 Conversions: National into State -4 +1 +3 State into National +8 -2 -5 -1 Federal Reserve membership:6 Admissions of State banks +16 -15 -1 Withdrawals of State banks.. -2 +2 Federal deposit insurance:7 +38 -38 +2 -2 Net increase or decrease -124 -124 -97 -20 +30 -37 +2 -2 Number of banks, Dec. 31,1955 14,243 13,716 4,692 1,851 6,677 499 220 307 Number of branches and additional offices, Dec. 31, 19548 6,416 6,108 2,900 1,710 1,462 36 221 87 Changes during 1955 De novo branches +462 +442 +231 +104 +105 +2 +12 +8 Banks converted into branches... +205 +203 +116 +62 +25 +1 +1 Discontinued —44 —44 —13 —17 —12 —2 -39 +57 -17 -1 Other changes10 . . .. +1 +1 +1 Net increase or decrease +624 +602 +296 +206 +101 -1 +13 +9 Number of branches and additional offices, Dec. 31, 1955" 7,040 6,710 3,196 1,916 1,563 35 234 96 Number of banking facilities, Dec. 31, 1954H 198 198 156 21 21 Changes during 1955 Established +20 +_20 +16 +2 +2 D In i t s e c r o c n la ti s n s u c e h d anges —5 + — 2 5 —2 Net increase or decrease +15 +15 +13 +2 Number of banking facilities, Dec. 31, 1955H 213 213 169 23 21 1 Excludes banks in United States territories and possessions except one national bank in Alaska. 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. 3Exclusive of new banks organized to succeed operating banks. ^Exclusive of liquidations incident to the succession, conversion, and absorption of banks. 5Newly organized State member bank formed by consolidation of 4 banks, located at the former head office of one of the discontinued national banks. •Exclusive of conversions of national banks into State member banks, and vice versa. 7Exclusive of insured nonmember banks converted into national banks or admitted to Federal Reserve membership, and vice versa. 8Except banking facilities which are shown separately; see footnote 11. 9For details of interclass branch changes, see Federal Reserve Bulletin, February 1956. 10Reflects restoration to series of a branch that had been eliminated. 11 Banking facilities (other than branches) that are provided at military and other Government establishments through arrangements made by the Treasury Department. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 ANNUAL REPORT OF BOARD OF GOVERNORS NO. 19—NUMBER OF BANKING OFFICES ON FEDERAL RESERVE PAR LIST AND NOT ON PAR LIST, BY FEDERAL RESERVE DISTRICTS AND STATES, DECEMBER 31, 19551 On par list TotaP Not on par list (Nonmember) Federal Total Member Nonmember Reserve district or State BanksBranches BanksBranches Banks Branches Banks Branches BanksBranches & offices & offices & offices & offices & offices DISTRICT 444 508 444 508 303 407 141 101 New York... 728 1,275 728 1,275 625 1,180 103 95 Philadelphia. 743 386 743 386 563 307 180 79 Cleveland.... 1,002 566 1,002 566 615 498 387 68 Richmond. .. 998 810 821 655 473 421 348 234 177 155 Atlanta 1,268 338 682 292 379 249 303 43 586 46 Chicago 2,484 801 2,484 801 1,022 431 1,462 370 St. Louis.... 1,459 218 1,151 149 492 91 659 58 308 69 Minneapolis.. 1,285 119 684 76 473 30 211 46 601 43 Kansas City.. 1,759 30 1,752 30 749 20 1,003 10 7 Dallas 1,060 91 969 78 634 55 335 23 91 13 SanFrancisco1 417 1,833 402 1,829 209 1,615 193 214 15 4 Xotal 13,647 6,975 11,862 6,645 6,537 5,304 5,325 1,341 1,785 330 STATE* Alabama. . . . 237 47 142 46 94 46 48 95 1 Arizona 10 93 10 93 4 67 6 26 Arkansas.... 233 25 119 7 71 4 48 3 114 18 California.... 142 1,210 142 1,210 92 1,105 50 105 Colorado. . .. 155 5 155 5 94 4 61 1 Connecticut.. 91 103 91 103 53 85 38 18 Delaware 30 38 30 38 11 16 19 22 Dist. of Col... 17 54 17 54 13 44 4 10 Florida .... 230 12 183 11 93 10 90 1 47 1 Georgia 407 61 122 59 64 52 58 7 285 2 Idaho 36 67 36 67 20 62 16 5 Illinois 916 4 914 4 518 4 396 2 Indiana.... 472 166 472 166 235 103 237 63 666 162 666 162 166 4 500 158 Kansas . .. 601 2 599 2 212 2 387 2 Kentucky.... 367 84 367 84 109 58 258 26 Louisiana 175 117 69 89 51 77 18 12 106 28 Maine 58 94 58 94 37 58 21 36 Maryland.... 152 168 152 168 70 96 82 72 Mass . . 173 261 173 261 134 226 39 35 Michigan.... 417 377 417 377 230 306 187 71 Minnesota... 679 6 272 6 206 6 66 407 Mississippi... 197 98 46 35 34 18 12 17 151 63 Missouri 599 3 540 3 175 3 365 59 Miontana 113 113 84 29 Nebraska. 414 1 414 1 139 1 275 Nevada 6 29 6 29 c 25 1 4 New Hamp. 75 2 75 2 52 1 23 1 New Jersey.. 294 261 294 261 252 231 42 30 New Mexico 51 30 51 30 33 13 18 17 New York. .. 506 1,033 506 1,033 442 973 64 60 N. Carolina.. 207 326 108 178 53 98 55 80 99 148 North Dakota 154 24 59 6 40 19 6 95 18 Ohio 623 369 623 369 401 327 222 42 Oklahoma. . . 384 3 377 3 223 3 154 7 Oregon 48 145 48 145 20 135 28 10 Pennsylvania. 812 472 812 472 615 406 197 66 Rhode Island. 10 69 10 69 6 53 4 16 S. Carolina.. 149 86 73 79 33 63 40 16 76 7 South Dakota 171 54 72 29 61 24 11 q 99 25 Tennessee. . . 297 138 215 123 86 90 129 33 82 15 Texas 933 19 891 19 580 19 311 42 Utah 51 45 51 45 26 40 25 Vermont 61 15 61 15 35 6 26 9 Virginia 316 176 315 176 205 120 110 56 1 Washington.. 103 208 103 208 42 197 61 11 West Virginia 181 180 111 69 1 Wisconsin. . . 552 150 552 150 166 22 386 128 Wyoming.... 53 1 53 1 40 1 13 Alaska 18 13 3 9 1 9 15 4 Hawaii 5 49 49 e 49 1 Includes Alaska arid Hawaii, assigned to the San Francisco District for check clearing and collection purposes. 2Cdmprises all commercial banking offices on which checks are drawn, including 213 banking facilities. Number of banks and branches differs from Table 18 because of banks and trust companies on Digitized for wFhRicAh SnEoR ch ecks are drawn, 3 mutual savings member banks, and banks in Alaska and Hawaii. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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RECORD OF POLICY ACTIONS BOARD OF GOVERNORS January 4, 1955 Amendments to Regulation T, Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges, and Regulation U, Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange. Effective January 4, 1955, the supplements to Regulations T and U were amended to increase the margin requirements from 50 per cent to 60 per cent, these requirements to be applicable both to purchases of securities and to short sales. Votes for this action: Messrs. Martin, Szymczak, Mills, Robertson, and Balderston. Votes against this action: none. During the latter part of 1954, the economy began a recovery from the recession that prevailed during the latter part of 1953 and the first part of 1954. The upturn was accompanied by a marked increase in stock market activity: information available to the Board when this action was under consideration showed that stock market credit had risen substantially from early 1954 to the end of November, and there were indications that the rate of increase had continued or become greater since the latest figures were available. This occurred during a period in which the volume of trading on securities exchanges had reached the highest levels in several years and evidences of substantial speculative activity were appearing. The Board's action in increasing margin requirements was designed to prevent the recovery from being hampered by excessive speculative activity in the stock markets. January 7, 1955 Revision of Regulation A, Advances and Discounts by Federal Reserve Banks. Effective February 15, 1955, Regulation A was revised by expanding the foreword of general principles and by making certain changes in the language of the body of the regulation to bring it up to date. (The last previous revision of the regulation was effective October 1, 1937, under the title Discounts for and Advances to Member Banks by Federal Reserve Banks.) Digitized for FRASER http://fraser.stlouisfed.org/ 82 Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 83 Votes for this action: Messrs. Martin, Szymczak, Mills, Robertson, and Balderston. Votes against this action: none. In announcing the revision of the regulation, the Board stated: While this revision of Regulation A makes certain changes in the language of the regulation itself, the most important change is the revision of the foreword (general principles) to Regulation A. The revised foreword is designed merely to restate and clarify certain guiding principles which are observed by the Federal Reserve Banks in making advances and discounts in accordance with the applicable provisions of the Federal Reserve Act and of Regulation A. The revision is not intended to further restrict or restrain access by member banks to the credit facilities of the Federal Reserve Banks. April 13, 1955 Increase in Rates on Discounts and Advances by Federal Reserve Banks. Effective April 14, 1955, the Board approved action by the board of directors of the Federal Reserve Bank of Kansas City establishing a rate of 1% per cent (an increase from li/ per cent) on 2 discounts for and advances to member banks under Sections 13 and 13a of the Federal Reserve Act. Votes for this action: Messrs. Martin, Balderston, Szymczak, Vardaman, Robertson, and Shepardson. 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: Boston April 15, 1955 New York April 15,1955 Cleveland April 15,1955 Richmond April 15, 1955 St. Louis April 15, 1955 Minneapolis April 15, 1955 Dallas April 15, 1955 Philadelphia April 22, 1955 Chicago April 22, 1955 San Francisco April 22, 1955 Atlanta May 2, 1955 The Board also approved actions taken by the boards of directors of all the Federal Reserve Banks, except Kansas City, in establish- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 ANNUAL REPORT OF BOARD OF GOVERNORS ing a rate of 2^4 pe* cent on advances to member banks under Section 10 (b) of the Federal Reserve Act. The effective dates of these approvals were the same as those shown above. In addition, the Board approved changes at some of the Federal Reserve Banks in rates on advances to individuals, partnerships, and corporations under the last paragraph of Section 13 of the Act. (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 involving new policy had been made in these rates since those referred to on pages 86-88 of the Board's Annual Report for 1954.) The demand for credit strengthened late in 1954, reflecting improved business activity, and continued strong throughout the first part of 1955. This demand, accompanied by a shift in Federal Reserve policy away from one characterized as "active ease," resulted in a moderate tightening of member bank reserve positions and increases in market rates of interest. The change in the discount rate recognized current money market conditions, including the higher level of interest rates, and, by making borrowing somewhat more expensive, served to discourage undue reliance on the discount facilities of the Federal Reserve Banks. April 22, 1955 Amendments to Regulation T, Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges, and Regulation U, Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange. Effective April 23, 1955, the supplements to Regulations T and U were amended to increase the margin requirements from 60 per cent to 70 per cent, these requirements to be applicable both to purchases of securities and to short sales. Votes for this action: Messrs. Martin, Balderston, Szymczak, Vardaman, Mills, Robertson, and Shepardson. Votes against this action: none. The period following the increase in margin requirements in January 1955 was marked by further growth, although at a somewhat lesser rate, in the volume of credit extended by banks and brokers for the purchase and carrying of securities, and by further indications of expanding speculative activity. This second action to increase margin requirements was taken in the light of these evidences of continued speculative pressures in the stock markets and was designed as an additional step to prevent excessive use of credit from adding to such pressures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 85 May 9, 1955 Amendment to Regulation F, Trust Powers of National Banks. Effective June 13, 1955, Section 10(c) of Regulation F was amended to permit the collective investment of funds of trusts which are established under employers' pension, profit-sharing, or stock bonus plans, without requiring compliance with the provisions of Section 17 of Regulation F, provided each such trust is exempt from Federal income taxes and collective investment is specifically authorized by the trust instrument or by court order. Votes for this action: Messrs. Balderston, Szymczak, Vardaman, Mills, Robertson, and Shepardson. Votes against this action: none. Mr. Martin, who was not present when this action was taken, stated that he concurred in it. Section 10 (c) of Regulation F heretofore prohibited the collective investment of funds held by a national bank as fiduciary except through the medium of a common trust fund, as permitted in Section 17 of the regulation. An increasing number of corporations had been creating pension, profitsharing, and similar type trusts for the benefit of their employees; in numerous cases, national banks had been designated to administer such trusts and frequently the provisions of the instruments creating such trust* authorize or require the trustee to commingle the funds for investment purposes. Although on occasion the funds of such trusts were commingled with the funds of other trusts in a common trust fund maintained by a national bank in accordance with the provisions of Section 17 of the regulation, it was the Board's understanding that certain restrictions contained in that section (particularly the limitation of $100,000 on the amount of funds of a single trust which may be placed in a common trust fund) posed difficult administrative problems. Also, pension and similar type trusts contain characteristics which set them apart from ordinary trusts and which necessitate investment considerations differing from those applicable to ordinary trusts. In addition, the Board was informed that pension and similar type trusts are excluded from Federal income taxation when they comply with certain conditions defined in the tax laws. In view of these circumstances, the Board concluded that if the collective investment of such trusts is specifically authorized by the trust instrument or by court order, such commingling might appropriately be permitted by Regulation F without the necessity for complying with the provisions contained in Section 17 specifically relating to common trust funds. