Federal Reserve Bulletin, 1977-09

SEPTEMBER 1977 FEDERAL RESERVE BULL -FTTN C om p lying w ith C o n su m er C red it R eg u latio n s— A C hallenge T h e Im p o rtan ce o f an In d e p e n d en t C en tral B an k C hanges in T im e an d S avings D ep o sits, Ja n u a ry -A p ril 1977 T reasu ry an d F e d e ra l R eserv e F o reig n E x ch an g e O p eratio n s Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A copy of the Federal Reserve Bulletin is sent to each member bank without charge; meniber banks desiring additional copies may secure them at a special $10.00 annual rate. The regular subscription price in the United States and its possessions, and in Bolivia, Canada, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, Guatemala, Haiti, Republic of Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, El Salvador, Uruguay, and Venezuela is $20.00 per annum or $2.00 per copy; elsewhere, $24.00 per annum or $2.50 per copy. Group subscriptions in the United States for 10 or more copies to one address, $1.75 per copy per month, or $18.00 for 12 months. The Bulletin may be obtained from the Division of Administrative Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551, and remittance should be made payable to the order of the Board of Governors of the Federal Reserve System in a form collectible at par in U.S. currency. (Stamps and coupons are not accepted.) 1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NUMBER 9 □ VOLUME 63 □ SEPTEMBER 1977 FEDERAL RESERVE BULLETIN B oard of G overnors of the Federal R eserve System W ashington, D .C . PUBLICATIONS COM M ITTEE Stephen H. Axilrod □ Joseph R. Coyne □ John M. Denkler □ Janet O. Hart John D. Hawke, Jr. □ James L. Kichline □ Edwin M. Truman Richard H. Puckett, Staff Director The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. Direction for the art work is provided by Mack R. Rowe. Editorial support is furnished by the Economic Editing Unit headed by Elizabeth B. Sette. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 769 Complying with 793 Treasury and Federal Reserve Consumer Credit Regulations— Foreign Exchange Operations A Challenge In the period from February Description of the Board’s role as through July 1977 the semiannual re­ the primary source of regulations and port on foreign exchange operations interpretations that affect consumer states that payments balances were credit; particular emphasis is placed shifting while the economy of the on the importance of compliance. United States was expanding more rapidly than were the economies of other major industrial countries. 775 Staff Economic Study Summary of “Greeley in Perspec­ 811 Statements to Congress tive” indicates that the scale of entry Henry C. Wallich, Member of the by bank holding companies into local Board of Governors, presents the banking markets affects future market views of the Board of Governors on structure and remains the basis for the recent growth of international in­ analyzing most future competition debtedness and some of the possible cases. implications of this growth before the Subcommittee on International Fi­ 777 The Importance of an nance of the Committee on Banking, Independent Central Bank Housing and Urban Affairs, U.S. Arthur F. Burns, Chairman of the Senate, August 29, 1977. Board of Governors, discusses the re­ 817 J. Charles Partee, Member of the lationship of the Federal Reserve’s Board of Governors, presents the rea­ independence within Government to sons for the Board’s unanimous sup­ the conduct of a meaningful antiport of the establishment of a Federal inflationary monetary policy. Bank Examination Council and for its unanimous opposition to the creation 782 Changes in Time and Savings of a Federal Bank Commission before Deposits at Commercial Banks, the Committee on Banking, Housing January-April 1977 and Urban Affairs, U.S. Senate, September 16, 1977. During the most recent survey period, growth in total time and sav­ 823 Record of Policy Actions of the ings deposits at all insured commer­ Federal Open Market Com­ cial banks increased by about 2 per mittee cent not seasonally adjusted—com­ pared with 3 per cent in the preced­ In the meeting held on July 19, ing 3 months. 1977, the Committee decided that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

rates of growth in M-1 and M-2 over An interpretation by the Board the July-August period at annual rates simplifies procedures under Regula­ within ranges of 3Vi to IVi per cent tion Z (Truth in Lending) for certain and 6V2 to 10V6 per cent, respectively, credit-card issuers. The Board also would be appropriate. The Federal postponed the effective date of a sec­ funds rate likely to be associated with tion of the same regulation dealing these ranges for the monetary aggre­ with billing of credit transactions. gates would be about 5% per cent, Changes in Board staff. although the Committee agreed that it could be modified within a range of One State bank was admitted to 5lA to 53A per cent depending on the membership in the Federal Reserve growth rate of the aggregates. System. The Committee also reviewed its 12month ranges for growth in the mone­ 869 Industrial Production tary aggregates. At the conclusion of Output declined by 0.5 per cent in the discussion, the Committee decided August. to reduce the lower limit of the range for M-1 by Vi of a percentage point and Al Financial and Business Statistics to retain the existing ranges for M-2 and M-3. The ranges would therefore A3 Domestic Financial Statistics be 4 to 6V2 per cent for M-1,7 to 9Vi per A46 Domestic Nonfinancial Statistics cent for M-2, and SV2 to 11 per cent A54 International Statistics for M-3. A70 Board of Governors and Staff 839 Law Department A72 Open Market Committee and Staff: Federal Advisory Council Various amendments, interpreta­ tions, and bank holding company and A73 Federal Reserve Banks and bank merger orders. Branches A74 Federal Reserve Board 867 Announcements Publications The Board of Governors has ap­ proved actions by the directors of the A76 Index to Statistical Tables 12 Federal Reserve Banks to increase the discount rate from 5lA to 53A per A78 Map of Federal Reserve System cent. Inside Back Cover: The Consumer Advisory Council held a meeting on September 15, Guide to Tabular Presentation and 1977. Statistical Releases Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

C o m p lyin g W ith C on su m e r C redit R egulations: A C hallenge This article was prepared in the Division of tions to implement the Truth in Lending sec­ Consumer Affairs. All footnotes appear at the tion of the Consumer Credit Protection Act of end of the article. 1968. The Board’s Division of Banking Supervi­ sion and Regulation drafted those regulations, The Consumer Credit Protection Act, which as well as the many amendments and interpre­ was passed in 1968, has been the basis for tations of Regulation Z that followed, after the more than a dozen laws and amendments de­ scope and demands of the law and the need for signed by the Congress to help consumers in more specific regulatory detail became evi­ many ways: To understand the nature and dent. cost of credit; to understand the bills received; By 1974, when the Fair Credit Billing Act, to settle billing disputes promptly; to shield the Equal Credit Opportunity Act, and a sub­ consumers from discrimination when they ap­ stantial number of amendments to the Truth in ply for credit; to protect them from shoddy Lending Act were moving through the Con­ goods and services purchased with a credit gress (with provisos for Board rulewriting), card; and to help them through large and the Board created a separate office—now the complicated transactions such as home buying Division of Consumer Affairs—to handle the and leasing of personal property. new responsibilities expected to result from In most cases the Congress has directed the the pending legislation. The function of that Board of Governors of the Federal Reserve office was to lay the groundwork for expe­ System to write regulations with the force of ditious writing of the new regulations that law to transform the general “thou shalts” and appeared inevitable. “thou shalt nots” of this legislation—as they The Board and the Division of Consumer apply to both consumers and creditors—into Affairs now face a second wave of challenges specific definitions, directives, and prohibi­ from the cascade of consumer credit protec­ tions. tion laws enacted during the past decade— In this way the Federal Reserve has become how to ensure that banks achieve compliance the chief source, outside of the Congress, of consumer credit protection laws. A decade Principal consumer credit laws ago the Federal Reserve touched the con­ sumer only in a general way as it worked to provide a healthy economic climate; safe and Act Enacted sound banks; and a cheap, efficient payments Truth in Lending....................................................... 1968 mechanism. Now the Board is the primary Fair Credit Billing..................................................... 1974 Equal Credit Opportunity..................................... 1974 source of regulation and interpretations reach­ Amendments to Truth in Lending..................... 1974 ing deep into the economic life of every con­ Real Estate Settlement Procedures.................. 1974 Federal Trade Commission Improvement ... 1975 sumer who uses credit. Home Mortgage Disclosure ................................ 1976 The initial task of the Board stemming from Consumer Leasing .................................................. 1976 Amendments to Equal Credit Opportunity .. 1976 the new consumer laws was to write regula­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

770 Federal Reserve Bulletin □ September 1977 with the massive body of law and regulation, • The questions banks are permitted—or and at the same time serve the objective both of required—to ask credit applicants. consumer guidance and protection and of a • The forms banks use. continuing healthy and innovative credit in­ • The records banks are required to keep. dustry on which consumers and the U.S. • The disclosures banks are required to economy can depend. give an applicant. • The reports banks are required to file with supervisory authorities or have available for public inspection. THE COMPLIANCE CHALLENGE These major regulatory changes have been Obviously, examiners of commercial banks supplemented by the Board through issuance could not accomplish the dual task of de­ of amendments and interpretations and termining compliance with, and correct­ through unofficial staff letters sent in response ing violations of, all of this consumer legisla­ to inquiries, all of which are made available to tion while still assessing the safety and sound­ the public. Furthermore, last year the Con­ ness of banks and their compliance with other gress empowered the Board to authorize the banking laws and regulations. Many banks, staff of its Division of Consumer Affairs to especially small- and medium-sized institu­ issue so-called “official staff interpretations” tions, do not have sufficient resources to upon which creditors can rely without fear of analyze and implement the regulations, and for civil liability, and the staff has begun to issue this reason some of them may have been such interpretations. The courts too have been losing the opportunity to be leaders in their making decisions on the acts, regulations, and communities. Without such resources, they interpretations; several hundred court deci­ may be exposing themselves to serious risks, sions have been reported under Truth in Lend­ most important of which are monetary penalties ing alone.2 As a result of all these changes, for noncompliance and loss of community bank management must now read, analyze, confidence. Furthermore, it has become clear and digest a wide variety of new materials, that banks have not always fully carried devise new procedures, and retrain personnel. out the intent of the Congress to grant credit Over the decade it has become increasingly on the basis of the ability to repay and to dis­ evident that the regular examination of com­ close to consumers the costs of credit. mercial banks does not provide the best To counteract these inadequacies, the Sys­ framework for helping banks to comply with tem, in March 1977,1 instituted a completely consumer laws and regulations. That examina­ new approach to compliance. Through its Di­ tion focuses, as it must, on a bank’s safety vision of Consumer Affairs it put into effect a and financial soundness. Although a com­ comprehensive new program of compliance mercial bank examiner receives training in examinations of State member banks. This consumer credit and other regulations3 and is effort was made in coordination with other expected to be alert to signs of non- Federal regulators of financial institutions that compliance, the rapid increase in the number effected similar programs for the institutions and scope of these consumer regulations— under their supervision. In addition, the Sys­ especially with the banking business itself in a tem has offered to all member banks an educa­ period of rapid adaptation to change—has tional service to help bring them into com­ made it extremely difficult, indeed almost im­ pliance with the consumer credit protection possible, for the examiner to do an adequate laws and regulations. job. Similar difficulties have been experienced Most of these new statutes and regulations by examiners of the Comptroller of the Cur­ have required changes in the methods by rency, the Federal Deposit Insurance Corpo­ which banks transact business, including: ration, and the Federal Home Loan Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Complying with Consumer Credit Regulations 111 Board.4 These problems of enforcement have consumer protection regulations and their re­ led to a series of congressional oversight hear­ quirements, in reviewing its forms and opera­ ings and to critical reports suggesting ways by tions, and in bringing itself into compliance if which the agencies might increase and im­ necessary. Each Reserve Bank sent a letter to prove their efforts.5 every member bank in its district explaining In September 1976 the Board formed a the service and offering to arrange for a visit System task force to seek a solution to the by a trained staff member or members, who problem of how examiners could deal with would spend as much time as necessary in the their new and increased responsibilities in the bank. Opportunities were also offered for area of consumer credit protection. The solu­ bankers to meet in groups with Reserve Bank tion adopted by the Board was the development staff for discussion and for question-andof a two-pronged program: (1) an advisory and answer sessions. educational service to inform both creditors In the first 4 months after the service was and borrowers about the provisions of con­ inaugurated, about 13 per cent of all State sumer credit statutes and regulations; and (2) member banks and 9 per cent of all national the conduct of special examinations of State banks requested help. Meetings with 269 member banks to determine compliance with individual banks were held within the the acts and regulations. System. These meetings, which last from Vi The task force, made up of representatives day to IV2 days, have been supplemented by of Federal Reserve Bank and Board staffs, almost 60 group meetings. met throughout the fall and winter and pre­ At each of these individual bank meetings, pared recommendations on every aspect of the an extensive over-all review of the bank’s consumer protection program. Meanwhile, a operations is completed. Following a brief Compliance Section was established in the discussion with the operating officers, the Board’s Division of Consumer Affairs. Special bank’s forms are examined. Forms represent schools for examiners were initiated. The cur­ an area in which lack of compliance is most riculum in these schools quickly expanded visible. Accordingly, the visits help to ensure from a 1-week to a 2-week session, and by the that banks are, or will be, using proper time the compliance examination program was forms. Many of the recently enacted regula­ established in March 1977, about 100 ex­ tions provide sample forms, which assist aminers had been trained. Three Federal with compliance. Also important is a review Reserve Banks conducted experimental ex­ of Regulation Z (Truth in Lending) to ensure aminations to test the new procedures that that there is a thorough understanding of es­ were being established. Close coordination sential aspects of the regulation, including the was maintained with the staffs of the Federal annual percentage rate and how it is com­ Deposit Insurance Corporation and of the Of­ puted, the finance charge, distinctions be­ fice of the Comptroller, who were also actively tween open- and closed-end credit, and the engaged in developing new examination right of rescission. Reserve Bank staffs also procedures. review or help in the development of a bank’s written loan policies. Responses from the banks that have been visited have been positive. One enthusiastic HELPING BANKS UNDERSTAND banker wrote, “It is one of the finest services CONSUMER CREDIT REGULATIONS that the Fed offers . . . ,”6 The service is The program announced in March of this year expected to be particularly helpful to banks emphasized the Federal Reserve’s determina­ that do not have their own in-house counsel, tion to aid every member bank that asked for or perhaps have only one in-house attorney help in acquainting its personnel with the who is responsible for answering the myriad of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

772 Federal Reserve Bulletin □ September 1977 legal questions that face any commercial bank. of these procedures are still in the process of Reserve Banks are honoring requests as being defined. In general, all apparent viola­ rapidly as possible and will continue to offer tions are reported to an officer in charge at the the service as long as it is needed. In fact, Reserve Bank, who then determines, in con­ experience shows that staff turnover as well as sultation with the staff of the Board’s Division new regulatory developments make it neces­ of Consumer Affairs when necessary, the need sary for banks—even those that have made a for additional investigation or the appropriate thorough effort to comply—to review their corrective measures. forms and procedures at least every 2 or 3 By the end of March 1978, each State years to make sure that those forms and member bank should have been examined at procedures are still correct and, even more least once under these new compliance important, that the proper procedures are still examination procedures. Compliance ex­ being observed. aminations at 170 banks have already been completed. During April-December 1978 addi­ tional examinations will be made of banks whose condition at the first examination in­ EXAMINING FOR COMPLIANCE dicated a need for follow-up. At the end of From the beginning, the Board has thought that 1978, the program will be evaluated to de­ special compliance examinations should be termine its usefulness and how it can be conducted separately from regular commercial modified and improved. or trust examinations, but that when feasible they should be conducted at the same time to minimize disruption of bank operations. The FURTHER PROBLEMS special compliance examiners were to be AND ACTIVITIES drawn, whenever possible, from the ranks of commercial examiners, so that they would be No examination program can be regarded as thoroughly familiar with the ways in which fixed or final. Examination procedures are banks operate. If persons with training in constantly being reviewed and improved as commercial examination were not readily the conditions and circumstances change and available, training in such procedures was to as regulators develop more sophistication and be provided. All compliance examiners, how­ expertise. For an entirely new program, such ever, were to be specially trained to examine as this one, important questions are expected for compliance with the consumer credit regu­ to remain. lations.7 Perhaps the most important problem is how The compliance examination, for which an to make the programs of the various supervi­ entirely new design was developed, consists of sory agencies as comparable as possible— a scientific sampling of loan files for com­ although all of these agencies recognize that pliance with Regulation Z and a review of complete comparability is virtually unattaina­ accepted and rejected applications for com­ ble. For example, the Federal Trade Commis­ pliance with Regulation B (Equal Credit Op­ sion, which supervises a vast majority of portunity). Special instructional manuals were creditors, does not—and could not, without developed for each regulation. An examina­ radical restructuring and the creation of a tion checklist was prepared to make the formidable new bureaucracy—have a program examinations more efficient and comprehen­ for the examination of individual creditors. In sive. A special examination report was de­ addition, a number of other enforcement veloped specifically to include each consumer agencies do not have programs for the periodic law and regulation covered by the compliance examination of the institutions under their examination program.8 supervision. It is nonetheless vital for the agen­ Procedures were also developed for reporting cies that do have an examination capability and correcting violations. However, a number to apply the same standards and to enforce Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Complying with Consumer Credit Regulations 773 compliance with similar sanctions. Staffs of assistance of an interagency staff-level task the Federal Reserve Board of Governors, the force on uniform enforcement procedures. It Comptroller of the Currency, and the Federal is hoped that the guidelines can be adopted in Deposit Insurance Corporation have been in final form soon. frequent contact during the development of To continue the emphasis on strengthening their new compliance programs for banks. its examination program, the Board plans over Each agency has observed experiments made the next 4 months to: by the others in order to improve its own bank • Host the fifth session of the System Con­ examination structure. sumer Affairs School for Bank Examiners, One of the most significant experiments in including approximately four examiners from achieving comparability among the various each Federal Reserve district (November agencies supervising financial institutions re­ 7-18). lates to the sanctions that should be imposed • Hold a 1-week Interagency Consumer for various violations of the regulations. In Protection Seminar (November 28-December that connection difficult questions, particularly 2). This will be the second such interagency with regard to reimbursement of overcharges meeting of personnel from the Federal Deposit to consumers, have been raised; included Insurance Corporation and the Office of the among these questions are the following: Comptroller of the Currency. Like the first • Should banks be required to reimburse session held in June, it will be designed to help overcharges resulting from violations as far personnel who are not involved in direct dayback as July 1, 1969, the effective date of the to-day consumer affairs compliance examina­ Truth in Lending Act, or would a more recent tion but who need to understand the various date be more appropriate? consumer affairs statutes. • Should there be a de minimis rule under • Hold an Interagency Consumer Affairs which reimbursement would not be required if School for Bank Examiners of the Federal the average amount reimbursable were so bank regulators during the 2-week period be­ small that the administrative costs did not ginning January 23, 1978. This will be the first justify its return? What amount should this be? such school of its kind, and the students will • How should an incorrect disclosure with include both examiners and assistant exam­ regard to credit insurance be remedied? iners. • How should an overcharge be reim­ bursed? ★ ★ ★ • Will information gathered as required by several statutes be useful as an enforcement In adopting legislation to protect consumers tool; and if so, how? in their credit transactions, the Congress dra­ These questions are but a few of many that matically changed the ways in which banks and must be answered as the consumer com­ creditors in general deal with consumers and pliance regulatory function takes shape. with consumer credit. The challenge that re­ The Board and the other regulators of Fed­ mains is to ensure bank compliance with these eral financial institutions plan to publish pro­ new regulatory requirements while maintaining posed guidelines dealing with such questions. the safety and soundness of financial institu­ The guidelines are being developed with the tions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

11A Federal Reserve Bulletin □ September 1977 FOOTNOTES federal Reserve press release, March 30, 1977. Affairs Subcommittee in the House of Representatives. (Bulletin, April 1977, pp. 427 and 428) Reports by Senate Committee on Banking, Housing and Statement by Philip C. Jackson, Jr., Governor, Board Urban Affairs on October 1, 1976, “Consumer Protection of Governors of the Federal Reserve System, before the Enforcement Activities by the Three Commercial Bank Consumer Affairs Subcommittee of the Committee on Regulatory Agencies” and House of Representatives Banking, Finance and Urban Affairs, House of Representa­ Committee on Government Operations, May 10, 1977, tives, Feb. 9, 1977 (Bulletin, Feb. 1977, pp. 125-28) “The Truth in Lending Act: Federal Banking Agencies 3Such as: 12 CFR 215, Regulation O, Loans to Execu­ Enforcement and the Need for Statutory Reform.” tive Officers of Member Banks; 12 CFR 216, Regulation 6 Letter of August 24, 1977, from H.E. Harrell, Execu­ P, Minimum Security Devices and Procedures for Federal tive Vice President and Cashier, The Citizens National Reserve Banks and State Member Banks; 12 CFR 217, Bank, Emporia, Virginia. Regulation Q, Interest on Deposits; 12 CFR 221, Regula­ 7 The full scope of the examination covers the following: tion U, Credit by Banks for the Purpose of Purchasing or Fair Credit Reporting Act; Fair Housing Act; Real Estate Carrying Margin Stock. Settlement Procedures Act; Equal Credit Opportunity Act 4As well as, to a considerable extent, by those of the (Regulation B), 12 CFR 202; Home Mortgage Disclosure National Credit Union Administration. The Federal Trade Act (Regulation C), 12 CFR 203; Truth in Lending, Fair Commission, which has enforcement authority for Regu­ Credit Billing, and Consumer Leasing Acts (Regulation lations B and Z over most other covered creditors, has no Z), 12 CFR 226; Unfair and Deceptive Acts and Practices regular examination program and focuses its enforcement by Banks and Consumer Complaints (Regulation AA), 12 efforts to a far greater extent on bringing test cases in CFR 227; National Flood Insurance Provisions (Regula­ court. tion H), 12 CFR 208; and Interest on Deposits (Regulation 5 Senate Hearings of July 27-29, 1976, concerning en­ Q), 12 CFR 217. forcement of Federal and State consumer protection laws, 8A copy of this report is sent to the board of directors of and hearings of September 15 and 16, 1976, concerning the State member bank under examination, and another investigation by the Commerce, Consumer and Monetary copy to the Division of Consumer Affairs at the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

775 Staff Econom ic Studies The research staffs of the Board of Governors In all cases the analyses and conclusions set of the Federal Reserve System and of the Fed­ forth are those of the authors and do not neces­ eral Reserve Banks undertake studies that cover sarily indicate concurrence by the Board of a wide range of economic and financial sub­ Governors, by the Federal Reserve Banks, or jects, and other staff members prepare papers by the members of their staffs. related to such subjects. In some instances the Single copies of the full text of each of the Federal Reserve System finances similar studies studies or papers summarized in the Bulletin by members of the academic profession. are available in mimeographed form. The list From time to time the results of studies that of Federal Reserve Board publications at the are of general interest to the economics profes­ back of each Bulletin includes a separate sion and to others are summarized—or they may section entitled “Staff Economic Studies” that be printed in full—in this section of the Federal enumerates the studies for which copies are Reserve Bulletin. currently available in that form. STUDY SUMMARY GREELEY IN PERSPECTIVE Paul Schweitzer and Joshua Greene—Staff, Board of Governors Prepared as a staff paper in early 1977 The Greeley Bank case of 1973 (iUnited States banking. Consequently, little evidence can be v. First National Bancorp.) was the first Su­ cited in support of this relationship, although preme Court case to present the potential and the belief that entry scale does affect future probable future competition theories as market structure remains the fundamental grounds for challenging a bank holding com­ basis for analyzing most probable future com­ pany acquisition. These theories presuppose petition cases. that the scale on which an organization enters This study is an attempt to provide empiri­ a market significantly affects the subsequent cal evidence on the relationship between entry concentration of industry resources in that scale and the subsequent local market struc­ market, with entry on a large scale having ture by tracing the changes in market structure anticompetitive implications. While a number that occurred in five secondary Colorado of studies have examined the effect of regula­ banking markets between the time when the tion on competition and entry into local bank­ Greeley applicant (First National Bancorp.) ing markets, not much work has been done on announced plans to acquire banks in those the relationship between entry scale and sub­ markets and June 1976—the most recent date sequent market concentration, particularly in for which reliable structure data were avail­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

776 Federal Reserve Bulletin □ September 1977 able. As all five of these acquisitions were banking resources in the market. The study announced between 1970 and 1972, this ap­ shows that the two markets that the applicant proach allowed us to control for three critical entered by acquiring relatively small banks variables that could have important effects on experienced noticeable decreases in market structural change in local banking markets: concentration over the years following acqui­ holding company orientation, State regulatory sition, while the three markets it entered by policy, and general economic conditions. At acquiring banks with much larger market the same time it enabled us to analyze in more shares exhibited either no change or a slight depth cases that had occurred during the initial increase in deposit concentration. Although phase of rapid holding company expansion in these results would not hold for all cases of Colorado. This period is the time when regula­ entry into new markets, we believe they would tory agencies have the greatest ability to influ­ hold for other States in which rapid holding ence local market structure, so events during company development is taking place. The this phase should be of particular importance study also indicates that relatively small-scale for regulatory policy. entry generated market deconcentration over The results of the study indicate that, to the and above any increase in the market share of extent that we have held constant alternative the acquired bank. This finding would suggest explanatory variables, the scale on which a that promoting small-scale entry may be a holding company enters a market does appear particularly effective means for deconcentratto affect the subsequent concentration of ing local banking markets. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

777 The Im portance o f an Independent C entral B a n k Today, I would like to talk to you about an Those, moreover, are merely among the issue that has been important throughout most readily visible consequences of inflation. much of recorded history and which is certain There are other less apparent effects that are to influence your lives—for better or worse. I even more pernicious. Once a nation’s econ­ refer to Government’s management of omy has been gripped by inflation, it becomes money—a function that in our country is virtually impossible to maintain an environ­ lodged by statute with the Federal Reserve ment in which jobs are plentiful and secure. System. The economic recession of 1974-75, in the No nation whose history I am familiar with course of which unemployment climbed to a has succeeded in managing the stock of money level above 8 million persons, would not have perfectly. Few, indeed, have even managed it been nearly so severe—and indeed might not well. And those societies that have been least have occurred at all—had it not been for the successful have paid dearly for their inep­ inflationary distortions of the preceding sev­ titude. Debasement of the currency had a eral years. great deal to do with the destruction of the That is clear, I think, from the sequence of Roman Empire. In our own times, excessive events. Double-digit inflation severely drained creation of money has released powerful infla­ many family pocketbooks, reduced consumer tionary forces in many countries around the confidence, and led to more cautious con­ globe. And once a nation’s money is de­ sumer spending. Businessmen, however, were bauched, economic stagnation and social and slow in responding to the weakening of con­ political troubles usually follow. sumer markets. They seem to have been Each of you in this assemblage, whatever blinded by the dizzying advance of prices and your age, has experienced at first hand som^ by the effect of that advance on their nominal of the consequences of monetary stress. For a profits. They thus continued aggressive pro­ dozen years now, our Nation has been sub­ grams of inventory expansion and capitaljected to a relentless siege of inflation that has goods expansion longer than was prudent, conferred undeserved windfall gains on some thereby causing economic imbalances to and undeserved hardships on others. In terms cumulate to major proportions. By the time of social well-being, these capricious pluses the weakening of consumer markets was fully and minuses by no means cancel out. Young recognized by businessmen, the need to scale people wanting to buy a home these days know back had become enormous. The worst reces­ that the price of decent shelter has soared sion in a generation ensued. almost out of reach. Parents across the coun­ The only positive aspect of that traumatic try know the shocking extent to which tuition episode is that it finally opened the eyes of costs have ballooned. And woe to anyone who many economists and public officials to the has major medical expenses and is not fact that inflation and unemployment are not adequately insured. alternatives for our economy. The message is now clear that inflation in time causes serious Note.—Address by Arthur F. Burns, Chairman, Board unemployment. Understanding of that rela­ of Governors of the Federal Reserve System, at Com­ tionship is gradually tending, I believe, to mencement Exercises of Jacksonville University, make public policies more sensible. Jacksonville, Florida, August 13, 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

778 Federal Reserve Bulletin □ September 1977 Some of you in this audience may be won­ subject available resources to increasingly in­ dering, I suspect, whether the Federal Re­ tensive demands; but we at the same time serve may not have something to do with the have sought to insure that incomes do not get inflation we have been experiencing. It may eroded when excessive pressures on resources fairly be asked: Has not the Federal Reserve generate inflation. This amounts, unfortu­ been creating too much money? And may not nately, to creating upward pressures on costs this be one of the causes of our inflation? and prices, and then arranging to perpetuate That question is, indeed, often put to me, them. That is the awesome combination that and I welcome it because of the opportunity it fighters against inflation have to try to counter. affords to clarify the nature of the dilemma our Theoretically, the Federal Reserve could country faces. Neither I nor, I believe, any of thwart the nonmonetary pressures that are tend­ my associates would quarrel with the proposi­ ing to drive costs and prices higher by provid­ tion that money creation and inflation are ing substantially less monetary growth than closely linked and that serious inflation could would be needed to accommodate these pres­ not long proceed without monetary nourish­ sures fully. In practice, such a course would ment. We well know—as do many others— be fraught with major difficulty and consider­ that if the Federal Reserve stopped creating able risk. Every time our Government acts to new money, or if this activity were slowed enlarge the flow of benefits to one group or drastically, inflation would soon either come another, the assumption is implicit that the to an end or be substantially checked. means of financing will be available. A similar Unfortunately, knowing that truth is not so tacit assumption is embodied in every pricing helpful as one might suppose. The catch is that decision, wage bargain, or escalator arrange­ nowadays there are tremendous nonmonetary ment that is made by private parties or gov­ pressures in our economy that are tending to ernment. The fact that such actions may in drive costs and prices higher. This, I should combination be wholly incompatible with note, applies not only to our country, nor is it moderate rates of monetary expansion is sel­ any more just a phenomenon of wars and their dom considered by those who initiate them. If aftermath as tended once to be the case. the Federal Reserve then sought to create a Rather, powerful upward pressures on costs monetary environment that seriously fell short and prices have become worldwide, and they of accommodating the nonmonetary pressures persist tenaciously through peacetime periods that have become characteristic of our times, as well as wars. severe stresses could be quickly produced in This inflationary bias reflects a wide range our economy. The inflation rate would proba­ of developments that have been evolving over bly fall in the process but so, too, would a span of decades in both governmental and production, jobs, and profits. private affairs. Foremost among these devel­ The tactics and strategy of the Federal Re­ opments is the commitment of modern gov­ serve System—as of any central bank—must ernments to full employment, to rapid eco­ be attuned to these realities. With sufficient nomic growth, to better housing, to improved courage and determination, it is nevertheless health, and to other dimensions of welfare. within our capacity to affect the inflation rate These are certainly laudable objectives, but significantly. We may not, as a practical mat­ they have too often caused governmental ter, be able to slow monetary growth drasti­ spending to outrun revenues. Other cally within any given short time span, but we developments—such as the escalator ar­ do have considerable discretion in accom­ rangements that various economic groups modating the pressures of the marketplace less have achieved through their efforts to escape than fully. We are, indeed, often engaged in the rigors of inflation—have speeded the probing and testing our capacity to do just transmission of inflationary impulses across that. And while we must be cautious about the economy. What we as a people, along with moving abruptly, my colleagues and I in the other nations, have been tending to do is to Federal Reserve System are firmly committed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Importance of an Independent Central Bank 779 to a longer-term effort of gradual reduction in making for Federal Reserve independence are the rate of growth of money—something that the following: First, the seven members of the is reflected in the progression of steps we have Federal Reserve Board serve long and been taking to lower permissible growth staggered terms and can only be removed for ranges for the money supply. Slowly under­ “cause.” This arrangement severely limits nourishing inflation and thus weakening it possibilities for any “packing” of the Board seems the most realistic strategy open to us. and enables members of the Board to act We believe that such an effort—especially if without special concern about falling out of the Congress becomes less tolerant of budget grace politically. Second, the Federal Reserve deficits—will ultimately create a much health­ System finances its activities with internally ier environment for the determination of generated funds and therefore is not subject to wages and prices. the customary appropriations process. This The capacity of the Federal Reserve to arrangement is intended to assure that the maintain a meaningful anti-inflationary pos­ congressional “power of the purse” will not ture is made possible by the considerable de­ be used in an effort to induce System officials gree of independence it enjoys within our to pursue policies that they otherwise might Government. In most countries around the consider poorly suited to the Nation’s needs. world, central banks are in effect instrumen­ The Federal Reserve has thus been able to talities of the executive branch of fashion monetary policy in an impartial and government—carrying out monetary policy objective manner—free from any sort of parti­ according to the wishes of the head of gov­ san or parochial influence. While the long ernment or the finance ministry. That is not history of the Federal Reserve is not faultless, the case in this country because the Congress its policies have consistently been managed by across the decades has deliberately sought to conscientious individuals seeking the Nation’s insulate the Federal Reserve from the kind of permanent welfare—rather than today’s fleet­ political control that is typical abroad. The ing benefit. Significantly, this country’s record reason for this insulation is a very practical in dealing with inflation—albeit woefully one, namely, recognition by the Congress that insufficient—has been much better generally governments throughout history have had a than the record of countries with weak central tendency to engage in activities that outstrip banks. Indeed, I would judge it no accident the taxes they are willing or able to collect. that West Germany and Switzerland, which in That tendency has generally led to currency recent years also have managed their economy depreciation, achieved by stratagems ranging better than most others, happen to have strong from clipping of gold or silver coins in earlier and independent monetary authorities like times to excessive printing of paper money or ours. to coercing central banks to expand credit The degree of independence that the Con­ unduly in more modern times. gress has conferred upon the Federal Reserve With a view to insuring that the power of has been a source of frustration to some money creation would not be similarly abused Government officials since the Federal Re­ in our country, the Congress has given our serve Act first became law. Certainly, from the central bank major scope for the independent standpoint of the executive branch, it would exercise of its best judgment as to what mone­ at times—perhaps often—be more convenient tary policy should be. In fact, the Congress to instruct the central bank what to do than to has not only protected the Federal Reserve reckon with the System’s independence. In System from the influence of the executive the end, however, the country would not be so branch; it also has seen fit to give the System well served. The Federal Reserve, it needs to a good deal of protection from transitory polit­ be emphasized, seeks earnestly to support or ical pressures emanating from the Congress to reinforce governmental policies to the itself. maximum extent permitted by its respon­ Probably the two most important elements sibilities. When the System’s actions depart, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

780 Federal Reserve Bulletin □ September 1977 as they occasionally have, from the way in to be their common objective, namely, to which the executive branch would wish it to reduce the Federal Reserve’s independence act, that is generally because the System tends and to restrict its scope for discretionary ac­ to take a longer-range view of the Nation’s tion. That, I believe, is the real thrust of the welfare. Actually, most of the time, monetary diverse efforts to “reform” the Federal Re­ and fiscal policies are well coordinated and serve System. It is perhaps of some signifi­ mutually reinforcing; in other words, they are cance that such proposals not infrequently the product of continuing and fruitful discus­ come from individuals who are basically dis­ sions between members of the administration satisfied with what they regard as excessive and Federal Reserve officials. Federal Reserve concern with battling infla­ Not only is dialogue continuous with the tion. executive branch of the Government, but The element of populism in all this is Federal Reserve officials also appear fre­ strong—particularly the preoccupation with quently before congressional committees— maintaining low interest rates. It makes no something that works, on the one hand, to difference how often Federal Reserve officials keep the Congress informed as to System repeat that the System’s continuing objective activities and that, on the other, affords is the lowest level of interest rates compatible Senators and Congressmen an effective means with sound economic conditions. That is not of registering approval or disapproval of enough. What is desired is assurance that Federal Reserve policy. In practical terms, the interest rates will be kept permanently down, economic policy dialogue that is always in or at least not be allowed to rise significantly. process within our Government produces a The Federal Reserve cannot, of course, give thorough exploration of options. It may fairly that kind of assurance. In a period of rising be said, I believe, that the System’s in­ demands for funds, a determined effort by the dependence results in a more thorough dis­ System to keep interest rates down could cussion and thrashing out of public issues quickly turn the Federal Reserve into some­ than would otherwise occur. thing akin to the engine of inflation that it was Despite the salutary influence that the Fed­ during the early Korean war period when the eral Reserve’s independence has had on our System unwisely tried to keep interest rates Nation’s economy, legislative proposals that down so that the cost of financing the Federal would place the System under tighter rein debt would not escalate. Actually, the conse­ keep being introduced in the Congress. The quences now would almost certainly be far proposals that have been put forth over the worse than they were a quarter century ago years cover a wide range—for example, to because the public has become far more sensi­ enlarge the size of the Board, to shorten the tive to inflation. terms of its members, to enable the President Long-term interest rates, in particular, tend to remove Board members at will, to diminish to respond quickly nowadays to changing in­ or eliminate the role of Federal Reserve bank flationary expectations. Once the financial directors, and to subject the System to the community perceived that the Federal Reserve congressional appropriations process or to was pumping massive reserves into commer­ audit by the Government Accounting Office. cial banks with a view to creating monetary In recent years, there have also been propo­ ease, fears of a new wave of inflation would sals calling for numerical forecasts of interest quickly spread. Potential suppliers of long­ rates or other sensitive magnitudes, which, if term funds would then be inclined to demand ever undertaken by the Federal Reserve, higher interest rates as protection against the could unsettle financial markets besides mis­ expected higher rate of inflation. Borrowers, leading individuals who lack sophistication in on the other hand, would be more eager to financial matters. acquire additional funds since they would The shortcomings of these individual propo­ expect to repay their loans in still cheaper sals matter less, however, than what appears dollars: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Importance of an Independent Central Bank 781 In short, heightened inflationary expec­ mined to continue promoting the expansion of tations would soon overwhelm markets in our economy and yet control the supply of today’s inflation-conscious environment by money so as to prevent a new wave of infla­ actually causing long-term interest rates— tion. Such a policy, I firmly believe, is the only which are generally more important to the responsible option open to us. economy than short-term rates—to rise. The I hope that I have succeeded today in con­ policy of seeking lower interest rates by flood­ veying some sense of the importance to you as ing banks with reserves would thus be frus­ individuals and to the Nation generally of the trated. And I need hardly add that adverse Federal Reserve’s role in our Government. effects on production, employment, and the Fortunately, despite the criticism that is not dollar’s purchasing power would follow. infrequently voiced by some of its members, The Federal Reserve System, I assure you, the Congress as a whole has kept the will not be deterred by the drumbeat of dubi­ Federal Reserve’s role in a clear perspec­ ous propositions concerning money and inter­ tive and has fully protected the essentials of est rates. We are determined to continue on a Federal Reserve independence. That will con­ path of further gradual unwinding of the infla­ tinue to be the case only if you who are tionary tendencies that have become so deeply graduating today and other citizens develop a embedded in our economic life. We are deter­ full understanding of what is at stake. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

782 C hanges in T im e and Sa v in g s D e p o sits at C om m ercial B a n ks, Ja n u a ry -A p ril 1977 Growth in total time and savings deposits at all despite continued rate cutting in almost all insured commercial banks slowed moderately maturity categories and rising market rates during the 3-month period ending April 27, of interest on alternative investments. The 1977. This article discusses changes in the outstanding volume of large-denomination composition of such deposits by using data ($100,000 and over) time deposits fell by al­ from the latest quarterly survey of time and most $2 billion, prolonging the decline begun savings deposits, conducted jointly by the in early 1975. Federal Reserve System and the Federal De­ posit Insurance Corporation.1 Total time and savings deposits increased by almost $12 bil­ SAVINGS DEPOSITS lion, or at a quarterly rate of about 2 per cent, not seasonally adjusted, compared with an Inflows to savings accounts at insured com­ increase of more than $15 billion, or a quar­ mercial banks totaled more than $8 billion, not terly rate of 3 per cent, in the preceding 3 seasonally adjusted, in the January to April months. The moderation in growth was most period, bringing the outstanding volume of evident among savings deposits, which rose such deposits to $213 billion. Individuals and by $8 billion in the interval from January to nonprofit organizations increased their hold­ April, or 4 per cent at a quarterly rate, in ings by more than $7 billion, accounting for 90 contrast to the sharp $13 billion rise in the per cent of the expansion. Although substan­ previous 3-month interval. Meanwhile, growth tial, this increase was nearly $3 billion less than in small-denomination (less than $100,000) that of the previous quarter, indicating that time deposits nearly kept pace with that of the inflows may have been dampened by the high preceding period, increasing about $5 billion, fuel bills resulting from severe weather condi­ tions in early 1977. Businesses and domestic Note.—Rebekah F. Wright and John R. Williams of the governmental units sharply reduced their sav­ Board’s Divison of Research and Statistics prepared this ings deposit inflows. The extremely rapid article. growth rate in these deposits in previous quar­ Purveys of time and savings deposits (STSD) at all ters reflected initial build-ups in funds after member banks were conducted by the Board of Gover­ these accounts first became available to gov­ nors in late 1965, in early 1966, and quarterly in 1967. In ernmental units in November 1974 and to January and July 1967 the surveys also included data for all insured nonmember banks collected by the Federal businesses a year later. Deposit Insurance Corporation (FDIC). Since the begin­ During the January-April period, some ning of 1968 the Board of Governors and the FDIC have small banks apparently reversed their recent conducted joint quarterly surveys to provide estimates for all insured commercial banks based on a probability sample reductions in offering rates on savings de­ of banks. The results of all earlier surveys have appeared posits of governmental units. Among banks in previous Bulletins from 1966 to 1977, the most recent with deposits of less than $100 million, the being June 1977. The current sample—designed to provide estimates of proportion paying the ceiling rate of interest the composition of deposits—includes about 560 insured on deposits of governmental units rose 4 per­ commercial banks. For details of the statistical methodol­ centage points to 86 per cent after falling 4 ogy, see “Survey of Time and Savings Deposits, July 1976” in the Bulletin for December 1976. points in the preceding 3 months. In contrast, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Time and Savings Deposits 783 1. Types of time and savings deposits held by insured commercial banks on survey dates, October 27, 1976, January 26, 1977, and April 27, 1977 Deposits Number of issuing banks Type of deposit In millions of dollars Percentage change Oct. 27, Jan. 26, Apr. 27, Oct. 27, Jan. 26, Apr. 27, Oct. 27- Jan. 26- 1976 1977 1977 1976 1977 1977 Jan. 26 Apr. 27 Total time and savings deposits.......................... 14,384 14,376 14,352 477,722 492,813 504,343 3.2 2.3 Savings............................................................. 14,384 14,376 14,352 191,388 204,603 212,824 6.9 4.0 Issued to: Individuals and nonprofit organizations... 14,384 14,373 14,352 179,695 189,829 197,199 5.6 3.9 Partnerships and corporations operated for profit (other than commercial banks). 8,146 8,497 8,961 7,555 8,869 9,154 17.4 3.2 Domestic governmental units..................... 6,080 6,965 6,614 3,882 5,575 6,347 43.6 13.8 All other....................................................... 748 714 730 256 329 124 28.4 -62.2 Interest-bearing time deposits in denomina­ tions of less than $100,000....................... 14,080 14,072 14,057 152,436 157,643 162,252 3.4 2.9 Issued to: Domestic governmental units....................... 10,407 10,751 10,497 4,174 4,309 4,743 3.2 10.1 Accounts with original maturity of: 30 up to 90 days...................................... 4,301 4,298 4,349 1,090 931 938 -14.6 0.7 90 up to 180 days.................................... 7,499 8,036 8,333 1,219 1,458 1,658 19.6 13.8 180 days up to 1 year.............................. 4,375 4,251 4,049 688 651 838 -5.4 28.8 1 year and over........................................ 7,787 8,258 8,109 1,177 1,269 1,308 7.8 3.1 Other than domestic governmental units.... 14,049 14,043 14,028 148,262 153,334 157,509 3.4 2.7 Accounts with original maturity of: 30 up to 90 days...................................... 6,309 5,686 5,889 7,229 6,980 7,074 -3.4 1.3 90 up to 180 days.................................... 11,535 11,091 11,747 30,164 31,105 31,526 3. 1 1.4 180 days up to 1 year.............................. 8,911 8,540 8,493 4,368 4,535 4,087 3.8 -9.9 1 up to 2 Vi years..................................... 13,553 13,622 13,674 34,002 33,979 33,836 -0. 1 -0.4 2 Vi up to 4 years..................................... 12,203 12,132 12,400 18,402 17,646 17,951 -4. 1 1.7 4 up to 6 years......................................... 11,773 12,071 12,345 44,781 48,047 50,588 7.3 5.3 6 years and over...................................... 8,169 8,526 9,027 9,317 11,043 12,448 18.5 12.7 Interest-bearing time deposits in denomina­ tions of $100,000 or more 11,186 10,980 11,190 127,137 124,719 122,903 -1.9 -1.5 Non-interest-bearing time deposits.............. 1,667 1,651 1,686 4,874 4,867 4,875 -0.2 0.2 In denominations of: Less than $100,000................................... 1,415 1,423 1,307 1,587 1,680 1,496 5.9 -10.9 $100,000 or more..................................... 683 672 788 3,288 3,186 3,379 -3. 1 6.1 Club accounts (Christmas savings, vacation, or similar club accounts)......................... 9,021 8,798 8,734 1,887 982 1,490 -48.0 51.7 Note.—All banks that had either discontinued offering or never had discontinued issuing certain deposit types are included in the offered certain deposit types as of the survey date are not counted as amounts outstanding. issuing banks. However, small amounts of deposits held at banks that Figures may not add to totals because of rounding. at banks with total deposits over $100 million, governmental units the average rate increased the share paying the maximum rate on gov­ 4 basis points to 4.94 per cent. As a result, the ernmental savings deposits fell 2 percentage weighted-average rate paid on all new issues points to 82 per cent, following a decline of 10 of savings deposits remained unchanged at percentage points between October and Janu­ 4.90 per cent. ary. For savings accounts of businesses, the proportion of banks paying the maximum rate SMALL-DENOMINATION fell 1 percentage point in both size categories, TIME DEPOSITS to 89 per cent at small banks and to 87 per cent at large banks. And for savings accounts of Although rates on intermediate-term market individuals, the share of small banks paying instruments had risen somewhat from their the maximum rate was unchanged at 84 per January levels, they remained below commer­ cent and the share of large banks rose 1 cial bank rate ceilings for all time-deposit percentage point, also to 84 per cent. maturities. As a result, inflows to most matu­ The average rate (weighted by the amount rity categories of small-denomination interestof deposits) paid at all banks on savings de­ bearing time accounts continued at a pace only posits acquired by individuals remained at moderately slower than in the preceding 3 4.90 per cent. For businesses, the average rate months. Such deposits grew at a 3 per cent fell 1 basis point to 4.93 per cent, while for quarterly rate to a level of $162 billion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

784 Federal Reserve Bulletin □ September 1977 2. Small-denomination time and savings deposits held by insured commercial banks on April 27 compared with January 26, 1977, by type of deposit, by most common rate paid on new deposits in each category, and by size of bank Size of bank Size of bank (total deposits in millions of dollars) (total deposits in millions of dollars) All banks All banks Deposit group, and dis­ tribution of deposits by Less than 100 100 and over Less than 100 100 and over most common rate Apr. 27 Jan. 26 Apr. 27 Jan. 26 Apr. 27 Jan. 26 Apr. 27 Jan. 26 Apr. 27 Jan. 26 Apr. 27 Jan. 26 Number of banks, or percentage distribution Amount of deposits (in millions of dollars), or percentage distribution Savings deposits Individuals and non­ profit organizations Issuing banks............ 14,352 14,373 13,374 13,403 978 970 197,199 189,829 89,639 71,490 107,560 118,339 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.00 or less............ 3.8 4.8 3.6 4.6 6.0 6.7 3.7 4.0 3.0 3.5 4.4 4.3 4.01-4.50............... 11.8 11.0 12.0 11.1 9.2 9.8 11.3 11.4 11.1 10.0 11.4 12.3 4.51-5.00............... 84.5 84.2 84.4 84.3 84.8 83.5 85.0 84.5 85.9 86.5 84.2 83.4 Paying ceiling rate1... 84.2 83.9 84.2 84.0 84.3 82.6 84.3 83.5 85.6 86.2 83.2 81.9 Partnerships and cor­ porations Issuing banks............ 8,961 8,497 7,997 7,540 964 957 9,154 8,869 3,269 2,527 5,885 6,343 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.00 or less............ 1.5 1.7 1.5 1.6 1.2 2.2 .9 1.5 1.3 1.5 .6 1.5 4.01-4.50............... 9.3 7.8 9.0 7.7 11.5 9.1 11.9 8.7 9.3 5.2 13.4 10.0 4.51-5.00............... 89.2 90.5 89.4 90.7 87.3 88.7 87.2 89.8 89.5 93.2 86.0 88.4 Paying ceiling rate1... 88.6 90.0 88.8 90.3 86.5 87.7 84.8 87.8 89.3 93.2 82.3 85.7 Domestic governmental units Issuing banks............ 6,614 6,965 5,994 6,361 620 604 6,347 5,575 2,925 1,924 3,422 3,651 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.00 or less............ 3.0 5.0 3.2 5.2 1.3 2.5 .6 1.3 . 1 1.9 1.0 1.0 4.01-4.50............... 10.6 12.3 10.1 12.2 15.6 12.6 10.2 15.7 5.2 11.0 14.5 18.2 4.51-5.00............... 86.4 82.8 86.7 82.6 83.1 84.9 89.2 83.0 94.7 87.1 84.5 80.8 Paying ceiling rate1... 85.8 82.3 86.2 82.1 82.1 83.9 87.8 81.4 94.6 87.0 82.0 78.5 All other Issuing banks............ 730 714 641 629 89 85 121 329 22 28 99 301 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.00 or less............ 12.0 12.3 13.2 13.6 3.2 3.2 1.5 .5 4.4 2.5 .8 .4 4.01-4.50............... (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) 4.51-5.00............... 88.0 87.7 86.8 86.4 96.8 96.8 98.5 99.5 95.6 97.5 99.2 99.6 Paying ceiling rate1... 87.7 87.7 86.8 86.4 95.7 96.8 97.2 99.5 95.6 97.5 97.6 99.6 Time deposits in denomina­ tions of less than $100,000 Domestic governmental units: Maturing in— 30 up to 90 days Issuing banks................ 4,349 4,298 3,696 3,627 653 671 938 931 593 564 345 368 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.50 or less............ 7.8 6.2 6.7 4.2 13.9 17.2 6.7 13.2 2.4 4.5 14.0 26.4 4.51-5.00............... 73.9 74.7 73.0 75.4 78.9 70.7 67.7 60.7 73.8 72.9 57.4 42.0 5.01-5.50............... 13.4 14.6 14.7 15.5 6.0 9.3 14.9 18.2 8.9 11.9 25.1 27.9 Paying 5 .5 c 1 e i 7 li . n 7 g 5. .. r .. a .... t .. e ... 1 .. . ...... (2 4 ) .9 (2 4 ) .6 (2 5 ) .6 (2 4 ) .9 (2 1 ) .2 (2 2 ) .7 ( 1 2 0 ) .7 (2 7 ) .9 ( 1 2 4 ) .9 ( 1 2 0 ) .7 (2 3 ) .5 (2 3 ) .7 90 up to 180 days Issuing banks............ 8,333 8,036 7,591 7,307 742 728 1,658 1,457 1,179 924 479 534 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.50 or less............ 2.4 4.7 2.1 4.7 5.7 4.9 2.3 3.2 2.3 3.6 2.3 2.4 4.51-5.00............... 19.1 15.0 18.7 14.0 23.4 25.1 15.6 15.6 13.8 11.0 20.0 23.7 5.01-5.50............... 74.6 74.6 75.1 75.2 69.3 68.7 79.1 76.2 80.5 78.3 75.7 72.6 5.51-7.75............... 3.9 5.6 4.2 6.1 1.5 1.2 3.0 5.0 3.4 7.1 2.0 1.3 Paying ceiling rate1... (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) 180 days up to 1 year Issuing banks............ 4,049 4,251 3,482 3,700 567 551 838 650 499 386 339 264 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.50 or less............ 2.4 5.0 2.1 5.2 4.4 3.9 6.8 7.8 10.8 4.3 .8 12.9 4.51-5.00............... 13.6 9.1 12.2 7.0 22.0 23.8 37.9 14.2 14.0 2.0 73.1 32.0 5.01-5.50............... 72.4 66.4 73.4 66.6 66.5 64.7 37.8 59.8 48.4 66.0 22.3 50.9 5.51-7.75............... 11.6 19.5 12.3 21.3 7.1 7.6 17.5 18.2 26.8 27.8 3.8 4.2 Paying ceiling rate1... (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) 1 year and over Issuing banks............ 8,109 8,258 7,375 7,594 734 665 1,306 1,265 1,031 1,032 275 233 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 5.00 or less............ 3.3 4.8 2.8 4.4 8.7 10.2 4.2 2.8 .9 2.1 16.6 6.2 5.01-5.50............... 7.9 4.3 7.0 3.0 17.1 18.7 12.7 13.0 5.6 4.3 39.3 51.3 5.51-6.00............... 71.0 68.5 72.6 69.7 55.5 53.7 70.2 68.0 78.9 75.5 37.6 35.0 6.01-7.75............... 17.7 22.4 17.6 22.9 18.7 17.3 12.9 16.2 14.7 18.1 6.4 7.5 Paying ceiling rate1... (2) (2) (2) (2) .4 .4 .1 (2) (2) (2) .3 .2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Time and Savings Deposits 785 TABLE 2—Continued Size of bank Size of bank (total deposits in millions of dollars) (total deposits in millions of dollars) All banks All banks Deposit group, and dis­ tribution of deposits by Less than 100 100 and over Less than 100 100 and over most common rate Apr. 27 Jan. 26 Apr. 27 Jan. 26 Apr. 27 Jan. 26 Apr. 27 Jan. 26 Apr. 27 Jan. 26 Apr. 27 Jan. 26 Number of banks, or percentage distribution Amount of deposits (in millions of dollars), or percentage distribution Time deposits in denomina­ tions of less than $100,000 (cont.) Other than domestic governmental units: Maturing in— 30 up to 90 days Issuing banks............ 5,889 5,686 5,039 4,836 850 850 7,053 6,955 1,368 1,351 5,684 5,604 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.50 or less............ 3.7 4.3 2.0 3.0 14.0 11.6 12.7 18.0 6.7 9.3 14.1 20.1 4.51-5.00............... 96.3 95.7 98.0 97.0 86.0 88.4 87.3 82.0 93.3 90.7 85.9 79.9 Paying ceiling rate1... 92.7 92.7 95.8 95.2 74.6 78.6 80.3 75.8 88.6 86.7 78.3 73.1 90 up to 180 days Issuing banks............ 11,747 11,091 10,786 10,139 961 951 31,509 31,042 12,632 12,423 18,877 18,619 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.50 or less............ .6 1.0 .5 .9 1.1 1.9 . 1 .2 .1 (2) .2 .4 4.51-5.00............... 13. 1 10.6 13.0 10.5 14.1 12.1 15.7 16.8 8.6 10.3 20.5 21.2 5.01-5.50............... 86.3 88.4 86.5 88.6 84.8 86.0 84.1 83.0 91.3 89.7 79.3 78.4 Paying ceiling rate1... 85.3 88.1 85.9 88.6 79.3 82.5 81.0 80.3 90.4 89.7 74.8 74.0 180 days up to 1 year Issuing banks............ 8,493 8,540 7,639 7,704 854 836 4,053 4,497 2,430 2,509 1,623 1,989 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.50 or less............ 1.1 .6 .8 .4 2.9 3.0 .6 .3 .3 (2) 1.1 .6 4.51-5.00............... 10.1 8.8 9.9 8.4 12.4 13. 1 10.0 10.0 7.4 4.3 13.9 17.3 5.01-5.50............... 88.8 90.5 89.3 91.3 84.7 83.9 89.3 89.7 92.2 95.7 85.0 82. 1 Paying ceiling rate1... 87.1 89.2 88.3 90.5 76.5 76.8 85.1 84.6 92.2 95.7 74.6 70.7 1 up to 2 l/i years Issuing banks............ 13,674 13,622 12,709 12,662 965 960 33,725 33,978 21,053 21,393 12,671 12,585 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 5.00 or less............ .7 .4 .7 .4 .5 .9 .2 1.7 . 1 .3 .4 4.2 5.01-5.50............... 4.0 2.8 3.7 2.5 7.8 6.7 4.8 2.8 2.9 2.1 8.1 4.0 5.51-6.00............... 95.3 96.8 95.6 97.1 91.7 92.4 94.9 95.5 97.0 97.6 91.5 91.9 Paying ceiling rate1... 91.9 94.5 92.3 95.1 86.4 86.8 92.0 89.4 94.7 96.4 87.5 77.4 2 Vi up to 4 years Issuing banks............ 12,400 12,132 11,463 11,199 937 933 17,840 17,565 10,417 10,316 7,423 7,248 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 6.00 or less............ 5.3 2.6 4.9 1.9 10.4 10.6 9.0 5.9 6.3 2.0 12.7 11.5 6.01-6.50............... 94.7 97.4 95.1 98.1 89.6 89.4 91.0 94.1 93.7 98.0 87.3 88.5 Paying ceiling rate1... 92.6 97.1 93.2 98.1 85.0 85.8 89.5 92.9 93.0 98.0 84.7 85.7 4 up to 6 years Issuing banks............ 12,345 12,071 11,419 11,143 926 928 49,718 47,581 25,144 24,003 24,574 23,578 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 6.50 or less............ 4.3 2.2 3.7 1.2 11.1 14.7 8.0 6.8 4.9 1.0 11.1 12.7 6.51-7.00............... 18.2 17.5 18.4 17.6 15.7 15.4 16.8 15.0 16.9 15.9 16.7 14.2 7.01-7.25............... 77.6 80.3 77.9 81.2 73.1 69.9 75.2 78. 1 78.2 83.1 72.2 73.1 Paying ceiling rate1... 77.4 80.0 77.8 80.9 73.1 69.4 75.0 78.0 77.6 83.0 72.2 72.9 6 years and over Issuing banks............ 9,027 8,526 8,215 7,717 812 809 12,293 10,886 5,262 4,625 7,031 6,261 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 5.00 or less............ .3 . 1 .2 (2) .8 .8 . 1 . 1 (2) (2) .2 .2 5.01-7.25............... 12.0 8.2 11.1 7.1 21.3 19.2 16.1 14.6 9. 1 3.7 21.3 22.7 7.26-7.50............... 87.7 91.7 88.7 92.9 77.9 80.0 83.8 85.3 90.9 96.3 78.5 77.2 Paying ceiling rate1... 87.7 91.7 88.7 92.9 77.8 80.0 83.8 85.3 90.9 96.3 78.5 77.2 Club accounts Issuing banks............ 8,734 8,798 7,998 8,076 736 721 1,392 944 657 544 735 400 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 0.00......................... 48.7 49.8 50.6 51.8 27.2 27.7 21.1 14.6 28.9 15.3 14.2 13.6 0.01-4.00............... 15.2 12.6 15.3 12.5 14.2 13.7 16. 1 11.4 18.9 9.9 13.5 13.3 4.01-4.50............... 8.5 6.9 8.5 6.6 8.2 9.6 13.5 11.0 13.8 6.8 13.3 16.7 4.51-5.50............... 27.6 30.7 25.5 29.0 50.4 48.9 49.3 63.0 38.4 67.9 58.9 56.4 1 See p. A10 for maximum interest rates payable on time and held at banks that had discontinued issuing deposits are not included savings deposits at the time of each survey. The ceiling rate is included in the amounts outstanding. Therefore, the deposit amounts shown in the rate interval in the line above. in Table 1 may exceed the deposit amounts shown in this table. 2 Less than .05 per cent. The most common interest rate for each instrument refers to the stated rate per annum (before compounding) that banks paid on the Note.—All banks that either had discontinued offering or had largest dollar volume of deposit inflows during the 2-week period never offered particular deposit types as of the survey date are not immediately preceding the survey date. counted as issuing banks. Moreover, the small amounts of deposits Figures may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

786 Federal Reserve Bulletin □ September 1977 Domestic governmental units increased Despite modest reductions in offering rates their holdings of small-denomination time de­ on deposits in most maturity categories, hold­ posits in all maturity categories. The 3-month ings of small-denomination time deposits by rise of more than $400 million, to a level of nongovernment entities advanced more than $4.7 billion, was more than double the rise of $4 billion to a level of nearly $158 billion. the preceding 3 months. Growth was concen­ Growth in deposits maturing in 4 years or trated primarily among deposits maturing in more accounted for 95 per cent of all growth in less than 1 year. nongovernmental small-denomination time 3. Average of most common interest rates paid on various categories of time and savings deposits at insured commercial banks on January 26, 1977, and April 27, 1977 Bank size (total deposits in millions of dollars) Type of deposit All size Less 20 up 50 up 100 up 500 up 1,000 groups than 20 to 50 to 100 to 500 to 1,000 and over April 27, 1977 Savings and small-denomination time deposits................. 5.50 5.66 5.59 5.49 5.42 5.46 5.44 Savings, total........................................................................ 4.90 4.94 4.88 4.94 4.90 4.84 4.91 Individuals and nonprofit organizations........................ 4.90 4.94 4.88 4.94 4.90 4.84 4.91 Partnerships and corporations........................................ 4.93 4.96 4.90 4.97 4.94 4.86 4.91 Domestic governmental units........................................ 4.94 4.99 4.99 4.92 4.94 4.88 4.88 All other........................................................................... 4.96 4.30 5.00 5.00 4.94 5.00 4.99 Time deposits in denominations of less than $100,000, total 6.30 6.29 6.46 6.33 6.28 6.27 6.16 Domestic governmental units, total............................... 5.47 5.56 5.61 5.45 5.31 5. 12 5. 18 Maturing in— 30 up to 90 days........................................................... 5.09 5.34 4.95 4.92 5. 18 4.85 4.81 90 up to 180 days......................................................... 5.38 5.39 5.45 5.35 5.41 5.09 5.26 180 days up to 1 year.................................................. 5.27 5.38 5.57 5. 10 5.05 5.34 5.16 1 year and over............................................................ 5.97 6.03 6.01 6.27 5.62 5.70 5.70 Other than domestic governmental units, total............. 6.32 6.33 6.49 6.35 6.31 6.29 6.17 Maturing in— 30 up to 90 days.......................................................... 4.91 4.98 5.00 4.92 4.96 4.93 4.85 90 up to 180 days........................................................ 5.40 5.46 5.46 5.44 5.46 5.40 5.26 180 days up to 1 year.................................................. 5.43 5.47 5.41 5.46 5.45 5.33 5.33 1 up to 2 Vi years.......................................................... 5.96 5.97 5.99 5.97 5.96 5.92 5.91 2 Vi up to 4 years......................................................... 6.44 6.46 6.47 6.45 6.41 6.44 6.40 4 up to 6 years............................................................. 7. 12 7.18 7.16 7.11 7.10 7.13 7.05 Over 6 years................................................................. 7.40 7.49 7.49 7.40 7.37 7.43 7.31 Memo: Club accounts1....................................................... 3.63 2.43 2.91 3.82 3.95 3.83 4.35 January 26, 1977 Savings and small-denomination time deposits................. 5.50 5.71 5.67 5.58 5.45 5.37 5.33 Savings, total....................................................................... 4.90 4.94 4.88 4.94 4.90 4.83 4.91 Individuals and nonprofit organizations........................ 4.90 4.94 4.88 4.93 4.89 4.82 4.91 Partnerships and corporations........................................ 4.94 4.99 4.93 4.97 4.93 4.89 4.93 Domestic governmental units......................................... 4.90 4.92 4.96 4.89 4.94 4.90 4.86 All other........................................................................... 4.98 4.84 5.00 5.00 4.98 5.00 Time deposits in denominations of less than $100,000, total 6.28 6.28 6.45 6.35 6.26 6.22 6.12 Domestic governmental units, total............................... 5.49 5.62 5.61 5.59 5.34 5.13 5. 11 Maturing in— 30 up to 90 days.......................................................... 5.06 5.24 4.99 4.93 5.13 4.86 4.77 90 up to 180 days........................................................ 5.37 5.45 5.33 5.43 5.41 5.15 5.15 180 days up to 1 year.................................................. 5.36 5.38 5.60 5.66 5.10 5.27 5.14 1 year and over............................................................ 6.02 6.06 6.06 6.26 5.74 5.66 5.65 Other than domestic governmental units, total............. 6.30 6.32 6.47 6.37 6.28 6.24 6. 13 Maturing in— 30 up to 90 days.......................................................... 4.88 4.88 5.00 4.92 4.95 4.87 4.82 90 up to 180 days........................................................ 5.39 5.46 5.46 5.42 5.45 5.36 5.27 180 days up to 1 year.................................................. 5.43 5.48 5.49 5.48 5.44 5.39 5.30 1 up to 2Vi years......................................................... 5.95 5.98 5.99 5.95 5.97 5.88 5.84 2Vi up to 4 years......................................................... 6.46 6.49 6.49 6.47 6.42 6.40 6.43 4 up to 6 years............................................................. 7.13 7.19 7.17 7.22 7.08 7.11 7.06 Over 6 years................................................................. 7.40 7.49 7.50 7.48 7.36 7.42 7.29 Memo: Club accounts1....................................................... 4. 11 2.69 2.91 4.80 3.91 3.83 4.27 1 Club accounts are excluded from all of the above categories. amount of that type of deposit outstanding. All banks that had either discontinued offering or never offered particular deposit types as of the Note.—The average rates were calculated by weighting the most survey date were excluded from the calculations for those specific common rate reported on each type of deposit at each bank by the deposit types. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Time and Savings Deposits 787 deposits. With about four-fifths of banks still $123 billion. The prolonged run-off of largepaying the maximum rate on these long- denomination time deposits reflects the ability maturity time deposits, the yields remained of banks to finance expanding loan demands in attractive relative to market alternatives. early 1977 through increased use of other managed liabilities, such as Federal funds and repurchase agreements, and from inflows to savings and small-denomination time ac­ OTHER TIME DEPOSITS counts. The level of non-interest-bearing time deposits—principally escrow accounts and During the January to April period, the out­ compensating balances held against loans— standing volume of large-denomination time remained essentially unchanged from the pre­ deposits declined almost $2 billion to a level of vious quarter at $4.9 billion. □ A PPEN D IX TABLES Al. Savings deposits issued to individuals and nonprofit organizations Most common interest rates paid by insured commercial banks on new deposits, April 27, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiling ceiling Group Total rate 1 Total rate 1 4.00 4.01 4.51 (5.00 4.00 4.01 4.51 (5.00 or to to per or to to per less 4.50 5.00 cent) less 4.50 5.00 cent) Number of banks Millions of dollars All banks............................................................ 14,352 539 1,690 12,123 12,090 197,199 7,386 22,203 167,610 166,257 Size of bank (total deposits in millions of dollars): Less than 20.................................................. 8,636 355 1,068 7,213 7,184 23,431 512 1,642 21,276 20,997 20-50.............................................................. 3,600 71 479 3,049 3,049 37,734 957 7,334 29,443 29,443 50-100............................................................ 1,138 53 53 1,032 1,032 28,474 1,228 939 26,307 26,307 100-500.......................................................... 785 48 58 679 679 48,836 2,458 4,548 41,830 41,830 500-1,000....................................................... 99 7 17 75 73 14,947 1,396 1,894 11,657 11,550 1,000 and over.............................................. 94 4 15 75 73 43,777 835 5,844 37,098 36,131 NOTES TO APPENDIX TABLES 1-16: 1 See p. A10 for maximum interest rates payable on time and held at banks that had discontinued issuing deposits are not included saving deposits at the time of each survey. The ceiling rate is the top in the amounts outstanding. Therefore, the deposit amounts shown of the rate interval immediately to the left. in Table 1 may exceed the deposit amounts shown in these tables. 2 Omitted to avoid individual bank disclosure. The most common interest rate for each instrument refers to the 3 Less than $500,000. stated rate per annum (before compounding) that banks paid on the largest dollar volume of deposit inflows during the 2 week period Note.—All banks that either had discontinued offering or had immediately preceding the survey date. never offered particular deposit types as of the survey date are not Figures may not add to totals because of rounding. counted as issuing banks. Moreover, the small amounts of deposits Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

788 Federal Reserve Bulletin □ September 1977 A2. Savings deposits issued to partnerships and corporations operated for profit Most common interest rates paid by insured commercial banks on new deposits, January 26, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiiing ceiling Group Total rate 1 Total rate i 4.00 4.01 4.51 (5.00 4.00 4.01 4.51 (5.00 or to to per or to to per less 4.50 5.00 cent) less 4.50 5.00 cent) Number of banks Millions of dollars 8,961 135 833 7,992 7,935 9,154 79 1,093 7,983 7,761 Size of bank (total deposits in millions of dollars): Less than 20.................................................. 3,812 241 3,571 3,542 726 61 665 661 20 50.............................................................. 3,132 107 408 2,617 2,617 1,236 35 179 1,022 1,022 50 100............................................................ 1,053 16 74 963 942 1,307 7 63 1,237 1,236 100 500.......................................................... 771 8 67 695 695 2,411 10 250 2,151 2,151 500 1,000....................................................... 99 2 25 71 67 849 (2) (2) 662 590 1,000 and over.............................................. 94 1 18 75 72 2,625 (2) (2) 2,245 2,100 A3. Savings deposits issued to domestic governmental units Most common interest rates paid by insured commercial banks on new deposits, January 26, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiling ceiling Group rate 1 Total rate 1 4.00 4.01 4.51 (5.00 4.00 4.01 4.51 (5.00 or to to per or to to per less 4.50 5.00 cent) less 4.50 5.00 cent) Number of banks Millions of dollars All banks.................................................. 6,614 198 704 5,712 5,677 6,347 38 647 5,661 5,571 Size of bank (total deposits in millions of dollars): Less than 20......................................... 3,641 154 239 3,248 3,219 1,199 14 1,184 1,180 20-50.................................................................... 1,788 36 315 1,437 1,437 922 11 909 909 50-100.................................................. 566 53 513 513 804 127 677 677 100-500................................................ 480 3 60 417 417 1,681 (2) (2) 1,492 1,492 500-1,000.............................................. 69 2 20 46 40 430 (2) (2) 368 282 1,000 and over...................................... 71 3 16 52 52 1,311 34 247 1,030 1,030 A4. Savings deposits issued to all others Most common interest rates paid by insured commercial banks on new deposits, January 26, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiling ceiling Group Total rate 1 Total rate 1 4.00 4.01 4.51 (5.00 4.00 4.01 4.51 (5.00 or to to per or to to per less 4.50 5.00 cent) less 4.50 5.00 cent) Number cf banks Millions of dollars All banks.................................................. 730 642 641 121 119 118 Size of bank (total deposits in millions of dollars): Less than 20......................................... 268 85 183 183 3 3 3 20-50.................................................... 315 315 315 4 4 4 50-100.................................................. 58 58 58 15 15 15 100-500................................................ 67 64 64 41 40 40 500-1,000.............................................. 3 3 3 (3) (3)) (3) 1,000 and over..................................... 18 18 17 58 58 57 For notes, see p. 787. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Time and Savings Deposits 789 A5. Government time deposits in denominations of less than $100,000— Maturities of 30 up to 90 days Most common interest rates paid by insured commercial banks on new deposits, April 27, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiling ceiling Group Total rate 1 Total rate i 5.00 5.01 5.51 (7.75 5.01 5.51 (7.75 or to to per to to per less 5.50 7.75 cent) less 5.50 7.75 cent) Number of banks Millions of dollars All banks.................................................. 4,349 3,552 584 213 938 698 140 100 Size oi bank (total deposits in millions of dollars): Less than 20......................................... 2,350 1,690 490 170 305 169 48 20-50.................................................... 1,006 948 23 36 151 150 (3) 50-100.................................................. 340 308 32 137 132 4 100-500................................................ 504 473 23 167 82 74 (2) 500-1,000.............................................. 79 67 12 82 73 (2) 1,000 and over..................................... 71 66 4 96 91 (2) (2V A6. Government time deposits in denominations of less than $100,000— Maturities of 90 up to 180 days Most common interest rates paid by insured commercial banks on new deposits, April 27, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiling ceiling Group Total rate 1 Total rate 1 5.00 5.01 5.51 (7.75 5.00 5.01 5.51 (7.75 or to to per or to to per less 5.50 7.75 cent) less 5.50 7.75 cent) Number of banks Millions of dollars All banks.................................................. 8,333 1,791 6,214 327 ,658 296 1,312 49 Size of bank (total deposits in millions of dollars): Less than 20......................................... 4,749 920 3,675 154 763 127 608 29 20-50.................................................... 2,318 517 1,655 146 284 32 243 10 50-100.................................................. 524 138 370 16 131 31 99 1 100-500................................................ 584 124 453 7 272 26 239 7 500-1,000.............................................. 83 49 31 2 58 28 (2) (2) 1,000 and over..................................... 75 42 30 2 149 52 (2) (2) A7. Government time deposits in denominations of less than $100,000— Maturities of 180 days up to 1 year Most common interest rates paid by insured commercial banks on new deposits, April 27, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiling ceiling Group Total rate 1 Total rate 1 5.00 5.01 5.51 (7.75 5.00 5.01 5.51 (7.75 or to to per or to to per less 5.50 7.75 cent) less 5.50 7.75 cent) Number of banks Millions of dollars All banks.................................................. 4,049 648 2,932 469 838 374 317 146 Size of bank (total deposits in millions of dollars): Less than 20......................................... 1,778 366 1,269 144 132 33 77 21 20-50.................................................... 1,393 59 1,070 264 238 5 145 88 50-100.................................................. 312 74 216 21 129 85 19 25 100-500................................................ 429 99 303 26 254 213 39 2 500-1,000............................................. 74 25 40 9 31 9 13 9 1,000 and over..................................... 65 25 34 5 54 29 24 2 For notes, see p. 787. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

790 Federal Reserve Bulletin □ September 1977 A8. Government time deposits in denominations of less than $100,000— Maturities of 1 year or more Most common interest rates paid by insured commercial banks on new deposits, April 27, 1977 Most common rate (per cent) Paying Most common rate (per qent) Paying ceiling ceiling rate 1 rate i Group Total 5.00 5.01 5.51 6.01 (7.75 Total 5.00 5.01 5.51 6.01 (7.75 or to to to per or to to to per less 5.50 6.00 7.75 cent) less 5.50 6.00 7.75 cent) Number of banks Millions of dollars All banks........................... 8,109 268 644 5,761 1,437 3 1,306 55 165 917 169 1 Size of bank (total deposits in millions of dollars): Less than 20.................. 4,030 115 463 2,602 851 482 1 53 365 63 20-50............................. 2,715 36 23 2,382 274 388 4 2 369 12 50-100........................... 630 53 32 371 174 161 4 2 79 76 100-500......................... 599 50 85 339 124 3 197 41 81 60 14 1 500-1 000....................... 73 9 19 40 6 31 2 9 20 1 1 000 and over.............. 63 5 22 28 7 47 3 19 23 3 A9. Other time deposits in denominations of less than $100,000— Maturities of 30 up to 90 days Most common interest rates paid by insured commercial banks on new deposits, April 27, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiling ceiling Group Total rate 1 Total rate 1 4.50 4.51 (5.00 4.50 4.51 (5.00 or to per or to per less 5.00 cent) less 5.00 cent) Number of banks Millions of dollars All banks.............................................................. 5,889 221 5,668 5,461 7,053 896 6,157 5,665 Size of bank (total deposits in millions of dollars): Less than 20..................................................... 2,639 29 2,611 2,553 261 3 258 249 20 50................................................................. 1,644 36 1,608 1,608 363 1 362 362 50-100 ............................................................... 756 37 719 666 745 88 657 601 100 500............................................................. 669 70 599 527 1,617 53 1,564 1,399 500 1,000.......................................................... 93 25 68 56 1,172 121 1,052 977 87 24 63 51 2,895 631 2,264 2,076 A10. Other time deposits in denominations of less than $100,000— Maturities of 90 up to 180 days Most common interest rates paid by insured commercial banks on new deposits, April 27, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiling ceiling Group Total rate 1 Total rate 1 4.50 4.51 5.01 (5.50 4.50 4.51 5.01 (5.50 or to to per or to to per less 5.00 5.50 cent) less 5.00 5.50 cent) Number of banks Millions of dollars All banks............................................................ 11,747 68 1,537 10,142 10,025 31,509 44 4,962 26,502 25,536 Size of bank (total deposits in millions of dollars): Less than 20.................................................. 6,606 835 5,771 5,743 3,553 267 3,285 3,285 20-50.............................................................. 3,121 36 407 2,678 2,642 4,645 (3) 302 4,343 4,240 50-100............................................................ 1,059 21 159 879 879 4,434 14 521 3,899 3,899 100-500......................................................... 775 4 83 688 645 7,947 (2) (2) 7,372 7,218 500-1,000....................................................... 92 5 20 67 64 2,728 3 419 2,306 2,150 1,000 and over............................................... 94 2 32 60 54 8,202 (2) (2) 5,298 4,745 For notes, see p. 787. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Time and Savings Deposits 791 All. Other time deposits in denominations of less than $100,000— Maturities of 180 days up to 1 year Most common interest rates paid by insured commercial banks on new deposits, April 27, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiling ceiling Group Total rate 1 Total rate 1 4.50 4.51 5.01 (5.50 4.50 4.51 5.01 (5.50 or to to per or to to per less 5.00 5.50 cent) less 5.00 5.50 cent) Number of banks Millions of dollars 8,493 89 861 7,542 7,399 4,053 26 406 3,621 3,450 Size of bank (total deposits in millions of dollars) • 4,757 29 567 4,161 4,161 1,434 (3) 72 1,362 1,362 20 50.............................................................. 2,052 36 82 1,934 1,898 468 8 67 393 392 50-100............................................................ 830 106 724 687 527 41 486 486 100-500.......................................................... 674 13 71 589 544 612 2 45 565 539 500-1,000........................................................ 92 10 13 69 60 288 (2) (2) 223 207 88 2 21 65 50 723 (2) (2) 592 464 A12. Other time deposits in denominations of less than $100,000— Maturities of 1 up to 2i/i years Most common interest rates paid by insured commercial banks on new deposits, April 27, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiling ceiling Group Total rate 1 Total rate 1 5.00 5.01 5.51 (6.00 5.00 5.01 5.51 (6.00 or to to per or to to per less 5.50 6.00 cent) less 5.50 6.00 cent) Number of banks Millions of dollars All banks............................................................ 13,674 98 547 13,030 12,568 33,725 80 1,632 32,012 31,021 Size of bank (total deposits in millions of dollars): Less than 20.................................................. 8,016 58 356 7,602 7,362 9,413 23 394 8,995 8,750 20-50.............................................................. 3,577 36 46 3,495 3,362 8,162 1 63 8,097 7,989 50-100............................................................ 1,117 69 1,048 1,011 3,479 147 3,331 3,194 100-500.......................................................... 775 53 722 679 5,186 256 4,930 4,711 500-1000........................................................ 97 2 7 87 86 1,733 (2) (2) 1,579 1,468 93 2 15 76 69 5,752 (2) (2) 5,080 4,909 A13. Other time deposits in denominations of less than $100,000— Maturities of 2l/i up to 4 years Most common interest rates paid by insured commercial banks on new deposits, April 27, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiling ceiling Group Total rate 1 Total rate 1 6.00 6.01 (6.50 6.00 6.01 (6.50 or to per or to per less 6.50 cent) less 6.50 cent) Number of banks Millions of dollars 12,400 662 11,738 11,485 17,840 1,604 16,236 15,971 Size of bank (total deposits in millions of dollars): Less than 20..................................................... 6,862 257 6,604 6,394 3,733 265 3,468 3,395 20-50................................................................ 3,554 228 3,326 3,326 4,405 192 4,214 4,214 50-100.............................................................. 1,048 79 969 969 2,279 204 2,075 2,075 100-500............................................................ 756 73 683 647 2,984 464 2,521 2,461 500-1,000.......................................................... 89 9 81 78 959 82 877 835 1,000 and over................................................. 91 16 75 71 3,480 398 3,082 2,991 For notes, see p. 787. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

792 Federal Reserve Bulletin □ September 1977 A14. Other time deposits in denominations of less than $100,000— Maturities of 4 up to 6 years Most common interest rates paid by insured commercial banks on new deposits, April 27, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiling ceiling Group Total rate 1 Total rate 1 6.50 6.51 7.01 (7.25 6.50 6.51 7.01 (7.25 or to to per or to to per less 7.00 7.25 cent) less 7.00 7.25 cent) Number of banks Millions of dollars All banks............................................................ 12,345 529 2,242 9,574 9,558 49,718 3,967 8,339 37,412 37,277 Size of bank (total deposits in millions of dollars): Less than 20.................................................. 7,067 212 1.345 5,510 5,510 7,620 146 1,442 6,032 6,032 20 50.............................................................. 3,326 156 561 2,608 2,608 11,270 645 1,628 8,998 8,998 50-100............................................................ 1,027 58 190 778 762 6,253 453 1,172 4,628 4,493 100-500.......................................................... 747 80 119 547 547 10,274 1,189 2,130 6,956 6,956 500-1,000....................................................... 89 9 14 67 67 4,182 261 866 3,054 3,054 1,000 and over............................................... 90 14 12 64 64 10,118 1,274 1,101 7,743 7,743 A15. Other time deposits in denominations of less than $100,000— Maturities of 6 years or more Most common interest rates paid by insured commercial banks on new deposits, April 27, 1977 Most common rate Most common rate (per cent) Paying (per cent) Paying ceiling ceiling Group Total rate 1 Total rate 1 5.00 5.01 7.26 (7.50 5.00 5.01 7.26 (7.50 or to to per or to to per less 7.25 7.50 cent) less 7.25 7.50 cent) Number of banks Millions of dollars All banks............................................................ 9,027 23 1,086 7,918 7,917 12,293 13 1,977 10,302 10,302 Size of bank (total deposits in millions of dollars): Less than 20.................................................. 4,761 607 4,154 4,154 1,025 47 978 978 20 50 .................................................... 2,486 154 2,332 2,332 2,394 56 2,338 2,338 50-100............................................................ 969 16 153 799 799 1,843 2 374 1,467 1,467 100 500.......................................................... 639 4 133 502 502 2,651 (3) 569 2,081 2,081 500 1,000....................................................... 84 1 18 64 64 1,164 (2) (2) 1,030 1,030 1,000 and over............................................... 89 1 21 67 66 3,216 (2) (2) 2,408 2,407 A16. Club accounts—Christmas savings, vacation, or similar club accounts Most common interest rates paid by insured commercial banks on new deposits, April 27, 1977 Most common rate (per cent) Paying Most common rate (per cent) Paying ceiling ceiling Group Total rate 1 Total rate 1 .01 4.01 4.51 (5.50 .01 4.01 4.51 (5.50 0.00 to to to per 0.00 to to to per 4.00 4.50 5.50 cent) 4.00 4.50 5.50 cent) Number of banks Millions of dollars All banks........................... 8,734 4,249 1,326 744 2,414 160 1,392 294 224 188 686 19 Size of bank (total deposits in millions of dollars): Less than 20................. 4,722 2,737 605 463 918 189 86 28 29 47 20-50............................. 2,407 1,037 517 152 702 133 205 55 63 32 55 6 50-100........................... 869 275 100 79 424 263 49 33 30 150 100-500......................... 602 165 88 38 312 25 413 67 72 45 229 11 500-1,000....................... 67 14 12 9 31 2 88 14 21 (2) 41 (2) 1,000 and over.............. 67 20 5 13 28 234 24 7 (2) 163 For notes, see p. 787. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