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 ANNUAL REPORT OF BOARD OF GOVERNORS May 11, 1955 Amendments to Regulation D, Reserves of Member Banks, and Regulation Q, Payment of Interest on Deposits. Effective May 16, 1955, Regulations D and Q were amended so as to permit deposits to be classified as "savings deposits" in certain circumstances and subject to certain limitations although the deposit is not evidenced by a pass book. Votes for this action: Messrs. Martin, Szymczak, Vardaman, Mills, Robertson, and Shepardson. Votes against this action: none. Mr. Balderston, who was not present when this action was taken, stated that he concurred in it The purpose of the amendments was to permit deposits in member banks to be classified as savings deposits even where not evidenced by a pass book, provided the bank reserved the right to require 30 days' written advance notice of intended withdrawal and provided withdrawals were permitted only through payments to the depositor himself. The Board concluded that the amendments would be useful as a means of enabling member banks to perform in an economical manner services associated with the encouragement of thrift and at the same time would retain adequate safeguards for the preservation of essential distinctions between savings deposits and commercial or checking accounts. (Effective the same date, the Federal Deposit Insurance Corporation adopted an identical amendment to its regulations.) August 3, 1955 Increase in Rates on Discounts and Advances by Federal Reserve Banks. Effective August 4, 1955, the Board approved actions by the boards of directors of the Federal Reserve Banks of Boston, Atlanta, and Chicago establishing a rate of 2 per cent (an increase from 1^4 per cent) on discounts for and advances to member banks under Sections 13 and 13a of the Federal Reserve Act; and action by the board of directors of the Federal Reserve Bank of Cleveland establishing a rate of 2^4 per cent (an increase from 1% per cent) on such discounts and advances. Votes for this action: Messrs. Martin, Balderston, Szymczak, Mills, Robertson, and Shepardson. Votes against this action: none. Mr. Vardaman, who was not present when this action was taken, stated that he concurred in the action. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 87 Pursuant to the policy established by this action, the Board subsequently approved rates for Federal Reserve Banks on such discounts and advances as shown in the following tabulation, effective on the dates indicated: 2 per cent 2V4 per cent Boston September 13,1955 New York August 5, 1955 September 9,1955 Philadelphia August 5, 1955 September 2, 1955 Richmond August 12, 1955 September 9, 1955 Atlanta August26, 1955 Chicago September 9, 1955 St. Louis August 8,1955 August 30, 1955 Minneapolis August 6, 1955 September 12, 1955 Kansas City August 5, 1955 September 9, 1955 Dallas August 5, 1955 September 9,1955 San Francisco August 5, 1955 September 9, 1955 In connection with the foregoing actions, the Board also approved, effective as of the dates indicated above, rates on advances to member banks under Section 10 (b) of the Federal Reserve Act which, as required by that section, were one-half of one per cent higher than the new rates in effect at the respective Banks on discounts for and advances to member banks under Sections 13 and 13a. In addition, the Board approved 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. Evidences of expansion in the economy became increasingly apparent during the spring and summer of 1955 and the demand for credit continued to be heavy in nearly all credit areas. With business activity approaching capacity in some sectors and credit pressures becoming stronger, the Federal Reserve System had shifted its monetary and credit policy toward restraining potential inflationary developments in the interest of sustainable economic growth. The discount rate increase was intended to keep the rate in alignment with System open market policy and to bring it into a better relationship with short-term money market rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 ANNUAL REPORT OF BOARD OF GOVERNORS November 17, 1955 Increase in Rates on Discounts and Advances by Federal Reserve Banks. Effective November 18, 1955, the Board approved actions by the boards of directors of the Federal Reserve Banks of New York, Philadelphia, Cleveland, Atlanta, Chicago, and San Francisco establishing a rate of 21^ per cent (an increase from 2*4 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, Balderston, Szymczak, Vardaman, Mills, Robertson, and Shepardson. Votes against this action: none. 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: Minneapolis November 21, 1955 Kansas City November 21, 1955 Boston November 22, 1955 Richmond November 22, 1955 St. Louis November 22, 1955 Dallas November 23, 1955 The Board also approved, for each of the Federal Reserve Banks, a rate of 3 per cent on advances to member banks under Section 10 (b) of the Federal Reserve Act, the effective dates of these approvals being the same as those shown above. In addition, the Board approved 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. The period since the previous increase in the discount rate was marked by further economic expansion and demand for credit, as well as further increases in the volume of member bank borrowing at the Federal Reserve Banks and in open market money rates. The current action, therefore, represented an additional step to increase the degree of credit restraint being exerted by Federal Reserve policy in the interest of preventing inflationary developments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

RECORD OF POLICY ACTIONS FEDERAL OPEN MARKET COMMITTEE January 11, 1955 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 fostering growth and stability in the economy by maintaining conditions in the money market that would encourage recovery and avoid the development of unsustainable expansion, (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. 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. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Leedy, Mills, Robertson, Szymczak, Digitized for FRASER http://fraser.stlouisfed.org/ 89 Federal Reserve Bank of St. Louis

90 ANNUAL REPORT OF BOARD OF GOVERNORS Williams, and Young. Votes against this action: none. Not voting: Mr. Bryan. Clause (b) of the directive was changed at this meeting to provide that transactions for the System open market account should be with a view, among other things, "to fostering growth and stability in the economy by maintaining conditions in the money market that would encourage recovery and avoid the development of unsustainable expansion." This superseded the clause in the directive that had been adopted by the Committee at its meeting on December 7, 1954 which read "to promoting growth and stability in the economy by maintaining a condition of ease in the money market." The change to eliminate the word "ease" from the Committee's directive and to adopt the wording set forth above reflected the view of the Committee that, while the economic situation was developing satisfactorily, easy credit was no longer needed to foster recovery. There had been a rapid advance in most indicators of over-all economic activity since mid-1954 to levels only moderately below earlier peaks and, at the same time, there were some indications that further ease might contribute to the germination of unhealthy speculative activity which might endanger stability. The volume of credit used in security trading had been increasing rapidly, and the Board of Governors had increased margin requirements from 50 per cent to 60 per cent, effective January 4, 1955. The Committee's conclusion that, in order to avoid the development of unsound conditions, it should not continue to promote "ease" in credit availability, was a shift in emphasis, a further step away from the policy of "active ease" that had been pursued during the latter part of 1953 and most of 1954 and which had been modified in December of that year by elimination of the word "active" from the instruction to pursue a policy of ease. While the Committee did not believe that it was yet fighting inflation, it took the position that this shift in emphasis was desirable to avoid credit conditions that might encourage the development of an inflationary situation. This would contemplate a gradual contraction in the volume of free reserve funds of banks from the level that had prevailed, and some increase in the cost and decrease in the ready availability of credit. On the other hand, the change in directive at this meeting did not call for pursuit at this stage of a program of credit restraint or of firmness in the money market. March 2, 1955 1. Authority to Effect Transactions in System Account. The Federal Open Market Committee approved a renewal without change of the directive issued at its meeting on January 11, 1955 with respect to effecting transactions for the System open market account. Among other things, this directive provided that transactions for the System open market Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 91 account be conducted with a view "to fostering growth and stability in the economy by maintaining conditions in the money market that would encourage recovery and avoid the development of unsustainable expansion." Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Leach, Mills, Robertson, Szymczak, and Vardaman. Votes against this action: none. The Committee's review of the economic situation indicated that expansive forces had continued generally strong, both domestically and abroad, during the opening months of 1955. Recovery was well advanced from the recession low of mid-1954 but industrial activity was still slightly below the previous peak reached in mid-1953. While there had been scattered increases in prices of raw materials, there had been no spreading of such increases to the general price structure. Speculative inventory accumulation was not apparent. Unemployment was still relatively high, notwithstanding the degree of recovery that the country had experienced. Concern was indicated with respect to the relaxation of terms for and the volume of expansion in mortgage and consumer credit, and there were some fears that in a few industries, including building, activity was reaching levels that could not be sustained. This situation did not appear to call for a generally restrictive credit policy but for a program that would continue to encourage sound economic growth and high employment, while discouraging speculative developments and financial over-commitments by business and consumers. Monetary policy had been taking some of the slack out of the money market since the turn of the year and money rates had risen. Thus, while policy had not become restrictive, it had recently resulted in some restraint on the rate of credit expansion. The Committee concluded that this policy was appropriate to the current needs of the economy, and it agreed that, although increased ease should be avoided, further measures toward restraint should be deferred until the effects of the shift in operations that had taken place since the beginning of the year were more apparent. 2. Authorization to Acquire Bankers' Acceptances When Consistent with the General Credit Policy of the Federal Open Market Committee. The Committee authorized the Federal Reserve Banks (a) to purchase or sell, at market rates of discount, prime bankers' acceptances of the kinds designated in the regulation of the Federal Open Market Committee, at such times and in such amounts as the executive committee might deem advisable and consistent with the general credit policies and instructions of the Federal Open Market Committee; and (b) to enter into repurchase agreements with nonbank dealers in bankers' acceptances at such times, in such amounts, and at such rates or rate ranges as the executive committee should prescribe. Incident to this change in the procedure it had been Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

92 ANNUAL REPORT OF BOARD OF GOVERNORS following with respect to acquisition of bankers' acceptances, the Committee discontinued the procedure approved on June 19, 1952 under which a minimum buying rate on prime bankers' acceptances was established by the Committee with authority for the Manager of the System Open Market Account to specify currently effective buying rates at which such purchases would be made. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Leach, Mills, Szymczak, and Vardaman. Vote against this action: Mr. Robertson. The purpose of this action was to authorize modest participation by the Federal Reserve in the market for bankers' acceptances as a means of showing the interest of the central banking organization in this market, which was expanding and which it was felt might become, in time, a more important means for financing international trade transactions. It was understood that transactions in bankers' acceptances would be entered into only when consistent with the general credit policies of the Federal Open Market Committee, within limits to be determined by the executive committee. Approval of this procedure by the full Committee was with the understanding that the executive committee would prepare a specific authorization to carry out the intent of the full Committee, and such authorization was issued by the executive committee to the Federal Reserve Bank of New York, effective March 29, 1955. In voting against this action, Mr. Robertson expressed the view that there appeared to be no adequate reason for the Reserve Banks' seeking actively to buy acceptances for their own accounts. He felt that the objective of supporting and encouraging the acceptance market could be achieved more effectively through a policy of standing ready to purchase all seasoned prime acceptances offered to Reserve Banks at published rates, the practice that he understood was followed by the Reserve Banks in the 1920's, the period of their most active participation in the acceptance market 3. Review of Continuing Authorities or Statements of Policy. The Committee reviewed and reaffirmed all continuing statements of operating policy and specific authorities for operations which were in effect immediately prior to this meeting. This included reaffirmation of the following statements, by the votes indicated below: A. It is not now the policy of the Committee to support any pattern of prices and yields in the Government securities market, and intervention in the Government securities market is solely to effectuate the objectives of monetary and credit policy (including correction of disorderly markets). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 93 Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Leach, Mills, Robertson, Szymczak, and Vardaman. Votes against this action: none. B. Operations for the System account in the open market, other than repurchase agreements, shall be confined to short-term securities (except in the correction of disorderly markets), and during a period of Treasury financing there shall be no purchases of (1) maturing issues for which an exchange is being offered, (2) whenissued securities, or (3) outstanding issues of comparable maturities to those being offered for exchange; these policies to be followed until such time as they may be superseded or modified by further action of the Federal Open Market Committee. Votes for this action: Messrs. Martin, Chairman, Balderston, Earhart, Fulton, Irons, Leach, Mills, Robertson, Szymczak, and Vardaman. Vote against this action: Mr. Sproul, Vice Chairman. C. 