793 T re asu ry and Federal R e se rve F o re ign E xch an ge O perations This 31st joint interim report reflects the now in demand, the respective central banks Treasury-Federal Reserve policy of making took the opportunity to buy dollars in the available additional information on foreign market and to rebuild their international re­ exchange operations from time to time. The serves.. The stabilization measures in these Federal Reserve Bank of New York acts as countries remained in force into the summer, agent for both the Treasury and the Federal and domestic growth slowed significantly. Open Market Committee of the Federal Re­ Major countries that had been in currentserve System in the conduct of foreign ex­ account surplus made little progress, how­ change operations. ever, toward their stated objective of reduc­ This report was prepared by Alan R. ing those surpluses. In particular, Japan’s Holmes, Manager, System Open Market Ac­ already massive current-account surplus wid­ count, and Executive Vice President in ened even further in early 1977 and set the charge of the Foreign Function of the Federal stage for a sharp rise of the yen in the ex­ Reserve Bank of New York, and by Scott E. changes. Germany’s current-account surplus, Pardee, Deputy Manager for Foreign Opera­ while narrowing somewhat, remained large. tions of the System Open Market Account But since it was roughly offset by capital and a Vice President in the Foreign Function outflows, the mark, which had already ap­ of the Federal Reserve Bank of New York. It preciated by 9 per cent since last summer, covers the period February 1977 through July traded in a narrow range against the dollar 1977. Previous reports have been published in through late spring. In general, the authorities the March and September Bulletins of each year beginning with September 1962. 1. Federal Reserve reciprocal currency arrangements During the 6-month period under review the In millions of dollars exchange markets were faced with a shifting configuration of payments balances at a time Institution Amount of facility, when the economy of the United States was July 31, 1977 expanding much more rapidly than those of Austrian National Bank........................... 250 other major industrial countries. National Bank of Belgium....................... 1,000 Bank of Canada........................................ 2,000 Several countries that had been in serious National Bank of Denmark..................... 250 Bank of England....................................... 3,000 current-account deficit were making clear Bank of France......................................... 2,000 progress, mainly through stabilization pro­ German Federal Bank............................. 2,000 Bank of Italy............................................. 3,000 grams, in reducing domestic inflation and Bank of Japan........................................... 2,000 Bank of Mexico........................................ 360 restoring international balance. Growing evi­ Netherlands Bank..................................... 500 dence of improvement helped to bolster mar­ Bank of Norway....................................... 250 Bank of Sweden........................................ 300 ket confidence in their currencies—par­ Swiss National Bank................................ 1,400 ticularly the pound sterling, the Italian Bank for International Settlements: Swiss francs/dollars........................... 600 lira, and the French franc—stimulating rever­ Other authorized European curren­ cies/dollars ................................. 1,250 sals of earlier capital outflows and previously Total........................................... 20,160 adverse leads and lags. With these currencies Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

794 Federal Reserve Bulletin □ September 1977 2. Federal Reserve System transactions countries with large current-account under reciprocal currency arrangements surpluses to contribute more to the interna­ with the German Federal Bank tional adjustment process. In this effort, the administration put forward a broad range of In millions of dollars equivalent; drawings, or repayments ( —) possible approaches the others could take, Commitments, Jan. 1, 1977..................................................... 14.9 including more rapid expansion of their Transactions, 1977: Ql.......................................................................................... -14.9 economies, the opening-up of their domestic Q2.......................................................................................................... July......................................................................................... 35.4 markets to foreign competition, and the Commitments, July 31, 1977................................................... 35.4 elimination of controls or administrative prac­ tices that might distort currency relation­ of surplus countries faced sluggish demand at ships. In these discussions, it was stressed home, and although they sought to promote that exchange-rate appreciation for the cur­ more rapid expansion, they were reluctant to rencies of countries in current-account press too hard for fear of refueling inflation. surplus would contribute to international Meanwhile, the U.S. economy had moved equilibrium. In the context of these discus­ into high gear in the early months of 1977. sions, the yen, in particular, staged its ad­ Our demand for foreign goods thus rose vance in the spring. sharply at a time when foreign demand for The markets for European currencies also American goods was growing only slightly. responded nervously to comments on ex­ Consequently, our trade and current-account change policy by European or U.S. officials. deficits, which emerged last year, deepened But these tensions largely subsided following further. Inflationary pressures also picked up the London economic summit in early May in the United States, although this partly re­ since exchange rates were not mentioned in flected temporary factors like the cold weath­ the communique. In late June, however, er last winter. Even so, market sentiment senior government officials meeting at the toward the dollar remained generally positive. Organization for Economic Cooperation and Dealers responded to a continuing flow of Development (OECD) stated their agreement favorable news about the underlying expan­ that countries with current-account surpluses sion of the U.S. economy. In addition, the should allow their currencies to appreciate. In market came to expect that short-term U.S. subsequent interviews with the press, gov­ interest rates would be firming while interest ernment officials in various countries were rates elsewhere were flat or easing. pressed on their interpretation of this agree­ By the spring, however, the magnitude of ment and on their views of the appropriate­ the U.S. trade deficit, which reached $30 ness of the current constellation of exchange billion at an annual rate in the first half of rates. The responses of the U.S. authorities 1977, was becoming a matter of broader con­ were framed in the context of the broad pol­ cern. In part, the deficit reflected the increas­ icy objective to achieve further payments ad­ ing dependence of this country on foreign justment, but as their remarks were reported sources of oil, and the administration’s en­ ergy proposals making their way through the 3. Federal Reserve System repayments under Congress were partly designed to slow the special swap arrangement with growth of oil imports over the longer term. the Swiss National Bank But the deficit also reflected special circum­ In millions of dollars equivalent stances in other goods markets. In the con­ text of a growing tendency toward trade re­ Commitments, Jan. 1, 1977................................................... 1,051.0 Repayments, 1977: strictions abroad, the size of the deficit con­ Ql......................................................................................... -148.4 Q2......................................................................................... -143.6 tributed to protectionist sentiment in many July....................................................................................... —53.6 Commitments, July 31, 1977................................................. 705.4 U.S. industries and labor unions. The admin­ istration resisted this approach to curbing the Note.—Data are on a value-date basis with the exception of the last two entries, which include transactions executed in late July for the deficit. At the same time, it began to urge value after the reporting period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 795 4. Drawings and repayments by foreign central banks and the BIS under reciprocal currency arrangements In millions of dollars; drawings, or repayments (—) 1977 1977 Banks drawing on Outstanding, Outstanding, System Jan. 1, 1977 July 31,1977 Ql Q2 July Bank of Mexico 150 0 -150.0 BIS (against German marks). 35.0\ -35.0/ Total. 150.0 t 35 01 -150.0 1-35.0/ and flashed around the world by the news interest rates in the United States began to services, the impression was left that a con­ firm, and by the end of July, dollar rates were certed effort was under wav to lead the mar­ being bid up from their latest lows against ket. several major currencies. By early July the dollar was coming heav­ In market intervention during the ily on offer not only against the currencies of February-July period, the Federal Reserve countries in surplus but also against nearly all sold a total of $209.1 million of German major currencies. As before, the central marks, of which $173.7 million was financed banks of the United Kingdom, Italy, and from balances and $35.4 million from swap France mopped up dollars offered against drawings on the German Federal Bank, which their currencies, thereby limiting the rise in were outstanding as of July 31. Total Federal their exchange rates. Other currencies were Reserve purchases of marks from corre­ bid up sharply, however, and in order to spondents and in the market for balances counter disorderly conditions several central amounted to $142.2 million equivalent. The banks—including those of Japan, Germany, System also sold $3.3 million of Dutch guil­ and Switzerland—also bought dollars. The ders out of balances and purchased $8.5 mil­ Federal Reserve intervened on several occa­ lion equivalent from correspondents. sions in the New York market. After late In addition, during the period the Federal June the yen advanced 3Vi per cent before Reserve repaid a further $287.1 million equiv­ leveling off. In Europe, the mark and the alent of special swap indebtedness in Swiss currencies linked to it rose by 3 to 5 per cent francs and the U.S. Treasury redeemed through late July. $171.7 million equivalent of franc-denom­ In the highly speculative atmosphere that inated securities. By July 31 the Federal developed, U.S. Treasury officials at first Reserve’s special swap debt to the Swiss sought to avoid further comment on exchange National Bank had been reduced to $705.4 rates, but as the press and market partici­ million equivalent, while the Treasury’s pants continued to rehash what had already 5. U.S. Treasury securities, been said or was thought to have been said, it foreign currency series became necessary to dispel the impression issued to the Swiss National Bank that the authorities had been deliberately talk­ ing the dollar down. The effort to clear the air In millions of dollars equivalent, issues, or redemptions (—) began in late July, when Federal Reserve Commitments, Jan. 1, 1977......... ................................. 1,545.7 Chairman Burns and Treasury Secretary Transactions, 1977 Ql............... ........................................................ -84.6 Blumenthal in several statements stressed Q2.. ...................................................... -85.8 July. . . . .............................-33.7 their belief in the importance of a strong Commitments, July 31, 1977................................................. 1,341.5 dollar for the United States and the world generally. These statements sparked a turn­ D N a o t t a e . a — re B e o c n a u a s e v a o l f u r e o -d u a n t d e i n b g a , s i f s ig e u x r c e e s p d t o f o n r o t l a a s d t d t w to o t e o n ta tr ls i . es, which include transactions executed in late July for value after the reporting around in market psychology. Moreover, period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

796 Federal Reserve Bulletin □ September 1977 Swiss franc-denominated obligations had cations of the harsh winter in the United States. been lowered to $1,341.5 million equivalent. Thus, the mark came into demand and rose As reported in June, from last year’s opera­ from $0.4157 on February 1 to as high as tions the Bank of Mexico repaid in February $0.4190 by the end of the month. To cushion the a $150 million swap drawing on the Federal mark’s advance, the German Federal Bank Reserve and prepaid in April $150 million bought modest amounts of dollars in drawn under the Exchange Stabilization Frankfurt, while the Federal Reserve inter­ Agreement with the Treasury. vened on 3 days when trading became unset­ Finally, in February the U.S. Treasury es­ tled in New York, selling a total of $20.9 tablished short-term credit facilities for Por­ million equivalent of marks from balances. tugal totaling $300 million. The Bank of Por­ In early March expectations of a further tugal subsequently drew the full amount of rise in German interest rates receded, after these facilities and repaid $85 million by Au­ the German Federal Bank announced an in­ gust 1. crease in its commercial bank rediscount quotas. But concern over an unexpectedly sharp rise in the U.S. trade deficit, compared with Germany’s continuing trade surplus, GERM AN M ARK kept dealers cautious. The mark settled Early in 1977 prospects for continued expan­ around the end-of-February levels against the sion of Germany’s economy were uncertain. dollar and remained near the lower limit of The worldwide lull in demand for capital the EC band through the end of March. Then on goods, the deflationary measures taken in Friday, April 1, when incomplete reports of several of Germany’s principal European an EC snake realignment reached the New markets, and the appreciation of the mark York market after the European close but during 1976 had clouded the outlook for a before the official announcement, trading be­ further strong expansion in exports. At home, came confused. The mark was abruptly bid investment demand remained soft, and un­ up to as high as $0.4204. The Federal Reserve employment remained worrisomely high. entered the market with moderate offers of Even so, a new round of wage negotiations marks, selling $15.3 million equivalent from had paved the way for pay increases above balances. the government’s target, and the authorities While the immediate nervousness sur­ were reluctant to provide additional economic rounding the snake realignment soon passed, stimulus lest it be viewed as inflationary. the market had been reawakened to the pos­ Meanwhile, with the relaxation of last sibility of further exchange-rate adjustments year’s tensions in the exchange markets, a within Europe and elsewhere. In addition, flow of capital out of Germany was well rumors began to circulate in the market that under way, keeping the mark near the bottom the question of exchange rates, particularly of the European Community (EC) snake, fol­ relating to the mark and the yen, would be lowing the October 1976 realignment, and on pursued at the economic summit meeting in offer against many other currencies. The London on May 7-8. With the yen having market nevertheless remained acutely sensi­ already advanced in recent weeks, the latetive to changing interest rate relationships— April announcements of a sharp widening of especially between Germany and the United the U.S. trade deficit in March and an in­ States in view of the broader importance of creased German trade surplus for that month the mark-dollar relationship in the interna­ reinforced expectations of a near-term rise in tional monetary system. the mark rate as well. During February signs of congestion in the Consequently, demand for marks against German capital market, generating expecta­ sales of dollars gathered momentum in late tions of a rise in German interest rates, coin­ April and carried over into early May. cided with concerns over the economic impli­ Moreover, strong bidding for Dutch guilders Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 797 at the top of the EC snake exerted an upward deficit for April generated an abrupt biddingpull on the mark. As the German Federal up of the mark, and the Federal Reserve sold Bank and the Netherlands Bank provided $6.4 million equivalent in steady trading. But substantial support for the mark at its lower apart from these two brief episodes, the mark intervention limit against the guilder, the spot traded quietly through mid-June at around rate advanced to as high as $0.4266 in $0.4240, some 2 per cent above the early- Frankfurt on May 5 just ahead of the summit. February levels, without intervention by To counter disorderly conditions in New either the Federal Reserve or the German York, the Federal Reserve intervened on four Federal Bank. During May and June the trading days over the period from April 15 to Trading Desk bought from correspondents May 4. In all, the System sold $34.8 million moderate amounts of marks to add to work­ equivalent of marks. Since the mark was at ing balances. the bottom of the EC snake at the time and In the weeks that followed, a number of the guilder at the top, the Federal Reserve press reports were interpreted by many mar­ supplemented its operations in marks with ket participants as implying that the U.S. offers of guilders, selling $3.3 million equiva­ Government was attempting to talk the dollar lent of that currency. down. On June 24 when trading had thinned The broad scope of the joint communique out after the European close, the New York issued from the London summit meeting, market was suddenly upset when the interna­ containing no reference to exchange rates, tional news services reported from the OECD relaxed previous market concerns. Con­ ministerial meeting in Paris that member sequently, although Germany’s trade surplus countries with strong external positions were remained strong, reflecting continued ready to see a weakening of their currentstrength in German exports and a slowing of account positions and an appreciation of their imports, the market’s attention shifted back currencies in response to underlying market to an assessment of the relative economic forces. This statement was viewed by the performance and interest rate outlook for market as going beyond the results of the Germany and the United States. German May summit and sparked an immediate rise in short-term rates remained soft, after the the mark as well as the yen. The demand German Federal Bank reduced commercial gathered force once market professionals bank reserve requirements and raised redis­ were free of their quarter-end positioning re­ count quotas effective June 1 to help tide the quirements, and by early July each succes­ money market over a period of anticipated sive advance of the yen in Tokyo was seasonal tightness. By comparison, U.S. matched by a strong bidding-up of the mark interest rates had firmed following Federal rate in Europe as traders built up long posi­ Reserve actions to counter a sharp rise in the tions in the German currency. By July 7 the U.S. monetary aggregates in April. mark had advanced more than 2lA per cent to Thus, the market generally came into better $0.4340, with the German Federal Bank re­ balance during May and June. On May 12, turning to the market for the first time since however, the wire services highlighted one March to buy dollars. aspect of a speech by International Monetary Following these operations and reports of Fund (IMF) Managing Director Witteveen forceful intervention by the Bank of Japan in stating that countries in a strong balance of Tokyo, the mark temporarily eased back. But payments position would have to permit their market participants were soon caught up again currencies to appreciate. These reports in a crossfire of statements stemming from the triggered a burst of demand for marks that news services and editorial comment on the unsettled the New York market, and the Fed­ worsening of the U.S. trade deficit, the decline eral Reserve intervened, selling $33.5 million of the dollar, and the administration’s at­ equivalent of marks. Again on May 26, the titudes toward these developments. As this announcement of another sizable U.S. trade process was unfolding, dealers saw little im­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

798 Federal Reserve Bulletin □ September 1977 mediate downside risk for the mark rate, with over the last days of July, the Federal Reserve the result that demand for marks progressively sold $3.5 million equivalent of marks and intensified. purchased $14.8 million equivalent, on bal­ In this speculative atmosphere, the market ance, gaining partial cover for the earlier $35.4 largely ignored the German Federal Bank’s million of swap drawings on the German Fed­ announcement on July 14 that it was reducing eral Bank. Germany’s official reserves rose by its Lombard rate by Vi percentage point to 4 $848 million in July, for a net increase of $685 per cent and that it would be prepared to million over the 6-month period. continue purchasing trade bills on a repur­ chase basis at a rate of 33A per cent. Instead, as generalized selling of dollars persisted, the STERLING mark was bid up to a 4-year high of $0.4455 by July 26 in trading that became increasingly Late in 1976 the British Government took disorderly. In response, the German Federal further steps to curb Britain’s inflation rate, Bank gradually stepped up its intervention, which remained among the highest in Europe; with significant dollar purchases at the daily to redress its persistently large currentfixings in Frankfurt. For its part, the Federal account deficit; and to stabilize sterling follow­ Reserve intervened in New York on nine ing its protracted decline during much of the trading days between July 8 and July 26, year. selling $94.7 million equivalent of marks. The The Bank of England moved to restrict System financed these sales from existing bal­ monetary expansion, partly by raising its ances and from $35.4 million equivalent of minimum lending rate to an unprecedented 15 drawings under the swap line with the German per cent and by reimposing an increasing Federal Bank. marginal reserve requirement, the so-called Under these circumstances, senior U.S. “corset.” The authorities sealed off a gap in financial officials sought to clarify U.S. exchange-control regulations by prohibiting exchange-rate policy. On July 26, in answer to the use of the pound in financing third-country questions before the House Banking Commit­ trade. And, in negotiating a $3.9 billion tee, Chairman Burns stressed the need “to standby arrangement with the IMF, the gov­ protect the integrity of our money” and ob­ ernment agreed to a package of fiscal restraint. served that “depreciation of the dollar means As announced in December, this package in­ higher prices domestically” while having cluded spending cuts, increased taxes, and “serious international repercussions.” Secre­ the sale of part of the British Government’s tary Blumenthal, in a speech in Louisville, holdings in the British Petroleum Company— Kentucky, emphasized that “a strong dollar is measures expected to reduce the public sec­ of major importance not only to the United tor borrowing requirement as a share of gross States but also to the rest of the world.” In domestic product from the existing 9 per cent response, dealers began to cut back their long to 6 per cent for the 1977-78 fiscal year. Mean­ mark positions. while, the second 1-year phase of wage re­ The dollar’s recovery continued even after straint, in place since July, was helping to slow a record $2.8 billion U.S. trade deficit was the rise in labor costs. announced for June. At the same time, These various measures were combined moreover, U.S. interest rates had begun to with a substantial bolstering of Britain’s re­ firm as the Federal Reserve reacted to a sharp serve position. The $3.9 billion IMF standby rise in the monetary aggregates in July. Thus, was formally approved in early January 1977. the mark began to move lower and reached Shortly thereafter, the U.K. authorities $0.4378 by July 29, down 1% per cent from reached agreement with the main industrial its peak 3 days earlier but still up more than countries over a plan, including a $3 billion 5 per cent on balance for the 6 months. In backstop facility administered by the Bank for further operations in the New York market International Settlements (BIS), to alleviate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 199 pressures on sterling from sudden shifts out of dollars to replenish official reserves. On bal­ officially held balances and to reduce those ance, U.K. reserves rose by some $3 billion balances over the near term. Late in January between the end of January and the end of the British Government announced a new $1.5 April. billion Euro-currency loan from a commercial The movement of funds into sterling, while banking syndicate. strong and persistent, was nevertheless inter­ Against this background, sterling staged a rupted by occasional outbursts of selling pres­ dramatic turnaround in the exchanges. Begin­ sure. Thus, sterling came heavily on offer in ning in late 1976, the very indications that new mid-February, falling briefly to as low as fiscal and monetary restraints and interna­ $1.6920 against the dollar, after news of a tional credit facilities were under serious con­ record trade deficit in January and widespread sideration had prompted bidding for pounds. press coverage of trade union opposition to a With sterling recovering, the high cost of third year of voluntary pay restraint. In midfunds in London began to squeeze out short March another temporary spasm of selling positions and to encourage the unwinding of pressure was triggered by political uncertain­ adverse leads and lags that had built up during ties that arose before the government nar­ months of demoralization over sterling’s pros­ rowly survived a parliamentary vote of nopects. The running-off of outstanding third- confidence. And in April signs of a stiffening country sterling trade credits gave an added of trade union opposition to continued wage impetus to net demand for the pound well into restraint again spurred some selling of sterling. early 1977. The growing reflux of funds into On each of these occasions, however, the sterling thus propelled the spot rate from its Bank of England stepped in promptly to avoid record low of $1.55 in October 1976 to just a significant decline in the sterling rate. In the under $1.72 by early February 1977. By then, context of the government’s broader policy the Bank of England was absorbing large commitments the market quickly stabilized. amounts of dollars from the market to add to Consequently, by early May sterling con­ reserves and to prevent sterling from rising to tinued to hold firm just below $1.72. levels that it judged might prove unsustainable In the meantime, the persistent domestic and once the immediate demand pressures eased. foreign demand for British securities had re­ As trading conditions gradually settled sulted in a progressive decline of interest rates down, dealers began to focus on the positive in London. In view of the continuing high rate factors for sterling. By early 1977 the flow of of domestic inflation and the government’s North Sea oil was beginning to reach sizable debt management objectives, the authorities proportions, giving credence to forecasts that had acted to slow the decline. Nevertheless, the oil would provide the basis for a swing of the drop was mirrored in successive reduc­ the U.K. current account into substantial tions in the Bank of England’s minimum lend­ surplus over the years ahead. Moreover, as ing rate to 8 per cent by mid-May—fully 7 the sterling rate stabilized, market participants percentage points below the crisis level of came to expect an easing of British interest October 1976. With U.S. interest rates rising at rates away from crisis levels. Each new is­ the time, yield differentials favoring sterling sue of government debt was met with reports placements had narrowed considerably, and of sizable bidding, from foreign as well as the market found the scope for further capital domestic sources, to take advantage of the gains on investments in British securities sub­ currently high coupon rates and the potential stantially reduced. Consequently, dealers be­ for capital appreciation. Consequently, the came sensitive to the possibility of a sudden British authorities were able to sell large unwinding of previous capital inflows. amounts of government debt at progressively Moreover, the market was also aware that lower rates, and sterling remained in demand reversals of adverse leads and lags and un­ in the early spring. Through April the Bank of winding of third-country trade finance that had England was able to buy large amounts of buoyed the pound in previous months were by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

800 Federal Reserve Bulletin □ September 1977 now largely completed. With sterling more By early July, opposition within the trade vulnerable to selling pressure, concerns over unions to a third year of wage restraint had the outlook for inflation surfaced again— built up to the point where virtually no hope following news of a sharp rise in retail prices remained of winning voluntary support for a in April and of the trade unions’ adverse re­ limit on negotiated wage increases for another action to the Labor government’s proposed year. The Labor government modified its formula, stated in the March 29 budget address, wage restraint strategy to seek union agree­ for a third year of pay restraint. ment to space out pay negotiations over 12 months, while obtaining moderate wage in­ In this more bearish atmosphere the pound creases within the public sector. This outcome came under a burst of largely professional led to only a brief bout of selling pressure. selling after mid-May, particularly on May 24. Instead, as the dollar continued on offer, these The Bank of England responded with forceful concerns receded into the background, and intervention to limit the decline in sterling, the movement of funds into sterling gathered helping to relieve the immediate pressures. renewed momentum. Then when Britain’s reserve figures for May As before, the Bank of England resumed were published early the next month, the purchases of dollars to avoid a rise of sterling, indicated size of official support impressed the but the effect of this approach was to allow the market that the U.K. authorities were pre­ pound to depreciate along with the dollar pared to use their now ample resources to against the currencies of other major trading keep the exchange rate steady over the near partners. Consequently, on July 27 the Bank term. of England shifted to an intervention approach Meanwhile, recent statistics had revealed keyed to a weighted average of major curren­ that Britain’s current account was improving cies. more rapidly than had been expected. The As soon as market participants learned that domestic economy remained depressed, lead­ the Bank of England was abandoning its strat­ ing to a leveling-off of imports. But, in addi­ egy of holding the pound around the $1.72 tion, increased North Sea oil production and level, there was an enormous rush to buy sharp rises in tourism receipts and other invis­ sterling, not only out of dollars but out of other ible earnings had brought the current account currencies as well. The pound advanced to as into near balance by the second quarter. high as $1.7420 against the dollar, for a net rise Moreover, capital inflows had resumed, as of about \V4 per cent over early 1977 levels, interest yields again looked attractive to and recouped part of its recent depreciation foreign investors compared with placements against other currencies. To limit the rise, the elsewhere. The British Government’s sale on Bank of England made heavy purchases of June 27 of a portion of its British Petroleum dollars. Mainly as a result of these and earlier holdings, which in the end was nearly five acquisitions by the central bank, Britain’s times oversubscribed, also drew in sizable external reserves rose $3.6 billion during the amounts of funds from abroad. June-July period to a record $13.6 billion at These factors contributed to an increasingly the end of July, for an over-all rise of $6.4 bullish atmosphere for the pound, which re­ billion over the 6-month period. mained in demand. Consequently, when the dollar came on offer against other major cur­ rencies in late June and early July, market SW ISS FRANC participants began to shift into sterling as well. In meeting this “hot money” inflow, the Bank Last winter the Swiss economy was pulling of England allowed the spot rate to edge above out of recession only slowly. The continued $1.72, but it continued to absorb most of the weakness of domestic demand was reflected in excess demand through heavy purchases of a further moderation of inflation and a trade dollars. surplus—the first in 20 years—which together Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 801 with large interest earnings from abroad had economic policies. Moreover, the Swiss mon­ boosted Switzerland’s current-account etary aggregates were growing faster than surplus close to $3.5 billion for 1976. To targeted. To avoid excessive monetary stimulate a revival of business activity while growth, the National Bank absorbed domestic also avoiding any upward pressure on the liquidity through net dollar sales under its Swiss franc that might inhibit export demand, capital export conversion program. Early in the Swiss National Bank had provided a more March, it took the opportunity to sell a small accommodative monetary policy. Also, to en­ amount of dollars in the exchange market. courage a continuing outflow of capital, the Then, as the end of the quarter approached, authorities reinforced their capital export con­ the central bank announced that it would version program, whereby the proceeds of provide only limited swap assistance to the new foreign bond issues in Switzerland are commercial banks to satisfy window-dressing immediately converted into foreign currency needs. In response, interest rates in Switzer­ at the central bank. land turned around toward the end of the As Swiss monetary conditions eased, inter­ month, capital outflows tapered off, and the est rates moved to levels well below those in Swiss franc began to firm in the exchanges. As other major countries, prompting sizable out­ it did, the Swiss National Bank resumed dollar flows of capital from Switzerland. This pro­ purchases in the market to moderate the rise. cess was magnified by a large-scale reversal of In April, demand for Swiss francs gathered much of the “hot money” inflows of previous strength as traders reacted to reports that months, when funds had been shifted into countries, such as Switzerland, with large Swiss francs out of those currencies—sterling, current-account surpluses were being urged to the French franc, and the Italian lira—that had let their currencies appreciate in response to been under pressure during 1976. Con­ market forces. With concern also deepening sequently, the Swiss franc had begun an over the widening trade deficit and potential across-the-board decline that continued well for renewed inflation in the United States, the into early 1977. franc continued to move up. In February the market’s view that low The rise in the franc was briefly interrupted interest rates would be maintained hardened in an initial reaction to news in mid-April that after the Swiss National Bank provided sup­ the Swiss Credit Bank had sustained substan­ port to an undersubscribed Swiss Government tial losses at its Chiasso branch in connection bond issue and released commercial bank with irregularities in the handling of fiduciary minimum reserves and sterilized deposits. deposits from Italy. Concerned that this news, Foreign investors therefore continued to shift together with closure of two small private funds out of low-yielding franc assets into banks in Switzerland, might cloud the reputa­ other currencies, now more stable and offering tion of Swiss banking, the authorities and the significantly greater rates of return. Private major banks worked out an agreement by forecasts of a sharply lower Swiss franc over early June on practices for accepting funds the medium term touched off further selling of and on bank secrecy. In the meantime, the francs. As a result, the Swiss franc dropped major Swiss commercial banks resumed their back to as low as $0.3893 by March 1, down by bidding for francs to improve their liquidity IVi per cent against the dollar since the end of positions, both in the wake of the Chiasso January and by 1XA per cent from its record affair and also in response to further signs of a highs of June 1976. In the meantime, the franc somewhat more restrictive monetary stance also lost further ground against the German by the Swiss authorities. As Swiss interest mark, for an over-all decline of 15 per cent rates were bid up and German interest rates since the June 1976 peaks. drifted lower, dealers covered their long In fact, however, the Swiss economy had mark-short franc positions. Consequently, begun hesitantly to respond to the stimulus of the franc advanced against both the mark and rising Swiss exports and the government’s the dollar, reaching $0.4029 in Zurich on June Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

802 Federal Reserve Bulletin □ September 1977 6 before the immediate demand for franc bal­ existing balances. In addition, the System ances began to subside and Swiss money purchased $24.9 million equivalent of Swiss market rates eased. francs in the market or from other correspond­ In late June the Swiss franc was caught up in ents mostly in late February—early March, the general advance of European currencies when the franc was weakening in the ex­ against the dollar. Initially, after release of the changes. By the end of July the Federal OECD communique on June 24, it moved Reserve’s special swap debt to the Swiss abruptly higher and then continued to rise National Bank had been reduced to $705.4 during much of July, although at a somewhat million equivalent while the Treasury’s Swiss slower pace than the mark. As the rate ad­ franc-denominated obligations had been low­ vanced, foreign companies with franc- ered to $1,341.5 million equivalent. denominated liabilities moved to acquire francs to prepay existing loans. In order to moderate the rise in the franc, FRENCH FRANC the Swiss National Bank bought substantial amounts of dollars in the market, more than Following recurrent bouts of selling pressure offsetting dollar sales under the capital export on the French franc through much of last year, conversion program. Also, on July 14, the the market for francs came into better balance Swiss authorities cut both the discount rate by early 1977. and the Lombard rate by Vi of a percentage Last September the French Government point each, to 1 Vi per cent and 2Vi per cent, introduced a wide-ranging stabilization pro­ respectively—a move that was timed to coin­ gram to deal with the underlying payments cide with the German Federal Bank’s imbalance and with the adverse market psy­ Vi-percentage-point reduction in its Lombard chology that had weighed on the franc. Pre­ rate. Even so, the franc advanced to a record sented by newly designated Premier Barre, the high of $0.4207 in European trading on July 26. plan represented a shifting of priorities away Then, with the change in market sentiment from immediate economic stimulus toward a toward the dollar that emerged and the firming concerted effort to curb inflation and stabilize of U.S. interest rates, the franc began easing the exchange rate. Specific measures included back with other European currencies. It a 3-month price freeze, a call for wage re­ closed on July 29 at $0.4162, almost 7 per cent straint, curbs on bank lending, and a 1-perabove its March low, for a net rise of 4lA per centage-point hike in the Bank of France’s cent since January 31. discount rate to 10Vi per cent. Meanwhile, the Federal Reserve and the The market’s initial response was hesitant, U.S. Treasury continued with the program in view of the controversial nature of some of agreed to last October for an orderly repay­ the measures. But by early winter the pace of ment of pre-August 1971 franc-denominated price and wage increases in France had slowed liabilities. The Federal Reserve repaid $287.1 markedly, and the trade deficit began to nar­ million equivalent of special swap indebted­ row. Also, tensions in markets for other major ness and the Treasury redeemed $171.7 mil­ European currencies were easing, and traders lion of Swiss franc-denominated securities by became less fearful that a spillover of pres­ the end of July. sures from other currency markets would dis­ Most of the francs for these repayments rupt trading in francs. Consequently, as the were acquired directly from the Swiss Na­ market’s previous extreme pessimism gradu­ tional Bank against dollars. But the Federal ally lifted, market participants began bidding Reserve also bought francs from the National for francs to cover short positions or to re­ Bank against the sale of $58.9 million equiva­ verse commercial leads and lags built up lent of German marks and $40.3 million equiv­ against the franc in previous months. The spot alent of French francs, which were in turn franc held firm around $0.2010 against the either acquired in the market or drawn from dollar through mid-February, while strength­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 803 ening some IV2 per cent against the German remained in strong demand through May and mark and other currencies in the EC snake. most of June. The spot rate edged up gradually In the meantime, the Bank of France took against the dollar to $0.2025 by late June, with advantage of the opportunity to buy dollars to the Bank of France continuing to take dollars add to foreign currency reserves. into reserves. Nevertheless, dealers were sensitive to When the dollar came under generalized political developments in France before gen­ selling pressure in the exchange markets be­ eral elections in early 1978. With the approach ginning in late June, the franc joined in the of municipal elections in March, for which upswing of major European currencies. It was public opinion polls projected a swing in favor bid up a further 3 per cent to a late-July peak of the opposition parties of the Left, the of $0.2086, some 3% per cent above earlymarket turned cautious and the franc again February levels, even as the Bank of France came on offer. To avoid a build-up of specula­ continued to buy sizable amounts of dollars to tive pressures, the Bank of France resumed moderate the rise of the franc rate. But as the intervention in support of the franc, selling franc did not keep pace with the continued moderate amounts of both dollars and German advance of the German mark, the French marks, and operated to keep French interest central bank also sold modest amounts of rates firm in the domestic money market. marks to cushion the decline in the rate against Against the dollar, the spot franc eased the German currency. about Vi per cent from mid-February levels to Toward the end of July, however, the franc almost $0.2000, while against the German began to settle back against the dollar follow­ mark and other EC snake currencies it de­ ing statements by U.S. officials emphasizing clined about 1 per cent. Once the immediate the need for a strong dollar and Premier uncertainties surrounding the municipal elec­ Barre’s remarks that the dollar had become tions had passed, market nervousness receded undervalued vis-a-vis the French franc and and the franc gradually regained its previous other European currencies. As a result, by the buoyancy. end of the month, the franc rate had eased to In the spring France’s underlying payments $0.2050, to close the 6-month period up 1% per position was clearly improving. Confidence in cent on balance against the dollar. Against the the country’s external position was bolstered German mark, the franc regained some of the by the further favorable swing in the French ground it had lost but still closed the period trade account that nearly halved the late-1976 some 3Vi per cent lower on balance. deficit and by expectations of a further mod­ eration of inflation despite lifting of the price freeze. In this context, the high interest rates ITALIAN LIRA in France, compared with lower or declining interest rates elsewhere, attracted sizable in­ By early 1977 Italy’s minority government had flows of interest-sensitive funds. Also, French gathered sufficient support to implement many public and private corporations continued to elements of its comprehensive stabilization borrow abroad. At the same time, however, program. Steps had been taken to bring the industrial production leveled off and unem­ public sector deficit under control through ployment rose somewhat. spending cuts, tax increases, and higher prices Toward the end of April the market began for public services. The Bank of Italy had to expect some easing of monetary policy, and reinforced its restrictive monetary policy by the franc softened somewhat in the exchanges raising its discount rate to 15 per cent and by although the authorities introduced programs imposing limits on bank lending. Even so, the to increase employment in specific areas. authorities’ efforts to negotiate modifications These were to be financed by borrowings in in Italy’s wage indexation system—wages had the market, and interest rates were kept rela­ risen more than 25 per cent in 1976, as against tively firm. The franc quickly recovered and price rises of some 21 per cent—gained little Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

804 Federal Reserve Bulletin □ September 1977 headway. Consequently, negotiations with the and a swing into current-account surplus next IMF over a new standby arrangement, which year. would provide Italy with $530 million of new This reinforcement of Italy’s stabilization IMF credit and assure the availability of a effort was welcomed in the market. In late further $500 million from the EC, were de­ April and May, reversals of previous outflows layed until more of the government’s anti- resumed. With domestic interest rates remain­ inflationary package was in place. ing high and regulations still in force encourag­ At first the lira had been stabilized by strict ing Italian exporters to seek foreign sources of exchange controls as well as by a repatriation finance, Italian banks and companies in­ of funds in response to an amnesty on previ­ creased their borrowings abroad. In addition, ous illegal outflows by Italian residents. the net reflux of “hot money” increased Gradually, the tight credit conditions in Italy sharply following disclosures by Swiss banks and the greater stability of the rate following of irregularities in dealings with Italian resi­ the 25 per cent depreciation in 1976 also dents’ funds. The passing of the period of tended to encourage flows into the lira. As seasonal weakness in current payments gave demand for lire mounted, the spot rate leveled additional buoyancy to the market. Taken off around $0.00134 (882 lire). The Italian together, these forces generated substantial authorities took the opportunity to buy dollars bidding for lire. The spot rate rose only in the market to rebuild their foreign exchange slightly, however, as the Bank of Italy con­ reserves to $3.3 billion by the end of January. tinued on balance to buy substantial amounts While many of these demands for lire con­ of dollars to add to reserves. tinued into February and March, the unwind­ By early June the stabilization measures ing of a 50 per cent import-deposit scheme and were clearly taking hold. The rate of inflation the dismantling of other exchange controls had moderated. The current-account deficit imposed in 1976 exposed the lira to occasional had narrowed significantly, albeit at the ex­ selling pressures. In late March, following the pense of a considerable slowdown in the outbreak of student rioting over government domestic economy. Moreover, tight controls policies and of workers’ strikes over proposed on bank credit had kept domestic lending in changes in the wage indexation system, the check. Consequently, the Bank of Italy was spot rate declined by about Vi per cent to able to begin easing domestic interest rates $0.001127 (887 lire). To contain these pres­ from crisis levels by cutting its discount rate sures the Bank of Italy intervened forcefully. by 2 percentage points to 13 per cent. Interest Its official dollar sales were partly reflected in differentials nevertheless remained favorable a decline of about $300 million in exchange for Italy and a net inflow of short-term funds reserves through the end of March. continued. By then, the possibility of further By this time the Italian Government had declines in Italian interest rates was prompting come closer to reaching agreement with the some Italian residents to repatriate funds in IMF on the terms of a letter of intent to anticipation of capital gains on new issues of support Italy’s request for a standby facility. Italian Treasury bills and notes. In this connection, the authorities extended Beginning in late June, demand for lire commercial bank lending ceilings through swelled further, partly on the seasonal rise in March 1978, gained trade union and legislative tourist receipts but also in connection with the approval for a compromise proposal for general strengthening of European currencies amending the wage indexation system, and against the dollar. The lira rate advanced only raised indirect taxes to finance a reduction in to $0.001135 (881 lire), however, as the Bank employers’ social security contributions. As of Italy continued to absorb dollars. In all, released on April 14, the IMF letter of intent from April through July, Italian exchange re­ also projected further cuts in public spending serves rose by $4.1 billion to $7.1 billion, even to reduce the budget deficit, a lowering of the with a repayment in July of previous drawings inflation rate to 13 per cent by March 1978, from the IMF. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 805 EC SN AK E realigned band, pressing at times on their upper limits against the mark when conver­ Following recurrent episodes of heavy specu­ sions of external borrowings buoyed their ex­ lation throughout 1976, the countries partici­ change rates. pating in the European currency arrange­ Market participants nevertheless remained ment—Germany, the Benelux countries, sensitive to further possible changes in Sweden, Denmark, and Norway—agreed exchange-rate relationships within the snake. in October on a realignment of exchange- As the May 7-8 London economic summit rate parities whereby the German mark drew closer, dealers came increasingly to be­ was adjusted upward by 2 per cent while lieve that a readjustment might emerge as part the Scandinavian currencies were adjusted of a more comprehensive agreement to allow downward by 1 to 4 per cent. These readjust­ currencies bolstered by strong current ac­ ments to offset disparities in relative inflation counts to appreciate. Market attention fo­ rates and economic performance among the cused on the Dutch guilder, which had traded participating countries relieved market ten­ near the top of the joint float since the previ­ sions and triggered a reversal of the earlier ous autumn and was generally expected to speculative flows. As a result, the German firm in the exchanges. The guilder came into mark fell to the bottom of the EC snake, and increasingly intense demand, frequently rein­ through March 1977 the member currencies forced by foreign purchases of Dutch securi­ traded comfortably within the snake’s 2V4 per ties, which offered yields that were relatively cent limits without any particular strains. favorable in comparison with those available By that time, however, the Swedish krona in Germany. had eased to near the bottom of the band in By late April the guilder was being pressed response to Sweden’s still relatively high infla­ at its upper intervention limit against the tion rate and deepening current-account defi­ mark, even as the mark itself was rising cit. As part of a program that the Swedish against the dollar. To maintain the EC snake authorities adopted to reverse the decline in limits, the Netherlands Bank and the German export competitiveness and to avoid an out­ Federal Bank bought sizable amounts of break of speculative selling of Swedish marks against sales of guilders in their respec­ kronor, a new realignment was agreed upon, tive markets. The Dutch central bank also implying a 6 per cent devaluation of the krona bought a large amount of dollars in Amster­ within the joint float. dam. Trading in New York also became unset­ As part of the realignment, the Danish and tled at times, and on May 4 the Federal Norwegian kroner were also devalued, each Reserve supplemented its intervention in by 3 per cent. When reports of this realign­ marks by selling $3.3 million equivalent of ment leaked out on Friday afternoon, April 1, guilders from balances. ahead of the official announcement, traders in On the following day, the Netherlands Bank New York were taken by surprise and became responded to the build-up of speculative reluctant to make markets in these currencies demand for guilders by announcing a until details of the parity changes were made 1-percentage-point cut in its discount rate to available. Once trading resumed on Monday, 3Vi per cent, a move immediately interpreted April 4, however, the market easily adjusted in the market as a signal of Dutch commitment to the new rate relationships. The Swedish to snake currency relationships at the time. krona, after depreciating somewhat less than Consequently, the pressures within the band the change in its central rate, began to benefit began to recede. When the London summit from inflows of funds and traded firmly near meeting ended without any changes in its new upper intervention limit against the exchange-rate relationships, the guilder mark, which remained at the bottom of the backed away from its upper intervention limit band. The Danish krone and Norwegian krone against the mark. Later on, figures were re­ also stabilized in the upper half of the leased showing that the Netherlands’ large Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