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; such policy to be followed until such time as it may be superseded or modified by further action of the Federal Open Market Committee. Votes for this action: Messrs. Martin, Chairman, Balderston, Earhart, Fulton, Irons, Leach, Mills, Robertson, Szymczak, and Vardaman. Vote against this action: Mr. Sproul, Vice Chairman. The only change made at this meeting in the wording of any of these statements was in the second, in which the words "other than repurchase agreements" were inserted. The purpose of this insertion was to make clear that the Committee did not intend to preclude repurchase agreements with nonbank dealers in Government securities covering Treasury securities that might have a maturity outside the short-term category, or that might be involved in a Treasury financing.1 Because pricing of securities in such agree- 1The repurchase agreement is a means of putting funds into the market at the initiative of the System during periods of undue money market tightness or strain attributable to temporary factors, under a procedure whereby such funds automatically come out of the market within a very short time when the elements of excessive tightness or strain have subsided. Such agreements are made to meet purely temporary needs for reserves when the impact of these needs has in some measure been shifted Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 ANNUAL REPORT OF BOARD OF GOVERNORS merits entails no element of price support, and because of the special nature of such agreements, the Committee felt that they ordinarily could appropriately cover Treasury securities which otherwise would not be bought or sold under the Committee's general policy of effecting transactions only in short-term securities and avoiding purchases of securities involved in a Treasury financing. Mr. Sproul voted against the statements under "B" and "C" because he continued to be opposed to the assertion by the Committee that it has a responsibility solely with respect to the volume of bank reserves; because he continued to oppose the Committee's renunciation of all or any transactions directly related to security issues involved in Treasury financings, as he believed that such transactions might in some circumstances facilitate, rather than interfere with, the attainment of the System's policy objectives; and because he continued to be opposed to the prohibition against offsetting purchases and sales of Treasury securities for the purpose of altering the maturity pattern of the System's portfolio and the limiting of transactions to short-term securities in all circumstances. In voting against these actions, Mr. Sproul said that he had been encouraged by the public statement contained in Chairman Martin's replies to questions submitted by the Subcommittee on Economic Stabilization of the Joint Committee on the Economic Report in connection with subcommittee hearings on December 7, 1954, that these operating policies are experimental, and by the warning this should convey to the market that there is no promise, expressed or implied, that these policies will always be followed. May 10, 1955 1. Authority to Effect Transactions in System Account. The following directive by the Federal Open Market 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 to the Government securities dealers, through sales to them of additional securities or withholding by banks or other lenders of funds needed by the dealers to carry their positions. The technical arrangements consist of a purchase by the System at an agreed price, subject to a dealer's undertaking to repurchase the same securities at the same price, plus a stipulated rate of interest, on or before a maturity date set by the System. In general, the interest rate has been equivalent to the discount rate of the Federal Reserve Bank of New York, although at times there may be a temporary deviation above or below this rate; the maturity has in practice been limited to 15 days or less; and the price set in the contract is determined by the System in each instance at a nominal margin below the latest-prevailing price in the market for the securities involved. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 95 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 fostering growth and stability in the economy by maintaining conditions in the money market that would avoid the development of unsustainable expansion, (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. 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. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Leach, Mills, Robertson, Shepardson, Szymczak, and Vardaman. Votes against this action: none. This directive was modified from that approved at the meetings on January 11 and March 2, 1955 by changing clause (b) to delete the words "encourage recovery" and to make the clause read "to fostering growth and stability in the economy by maintaining conditions in the money market that would avoid the development of unsustainable expansion." The Committee noted that during the current or second quarter gross national product was estimated at an annual rate of $375 billion, nearly $20 billion above the low of last year and $5 billion above the mid-1953 peak; that strong expansion in activity was generally continuing abroad; and that in the United States a number of industries were operating at or close to capacity. Supply shortages had appeared in some industrial materials and prices of metals had advanced, although price averages were still generally steady. Business, financial, and consumer confidence was extraordinarily Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 ANNUAL REPORT OF BOARD OF GOVERNORS high. On the other hand, manpower and industrial resources of the United States were generally ample for growth, and a substantial amount of unemployment still existed in some areas. Prices of farm products continued under pressure from surplus supplies and excess capacity. There had been no seasonal contraction of business loans, and rapid expansion of real estate and consumer loans had continued. This further expansion in the volume of credit and evidences of continued speculative pressures in the stock markets had been followed by action of the Board of Governors increasing margin requirements from 60 to 70 per cent, effective April 23, 1955. In deleting the previous instruction to "encourage recovery" the Committee had in mind that recovery now was an accomplished fact and that credit policy need no longer be directed toward encouraging recovery. Its problem now was to conduct open market operations so as to foster stable growth in line with expanding manpower and industrial resources and at the same time to restrain financial over-commitments and dampen speculative excesses. The Committee noted that since its meeting on March 2, the Board of Governors of the Federal Reserve System had approved an increase of lA of 1 per cent in the discount rate at all Federal Reserve Banks, in recognition of current money market conditions and as a means of discouraging undue reliance on the discount facilities of the Reserve Banks. Like the change made in the directive of the Federal Open Market Committee in January, the change approved at this meeting was a further shift in emphasis toward a policy that would discourage undue credit expansion. It meant that the Committee was aiming at a lower level of free reserves of banks, and that consequently credit might cost more and be somewhat less readily available. The Committee was seeking to allow market forces to have their effect within some moderate limits, although it favored efforts to smooth temporary swings in money market conditions and to maintain stability in the market during a period of a Treasury financing. June 22, 1955 1. Authority to Effect Transactions in System Account. The following directive from the Federal Open Market Committee to the Federal Reserve Bank of New York was approved: To make such purchases, sales, or exchanges (including replacement of maturing securities, and allowing maturities to run off without replacement) for the System open market account in the open market or, in the case of maturing securities, by direct exchange with the Treasury, 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) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 97 to fostering growth and stability in the economy by maintaining conditions in the money market that would avoid the development of unsustainable expansion, and (c) 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 $1 billion. To purchase direct from the Treasury for the account of the Federal Reserve Bank of New York (with discretion, in cases where it seems desirable, to issue participations to one or more Federal Reserve Banks) 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 $500 million; To sell direct to the Treasury from the System account for gold certificates such amounts of Treasury securities maturing within one year as may be necessary from time to time for the accommodation of the Treasury; provided that the total amount of such securities so sold shall not exceed in the aggregate $500 million face amount, and such sales shall be made as nearly as may be practicable at the prices currently quoted in the open market. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Leach, Mills, Robertson, Shepardson, and Vardaman. Votes against this action: none. This directive was issued by the Committee to the Federal Reserve Bank of New York as the Bank selected by the Committee to execute transactions for the System open market account because earlier during this meeting the executive committee of the Federal Open Market Committee, to which the full Committee formerly issued its directives, was abolished. In connection with the issuance of the directive running from the Committee to the Agent Bank, there was eliminated one of the provisions that the full Committee previously had included in its instruction to the executive committee, namely, that in arranging for transactions for the System account the executive committee should do so with a view, among other things, "to correcting a disorderly situation in the Government securities market." That provision had been included in the directive to the executive committee since March of 1953 with the understanding that intervention to correct a disorderly situation in the Government securities market would be initiated Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 ANNUAL REPORT OF BOARD OF GOVERNORS only upon the affirmative vote of a majority of the executive committee after the existence of a situation seeming to require correction had come to its attention through notice from the Manager of the System Open Market Account or otherwise. Since an authorization for intervention in the future would require the affirmative vote of a majority of the Federal Open Market Committee, no similar provision was included in this directive to the Agent Bank. No change of substance was made in the directive at this meeting in so far as it stated the policy of the Federal Open Market Committee with respect to current credit needs of the economy, and the clause which from time to time had been modified to reflect changes in policy or emphasis by the full Committee remained the same as that included in the directive issued at the meeting on May 10, 1955, that is, that operations for the System account should be with a view "to fostering growth and stability in the economy by maintaining conditions in the money market that would avoid the development of unsustainable expansion." In its review of the economic situation at this meeting, the Committee noted that activity was continuing to rise to new record levels, with expansion activated by private spending. Industrial production in May had reached a new high and some further increase appeared to be occurring in June. Broad averages of commodity prices had been stable despite sharp expansion in output. Industrial capacity and manpower resources were being used fairly intensively and some materials were in tight supply. Use of the country's resources was not so intensive as in the spring of 1953, however, partly because the labor force, productivity, and capacity had grown since then. Some unemployment still existed and conditions in agriculture and coal mining were not satisfactory, but the general level of economic activity and prosperity was high. This feeling of satisfaction with over-all economic progress was tempered by the fact that the high levels of productivity and employment had been supported by rapid expansion in consumer and mortgage credit on easy terms, and by the likelihood that prices, after two years of stability, might break out on the up-side because of pressure from costs and anticipation of price rises by businessmen and consumers. There appeared to be little leeway for further increases in production, and it was doubtful that productivity could be increased rapidly enough to counteract cost-price influences. While the Committee recognized that monetary policy was only one of the factors influencing the level of demand for goods and services, it felt that restraint from the credit side could be helpful at this time in preventing unsound developments. On the other hand, it noted that a period was approaching when, in addition to supplying funds for growth in the economy, substantial amounts of reserves would be required to meet normal seasonal needs, The Committee also took cognizance of Treasury financing require- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 99 ments during the third quarter of the year which would add to the demand for reserves at least temporarily because of necessary bank participation in the initial absorption of the new issues. After considering all factors, the Committee concluded that for the immediate future it should not alter the course it had been following recently which had had a restraining influence on credit expansion, that reserves should be supplied to the market on the basis of current needs, and that operations for the System account should be directed toward maintaining about the existing degree of pressure on the reserve position of banks. The directive included a paragraph authorizing the sale to the Treasury from the System account, against payment in gold certificates, of Treasury securities maturing within one year in an amount not to exceed $500 million. The purpose of this authorization, as had been the case when a similar transaction was consummated in November 1953, was to enable the System account to make it possible for the Treasury to use some of its gold in repaying some Federal Reserve-held debt without affecting the reserve position of member banks, should the Treasury find it necessary to do so in order to avoid exceeding the statutory debt limit. A similar continuing authorization previously had been given by the executive committee to the Federal Reserve Bank of New York but, with the abolishment of the executive committee at this meeting, the Committee concluded that it would be desirable to include this authorization within its directive to the New York Bank. July 12, 1955 1. Authority to Effect Transactions in System Account. The Federal Open Market Committee renewed its directive to the Federal Reserve Bank of New York in the same form as the directive issued at the meeting on June 22, 1955, including the instruction that operations for the System open market account were to be with a view, among other things, "to fostering growth and stability in the economy by maintaining conditions in the money market that would avoid the development of unsustainable expansion." Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Fulton, Irons, Leach, Robertson, Shepardson, Vardaman, and Powell. Votes against this action: none. The Committee's review of the over-all economic situation revealed underlying strength and further advance, domestically and abroad. Business and financial expectations as to sales and profits were decidedly optimistic. Industrial production continued at high levels. Manufacturers' orders were running ahead of sales, and unfilled orders were rising further largely because Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