806 Federal Reserve Bulletin □ September 1977 current-account surplus had virtually disap­ longer-term outlook for economic growth with peared during the first quarter of 1977. Signs unusual caution. The actual and expected of some acceleration of Dutch inflation also weakness in domestic demand, in turn, diminished bullish market sentiment toward exerted a powerful drag on Japanese imports. the guilder. Thus, as short-term interest rates The combination of strong exports and stag­ in the Netherlands continued to decline to nant imports produced a further widening of levels well below comparable rates in Ger­ Japan’s trade and current-account surpluses, many, the guilder eased against the mark, and already at record levels last year. the entire band contracted. The Japanese authorities had moved to Tensions re-emerged within the snake dur­ stimulate the economy through some easing of ing June and July, however. Following the fiscal policies, but they had proceeded with outcome of protracted wage negotiations in caution in view of the continuing high rate of Sweden, talk intensified of a further devalua­ domestic inflation, and the Bank of Japan had tion of the krona to offset the impact of rising kept its discount rate at 6V2 per cent. Once unit labor costs on price competitiveness. uncertainties in December over Japanese elec­ Fairly heavy selling of the Swedish krona and tions and the magnitude of a new Organization other Scandinavian currencies built up— of Petroleum Exporting Countries (OPEC) oil especially before each weekend. The sharp price rise passed, market sentiment in the rise in the German mark against the dollar that exchanges turned increasingly bullish toward quickly gathered momentum in late June and the yen. Bolstered by the large currentearly July exceeded that of the other joint float account surplus and inflows of interestcurrencies, and the mark soon moved up to sensitive funds from abroad, the yen re­ the top of the band. bounded sharply from its December lows. The guilder and the commercial Belgian After having intervened forcefully to support franc, pulled up by the mark’s rise, traded com­ the yen in its previous decline, the Japanese fortably within the EC snake. But the Scandi­ authorities refrained from intervention as the navian currencies, while still rising against the rate rose by about 3 per cent against the dollar dollar, lagged behind. To keep their currencies to $0.003470 (288 yen) at the end of January. above the lower limit of the snake the central By early February the magnitude of Japan’s banks of Sweden, Denmark, and Norway current-account surplus was attracting inter­ therefore continued to intervene, principally national attention. Statements by Japanese through sales of dollars in the market. Never­ government officials, as well as by economists theless, these pressures persisted, leading ulti­ and officials abroad, had already focused on mately to Sweden’s withdrawal from the snake the need for global adjustment of currentand to a further realignment of the remaining account imbalances. In addition, the press currencies late in August. reported that some countries were taking steps to limit imports of specific Japanese products. In this environment dealers moved to lengthen yen positions, and commercial leads and lags shifted more heavily in Japan’s favor on ex­ JAPANESE Y EN pectation of a further rise in the yen. As a By early 1977 Japanese exports were again result, the yen advanced strongly, breaking rising strongly as a result of the reacceleration through the 280-yen level following the March of economic growth in the United States and 19-20 weekend meeting between Prime Minis­ buoyant demand elsewhere for Japanese ter Fukuda and President Carter. Further pub­ products. However, demand within Japan re­ lic statements by Japanese officials assured mained generally weak. Business investment the market that the authorities would continue was particularly sluggish as Japanese indus­ to intervene only to counter erratic fluctua­ trialists, still trying to come to grips with the tions in the exchange rate. Consequently, the severe dislocations of recent years, viewed the yen was bid up further, to as high as $0.003700 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 807 (270.3 yen) by April 12, even as the Bank of while U.S. short-term interest rates had Japan intervened increasingly forcefully. leveled off. Thus, as the yen began to move up With the yen now at a 3-year high, dealers again, the market came to the view that the became increasingly cautious. At that time, liberalization of exchange restrictions would the U.S. Customs Court ordered the Treasury permit larger inflows of capital to Japan. to impose import duties on Japanese elec­ Against this background, the OECD meet­ tronic products (a decision that was appealed) ing and subsequent communique on June 24 and the British Government imposed a provi­ provided the catalyst for a renewed surge in sional tariff on certain types of steel from the yen rate. Reports that the finance minis­ Japan. Moreover, the boost of the Japanese ters had agreed that countries with currenteconomy provided during the first quarter by account surpluses were ready to see an ap­ the buoyant export sector had failed to spark a preciation of their currencies in response to broadly based and self-sustaining recovery. underlying market forces triggered an im­ Consequently, when the Bank of Japan mediate demand for yen. Subsequent state­ acted to provide further impetus to the econ­ ments by government officials in the United omy by cutting the discount rate, for the States and Japan were interpreted as confirm­ second time in 2 months, to 5 per cent, effec­ ing this view. In addition, rumors circulated in tive April 19, dealers began to take profits on the Tokyo market that Japan might accept the their yen positions. The subsequent lowering U.S. Treasury’s suggestion at the OECD of short-term money market rates and com­ meeting and sell its interest earnings on exist­ mercial bank prime rates reduced incentives ing reserves in the exchanges. for further short-term flows into Japan. Com­ Propelled by professional and commercial mercial leads and lags were reversed, and demand from around the world, the yen con­ Japanese borrowings abroad tapered off. tinued to advance through late June and early Thus, the yen eased to as low as $0.003593 July to as high as $0.003800 (263 yen) on July (278.3 yen) on April 26, while the Bank of 11. By that time, however, Japanese busi­ Japan sold dollars to moderate the decline. nessmen were expressing concern over the The yen firmed slightly ahead of the May 7-8 rise in the rate. Moreover, the Bank of Japan London summit. Thereafter, with U.S. money had re-entered the market to purchase a sub­ market rates now having risen somewhat, the stantial amount of dollars to check a further yen settled back in subdued trading through sharp appreciation of the yen. Thereafter, the late May. yen rate settled back in quieter trading to In June the Japanese Finance Ministry an­ $0.003754 (266.4 yen) by the month-end, for a nounced a gradual liberalization of Japanese net rise of 8 per cent over the 6-month period exchange controls governing flows both into and 11% per cent from its lows of last Decem­ and out of Japan. With respect to inflows, the ber. Japanese official reserves rose by some authorities eased limitations on conversions of %\XA billion to a level of nearly $18 billion from foreign funds and increased the accessibility of the end of January to the end of July. the Japanese money market to foreign inves­ tors. With respect to outflows, controls were lifted on short-term overseas lending by CA NAD IAN DO LLAR Japanese banks and Japanese resident pur­ chases of foreign currency bonds. The amount Throughout 1976 Canadian economic policy of foreign currency that Japanese tourists may had been directed at curbing inflationary take abroad was raised. Also, regulations gov­ pressures, while permitting expansionary erning foreign bond issues in Tokyo were forces to work through the economy gradu­ liberalized. Initially, the market’s response to ally. By early 1977 broad monetary and fiscal the changes in capital controls was muted. But restraint, together with a wage-price control by mid-June Japanese interest rates had begun program, had helped to bring the underlying edging back up from the lows reached in May rate of inflation down toward the declared Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

808 Federal Reserve Bulletin □ September 1977 target of 6 per cent. But opposition to the dollar, and market professionals built up sub­ government’s wage-price program was stantial short positions against the currency. gathering strength in both business and labor Concern that the government’s April 1 budget circles, and the immediate prospects for a would be more expansionary to address the further reduction in the inflation rate were unemployment problem and publication of clouded by sharply rising food prices. private forecasts suggesting a sharply lower At the same time, economic recovery in Canadian dollar rate magnified the selling Canada had come to a virtual standstill. As a pressure even more. Consequently, the result, the rate of unemployment had begun Canadian dollar dropped 4 per cent, from to edge up again, particularly in areas like $0.9825 at the end of January to as low as Quebec and the Maritime Provinces. $0.9430 by April 1. The Bank of Canada Moreover, the growth in monetary aggregates intervened on both sides of the market to had fallen below the Bank of Canada’s targets maintain orderly trading conditions, with offi­ and short-term interest rates were progres­ cial reserves declining by $585 million during sively lowered, narrowing the favorable February and March. interest rate differential relative to the United In April market pessimism lifted somewhat States. Successive cuts in the Bank of Cana­ as it became clear from the Federal budget da’s discount rate to 8 per cent by February 1 that the government was not significantly were viewed as confirming the downtrend in loosening the restrictive tone of fiscal policy. Canadian short-term interest rates. By this time, too, Moody’s Investors Service In addition, the election last November of a had announced that it was maintaining its Separatist Party government in Quebec com­ current rating on Quebec bonds. In the wake mitted to establishing independence for the of that announcement, indications of a pick­ French-speaking province raised doubts up in foreign borrowings by Canadian pro­ about the receptiveness of new Canadian vinces and public authorities began to bond issues, particularly those of Quebec, in emerge, including a $300 million credit raised international capital markets. Foreign place­ by the Province of Quebec in the Euro­ ments had been expected to reach levels that currency market. would more than offset Canada’s continuing In addition, figures were released showing current-account deficit of some $4 billion per a strong trade surplus for Canada in the first annum. But in early 1977 the two major quarter, as Canadian exports benefited from bond-rating agencies in the United States the vigorous expansion of the U.S. economy. were reassessing their evaluations of certain Thus, the Canadian dollar market gradually Quebec borrowers. In the interim, some came into better balance. The spot rate edged scheduled Canadian issues in the New York up to trade narrowly around $0.9535 through bond market were either withdrawn or post­ mid-May. The Bank of Canada therefore op­ poned. With the prospects for conversions of erated less heavily than before, taking in dol­ borrowing proceeds correspondingly scaled lars on balance as reflected in the $137 million down, the Canadian dollar became vulnerable reserve increase during April-May. to adverse swings in market sentiment. During the remainder of the period, how­ In this unsettled market atmosphere, the ever, underlying concerns over Canada’s Canadian dollar, which had already dropped political outlook and economic performance some 4lA per cent in just 3 months, again dominated market psychology. Market partic­ came on offer in late January and then fell off ipants followed closely the debate over the sharply during February. In the absence of issue of Quebec separatism. At the same any sizable conversions of foreign issues by time, with the unemployment rate still hover­ Canadian borrowers, the decline met little re­ ing around 8 per cent, the market expected sistance in the market. Thus, the downslide the Canadian authorities to adopt more quickly accelerated as commercial leads and stimulative policies even though inflation was lags gradually shifted against the Canadian starting to pick up again. Interest rate differ­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 809 entials favoring Canada had by then nar­ the peso. Nevertheless, the reversal was in­ rowed significantly following another complete, as many market participants Vi-percentage-point cut in the Canadian dis­ awaited firmer evidence of improvement in count rate and the run-up of short-term U.S. the underlying situation. By early February interest rates in early May. Moreover, esti­ the peso had settled at around $0.0450 in New mates of the volume of new Canadian issues York, some 44 per cent below the prefloat abroad were scaled down. level. In this atmosphere a gradual build-up of Coming into the spring, Mexico’s economic professional selling, combined with the end- indicators showed that the painful process of of-June clustering of royalty and debt service adjustment was under way. The burst of in­ payments to nonresidents, pushed the spot flation of late last year, due in part to the rate down to $0.9425 where it traded some­ sharp decline of the peso, was tapering down. what unsteadily through mid-July. In late July Imports were at a lower level than before the the Canadian dollar again came on offer. By peso depreciation, reflecting largely a con­ that time, U.S. short-term interest rates were traction of industrial production and a slow­ beginning to rise. Moreover, on July 25, the down in public investment spending. Canadian Government indicated that its 6 per At the same time, export receipts were cent per annum target for inflation apparently rising in response to the speed-up of growth would not be met. In a renewed burst of in the United States, the increasing flow of commercial and professional selling, the spot Mexican oil production into world markets, rate fell to just above $0.9350. On balance, and higher coffee and other agricultural prices the Canadian dollar declined by some 4% per abroad. As a result, Mexico’s trade and cent between the end of January and the end current-account deficits narrowed markedly, of July, thereby extending the decline that reducing the need for new international bor­ had begun late in 1976 to 9 per cent. Over the rowing by Mexican entities. With the market 6 months, Canadian reserves had declined by thus in better balance, the peso continued to a net $670 million. move narrowly. The Bank of Mexico liq­ uidated at maturity the $150 million drawn under the swap line with the Federal Reserve in November 1976. In April it repaid the remaining $150 million in drawings under the M EXICAN PESO Exchange Stabilization Agreement with the By early 1977 Mexico was beginning to re­ U.S. Treasury. cover from the financial crisis of the previous Through the spring and early summer, the autumn, which had resulted in a precipitous Mexican authorities reinforced the stabiliza­ drop of the peso in the exchange markets. tion program by means of a series of financial Following the inauguration of President and administrative reforms to improve the Lopez Portillo in December, the new admin­ efficiency of the banking system and to istration sought to revive public confidence, strengthen monetary control. In April the pledging to reduce the government deficit and structure of differential reserve requirements to encourage the growth of the private sector. was simplified, with the effect of lowering the An important agreement that limited the rise net reserve requirement and providing the in wages in 1977 was struck with the trade commercial banks with increased lending ca­ unions. The Mexican authorities also ratified pacity. the agreement made in October 1976 with the In May the previous system of adminis­ IMF that could provide Mexico with more than tered interest rates was replaced by rate ceil­ $600 million in credits over a period of 3 years. ings, which were set above the earlier levels, These initial efforts were welcomed by the and the Bank of Mexico pledged to seek to business and financial community in Mexico encourage interest rate levels compatible with and abroad, leading to a reflux of funds into underlying economic forces. In July the au­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

810 Federal Reserve Bulletin □ September 1977 thorities began to introduce a program in industrial production was beginning to revive which companies would be able to borrow and exports remained strong. Moreover, a pesos from Mexican commercial banks scaling-up of estimates of Mexico’s proven oil against the collateral of an interest-bearing reserves strengthened expectations that rising dollar deposit with the lending bank. The oil exports would substantially improve central bank would impose a 100 per cent Mexico’s current-account position. reserve requirement on this deposit while re­ As investor caution gradually receded, new discounting the peso loan. This program was Mexican foreign borrowings linked to the de­ thus a means of expanding credit to the pri­ velopment of oil resources were well received vate sector and at the same time replenishing in international capital markets. Thus by the international reserves. end of July the peso held at $0.0437 for little net Meanwhile, although market concerns over change over the 6-month period. Reflecting the outlook for the peso surfaced from time to the improving sentiment for the peso during time, the exchange rate held fairly steady. By that time, the discount on 3-month forward summer, Mexico’s economic performance pesos in New York narrowed from some 37 continued to show signs of improvement, as per cent to 20 per cent. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

811 Statements to Congress Statement by Henry C. Wallich, Member, grown at a much slower pace than global Board of Governors of the Federal Reserve current-account deficits. Consequently, a System, before the Subcommittee on Interna­ major portion of the increase in these deficits tional Finance of the Committee on Banking, has been financed through private capital Housing and Urban Affairs, U.S. Senate, markets ^particularly banks. The rapid change August 29, 1977. in the size and composition of external bor­ rowing has given rise to concern about the I appreciate this opportunity to present the ability of some borrowing countries to con­ views of the Board of Governors of the Fed­ tinue servicing their external indebtedness and eral Reserve System before your subcommit­ about the corollary increase in risk for private tee on recent growth of international indebt­ lending institutions. edness and some of the possible implications of this growth. In this testimony, I shall focus primarily on: (1) the major characteristics of D ebt to Banks the growth in international indebtedness and Data on private bank foreign lending recently its potential associated risks, with special ref­ have been improved, although information on erence to developing countries, (2) new the current level of external indebtedness of sources of financing for future balance of many countries is still incomplete. According payments needs of deficit countries, and (3) to figures compiled by the Bank for Interna­ improvements in the assessment of country tional Settlements (BIS), total short- and long­ creditworthiness and in the supervision of term commercial bank claims on countries U.S. bank lending to foreign countries. other than the Group of Ten (G-10) major industrial countries and offshore banking cen­ ters reached $193 billion at the end of the first quarter of 1977, an increase of $44 billion or 30 DIM ENSIO NS OF IN D EBTED N ESS per cent from a year earlier. During the same Recent large increases in global external in­ period, total U.S. bank claims on the same debtedness are in part traceable to the major group of countries rose by $18 billion to $78 oil-price increases in 1973 and 1974 and the billion, or also a 30 per cent increase. (The associated need for many developed and de­ share of U.S. bank claims in total claims on veloping countries to finance the resulting these countries is overstated by these statis­ large expansion in their current-account def­ tics since the BIS data do not include claims icits. But external indebtedness of many de­ held by non-U.S. bank branches operating in veloping countries, in particular, has ex­ non-G-10 countries.) panded also because they borrowed heavily during the commodity boom of the early Grounds for Confidence 1970’s to launch ambitious new develop­ ment programs and later, to sustain these It should be observed, in the first place, that programs in the face of reduced export rev­ world trade has increased at a rapid rate in enues during the 1974-75 recession. recent years, although at a slower rate than the The flow of official financing, for both bal­ growth in recorded external indebtedness. As ance of payments and aid purposes, has a result, debt service ratios (the ratios of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

812 Federal Reserve Bulletin □ September 1977 interest and amortization payments to ex­ Eastern bloc countries, whose total borrow­ ports) hardly deteriorated in the aggregate ings from banks are substantially less than over this period, although some deterioration those of non-OPEC developing countries and may still lie ahead. Furthermore, these capital where the involvement of U.S. banks is rela­ flows served to sustain productive investment tively small, also have reduced somewhat in the recipient countries, which otherwise their aggregate trade deficit and related exter­ might have dropped significantly in the face of nal financing needs. In contrast, some smaller world recession. These developments were developed countries have increased their rate made possible by the great expansion of inter­ of external borrowing to finance expanding national capital markets, especially in the form current-account deficits. of bank credit. It is important to recognize that much of There are also substantial grounds for con­ U.S. international bank lending has been fi­ fidence concerning the recent increase in nanced through deposits and other funds from international indebtedness, particularly with non-U.S. sources. In fact, the United States respect to non-OPEC (Organization of Petro­ itself is currently a net borrower of foreign leum Exporting Countries) developing coun­ funds as evidenced by a net inflow of private tries whose total external indebtedness has and official capital in our international transac­ been estimated at between $140 billion and tions. $180 billion at the end of 1976. Through a combination of improved export earnings and a slower growth of imports, non-OPEC de­ NEW FIN A N C IN G FACILITIES veloping countries reduced their currentaccount deficits in the aggregate by about $12 Despite recent improvements in the interna­ billion in 1976. Although their aggregate deficit tional debt situation, the need to finance in 1977 is expected to remain virtually un­ current-account deficits will remain large at changed from the approximately $26 billion least until the OPEC surplus is significantly deficit in 1976, the distribution of this deficit reduced. Recognition of this fact gave impetus among debtor countries is expected to be more to the Witteveen Facility, which Under Sec­ in keeping with these countries’ financial retary Solomon has discussed in detail with strength. External credits arranged for non- you. Although commercial banks have pro­ OPEC developing countries in the first half of vided large amounts of additional financing in 1977 only moderately exceeded the volume of recent years, increases in other sources of credits arranged for the same period a year financing are desirable for several reasons. earlier and were sharply lower than in the Banks have tended to lend to industrial and second half of 1976. higher-income developing countries, whereas A significant portion of recent borrowing by many middle- to lower-income developing non-OPEC less developed countries (LDC’s), countries have had to rely mostly on official moreover, may have served the purpose of sources of development aid and balance of building up international reserves to meet fu­ payments financing to cover their deficits. ture needs. In fact, the official international In addition, developing countries have need reserves of six major non-OPEC LDC for long-term capital that cannot be met by borrowers—Argentina, Brazil, Mexico, the banks. Philippines, South Korea, and Taiwan—that Some banks may have reached prudent account for three-fourths of total claims of limits in extending credits to individual coun­ U.S. banks on all non-OPEC developing coun­ tries and may be reluctant to increase their tries increased in 1976 by an amount equal to exposure in those countries further, although about two-thirds of the Euro-credits arranged they may consider loans designed to achieve for them in the same period. Their reserves broader diversification as still appropriate. appear to have risen substantially further in Moreover, some countries have reached the first half of 1977. levels of debt where further increases in bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 813 debt appear feasible only if accompanied by maturities more suitable to prevailing condi­ improved fiscal and monetary policies. Some tions in those countries. countries have spontaneously adopted such Moreover, these institutions, with special­ policies—often followed by a notable im­ ized staffs and intimate knowledge of develop­ provement in their balance of payments. Some ing countries, can provide technical assistance countries have taken appropriate measures in and influence the formulation of sound projects connection with International Monetary Fund and development programs in ways not avail­ (IMF) standby arrangements. able to commercial banks. Commercial banks are not in as good a These institutions also finance projects position as international agencies to influence yielding long-run benefits to borrowing coun­ the policies of countries suffering from cur­ tries that fall beyond the normal scope of rent-account imbalances to bring about needed private capital markets. adjustment through improved economic and financial policies. International lending agen­ cies can more appropriately exert such a con­ Cofinancing structive influence in conjunction with their Cofinancing is one new technique for coopera­ lending activities. tion between the World Bank and regional lending institutions, on the one hand, and private banks, on the other hand, that merits Expansion of IM F Resources careful attention as a means of channeling In this regard, agreement on the IMF additional financial resources to developing Supplementary Financing Facility (Witteveen countries. Cofinancing encourages private Facility) is a most encouraging development banks to participate in the financing of proj­ supplementing the increase in IMF quotas ap­ ects in developing countries by giving them proved by the Congress last fall and expected to protection through cross-default clauses and become effective shortly. With substantial in­ providing them access to information that is creases in its resources, the IMF will be better available to these international lending institu­ able to assist countries to meet their balance of tions regarding the viability and risk as­ payments needs. Moreover, these resources sociated with proposed projects. Such infor­ will lend the Fund’s views greater force with mation is often very difficult or expensive for members who in the past may have been the commercial banks to develop on their reluctant to submit to IMF conditions because own. Moreover, countries borrowing through of the small amount of credit available to them cofinancing arrangements may obtain funds on from this source relative to their financing more favorable terms, particularly with re­ needs. The Board of Governors of the Federal spect to maturities. Reserve System urges the Congress to give Another noteworthy recent development sympathetic and prompt attention to the legis­ has been the reluctance of commercial banks lation approving the U.S. contribution to the to provide additional financing to countries new IMF facility when it shortly comes before with serious balance of payments problems in you. the absence of assurances that the borrowing country is following sound economic policies provided under an IMF standby arrangement. Expansion in Thus, some countries are finding that IMF Resources of Other approval of their economic and financial INTERNATIONAL LENDING AGENCIES policies through a standby arrangement is be­ Proposed increases in resources for the World coming a precondition for maintaining their Bank group and for the regional development access to private capital markets. This de­ banks should enhance the capacity of these velopment has been salutory in reducing the institutions to meet the longer-run capital possibility that bank lending could frustrate needs of developing countries on terms and Fund efforts to encourage countries to adopt Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

814 Federal Reserve Bulletin □ September 1977 better stabilization policies. The Fund is also a consequence of the rapid expansion in inter­ in a position to supply information to private national bank lending in recent years, banks lenders within the limits imposed by the confi­ now hold a growing proportion of the external dentiality of its relations with member coun­ debt of a larger number of borrowing coun­ tries. There is no indication, however, that the tries, often in the form of syndicated credits. Fund would be prepared to become directly In the event that severe debt problems should involved in evaluating or approving private precipitate debt renegotiations for any of these loans. countries, care will have to be taken that private and official creditors receive equitable treatment. While governments should avoid exerting pressure on private banks to influ­ DEBT RENEG O TIATIO NS ence the outcome of the banks’ negotiations Despite the somewhat improved outlook for with debtor countries, official debt relief many countries that have incurred large in­ should not be looked to as a bailout for private creases in external indebtedness in recent banks. years, some individual countries may en­ counter difficulties in servicing their external Generalized D ebt Relief debt and may require some refinancing or rescheduling. This topic has been covered in Some developing countries have advocated greater detail in Under Secretary Cooper’s the idea of generalized debt relief or automatic testimony and I will only add a few general criteria for debt rescheduling as a method of observations. dispensing aid. Such generalized debt re­ scheduling is highly undesirable. It would, for one thing, be certain to reduce the access of Official Rescheduling developing countries to private external capi­ Reschedulings of debts of governments to tal by calling into question their future other governments have taken place periodi­ creditworthiness. Furthermore, proposals for cally since World War II under Paris Club and generalized debt rescheduling, if implemented, similar arrangements. Since 1956 there have would prove very inefficient economically been close to 40 international agreements pro­ since the aid they imply would be channeled viding debt relief for roughly a dozen coun­ on the basis of past borrowing rather than tries. These exercises, which have been con­ to countries with the greatest current needs. ducted under a case-by-case approach, have Finally, such a mechanism would create disin­ generally aimed at encouraging debtor coun­ centives to the pursuit of economic and tries to undertake measures to reduce the financial policies designed to promote eco­ underlying sources of their difficulties while nomic stability and the most efficient utiliza­ providing debt relief that would enable them to tion of resources. move toward financial recovery and permit a resumption of normal capital inflows. Private debts usually have not been rescheduled in ASSESSM ENT OF this context, in part because the amounts CO UNTRY RISK involved have in the past been relatively small compared with official claims. Let me turn next to the problem of the assess­ ment of creditworthiness of individual borrow­ ing countries. Despite the rapid growth and Private Rescheduling current size of their international lending, U.S. Workouts of debt to private creditors have banks’ loss ratios on international credits have been much more infrequent and have tended continued substantially below loss ratios on to take the form of refinancing rather than domestic credits. We know, however, that rescheduling of existing debt. Nevertheless, as past history may be a poor guide to the future. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 815 There are risks to be guarded against. Con­ tions, have developed considerable knowledge sequently, the Federal Reserve has been ac­ about and expertise on individual countries. If tive in improving the flow of data needed by some of this factual information, particularly lending banks to assess creditworthiness of of the kind contained in their country reviews, international borrowers and has been review­ were to be made available to the private ing better ways to incorporate the concept of market on an up-to-date basis, it would repre­ country risk into the supervisory process. sent an important contribution toward improv­ The Federal Reserve has taken several steps ing risk evaluations. Such sharing of informa­ to provide new or improved sources of data tion must be done in a way, however, that useful for assessing country risk. would not reveal sensitive material and judg­ As part of a data-gathering operation spon­ ments, or reduce the explicit and frank nature sored by the BIS, the Federal Reserve con­ of the discussion and analysis. Otherwise, the ducted a special survey of foreign lending by usefulness of such reports for the countries U.S. banks at the end of 1976, which provided and official lending institutions themselves for the first time information on maturity might be impaired. structure, guarantee status, and commitments to lend by country. It is anticipated that the BIS effort will be repeated in December 1977. Federal Reserve System Committee The Federal Reserve is also cooperating on Foreign Lending with other U.S. bank regulatory agencies in The Federal Reserve System Committee on collecting similar information on U.S. banks’ Foreign Lending is considering the treatment country exposure as of June 1977. I should of country risk in bank examinations. As part also note that in an ongoing revision of a of its work, the Committee has conducted an number of Federal Reserve and Treasury re­ informal survey of the methods used by major ports received from banks, special attention U.S. banks to define, monitor, and analyze has been given to improving the usefulness of country exposure. That survey indicated that international data derived from these reports. while U.S. banks differ somewhat in their In addition to the improvement in banking approaches to these questions, the major U.S. statistics, the BIS, at Chairman Burns’ sugges­ banks that are active in international lending tion, is developing a list of information that have well-developed systems of country risk borrowing countries would be encouraged to analysis. Moreover, these banks are devoting provide to commercial banks, and the banks considerable resources to improving their would be encouraged to ask for, as an impor­ country analysis. tant step in loan negotiations. Work is now Judging the degree of risk attached to going forward in examining what types of foreign borrowers and making effective use of information are most in need of improvement this judgment present problems for both in order to serve banks in evaluating country banks and supervisory authorities. While it is risk. More complete data on the amount of important to delineate problem areas to banks external borrowing by the private sectors of in the examination process, bank regulators individual countries should be one useful out­ need to be sensitive to the fact that admonish­ come of these efforts. ments to banks can result in damages to the creditworthiness of borrowing countries. As a possible way of dealing with this potential Information from problem, the Federal Reserve is exploring a International Lending A gencies supervisory approach that would focus on the International lending agencies could also make degree of country concentration of foreign a contribution to improving the flow and qual­ loans in portfolios of individual banks, and on ity of economic and financial information on the quality of information possessed by banks individual countries. The IMF and the World in assessing the degree of risk attached to their Bank, as well as regional lending organiza­ international loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

816 Federal Reserve Bulletin □ September 1977 stems from an effort to avoid losses. Whatever PROPOSALS FOR its purpose, speculation that leads to greater LIM ITING PAYM ENTS IM BALANCES stability in exchange rates should not be dis­ In his statement announcing these hearings, couraged. The best means of achieving stable Senator Stevenson has noted several possible exchange rates is the pursuit of monetary and methods by which international payments im­ fiscal policies that contribute to domestic balances, which have given rise to the large stability. accumulations of international debt over the past several years, might be reduced in the future. Trade Liberalization A smoother, more effective adjustment pro­ cess will also require that all countries avoid Economic and Financial Policies protectionist trade policies and restrictions An essential first step in correcting imbalances that lead to global economic inefficiency and is to ensure that countries with large balance frustrate the adjustment process. Protec­ of payments deficits move to adopt sound tionism not only inhibits countries in deficit monetary, fiscal, and balance of payments from expanding exports in order to reduce policies. An important mechanism for en­ their current-account deficits but, in the form couraging countries to pursue policies that of capital controls, protectionism can also facilitate adjustment is the conditionality at­ retard movements in foreign exchange rates tached to drawings under IMF standby ar­ that may be necessary to achieve and sustain a rangements. And, as noted earlier, a substan­ better global payments position. tial increase in IMF resources should enhance the Fund’s leverage in encouraging better ad­ justment policies. Conclusion In summary, the surge in external country indebtedness that has accompanied a large Exchange-Rate Folicies increase in world payments imbalances since It should be recognized that realistic exchange 1973, while attracting substantial attention, rates are a necessary ingredient in balance of does not seem to pose any imminent threat to payments adjustment policies. Under the cur­ the stability of the world economic and financial rent exchange-rate regime, the IMF is charged system. We must nevertheless take measures with the responsibility for surveillance of indi­ to meet evolving situations lest the potential vidual countries’ exchange-rate policies to sources of instability that exist eventually discourage the maintenance of exchange rates develop into real threats. The Federal Reserve, at variance with underlying economic and in exercising its supervisory role, must financial conditions. keep in mind both the necessity of a sound Substantial official intervention and capital and stable U.S. banking system and the market controls both tend to result in ex­ positive role our banks play in meeting the change rates different from those that would financing needs of other countries. The Fed­ be determined by basic market forces. Some eral Reserve will also maintain an active role official intervention may reflect a desire on the in seeking greater cooperation between banks part of authorities to counteract private specu­ and official lending institutions and in support­ lation or, in some cases, may reflect commit­ ing new mechanisms that can contribute to ments to the IMF. However, it must be recog­ sound and lasting international economic growth nized that private speculation often merely and stability. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 817 Statement by J. Charles Partee, Member, banks requiring unusual amounts of supervi­ Board of Governors of the Federal Reserve sory attention—increased considerably over System, before the Committee on Banking, the 1975-76 period, and these included some of Housing and Urban Affairs, U.S. Senate, our very large banks. But continued favorable September 16, 1977. earnings flows, more conservative bank man­ agement policies, and effective supervisory I appreciate the opportunity to appear before oversight—all in the environment of an improv­ this distinguished committee today to present ing economy—combined to forestall any im­ the views of the Board of Governors of the portant adverse economic or financial de­ Federal Reserve System on S. 684 and S. 711. velopments that might have arisen. My testimony will develop the reasons for the Today it is apparent, even to the casual Board’s unanimous support for S. 711, the bill observer, that there has been a strengthening in that would establish a Federal Bank Examina­ the condition of the banking industry. The tion Council, and for its unanimous opposition number of banks experiencing increased dif­ to the creation of a Federal Bank Commission ficulties has declined dramatically over the past as proposed in S. 684. year or so. Total bank net income for 1976 rose The establishment of a Federal Bank Exami­ by more than 8 per cent from the year before nation Council, we believe, would represent a and was about 11 per cent above the 1974 level. constructive evolutionary step toward for­ The ratio of total bank capital to total assets malizing the existing cooperative arrangements improved to 7.15 per cent at year-end 1976 from among the Federal bank regulatory agencies. 7.11 and 6.86 per cent, respectively, in the two But in the Board’s judgment, complete cen­ preceding years. Banks also have buttressed tralization of bank supervision at the Federal their liquidity positions by adding greatly to level, as envisioned in S. 684, would constitute their holdings of liquid assets and by paying off an unnecessary, disruptive, counterproductive some money market sources of funds. In short, change. In the short run it would almost the financial position of banks has improved certainly produce confusion and significant markedly over this period. operating inefficiencies. And in the longer run The volume of assets classified by examiners it might adversely affect both the quality of remains higher than any of us would like to banking supervision and the performance of see, although indications from 1977 examina­ the banking industry. Such a restructuring, tions are that they are now beginning to de­ moreover, would tend to isolate bank super­ cline. But bankers and regulators both learned visory policy from the monetary policy func­ hard lessons from the experience of the reces­ tion, to the detriment of both. In short, the sion, and there is every prospect of con­ Board can find no compelling arguments for the tinued good progress in the reduction of proposed regulation of the Nation’s banks by a problem bank assets. The working out of single Federal agency that overcome the prac­ problem loans is a lengthy and laborious pro­ tical shortcomings and prospective loss of cess, so loan classifications are necessarily a policy integration that this approach entails. lagging indicator of banking conditions. The The Board’s position on these bills is improvement in financial ratios that I have founded on our belief that the banking system noted, however, leaves little doubt that the currently is in sound condition, which reflects Nation’s banking system has been coping suc­ in no small part the substantial efforts of both cessfully with its problems and is in a favorable the bankers and the bank regulators over the position to handle the credit needs of an last several difficult years. I make this state­ expanding economy. ment even though it is well known that some Against this record of achievement, it is not banks encountered serious problems during the clear to the Board why consolidation of the recent recession and that a few failed to weath­ three Federal bank regulators is now being er the storm. The number of banks on the proposed, for there appears to be no compel­ Federal agency “problem” lists—that is, ling reason to replace the present system with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

818 Federal Reserve Bulletin □ September 1977 one that is untried and unproven. The existing have worked better in some respects, and our structure of Federal supervision of the banking recent experience has helped identify areas of system has evolved over a very long period, needed improvement. The banking agencies dating from establishment of the Office of the have recognized these needs and are taking Comptroller of the Currency in 1863, the Fed­ appropriate steps to improve supervisory per­ eral Reserve System in 1913, and the Federal formance. We are now engaged in a re-evalua­ Deposit Insurance Corporation in 1933. The tion and updating of examination procedures division of duties and responsibilities among and other supervisory techniques, about which these agencies can seem confusing to the I will comment later in more detail. It must be uninitiated and, at times, even to the well recognized, however, that there will always be informed. But this structure of bank regulation some banks that require special supervisory has worked reasonably well, as evidenced by attention. Making loans is an inherently risky the stability of the U.S. banking system over business, and banks must accept a measure of the last several decades. During the recent risk if they are to play their part in financing a period of severe economic and financial dynamic growing economy. It should not be the strains, the Federal bank supervisors, working purpose of bank supervision to prevent such together, were able to arrange takeovers of functional risk-taking, but rather to guard almost all of the failing banks by healthy ones, against unusual or excessive risk concentra­ thereby permitting uninterrupted service to tions and banking practices that may under­ bank customers. Public confidence in the bank­ mine an institution’s viability. The bank super­ ing system has been maintained in no small part visory agencies must also be alert to the spread because of the combined efforts of the three of problems from one institution to another Federal bank regulatory agencies. and must strive to prevent any large-scale These agencies have been criticized from adverse effects on either the local or the time to time for not anticipating the banking national economy. Viewed from this perspec­ problems of the 1970’s and for failing to take tive, the Federal bank regulatory agencies have measures to avoid them. As with any event, the performed quite well. advantage of hindsight always provides a much Thus, before moving from the present struc­ sharper perspective on alternative courses of ture of Federal bank regulation to the single action that might have been taken. But I believe agency concept proposed in S. 684, the Board that decisive efforts were made by the Federal would urge the Congress to weigh carefully Reserve as soon as the prospective problems the potential for damage that could accom­ were clearly identified. Our actions have been pany such wholesale reform. There are a vari­ described to this committee in other testimony, ety of shortcomings and possible difficulties and I will not dwell on them here. But I would that we foresee. note for the record that, beginning in April First, it needs to be recognized that such an 1973, the Federal Reserve took steps to slow agency is unlikely to bring greater operating and discipline the unsustainable growth of efficiencies. Indeed, after reviewing the exist­ banking assets and liabilities. It employed ing structure of Federal bank regulation, the supervisory tools ranging from “moral sua­ Comptroller General concluded in congres­ sion” concerning the lending practices of in­ sional testimony early this year that a single dividual institutions to a “go-slow” policy agency would not provide any cost savings. regarding approvals for the expansion of bank Second, the creation of a single banking holding company and international activities. agency, whose mission is tied exclusively to a These measures did have an impact and helped single industry, would increase the risk that persuade many institutions to adopt more regulatory policy could be shaped to an undue realistic plans for expansion. In their absence degree by the special interests of the industry. the recession might well have taken a greater This has been a major congressional concern, toll on the Nation’s banks. at least in other sectors. To be sure, the supervisory system could Third, with a single Federal bank super­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 819 visor, the banking industry could be more as called for in S. 684, would work adversely exposed to the possibility of extreme shifts in on the Board’s effectiveness in carrying out its the regulatory climate. Continuous consulta­ monetary policy function. We also believe that tion and cooperation among the three inde­ the quality of bank regulation would suffer. pendent Federal banking agencies, on the Our view continues to be that the conduct and other hand, provides a system of checks and formulation of monetary policy and the super­ balances that tends to attenuate marked shifts vision and regulation of banking are so closely in regulatory policy with their potentially de­ related functionally that they should not be stabilizing ramifications. determined in isolation. If supervisory stand­ Fourth, centralization of the bank supervi­ ards for bank performance are independently sory function could have the undesirable effect set, there is the very real risk that bank of suppressing innovation and healthy compe­ regulation could frustrate the objectives of tition in the industry. Since FDIC insurance is monetary policy. Above all, a recurrence of a virtual necessity in today’s environment, the situation of the mid-1930’s is to be creation of a single Federal agency would avoided, when overly conservative bank regu­ mean that practically every bank in the latory standards tended to inhibit needed ex­ country—whether nationally or State tensions of credit by banks and thus to slow chartered—would have to follow the the financing of economic recovery. guidelines set forth by that one supervisor, Although S. 684 would place a Board and the impetus to effect changes could be member on the Federal Bank Commission, stifled. our judgment is that this would not provide Fifth, there would undoubtedly be signifi­ adequate coordination with, or a sufficient cant transition problems associated with the depth of information to, the Board. All of the organization of a new agency. In the Board’s Board members are now involved on a con­ judgment, the Nation should not be needlessly tinuing basis with both monetary policy formu­ exposed to the risk of a discontinuity in bank lation and the setting of bank supervisory supervision while a new Federal bank regula­ policies. From this vantage point, the Board tory agency organized, grappled with the in­ gains direct knowledge about how changes in evitable administrative problems, and began monetary policy affect the condition of banks. to establish its operating rationale. And because of this dual responsibility, the Sixth, the proposed Federal Bank Commis­ Board members are well apprised of the im­ sion at the regional level would supplant many pact of changing banking supervisory policies of the regulatory functions now provided by on banking and financial markets and the the Federal Reserve Banks. The important implications for monetary policy. With a Fed­ role of these Banks in the supervisory process eral Reserve Board member on the commis­ is, I believe, often overlooked. They contri­ sion, it is true that information could be bute a depth of understanding of local and transmitted back and forth. If the new system regional economic, banking, and financial worked ideally, this would include not only conditions that is unlikely to be equaled by an data on statistical trends but also qualitative agency devoted solely to bank regulation. And insights into new banking practices and proce­ I find it doubtful that the authority of a re­ dures. Even so, the advantages currently gional administrator of the proposed Commis­ gained from the deliberations of seven persons sion would often approach that of a Federal with first-hand knowledge in all of the relevant Reserve Bank president, who deals with local areas would be lost. banking institutions over a wide-ranging vari­ The benefits that flow from integration of ety of issues and has responsibilities on the the monetary policy and bank supervisory and national credit scene as well. regulatory policy functions may be illustrated Finally, and most importantly, the Board by citing a few of the situations in which such remains gravely concerned that the removal of integration is needed. For example, careful its supervisory and regulatory responsibilities, attention must be given to the financial Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