100 ANNUAL REPORT OF BOARD OF GOVERNORS of private as distinct from Government buying. Business inventories had risen sharply at both manufacturer and distributor levels in the spring months although they were substantially below peak 1953 levels. Unemployment had declined further. Credit demand continued active with business loans showing further substantial expansion and consumer credit and mortgage debt rising rapidly. Expansion in total bank credit was more moderate because banks were meeting a large part of the increased loan demand through sales of United States Government securities. This situation suggested the need for increased restraint in order to avoid stimulating demands to the point of straining available productive capacity. However, general price indexes had continued stable, and as output had approached nearer to capacity the rate of expansion had slowed. The Committee was clear that there should be no easing of the situation, but it did not feel that a more restrictive credit policy was immediately necessary. Furthermore, such a policy might complicate Treasury financing operations later in July, which would add to the demand for bank reserves that would arise from seasonal factors and prospective growth in the economy. In these circumstances, the Committee agreed that it should maintain substantially the degree of restraint that had existed and that during the period of the forthcoming Treasury financing open market operations should be so conducted as to maintain stability in the money market. 2. Repurchase Agreements Covering United States Government Securities. The Federal Open Market Committee rejected a proposal that would have discontinued the procedure that had been followed previously under which Federal Reserve Banks were authorized to enter into repurchase agreements with nonbank dealers in United States Government securities covering such securities, and which would have substituted therefor a procedure under which there would have been established at the Federal Reserve Banks an open window for use in financing dealers at rates preferably above, but not lower than, the discount rate. Votes against the proposal: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Fulton, Irons, Leach, Shepardson, Vardaman, and Powell. Vote for the proposal: Mr. Robertson. Mr. Robertson made this proposal because he felt that the continuation of the existing procedure was likely to encourage unnecessarily frequent and extensive use of repurchase agreements in order to affect the level of shortterm rates in the money market. Furthermore, at times when short-term rates in the money market were below the discount rate, dealers might be given access to Federal Reserve credit at rates lower than those available to member banks, which he believed to be undesirable. If Federal Reserve credit were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 101 to be supplied at such times, he believed it preferable that this be done directly through purchases of bills by the Federal Reserve System. While he would prefer that the use of repurchase agreements be discontinued entirely, Mr. Robertson felt that if they were to be continued they should be used not as a supplementary technique in providing or absorbing reserves, but for the purpose of enabling dealers in Government securities to maintain broad and ready markets. He felt that this could be done through a procedure similar to rediscount operations by establishing an open window at the Reserve Banks for carrying dealers at rates preferably above but in no event below the discount rate. Under this arrangement, he suggested that dealers should feel assurance that the facility was always available to them within reasonable limits, in the same manner as the discount window is open to member banks. Those who voted against Mr. Robertson's proposal did so in the belief that repurchase agreements had been useful as a supplementary means of making open market policy effective at the initiative of the Committee. They did not believe that repurchase agreements should be available at the initiative of Government securities dealers. Following rejection by the Committee of the proposal stated above, the Committee authorized the Reserve Banks to continue to use repurchase agreements covering United States Government securities, pending further study by the Committee, with the understanding that the authority would be used sparingly in entering into agreements at rates below the discount rate. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Fulton, Irons, Leach, Robertson, Shepardson, Vardaman, and Powell. Votes against this action: none. August 2, 1955 1. Authority to Effect Transactions in System Account. At this meeting, the Federal Open Market Committee changed clause (b) of its directive to the Federal Reserve Bank of New York to provide that transactions for the System open market account be with a view, among other things, "to restraining inflationary developments in the interest of sustainable economic growth." This replaced the clause in the directive issued at the meetings in May, June, and July, which provided that operations be with a view, among other things, "to fostering growth and stability in the economy by maintaining conditions in the money market that would avoid the development of unsustainable expansion." Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Mills, Robertson, Shepardson, Szymczak, and Erickson. Votes against this action: none. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

102 ANNUAL REPORT OF BOARD OF GOVERNORS The shift to a policy of restraining inflationary developments resulted from the Committee's review of the economic situation and its conclusion that the supply of money and credit was a more stimulating force at the time than was desirable in the interest of sustainable economic growth. Information that had become available for June and July indicated that industrial production had increased to a new high level, with fairly general advances in durable and nondurable goods lines as well as in minerals. Unfilled orders had continued to rise. In addition, a renewed upsurge of consumer buying appeared to be developing. Buying of automobiles in July continued at record levels, and sales of appliances and other goods at department stores showed remarkable gains from the preceding month and a year ago. This upsurge in consumer demand reflected a further marked rise in consumer instalment credit and an increased willingness of consumers to draw on liquid asset accumulations. It also suggested consumer expectations of higher prices later on. Numerous industries appeared to be producing at nearcapacity, and over-all productivity gains had virtually disappeared in recent months. The situation was one in which a given percentage gain in output called for about an equal percentage gain in manhours, and in which too easy access to bank credit was likely to result in increased prices rather than in increased production. There had been a substantial and contra-seasonal rise in bank loans during the first half of the year, and in July all banking reports confirmed a continuing strong demand for bank credit. The Committee believed that, with increased costs pushing upward on industrial prices, the general price level might well move upward with accompanying speculative increases in inventories. It also took into account discussions relating to a probable increase in the discount rate at the Federal Reserve Banks early in August, based on observations of economic and financial developments in the respective Federal Reserve districts, and it agreed that the wording of its directive should be changed, as indicated above, to show that increased monetary restraint on credit expansion was now clearly appropriate. 2. Repurchase Agreements Covering United States Government Securities. The Committee modified its authorization for repurchase agreements covering United States Government securities to provide that the Federal Reserve Bank of New York, rather than all Federal Reserve Banks, be authorized to enter into such agreements with nonbank dealers in Government securities, subject to the following conditions and to the understanding that the authority would be used sparingly in entering into repurchase agreements at rates below the discount rate: 1. Such agreements (a) In no event shall be at a rate below whichever is the lower of (1) the discount rate of the Federal Reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 103 Bank on eligible commercial paper, or (2) the average issuing rate on the most recent issue of three-month Treasury bills; (b) Shall be for periods of not to exceed 15 calendar days; (c) Shall cover only Government securities maturing within 15 months; and (d) Shall be used as a means of providing the money market with sufficient Federal Reserve funds to avoid undue strain on a day-to-day basis. 2. Reports of such transactions shall be included in the weekly report of open market operations which is sent to the members of the Federal Open Market Committee. 3. In the event Government securities covered by any such agreement are not repurchased by the dealer pursuant to the agreement or a renewal thereof, the securities thus acquired by the Federal Reserve Bank of New York shall be sold in the market or transferred to the System open market account. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Mills, Robertson, Shepardson, Szymczak, and Erickson. Votes against this action: none. The change to limit the authorization for repurchase agreements to the Federal Reserve Bank of New York was in recognition of the fact that, in practice, that was the only Bank that had been entering into repurchase agreements covering Government securities, and there was little or no likelihood that the authority would be used by Federal Reserve Banks other than New York. In voting to approve this action, Mr. Robertson stated that he did so notwithstanding his expressed doubts about the use of repurchase agreements. At subsequent meetings during 1955, the Committee considered the use to be made of repurchase agreements and reaffirmed its authorization for the Federal Reserve Bank of New York to enter into such agreements, subject to the conditions set forth above. August 23, 1955 1. Authority to Effect Transactions in System Account. The directive to the Federal Reserve Bank of New York was renewed at this meeting in the same form as the directive approved at the meeting of the Committee on August 2, 1955, at which time it was agreed that operations for the System open market account should be with a view, among other things, "to restraining inflationary developments in the interest of sustainable economic growth." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 ANNUAL REPORT OF BOARD OF GOVERNORS Votes for this action: Messrs. Martin, Chairman, Earhart, Irons, Mills, Leach, Shepardson, Szymczak, Vardaman, Treiber, and Young. Votes against this action: none. Since the meeting on August 2, at which the Committee adopted a clearcut policy of restraining inflationary developments, the reserve position of banks had changed markedly. During August, banks had been in the position of borrowing net amounts of reserves, whereas in July and most earlier months of the year the banking system had had a moderate to substantial volume of free reserves available for lending. Discount rates at all of the Federal Reserve Banks had been increased during the first half of August, one Bank having increased the rate from 13A per cent to 2XA per cent, and the other Banks having increased their rates from 1% to 2 per cent. Other interest rates had also resumed an upward tendency after an interruption early in August. Bank credit had continued to rise, however, reflecting expansion in most types of loans in a period of usual seasonal slack. It appeared that the rate of growth in the money supply had increased. The economic situation continued to be one of demand pressure in the industrial sector and supply pressure in the agricultural sector of the economy; there was apparent over-all price stability because price declines in the agricultural sector were offsetting price increases in the industrial sector. The wage-cost pressures toward higher prices appeared to be increasing, and the feeling of optimism on the part of business and the public did not appear to have lessened. Inventory accumulation seemed to be increasing. The Committee felt that a restrictive credit policy was called for in this situation and that one of the questions was how to conduct open market operations so as to make the increase that had taken place in discount rates at the Reserve Banks effective as a restraining force. There was agreement that the Committee's policy should be one of gradually increasing pressure and that such a condition would result if the System continued its existing policy of not supplying reserves through open market operations except to relieve temporary stringencies in the money market. It was also thought that a further increase in discount rates at the Federal Reserve Banks might be needed as a part of a program of continuing restraint on credit expansion. The Committee's existing directive calling for operations for the System account that would restrain inflationary developments in the interest of sustainable economic growth seemed appropriate to the program agreed upon, and it was therefore renewed without change. September 14, 1955 1. Authority to Effect Transactions in System Account. The Committee renewed without change the directive to the Federal Reserve Bank of New York that had been approved at its meetings on August 2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 105 and 23, 1955, providing that, among other things, transactions for the System open market account be with a view "to restraining inflationary developments in the interest of sustainable economic growth." Votes for this action: Messrs. Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Leach, Mills, Robertson, Shepardson, Szymczak, and Vardaman. Votes against this action: none. Review of the available data suggested that the economy had entered a phase of decelerating advance. Manufacturing employment in durable goods lines had been maintained on an overtime basis for several months; output in several important industries was close to capacity; the labor market had reached a state of tightness in many localities; and restrictive monetary developments with higher interest rates had been operating with mounting pressure to brake credit expansion. Since the preceding meeting, discount rates at the 11 Federal Reserve Banks that had fixed such rates at 2 per cent in August had been brought up to the 2lA per cent level, to which the rate had been increased by one Reserve Bank early in August. Demand was still pressing the markets for industrial products, however, despite the prevailing high level of supply. Price advances were occurring in considerable numbers, with further widespread increases in prospect. Business, consumer, and mortgage loans at banks had continued to expand, a particularly sharp advance having appeared in business loans. It was the judgment of the Committee that this situation called at least for the maintenance of, and preferably for some slight increase in, the restraining pressure it had been exerting through open market operations. To carry this out, it renewed the directive calling for restraint on inflationary developments through maintaining pressure on the reserve position of banks, but with the additional understanding that doubts should be resolved on the side of increased pressure. September 26, 1955 1. Authority to Effect Transactions in System Account. At this meeting, which was held through telephone conference arrangement, the Committee agreed that no change be made in the existing general program of restraint on credit expansion, excepting the elimination of the understanding reached at the meeting on September 14, 1955, that, in conducting operations for the System open market account in pursuit of the policy of restraint, doubts should be resolved on the side of greater restraint. Votes for this action: Messrs. Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Leach, Mills, Robertson, Shepardson, Szymczak, and Vardaman. Votes against this action: none. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 ANNUAL REPORT OF BOARD OF GOVERNORS This meeting was for the purpose of discussing the potential economic effects of the President's illness over the preceding week-end and what, if any, change should be made at this time in credit policy. The Committee concluded that since there had been no change in the fundamental economic situation it should aim at maintaining about the same degree of credit pressure that had existed, with the understanding, however, that doubts need not be resolved on the side of greater restraint. This change was made for the purpose of providing flexibility in order to counter adverse psychological developments that might appear. October 4, 1955 1. Authority to Effect Transactions in System Account. The Committee again renewed without change the directive to the Federal Reserve Bank of New York in the form approved at meetings held on August 2, August 23, and September 14, 1955, including the instruction that transactions for the System account be with a view, among other things, "to restraining inflationary developments in the interest of sustainable economic growth." In addition, the Committee restored the understanding that had been reached at the meeting on September 14, 1955, and which was suspended at the special meeting on September 26, 1955, that in carrying out open market operations, doubts should be resolved on the side of greater restraint rather than of ease. Votes for this action: Messrs. Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Leach, Mills, Robertson, Shepardson, and Szymczak. Votes against this action: none. At the time of this meeting the economic situation had advanced to a point where financial developments had become a more critical factor in the shaping of business trends. Consumer credit had been rising rapidly to new heights and so also had mortgage credit, supporting very active markets for automobiles and housing. It was at this stage of economic developments that announcement of the President's illness on September 24 had come as a shock to confidence and, while it was too early at the time of this meeting to assess the economic significance of that announcement, the immediate response had been a sharp setback in stock prices accompanied by a sharp rise in trading. It was suggested that there was at least the possibility of some postponement in business and consumer spending. Despite the psychological shock to the business community, the current and prospective momentum of economic activity was such that the Committee concluded the situation called for continuing the present policy of restraint without allowing the restraint to become so severe as to accentuate any tendency toward a downturn in the economy that might develop. While Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 107 there were various shades of opinion as to the effect of the President's illness on the economy, the apparent leveling off at a high level of production still seemed to be accompanied by increasing upward pressure on prices. The Committee approved the same general instruction with respect to open market operations that had been adopted at the meeting on September 14— restraint on credit expansion, with the understanding that doubts should be resolved on the side of increased restraint. October 25, 1955 1. Authority to Effect Transactions in System Account. The Committee renewed at this meeting the directive to the Federal Reserve Bank of New York that had been approved at the meeting of the Committee on August 2, 1955 and at each meeting since and which included the specific instruction that, among other things, operations for the System account be with a view "to restraining inflationary developments in the interest of sustainable economic growth." In addition, it was understood that while the Committee wished to maintain a restraining influence on the credit situation, it did not wish to increase pressure drastically. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Leach, Mills, Robertson, Shepardson, and Szymczak. Votes against this action: none. The economic situation was still one of advance but with the pace of advance, in terms of physical output, necessarily slowing down as capacity operations were reached in basic industries. Most economic indicators were showing moderate fluctuations at advanced levels. Industrial prices had risen 3 per cent since midyear and consumer prices had risen slightly in September. Mortgage credit had become tight and was getting tighter, and residential building was falling off somewhat more than seasonally; but business and industrial construction was rising. It was still difficult to judge the economic effect of the President's illness, the Committee felt, and how that factor might have altered plans of businessmen and consumers. Inflationary pressures did not seem to be carrying through to speculative excesses in the accumulation of inventories or in rapidly spiraling prices. With the over-all business and credit outlook remaining exceedingly strong, however, it was not evident that the present policy of restraint had been too restrictive, and the Committee's judgment was that the situation did not call for action to ease credit policy. Monetary policy could not be expected to correct the disparity between industrial and agricultural prices, nor could general policy be expected to correct the imperfections that had been evident in the mortgage credit and consumer credit fields without causing difficulty in other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 ANNUAL REPORT OF BOARD OF GOVERNORS parts of the economy. Continuation of the policy of restraint on credit expansion seemed to be called for, with the understanding that doubts should be resolved on the side of dispelling any idea of an easing of System policy at this time. In renewing the existing directive to restrain inflationary developments in the interest of sustainable economic growth, the Committee did so with the understanding that pressure on the money market should not be increased drastically. November 16, 1955 1. Authority to Effect Transactions in System Account. The Committee approved another renewal of its directive to the Federal Reserve Bank of New York in the form that had been approved at several recent meetings providing that transactions for the System open market account be conducted with a view, among other things, "to restraining inflationary developments in the interest of sustainable economic growth." Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Leach, Mills, Robertson, Shepardson, Szymczak, and Vardaman. Votes against this action: none. Analysis of the situation at the time of this meeting in mid-November showed that businessmen and consumers had thrown off doubts about economic prospects that had been created by the President's illness. Consumer spending and borrowing continued extremely high. Plans for business spending for plant and equipment during 1956 were being announced in substantially higher volumes than for 1955. Production was approaching or had reached capacity levels in more and more industries, and the labor market was showing further tightening. Markets for industrial commodities were very strong, manufacturers' unfilled orders were continuing to rise, and industrial price rises were spreading. These factors suggested the need for additional restraint but, at the same time, the Committee noted that normal seasonal developments would require additional reserves to assist banks in supplying essential credit needs between mid-November and the year-end. The Committee was also aware that the Treasury would be in the market to refund $12 billion of maturing securities toward the end of November or early in December and that it probably would have to borrow around a billion dollars of new money by the middle of December. In addition, the Committee noted that consideration was currently being given to a further increase to 2V2 per cent in the discount rates of the Federal Reserve Banks, which had been increased to 2lA per cent in August and September. In considering these several factors, the Committee agreed that, while the Federal Reserve should operate to restrain Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 109 excesses, it should avoid undue pressure on the supply of reserves through more restrictive open market operations at a time when the Treasury was getting ready to announce its financing and during a period in which the money market and banks might be adjusting to an increase in the discount rate. Under these circumstances, the Committee renewed the existing directive with the understanding that, while it was trying to move in the direction of maintaining tightness, it should not be concerned if operations in the open market during the immediate future did not achieve as great a degree of tightness as had existed recently. November 30, 1955 1. Authority to Effect Transactions in System Account. The Federal Open Market Committee authorized the Federal Reserve Bank of New York to purchase for the System open market account in the open market, on a when-issued basis, up to $400 million of 2% per cent Treasury certificates of indebtedness to be dated December 1, 1955, maturing December 1, 1956. Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Leach, Shepardson, and Szymczak. Votes against this action: Messrs. Mills, Robertson, and Vardaman. This meeting, which was held through telephone conference arrangement, was called for the purpose of considering what, if any, action the Committee should take in view of developments in the market which suggested that the current Treasury offering of approximately $12 billion of refunding securities might be subject to unusually large requests for cash redemption. The Treasury offering had been announced on November 25 and books were open on Monday, Tuesday, and Wednesday, November 28, 29, and 30, 1955. The response to the announcement of the terms of the offering indicated that the market regarded the new issue as being properly priced. Shortly after the opening of the books, however, it became apparent that a large proportion of holders of the maturing issue had earmarked the proceeds of this maturity for other uses. This indicated that the volume of cash redemptions would be considerably larger than had been generally anticipated. Moreover, unexpectedly stringent money market conditions had developed during the latter part of November. Apparently this was in part a delayed response to an increase in mid-November to 2V2 per cent in the discount rates of all Federal Reserve Banks. In considering this situation, the Committee noted that on the basis of earlier projections of reserve needs to meet seasonal and other demands, it would probably find it necessary in any event to put into the market upwards of $400 million of reserves within the next week. Further, addi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 ANNUAL REPORT OF BOARD OF GOVERNORS tional reserves would have to be supplied to the market later during December to assist in meeting the seasonal increase in currency demand for holiday and other year-end needs. The situation was considered in the light of the policy adopted by the Committee in March 1953 and last reaffirmed in March 1955, that, during a period of Treasury financing, the Committee would refrain from purchasing (1) maturing issues for which an exchange is being offered, (2) when-issued securities, or (3) outstanding issues of comparable maturity to those being offered for exchange; such policy to be followed until such time as it might be superseded or modified by further action of the Federal Open Market Committee. Those who voted for making an exception to the foregoing policy and authorizing the purchase on a when-issued basis of securities being offered in the current Treasury financing felt that the Committee could not ignore the position in which it had been placed by a request made by the Secretary of the Treasury for assistance directed toward preventing undue cash redemption of the maturing issue, and by the possibility of psychological deterioration of the whole securities market if the Treasury offering came to be regarded as a failure. They noted that the Treasury had tried to price the new securities correctly in relation to the market situation. They also emphasized that, in making an exception to the general policy that had been followed since March of 1953 against purchasing securities involved in a Treasury financing, the Committee would not be abandoning that policy but rather deviating from it only because of the unforeseen circumstances that had developed in connection with the current Treasury refunding operation. The members of the Committee who voted against this action were of the opinion that the possibility that an abnormal proportion of the maturing securities would be turned in for cash, rather than exchanged