820 Federal Reserve Bulletin □ September 1977 strength of banks during periods when mone­ obtained only from a separate bank regulatory tary restraint is being applied. In such periods agency, the Federal Reserve might find it interest rates typically are high, by historical difficult to act quickly and appropriately to standards, and trending upward. This can re­ forestall a developing regional or national fi­ sult in substantial declines in the market value nancial squeeze. of certain bank assets—among them long-term Finally, the supervision and regulation of securities and mortgage loans—and place a international banking activities is an area that premium on the maintenance of ample ready requires especially close coordination with liquidity. In addition, a restrictive monetary monetary policy. U.S. banks are active partic­ policy often requires relatively substantial ad­ ipants in foreign exchange markets and inter­ justments in certain sectors of the economy national lending, and these activities influence and in some local credit markets. As a result, foreign exchange rates, international capital bank loans in these sectors may be exposed to flows, and trade balances, all of which are of deterioration in quality. In implementing a direct concern to monetary policy. Also, Fed­ restrictive monetary policy, therefore, con­ eral Reserve monetary actions may affect in­ sideration of the likely impact on the condition ternational financial markets, and these effects of banks and other financial intermediaries is can have important implications for bank regu­ essential. lation and supervision, especially as they per­ Another source of potential difficulty in tain to the operations of the Nation’s largest periods of high economic activity is the tend­ banks. Through its contacts with foreign cen­ ency to accumulate large backlogs of unused tral banks and international institutions, the bank loan commitments—that is, promises to Federal Reserve has available more complete lend money on request—which are made international economic information than chiefly to business customers. During the would be likely for an agency whose sole early 1970’s, the bulge in bank loan commit­ responsibility is bank supervision. I cannot ments created problems for both monetary stress enough the importance of first-hand policy and bank regulation. It was clear that knowledge in this complex, critical area. the overhang of outstanding commitments was Just as bank supervision and regulation is slowing the restraining effects of monetary interrelated with the monetary policy and policy; and there was a danger that under credit functions of the Federal Reserve, so is it continued conditions of monetary restraint, strongly related to the deposit insurance func­ some banks might have insufficient liquidity to tion of the FDIC and the national bank char­ meet their commitments. Under those circum­ tering function of the Comptroller of the Cur­ stances, the Federal Reserve—with respon­ rency. Through cooperation and coordination sibilities for both monetary and bank regula­ among the three agencies, the examination tory policy—took the lead in exerting pressure and supervision of the Nation’s banks has on bankers to bring their commitment activity been divided so that each bank has only one under better control. primary Federal bank supervisor. Thus, dupli­ A traditional responsibility of the central cation of effort on the part of both the banks bank is to serve as a lender of last resort. and the agencies has been avoided, and a full While the purpose of this function is to cush­ exchange off information among the Federal ion the financial dislocation that might bank regulators has been promoted. threaten when general monetary restraint re­ The relationship of bank holding company duces the over-all liquidity of the economy, its supervision to the other functions of each of implementation involves actions to bolster the the three Federal bank supervisors is less well financial condition of individual banks—in defined. A single primary Federal bank hold­ particular their liquidity positions. In provid­ ing company supervisor is not always readily ing such support, the Federal Reserve draws identifiable. For example, a holding company heavily on the expertise provided by its staff may have several bank subsidiaries, each of of bank supervisors. If such expertise could be which is responsive to a different primary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 821 supervisor. Or it may have a variety of non­ companies for any signs indicating a deteriora­ bank affiliates, the supervision of which is not tion in condition. Early identification of poten­ readily integrated with the normal bank super­ tial problem organizations should aid in the visory process. System’s effort to give especially close super­ The Board therefore would urge the Con­ visory attention where it appears most war­ gress to maintain the bank holding company ranted. regulatory function in a single agency. Among In addition, I would note that the System the existing Federal bank supervisors, the has not hesitated to apply supervisory sanc­ central bank is best qualified to fill that role. In tions. In October 1974 the Board’s request for support of its monetary policy function, the cease-and-desist authority over bank holding System has insight into the operations of companies was granted by the Congress. domestic and international financial markets Since that time, 43 cease-and-desist orders and the workings of the economy generally. have been issued or written agreements Such information is vital to the effective negotiated, and 29 of these involved bank supervision of bank holding companies—and, holding companies. And of course there are in particular, to the regulation of nonbank literally hundreds of cases where bank holding affiliate activities at home and abroad. companies and banks, in response to super­ With respect to its regulatory functions, I visory criticism, have committed themselves think the record shows that the System has not in writing to take appropriate corrective ac­ been a complacent supervisor, either of tion. member banks or of bank holding companies. The Federal bank regulatory agencies have In testimony on S. 2298 before your Commit­ a long history of cooperation and coordination tee in December 1975, Governor Holland re­ on supervisory matters, and efforts are being ported the major steps that the Federal Re­ made to strengthen the ties. A recent de­ serve had taken in recent years. Since that velopment is the establishment in February of time improvements have been made in the this year of the Interagency Supervisory training program for System bank examiners. Committee. This new standing committee of Increased attention has been given to loan and agency officers will deal exclusively with bank credit analysis, as well as compliance with supervisory matters of a technical nature. The regulations. Special schools have been estab­ Supervisory Committee’s immediate mission lished for examiners in the area of consumer is to achieve coordination among the agencies credit statutes and regulations and in the com­ with respect to bank examination policies and plexities of holding company supervision and procedures. regulation. In addition, a new bank holding During this initial year, the Supervisory company inspection report is being developed Committee has developed—and the agencies in order to standardize the examination pro­ have adopted—uniform policies on the defini­ cess and to enhance the System’s ability to tion and identification of concentrations of identify and supervise those holding com­ credit. At the committee’s recommendation, panies that fail to act as a source of strength to the agencies agreed to a survey of the level their subsidiaries. Improvements are also and types of risk being taken by U.S. banks as being made in our examinations of foreign a result of their international lending. The branches and Edge Act corporations in order committee is also studying the feasibility of to better monitor and supervise the interna­ adopting a uniform bank rating system and a tional activities of these banking organiza­ uniform approach to the treatment of nonac­ tions. cruing loans. The Federal Reserve’s supervisory capabil­ S. 711 has our full support because it would ity is being augmented also by the develop­ build upon these existing cooperative ar­ ment of a computer-based surveillance sys­ rangements and would provide an evolu­ tem, which screens information collected tionary framework for more effective interac­ periodically from banks and bank holding tion and coordination among the three Federal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

822 Federal Reserve Bulletin □ September 1977 banking agencies. This bill, which closely bank supervisory agencies, that is to meet at parallels legislation that the Board proposed least twice a year with the council. This ar­ earlier this year, would require a Federal Bank rangement would foster more coordination Examination Council to focus on the matters with the State agencies, with the prospect of most in need of attention now—the develop­ developing uniformity in examinations on a ment of better and more uniform standards mutually cooperative basis by State and Fed­ and procedures for the examination of banks. eral agencies. The proposed council would conduct schools In the Board’s view, the council’s respon­ for examiners of all the Federal agencies, sibilities are modest but reasonable. which would also be open to enrollment by Moreover, in the fulfillment of these respon­ employees of State bank supervisory agen­ sibilities, significant progress could be made in cies. The council would develop uniform re­ a manner not disruptive to the continuing porting systems for banks, bank holding com­ performance of the three existing agencies. panies, and nonbank subsidiaries. The council Experience with the council might well lead to would also be authorized to make recom­ the conclusion that some further coordination mendations for uniformity in other supervis­ among or consolidation of certain functions of ory matters and would be provided with a the bank regulatory authorities would be de­ forum—through its annual reports—to pro­ sirable. But in that event, such a finding would pose legislative initiatives to the Congress. be based on a practical awareness of the These are all steps in the right direction. difficulties that would have to be overcome. In addition, the Board welcomes the provi­ The Board believes that it is much the wiser sion of S. 711 for participation by State bank course to proceed in this manner, on the basis supervisors. Section 7 of the bill provides that of demonstrated need, and that S. 711—the the council shall establish a liaison committee, Federal Bank Examination Council Act— composed of five representatives of State provides just the mechanism for doing so. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

823 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON JULY 19, 1977 Domestic Policy Directive The information reviewed at this meeting suggested that growth in real output of goods and services in the second quarter had been close to the pace in the first quarter, indicated by estimates of the Commerce Department to have been at an annual rate of 6.9 per cent. The rise in average prices—as measured by the fixed-weighted price index for gross domestic business product—appeared to have been somewhat faster than the annual rate of 6.5 per cent estimated for the first quarter, owing in large part to substantial increases in prices of foods. Staff projections suggested that the rate of growth in real GNP would be less rapid in the second half of 1977 than in the first and that it would slow somewhat further into 1978. The projections also suggested that the rate of increase in prices would moderate from that in the first half but would remain high. In the second quarter, according to the latest staff estimates for the expenditure components of real GNP, growth in personal con­ sumption expenditures had slowed appreciably from the high rate in the first quarter. Moreover, expansion in business fixed investment had been substantially below the rapid pace in the first quarter, reflecting recovery from strikes. On the other hand, residential construction activity had expanded very sharply, in part because of recovery from the effects of severe winter weather in the first quarter; State and local government purchases of goods and services had turned up; and the rate of business inventory accumulation had increased considerably further. Staff projections for the second half of the year were virtually the same as those made a month earlier. They suggested that growth in consumption expenditures would slow somewhat further and that the pace of expansion in residential construction would moderate. At the same time, however, it was expected that increases in Federal purchases of goods and services would be substantial; that growth in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

824 Federal Reserve Bulletin □ September 1977 State and local government purchases would be sustained at a high rate; that expansion of business investment would remain relatively strong; and that the rate of inventory accumulation would rise further, although by much less than in the first half. In June industrial production rose 0.7 per cent, following gains of 0.7 and 1.0 per cent in April and May, respectively. Much of the June advance was accounted for by increases in output of automo­ tive products—following 2 months of declines—and in production of business equipment and durable goods materials. Output of nondu­ rable consumer goods and of nondurable goods materials changed little. Over the period from March to June, when the over-all index rose 2Vi per cent, output of business equipment expanded about 5 per cent and production of consumer goods about Wa per cent. The rate of capacity utilization for the materials-producing indus­ tries remained near 83 per cent in June, compared with about 81^ per cent in March. For durable goods materials and nondurable goods materials, respectively, the rates were about 80V^ and %1Vi per cent in June, compared with 78 and 87 per cent in March. Expansion in employment moderated in June. Payroll employ­ ment in nonfarm establishments rose by 135,000 persons, less than half the average monthly increase in the preceding 5 months. Employment in manufacturing—after vigorous expansion earlier in the year—declined slightly in June, reflecting reductions in a number of nondurable goods industries. The unemployment rate rose from 6.9 to 7.1 per cent, reflecting an increase in the number of persons seeking part-time jobs—mainly teenagers and adult women. The civilian labor force continued to grow at a rapid pace. Since December 1976, when the unemployment rate was 7.8 per cent, the civilian labor force had risen by about \3A million persons. Teen­ agers and adult women accounted for about three-fourths of that increase. Personal income expanded considerably less in April and May than in the preceding 2 months when increases had been especially large owing to the rebound in wage and salary payments from the weather-reduced level in January and to large increases in transfer payments. Wage and salary payments rose about 1 per cent in both April and May, close to the average monthly increase for the first quarter. For June the employment statistics suggested a smaller increase in wage and salary payments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 825 Retail sales in June remained at about the level reached in March; however, the total for the second quarter was about 2 per cent above the first-quarter level. In June sales declined at general merchandise stores for the second consecutive month and fell sharply at apparel stores, but they rose appreciably at furniture and appliance stores and continued to expand at food stores. Sales of new automobiles— at an advanced annual rate of 11.8 million units—were close to the level of April and May and about 5 per cent above the average for the first quarter. The book value of inventories in manufacturing and trade rose sharply in May, and the rate of increase over the first 2 months of the second quarter was moderately higher than that for the first quarter. In manufacturing, the rate of increase over the April-May period was almost twice as fast as in the first quarter, and for nondurable goods industries alone it was more than three times as fast. The number of private housing units started in June had not been made public by the time of this meeting. In April and May starts were at an annual rate of about 1.9 million units—about 10 per cent above the average for both the first quarter of 1977 and the fourth quarter of 1976. Sales of new homes declined in May for the third consecutive month and were 16 per cent below the advanced rate for the first quarter. However, sales of existing homes rose in May to a near-record rate that was 7 per cent above the first-quarter average. New orders for nondefense capital goods were unchanged in May, after having expanded about 6 per cent on balance over the preceding 4 months. Shipments of such goods continued to change little in May, and unfilled orders rose further to a level nearly 4 per cent higher than at the end of 1976. Contract awards for commercial and industrial buildings—as measured in terms of floor space— fluctuated widely during the first 5 months of 1977, but the April- May average was about 7>Yi per cent higher than the average for the first quarter. As had been reported before the June meeting of the Committee, the latest Commerce Department survey of business plans suggested that in the third and fourth quarters of 1977 increases in spending for plant and equipment would be small—perhaps no more than the rise in prices for such goods. According to the survey, businesses would spend 12.3 per cent more for plant and equipment in 1977 than they had in 1976. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

826 Federal Reserve Bulletin □ September 1977 The index of average hourly earnings for private nonfarm produc­ tion workers rose at an annual rate of 3.7 per cent in June. The rate of advance over the first 6 months of 1977 was 6.7 per cent, compared with an increase of 6.9 per cent during 1976. Over the first half of 1977, however, relatively greater growth of employment in higher-wage industries and an increase in hours of overtime had resulted in a faster rate of advance in actual average hourly earnings than in the index, which is adjusted to exclude the effects of fluctuations in overtime in manufacturing and also the effects of changes in the proportion of workers in high-wage and low-wage industries. The wholesale price index declined in June, after having risen much less in May than in the preceding 3 months. Average prices for farm products fell sharply further in June, and those for processed foods also declined. As in May, average prices of industrial com­ modities rose appreciably less than in earlier months of 1977. The consumer price index rose 0.6 per cent in May—a little less than in April and the same as in March. Retail prices of foods increased 0.7 per cent in May—about half as much as in April— while commodities other than foods and services rose 0.4 per cent and 0.7 per cent, respectively. The average value of the dollar against leading foreign currencies declined by more than 1 per cent over the inter-meeting period, following more than a year of relative stability. Over the 4-week period, moreover, foreign central banks intervened in the exchange markets to purchase, on balance, a substantial amount of dollars. The downward pressure on the dollar intensified at the end of June when public statements by some government officials fostered market expectations that the currencies of countries with large surpluses in their current accounts would appreciate. Declines in the dollar, which occurred against almost all major currencies, were especially marked against the Japanese yen, the German mark, and the Swiss franc. The U.S. foreign trade deficit diminished somewhat in May from the high average during the preceding 4 months. In May imports of petroleum declined, and exports of agricultural commodities in­ creased sharply, reflecting chiefly a rise in exports of soybeans. Exports of nonagricultural commodities were virtually unchanged; since the third quarter of 1976 they had been stable, on balance, in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 827 association with only moderate expansion in economic activity in major industrial countries marked by sluggishness in capital invest­ ment. At U.S. commercial banks, growth in total credit slowed some­ what further in June and was slightly below the average for the first 5 months of the year. The slowing in June reflected declines in net acquisitions of Treasury and other securities. Growth of real estate loans accelerated to a near-record pace, and growth of most other major categories of loans was substantial. However, nonbank finan­ cial institutions reduced their outstanding bank loans, as they raised a record volume of funds in the commercial paper market. Business credit demands—which had fallen off in May— rebounded in June, apparently in part because of borrowing by corporations to finance a record amount of Federal income tax payments due at midmonth. Business loans at banks and the outstanding volume of commercial paper issued by nonfinancial corporations both expanded at relatively high rates. Over the first half of the year, growth in business loans (excluding bankers acceptances) and in outstanding commercial paper was substantially faster than over the fourth quarter of 1976. The narrowly defined money stock (M-l), after having risen at an exceptionally rapid rate in April and having increased little in May, grew at a moderate pace in June. On a quarterly-average basis, M-l grew at an annual rate of 8.5 per cent in the second quarter, compared with 4.2 per cent in the first quarter. Growth in the more broadly defined measures of money (M-2 and M-3) also was moderate in June. Inflows to banks of the time and savings deposits included in M-2 picked up somewhat, after having slackened for a number of months, and inflows to nonbank thrift institutions remained sizable. On a quarterly-average basis, M-2 and M-3, respectively, grew at annual rates of 9.2 and 10.0 per cent in the second quarter, compared with 9.9 and 11.3 per cent in the first quarter. At its June meeting the Committee had decided that operations in the period immediately ahead should be directed toward maintaining about the prevailing money market conditions, as represented by a weekly-average Federal funds rate of 5% per cent, provided that M-l and M-2 appeared to be growing over the June-July period at annual rates within ranges of 2Vi to 6V2 per cent and 6 to 10 per cent, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

828 Federal Reserve Bulletin □ September 1977 respectively. Throughout the inter-meeting period, incoming data suggested that over the June-July period M-l and M-2 would grow at rates within those ranges. Accordingly, the Manager of the System Open Market Account sought to maintain the Federal funds rate around 53/s per cent. In association with the stability in the Federal funds rate, market interest rates in general changed little during the inter-meeting period despite some increase in over-all credit demands. Rates on Treasury bills edged up—although the Treasury continued to re­ deem bills in its regular auctions—as the market apparently began to adjust to the anticipated near-term cessation of large redemptions. Changes in rates on private short-term instruments and on longerterm issues were small. Treasury public sales and redemptions of securities were about in balance during the inter-meeting interval. For the second quarter as a whole, the Treasury made net repayments of marketable securities of $5 billion, in contrast with net borrowings of $14 billion during the first quarter. It was anticipated that the Treasury would raise a substantial amount of new money in conjunction with its mid-August refunding of $3.3 billion of maturing securities held by the public; it was expected that the terms of the financing would be announced on July 27. In the corporate bond market the volume of new securities offered to the public increased in June, reflecting a relatively large volume of new issues by public utilities and financial concerns. For the second quarter as a whole, however, offerings were below the volume for the previous quarter, and those by industrial corporations were at the lowest level in more than 3 years. Offerings of State and local government bonds rose to a record in June, raising the second-quarter volume to an unprecedented $13.4 billion, following $10.7 billion in the first quarter. As in other recent months, demands for these securities were strong from propertycasualty insurance companies, commercial banks, and individuals— both directly and through municipal bond investment companies. The volume of mortgage lending remained large in June at commercial banks as well as at savings and loan associations. Estimates for the second quarter indicated an acceleration from the high rate for the first quarter. While issues of GNMA-guaranteed, mortgage-backed securities declined from the strong first-quarter Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 829 pace, net acquisitions of mortgages by FNMA expanded substan­ tially. Average interest rates on new commitments for conventional home mortgages continued to edge higher in late June and early July, and yields in the secondary mortgage market changed little on balance. In their discussion of the economic situation, members of the Committee agreed with the general outlines of the staff projections, which were described as presenting a fairly optimistic picture of prospective developments. Despite the broad consensus on the outlook, several members suggested that expansion in some sectors of demand might prove to be less strong than expected by the staff and that growth in real GNP was more likely to fall short of than to exceed the projected rates. With respect to the immediate situation, attention was called to the rate at which inventories had accumulated in some sectors. The view was expressed that a minor adjustment of inventories—similar to although smaller than the one in the latter part of 1976—had been under way for the past 2 months or so and had already affected production and employment in nondurable goods industries. It was observed that businesses appeared to adjust inventory imbalances more promptly now than they had in the past; that such minor adjustments tended to forestall the development of a need for major adjustment; and that the adjustment that appeared to be in process was healthy in that it would serve to make the business expansion more sustainable. A question was raised as to whether the staff projections for the very near term adequately reflected the adjust­ ment in inventories that appeared to be under way. Questions were also raised about the staff projections for sales of new automobiles and for residential construction. It was suggested that auto sales might be reduced from the advanced level of recent months by two influences: one, increases in prices, not only for domestic models but also for imports because of the substantial appreciations of the Japanese yen and the German mark against the dollar; and two, the high level of consumer debt. With respect to residential construction, two members felt that the expansion in that sector might slow sooner than projected; in support of this view, it was suggested that the rise in prices for new homes had diminished the ability of consumers to buy them. Despite the questions about certain aspects of the staff pro­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

830 Federal Reserve Bulletin □ September 1977 jections, a number of reasons were advanced for viewing the prospective course of economic activity with some confidence: The trend of retail sales was basically upward—even though sales had leveled off on a high plateau in recent months—and the minor inventory imbalance was being corrected; any falling off in sales of automobiles that might develop was likely to be accompanied—as often in the past—by more rapid growth in sales of consumer nondurable goods; the expansion in business capital expenditures was gaining momentum; and purchases of goods and services by State and local governments would be a source of increasing strength in over-all activity. It was suggested, moreover, that a gradual slowing of growth in real GNP toward its long-term trend was desirable as rates of resource utilization approached their practical limits. Although the outlook for plant and equipment expenditures was viewed as favorable, concern was expressed that the lag in growth of productive facilities so far in this business expansion might result in the development of pressures against available capacity while the unemployment rate was still relatively high. At the same time, it was noted that economists in general believed that the unemployment rate consistent with the goal of full employment was appreciably higher now than it had been some years earlier. The observation was made that the unemployment rate had remained comparatively high de­ spite the extraordinary growth in employment so far in this business expansion mainly because women—and to a lesser extent, teenagers—had entered the labor force in unusually large numbers. It was suggested that many women sought part-time jobs—in some cases because of the effects of inflation—and that even though businesses had been adapting to this change in the labor market, the increase in the number of part-time jobs available had been far from sufficient. Some members commented on pending legislation to increase the minimum wage. The view was expressed that an increase in the minimum tended to raise the whole structure of wages and that it had adverse effects on employment, particularly of teenagers, and on prices. Finally, some members of the Committee expressed concern about the possible effects of developments abroad on the U.S. economy. Specifically, they observed that in some major countries Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 831 the outlook for economic activity did not appear to be particularly strong and that continued sluggishness abroad had adverse implica­ tions for the U.S. trade balance, already heavily in deficit. At this meeting the Committee reviewed its 12-month ranges for growth in the monetary aggregates. At its April meeting the Com­ mittee had specified the following ranges for growth over the period from the first quarter of 1977 to the first quarter of 1978: M-l, 4Vi to 6V2 per cent; M-2, 7 to 9V2 per cent; and M-3, SV2 to 11 per cent. The associated range for growth in the bank credit proxy was 7 to 10 per cent. The ranges being considered at this meeting were for the period from the second quarter of 1977 to the second quarter of 1978. In the discussion of the ranges for growth in the aggregates over the year ahead, most members of the Committee expressed the belief that a small downward adjustment should be made. All but one of these members supported a proposal to reduce the lower limit of the range for M-l by V2 of a percentage point while retaining the existing ranges for M-2 and M-3; one member favored small reduc­ tions in the ranges for M-2 and M-3 as well as the ^-point decrease in the lower limit of the range for M-l. Other Committee members advocated more of a downward adjustment in the ranges; specif­ ically, they favored a reduction of V2 of a percentage point in both the upper and the lower limits of the range for M-l, and these members in general favored some decrease in the ranges for M-2 and M-3 as well. In support of the proposal to make some downward adjustment, several Committee members suggested that it would be desirable to take another step in the gradual process of bringing the longer-run ranges for growth in the monetary aggregates down to rates compatible with general price stability. Moreover, it was observed that the annual rate of growth in M-l from the first to the second quarter of 1977 had exceeded the range adopted by the Committee at its meeting in April; that despite the gradual reduction of projected ranges of growth for the aggregates during the past 2 years, no meaningful reduction had as yet occurred in actual rates of growth; that the outlook for growth in real GNP was relatively good; and that the rate of inflation had intensified somewhat during the first half of 1977. One member of the Committee favored a reduction of V2 of a percentage point in the upper, as well as the lower, limit of the range Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

832 Federal Reserve Bulletin □ September 1977 for M-l while retaining the existing ranges for M-2 and M-3, with the objective of realigning the ranges in view of the increasing importance of new means of payment as substitutes for demand deposits. Other members argued, on the other hand, that any downward adjustment in the range for M-l should be limited to the lower limit. It was noted that while second-quarter growth for that aggregate had been relatively high, growth in the first quarter had been low in relation to the Committee’s longer-run range. In view of prospective developments—including, specifically, increases in prices attributa­ ble to such exogenous forces as increases in energy costs and in the minimum wage—it was suggested that a reduction of V2 of a percentage point in the upper as well as in the lower limit of the range for M-l might run the risk of undesirable pressures in financial markets, a principal effect of which would be to slow growth in real GNP more than projected. Three members of the Committee advocated a reduction of V2 of a percentage point in both limits of the range for M-l and also some reduction in the ranges for the broader monetary aggregates. Their reasons for this position are contained in the statements of dissent below. At the conclusion of its discussion the Committee decided to reduce the lower limit of the range for M-1 by V2 of a percentage point and to retain the existing ranges for M-2 and M-3. The ranges thus were 4 to 6V2 per cent for M-1, 7 to W2 per cent for M-2, and 8V2 to 11 per cent for M-3. The associated range for the rate of growth in commercial bank credit was 7 to 10 per cent.1 It was agreed that the longer-run ranges, as well as the particular aggregates for which such ranges were specified, would be subject to review and modifi­ cation at subsequent meetings. It was also understood that short-run factors might cause growth rates from month to month to fall outside the ranges contemplated for the year ahead. The Committee adopted the following ranges for rates of growth in monetary aggregates for the period from the second quarter of 1977 to xAt this meeting the Committee decided to replace the bank credit proxy with a broader measure of all commercial bank credit. In recent years the proxy—which is based solely on data for member banks—has become increasingly less representative of total bank credit, in part because of the growth in importance of nonmember banks and in part because the proxy does not include certain borrowings by banks from the nonbank public. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 833 the second quarter of 1978: M-l, 4 to 6V2 per cent; M-2, 7 to W2 per cent; and M-3, SV2 to 11 per cent. Votes for this action: Messrs. Burns, Volcker, Gardner, Guffey, Lilly, Mayo, Morris, Partee, and Wallich. Votes against this action: Messrs. Coldwell, Jackson, and Roos. Mr. Coldwell dissented from this action because he thought that liquidity was high; that less rapid growth in real GNP was now necessary in order to sustain the expansion later on; and that action to reduce the rate of growth in the aggregates might lessen upward pressures on prices, improve the U.S. foreign trade position, and strengthen the dollar. Mr. Jackson dissented because he believed that it was important to reduce the upper limit of the range for M-l so that the Committee would take action to avoid a higher rate of growth, and that it was a logical consequence of that position to favor reductions also in the ranges for the broader aggregates. Mr. Roos, who also dissented, held the view that the retention of the existing upper limit of the range for M-l following the overshoot of growth in that aggregate from the first to the second quarter of 1977 might result in too rapid monetary growth over the five-quarter period ending in the second quarter of 1978 and therefore lead to a probable acceleration of the rate of inflation. As to policy for the period immediately ahead, members of the Committee did not differ greatly in their preferences for ranges of growth for the monetary aggregates over the July-August period. Most of them favored ranges of V/i to IV2 per cent and 6V2 to IOV2 per cent for the annual rates of growth in M-l and M-2, respectively. One member suggested that the Committee specify somewhat wider ranges around the same midpoints of those ranges because of greater-than-usual uncertainty about projections of monetary growth for the period just ahead. Also, some sentiment was ex­ pressed for slightly higher, and some for slightly lower, ranges. All members favored a return to basing decisions for open market operations in the period immediately ahead primarily on the be­ havior of the monetary aggregates. At its meeting in June the Committee had decided to give greater weight than usual to money market conditions in conducting operations in the period until this meeting. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

834 Federal Reserve Bulletin □ September 1977 Almost all members favored directing operations initially toward the objective of maintaining the Federal funds rate at its current level of 5% per cent, but a few members suggested that operations be directed toward achieving a slightly higher rate within a short time. With respect to the degree of leeway for operations during the inter-meeting period should the aggregates appear to be deviating significantly from the midpoints of the specified ranges, most members advocated retaining the range for the Federal funds rate of 5V4 to 5% per cent that had been specified at the two preceding meetings. A few members suggested that it would be appropriate to specify a wider range for the funds rate in association with the return to conducting operations on the basis of the behavior of the monetary aggregates; ranges of 5lA to 6 per cent, 5 to 6 per cent, and 5 to 5% per cent were suggested. At the conclusion of the discussion the Committee decided that growth in M-l and M-2 over the July-August period at annual rates within ranges of V/i to IVi per cent and 6Vi to IOV2 per cent, respectively, would be appropriate. It was understood that in assessing the behavior of the aggregates, the Manager should give approximately equal weight to the behavior of M-l and M-2. In the judgment of the Committee, such growth rates of the aggregates were likely to be associated with a weekly-average Federal funds rate of about 5% per cent. The Committee agreed that if growth rates of the aggregates over the 2-month period appeared to be deviating significantly from the midpoints of the indicated ranges, the operational objective for the weekly-average Federal funds rate should be modified in an orderly fashion within a range of 5 Vato 5% per cent.2 As customary, it was understood that the Chairman might call upon the Committee to consider the need for supplementary instructions before the next scheduled meeting if significant inconsistencies appeared to be developing among the Committee’s various objectives. The following domestic policy directive was issued to the Federal Reserve Bank of New York: The information reviewed at this meeting suggests that real output of goods and services grew in the second quarter at about the rapid Subsequently, as described on p. 836, the Committee modified the range by increasing the upper limit to 6 per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 835 rate of the first quarter. In June industrial output continued to expand at a substantial pace. The rise in employment moderated, and the unemployment rate edged up from 6.9 to 7.1 per cent. Total retail sales remained at about the level reached in March; for the second quarter as a whole, however, sales were moderately above the first-quarter level. The wholesale price index for all commodities declined in June, owing to sharp decreases among farm products and foods; as in May, average prices of industrial commodities rose appreciably less than in earlier months of 1977. The index of average hourly earnings rose over the first half of the year at about the same pace that it had on the average during 1976. The average value of the dollar against leading foreign currencies has declined more than 1 per cent over the past month; the declines were especially marked against the Japanese, German, and Swiss currencies. In May the U.S. foreign trade deficit diminished some­ what from the high rate in the first 4 months of the year. M-l, after rising at an exceptionally rapid rate in April, increased little in May and grew at a moderate pace in June. Growth in M-2 and M-3 also was moderate in June. Inflows to banks of time and savings deposits included in M-2 picked up somewhat, after having slackened for a number of months, and inflows to nonbank thrift institutions remained sizable. Business short-term borrowing expanded sharply in June. Market interest rates in general have changed little in recent weeks. In light of the foregoing developments, it is the policy of the Federal Open Market Committee to foster bank reserve and other financial conditions that will encourage continued economic expansion and help resist inflationary pressures, while contributing to a sustainable pattern of international transactions. Growth in M -l, M-2, and M-3 within ranges of 4 to 6V2 per cent, 7 to 9Vi per cent, and SV2 to 11 per cent, respectively, from the second quarter of 1977 to the second quarter of 1978 appears to be consistent with these objectives. These ranges are subject to reconsideration at any time as conditions warrant. The Committee seeks to encourage near-term rates of growth in M-l and M-2 on a path believed to be reasonably consistent with the longer-run ranges for monetary aggregates cited in the preceding paragraph. Specifically, at present, it expects the annual growth rates over the July-August period to be within the ranges of 3Vi to IV2 per cent for M-l and 6V2 to IOV2 per cent for M-2. In the judgment of the Committee such growth rates are likely to be associated with a weekly-average Federal funds rate of about 53/s per cent. If, giving Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

836 Federal Reserve Bulletin □ September 1977 approximately equal weight to M-l and M-2, it appears that growth rates over the 2-month period will deviate significantly from the midpoints of the indicated ranges, the operational objective for the Federal funds rate shall be modified in an orderly fashion within a range of 5lA to 53A per cent. If it appears during the period before the next meeting that the operating constraints specified above are proving to be significantly inconsistent, the Manager is promptly to notify the Chairman who will then decide whether the situation calls for supplementary instructions from the Committee. Votes for this action: Messrs. Burns, Volcker, Coldwell, Gardner, Guffey, Jackson, Lilly, Mayo, Morris, Partee, Roos, and Wallich. Votes against this action: None. Subsequent to the meeting, on August 4, nearly final estimates indicated that in July M-l had grown at an annual rate of about I8V2 per cent and M-2 at a rate of about 16^ per cent. For the July-August period staff projections suggested that the annual rates of growth for both aggregates would be well above the upper limits of the ranges specified by the Committee in the next-to-last para­ graph of the domestic policy directive issued at the July meeting. The Federal funds rate had averaged 5.80 per cent in the statement week ended August 3, up from 5.45 per cent in the week ended July 27 and 5.35 per cent in the preceding 3 weeks. The Manager of the System Open Market Account was currently aiming at a funds rate of 53A per cent, the upper limit of the inter-meeting range specified in the directive. Against that background, Chairman Burns recommended on Au­ gust 4 that the upper limit of the range for the Federal funds rate be increased to 6 per cent so that the Manager might have some additional leeway for operations, while continuing to take account of the current Treasury financing and financial market developments. He further recommended that this additional leeway be used very gradually, and only in the event that the aggregates continued to register values far beyond the Committee’s objectives. On August 5, 1977, the Committee modified the inter-meeting range for the Federal funds rate specified in the next-to-last paragraph of the domestic policy directive issued on July 19, 1977, by increasing the upper limit from 53A to 6 per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 837 Votes for this action: Messrs. Burns, Jackson, Mayo, Morris, Partee, Roos, Wallich, Balles, and Timlen. Votes against this action: None. Absent and not voting: Messrs. Coldwell, Gardner, Guffey, Lilly, and Volcker. (Messrs. Balles and Timlen voted as alternates for Messrs. Guffey and Volcker, respectively.) * * * * * Records of policy actions taken by the Federal Open Market Committee at each meeting, in the form in which they will appear in the Board’s Annual Report, are released about a month after the meeting and are subsequently published in the B ulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

839 Law Department Statutes, regulations, interpretations, and decisions MEMBERSHIP OF sentative unless it has filed with the Board an STATE BANKING INSTITUTIONS original and two copies of Form MSD-4, “Uniform IN THE FEDERAL RESERVE SYSTEM Application for Municipal Securities Principal or Municipal Securities Representative Associated The Board of Governors has amended its Regula­ with a Bank Municipal Securities Dealer,”* com­ tion H to require State member banks, and their pleted in accordance with the instructions con­ subsidiaries, departments, and divisions, that are tained therein, for that person. Form MSD-4 is municipal securities dealers to file with the Board prescribed by the Board for purposes of paragraph information about persons who are associated with (b) of Municipal Securities Rulemaking Board them as municipal securities principals or municipal Rule G-7, “Information Concerning Associated securities representatives. Persons.” Effective October 31, 1977, a new paragraph (j) is (3) Whenever a municipal securities dealer re­ added to section 208.8 as set forth below. ceives a statement pursuant to paragraph (c) of Pursuant to sections 15B(c)(5), 17, and 23 of Municipal Securities Rulemaking Board Rule G-7, the Securities Exchange Act of 1934 (15 U.S.C. §§ “Information Concerning Associated Persons,” 78o-4(c)(5), 78q, and 78w and section 11(a) of the from a person for whom it has filed a Form MSD-4 Federal Reserve Act (12 U.S.C. § 248(a)), the with the Board pursuant to subparagraph (2) of this Board amends Regulation H (12 CFR 208) by paragraph, such dealer shall, within ten days there­ adding a new paragraph (j) to section 208.8 as set after, file three copies of that statement with the forth below: Board accompanied by an original and two copies Section 208.8—Banking Practices of a transmittal letter which includes the name of the dealer and a reference to the material transmit­ * * * * * ted identifying the person involved and is signed by a municipal securities principal associated with the (g) [Reserved] dealer. (h) [Reserved] (4) Within thirty days after the termination of the (i) [Reserved] association of a municipal securities principal or (j) STATE MEMBER BANKS, AND SUBSIDI­ municipal securities representative with a munici­ ARIES, DEPARTMENTS, AND DIVISIONS pal dealer that has filed a Form MSD-4 with the THEREOF, WHICH ARE MUNICIPAL SE­ Board for that person pursuant to subparagraph (2) CURITIES DEALERS. of this paragraph, such dealer shall file an original (1) For purposes of this paragraph, the terms and two copies of a notification of termination with herein have the meanings given them in section 3(a) the Board on Form MSD-5, “Uniform Termination of the Securities Exchange Act of 1934 (15 U.S.C. § Notice for Municipal Securities Principal or Munic­ 78c(a)) and the rules of the Municipal Securities ipal Securities Representative Associated with a Rulemaking Board. The term Act shall mean the Bank Municipal Securities Dealer,”* completed in Securities Exchange Act of 1934 (15 U.S.C. § 78a et accordance with instructions contained therein. seq.). (5) A municipal securities dealer that files a (2) On and after October 31, 1977, a State Form MSD-4, Form MSD-5, or statement with the member bank of the Federal Reserve System, or a Board under this paragraph shall retain a copy of subsidiary or a department or a division thereof, that is a municipal securities dealer shall not permit a person to be associated with it as a municipal *Printed copies of Forms MSD-4 and MSD-5 are available from securities principal or municipal securities repre­ the Board of Governors or from the Federal Reserve Banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

840 Federal Reserve Bulletin □ September 1977 each such Form MSD-4, Form MSD-5, or state­ waiting period requirements for municipal securi­ ment until at least three years after the termination ties principals and municipal securities representa­ of the employment or other association with such tives under Municipal Securities Rulemaking Board dealer of the municipal securities principal or Rule G-3, (ii) to grant or deny requests for a municipal securities representative to whom the determination that a natural person or municipal form or statement relates. securities dealer subject to a statutory disqualifica­ (6) The date that the Board receives a Form tion is qualified to act as a municipal securities MSD-4, Form MSD-5, or statement filed with the principal or municipal securities representative or Board under this paragraph shall be the date of municipal securities dealer under Municipal Securi­ filing. Such a Form MSD-4, Form MSD-5, or ties Rulemaking Board Rule G-4, and (iii) to ap­ statement which is not prepared and executed in prove or disapprove clearing arrangements under accordance with the applicable requirements may Municipal Securities Rulemaking Board Rule G-8, be returned as unacceptable for filing. Acceptance in connection with the administration of Municipal for filing shall not constitute any finding that a Form Securities Rulemaking Board rules for municipal MSD-4, Form MSD-5, or statement has been com­ securities dealers for which the board is the appro­ pleted in accordance with the applicable require­ priate regulatory agency under section 3(a)(34) of ments or that any information reported therein is the Securities Exchange Act of 1934 (15 U.S.C. true, current, complete, or not misleading. Every 78c(a)(34)). (15 U.S.C. 78w and 12 U.S.C. 248.) Form MSD-4, Form MSD-5, or statement filed with the Board under this paragraph shall constitute a filing with the Securities and Exchange Commis­ TRUTH IN LENDING sion for purposes of section 17(c)(1) of the Act (15 The Board of Governors has postponed the Oc­ U.S.C. § 78q(c)(l)) and a “report,” “application,” tober 28, 1977, date for full implementation of or “document” within the meaning of section 32(a) § 226.7(k)(3)(ii) of Regulation Z, as reflected in of the Act (15 U.S.C. § 78ff(a)). (15 U.S.C. §§ 78o- § 226.7(k)(7)(i), until March 28, 1978. During the 4(c)(5), 78q, and 78w and 12 U.S.C. § 248(a).) period of the postponement a creditor may comply with the requirements for identifying nonsale credit The Board of Governors has also delegated cer­ transactions on or with open-end credit periodic tain of its functions in connection with the adminis­ statements either by use of the methods prescribed tration of Municipal Securities Rulemaking Board in § 226.7(k)(3), by use of the alternatives pre­ rules to the Director of the Division of Banking scribed in § 226.7(k)(4) or § 226.7(k)(7)(i), or by use Supervision and Regulation. These delegations of a combination of those methods. were made to expedite and facilitate the Board’s administration of Municipal Securities Rulemaking RULES REGARDING Board rules. DELEGATION OF AUTHORITY Effective September 1, 1977, section 265.2 of the Board’s Rules Regarding Delegation of Authority, The Board of Governors has amended its Rules is amended by adding a new subparagraph (24) Regarding Delegation of Authority to expand the to paragraph (c) as follows: authority of the Secretary of the Board to approve on the Board’s behalf certain applications to estab­ Section 265.2— Specific lish branches overseas. Therefore, under the authority of 12 U.S.C. § Functions D elegated to Board 248(k), 12 CFR Part 265 is amended, effective Employees and to Federal Reserve Banks immediately, by revising paragraph (a)(8) of § 265.2 * * * * * to read as follows: (c) THE DIRECTOR OF THE DIVISION OF Section 265.2— Specific BANKING SUPERVISION AND REGULATION (or, Functions D elegated to Board in the Director’s absence, the Acting Director) is Em ployees and F ederal Reserve Banks authorized: * * * * * * * * * * (24) Pursuant to section 23 of the Securities (a) THE SECRETARY OF THE BOARD (or, in Exchange Act of 1934 (15 U.S.C. 78w) (i) to grant the Secretary’s absence, the Acting Secretary) is or deny requests for waiver of examination and authorized: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 841 (8) Under the provisions of sections 25 and 25(a) charged with the administration of the loan pro­ of the Federal Reserve Act and Parts 211 and 213 of gram. this chapter (Regulations K and M), to approve the establishment, directly or indirectly, of a foreign branch or agency by a member bank or corporation INTERPRETATION OF REGULATION Z organized under section 25(a) (an “Edge” corpora­ tion) or operating under an agreement with the It has come to the Board’s attention that certain Board pursuant to section 25 (an “Agreement” credit cards are issued, the card issuer and the corporation) if all the following conditions are met: seller being the same person or related persons, in (i) the appropriate Reserve Bank recommends connection with which no finance charge is im­ approval. posed and customers are billed in full for each use (ii) the relevant divisions of the Board’s staff of the card on a transaction-by-transaction basis by recommend approval. means of an invoice or other statement reflecting (iii) no significant policy issue is raised by the each use of the card. No cumulative account which proposal as to which the Board has not expressed reflects the transactions by each customer during a its view. period of time, such as a month, is maintained. (iv) the application is not one for the applicant’s Section 103(f) of the Act requires all credit card first full-service branch in a foreign country. issuers to comply with certain provisions, even though those provisions are generally applicable INTERPRETATION OF REGULATION B only to creditors of open-end credit plans, and requires the Board to apply these provisions to all card issuers “to the extent appropriate.” The ques­ In order to provide guidance concerning the tion arises as to which of those provisions, as intended coverage of § 202.8(a)1 of Regulation B, implemented by this Part, appropriately apply to the Board interprets a term used in that section as such card issuers. follows: A credit program is considered to be Such card issuers may bill customers on a “expressly authorized by Federal or State law” if it transaction-by-transaction basis and need not main­ is authorized by the terms of a Federal or State tain a cumulative account for each customer for statute or by a regulation lawfully promulgated by which a periodic statement must be sent. the administering agency (i.e., the agency responsi­ Prior to the first use of the credit card, the card ble for implementing the program). issuer shall provide the customer With a statement It is the responsibility of the administering setting forth the disclosures required by § 226.7(a)(9) agency to ensure that implementing regulations are and, as applicable, § 226.7(a)(6) and § 226.7(a)(7). consistent with applicable Federal and State law. A The disclosure required by § 226.7(a)(6) shall creditor participating in a loan program expressly be limited to those charges that are or may be authorized by Federal or State law will not violate imposed as a result of the deferral of payment by Regulation B by complying in good faith with the law authorizing a program or with a regulation use of the card, such as late payment or delin­ quency charges. Such card issuers need not provide promulgated by an administering agency to imple­ the disclosure required by § 226.7(a)(8). ment a program that the agency has determined is a The disclosures required by § 226.7(b)(l)(i), (iii) special purpose credit program under § 202.8(a)(1) of Regulation B. and (ix) need not be given by such credit card issuers. The requirements of § 226.7(b)(l)(ii) and § In addition, the Board announces that it will not 226.7(b)(l)(x) are applicable to such card issuers, make determinations as to whether particular pro­ and compliance may be achieved by placing the grams benefit an “economically disadvantaged required disclosures on the invoice or statement class of persons.” The Board believes that such a sent to the customer for each transaction. Section determination is more properly made by the agency 226.7(b)(2) does not apply to these credit card issuers. Standards for programs. Subject to the provisions of subsec­ tion (b), the Act and this Part are not violated if a creditor refuses The provisions of § 226.7(c), including those to extend credit to an applicant solely because the applicant does which permit certain required disclosures to be not qualify under the special requirements that define eligibility for made other than on the front of a periodic state­ the following types of special purpose credit programs: (1) any credit assistance program expressly authorized by Fed­ ment, shall apply. All references to the “periodic eral or State law for the benefit of an economically disadvantaged statement” in § 226.7(c) shall be read to indicate the class of persons; invoice or other billing document sent to the cus­ ^ ^ sfc >f: tomer for each transaction. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