for an equivalent amount of the new issue, was an insufficient reason to deviate from the existing policy. They felt that if heavy cash redemptions developed in the refunding, the difference could be made up subsequently through the conventional means of selling additional Treasury bills or tax anticipation certificates. In their opinion, reserves that would be needed in the market to meet seasonal and other needs should be provided in the usual manner by purchases of other short-term securities, preferably Treasury bills. In short, they did not believe that the circumstances were such at that time as to warrant an exception to the general policy against purchasing Treasury securities involved in a refunding. December 13, 1955 1. Authority to Effect Transactions in System Account. The Committee renewed its directive to the Federal Reserve Bank of New York in the form in which it had been approved in August and since, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 111 calling for transactions in the System open market account with a view, among other things, "to restraining inflationary developments in the interest of sustainable economic growth." Votes for this action: Messrs. Martin, Chairman, Sproul, Vice Chairman, Balderston, Earhart, Fulton, Irons, Leach, Mills, Robertson, Shepardson, and Szymczak. Votes against this action: none. Economic activity in the countries of the free world generally had been at a high level and rising throughout 1955. Monetary and fiscal authorities everywhere had been faced with the problem of checking actual or potential inflationary developments. In recent months, pressures on labor and other resources had been spreading gradually, but measures of restraint had helped to limit price advances. The rise in output within the United States recently had been less rapid than in the latter part of 1954 and the first half of 1955, reflecting in part capacity limitations in key industries and in part a leveling off in demand for new automobiles and houses. Because of seasonal influences, the number of unemployed had risen somewhat in November. Business was indicating plans for further expansion in plant and equipment during 1956, and a general feeling of optimism regarding the outlook prevailed. It was in the light of this sustained high level of economic activity and of the generally favorable outlook that the Committee reviewed the policy of credit and monetary restraint that had been pursued during the fall months of the year. A sharp increase in pressure on the reserve position of banks had taken place during the four weeks ending November 23, but this had been followed by some easing after the System injected a substantial volume of reserve funds into the market during the last week of November and the first week of December, when market conditions were affected by a combination of seasonal reserve pressures, the increase in Reserve Bank discount rates in mid-November, and the Treasury's refunding and cash financing operations. With the passage of that difficult period, it seemed desirable to attempt to regain as far as possible the level of pressure that had existed around November 23, just prior to the announcement of the Treasury's refunding. The Committee recognized, however, that it might not be possible—or even desirable—to reestablish all of the pressure that had existed in November, partly because of the year-end needs that were developing. After considering these factors, it concluded that the general policy of restraint followed in recent months should be reaffirmed with a view to regaining, without causing sudden market disturbances, as much as possible of the level of pressure that had existed shortly before the announcement of the Treasury refunding operation near the end of November. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM [December 31, 1955] Term Expires WM. MCC. MARTIN, JR., of New York, Chairman January 31, 1956 C. CANBY BALDERSTON of Pennsylvania, Vice Chairman January 31, 1966 M. S. SZYMCZAK of Illinois January 31, 1962 JAMES K. VARDAMAN, JR., of Missouri January 31, I960 A. L. MILLS, JR., of Oregon January 31, 1958 J. L. ROBERTSON of Nebraska January 31, 1964 CHAS. N. SHEPARDSON of Texas January 31, 1968 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 CHARLES MOLONY, Special Assistant to the Board S. R. CARPENTER, Secretary MERRITT SHERMAN, Assistant Secretary KENNETH A. KENYON, Assistant Secretary CLARKE L. FAUVER, 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. NO YES, 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, Associate Director, Division of Bank Operations LOWELL MYRICK, Assistant Director, Division of Bank Operations GERALD M. CONKLING, Assistant Director, Division of Bank Operations JOHN R. FARRELL, Assistant Director, Division of Bank 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL OPEN MARKET COMMITTEE [December 31, 1955] 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) C. E. EARHART (Elected by Federal Reserve Banks of Minneapolis, Kansas City, and San Francisco) W. D. FULTON (Elected by Federal Reserve Banks of Cleveland and Chicago) W. H. IRONS (Elected by Federal Reserve Banks of Atlanta, St. Louis, and Dallas) HUGH LEACH (Elected by Federal Reserve Banks of Boston, Philadelphia, and Richmond) A. L. MILLS, JR. (Board of Governors) J. L. ROBERTSON (Board of Governors) CHAS. N. SHEPARDSON (Board of Governors) M. S. SZYMCZAK (Board of Governors) JAMES K. VARDAMAN, JR. (Board of Governors) OFFICERS WINFIELD W. RIEFLER, Secretary J. DEWEY DAANE, Associate Economist ELLIOTT THURSTON, Assistant Secretary L. MERLE HOSTETLER, Associate Economist GEORGE B. VEST, General Counsel MORGAN H. RICE, Associate Economist FREDERIC SOLOMON, Assistant General H. V. ROELSE, Associate Economist Counsel O. P. WHEELER, Associate Economist WOODLIEF THOMAS, Economist RALPH A. YOUNG, Associate Economist AGENT FEDERAL RESERVE BANK OF NEW YORK ROBERT G. ROUSE, Manager of System Open Market Account 113 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL ADVISORY COUNCIL [December 31, 1955] 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—WILLIAM R. K. MITCHELL, Chairman of the Board, Provident Trust Company of Philadelphia, Philadelphia, Pennsylvania. District No. 4—FRANK R. DENTON, Vice Chairman, Mellon National Bank and Trust Company, Pittsburgh, Pennsylvania. District No. 5—ROBERT V. FLEMING, Chairman of the Board, 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 of the Board, The First National Bank of Chicago, Chicago, Illinois. District No. 8—W. W. CAMPBELL, Chairman of the Board, 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—GEORGE 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 FRANK R. DENTON WILLIAM D. IRELAND OFFICERS President, EDWARD E. BROWN Vice President, ROBERT V. FLEMING Acting Secretary, WILLIAM J. KORSVIK 114 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BANKS AND BRANCHES [December 31, 1955] CHAIRMEN AND DEPUTY CHAIRMEN OF BOARDS OF DIRECTORS Chairman and Federal Reserve Bank of— Deputy Chairman Federal Reserve Agent Boston Harold D. Hodgkinson... Robert C. Sprague New York... Jay E. Crane Forrest F. Hill Philadelphia.. William J. Meinel Henderson Supplee, Jr. Cleveland John C. Virden Sidney A. Swensrud Richmond John B. Woodward, Jr... Alonzo G. Decker, Jr. Atlanta Rufus C. Harris Harllee Branch, Jr. Chicago John S. Coleman Bert R. Prall St. Louis.... M. Moss Alexander Caffey Robertson Minneapolis.. Leslie N. Perrin O. B. Jesness Kansas City.. Raymond W. Hall Joe W. Seacrest Dallas Robert J. Smith Hal Bogle 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. Virden, Chairman of the Federal Reserve Bank of Cleveland, was elected Chairman of the Conference and of the Executive Committee in December 1954 and served as such through the meeting held in December 1955. Mr. Woodward, Chairman of the Federal Reserve Bank of Richmond, and Mr. Crane, Chairman of the Federal Reserve Bank of New York, served with Mr. Virden as members of the Executive Committee, Mr. Woodward also serving as Vice Chairman of the Conference. At the meeting held in December 1955, Mr. Woodward was elected Chairman of the Conference and of the Executive Committee. Mr. Meinel, Chairman of the Federal Reserve Bank of Philadelphia, was elected Vice Chairman and a member of the Executive Committee, and Mr. Hall, Chairman of the Federal Reserve Bank of Kansas City, was elected as the other member of the Executive Committee. 115 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 ANNUAL REPORT OF BOARD OF GOVERNORS FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. DIRECTORS Class A and Class B directors are elected by the member banks of the district. Class C directors are appointed by the Board of Governors of the Federal Reserve System. The Class A directors are chosen as representatives of member banks and, as a matter of practice, are active officers of member banks. The Class B directors may not, under the law, be officers, directors, or employees of banks. At the time of their election they must be actively engaged in their district in commerce, agriculture, or some other industrial pursuit. The Class C directors may not, under the law, be officers, directors, employees, or stockholders of banks. They are appointed by the Board of Governors as representatives not of any particular group or interest, but of the public interest as a whole. Federal Reserve Bank branches have either five or seven directors, of whom a majority are appointed by the Board of Directors of the parent Federal Reserve Bank and the others are appointed by the Board of Governors of the Federal Reserve System. District I—Boston Term Expires DIRECTORS Dec. 31 Class A: Oliver B. Ellsworth President, Riverside Trust Company, Hartford, Conn 1955 Lloyd D. Brace . President, The First National Bank of Boston, Boston, Mass 1956 Harold I. Chandler President, The Keene National Bank, Keene, N. H 1957 Class B.- Harry E. Umphrey President, Aroostook Potato Growers, Inc., Presque Isle, Me 1955 Harvey P. Hood President, H. P. Hood & Sons, Inc., Boston, Mass. 1956 Frederick S. Blackall, jr.. . .President and Treasurer, The Taft-Peirce Manufacturing Company, Woonsocket, R. 1 1957 Class C: 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 Robert C. Sprague Chairman and Treasurer, Sprague Electric Company, North Adams, Mass 1957 District 2—New York Class A: 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 Ferd I. Collins President and Trust Officer, Bound Brook Trust Company, Bound Brook, N. J 1957 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 117 FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Class B: Clarence Francis Director, General Foods Corporation, New York, N. Y 1955 Lansing P. Shield President, The Grand Union Company, East Paterson, N. J 1956 John E. Bierwirth President, National Distillers Products Corporation, New York, N. Y 1957 Class C: Franz Schneider Consultant to Newmont Mining Corporation, New York, N. Y 1955 Jay E. Crane Vice President, Standard Oil Company (New Jersey), New York, N. Y 1956 Forrest F. Hill Vice President, The Ford Foundation, New York, N. Y 1957 Buffalo Branch Appointed by Federal Reserve Bank: 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 Charles H. Diefendorf President, The Marine Trust Company of Western New York, Buffalo, N. Y 1957 Appointed by Board of Governors: Edgar F. Wendt President, Buffalo Forge Company, Buffalo, N. Y 1955 Robert C. Tait Senior Vice President, General Dynamics Corporation, and President, Stromberg-Carlson Company Division, Rochester, N. Y 1956 Clayton G. White Dairy farmer, Stow, N. Y 1957 District 3—Philadelphia Class A: Bernard C. Wolfe President, The First National Bank of Towanda, Towanda, Pa 1955 Wm. Fulton Kurtz Chairman of the Executive Committee, The First Pennsylvania Banking and Trust Company, Philadelphia, Pa 1956 W. Elbridge Brown President and Trust Officer, Clearfield Trust Company, Clearfield, Pa 1957 Class B.- Charles E. Oakes President, Pennsylvania Power and Light Company, Allentown, Pa 1955 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 ANNUAL REPORT OF BOARD OF GOVERNORS FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Cont. p 3; ec Warren C. Newton President, O. A. Newton and Son Company, Bridgeville, Del 1956 Bayard L. England President, Atlantic City Electric Company, Atlantic City, N. J 1957 Class C: Henderson Supplee, Jr.... President, The Atlantic Refining Company, Philadelphia, Pa 1955 Lester V. Chandler Professor of Economics, Princeton University, Princeton, N. J 1956 William J. Meinel Chairman of the Board, Heintz Manufacturing Company, Philadelphia, Pa 1957 District 4—Cleveland Class A: 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 Edison Hobstetter President, The Pomeroy National Bank, Pomeroy, Ohio 1957 Class B: Edward C. Doll President, Lovell Manufacturing Company, Erie, Pa 1955 Alexander E. Walker Chairman of the Board, The National Supply Company, Pittsburgh, Pa 1956 Joseph B. Hall President, The Kroger Company, Cincinnati, Ohio 1957 Class C: 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 Frank J. Welch Dean, College of Agriculture and Home Economics, University of Kentucky, Lexington, Ky. 1957 Cincinnati Branch Appointed by Federal Reserve Bank: 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 Roger Drackett President, The Drackett Company, Cincinnati, Ohio 1957 Bernard H. Geyer President, The Second National Bank of Hamilton, Hamilton, Ohio 1957 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 119 FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Cont. D . 32 ec Appointed by Board of Governors: Henry C. Besuden Farmer, Winchester, Ky 1955 Anthony Haswell President, The Dayton Malleable Iron Company, Dayton, Ohio 1956 W. Bay Irvine President, Marietta College, Marietta, Ohio 1957 Pittsburgh Branch Appointed by Federal Reserve Bank: Paul Malone President, Gallatin National Bank, Uniontown, Uniontown, Pa 1955 Albert L. Rasmussen President, The Warren National Bank, Warren, Pa 1956 John H. Lucas President, Peoples First National Bank & Trust Company, Pittsburgh, Pa 1957 Irving W. Wilson President, Aluminum Company of America, Pittsburgh, Pa 1957 Appointed by Board of Governors: Douglas M. Moorhead.... Farmer, North East, Pa 1955 Henry A. Roemer, Jr President, Sharon Steel Corporation, Sharon, Pa. 1956 John C. Warner President, Carnegie Institute of Technology, Pittsburgh, Pa 1957 District 5—Richmond Class A: Warren S. Johnson Investment Counselor, Peoples Savings Bank & Trust Company, Wilmington, N. C 1955 Vacancy 1956 Daniel W. Bell President and Chairman of the Board, American Security and Trust Company, Washington D. C 1957 Class B: 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 Robert O. Huffman President, Drexel Furniture Company, Drexel, N. C 1957 Class C: 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 D. W. Colvard Dean of Agriculture, North Carolina State College of Agriculture and Engineering, Raleigh, N. C 1957 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 ANNUAL REPORT OF BOARD OF GOVERNORS FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Cont. Dec. 51 Baltimore Branch Appointed by Federal Reserve Bank: Lacy I. Rice President, The Old National Bank, Martinsburg, W. Va 1955 Stanley B. Trott President, Maryland Trust Company, Baltimore, Md 1955 Charles W. HofT President, Union Trust Company of Maryland, Baltimore, Md 1956 Charles A. Piper President, The Liberty Trust Company, Cumberland, Md 1957 Appointed by Board of Governors: Wm. Purnell Hall Executive Vice President, Maryland Shipbuilding and Drydock Company, Inc., Baltimore, Md. 1955 Theodore E. Fletcher Agriculturist, Easton, Md 1956 Clarence R. Zarfoss Vice President, Western Maryland Railway Company, Baltimore, Md 1957 Charlotte Branch Appointed by Federal Reserve Bank: 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 Chairman of the Board, Wachovia Bank and Trust Company, Winston-Salem, N. C 1956 Ernest Patton Chairman of the Board, The Peoples National Bank of Greenville, Greenville, S. C 1957 Appointed by Board of Governors: 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 Paul T. Taylor President, Taylor Warehouse Company, Winston- Salem, N. C 1957 District 6—Atlanta Class A: Leslie R. Driver President, The First National Bank in Bristol, Bristol, Tenn 1955 Roland L. Adams President, Bank of York, York, Ala 1956 W. C. Bowman Chairman of the Board, The First National Bank of Montgomery, Montgomery, Ala 1957 Class B: Donald Comer Chairman of the Board, Avondale Mills, Birmingham, Ala 1955 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 121 FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Cont. Dec. 31 A. B. Freeman Chairman of the Board, Louisiana Coca-Cola Bottling Company, Ltd., New Orleans, La.... 1956 Pollard Turman President, J. M. Tull Metal & Supply Company, Inc., Atlanta, Ga 1957 Class C: Rufus C. Harris President, The Tulane University of Louisiana, New Orleans, La 1955 Harllee Branch, Jr President, Georgia Power Company, Atlanta, Ga. 1956 Vacancy 1957 Birmingham Branch Appointed by Federal Reserve Bank: 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 Malcolm A. Smith First Vice President, Birmingham Trust National Bank, Birmingham, Ala 1957 Appointed by Board of Governors: Thad Holt Norton and Holt, Birmingham, Ala 1955 Adolf Weil, Sr President, Weil Brothers-Cotton, Inc., Montgomery, Ala 1956 Edwin C. Bottcher Farmer, Cullman, Ala 1957 Jacksonville Branch Appointed by Federal Reserve Bank: 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 James G. Garner President, Little River Bank and Trust Company, Miami, Fla 1956 James L. Niblack President, The First National Bank of Lake City, Lake City, Fla 1957 Appointed by Board of Governors: 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 J. Wayne Reitz President, University of Florida, Gainesville, Fla , 1957 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 ANNUAL REPORT OF BOARD OF GOVERNORS FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Cont. £)eCt $1 Nashville Branch Appointed by Federal Reserve Bank: James V. Sprouse President, The First National Bank of Springfield, Springfield, Tenn 1955 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 J. R. Kellam, Jr Executive Vice President, Commerce Union Bank, Nashville, Tenn 1957 Appointed by Board of Governors: Ernest J. Moench President, Tennessee Tufting Company, Nashville, Tenn 1955 Frank B. Ward Dean, College of Business Administration, University of Tennessee, Knoxville, Tenn 1956 A. Carter Myers Treasurer, Knoxville Fertilizer Company, Knoxville, Tenn 1957 New Orleans Branch Appointed by Federal Reserve Bank: 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 D. U. Maddox President, The Commercial National Bank and Trust Company of Laurel, Laurel, Miss 1957 Appointed by Board of Governors: E. O. Batson President, Batson-McGehee Company, Inc., Millard, Miss 1955 E. E. Wild Rice grower, Midland, La 1956 Joel L. Fletcher, Jr President, Southwestern Louisiana Institute, Lafayette, La 1957 District 7—Chicago Class A: 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 Walter J. Cummings Chairman, Continental Illinois National Bank and Trust Company of Chicago, Chicago, 111. 1957 Class B: William J. Grede President, Grede Foundries, Inc., Milwaukee, Wis 1955 William A. Hanley Director, Eli Lilly and Company, Indianapolis, Ind 1956 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 123 FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Walter E. Hawkinson..». Vice President in Charge of Finance, and Secretary, Allis-Chalmers Manufacturing Company, Milwaukee, Wis 1957 Class C: John S. Coleman President, Burroughs Corporation, Detroit, Mich. 1955 J. Stuart Russell Farm Editor, The Des Moines Register & Tribune, Des Moines, Iowa 1956 Bert R. Prall President, Butler Bros., Chicago, 111 1957 Detroit Branch Appointed by Federal Reserve Bank: Raymond T. Perring President, The Detroit Bank, Detroit, Mich 1955 Ira A. Moore President, Peoples National Bank of Grand Rapids, Grand Rapids, Mich 1956 Howard P. Parshall President, Bank of the Commonwealth, Detroit, Mich 1957 Ernest W. Potter President, Citizens Commercial & Savings Bank, Flint, Mich 1957 Appointed by Board of Governors: William M. Day Vice President and General Manager, Michigan Bell Telephone Company, Detroit, Mich 1955 Vacancy 1956 John A. Hannah President, Michigan State College, East Lansing, Mich 1957 District 8—St. Louis Class A: 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 Phil E. Chappell President, Planters Bank & Trust Company, Hopkinsville, Ky 1957 Class B: S. J. Beauchamp, Jr President, Terminal Warehouse Company, Little Rock, Ark 1955 Louis Ruthenburg Chairman of the Board, Servel, Inc., Evansville, Ind 1956 Leo J. Wieck Vice President and Treasurer, The May Department Stores Company, St. Louis, Mo 1957 Class C: Caffey Robertson President, Caffey Robertson Company, Memphis, Tenn 1955 M. Moss Alexander President, Missouri Portland Cement Company, St. Louis, Mo 1956 Joseph H. Moore Farmer, Charleston, Mo 1957 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 ANNUAL REPORT OF BOARD OF GOVERNORS FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Coat. Dec. SI Little Rock Branch Appointed by Federal Reserve Bank: Harvey C. Couch, Jr. President, Union National Bank of Little Rock, Little Rock, Ark 1955 Donald Barger President, Peoples Exchange Bank, Russellville, Ark 1956 H. C. McKinney, Jr President, The First National Bank of El Dorado, El Dorado, Ark 1957 E. C. Benton President, Fordyce Bank and Trust Company, Fordyce, Ark 1957 Appointed by Board of Governors: A. Howard Stebbins, Jr... President, Stebbins and Roberts, Inc., Little Rock, Ark 1955 G. Ted Cameron President, Cameron Feed Mills, North Little Rock, Ark 1956 Shuford R. Nichols Farmer, ginner, and cotton broker, Des Arc, Ark .. 1957 Louisville Branch Appointed by Federal Reserve Bank: Magnus J. Kreisle President, The Tell City National Bank, Tell City, Ind 1955 Noel Rush President, Lincoln Bank and Trust Company, Louisville, Ky 1956 M. C. Minor President, The Farmers National Bank of Danville, Danville, Ky 1957 W. Scott Mclntosh President, State Bank of Hardinsburg, Hardinsburg, Ind 1957 Appointed by Board of Governors: Smith Broadbent, Jr Farmer, Cadiz, Ky 1955 David F. Cocks Vice President and Treasurer, Standard Oil Company (Kentucky), Louisville, Ky 1956 Pierre B. McBride President, Porcelain Metals Corporation, Louisville, Ky 1957 Memphis Branch Appointed by Federal Reserve Bank: Ben L. Ross Chairman of the Board, Phillips National Bank, Helena, Ark 1955 John K. Wilson President, The First National Bank of West Point, West Point, Miss 1956 John A. McCall President, The First National Bank of Lexington, Lexington, Tenn 1957 William B. Pollard President, National Bank of Commerce in Memphis, Memphis, Tenn 1957 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 125 FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Appointed by Board of Governors: Henry Banks Farmer, Clarkedale, Ark 1955 John D. Williams Chancellor, The University of Mississippi, University, Miss 1956 A. E. Hohenberg President, Hohenberg Bros. Company, Memphis, Tenn. 1957 District 9—Minneapolis Class A: Edgar F. Zelle Chairman of the Board, First National Bank of Minneapolis, Minneapolis, Minn 1955 Harold N. Thomson Vice President, Farmers & Merchants Bank, Presho, S. D. 1956 Harold C Refling Cashier, First National Bank in Bottineau, Bottineau, N. D 1957 Class B: Homer P. Clark Honorary Chairman of the Board, West Publishing Company, St. Paul, Minn 1955 John E. Corette President and General Manager, Montana Power Company, Butte, Mont 1956 Ray C. Lange President, Chippewa Canning Company, Inc., Chippewa Falls, Wis 1957 Class C: F. Albee Flodin President and General Manager, Lake Shore, Inc., Iron Mountain, Mich 1955 Leslie N. Perrin Director, General Mills, Inc., Minneapolis, Minn. 1956 O. B. Jesness Head, Department of Agricultural Economics, University of Minnesota, St. Paul, Minn 1957 Helena Branch Appointed by Federal Reserve Bank: A. W. Heidel President, Powder River County Bank, Broadus, Mont 1955 J. Willard Johnson Financial Vice President and Treasurer, Western Life Insurance Company, Helena, Mont 1956 Geo. N. Lund Chairman of the Board and President, The First National Bank of Reserve, Reserve, Mont 1956 Appointed by Board of Governors: George R. Milburn Manager, N Bar Ranch, Grass Range, Mont 1955 Carl McFarland President, Montana State University, Missoula, Mont 1956 District 10—Kansas City Class A: W. S. Kennedy President and Chairman of the Board, The First National Bank of Junction City, Junction Gty, Kan 1955 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 ANNUAL REPORT OF BOARD OF GOVERNORS FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Cont. W. L. Bunten President, Goodland State Bank, Goodland, Kan. 1956 Harold Kountze Chairman of the Board, The Colorado National Bank of Denver, Denver, Colo 1957 Class B: E. M. Dodds Chairman of the Board, United States Cold Storage Corporation, Kansas City, Mo 1955 K. S. Adams Chairman of the Board, Phillips Petroleum Company, Bartlesville, Okla 1956 Max A. Miller Livestock rancher, Omaha, Neb. 1957 Class C: Raymond W. Hall ...Vice President and Director, Hallmark Cards, Inc., Kansas City, Mo 1955 OliverS. Willham President, Oklahoma A. & M. College, Stillwater, Okla 1956 Joe W. Seacrest President, State Journal Company, Lincoln, Neb. 1957 Denver Branch Appointed by Federal Reserve Bank: Merriam B. Berger Vice President, The Colorado National Bank of Denver, Denver, Colo 1955 Ralph S. Newcomer Executive Vice President, First National Bank in Boulder, Boulder, Colo 1956 Arthur Johnson President, First National Bank in Raton, Raton, N. Mex 1956 Appointed by Board of Governors: Aksel Nielsen President, The Title Guaranty Company, Denver, Colo 1955 Ray Reynolds Cattle feeder and farmer, Longmont, Colo 1956 Oklahoma City Branch Appointed by Federal Reserve Bank: George R. Gear President, The City National Bank of Guymon, Guymon, Okla 1955 F. M. Overstreet President, The First National Bank at Ponca City, Ponca City, Okla 1956 R. Otis McClintock Chairman of the Board, The First National Bank and Trust Company of Tulsa, Tulsa, Okla. ... 1956 Appointed by Board of Governors: Davis D. Bovaird President, The Bovaird Supply Company, Tulsa, Okla 1955 Phil H. Lowery Owner, Lowery Hereford Ranch, Loco, Okla. .. 1956 Omaha Branch Appointed by Federal Reserve Bank: Ellsworth Moser President, The United States National Bank of Omaha, Omaha, Neb 1955 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 127 FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Cont. Dec. 31 George J. Forbes Executive Vice President, The First National Bank of Laramie, Laramie, Wyo 1955 William N. Mitten Chairman of the Board, First National Bank of Fremont, Fremont, Neb 1956 Appointed by Board of Governors: Gilbert C. Swanson Vice President, Campbell Soup Company, and General Manager of its C. A. Swanson & Sons Operations, Omaha, Neb. 1955 Manville Kendrick Rancher, Sheridan, Wyo 1956 District 11-—Dallas Class A: J. Edd McLaughlin President, Security State Bank & Trust Company, Rails, Tex 1955 W. L. Peterson President, The State National Bank of Denison, Denison, Tex 1956 Sam D. Young President, El Paso National Bank, El Paso, Tex. 1957 Class B: 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 D. A. Hulcy Chairman of the Board and President, Lone Star Gas Company, Dallas, Tex 1957 Class C: Henry P. Drought Attorney at Law, San Antonio, Tex 1955 Hal Bogle Rancher and feeder, Dexter, N. Mex 1956 Robert J. Smith Chairman of the Board and President, Pioneer Aeronautical Services, Inc., Dallas, Tex 1957 El Paso Branch Appointed by Federal Reserve Bank: Thomas C. Patterson Vice President, El Paso National Bank, El Paso, Tex 1955 F. W. Barton President, The Marfa National Bank, Marfa, Tex 1956 John P. Butler President, The First National Bank of Midland, Midland, Tex 1957 J. M. Sakrison President, Southern Arizona Bank & Trust Company, Tucson, Ariz 1957 Appointed by Board of Governors: 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 President, Stahmann Farms, Inc., Las Cruces, N. Mex 1956 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 ANNUAL REPORT OF BOARD OF GOVERNORS FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Cont. £)eCt $i James A. Dick President, James A. Dick Investment Company, El Paso, Tex 1957 Houston Branch Appointed by Federal Reserve Bank: S. Marcus Greer. ...Vice Chairman of the Board, The City National Bank of Houston, Houston, Tex 1955 I. F. Betts President, The American National Bank of Beaumont, Beaumont, Tex 1956 W. B. Callan President, The Victoria National Bank, Victoria, Tex 1957 L. R. Bryan, Jr President, The Second National Bank of Houston, Houston, Tex 1957 Appointed by Board of Governors: Tyrus R. Timm Head, Department of Agricultural Economics and Sociology, A. & M. College of Texas, College Station, Tex 1955 Herbert G. Sutton T. O. Sutton and Sons, Colmesneil, Tex 1956 John C. Flanagan Vice President and General Manager, Texas Distribution Division, United Gas Corporation, Houston, Tex 1957 San Antonio Branch Appointed by Federal Reserve Bank: Burton Dunn President, The Corpus Christi National Bank, Corpus Christi, Tex 1955 E. C. Breedlove President, The First National Bank of Harlingen, Harlingen, Tex 1956 V. S. Marett President, The Citizens National Bank of Gonzales, Gonzales, Tex 1957 J. W. Beretta President, First National Bank of San Antonio, San Antonio, Tex 1957 Appointed by Board of Governors: D. Hayden Perry Livestock farming, Robstown, Tex 1955 Clarence E. Ayres Professor of Economics, The University of Texas, Austin, Tex 1956 Alex R. Thomas Vice President, Geo. C. Vaughan & Sons, San Antonio, Tex 1957 District 12—San Francisco Class A: 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 129 FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Carroll F. Byrd President, The First National Bank of Willows, Willows, Calif 1957 Class B: Walter S. Johnson President, American Forest Products Corporation, •, • . San Francisco, Calif 1955 Alden G. Roach President, Columbia-Geneva Steel Division, United States Steel Corporation, San Francisco, Calif 1956 Reese H. Taylor President, Union Oil Company of California, Los Angeles, Calif 1957 Class C: Y. Frank Freeman....... Vice President, Paramount Pictures Corporation, Hollywood, Calif. 