842 Federal Reserve Bulletin □ September 1977 The provisions of § 226.7(d) shall apply to such The provisions of § 226.7(h) shall apply to such credit card issuers. Compliance therewith may be credit card issuers, except that all requirements to achieved (1) by mailing or delivering the statement credit amounts to an account may be complied with required by § 226.7(a)(9) to each customer who by other reasonable means, such as a credit memo­ receives a transaction invoice during a one-month randum. Since no periodic statements are provided period chosen by the card issuer which meets the or required for the credit card systems subject to this timing requirements of § 226.7(d)(2), (3), and (4); or interpretation, a notice of excess payment should (2) by sending either the statement prescribed by be sent to the customer within a reasonable period § 226.7(a)(9) or the statement prescribed by of time following its occurrence unless a refund of § 226.7(d)(5) with each invoice sent to a customer. the excess payment is mailed or delivered to the The provisions of § 226.7(f) apply to these credit customer within 5 business days of its receipt by the card issuers, except that (1) notice of the change in card issuer. terms shall be given at least 15 days prior to the date The card issuer shall comply with all the provi­ upon which the change takes effect, rather than 15 sions of § 226.13, including § 226.13(i) and (j) to the days prior to the beginning date of the billing cycle extent that they are applicable to the credit card in which it takes effect, and (2) the card issuer need plan, except that § 226.13(k) is inapplicable. notify cardholders in advance of only those changes in terms which, if undertaken by creditors of open- The card issuer shall comply with the provisions end credit plans generally, would necessitate notice of § 226.14, as applicable. All references in § 226.14 to all customers prior to imposing the change on to the “periodic statement” shall be read to indi­ their accounts. cate the invoice or other statement for the relevant The provisions of § 226.7(g) shall apply to such transaction. All actions referenced in § 226.14 with credit card issuers if the credit card plan includes regard to correcting and adjusting a customer’s the possible imposition of a specific charge for late account may be taken by issuing a refund or a new payment, default, or delinquency. Otherwise, they invoice, or by other appropriate means consistent do not apply to such credit card issuers. with the purposes of the section. BANK HOLDING COMPANY AND BANK MERGER ORDERS ISSUED BY THE BOARD OF GOVERNORS Orders U nder Section 3 tion and all comments received in light of the of Bank Holding Company Act factors set forth in § 3(c) of the Act (12 U.S.C. § 1842(c)). Ark Valley Bankshares, Inc., Applicant is a nonoperating corporation or­ ganized for the purpose of becoming a bank holding La Junta, Colorado company. La Junta Bank and Empire Bank have Order Approving aggregate deposits of $14.2 million, representing Formation of Bank Holding Company 0.17 per cent of the total deposits in commercial banks in Colorado.1 Approval of the application Ark Valley Bankshares, Inc., La Junta, Col­ would not increase significantly the concentration orado, has applied for the Board’s approval under of banking resources in Colorado. § 3(a)(1) of the Bank Holding Company Act (12 U.S.C. § 1842(a)(1)) of formation of a bank holding La Junta Bank ($9.2 million in deposits) is the company by acquiring 83 per cent of the voting second largest of seven banks operating in the shares of The La Junta State Bank, La Junta, relevant market, which is approximated by Otero Colorado (“La Junta Bank”), and 56 per cent of the County, while Empire Bank ($5.0 million in de­ voting shares of The Empire State Bank, Rocky posits), located 11 miles away in Rocky Ford, is the Ford, Colorado (“Empire Bank”). sixth largest bank in that same market. Applicant, Notice of the application, affording opportunity upon consummation, would control approximately for interested persons to submit comments and 24 per cent of total deposits in commercial banks in views, has been given in accordance with § 3(b) of the Act. The time for filing comments and views has expired, and the Board has considered the applica­ *A11 banking data are as of December 31, 1976. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 843 the relevant market, and would be the second needs of the community to be served are consistent largest of the six remaining banking organizations. with approval of the application. It is the Board’s No existing competition would be eliminated by judgment that the proposed transaction would be this proposal, however. Both banks are commonly consistent with the public interest and that the owned and managed by principals of Applicant, application should be approved. who purchased a majority of the shares of both On the basis of the record, the application is banks during 1975. In a case where a prior purchase approved for the reasons summarized above. The by an applicant’s principals eliminates substantial transaction shall not be made (a) before the thir­ competition between two banks, the Board is reluc­ tieth calendar day following the effective date of tant to approve the formation of a bank holding this Order or (b) later than three months after the company, even though such a formation, on its effective date of this Order, unless such period is face, would appear to eliminate no existing compe­ extended for good cause by the Board, or by the tition.2 However, in this instance, the two banks Federal Reserve Bank of Kansas City pursuant to have been under common ownership and control delegated authority. since the formation of Empire Bank in 1949, and By order of the Board of Governors, effective therefore the 1975 purchase of both banks by prin­ August 10, 1977. cipals of Applicant was not anticompetitive. While Voting for this action: Chairman Burns and Governors approval of the proposal would further solidify the Wallich, Coldwell, Jackson, Partee, and Lilly. Absent and not voting: Governor Gardner. long-existing relationship between these two banks and reduce the likelihood that they would become independent competitors in the future, it is the (Signed) Griffith L. Garw ood, Board’s view that consummation of this proposal [seal] Deputy Secretary of the Board. would not have any significant adverse effect on existing or potential competition in view of the Central Bancompany, small size of Empire Bank and the significant num­ Jefferson City, Missouri ber of remaining banking alternatives given the size of the market. Several principals of Applicant are Order Approving Acquisition of Bank also principals of G. S. Bancshares, Inc., Goodland, Central Bancompany, Jefferson City, Missouri, a Kansas, a one-bank holding company; the bank bank holding company within the meaning of the controlled by that holding company does not com­ Bank Holding Company Act, has applied for the pete in the Otero County banking market, and Board’s approval under § 3(a)(3) of the Act (12 approval of this proposal would eliminate no exist­ U.S.C. § 1842(a)(3)) to acquire all of the voting ing competition among these three banks. Accord­ shares of The First National Bank of Mexico, ingly, on the basis of the facts of record, the Board Mexico, Missouri (“Bank”). concludes that consummation of the proposal Notice of the application, affording opportunity would not have any significantly adverse effect on for interested persons to submit comments and competition. views, has been given in accordance with § 3(b) of The financial and managerial resources and fu­ the Act. In response to the large number of com­ ture prospects of Applicant and both banks are ments received in opposition to the application considered to be satisfactory and are consistent from various individuals including Bank’s President with approval of the application. Although Appli­ (“Protestant”), the Board ordered an Oral Presen­ cant will incur debt in connection with the proposal, tation which was held at the Federal Reserve Bank it appears to have the necessary financial resources of St. Louis on June 14, 1977.1 The Board has available to service the debt without impairing the considered the application, all written comments financial condition of either bank. While there will received and the testimony presented at the Oral be no immediate increase in the services offered by Presentation in light of the factors set forth in § 3(c) either bank as a result of the proposed transaction, of the Act (12 U.S.C. § 1842(c)). the considerations relating to the convenience and Applicant, the eighth largest banking organiza­ tion in Missouri, controls four banks with aggregate 2 See the Board’s Order of May 11,1977, denying the application of Mahaska Investment Company, Oskaloosa, Iowa, to become a bank holding company (63 Federal Reserve Bulletin 579 ^ee the Board’s Order of April 11, 1977 (63 Federal Reserve (1977)). Bulletin 493). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

844 Federal Reserve Bulletin □ September 1977 deposits of $374.4 million, representing 2 per cent relevant banking market. This analysis relates pri­ of the total deposits in commercial banks in the marily to the number of existing or potential bank­ State.2 Acquisition of Bank, which holds deposits ing organizations competing in a market. There is of $15.2 million, would increase Applicant’s share nothing in the legislative history of the Act in this of Statewide commercial bank deposits by less than regard that indicates that the Board is to consider 0.1 per cent and would have no appreciable effect whether a banking organization is independently upon the concentration of banking resources in the owned or owned by a multibank holding company State. to be in and of itself a competitive factor. Owner­ Bank is the third largest of six banking organiza­ ship and management do, of course, enter tions in the Mexico banking market and controls into the convenience and needs factors, as dis­ approximately 17.1 per cent of the total deposits in cussed below. It appears that the acquisition of commercial banks in the market.3 Applicant’s Bank by Applicant would result in the introduction nearest subsidiary bank is located approximately 40 of a significant multibank holding company into the miles west of Bank. In view of the distance between market and would stimulate competition between Bank and Applicant’s nearest banking subsidiary, Bank and the two other banks in the market con­ and other facts of record, no significant competition trolled by major bank holding companies.7 Accord­ exists between Bank and Applicant’s banking sub­ ingly, the Board finds that consummation of the sidiaries.4 Furthermore, the Mexico banking mar­ proposal would neither eliminate any significant ket is not considered attractive for de novo entry in existing or potential competition nor increase the view of the declining population within the market.5 concentration of banking resources in any relevant The deposits per banking office ratio of $9.1 million market and that competitive considerations are for the market is substantially below the State consistent with approval of the application. average of $16.6 million. Thus, competition does Protestant maintains that the manner in which not appear likely to develop in the future. Applicant secured tender offers for a majority of Protestant claims that consummation of the pro­ Bank’s stock reflects so adversely upon Applicant’s posal would result in 83 per cent of the total bank management as to warrant denial of the application. assets in Audrain County and 100 per cent of the As further support for a denial of the application bank assets in Mexico being owned by bank holding due to managerial considerations, Protestant claims companies. Protestant contends that this would that the price Applicant offered for the shares of amount to an undue concentration of banking re­ Bank was unconscionably low, that Applicant lacks sources and a loss of competition within the rele­ the managerial resources to replace Bank’s man­ vant market.6 The Board has reviewed the submis­ agement which has threatened to resign if the sions and testimony of Protestant and is unable to application is approved, and that Applicant violated agree with this conclusion. the Act when one of its subsidiary banks acquired Section 3(c) of the Act requires the Board to sole discretionary authority to exercise voting consider whether a proposed acquisition would rights with respect to 100 shares of Bank placed in have adverse effects upon competition within a trust with one of Applicant’s subsidiary banks. On the basis of the complete record on the applica­ tion, the Board makes the following findings. The three largest shareholders of Bank are Brad­ 2 All banking data are as of December 31, 1976. ford Brett, President of Bank and owner of 255 3 The Mexico market is approximated by Audrain County plus the town of Auxvasse in adjoining Callaway County. shares representing 25.5 per cent of Bank’s stock; 4 At the Oral Presentation, Bank’s President conceded that there Ms. Anne Parry, a cousin of Bradford Brett and was no significant competiton between Bank and Applicant (Tran­ owner of 210 shares representing 21 per cent of script p. 117-118). 5 Population data and estimates from the Bureau of the Census Bank’s stock, and Mrs. Miriam Edmonston, a sister show that the market population declined 2.7 per cent from of Anne Parry and owner of 240 shares representing 1960-70 relative to a gain of 8.3 per cent for the State and it is estimated that the market did not grow from 1970-74 (25,362 to 24 per cent of Bank’s stock. During 1974 and 1975, 25,300), relative to an estimated gain of 2.1 per cent for the State Ms. Parry indicated to Mr. Brett that she and her during this period. 6 Protestant contends that the fact that 83 per cent of the banking assets in the relevant market will be controlled by multibank holding companies constitutes an undue concentration of banking resources. This analysis is incorrect. The Board must consider the 7 We note as an aside that in any event, three independent banks percentage of the market’s banking deposits controlled by each will remain in the market as alternatives for those individuals who banking organization, not by multibank holding companies as a prefer to deal with a bank that is not affiliated with a holding group or independent banks as a group. company. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 845 sister, Mrs. Edmonston, were considering selling an offer for a majority of Bank’s stock was out­ their Bank stock and requested Mr. Brett’s assist­ standing. The majority shareholders of a bank do ance in facilitating a sale. Ms. Parry indicated that not have an obligation to perpetuate the manage­ she needed more income than the dividends paid on ment of a bank or advise management of plans to Bank’s stock were providing her at that time. Ms. sell their stock. On the contrary, the obligations and Parry indicated her belief that $1000 per share was responsibilities run in the opposite direction; man­ an acceptable price for Bank’s stock; however, Mr. agement owes a fiduciary duty to all of the share­ Brett indicated to her that it was unlikely that he holders of a bank. could obtain more than $600 per share for Bank’s With respect to Protestant’s assertion that the stock. Book value of the stock at that time was price of $2000 per share is so low as to be uncon­ about $1200 per share. It appears that neither Ms. scionable, the Board notes that at the Oral Presen­ Parry nor Mrs. Edmonston was successful in selling tation Mr. Brett estimated that the shares of Bank her Bank stock. stock were worth a minimum of $2500 (Transcript On July 27, 1976, Mrs. Edmonston mentioned to p. 98). This difference of $500 per share between Mr. R. B. Price, the President of Applicant’s sub­ Protestant’s valuation and Applicant’s offer does sidiary bank located in Columbia, Missouri, that not appear to support Protestant’s claim that $2000 she and her sister were considering an offer by an is an unconscionably low offer in light of the fact individual in Seattle, Washington, to purchase their that the $2000 per share price is 1.6 times the book Bank stock for $1500 per share. On July 30, 1976, value of Bank’s stock and was freely arrived at by Mrs. Edmonston met with representatives of Ap­ Bank’s shareholders and Applicant after extensive plicant and Mr. Price to discuss a possible sale of negotiations.8 her Bank stock to Applicant. Negotiations ensued With respect to the threatened resignations of and on August 1, Mrs. Edmonston, Ms. Parry, and Bank’s officers and directors, Applicant has indi­ another shareholder of Bank, Mr. Stephenson, ten­ cated, and the Board finds, that Applicant has dered their shares representing a majority of Bank’s adequate experienced personnel to assume control stock to Applicant for $2000 per share. Mr. Brett of the daily operations and the management of Bank was not consulted until August 2, 1976, when Mr. were such action necessary. Moreover, several of Quigg, representing Applicant, informed Mr. Brett the directors who testified at the Oral Presentation, of the tender offer and offered to purchase his including Mr. Brett himself, indicated that they shares of Bank. Shortly after the meeting, Mr. Brett might remain as directors even if the application is undertook a campaign to rally public support for his approved and have indicated that they are aware of opposition to the proposed acquisition. On August their fiduciary duties to the shareholders who 16, 1976, representatives of Applicant met with the elected them in the event minority shareholders Board of Directors of Bank. A copy of the state­ remain. ment made by Applicant’s representatives at that Finally, Protestant contends that Applicant may meeting shows that they expressed a desire to have violated the Act when its subsidiary bank in operate Bank as a local bank, to retain the officers Columbia, Missouri, established a trust for one of and employees of Bank, to retain the directors of Bank’s shareholders in December 1976, a part of Bank and to purchase the outstanding shares of the corpus of which was 100 shares of Bank. Bank at the same price per share that Applicant had Applicant’s subsidiary acquired sole discretionary agreed to pay for the controlling block of stock voting authority over those Bank shares. Protestant already tendered. Bank’s Board of Directors appar­ contends alternatively that those shares of Bank ently rejected Applicant’s offers and threatened to were not acquired by Applicant’s subsidiary bank resign en masse if the proposal were approved. in good faith, as required by § 3(a) of the Act, or if The Board is unable to agree with Protestant that acquired in good faith, Applicant failed to make Applicant’s acquisition of tender offers for a major­ proper application to the Board within 90 days to ity of Bank’s stock reflects adversely on managerial factors. It appears that the initial contact was initiated by Bank’s majority shareholders. Further, 8It appears that in early 1976, Mr. Brett proposed an exchange of stock with Ms. Parry. Mr. Brett’s own valuation of Ms. Parry’s Bank’s remaining shareholders were offered the Bank stock for purposes of an exchange for unrelated securities opportunity to sell their shares at the same price as held by Mr. Brett was $600 per share. Mr. Brett stated at the hear­ ing that there were no changes that would give rise to a signifi­ Bank’s majority shareholders. Applicant had no cant increase in the value of Bank’s stock in the 18 months since legal duty to inform the management of Bank that Mr. Brett’s exchange offer. (Transcript p. 120-121) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

846 Federal Reserve Bulletin □ September 1977 retain the shares as required in § 3(a) of the Act. On relationships with Bank. The petitions do not name the basis of a review of the facts surrounding the Applicant or the proposed acquisition. The petitions formation of the trust, the documents evidencing merely express support for Mr. Brett to do his best the trust and the affidavits of the parties to the to keep Bank an independent bank. transaction, it appears that the transaction was not Protestant alleges that independent banks serve an attempt to evade the Act, that the Federal their communities better than banks owned by bank Reserve Bank of St. Louis was made fully aware of holding companies. Moreover, Protestant contends the circumstances surrounding creation of the trust that people within a community should have a within 90 days of Applicant’s acquisition of sole choice between doing business with an independent discretionary voting authority over the shares of bank and a subsidiary bank of a bank holding com­ Bank, and that the shares of Bank were acquired in pany. The Board regards these arguments as being good faith in a fiduciary capacity. Applicant has relevant only to the extent that they reflect upon the indicated that if its present application is denied it convenience and needs of the relevant community to will accept that determination by the Board as a be served in each application. The record in this determination that it may not retain the 100 shares application shows that the Mexico banking market of Bank’s stock held in trust and will divest of those is not a highly competitive banking market.9 The shares in compliance with the two-year statutory Comptroller of the Currency has noted in his com­ requirement in § 3(a) of the Act. In view of the ments upon this application that “Applicant ap­ foregoing, the Board finds that Applicant’s conduct pears to possess the financial and managerial re­ with respect to the shares held in trust has not been sources necessary to aid Bank in becoming a more such as would require denial of this application. aggressive competitor and a more meaningful bank­ Considerations relating to the financial resources ing alternative.” of Bank and Applicant are consistent with approval Applicant has stated that it will provide a variety of the application. The financial resources of Appli­ of new or expanded services, including $200 cant and its subsidiaries are considered satisfac­ minimum balance free checking, maximum interest tory. Although Applicant would incur some debt in rates on customers’ savings, expanded operating connection with its acquisition of Bank, Applicant hours, improved drive-in facilities, trust services, has stated that all indebtedness related to Bank’s improved data processing services for Bank, direct acquisition could be retired within four years. equipment leasing and an automobile leasing pro­ Protestant contends that the future prospects of gram. Thus, considerations relating to the conveni­ Bank and the convenience and needs of the com­ ence and needs of the community to be served lend munity would be adversely affected by approval of some weight toward approval of the application. this application. Protestant points to a petition The Board finds that approval of the proposed signed by over 6000 local residents supporting Mr. application would be in the public interest and that Brett and his effort to keep Bank an “independent” the application should be approved. bank. Protestant contends that the future prospects On the basis of the complete record, the applica­ of Bank would be adversely affected by the combi­ tion is approved for the reasons summarized above. nation of a loss of Bank’s current management and The transaction shall not be made (a) before the a withdrawal of deposits by citizens opposing the thirtieth calendar day following the effective date of acquisition. The Board has reviewed the complete this Order or (b) later than three months after the record and finds that, although some of Bank’s effective date of this Order, unless such period is management may leave as a result of this acquisi­ extended for good cause by the Board, or.by the tion, Applicant has sufficient managerial resources Federal Reserve Bank of St. Louis pursuant to to fill any vacancies that may occur. Moreover, delegated authority. most of Bank’s officers, including Mr. Brett, are By order of the Board of Governors, effective over 65 years old and would be likely to retire soon August 11, 1977. in any case. Bank’s management presently has no plans for management succession and to that end, Applicant’s ability to provide successor manage­ ment lends some weight toward approval of this application. In addition, the 6000 signatures Protes­ 9 It appears that the other bank located in Mexico is the only subsidiary bank of the third largest holding company in Missouri tant has collected do not indicate an intent on the that does not offer free checking services. Bank does not offer free part of the signatories to terminate their business checking services to its customers either. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 847 Voting for this action: Chairman Burns and Governors and controls approximately 35.6 per cent of the Wallich, Coldwell, Jackson, Partee, and Lilly. Absent and total deposits in commercial banks in the market. not voting: Governor Gardner. Applicant’s closest subsidiary bank, Huntington (Signed) G riffith L. Garwood, First National Bank of Kenton, (“Kenton Bank”), [seal] Deputy Secretary of the Board. is located in the separate Hardin County banking market, which adjoins Logan County to the north. Bank operates four offices, the closest of which is Huntington Bancshares Incorporated, located in Belle Center and is 13.3 miles from the Columbus, Ohio nearest Kenton Bank office and in a different banking market. In light of all the evidence of Order Approving Acquisition of Bank record, including the fact that Bank and Kenton Huntington Bancshares Incorporated, Colum­ Bank are located in separate banking markets, it bus, Ohio (“Applicant”), a bank holding company appears that no meaningful amount of existing within the meaning of the Bank Holding Company competition would be eliminated. Furthermore, ac­ Act, has applied for the Board’s approval under quisition of Bank would not have any significant § 3(a)(3) of the Bank Holding Company Act adverse effects upon potential competition, since it (12 U.S.C. § 1842(a)(3)) to acquire 100 per cent of is unlikely Applicant would enter the Logan County the voting shares (less directors’ qualifying shares) banking market de novo, and after consummation of the successor by merger to Bellefontaine National of this proposal four independent banks would Bank, Bellefontaine, Ohio (“Bank”). The bank into remain as entry vehicles for outside bank holding which Bank is to be merged has no significance companies. Accordingly, on the basis of the above except as a means to facilitate the acquisition of and other facts of record, it is concluded that the voting shares of Bank. Accordingly, the pro­ consummation of the proposed transaction would posed acquisition of shares of the successor not have any significant adverse competitive effect. organization is treated herein as the proposed In arriving at this conclusion, the Board has also acquisition of the shares of Bank. considered the comments by the Department of Notice of the application, affording opportunity Justice that consummation would have adverse for interested persons to submit comments and competitive effects. While consummation of the views, has been given in accordance with § 3(b) of proposal may have some slight adverse effects on the Act. The time for filing comments and views has potential competition, in light of the Board’s find­ expired, and the Board has considered the applica­ ings described above, it does not appear that such tion and all comments received, including those of effects would be significant, and, balanced against the Department of Justice, in light of the factors set the convenience and needs considerations dis­ forth in § 3(c) of the Act (12 U.S.C. § 1842(c)). cussed below, the Board is of the view that denial of Applicant, the seventh largest banking organiza­ the subject application is not warranted. tion in Ohio, controls twelve banking subsidiaries Considerations relating to the financial and man­ with aggregate deposits of approximately $1.4 bil­ agerial resources and future prospects of Bank and lion, representing 4.1 per cent of total commercial Applicant and its subsidiaries are regarded as satis­ bank deposits in Ohio.1 Acquisition of Bank ($29.9 factory. Managerial succession at Bank will be million in deposits) would increase Applicant’s furnished by Applicant; therefore, banking factors share of Statewide commercial bank deposits by are consistent with approval. only 0.2 per cent and would have no appreciable effect upon the concentration of banking resources Applicant has indicated that affiliation will enable in Ohio. Bank to increase services currently offered to its Bank is the largest of seven banking organiza­ customers, including business checking accounts, tions located in the Logan County banking market,2 expanded checking services to include Applicant’s “All-in-One Account”, bank credit card services, data processing services, and specialized commer­ cial loan services and overdraft protection. Con­ siderations relating to the convenience and needs of the community to be served lend some weight 1 All banking data are as of December 31, 1976, and reflect bank holding company formations and acquisitions approved as of June toward approval of the application and outweigh 30, 1977. any slightly adverse competitive effects that ap­ 2The relevant geographic market for purposes of analyzing the proval may have. Accordingly, it has been deter­ competitive effects of the proposed transaction is approximated by Logan County, Ohio. mined that the proposed acquisition would be in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

848 Federal Reserve Bulletin □ September 1977 public interest and that the application should be Bank is to be located in the St. Louis banking approved. market,2 the same market in which Applicant’s two On the basis of the record, and for the reasons existing subsidiary banks are located. Applicant is summarized above, the application is approved. the thirteenth largest banking organization in the St. The transaction shall not be made (a) before the Louis banking market, with 1.7 per cent of total thirtieth calendar day following the effective date of deposits in commercial banks in the market. Appli­ this Order or (b) later than three months'after the cant’s share in this banking market would not effective date of this Order, unless such period is change initially as a result of approval. The pro­ extended for good cause by the Board, or by the posed site of Bank is Maryland Heights, a suburban Federal Reserve Bank of Cleveland pursuant to area in west St. Louis County, with the closest delegated authority. banking office of any subsidiary of Applicant3 lo­ By order of the Board of Governors, effective cated approximately 17 miles southeast of Bank. August 31, 1977. The expected primary service area (“PSA”) of Bank does not include any portion of the PSA’s of Voting for this action: Vice Chairman Gardner and Governors Wallich, Coldwell, Jackson, Partee, and Lilly. Applicant’s subsidiary banks, although the sub­ Absent and not voting: Chairman Burns. sidiaries currently do derive some business from Bank’s expected PSA. One other bank, Plaza Bank (Signed) Robert E. Matthew s, ($38.2-million in deposits), is located in Bank’s PSA [seal] Assistant Secretary of the Board. and seven other banks (none of them subsidiaries of Applicant) are located within six miles of Bank. Manchester Financial Corp., Since Bank is a de novo bank, there will be no St. Louis, Missouri elimination of existing or potential competition. There would appear to be, therefore, no adverse Order Approving Acquisition of Bank competitive effects that would derive from con­ Manchester Financial Corp., St. Louis, Missouri, summation of this proposal. a bank holding company within the meaning of the The financial and managerial resources and fu­ Bank Holding Company Act, has applied for the ture prospects of Applicant and its subsidiary banks Board’s approval under § 3(a)(3) of the Act (12 are regarded as satisfactory. Bank, as a proposed U.S.C. § 1842(a)(3)) to acquire all of the voting de novo bank, has no financial or operating history; shares, less directors’ qualifying shares, of Man­ however, its prospects as a subsidiary of Applicant chester Bank West County, Maryland Heights, appear favorable. Missouri (“Bank”), a proposed de novo bank. Establishment of Bank would provide an addi­ Notice of the application, affording opportunity tional source of banking service to the community. for interested persons to submit comments and Bank would offer a full range of banking services, views, has been given in accordance with § 3(b) of including data processing, commercial and con­ the Act. The time for filing comments and views has sumer loans, construction and real estate loans, and expired, and the Board has considered the applica­ savings plans. Bank will have access to Applicant’s tion and all comments received including those of financial and managerial resources and the capabil­ the Plaza Bank of West Port, St. Louis, Missouri ity of selling loan participations in excess of (“Plaza Bank”), and of the Missouri Association of $1,000,000 to Applicant’s subsidiary banks, thereby Community Organizations for Reform Now, in light meeting the larger credit needs of the community. of the factors set forth in § 3(c) of the Act (12 The Board has received comments in opposition U.S.C. § 1842(c)). to the proposal that relate to convenience and needs Applicant controls two banks with total deposits factors. Plaza Bank, the only other commercial of $140.9 million, representing approximately 0.7 bank located in Bank’s projected primary service per cent of the total deposits in commercial banks in area, suggests that the growth of the proposed Missouri.1 Since the application involves the acqui­ service area has leveled off since 1970 and that, sition of a proposed de novo bank, consummation of the proposal would not immediately increase Applicant’s share of commercial bank deposits in Missouri. 2 The St. Louis banking market includes all of the city of St. Louis and St. Louis County, portions of St. Charles and Jefferson Counties in Missouri, and portions of Madison and St. Claire Counties in Illinois. *A11 deposit data are as of December 31, 1976. 3The National Bank of Affton, Affton, Missouri. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 849 therefore, the area cannot support a de novo bank increased substantially and at a greater rate than the at the present time. In support of this, Plaza Bank aggregate deposit growth of all banks in St. Louis submitted economic statistics that forecast slower County. In the Board’s view, this area can support rates of growth for the proposed service area of the an additional bank and the Board, therefore, agrees new bank by 1980. with the Missouri Commissioner of Banking that Bank will be located in the St. Louis County the formation of a new bank in this area would portion of the St. Louis banking market. This area significantly enhance the convenience and serve the has been one of the fastest growing counties in the needs of the community. St. Louis Standard Metropolitan Statistical Area The Board has received the views of the Missouri (“SMSA”). During the 1960-70 decade, the popula­ Association of Community Organizations for Re­ tion of St. Louis County increased 35.3 per cent form Now (“ACORN”) relating to the convenience relative to an increase of 11.2 per cent for the St. and needs of the communities to be served. Louis SMSA and 8.0 per cent for the State.4For the ACORN asserts that Applicant’s larger subsidiary period 1970-75, the population of St. Louis County bank, Manchester Bank of St. Louis, St. Louis, increased approximately 3.9 per cent relative to a Missouri (“Manchester Bank”, total deposits of 1.8 per cent increase for the population of the State. $126.6 million) follows a practice of disinvestment St. Louis County is projected to grow an additional in the city of St. Louis. Specifically, ACORN 3.8 per cent in population by 1980. alleges that in 1975, the Manchester Bank made The population growth of the proposed PSA of only 11 mortgage loans in the entire City of St. Bank exceeded that of St. Louis County from 1960 Louis, totalling $78,000 or 7.6 per cent of the total to 1975. For example, population for the PSA mortgage dollars lent by Manchester Bank, while increased 168.3 per cent (12,300 to 33,000) from “three wealthy suburbs received $539,000 in 1960 to 1970 and an additional 30.3 per cent (33,000 mortgage loans or 52.8 per cent of the 1975 total.” to 43,000) from 1970 to 1975. As Plaza Bank ACORN further alleges that during the period suggests, it may be difficult for this area to maintain from January to June 1976, Manchester Bank made this high rate of population growth in future years; 20 home mortgage loans totalling $889,000, only however, there is nothing in the record to indicate four of which were made in the city, totalling that this area will not continue to experience growth $51,000, or less than 6 per cent of the total. From or that the area is unable to support a new bank. July to December of 1976, $851,100 in mortgage Bank will be located in a new shopping center, loans were made by Manchester Bank, nine of one mile west of the largest industrial district in which (comprising 13 per cent of the total dollars) northwest St. Louis County. It is estimated that were made within the city, according to ACORN. there are approximately 1,100 firms in the PSA, Yet, during the year only two mortgage loans employing 17,000 persons. In addition, a multifa­ totalling $10,500 were made in “the Manchesterceted business, retail, and entertainment complex Tower Grove area” in which Manchester Bank is lies within the PSA. There are no local conditions located, according to ACORN. apparent at this time that would adversely affect the Finally, ACORN asserts that from July to De­ future of Bank. cember of 1976, Manchester Bank made 100 home From 1970 to 1976, total deposits increased 78.1 improvement loans totalling $216,433 and that only percent for the banks in St. Louis County relative two of these loans—totalling, $8,976—were made in to 56.5 per cent deposit growth for all the banks in the Bank’s immediate area. ACORN urges the the SMSA and 66.6 per cent for the State. In Board to consider the alleged community disin­ addition, Plaza Bank moved to its present location vestment practices of Manchester Bank in its deci­ in April 1975, presumably finding that relocation, sion on this application. which is near the site of Bank and within Bank’s Applicant has responded to ACORN’s assertions PSA, to be responsive to a need for banking ser­ by citing Manchester Bank’s “extensive involve­ vices in that area. From June 1975 to December ment in recent years in efforts to redevelop areas of 1976 in this new location, Plaza Bank’s deposit base the City of St. Louis, including the area im­ mediately surrounding the Bank. ... ” In evaluating ACORN’s comments, it is signifi­ cant that it relates to only one type of banking 4All population data are from the Bureau of the Census. service. An examination of one service alone does Population projections are from the St. Louis Chapter, American Statistical Association. not produce an accurate view of a bank’s overall Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

850 Federal Reserve Bulletin □ September 1977 ability to meet the convenience and needs of its focus on a limited area, the Board looks to the community. ACORN focuses primarily upon the aggregate of all the commercial banking services origination of residential real estate loans, and provided by a bank in evaluating what weight ignores the many other types of services and loans should be accorded the convenience and needs offered by Manchester Bank. As of December 31, considerations in connection with a particular ap­ 1976, 11.5 per cent ($7.7 million) and 1.0 per cent plication. ($0.7 million) of Manchester Bank’s total loan port­ In this case, the data submitted to the Board by folio were loans secured by mortgages on 1-4 family ACORN, when considered in the context of Man­ residential properties and home improvement chester Bank’s aggregate investment and loan loans, respectively. It appears from the record that portfolio and the variety of other services offered Manchester Bank emphasizes loans to businesses, by that institution, do not, in the Board’s judgment, that is, commercial real estate loans ($8.7 million, establish probable cause to believe that Manchester 12.9 per cent of total loans) and commercial and Bank has failed to serve the needs of the commu­ industrial loans ($36.8 million, 54.5 per cent of total nity in which it operates, nor that Bank, as a loans) over residential mortgage loans. The balance subsidiary of Applicant, will not be in a position to of Manchester Bank’s loans are in the consumer serve the convenience and needs of the community area (approximately $13.6 million, 20.1 per cent). in which it will be operating. As the Board has indicated on previous occasions, Finally, Plaza Bank has argued here that the commercial banks are multiproduct firms that offer method of Bank’s incorporation represents a viola­ a broad range of services to the community. As the tion of a provision of Missouri State law6 that Board has previously stated: should prevent the Board from approving the pro­ posal. Plaza’s argument rests on two premises: (1) ‘ ‘bank managements should and do have a range of discretion as to the types of loans they will make that the Board is required to consider issues of and the degree of risk they will assume.” AS&T State law such as that presented by this proposal in may reasonably choose to minimize or to emphasize deciding whether to approve or deny the subject a particular type of lending, and it would not be application; and (2) that the chartering of Bank was appropriate to assess AS&T’s performance in satis­ invalid under § 362.015 of the Statutes of Missouri.7 fying the convenience and needs of the community Pursuant to the Supreme Court’s holding in by focusing on only two of the many services it Whitney National Bank of Jefferson Parish v. Bank offers.5 of New Orleans and Trust Company,8 the Board To evaluate a bank’s performance with respect to may “not approve a holding company arrangement serving the convenience and needs of the commu­ involving the organization and opening of a new nity solely on the basis of only one of the services a bank if the opening of the bank, by reason of its bank may offer overlooks entirely the interests of ownership by a bank holding company, would be the many other customers a bank may serve prohibited by a valid State law.”9 The Whitney case through a broad range of services denominated as involved a bank holding company acquisition of a “commercial banking.” For instance, it appears that Manchester Bank has invested more funds in redevelopment bonds than its total mortgage lend­ ing volume during the July to December 1976 period 6MO. ANN. STAT § 362.015 (Vernon, 1968). 7Section 362.015 of the Statutes of Missouri (MO. ANN. STAT. cited by ACORN. These bonds, issued by the § 362.015 (Vernon 1968)) provides that “any five or more persons Planned Industrial Expansion Authority of the City who shall have associated themselves by articles of agreement in writing, as provided by law, for the purpose of establishing a bank of St. Louis, Missouri, are earmarked for commer­ or trust company may be incorporated under any name or title cial development in the very area as to which designating such business.” This provision has been interpreted by ACORN has alleged disinvestment. Instead of this Missouri State courts as prohibiting a corporation from acting as the principal named incorporator of a bank, Mark Twain Cape Girar­ deau Bank v. State Banking Board, 528 S.W. 2d 443 (Mo. App. 1975); Mark Twain Bancshares, Inc., v. Kostman, 541 S.W. 2d (Mo. App. 1975). Plaza Bank contends that the five individual incorporators of Bank (who presently serve in the capacity of 5 Board’s Order of February 19,1976 approving the application of officers and/or directors in Applicant and/or Applicant’s subsidiary American Security Corporation, to acquire the successor by banks) are not “persons” within the meaning of § 362.015 because, merger to American Security and Trust Company, both of Wash­ Plaza Bank argues, the individuals are acting in the capacity of ington, D.C., 62 Federal Reserve Bulletin 255, 258 (1976), citing agents of Applicant and a corporation should not be able to do the Board’s Order of November 19,1975, approving the acquisition indirectly what it is prohibited from doing directly. and merger applications of Marine Midland Bank, Inc., Buffalo, 8379 U.S. 411 (1963). New York, 61 Federal Reserve Bulletin 890, 893 (1975). 9Id. at 419. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 851 new bank that, the plaintiff contended, would in Based on the foregoing and the facts of record, actuality function as a branch bank in a State in the Board concludes that there would be no adverse which branch banking was prohibited by State law. competitive effects resulting from consummation of Thus, it was asserted, Board approval of an applica­ the proposal and that considerations relating to tion to acquire such a bank would have enabled the banking factors and convenience and needs of the bank holding company to enter into a de facto community to be served are consistent with ap­ branch banking arrangement that was prohibited by proval of the application. It is the Board’s judgment State law and, in effect, would have constituted that the proposed acquisition is in the public inter­ Board approval of unlawful conduct. Since the est and that the application should be approved. holding in Whitney, the Board has resolved issues On the basis of the record, the application is of State law where they directly pertain to the approved for the reasons summarized above. The question of whether the acquisition of a bank by a transaction shall not be made (a) before the thirtieth bank holding company would result in a violation of calendar day following the effective date of this State law.10 In the facts presented by the instant Order or (b) later than three months after that date, application, however, the violation, if any, of Mis­ and (c) Manchester Bank of West County, Mary­ souri law occurred upon the issuance of the charter land Heights, Missouri, shall be opened for busi­ for Bank by the Missouri Commissioner of Finance. ness not later than 6 months after the effective date Approval of the instant application would consti­ of this Order. Each of the periods described in (b) tute an approval of Applicant’s acquisition of and (c) may be extended for good cause by the shares of Bank, not approval of the chartering of Board, or by the Federal Reserve Bank of St. Bank. Thus, the Board, by approving the instant Louis, pursuant to delegated authority. application, would not approve assertedly unlawful By order of the Board of Governors, effective conduct. August 15, 1977. The Board has never presumed to review the Voting for this action: Governors Wallich, Coldwell, incorporation or chartering procedures defined by Jackson, Partee, and Lilly. Absent and not voting: Chair­ State statutes and administered by State banking man Burns and Governor Gardner. officials. Instead, the Board merely requires evi­ dence of the issuance of the necessary charter or its (Signed) Robert E. M atthew s, conditional or preliminary approval and solicits the [seal] Assistant Secretary of the Board. comments of the appropriate banking authority.11 Here, Bank’s charter has been granted by the Metropolitan Bank and Trust Company, Missouri Finance Commissioner and, absent a judi­ Philippine Securities Corporation and cial determination to the contrary, the Board pre­ Tytana Corporation, sumes that the charter was granted lawfully. Since Makati, Rizal, Philippines the effectiveness of the chartering action has not been stayed, the pending litigation in the Missouri Order Approving State courts does not act as a bar to the Board’s Formation of Bank Holding Companies action on this application.12 Metropolitan Bank and Trust Company (“Met­ ropolitan”), Philippine Securities Corporation 10See Intermountain Bankshares Co., 61 Federal Reserve Bull- (“PSC”), and Tytana Corporation (“Tytana”), all letin 442 (1975) (West Virginia statute arguably prohibiting the of Makati, Rizal, Philippines (referred to collec­ formation of bank holding companies in the State); Northwest Bancorporation, 38 Fed. Reg. 21530(1973) (Iowa statute restricting tively as “Applicants”), have applied for the acquisition of Iowa Bank by out-of-State bank holding companies); Board’s approval under § 3(a) (1) of the Bank and Valley View Bancshares, Inc., 61 Federal Reserve Bulletin Holding Company Act (12 U.S.C. § 1842 (a) (1)) of 676 (1975) (Kansas statute prohibiting formation of multi-bank holding companies). formation of bank holding companies by acquiring 11 The Board’s practice of not examining the validity of State directly or indirectly up to 35 per cent of the voting banking charters is consistent with Missouri State law which shares of International Bank of California, Los provides that the exclusive proceeding by which competing banks may challenge a bank charter is by appealing the issuance of that Angeles, California (“Bank”). charter in State court, pursuant to §§ 361.094 and 361.095, Missouri Notice of the applications, affording opportunity Statutes. 12 Plaza Bank has challenged the charter in several State admin- for interested persons to submit comments and trative and judicial actions, some of which are still pending; views, has been given in accordance with § 3(b) of however, to date the Bank’s charter has not been stayed. The the Act. The time for filing comments and views Board’s approval, of course, does not preclude Plaza Bank from continuing to pursue its remedies in the Missouri State courts. has expired, and the Board has considered the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

852 Federal Reserve Bulletin □ September 1977 applications and all comments received in light of ket. Therefore, on the basis of the record, the the factors set forth in § 3(c) of the Act (12 U.S.C. Board concludes that consummation of the propo­ § 1842(c)). sal would not have a significant adverse effect on Metropolitan (deposits of approximately $165.3 existing or potential competition, nor would it have million)1 was organized in 1962 as a Philippine a significant effect on the concentration of banking commercial bank. It presently operates 86 branches resources, in any relevant area. Competitive con­ in the Philippines, a branch in Taiwan, and an siderations are, therefore, consistent with approval agency in Los Angeles, California. PSC is princi­ of the applications. pally engaged in the real estate business as a direct The financial and managerial resources and fu­ investor and dealer. PSC’s application to become a ture prospects of Applicants are considered gen­ bank holding company is necessitated by the fact erally satisfactory; and, in view of Applicants’ that it exercises a controlling influence over the intention to strengthen the management of Bank, management or policies of Metropolitan.2 Tytana is the same considerations appear to be generally a Philippine investment company that directly or satisfactory with respect to Bank. Accordingly, indirectly owns 27.7 per cent of the voting shares of banking factors are consistent with approval of the Metropolitan and thus is deemed to control Met­ subject applications. Although there would be no ropolitan pursuant to § 2(a)(2)(A) of the Act. With immediate increase in the services offered by Bank the exception of Metropolitan’s Los Angeles as a result of the proposed transaction, the con­ agency, neither Metropolitan, PSC, nor Tytana is siderations relating to the convenience and needs of engaged in any activities directly or indirectly in the the community to be served are consistent with United States. approval of the applications. In particular, Bank’s Bank (deposits of approximately $4.4 million)3 affiliation with Metropolitan will result in another ranks 96th out of 98 banking organizations in the international banking link between the Philippines relevant banking market and has only a .01 per cent and the United States. It is the Board’s judgment share of market deposits.4 Metropolitan’s Los that the proposed transactions would be consistent Angeles agency is not authorized to accept domes­ with the public interest and that the applications tic deposits, and it does not appear from the facts of should be approved. record that any meaningful competition between On the basis of the record, the applications are Bank and the agency would be eliminated as a approved for the reasons summarized above. The result of this proposal. In view of Bank’s size and transactions shall not be made (a) before the thir­ its rank in the market, the Board believes that its tieth calendar day following the effective date of acquisition by Metropolitan, a major Philippine this Order or (b) later than three months after the commercial bank, should have a salutary effect on effective date of this Order, unless such period is competition by enhancing Bank’s competitive extended for good cause by the Board, or by the capabilities relative to the other banks in the mar­ Federal Reserve Bank of San Francisco pursuant to delegated authority. By order of the Board of Governors, effective August 10, 1977. *As of January 31, 1977. Voting for this action: Chairman Burns and Governors 2PSC owns approximately 18.8 per cent of the voting shares of Wallich, Coldwell, Jackson, Partee, and Lilly. Absent and Metropolitan. In addition, PSC’s principals own approximately not voting: Governor Gardner. 35.6 per cent of the voting shares of Metropolitan and three of PSC’s officers or directors also serve as officers or directors of Metropolitan. PSC has previously been advised that in the view of (Signed) Griffith L. Garw ood, the Board’s staff the rebuttable presumption of control contained in § 225.2(b)(2) of Regulation Y [12 CFR § 225.2(b)(2)] would apply to [seal] Deputy Secretary of the Board. PSC’s relationship with Metropolitan if Metropolitan were to become a bank holding company. By virtue of its filing the subject application to become a bank holding company, PSC acknowledges Northwest Bancorporation, that it would exercise a controlling influence over Metropolitan and Minneapolis, Minnesota thereby waives the notice and opportunity for hearing requirements of § 2(a)(2)(C) of the Act. In connection with its consideration of Order Granting Reconsideration PSC’s application, the Board has determined that PSC exercises a controlling influence over the management or policies of Metropoli­ tan and thus would become a bank holding company upon Northwest Bancorporation, Minneapolis, Min­ consummation of the subject proposal. nesota (“Northwest”), has requested reconsidera­ 3As of December 31, 1976. tion of the Order of May 2, 1977 (63 Federal 4 The relevant banking market is approximated by Orange and Los Angeles Counties. Reserve Bulletin 585 (1977)), whereby the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 853 of Governors denied the application of Northwest views, has been given in accordance with § 3(b) of for prior approval of the acquisition of First Na­ the Act. The time for filing comments and views has tional Bank, Fort Dodge, Iowa, pursuant to section expired, and the Board has considered the applica­ 3(a)(3) of the Bank Holding Company Act of 1956, tion and all comments received in light of the as amended (12 U.S.C. § 1842(a)(3)). factors set forth in § 3(c) of the Act (12 U.S.C. The request for reconsideration is filed pursuant § 1842(c)). to section 262.3(g)(5) of the Board’s Rules of Pro­ Applicant is a nonoperating corporation or­ cedure (12 CFR § 262.3(g)(5)), which provides that ganized for the purpose of becoming a bank holding the Board will not grant any request for recon­ company by acquiring Bank, which holds deposits sideration “unless the request presents relevant of $3.9 million.1 Upon acquisition of Bank, Appli­ facts that, for good cause shown, were not previ­ cant would control one of the smaller commercial ously presented to the Board, or unless it otherwise banking organizations in the State of Georgia, hold­ appears to the Board that reconsideration would be ing approximately 0.03 per cent of total deposits in appropriate.” The Board finds that the request for commercial banks in that State. reconsideration presents relevant facts and issues Bank is the 10th largest commercial banking which appear appropriate in the public interest for organization in the relevant banking market and the Board to consider. Accordingly, the request for holds approximately 0.78 per cent of the total reconsideration is hereby ap proved. commercial bank deposits in the market.2 Since In order to facilitate such consideration, com­ Applicant has no subsidiaries and Applicant’s prin­ ments regarding the proposed acquisition may be cipals do not control any other banks, it appears filed with the Board not later than September 23, unlikely that consummation of the proposal would 1977. Communications should be addressed to the have any adverse effect upon existing or potential Secretary, Board of Governors of the Federal Re­ competition or increase the concentration of bank­ serve System, Washington, D.C. 20551. The appli­ ing resources in any relevant area.3 Thus, the Board cation, as supplemented by Northwest’s request for concludes that the competitive effects of the propo­ reconsideration, may be inspected at the offices of sal are consistent with approval of the application. the Board of Governors or at the Federal Reserve The financial resources and future prospects of Bank of Minneapolis. Applicant and Bank are generally satisfactory. By order of the Board of Governors, effective Since the proposed transaction will be ac­ August 29, 1977. complished through an exchange of stock, there is no acquisition debt associated with the proposal. Voting for this action: Vice Chairman Gardner and Bank was originally chartered as a building and Governors Wallich, Jackson, and Partee. Present and loan association by the State of Georgia with the abstaining: Governor Lilly. Absent and not voting: Chairman Burns and Governor Coldwell. name Southern Savings and Loan Company (“Southern Savings”). Approximately 40 per cent (Signed) Griffith L. Garw ood, of that institution’s outstanding voting shares were [seal] Deputy Secretary of the Board. owned directly and indirectly by Atlantic Insurance and Investment Company, Savannah, Georgia (“Atlantic”). Atlantic’s principal officers are also Southern Bank Holding Company, principal officers of Applicant and Atlantic’s five Savannah, Georgia largest stockholders will become Applicant’s prin­ Order Approving Formation cipal owners as a result of the proposed transaction.4 of Bank Holding Company *A11 banking data are as of December 31, 1976. Southern Bank Holding Company, Savannah, 2 The relevant banking marked is approximated by all of Chatham Georgia (“Applicant”), has applied for the Board’s and Effingham Counties, Georgia, and those portions of Liberty approval under § 3(a)(1) of the Bank Holding Com­ and Bryan Counties, Georgia, east of Fort Stewart. 3 Applicant’s principals do control several nonbanking corpora­ pany Act (12 U.S.C. § 1842(a)(1)) (“Act”) of the tions. However, none of these corporations is engaged to any formation of a bank holding company through ac­ significant extent in the provision of any of the services provided by Bank. quisition of 54.7 per cent or more of the voting 4 Atlantic’s direct and indirect interest in Bank will be transferred shares of Southern Bank and Trust Company, to Atlantic’s shareholders as part of the proposed transaction. Savannah, Georgia (“Bank”). Atlantic’s shareholders will then exchange those and other shares of Bank for the Applicant’s shares. The Board’s approval of the Notice of the application, affording opportunity instant application does not represent a determination that the for interested persons to submit comments and proposed transaction will terminate Atlantic’s control of Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

854 Federal Reserve Bulletin □ September 1977 In May of 1975 Southern Savings was granted a On the basis of the record, the application is commercial banking charter by the State and its approved for the reasons summarized above. The name was changed to that of Bank. The conversion transaction shall not be made (a) before the thirtieth of Southern Savings’ charter may have caused calendar day following the effective date of this Atlantic to become a bank holding company without Order or (b) later than three months after the the Board’s prior approval in contravention of effective date of this Order, unless such period is section 3(a)(1) of the Act. However, in a recently extended for good cause by the Board, or by the filed request for a “prior certification” under the Federal Reserve Bank of Atlanta pursuant to dele­ Bank Holding Company Tax Act of 1976 (26 U.S.C. gated authority. § 1101 et seq.), Atlantic contends that Southern By order of the Board of Governors, effective Savings was a “bank” within the meaning of section August 31, 1977. 2(c) of the Act since at least as early as July 7, 1970. Voting for this action: Vice Chairman Gardner and The Board does not decide this issue at this time, but Governors Wallich, Coldwell, Jackson, Partee, and Lilly. rather reserves it for consideration in the context of Absent and not voting: Chairman Burns. Atlantic’s tax certification request. In considering Applicant’s managerial resources, the Board does (Signed) Robert E. M atthew s, note, however, that even Atlantic’s view of the law [seal] Assistant Secretary of the Board. and the facts would compel the conclusion that Atlantic has violated the Act in that it would have become a bank holding company upon the enact­ O rder U nder Sections 3 A nd 4 ment of the 1970 amendments to the Act and of the Bank H olding Com pany A ct thereafter have failed to register as a bank holding company as required by section 5(a) of the Act. First Guthrie BancShares, Inc., Accordingly, the Board concludes that Atlantic has Guthrie, Oklahoma violated the Act without reaching the issue of Order Approving whether section 3(a)(1) or section 5(a) of the Act has Formation of Bank Holding Company been violated. and Engaging in Insurance Agency Activities It is the Board’s view, however, on the basis of the facts and circumstances of the subject application, First Guthrie BancShares, Inc., Guthrie, Ok­ that Atlantic’s violation of the Act was inadvertent. lahoma, has applied for the Board’s approval under Additionally, the Board notes that Atlantic, upon § 3(a)(1) of the Bank Holding Company Act (12 becoming aware of the existence of the violation, U.S.C. § 1842(a)(1)) of formation of a bank holding took steps to conform its operations to the Act by company by acquiring 80 per cent or more of the agreeing to terminate its direct and indirect voting shares of The First National Bank of Guthrie, ownership of Bank’s shares. The officers of Atlantic Guthrie, Oklahoma (“Bank”). and Applicant have taken steps to prevent further Applicant has also applied for the Board’s ap­ violations from occurring by establishing proce­ proval, pursuant to § 4(c)(8) of the Act (12 U.S.C. § dures for centralized internal review of all of Appli­ 1843(c)(8)) and § 225.4(b)(2) of the Board’s Regula­ cant’s and Atlantic’s activities for compliance with tion Y (12 CFR § 225.4(b)(2)), to acquire 100 per cent the substantive and procedural requirements of the of the beneficial interest of a proposed business Act and the Board’s Regulation Y. The Board trust, First Guthrie Business Trust, Guthrie, Ok­ expects that these actions will assist Applicant and lahoma, which will in turn own 100 per cent of First Atlantic in avoiding a recurrence of similar viola­ Guthrie Insurance Agency, Guthrie, Oklahoma tions. In consideration of the above and other (“Insurance”), a company that will engage in the information in the record of this application, the activities of offering credit life insurance and credit Board has determined that the circumstances of the accident and health insurance in connection with above violations do not warrant denial of the appli­ extensions of credit by Bank. Such activities have cation. been determined by the Board to be closely related Considerations relating to the convenience and to banking (12 CFR § 225.4(a)(9)). needs of the community to be served are consistent Notice of the applications, affording opportunity with approval. It is the Board’s judgment that for interested persons to submit comments and consummation of the proposed transaction would be views on the applications, has been given in accord­ consistent with the public interest and the applica­ ance with §§3 and 4 of the Act (42 Federal Register tion should be approved. 31838). The time for filing comments and views has Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 855 expired, and the Board has considered the applica­ insurance in connection with the extensions of credit tions and all comments received in light of the by Bank. Under Oklahoma State law, financial factors set forth in § 3(c) of the Act and the institutions may not act as agent for the sale of considerations specified in § 4(c)(8) of the Act. credit-related insurance, nor may an insurance Applicant is a non-operating corporation or­ agency pass its income on to any corporation not ganized for the purpose of becoming a bank holding licensed as an agent. The Oklahoma Attorney Gen­ company by acquiring Bank, which holds deposits of eral has ruled, however, that the prohibition of $24.7 million.1 Upon acquisition of Bank, Applicant Oklahoma insurance statutes do not apply to a would control the 99th largest commercial banking business trust. Approval of the application would organization in the State of Oklahoma and approxi­ provide a convenient source of credit-related insur­ mately 0.2 per cent of total deposits in commercial ance, and the Board views this as being in the public banks in that State. interest. It does not appear that Applicant’s en­ Bank is the largest of seven banks in the relevant gagement in these activities would have any signifi­ banking market, which is approximated by Logan cant adverse effects on competition. Furthermore, County, and holds approximately 43.5 per cent of there is no evidence in the record indicating that the total commercial bank deposits in that market. consummation of the proposal would result in any Since Applicant has no other banking subsidiaries undue concentration of resources, unfair competi­ and Applicant’s principals do not control any other tion, conflicts of interests, unsound banking prac­ banks, consummation of the proposal would not tices or other adverse effects on the public interest. have any adverse effects upon either existing or Based on the foregoing and other considerations potential competition nor would it increase the reflected in the record, the Board has determined concentration of banking resources in any relevant that the considerations affecting the competitive area. Thus, the Board concludes that the competi­ factors under § 3(c) of the Act and the balance of the tive effects of the proposal are consistent with public interest factors the Board must consider approval of the application. under § 4(c)(8) of the Act both favor approval of The financial and managerial resources and future Applicant’s proposals. prospects of Applicant, which are dependent upon Accordingly, the applications are approved for the those of Bank and Insurance, appear satisfactory reasons summarized above. The acquisition of Bank and are regarded as being consistent with approval shall not be made before the thirtieth calendar day of the application to become a bank holding com­ following the effective date of this Order. The pany. The debt to be incurred by Applicant in acquisition of Bank and the commencement of the connection with this proposal appears to be service­ above-described insurance agency activities shall be able without having adverse effects on the financial made not later than three months after the effective condition of either Bank or Insurance. Therefore, date of this Order, unless such period is extended for considerations relating to banking factors are re­ good cause by the Board or by the Federal Reserve garded as being consistent with approval. While no Bank of Kansas City pursuant to delegated authori­ major changes are contemplated in Bank’s services, ty. The approval of Applicant’s credit-related insur­ considerations relating to convenience and needs of ance activities is subject to the conditions set forth in the community to be served are also consistent with § 225.4(c) of Regulation Y and to the Board’s approval. Accordingly, it is the Board’s judgment authority to require reports by, and make examina­ that Applicant’s proposal to form a bank holding tions of, holding companies and their subsidiaries company would be consistent with the public inter­ and to require such modification or termination of est and that the application should be approved. the activities of a bank holding company or any of its In connection with its application to become a subsidiaries as the Board finds necessary to assure bank holding company, Applicant has also applied compliance with the provisions and purposes of the for approval to acquire 100 per cent of the beneficial Act and the Board’s regulations and orders issued interest in First Guthrie Business Trust, which in thereunder or to prevent evasion thereof. turn would own 100 per cent of the voting shares of By order of the Board of Governors, effective Insurance. Insurance would engage de novo in the August 23, 1977. sale of credit life and credit accident and health Voting for this action: Vice Chairman Gardner and Governors Wallich, Jackson, Partee, and Lilly. Absent and not voting: Chairman Burns and Governor Coldwell. (Signed) Griffith L. Garwood, *A11 banking data are as of December 31, 1976. [SEAL] Deputy Secretary of the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

856 Federal Reserve Bulletin □ September 1977 P etition of Investm ent Company with respect to any application by a bank holding Institute for R econsideration and company for permission to engage in the activity Recision of a R egulation of th e Board, described in 12 C F R § 225.4(a)(5)(ii). 12 CFR § 225.4(a)(5)(ii) The additional facts presented by ICI with the present petition are to the same effect as the facts Order presented with ICI’s previous petition for recon­ sideration: A number of banking organizations are On January 29, 1972, the Board promulgated a giving investment advice to investment companies regulation, 12 C F R § 225.4(a)(5)(ii), and interpre­ registered under the Investment Company Act of tive ruling, 12 C F R § 225.125, by which it deter­ 1940. However, as with ICI’s previous petition to mined that the activity of serving as an investment the Board, most of the investment advisors iden­ advisor, as defined in § 2(a)(20) of the Investment tified by ICI are commercial banks, as distinguished Company Act of 1940, to an investment company from bank holding companies, which did not seek registered under that Act is closely related to bank­ the Board’s prior approval pursuant to 12 U.S.C. § ing and thus a permissible activity for bank holding 1843(c)(8) and 12 C F R § 225 before commencing companies to engage in, subject to the procedures the subject investment advisory activities.1 The set out in the Board’s Regulation Y, 12 C F R § 225. Board’s regulation governs the investment advisory 31 Federal Register 1463-1464 (1972). Notice of the activities of bank holding companies and their non­ rulemaking had been duly given in the Federal banking subsidiaries. The conduct of commercial Register on August 25, 1971, 36 Federal Register banks in this area is subject to administrative sanc­ 16695, and on September 1, 1971, 36Federal Regis­ tion at the Federal level by the Comptroller of the ter 17514; and a public hearing on the matter was Currency (as to national banks) and the Board (as to held on November 12, 1971. State member banks); but such supervision is exer­ On December 12, 1973, the Investment Company cised without regard to the Bank Holding Company Institute (“ICI”), Washington, D.C., the national Act or the challenged regulation. ICI and courts association for the American mutual fund industry, before which ICI has argued have recognized these filed with the Board a petition for reconsideration distinctions in Investment Company Institute v. and recision of 12 C F R § 225.4(a)(5)(ii). The Board Camp, 401 U.S. 617 (1971) and in New York Stock duly considered ICI’s petition and, by letter dated Exchange and Investment Company Institute v. March 8, 1974, the Board denied the petition and Robert Bloom, No. 76-1235 (D.C. Cir., decided July responded in detail to the arguments that ICI had 19, 1977). Although the national banking organiza­ raised. ICI thereafter sought judicial review of the tions in those cases, whose activities were alleged to Board’s order denying its petition for reconsidera­ be in violation of the Glass-Steagall Act, were tion. However, the United States District Court for holding company subsidiaries, it is clear that the the District of Columbia dismissed ICI’s petition for courts as well as ICI viewed the Comptroller as the review in an order dated July 30, 1975, 398 F. Supp. appropriate regulatory authority to consider the 725; and the Court of Appeals subsequently affirmed Glass-Steagall Act questions. Nevertheless, ICI the District Court’s order of dismissal for lack of asks the Board to rescind its regulation although the subject matter jurisdiction, 551 F.2d 1270 (D.C. Cir. activity being complained of is being conducted 1977). Nevertheless, the Court of Appeals, having chiefly by banks and the Board was not asked to determined that the state of the law of jurisdiction approve, and in fact did not approve the activity was not clear at the time ICI filed its previous pursuant to Regulation Y.2 petition, determined that ICI should have the oppor­ tunity to file a second petition for reconsideration and recision of the Board’s regulation. XA11 seven of the open-end funds identified on page 12, footnote 6 of ICI’s Memorandum are advised by banks; and the Board has Pursuant to the Court’s order ICI has filed a no record of the filing of any application under the Bank Holding second petition for reconsideration and recision with Company Act relating to these activities. In addition, 8 of 12 funds identified on page 7, footnote 2 of ICI’s Memorandum are advised the Board. The petition is accompanied by a by banks or subsidiaries of banks. memorandum containing ICI’s legal arguments and 2ICI claims that the Board’s previously expressed position that by affidavits setting out facts in support of the the challenged regulation and interpretation do not cover the activities of commercial banks “involves, as a practical matter, an petition. In addition, ICI has requested that the illusory distinction.” However, as the United States Court of Board convene a formal hearing pursuant to the Appeals in the District of Columbia Circuit stated with respect to Administrative Procedure Act and that ICI’s most the Board’s determination that a certain other activity is closely related to banking, “[t]he order under review does not itself recent petition be determined on the record of such a authorize any particular bank holding company to engage in hearing. ICI has not protested or filed comments Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 857 ICI’s most recent petition also suggests that the ICI also reiterates its previous position that bank Board consider the circumstances surrounding the holding companies should not be permitted to spon­ formation of certain open-end funds which purport sor closed-end funds. However, in support of its to be sponsored by brokerage organizations and to contention ICI indicates that a certain closed-end receive only investment advice from various bank fund recently converted itself into an open-end fund. affiliates of bank holding companies; the circum­ ICI argues that if the bank sponsor intended to stances surrounding the organization and sub­ open-end the fund from the day the fund was sequent open-end conversion of Advance Investors created, sections 16 and 21 would have been vio­ Corporation; the feasibility as a commercial matter lated; but ICI admits “we presently have no reason that investment funds can and will select banks as to suspect that the foregoing is what actually hap­ advisors without bank participation in the creation pened.” of the fund; and the desirability of regulating and As set forth more fully below, the Board has prohibiting certain relationships between bank hold­ determined that a formal hearing is not required or ing company affiliates and firms which sponsor or appropriate in the present case. Neither the Ad­ administer funds, such as the placement of broker­ ministrative Procedure Act, U.S.C. § 551, et seq., age, extensions of credit, and business referrals. nor the Bank Holding Company Act, 12 U.S.C. § In presenting the above suggestions of topics to be 1841 et seq., requires that the Board’s rulemaking considered by the Board, ICI does not raise issues of proceedings be governed by formal procedures such material fact that are appropriate for resolution by as those used in judicial trials and administrative the Board in this proceeding. ICI notes that at least adjudications. In fact the latter statute has been seven open-end investment companies created since amended by Congress to provide that the Board’s ICI’s previous petition are advised by commercial proceedings need not be held “on the record”; and banks and that such banks have undertaken to this amendment has the effect of preserving the restrict their activities with respect to such funds to Board’s ability to use informal rulemaking proce­ the giving of investment advice. But ICI, which dures. See, e.g., Independent Bankers Association suggests the banks may have illegally sponsored of Georgia v. Board of Governors, 516 F.2d 1206 these funds and indicates the banks place brokerage (D.C. Cir. 1975). with the nominal sponsors, does not indicate that The Board has also determined that informal these activities are being engaged in pursuant to the hearing procedures, like those used by the Board Board regulation here challenged by ICI. All seven when it considered adoption of the challenged regu­ investment advisors named are banks, and no appli­ lation in 1971, are not required for full and fair cations for prior approval of these activities were disposition of ICI’s most recent petition for recon­ filed with or considered by the Board under § 4(c)(8) sideration and recision of 12 CFR § 225.4(a)(5)(ii). of the Bank Holding Company Act and the related ICI fully participated in the hearing held in this regulations.3 matter prior to adoption of the regulation. The question raised by ICI—whether the challenged regulation and interpretive ruling allow bank holding companies to violate sections 16 and 21 of the courier activities.” National Courier Association v. Board of Governors, 516 F.2d 1229, 1233 n. 4 (D.C. Cir. 1975). To give Glass-Steagall Act, 12 U.S.C. §§ 24 and 378—is a investment advice pursuant to the challenged regulation, a com­ legal question and was considered in the Board’s pany must file an application pursuant to 12 CFR § 225. That the deliberations leading to adoption of the regulation commercial bank advisors identified by ICI have failed to do so merely evidences the fact that their activities are not subject to the and in response to ICI’s previous petition for recon­ regulation and are not being engaged in pursuant thereto. The fact sideration. Finally, ICI has presented no new facts that some of the investment funds thus advised cite the Board’s interpretation in their securities registration statements may indi­ which raise issues of material fact for resolution by cate an acceptance of the Board’s distinction between open-end the Board; and as discussed hereinafter the Board and closed-end companies for purposes of determining whether has concluded that the factual inquiries suggested by affiliated investment companies “engaged principally” or “primarily engaged” in the securities business and thus whether ICI are best left for later adjudicatory proceedings sections 20 and 32 of the Glass-Steagall Act were violated. The which may, depending on the circumstances, re­ logic of ICI’s position would require approval under the Bank quire use of formal or informal hearing procedures. Holding Company Act of almost all corporate activities carried out by banks directly. This Congress clearly did not intend. Such adjudicatory proceedings must be held before 3Although some of the named banks are State member banks, any bank holding company may engage in the the Board has not been asked by ICI to determine whether such banks are violating the Glass-Steagall Act through the named activity described by 12 C F R § 225.4(a)(5)(ii). See activities, but only whether their activities can be viewed as generally 12 C F R § 225.4. closely related to banking under a statute, section 4(c)(8) of the In support of its request for a hearing, ICI cites Bank Holding Company Act, on which they have not relied in commencing these activities. several judicial decisions in which courts of appeal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

858 Federal Reserve Bulletin □ September 1977 have determined that hearings were appropriate on by ICI can be pursued absent such intervention. applications by bank holding companies for permis­ None of these organizations intervened in the law­ sion to engage in activities previously determined by suit that preceded ICI’s filing of the present peti­ the Board to be closely related to banking. Alabama tion. The present petition for reconsideration of a Association of Insurance Agents v. Board of Gover­ rule does not involve “resolution of conflicting nors, 533 F.2d 224 (5th Cir., 1976); Independent private claims to a valuable privilege.” Action for Bankers Association of Georgia v. Board of Gover­ Children's Television v. United States, No. 74-2006 nors, 516 F.2d 1206 (D.C. Cir. 1975). ICI argues that (D.C. Cir., decided July 1, 1977). For the foregoing it would be entitled to a hearing were it opposing reasons, the request for a hearing should be, and it such an application, and that it should have a hearing hereby is, denied.4 in this case because the Court of Appeals recognized The next question presented for the Board’s that ICI’s interest in the Board’s regulation extends consideration is whether the Board should recon­ beyond the facts of any particular application. sider and rescind 12 C F R § 225.4(a)(5)(ii). ICI However, these cases and ICI’s argument appear to argues that the challenged regulation and interpre­ support the Board’s conclusion that ICI’s proposed tation authorize bank holding companies to violate factual inquiries should be resolved in later ad­ sections 16 and 21 of the Glass-Steagall Act. Among judicatory proceedings. other things, ICI claims that bank holding com­ ICI apparently recognizes that the Board must panies and their banking subsidiaries are single determine two questions with respect to section entities, and that sections 16 and 21 are violated by 4(c)(8) and that the second question, the “public the activities of such companies engaged in pur­ benefits” question, is the one that creates the need suant to the Board’s regulations. for a factual inquiry. Memorandum in Support of In its previous orders in this matter—37 Federal Petition for Reconsideration, pp. 32-33. In discus­ Register 1463-1464; letter of March 8, 1974, from sing its proposed factual inquiries, ICI states: the Board’s Secretary to ICI’s counsel—the Board dealt with ICI’s contentions on the merits in con­ We submit, therefore, that Section 225.4(a)(5)(ii) siderable detail. After due consideration of the requires reconsideration not only to pre­ present petition and of those previous orders, and vent the direct sponsorship of closed-end funds of the entire record that has been made in this in violation of the Glass-Steagall Act, as we have previously contended, but also to avoid another proceeding, the Board believes its previous orders problem: that is, situations involving open-end were legally and factually correct. Accordingly, the funds which may not on their face demonstrate Board hereby reaffirms its previous orders in this Glass-Steagall violations, but which depending on matter and incorporates both orders by reference the facts, may indeed involve violations. In any herein. event, these situations also present the possibility of In what appears to be ICI’s principal attempt to a clear conflict with the Board’s responsibilities present “any relevant information which is de­ under the Bank Holding Company Act to avoid veloped in the interim” (since the Board’s con­ ‘undue concentration of resources, decreased or sideration of ICI’s first petition for reconsidera­ unfair competition [or] conflicts of interest. . .’ 12 tion), as suggested by the Court of Appeals, ICI U.S.C. § 1843(c)(8) [Emphasis supplied] alludes to information which suggests banks acting Memorandum, pp. 20-21. It is thus clear that ICI is asking the Board to apply the “public benefits” test of section 4(c)(8) in the context of an 4ICI indicates it is aware of the Board’s weekly press release industry-wide rulemaking. ICI’s allegations, how­ (Form H.2) and Federal Register notice summarizing each action ever, go to the facts of particular operations by taken and application received by the Board during the week individual companies and how they bear on the covered by these notices. See above Memorandum in Support of Petition for Reconsideration, p. 10. ICI may challenge any applica­ public benefits aspects. See National Courier As­ tion to the Board for permission to advise open-end or closed-end sociation v. Board of Governors, 516 F.2d at 1233. funds by responding to such notices or to the Federal Register or publication notices given on each such application to the Board. If Moreover, it is not clear whether the banking any activity previously authorized by the Board has led to organizations identified in ICI’s most recent peti­ Glass-Steagall Act violations in spite of the safeguards and restric­ tion would intervene in any hearing convened by tions in 12 C F R § 225.125, ICI may petition the Board to institute cease and desist proceedings pursuant to 12 U.S.C. § the Board at this time, since most such organiza­ 1818, or may refer alleged criminal violations of the Act directly to tions are not engaging in investment advisory ac­ the appropriate United States Attorney, or may simply itself sue tivities pursuant to 12 C F R § 225.4(a)(5)(ii); and it the offending banking organization. New York Stock Exchange and Investment Company Institute v. Robert Bloom, No. 76-1235 is not apparent how the factual inquiries proposed (D.C. Cir., decided July 19, 1977). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law D epartm ent 859 as investment advisors regularly place brokerage be “engaged principally” or “primarily engaged” transactions with the brokerage houses which have in the securities business through the issuance of been designated as the sponsors of the funds that securities on a more or less regular basis. they advise (Memorandum* pages 19-22). ICI then Moreover, bank holding companies may affiliate proceeds to argue that this may involve “undue with closed-end investment companies only “as concentration of resources, decreased or unfair long as such companies are not primarily or fre­ competition [or] conflicts of interest. . .” which are quently engaged in the issuance, sale and distribu­ factors that the Board must consider under section tion of securities.” This is consistent with—and 4(c)(8). ICI thereupon states “If the Board were to even stricter than—the provision of section 20 of the prohibit or restrict the placement of brokerage by a Glass-Steagall Act which merely prohibits affilia­ bank holding company subsidiary with a firm which tions with a member bank where a company is sponsors a mutual fund for which the subsidiary “engaged principally” in securities activities. acts as investment advisor and otherwise regulate In addition, the Board stated in its interpretive or prohibit transactions between the two entities, it ruling that the provisions of the Glass-Steagall Act would be possible to be far more confident that the are not affected by the Bank Holding Company Act selection and retention of banks as investment Amendments of 1970 (84 Stat. 1760), and that the advisors to funds they allegedly do not ‘sponsor’ Board’s regulation and the interpretive ruling are will be based upon proper competitive con­ consistent “with the spirit and purpose of the siderations.” Glass-Steagall Act. ...” In the Board’s view ICI’s argument in this regard It is clear from the legislative history of the Bank is without merit. In the passage just cited, it would Holding Company Act Amendments of 1970 (84 appear that ICI is admitting that the new open-end Stat. 1760) that the Glass-Steagall Act provisions funds are sponsored and controlled by the broker­ were not intended to be affected thereby. Accord­ age firms, rather than the bank advisors.5 Further­ ingly, the Board regards the Glass-Steagall Act more, the obligations of a fund’s directors with provisions and the Board’s prior interpretations respect to selection of its investment advisor are thereof as applicable to a holding company’s ac­ clearly spelled out in the Investment Company Act tivities as an investment advisor. Consistently with of 1940 and Congress recently considered at length the spirit and purpose of the Glass-Steagall Act, and enacted legislation dealing with the question of this interpretation applies to all bank holding com­ panies registered under the Bank Holding Com­ selection of brokerage firms by money managers as pany Act irrespective of whether they have sub­ part of the Securities Acts Amendments of 1975 (15 sidiaries that are member banks. U.S.C. 28(e)(1)); (Sen. Rep. 94-75, pp. 69-71). Ac­ cordingly, the Board believes that this subject mat­ 12 CFR 225.125(b). The Board also stated that bank ter is fully covered by existing law and that it would holding companies may not undertake any activity serve no useful purpose to consider the matter at prohibited by the Glass-Steagall Act: this time in discharging its responsibilities under the The Board intends that a bank holding company Bank Holding Company Act. may exercise all functions that are permitted to be The Board has placed conditions upon the in­ exercised by an “investment advisor” under the vestment advisory activities of bank holding com­ Investment Company Act of 1940, except to the panies and their nonbanking subsidiaries designed extent limited by the Glass-Steagall Act provisions, to prevent the occurrence of Glass-Steagall Act as described, in part, hereinafter. violations as a result of such activities. 12 CFR § 12 CFR 225.125(d). Pursuant to U.S.C. § 1818, the 225.125. For example, bank holding companies may Board may issue cease and desist orders to restrain advise but may not sponsor open-end investment violations of law by bank holding companies, in­ companies because such companies may be said to cluding violations of the Glass-Steagall Act. The Board is prepared to use this authority where it appears that a bank holding company has violated 5In addition, on page 20 of its Memorandum, ICI also states “Thus, while the ranks of directors and officers of the new or is violating 12 CFR § 225.4(a)(5)(ii) or any of the open-end funds may be dominated by personnel associated with limitations on investment advisory activities the brokerage house and not with the bank, some doubt arises as to the practical likelihood that the decision to retain the bank as specified in 12 CFR § 225.125. If ICI is aware of any investment advisor to the fund will in all instances be made such violations of law which merit investigation by objectively on the basis of capabilities and performance, without the Board or the institution of cease and desist consideration of the substantial benefits which the bank is in a position to confer upon the brokerage house.” proceedings pursuant to 12 U.S.C. § 1818, it should Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

860 Federal Reserve Bulletin □ September 1977 advise the Board accordingly. In addition, ICI may on competition, the financial and managerial re­ seek intervention in any future proceeding arising sources and prospects of the banks involved, and out of an application by a bank holding company for the convenience and needs of the communities to permission to give investment advice pursuant to 12 be served and finds that: CFR § 225.4(a)(5)(ii), if it believes the applicant On the basis of the information before the Board, bank holding company may violate the Glass- it is apparent that an emergency situation exists so Steagall Act. ICI thus has the same remedies avail­ as to require that the Board act immediately pur­ able to it in this case as it has with respect to the suant to the provisions of the Bank Merger Act in bank investment service activities that it challenged order to safeguard depositors of Donahue Savings in New York Stock Exchange and Investment Com­ Bank. pany Institute v. Robert Bloom, No. 76-1235 (D.C. Such anticompetitive effects as may be attributa­ Cir., decided July 19, 1977), as well as the addi­ ble to consummation of the transaction are clearly tional remedy of being able to seek intervention in outweighed in the public interest by considerations future adjudicatory proceedings under the chal­ relating to and involved in the emergency situation lenged regulation. found to exist. From the record in the case, it is the For the foregoing reasons, ICI’s petition for Board’s judgment that any disposition of the applica­ reconsideration and recision of 12 CFR § tion other than approval would be inconsistent with 225.4(a)(5)(ii) should be, and it hereby is, denied. the best interests of the depositors of Donahue By order of the Board of Governors, effective Savings Bank, and the Board concludes that the August 31, 1977. proposed transaction should be approved on a basis that would not delay consummation of the propo­ Voting for this action: Vice Chairman Gardner, and sal. Governors Wallich, Jackson, Partee, and Lilly. Absent and not voting: Chairman Burns and Governor Coldwell. It is hereby ordered, on the basis of the record, that the application be and hereby is approved and (Signed) Theodore E. Allison, that the acquisition of assets and assumption of [seal] Secretary of the Board. liabilities and the establishment of a branch office may be consummated immediately but in no event later than three months after the date of this Order Order U nder Bank M erger A ct unless such period is extended for good cause by the Board, or by the Federal Reserve Bank of Davenport Bank and Trust Company, Chicago pursuant to delegated authority. Davenport, Iowa By order of the Board of Governors, effective Order Approving Acquisition of Assets August 29, 1977. Davenport Bank and Trust Company, Daven­ Voting for this action: Vice Chairman Gardner and port, Iowa, a State member bank of the Federal Governors Jackson, Partee, and Lilly. Absent and not voting: Chairman Burns and Governors Wallich and Cold- Reserve System, has applied, pursuant to the Bank well. Merger Act (12 U.S.C. 1828(c)), for the Board’s prior approval to acquire certain assets and assume (Signed) Theordore E. Allison, certain liabilities of Donahue Savings Bank, [seal] Secretary of the Board. Donahue, Iowa ($5 million in deposits1), and, as an incident thereto, to operate the present office of Prior Certifications Pursuant to the Donahue Savings Bank as a branch office. Bank H olding Com pany Tax A ct of 1976 Published notice of the proposed acquisition of assets and assumption of liabilities and requests for Republic of Texas Corporation, reports on the competitive factors involved therein Dallas, Texas have been dispensed with as authorized by the [Docket No. TCR 76-107] Bank Merger Act. The Board has considered all relevant material Republic of Texas Corporation, Dallas, Texas contained in the record in the light of the factors set (“Republic”) has requested a prior certification forth in the Act, including the effect of the proposal pursuant to § 6158(a) of the Internal Revenue Code (the “Code”), as amended by § 3(a) of the Bank Holding Company Tax Act of 1976 (the “Tax deposit data are as of December 31, 1976. Act”), that the proposed sale by The Howard Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law D epartm ent 861 Corporation (“Howard”) of certain of its nonbank­ not entitled to the benefit of any grandfather ing assets, which assets are described in Schedule privileges that Old Republic Bank may have A hereto (the “Howard Assets”), is necessary or possessed pursuant to the proviso in § 4(a)(2) of the appropriate to effectuate § 4 of the Banking Hold­ BHC Act. ing Company Act (12 U.S.C. § 1843) (“BHC Act”). 6. By Order dated October 25, 1973, the Board In connection with this request, the following approved Republic’s application under § 3(a)(1) of information is deemed relevant for purposes of the BHC Act to become a bank holding company issuing the requested certification:1 through the acquisition of 100 per cent of the voting 1. On July 7, 1970, Republic National Bank of shares (less directors’ qualifying shares) of the Dallas (“Old Republic Bank”), a national banking successor by merger to Old Republic Bank and the association, indirectly controlled 29.9 per cent of indirect acquisition of control of 29.9 per cent of the the voting shares of Oak Cliff Bank and Trust voting shares of Oak Cliff Bank. Pursuant to the Company, Dallas, Texas (“Oak Cliff Bank”). provisions of § 4(a)(2) of the BHC Act, Republic 2. On July 7, 1970, Old Republic Bank indirectly was required by that order to divest itself, within controlled, through Howard, a trusteed affiliate, two years from the date as of which it would property, including the Howard Assets, the disposi­ become a bank holding company, of the impermis­ tion of which would have been necessary or appro­ sible nonbanking interests that would be directly or priate to effectuate § 4 of the BHC Act if Old indirectly controlled by the successor by merger: to Republic Bank were to have continued to be a bank Old Republic Bank, including such impermissible holding company beyond December 31, 1980, interests held by Howard. which property was “prohibited property” within 7. On May 9, 1974, in a transaction described in § the meaning of §§ 6158(f)(2) and 1103(c) of the 368(a)(1)(A) and § 368(a)(2)(D) of the Code, Old Code. Republic Bank was merged into the present Repub­ 3. Old Republic Bank became a bank holding lic National Bank of Dallas (“New Republic company on December 31, 1970, as a result of the Bank”), a national banking association that was a 1970 Amendments to the BHC Act, by virtue of its wholly-owned subsidiary (except for directors’ indirect control at that time of more than 25 per cent qualifying shares) of Republic. New Republic Bank of the outstanding voting shares of Oak Cliff Bank, thereby acquired substantially all of the properties and it registered as such with the Board on Septem­ of Old Republic Bank and Republic thereupon ber 24, 1971. Old Republic Bank would have been a became a bank holding company. By virtue of two bank holding company on July 7, 1970, if the BHC one-year extensions granted by the Board, Repub­ Act Amendments of 1970 had been in effect on such lic presently has until May 9, 1978, to complete the date, by virtue of its indirect control on that date of divestitures required by the Board’s Order of Octo­ more than 25 per cent of the outstanding voting ber 25, 1973. shares of Oak Cliff Bank. 8. As part of the same transaction by which 4. Republic is a corporation that was organized Republic became a bank holding company, in a under the laws of the State of Delaware on July 12, transaction to which § 351 of the Code applied, 1972, for the purpose of effecting the reorganization Republic acquired beneficial interests in the shares of Old Republic Bank into a subsidiary of Republic. of Howard held by trustees for the benefit of 5. On September 10, 1973, the Board ruled that shareholders of New Republic Bank, which shares in the event Republic were to become a bank are shares described in § 2(g)(2) of the BHC Act. holding company through the acquisition of the suc­ 9. The Howard Assets are a part of the property cessor by merger to Old Republic Bank, Republic of Howard in which Republic acquired a beneficial would not be regarded as a “successor” to Old interest pursuant to § 2(g)(2) of the BHC Act. Republic Bank as defined in § 2(e) of the BHC Act 10. By a Purchase Agreement dated as of Febru­ for the purposes of § 2(a)(6) of the BHC Act, or ary 1, 1977 (the “Purchase Agreement”), Howard as a “company covered in 1970,” as that term is proposes to sell the Howard Assets, as well as defined in the BHC Act, and that Republic was certain other assets acquired by Howard after July 7, 1970, to A A Development Corporation (“De­ velopment”), a Texas consuming assets corpora­ irThis information derives from Republic’s correspondence with tion. All of the outstanding voting shares of De­ the Board concerning its request for this certification, Republic’s velopment, consisting of 100,000 shares of common Registration Statement filed with the Board pursuant to the BHC stock, are owned and controlled by American Air­ Act, as well as the Registration Statement of Republic National Bank and other records of the Board. lines, Inc. (“AA”). As consideration for the pur­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

862 Federal Reserve Bulletin □ September 1977 chase of the Howard Assets and the other assets to of § 2(d) of the BHC Act) of Republic, and as such be sold pursuant to the Purchase Agreement, De­ is treated as a qualified bank holding corporation velopment will pay Howard $52,825,654 in cash, for the purposes of § 1103(b) and § 6158 of the and will assume various liabilities and obligations of Code, pursuant to § 3(d) of the Tax Act; Howard with respect to all the assets to be sold (E) Each of the Howard Assets described in pursuant to the Purchase Agreement. As additional Schedule A hereto is “prohibited property” for the consideration for the purchase, Development will, purposes of § 6158 of the Code; and simultaneously with the purchase of the Howard (F) The sale of each of the Howard Assets is Assets, sell to Republic for $500,000 in cash a necessary or appropriate to effectuate § 4 of the warrant to purchase all of the 5,000 authorized BHC Act. shares of Development’s preferred stock (the This certification is based upon the representa­ “Warrant”). By its terms, the Warrant may be tions and commitment made to the Board by Re­ exercised for a period of 18 months after the public and upon the facts set forth above. In the occurrence of certain events specified in the Pur­ event the Board should hereafter determine that chase Agreement. Simultaneously with the pur­ facts material to this certificatin are otherwise than chase of the Warrant by Republic, Data Center, as represented by Republic, or that Republic has Inc. (“Data”), a corporation formed under the laws failed to disclose to the Board other material facts, of the State of Delaware all of the outstanding or has failed to meet its commitment, it may revoke voting shares of which are owned and controlled by this certification. AA, will execute an Agreement for the Purchase By order of the Board of Governors acting and Sale of Warrant (the “Warrant Agreement”), through its General Counsel, pursuant to delegated under which, during the period the Warrant is authority (12 CFR § 265.2(B)(3)), effective May 25, exercisable, Republic will have the right to require 1977. Data to purchase the Warrant, and Data will have (Signed) Ruth A. Reister, the right to require Republic to sell the Warrant to [seal] Assistant Secretary of the Board. it. The purchase price to be paid for the Warrant by Data in the event either Republic or Data exercises its rights under the Warrant Agreement, is to be determined at a future date in accordance with a Schedule A formula described in the Warrant Agreement. Re­ Republic of Texas Corporation public has committed to the Board by letter dated [Docket No. TCR 76-107] May 24, 1977, that under no circumstances will it exercise the Warrant. The following is a summary description of the On the basis of the foregonig information, and in Howard Assets to be sold to AA to which this prior light of Republic’s commitment to the Board with certification relates. These assets are described in respect to the exercise of the Warrant, it is hereby detail in Schedule II to the Purchase Agreement,2 certified that: and in an Instrument of Conveyance and Assign­ (A) Prior to May 9, 1974, Old Republic Bank was ment dated as of May 26, 1977 from Howard to a “qualified bank holding corporation,” within the Development (“Conveyance Instrument”),3 each meaning of subsection (b) of § 1103 of the Code, and of which is incorporated here to by reference insofar satisfied the requirements of that subsection; as it relates to the Howard Assets. For the purposes (B) New Republic Bank is a corporation that of this certification, the term “Howard Assets” acquired substantially all of the properties of a refers to those assets described below only to the qualified bank holding corporation, and as such is extent that such assets were either (1) acquired by treated as a qualified bank holding corporation for Howard on or before July 7, 1970, or (2) acquired the purposes of § 1103(b) and § 6158 of the Code, by Howard after July 7, 1970, under circumstances pursuant to § 3(d) of the Tax Act; described in § 1101(c) of the Code such that the (C) Republic is a corporation in control (within the meaning of § 2(a)(2) of the BHC Act) of New Republic Bank, and as such is treated as a qualified bank holding corporation for the purposes of § 1103(b) and § 6158 of the Code, pursuant to § 3(d) of 2A complete copy of the Purchase Agreement and the Schedules thereto is on file with the Board. the Tax Act; 3A complete copy of the Conveyance Instrument is on file with (D) Howard is a subsidiary (within the meaning the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law D epartm ent 863 assets could be distributed without recognition of 1968 to acquire and hold all the shares of Wachovia gain pursuant to § 1101(a)(1) of the Code. Bank and Trust Company, N.A. (“Bank”). 1. Certain oil and gas interests, each of which is 2. On December 31, 1968, Wachovia acquired more particularly described in the Conveyance In­ ownership and control of all of the outstanding strument. voting shares (less directors’ qualifying shares) of 2. Real property described in Schedule II to the Bank. Purchase Agreement (excluding Town and Country 3. Wachovia became a bank holding company on Shopping Center, Midland, Texas and Uptown December 31, 1970, as a result of the 1970 Amend­ Shopping Center, Shreveport, Louisiana for which ments to the BHC Act, by virtue of its ownership prior certifications have already been issued in and control at that time of more than 25 per cent of connection with sales to parties other than De­ the outstanding voting shares of Bank, and it regis­ velopment). tered as such with the Board on January 20, 1972. 3. Properties known as “The Walker-Louisiana Wachovia would have been a bank holding com­ Properties” that are more particularly described in pany on July 7, 1970, if the BHC Act Amendments the Conveyance Instrument. of 1970 had been in effect on such date, by virtue of its ownership and control on that date of more than 25 per cent of the voting shares of Bank. Wachovia presently owns and controls 100 per cent (less directors’ qualifying shares) of the outstanding vot­ The Wachovia Corporation, ing shares of Bank. Winston-Salem, North Carolina 4. Agency was organized in January 1969 as a [Docket No. TCR 76-104] wholly-owned subsidiary of Wachovia to engage in The Wachovia Corporation, Winston-Salem, the business of acting as agent for the sale of all North Carolina (“Wachovia”) has requested a prior types of insurance, including fire, casualty and certification pursuant to § 6158(a) of the Internal marine insurance, fidelity and surety bonds and Revenue Code (the “Code”), as amended by § 3(a) group accident and health coverage. On April 30, of the Bank Holding Company Tax Act of 1976 (the 1976 Wachovia owned and controlled the 20,000 “Tax Act”), that its sale on April 30, 1976 of all the issued and outstanding shares of common stock of 20,000 issued and outstanding shares of common Agency, all of which it acquired before July 7, 1970. stock of Wachovia Insurance Agency, Inc., 5. Wachovia did not file an application with the Winston-Salem, North Carolina (“Agency”), then Board, and did not otherwise obtain the Board’s held by Wachovia was necessary or appropriate to approval, pursuant to § 4(c)(8) of the BHC Act to effectuate § 4 of the Bank Holding Company Act retain the shares of Agency or engage in the ac­ (12 U.S.C. § 1843) (“BHC Act”). The shares of tivities carried on by Agency.3 Agency were sold by Wachovia to Alexander & Alexander, Inc., Baltimore, Maryland (“A&A”), in exchange for 130,000 shares of common stock of Alexander & Alexander Services, Inc. (“Ser­ vices”), the parent company of A&A.1 3Although Wachovia did not seek Board approval to retain In connection with this request, the following Agency, some or all of Agency’s activities may be among those activities that the Board has previously determined to be closely information is deemed relevant for purposes of related to banking, under § 4(c)(8). See 12 CFR §§ 225.4(a)(9) and issuing the requested certification:2 225.128; Alabama Association for Insurance Agents et al. v. Board of Governors of the Federal Reserve System, 544. 2d 572 1. Wachovia is a corporation organized under (1977). Under the Board’s present procedures, however, the the laws of the State of North Carolina in September question whether, or to what extent, Wachovia would have been permitted to retain these activities would not have been determin­ able unless and until Wachovia filed an application for permission to retain the activities. In passing upon such an application the Board would have been required to apply the second test set forth *Pursuant to § 3(e)(2) of the Tax Act, in the case of any sale that in § 4(c)(8) and to determine whether the performance of these takes place on or before December 31, 1976 (the 90th day after the activities by a subsidiary of Wachovia “can reasonably be ex­ date of the enactment of the Tax Act), the certificaf >n described pected to produce benefits to the public, such as greater conveni­ in § 6158(a) shall be treated as made before the sale if application ence, increased competition, or gains in efficiency, that outweigh for such certification was made before the close oi December 31, possible adverse effects, such as undue concentration of re­ 1976. Wachovia’s application for such certification was received sources, decreased or unfair competition, conflicts of interest, or by the Board on November 19, 1976. unsound banking practices.” In the absence of favorable action 2This information derives from Wachovia’s correspondence with on such an application Wachovia would have had no authority for the Board concerning its request fo this certification, Wachovia’s retaining Agency beyond December 31, 1980, if it continued to be Registration Statement filed with the Board pursuant to the BHC a bank holding company beyond that date. The legislative history Act and other records of the Board. of the Tax Act does not indicate a Congressional intent that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

864 Federal Reserve Bulletin □ September 1977 6. On April 30, 1976 Wachovia sold the shares of Code, and satisfied the requirements of that subsec­ Agency to A&A in exchange for 130,000 shares of tion; common stock of Services, which shares repre­ (B) The shares of Agency that were sold by sented 2.4 per cent of the outstanding voting shares Wachovia on April 30, 1976 were “prohibited of Services. On August 2, 1976 Wachovia sold the property” within the meaning of §§ 6158(f)(2) and Services shares and it presently holds no interest in 1103(c) of the Code; and Services or any subsidiary of Services. (C) The sale of the shares of Agency was neces­ On the basis of the foregoing information it is sary or appropriate to effectuate § 4 of the BHC hereby certified that: Act. (A) On April 30, 1976 Wachovia was a qualified This certification is based upon the representa­ bank holding corporation, within the meaning of § tions made to the Board by Wachovia and upon the 6158(f)(1) and subsection (b) of section 1103 of the facts set forth above. In the event the Board should hereafter determine the facts material to this certifi­ cation are otherwise than as represented by Wachovia, or that Wachovia has failed to disclose to the Board other material facts, it may revoke this certification. companies subject to such a divestiture requirement exhaust the By order of the Board of Governors acting possibilities for retaining the activity before being eligible for tax relief, and in view of the paramount purpose of § 4 of the BHC through its General Counsel, pursuant to delegated Act, that “banking and commerce should remain separate,” S. authority (12 CFR § 265.2(b)(3)), effective July 12, Rep. No. 1084, 91st Cong., 2d Sess. 12 (1970), it would appear that 1977. the disposition of a potentially permissible activity, without first seeking approval for retention, is at least “appropriate” to effec­ (Signed) Ruth A. Reister, tuate § 4. [seal] Assistant Secretary of the Board. ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By the Board of Governors During August 1977, the Board of Governors approved the applications listed below. The orders have been published in the Federal Register, and copies are available upon request to Publications Services, Division of Administration Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Board action Federal (effective Register Applicant Bank(s) date) citation American State Bancshares, The American State 8/31/77 42 F.R. 45031 Inc., Osawatomie, Kansas Bank, Osawatomie, 9/8/77 Kansas Caprice Corporation, Red Plummer State Bank, 8/10/77 42 F.R. 41664 Lake Falls, Minnesota Plummer, Minnesota 8/18/77 The Central Bancorporation, First National Bank 8/9/77 42 F.R. 41475 Inc., Cincinnati, Ohio of Mercer County, 8/17/77 Celina, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law D epartm ent 865 Section 3—Continued Board action Federal (effective Register Applicant Bank(s) date) citation First Midwest Bancorp., The Farmers Bank 8/1/77 42 F.R. 40049 Inc., St. Joseph, of Gower, Gower, 8/8/77 Missouri Missouri First of Grandfield First State Bank, 8/19/77 42 F.R. 43121 Corporation, Grandfield, Grandfield, 8/26/77 Oklahoma Oklahoma Maryville Bancshares, Citizens State Bank 8/30/77 42 F.R. 45033 Inc., Kansas City, of Maryville, 9/8/77 Missouri Maryville, Missouri National City Corpor­ National Union Bank, 8/24/77 42 F.R. 43887 ation, Cleveland, Columbiana, Ohio 8/31/77 Ohio Sections 3 and 4 Nonbanking Federal company Reserve Effective Register Applicant Bank(s) (or activity) Bank date citation Ottawa Bancshares, The Kansas sale of Kansas City S/25/11 42 F.R. 45031 Inc., Ottawa, State Bank, insurance 9/8/77 Kansas Ottawa, directly Kansas related to extensions of credit (Pending Cases Involving the Board of Governors to follow.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

866 Federal Reserve Bulletin □ September 1977 PENDING CASES INVOLVING THE BOARD OF GOVERNORS* BankAmerica Corporation v. Board of Governors, Memphis Trust Company v. Board of Governors, filed May 1977, U.S.D.C. for the Northern Dis­ filed February 1976, U.S.D.C. for the Western trict of California. District of Tennessee. BankAmerica Corporation v. Board of Governors, First Lincolnwood Corporation v. Board of Gover­ filed May 1977, U.S.C.A. for the Ninth Circuit. nors , filed February 1976, U.S.C.A. for the First Security Corporation v. Board of Governors, Seventh Circuit. filed March 1977, U.S.C.A. for the Tenth Cir­ Roberts Farm, Inc. v. Comptroller of the Currency, cuit. et al., filed November 1975, U.S.D.C. for the Farmers State Bank of Crosby v. Board of Gover­ Southern District of California. nors, filed January 1977, U.S.C.A. for the Eighth Florida Association of Insurance Agents, Inc. v. Circuit. Board of Governors, and National Association National Automobile Dealers Association, Inc. v. of Insurance Agents, Inc. v. Board of Gover­ Board of Governors, filed November 1976, nors, filed August 1975, actions consolidated in U.S.C.A. for the District of Columbia. U.S.C.A for the Fifth Circuit. First Security Corporation v. Board of Governors, tXDavid R. Merrill, et al. v. Federal Open Market filed August 1976, U.S.C.A. for the Tenth Cir­ Committee of the Federal Reserve System, filed cuit. May 1975, U.S.D.C. for the District of Colum­ Central Wisconsin Bankshares, Inc. v. Board of bia, appeal pending, U.S.D.A. for the District Governors, filed June 1976, U.S.C.A. for the of Columbia. Seventh Circuit. Louis J. Roussel v. Board of Governors, filed April National Urban League, et al. v. Office of the 1975, U.S.D.C. for the Eastern District of Comptroller of the Currency, et al., filed April Louisiana. 1976, U.S.D.C. for the District of Columbia Georgia Association of Insurance Agents, et al. v. Circuit. Board of Governors, filed October 1974, Farmers & Merchants Bank of Las Cruces, New U.S.C.A. for the Fifth Circuit. Mexico v. Board of Governors, filed April 1976, Alabama Association of Insurance Agents, et al. v. U.S.C.A. for the District of Columbia Circuit. Board of Governors, filed July 1974, U.S.C.A. Grandview Bank & Trust Company v. Board of for the Fifth Circuit. Governors, filed March 1976, U.S.C.A. for the Bankers Trust New York Corporation v. Board of Eighth Circuit. Governors, filed May 1973, U.S.C.A. for the Association of Bank Travel Bureaus, Inc. v. Board Second Circuit. of Governors, filed February 1976, U.S.C.A. for the Seventh Circuit. *This list of pending cases does not include suits against the tDecisions have been handed down in these cases, subject to Federal Reserve Banks in which the Board of Governors is not appeals noted. named a party. $The Board of Governors is not named as a party in this action. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

867 Announcements CHANGE IN DISCOUNT RATE bank borrowing was quite limited until early Au­ gust, the vast majority of banks are now in this The Board of Governors of the Federal Reserve position. Of these, a small but increasing number System has announced the approval of actions by of banks are meeting a larger share of their bor­ the directors of the Federal Reserve Banks of rowing needs at the discount window in order to Philadelphia, Cleveland, Atlanta, Chicago, and St. take advantage of the relatively low level of the Louis increasing the discount rate of those banks discount rate. from 5lA per cent to 53A per cent, effective August 30. Subsequently the Board announced the ap­ proval of similar actions by the directors of the CONSUMER ADVISORY COUNCIL: Federal Reserve Banks of Richmond and Min­ Meeting neapolis effective August 30, by the directors of the Federal Reserve Bank of New York effective The Board of Governors announced a meeting of August 31, and by the directors of the Federal its Consumer Advisory Council on September 15, Reserve Banks of Boston, Kansas City, Dallas, 1977. and San Francisco effective September 2. The Council considered consumer credit regula­ The Board’s action was taken to reduce the tory and legislative actions since its last meeting, incentive for member banks to borrow from the June 2, and heard a staff report of proposals for Federal Reserve. Such borrowing has increased joint action by the Federal Reserve Board, Comp­ rapidly in recent weeks. troller of the Currency, Federal Home Loan The Board stated that this action is intended as a Bank Board, and the Federal Deposit Insurance technical move for the purpose of bringing the Corporation on compliance with consumer credit discount rate into better alignment with other laws by financial institutions. The Council also short-term interest rates and that it has no mone­ discussed legislation that would prohibit discrimi­ tary policy implications. nation in the granting of credit based upon residen­ In taking the action, the Board noted that tial location. member bank borrowings averaged about $1.7 bil­ lion in the statement week ending August 24 com­ pared with $295 million 4 weeks earlier. REGULATION Z: During this period, the Federal Reserve discount Interpretation and Action rate has remained at the 5lA per cent level estab­ lished in November 1976 while interest rates that The Board of Governors has approved an interpre­ banks must pay for other short-term money market tation of Regulation Z (Truth in Lending) simplify­ funds have risen considerably. The discount rate is ing procedures for credit-card issuers that bill cus­ the interest rate charged member commercial tomers in full on a transaction-by-transaction basis banks when they borrow from their district Fed­ and impose no finance charges. eral Reserve Bank. Most credit cards extend open-end credit, such In the Board’s view the recent surge in member as the credit available with a bank credit card or a bank borrowing has resulted mainly from the di­ department store card, and customers are billed, vergence between the unchanged discount rate and usually monthly, for their purchases. A debt bal­ current market interest rates. ance may be left after the customer makes a pay­ Under the terms of the Board’s Regulation A ment. Certain credit-card issuers, however, such relating to extensions of credit by Federal Reserve as some automobile rental companies, require Banks, member banks have ready access to the payment in full for each transaction, and send bills discount window if they have not recently made only when there has been a transaction. No fi­ excessive use of this privilege. Because member nance charges are imposed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

868 Federal Reserve Bulletin □ September 1977 The interpretation permits such credit-card is­ CHANGES IN BOARD STAFF suers to continue sending bills to their customers The Board of Governors has announced the ap­ only when a transaction has occurred. The in­ pointment of John L. Grizzard as Assistant Di­ terpretation also requires such card issuers to con­ rector in the Division of Administrative Services, form only to provisions of Regulation Z that are effective September 19, 1977. clearly consistent with their type of billing. Mr. Grizzard, formerly Project Engineer with I ft addition the Board on September 2, 1977, Deleuw, Cather & Company of Washington, D.C., announced that it had postponed the effective date holds a B.S. from Virginia Polytechnic Institute of a section of Regulation Z (Truth in Lending) and is a graduate of the Industrial College of the dealing with rules for the billing of credit transac­ Armed Forces. tions, such as cash advance checks. The Board has also announced the promotion of The section of the regulation involved John J. Mingo, Associate Research Division Officer, (226.7(k)(3)(ii» had been scheduled to go into ef­ to Senior Research Division Officer in the Division fect October 28, 1977. The date for full implemen­ of Research and Statistics, effective September 19, tation of this section of the regulation has been 1977, and the retirement of Reed J. Irvine, Senior postponed to March 28, 1978. International Division Officer, on September 30, The announcement said the action was taken 1977. because the Board is considering proposals de­ signed to facilitate compliance with the regulation by creditors, while maintaining requirements for REVISED SERIES description of transactions adequate to allow cus­ tomers to identify them. The industrial production indexes have been re­ At present, full implementation of this part of vised back to January 1976. Revised data for this Regulation Z calls for the creditor to send a bill to series and for capacity utilization appear in the the customer showing the date of the transaction or Board’s statistical releases G.12.3 (September 16, the date on the credit document (such as a cash 1977) and G.3 (September 19,1977). Tables 2.11 and advance check), the amount of the transaction, 2.13 on pp. A46 and A48-49, respectively, incorpo­ and a statement as to what type of nonsale credit rate these revisions. transaction is involved, such as a cash advance check, an overdraft credit, or other. Until full implementation on March 28, 1978, System Membership: creditors may substitute for the transaction date or Admission of State Bank the date on the credit document the date the trans­ action is debited to the customer’s account, or the The following bank was admitted to membership in creditor may omit any of the required information the Federal Reserve System during the period Au­ that is not available and treat any resulting inquiry gust 16, 1977, through September 15, 1977: from the customer as a billing error, triggering the Utah billing error requirements of Regulation Z. Sandy----------------------------------Sandy State Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

869 Industrial Production Released for publication September 16 (Earlier published indexes for 1976 and 1977 have been revised. The new indexes are available in the Board’s G. 12.3 statistical release for September 16, Industrial production declined by an estimated 0.5 1977.) per cent in August to 138.2 per cent of the 1967 average. This was the first drop in the index since the weather-related reduction in January 1977. De­ Seasonally adjusted, ratio scale, 1967=100 clines in output were widespread but were concen­ trated in auto production and electric utility power generation, both of which had increased sharply in July. The drop in production was associated with declines in employment, with a generally shortened workweek in manufacturing industries, and to a limited extent, with a strike in the iron ore industry. Output of consumer durable goods declined 1.7 per cent in August. Seasonally adjusted auto as­ semblies dropped to an annual rate of 9.4 million units, after allowance for model changeover, fol­ lowing the very high rate of 10.0 million units in July. Production of home goods such as appliances and furniture decreased slightly, while output of consumer nondurable goods declined 0.7 per cent. Production of business equipment was reduced 0.4 per cent. Output of durable goods materials declined slightly, as small increases in raw steel and equip­ ment parts were more than offset by strike-reduced iron ore production. Nondurable materials produc­ F.R. indexes, seasonally adjusted. Latest figures: August. tion was almost unchanged. *Auto sales and stocks include imports. Seasonally adjusted, 1967 = 100 Per cent changes from— Industrial production 1977 May June Julyp Aug.e Month ago Year ago Ql to Q2 Total .............................................................................................. 137.0 137.9 138.9 138.2 -.5 5.3 2.5 Products, total............................................................................. 136.5 137.5 138.8 137.9 -.7 6.0 2.0 Final products........................................................................ 134.7 135.5 136.9 135.7 -.9 6.0 2.2 Consumer goods............................................................... 143.1 143.7 145.5 144.1 -1.0 5.2 1.5 Durable goods............................................................... 152.2 155.5 158.1 155.5 -1.7 7.8 3.4 Nondurable goods......................................................... 139.5 139.0 140.5 139.5 -.7 3.9 .7 Business equipment......................................................... 148.9 150.3 151.6 151.0 -.4 9.7 3.7 Intermediate products ......................................................... 143.5 144.5 145.9 145.8 -.1 5.3 1.1 Construction supplies....................................................... 138.7 139.2 140.4 140.6 .1 4.2 1.7 Materials....................................................................................... 137.8 138.5 138.9 138.7 -.2 4.3 3.4 ^Preliminary. ^Estimated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 1 Financial and Business Statistics CONTENTS DOMESTIC FINANCIAL STATISTICS W eekly Reporting Commercial Banks A3 Monetary aggregates and interest rates Assets and Liabilities of— A4 Factors affecting member bank reserves A20 All reporting banks A5 Reserves and borrowings of member A21 Banks in New York City banks A22 Banks outside New York City A6 Federal funds transactions of money A23 Balance sheet memoranda market banks A24 Commercial and industrial loans A25 Gross demand deposits of individuals, Policy Instruments partnerships, and corporations A8 Federal Reserve Bank interest rates A9 Member bank reserve requirements Financial M arkets A10 Maximum interest rates payable on time and savings deposits at Federally A25 Commercial paper and bankers insured institutions acceptances outstanding A10 Margin requirements A26 Prime rate charged by banks on A11 Federal Reserve open market short-term business loans transactions A26 Interest rates charged by banks on business loans Federal Reserve Banks A27 Interest rates in money and capital markets A12 Condition and F.R. note statements A28 Stock market—Selected statistics A13 Maturity distribution of loan and security holdings A29 Savings institutions—Selected assets and liabilities Monetary and Credit Aggregates A13 Demand deposit accounts—Debits and Federal Finance rate of turnover A30 Federal fiscal and financing operations A14 Money stock measures and components A31 U.S. Budget receipts and outlays A15 Aggregate reserves and deposits of A32 Federal debt subject to statutory member banks limitation A15 Loans and investments of all A32 Gross public debt of U.S. Treasury— commercial banks Types and ownership A33 U.S. Government marketable Commercial Bank Assets and Liabilities securities—Ownership, by maturity A16 Last-Wednesday-of-month series A34 U.S. Government securities dealers— A17 Call-date series Transactions, positions, and financing A18 Detailed balance sheet, Mar. 31, 1977 A35 Federal and Federally sponsored credit agencies—Debt outstanding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A2 Federal Reserve Bulletin □ Septem ber 1977 Securities M arkets and INTERNATIONAL STATISTICS Corporate Finance A54 U.S. international transactions— A36 New security issues—State and local Summary government and corporate A55 U.S. foreign trade A37 Corporate securities—Net change in A55 U.S. reserve assets amounts outstanding A56 Selected U.S. liabilities to foreigners A37 Open-end investment companies—Net and to foreign official institutions sales and asset position A38 Corporate profits and their distribution Reported by Banks in the United States: A38 Nonfinancial corporations—Assets and A57 Short-term liabilities to foreigners liabilities A59 Long-term liabilities to foreigners A38 Business expenditures on new plant A60 Short-term claims on foreigners and equipment A61 Long-term claims on foreigners A39 Domestic finance companies—Assets and liabilities; business credit A62 Foreign branches of U.S. banks— Balance sheet data Real Estate A40 Mortgage markets Securities Holdings and Transactions A41 Mortgage debt outstanding A64 Marketable U.S. Treasury bonds and notes—Foreign holdings and Consumer Instalment Credit transactions A42 Total outstanding and net change A64 Foreign official accounts A43 Extensions and liquidations A65 Foreign transactions in securities Flow of Funds Reported by Nonbanking Concerns in the United States: A44 Funds raised in U.S. credit markets A45 Direct and indirect sources of funds to A66 Short-term liabilities to and claims on credit markets foreigners A67 Long-term liabilities to and claims on DOMESTIC NONFINANCIAL STATISTICS foreigners A46 Nonfinancial business activity— Interest and Exchange Rates Selected measures A46 Output, capacity, and capacity A68 Discount rates of foreign central banks utilization A68 Foreign short-term interest rates A47 Labor force, employment, and A68 Foreign exchange rates unemployment A48 Industrial production—Indexes and SPECIAL TABLE gross value A50 Housing and construction A69 Sales, revenue, profits, and dividends of large manufacturing corporations A51 Consumer and wholesale prices AJ2 Gross national product and income A53 Personal income and saving INSIDE BACK COVER Guide to Tabular Presentation and Statistical Releases Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Dom estic Financial Statistics A3 1.10 MONETARY AGGREGATES AND INTEREST RATES 1976 1977 1977 Item Q3 Q4 Ql Q2 Apr. May June July Aug. Monetary and credit aggregates (annual rates of change, seasonally adjusted in per cent)1 Member bank reserves 1 Total............................................................................... 2.7 4.4 2.7 3.0 13.0 1.5 4.8 16.9 2 Required........................................................................ 2.4 4.0 3.0 3.5 13.9 0.9 6.9 12.5 3 Nonborrowed............................................................... 2.6 4.8 2.6 1.9 14.1 -3.1 2.9 14.9 Concepts of money 1 4 M-l................................................................................. 4.4 6.5 4.2 '8.4 19.4 0.7 '4.5 18.3 5 M-2................................................................................. 9.1 12.5 9.9 '9.2 13.5 4.7 '8.1 16.6 6 M-3................................................................................. 11.4 14.4 11.3 10.0 12.4 7.3 '9.8 16.1 Time and sayings deposits Commercial banks: 7 Total........................................................................... 7.0 12.2 12.5 8.3 6.9 8.3 13.2 11.0 8 Other than large CD’s............................................ 12.8 17.1 14.0 9.8 9.5 7.6 10.7 15.4 9 Thrift institutions 2..................................................... 14.8 17.3 13.4 11.1 10.5 '11.2 '12.0 15.5 10 Total loans and investments at commercial banks 3 6.9 10.8 11.9 14.0 10.3 8.9 9.3 Interest rates (levels, per cent per annum) Short-term rates 11 Federal funds 4......................................... 5.28 4.88 4.66 5.16 4.73 5.35 5.39 5.42 5.90 12 Treasury bills (3-month market yield) 5 5.15 4.67 3.63 4.84 4.54 4.96 5.02 5.19 5.49 13 Commercial paper (90- to 119-day) 6.. 5.41 4.91 4.74 5.15 4.75 5.26 5.42 5.38 5.75 14 Federal Reserve discount 7..................... 5.50 5.39 5.25 5.25 5.25 5.25 5.25 5.25 Long-term rates Bonds: 15 U.S. Govt. 8........................................... 7.90 7.54 7.62 7.68 7.67 7.74 7.64 7.60 7.64 16 State and local government 9............ 6.64 6.18 5.88 5.70 5.73 5.75 5.62 5.63 5.62 17 Aaa utility (new issue) io................... 8.48 8.15 8.17 '8.21 8.26 8.33 '8.08 8.14 5.04 18 Conventional mortgages 11.................... 9.03 8.95 8.82 8.95 8.90 8.95 9.00 9.00 1 M-l equals currency plus private demand deposits adjusted. 7 Rate for the Federal Reserve Bank of New York. M-2 equals M-l plus bank time and savings deposits other than large 8 Market yields adjusted to a 20-year maturity by the U.S. Treasury. negotiable CD’s. 9 Bond Buyer series for 20 issues of mixed quality. M-3 equals M-2 plus deposits at mutual savings banks, savings and I o Weighted averages of new publicly offered bonds rated Aaa, Aa, loan associations, and credit union shares. and A by Moody’s Investors Service and adjusted to an Aaa basis. 2 Savings and loan associations, mutual savings banks, and credit Federal Reserve compilations. unions. II Average rates on new commitments for conventional first mortgages 3 Quarterly changes calculated from figures shown in Table 1.23. on new homes in primary markets, unweighted and rounded to nearest 4 Seven-day averages of daily effective rates (average of the rates on 5 basis points, from Dept, of Housing and Urban Development. a given date weighted by the volume of transactions at those rates). 12 Unless otherwise noted, rates of change are calculated from average 5 Quoted on a bank-discount rate basis. amounts outstanding in preceding month or quarter. 6 Most representative offering rate quoted by five dealers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Financial Statistics □ September 1977 1.11 FACTORS AFFECTING MEMBER BANK RESERVES Millions of dollars Monthly averages of daily Weekly averages of daily figures for weeks ending— figures 1977 1977 June July Aug.p July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24^ Aug. 31p SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding---- 109,453 113,886 111,036 113,109 112,220 113,786 110,232 110,161 111,237 110,781 2 U.S. Govt, securities1..................... 95,337 98,359 95,977 96,869 97.338 98,300 95.177 95.201 96.162 96,626 3 Bought outright.......................... 94,132 96,930 95,835 96,508 96.339 96,546 95.177 95.201 96.162 96,472 4 Held under repurchase agree­ ment .......................................... 1,205 1,429 142 361 999 1,754 154 5 Federal agency securities............. 7,312 7,611 7,412 7,491 7,590 7,609 7.411 7.411 7.411 7,394 6 Bought outright........................... 7,176 7,423 7,403 7,423 7,423 7,420 7.411 7.411 7.411 7,372 7 Held under repurchase agree­ ment .......................................... 136 188 9 68 167 189 22 8 Acceptances..................................... 228 213 34 56 207 306 13 8 6 23 9 Loans................................................ 262 336 1,070 406 295 598 585 901 1,665 1,392 10 Float.................................................. 3,432 4,005 3,693 4,875 3,589 3,613 3,815 3,745 3,607 2,877 11 Other Federal Reserve assets 2,882 3,362 2,850 3,412 3,201 3,360 3,231 2,896 2,386 2,469 12 Gold stock........................................... 11,628 11,609 11,595 11,605 11,605 11,595 11,595 11,595 11,595 11,595 13 Special Drawing Rights certificate account......................................... 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 14 Treasury currency outstanding........ 11,099 11,141 11,191 11,151 11,153 11,149 11,176 11,191 11,196 11,207 ABSORBING RESERVE FUNDS 15 Currency in circulation..................... 96,029 97,422 97,782 97,604 97,166 97,345 97,906 98,080 97,719 97,470 16 Treasury cash holdings..................... 437 431 432 All 423 423 428 428 434 450 Deposits, other than member bank reserves with F.R. Banks: 17 Treasury.......................................... 7,057 8,843 6,025 6,783 8,000 8,499 6,058 4,967 6,271 5,853 18 Foreign............................................ 277 324 310 330 256 393 270 284 325 367 19 Other2.............................................. 675 759 607 1,025 638 687 551 607 599 604 20 Other F.R. liabilities and capital... 3,260 3,395 3,341 3,328 3,431 3,496 3,196 3,271 3,369 3,541 21 Member bank reserves with F.R. Banks............................................... 25,646 26,663 26,523 27,569 26,265 26,887 25,796 26,510 26,511 26,499 End-of-month figures Wednesday figures 1977 1977 June July Aug.? July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24p Aug. 31 p SUPPLYING RESERVE FUNDS 22 Reserve Bank credit outstanding. .. 117,679 113,916 113,450 115,722 113,871 113,329 107,474 110,776 110,055 113,450 23 U.S. Govt, securities1..................... 102,239 98,711 98,436 98,418 98,397 96.842 92.063 95.859 94.831 98,436 24 Bought outright......................... 98,163 96,381 97,357 95,891 96,834 96.842 92.063 95.859 94.831 97,357 25 Held under repurchase agree­ ment ......................................... 4,076 2,330 1,079 2,527 1,563 1,079 26 Federal agency securities............... 8,033 7,768 7,505 7,896 7,628 7.411 7.411 7.411 7.411 7,505 27 Bought outright......................... 7,423 7,423 7,354 7,423 7,423 7.411 7.411 7.411 7.411 7,354 28 Held under repurchase agree­ ment ......................................... 610 345 151 473 205 151 29 Acceptances.................................... 621 393 131 211 268 17 9 7 6 131 30 Loans............................................... 260 788 1,267 220 514 605 917 1,010 2,323 1,267 31 Float................................................ 3,604 2,543 3,649 4,737 3,832 4,721 3,770 4,171 3,096 3,649 32 Other Federal Reserve assets. . . 2,922 3,713 2,462 4,240 3,232 3,733 3,304 2,318 2,388 2,462 33 Gold stock.......................................... 11,620 11,595 11,595 11,605 11,605 11,595 11,595 11,595 11,595 11,595 34 Special Drawing Rights certificate account............................................ 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 35 Treasury currency outstanding 11,081 11,119 11,210 11,151 11,166 11,175 11,178 11,194 11,198 11,210 ABSORBING RESERVE FUNDS 36 Currency in circulation.................... 96,652 97,047 97,982 97,564 97,422 97,834 98,349 98,178 97,776 97,982 37 Treasury cash holdings..................... 440 426 450 427 421 422 All 430 428 450 Deposits, other than member bank reserves with F.R. Banks: 38 Treasury.......................................... 15,183 8,789 6,115 7,220 8,616 7,195 4,523 6,516 6,562 6,115 39 Foreign............................................ 379 469 535 247 289 301 250 281 351 535 40 Other2.............................................. 748 578 679 1,867 699 725 560 543 532 679 41 Other F.R. liabilities and capital. . 3,616 3,606 3,623 3,383 3,495 3,163 3,174 3,290 3,435 3,623 42 Member bank reserves with F.R. Banks............................................... 24,562 26,912 28,071 28,971 26,901 27,659 24,164 25,527 24,964 28,071 1 Includes securities loaned—fully guaranteed by U.S. Govt, securities voluntarily held with member banks and redeposited in full with Federal pledged with F.R. Banks—and excludes (if any) securities sold and sched­ Reserve Banks. uled to be bought back under matched sale-purchase transactions. Note.—For amounts of currency and coin held as reserves, see Table 2 Includes certain deposits of foreign-owned banking institutions 1.12. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

M em ber Banks A5 1.12 RESERVES AND BORROWINGS Member Banks Millions of dollars Monthly averages of daily figures Reserve classification 1975 1976 1977 Dec. Dec. Jan. Feb. Mar. Apr. May June July Aug.*7 All member banks Reserves: 1 At F.R. Banks............................... 27,215 26,430 27,229 25,725 25,849 26,096 25,970 25,646 26,663 26,523 ?, Currency and coin........................ 7,773 8,548 8,913 8,326 8,134 8,368 8,610 8,609 8,622 8,715 3 Total held*...................................... 34,989 35,136 36,290 34,199 34,135 34,613 34,732 34,406 35,391 35,335 4 Required..................................... 34,727 34,964 35,796 34,234 33,870 34,602 34,460 34,293 35,043 34,990 5 Excess1........................................ 262 172 494 -35 265 11 272 113 348 345 Borrowings at F.R. Banks:2 6 Total................................................ 127 62 61 79 110 73 200 262 336 1,070 7 Seasonal.......................................... 13 12 8 12 13 14 31 55 60 101 Large banks in New York City 8 Reserves held...................................... 6,812 6,520 7,076 6,442 6,331 6,264 6,310 6,241 6,359 6,238 9 6,748 6,602 6,948 6,537 6,259 6,351 6,279 6,188 6,342 6,247 10 Excess.............................................. 64 -82 128 -95 72 -87 31 53 17 -9 11 Borrowings2....................................... 63 15 6 47 44 16 18 36 74 156 