1955 A. H. Brawner Chairman of the Board, W. P. Fuller & Company, San Francisco, Calif 1956 Philip I. Welk President, Preston-Shaffer Milling Company, Walla Walla, Wash 1957 Los Angeles Branch Appointed by Federal Reserve Bank: Hugh C. Gfuwell Chairman of the Board, First National Bank of Arizona, Phoenix, Ariz 1955 Anderson Borthwick President, The First National Trust and Savings Bank of San Diego, San Diego, Calif 1956 James E. Shelton........ Chairman, Security-First National Bank of Los Angeles, Los Angeles, Calif. 1956 Appointed by Board of Governors: Shannon Crandall, Jr President, California Hardware Company, Los Angeles, Calif 1955 Charles Detoy Partner, Coldwell, Banker and Company, Los Angeles, Calif 1956 Portland Branch Appointed by Federal Reserve Bank: E. C. Sammons President, The United States National Bank of Portland, Portland, Ore 1955 John B. Rogers President, The First National Bank of Baker, Baker, Ore 1956 J. H. McNally President, The First National Bank of Bonners Ferry, Bonners Ferry, Idaho 1956 Appointed by Board of Governors: Warren W. Braley Partner, Braley & Graham Buick, Portland, Ore. 1955 William H. Steiwer, Sr.. .Livestock and farming, Fossil, Ore 1956 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 ANNUAL REPORT OF BOARD OF GOVERNORS FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. Term Expires DIRECTORS—Cont. Dec. 31 Salt Lake City Branch Appointed by Federal Reserve Bank: Harry Eaton President, Twin Falls Bank and Trust Company, Twin Falls, Idaho 1955 Russell S. Hanson Executive Vice President, The First National Bank of Logan, Logan, Utah 1956 George S. Eccles President, First Security Bank of Utah, National Association, Salt Lake City, Utah 1956 Appointed by Board of Governors: Joseph Rosenblatt President, The Eimco Corporation, Salt Lake City, Utah 1955 Geo. W. Watkins President, Snake River Equipment Company, Idaho Falls, Idaho 1956 Seattle Branch Appointed by Federal Reserve Bank: Charles F. Frankland President, The Pacific National Bank of Seattle, Seattle, Wash 1955 S. B. Lafromboise President, The First National Bank of Enumclaw, Enumclaw, Wash 1956 James Brennan President, First National Bank in Spokane, Spokane, Wash 1956 Appointed by Board of Governors: D. K. MacDonald Chairman of the Board, D. K. MacDonald & Company, Inc., Seattle, Wash 1955 Ralph Sundquist President and General Manager, Sundquist Fruit and Cold Storage, Inc., Yakima, Wash 1956 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM 131 FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. PRESIDENTS AND VICE PRESIDENTS Federal Reserve President Vice Presidents Bank of— First Vice President Boston J. A. Erickson D. H. Angney Carl B. Pitman Alfred C. Neal E. O. Latham O. A. Schlaikjer 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 Wm. G. McCreedy W. J. Davis Robert N. Hilkert P. M. Poorman E. C. Hill J. V. Vergari Cleveland. W. D. Fulton Dwight L. Allen Martin Morrison Donald S. Thompson Roger R. Clouse H. E. J. Smith A. H. Laning 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 Atlanta. Malcolm Bryan V. K. Bowman L. B. Raisty Lewis M. Clark J. E. Denmark Earle L. Rauber John L. Liles, Jr. S. P. Schuessler Harold T. Patterson Chicago. C. S. Young Neil B. Dawes George W. Mitchell E. C. Harris W. R. Diercks A. L. Olson L. G. Meyer W. W. Turner St. Louis. Delos C. Johns Wm. J. Abbott, Jr. H. H. Weigel Frederick L. Deming Dale M. Lewis J. C. Wotawa Wm. E. Peterson Minneapolis.. O. S. Powell C. W. Groth Otis R. Preston A. W. Mills E. B. Larson M. H. Strothman, Jr. H. G. McConnell Sigurd Ueland Kansas City.. H. G. Leedy John T. Boysen 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 Howard Carrithers Morgan H. Rice W. H. Holloway Harry A. Shuford T. W. Plant San Francisco. C. E. Earhart E. R. Millard Eliot J. Swan H. N. Mangels H. F. Slade O. P. Wheeler Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 ANNUAL REPORT OF BOARD OF GOVERNORS FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1955—Cont. VICE PRESIDENTS IN CHARGE OP BRANCHES Federal Reserve Bank of— Branch Vice Presidents 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 Kyle K. Fossum Kansas City. . Denver Cecil Puckett Oklahoma City R. L. Mathes Omaha P. A. Debus Dallas El Paso C. M. Rowland Houston J. L. Cook San Antonio W. E. Eagle San Francisco Los Angeles W. F. Volberg Portland J. A. Randall Salt Lake City W. L. Partner Seattle J. M. Leisner CONFERENCE OF PRESIDENTS The Presidents of the Federal Reserve Banks are organized into a Conference of Presidents which meets from time to time to consider matters of common interest and to consult with and advise the Board of Governors. Mr. Young, President of the Federal Reserve Bank of Chicago, and Mr. Earhart, President of the Federal Reserve Bank of San Francisco, who were elected Chairman of the Conference and Vice Chairman, respectively, at the meeting held in March 1954, were re-elected in March 1955 and continued to serve as such during 1955. Mr. Robert C. Holland, an Economist at the Federal Reserve Bank of Chicago, who was elected Secretary of the Conference in March 1954, was re-elected in March 1955, and continued to serve as such during 1955. 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 a 55 3 1 BOUNDARIES OF FEDERAL RESERVE DISTRICTS BOUNDARIES OF FEDERAL RESERVE BRANCH TERRITORIES BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM ® FEDERAL RESERVE BANK CITIES • FEDERAL RESERVE BRANCH CITIES DECEMBER 1.1954 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 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 the 1954 Annual Report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX Page Acceptances, bankers': Authorization for Federal Reserve Banks to acquire 91 Federal Reserve Bank holdings 51, 58, 60 Minimum buying rate discontinued 92 Agricultural developments 14 Assets and liabilities: Banks, by classes 77 Federal Reserve Banks 58-63 Balance of payments 37 Bank credit and money, review for year 23 Bank holding companies 44 Bank premises, Federal Reserve Banks and branches 52, 58, 60, 62, 72 Bank supervision by Federal Reserve System 44 Banking offices, changes in number 42, 79 Board of Governors: Accounts audited 53 Income and expenses 53 Members and officers 112 Policy actions 82 Reimbursable expenditures 55 Branch banks: Domestic, changes in number 42, 79 Federal Reserve {See Federal Reserve Banks) Foreign: Examination of European branches 46 Number in operation 45 Capital accounts: Banks, by classes 42, 77 Federal Reserve Banks 59, 61, 63 Chairmen of Federal Reserve Banks: Conference of 115 List of 115 Meetings 53 Charts: Business indexes, selected 13 Demand deposits and currency 29 Excess reserves and borrowings 27 Gross national product 9 Industrial production 33 Interest rates 22 U. S. balance of payments 38 Commercial banks: Assets and liabilities 77 Banking offices, changes in number 79 Loans and investments 5,23, 77 Number, by classes 77 Condition statement of Federal Reserve Banks 58-63 134 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 135 Page Consumer credit 17, 19, 24 Credit and economic review 2 Credit policy, Federal Reserve 5 Currency and deposits, changes in 29 Debt and equity financing 16, 19 Defense Production Act of 1950, amendment 48 Defense production loans 39, 76 Deposits : Banks, by classes 77 Changes in 29 Federal Reserve Banks 59, 61, 63, 70 Savings deposits, not evidenced by pass book, amendment to Regulations D and Q 47, 86 Time deposits, maximum rates 75 Deputy Chairmen of Federal Reserve Banks 115 Directors, Federal Reserve Banks and branches 116 Discount rates at Federal Reserve Banks: Changes in 2, 7, 8, 83, 86, 88 Table of 74 Discounts and advances by Federal Reserve Banks. . .51, 58, 60, 62, 65, 70 Dividends: Federal Reserve Banks 50, 67, 68 Member banks 41, 78 Earnings: Federal Reserve Banks 49, 50, 51, 66, 68 Member banks 40, 78 Economic conditions 8 Economic and credit review 2 Economic and financial developments abroad 31 Examinations: Federal Reserve Banks 44 Foreign banking corporations 46 Holding company affiliates 44 State member banks and European branches 44, 46 Expenses: Board of Governors 53 Federal Reserve Banks 49, 50, 66, 68 Member banks 41, 78 Federal Advisory Council: Meetings 53 Members and officers 114 Federal Open Market Committee: Executive committee abolished 48, 97 Meetings 52 Members and officers 113 Policy actions 89 Review of continuing authorities or statements of policy 92 Federal Reserve Act, section 24, amendment relating to real estate loans by national banks 49 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 INDEX Page Federal Reserve Banks: Assessment for expenses of Board of Governors 55, 66 Bank premises 52, 58, 60, 62, 72 Branches: Bank premises 52, 72 Directors 116 Vice Presidents in charge of 132 Capital accounts 59, 61, 63 Chairmen (See Chairmen of Federal Reserve Banks) Condition statement 58-63 Directors 116 Discount rates: Changes in 2, 7, 8, 83, 86, 88 Table of 74 Dividends 50, 67, 68 Earnings and expenses. . 49, 50, 51, 66, 68 Examination of 44 Foreign and international accounts 51 Officers and employees, number and salaries 66, 73 Presidents and other officers 131 Profit and loss 67 Treasury certificates, holdings of special short-term, purchased directly from the U. S 65 U. S. Govt. securities held by 51, 58, 60, 62, 64, 65, 70 Volume of operations 49, 65 Federal Reserve credit policy 5 Federal Reserve notes: Condition statement data 58-63 Cost of printing 55 Interest paid to Treasury 50, 67, 68 Federal Reserve System: Bank supervision by 44 Map of 133 Membership, changes in 43 Foreign banking corporations 46 Foreign economic and financial developments 31 Government securities (See U. S. Government securities) Gross national product 2, 9 Holding company affiliates 44 Income and saving 16 Industrial advances by Federal Reserve Banks 51, 58, 62, 65, 74 Industrial production: Domestic 3, 11 Western Europe 4, 32 Inter-Agency Bank Examination School 46 Interest rates: Federal Reserve rates (See also Discount rates) 74 Regulation V loans 76 Review for year 21 Time deposits, maximum rates 75 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 137 Page International trade and balance of payments 37 Investments: Banks, by classes 77 Commercial banks 5, 23, 77 Federal Reserve Banks 58, 60, 62 Member banks 77 Labor market 14 Legislation: Defense Production Act of 1950, amendment 48 Real estate loans by national banks, amendment to section 24 of Federal Reserve Act 49 Loans (See also specific types of loans) : Banks, by classes 77 Commercial banks 5, 23, 77 Federal Reserve Banks 51, 58, 60, 62, 65, 70 Margin requirements: Changes in 2, 7, 48, 82, 84 Table of 76 Meetings: Chairmen of Federal Reserve Banks 53 Federal Advisory Council 53 Federal Open Market Committee 52 Presidents of Federal Reserve Banks 53 Member banks: Assets and liabilities 77 Banking offices, changes in number 79 Capital accounts 42, 77 Dividends .41, 78 Earnings and expenses 40, 78 Foreign branches, number in operation 45 Number 43, 77 Reserve positions 26 Reserve requirements 75 Reserves and related items 28, 70 Membership in Federal Reserve System, changes in 43 Money and bank credit, review for year 23 Mutual savings banks .77, 79 National banks: Assets and liabilities 77 Banking offices, changes in number 79 Foreign branches, number in operation 45 Number 43, 77 Real estate loans, amendment to section 24 of Federal Reserve Act.. 49 Trust powers: Amendment to section 10(c) of Regulation F 47, 85 Number of banks granted 45 Nonmember banks 77, 79 Open market operations 6, 7, 8, 89-111 Par List 43, 80 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 INDEX Page Policy actions, Board of Governors: Discounts for and advances to member banks, increases in rates 83, 86, 88 Regulation A, Advances and Discounts by Federal Reserve Banks, revision of 82 Regulation D, Reserves of Member Banks, amendment to 86 Regulation F, Trust Powers of National Banks, amendment to 85 Regulation Q, Payment of Interest on Deposits, amendment to 86 Regulation T, Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges, amendments to 82, 84 Regulation U, Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange, amendments to 82, 84 Policy actions, Federal Open Market Committee: Authority to effect transactions in System account 89, 90, 94, 96, 99, 101, 103-111 Bankers' acceptances, authorization to acquire 91 Repurchase agreements, U. S. Government securities 100, 102 Review of continuing authorities or statements of policy 92 Presidents of Federal Reserve Banks: Conference of 132 List of 131 Meetings 53 Prices, changes in 3, 15 Production, review for year 9 Rates (See Interest rates) Real estate loans: Growth in 17, 19, 24, 25 National banks, amendment to section 24 of Federal Reserve Act. . . 49 Regulations, Board of Governors: A, Advances and Discounts by Federal Reserve Banks, revision of 47, 82 D, Reserves of Member Banks, amendment relating to savings deposits not evidenced by pass book 47, 86 F, Trust Powers of National Banks, amendment to section 10 (c) relating to collective investment of trust funds 47, 85 Q, Payment of Interest on Deposits, amendment relating to savings deposits not evidenced by pass book 47, 86 T, Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges, amendments increasing margin requirements 48, 82, 84 U, Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange, amendments increasing margin requirements 48, 82, 84 V, Loan Guarantees for Defense Production 39, 76 Regulations, Federal Open Market Committee, amendment abolishing executive committee 48 Repurchase agreements: Bankers* acceptances 91 U. S. Government securities 93, 100, 102 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX 139 Page Reserve positions of banks 26 Reserve requirements, member banks 75 Reserves: Foreign 39 Member banks 26, 28, 70 Salaries: Board of Governors 55 Federal Reserve Banks 66, 73 State member banks: Assets and liabilities 77 Banking offices, changes in number 79 Examination of, and European branches 44, 46 Foreign branches, number in operation 45 Number 43, 77 System open market account: Authority to effect transactions in 89, 90, 94, 96, 99, 101, 103-111 Bankers' acceptances 91 Repurchase agreements 91, 93, 100, 102 Review of continuing authorities or statements of policy 92 Treasury finance 19 Trust powers of national banks: Collection investment of trust funds, amendment to section 10(c) of Regulation F 47, 85 Number of banks granted 45 U. S. Government securities: Bank holdings, by class of bank 77 Commercial bank holdings 24, 25, 77 Federal Reserve Bank holdings 51, 58, 60, 62, 64, 65, 70 Open market operations 6, 7, 8, 89-111 Repurchase agreements 93, 100, 102 Treasury certificates, Federal Reserve holdings of special short-term, purchased directly from the U. S 65 Voting permits issued to holding company affiliates 44 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis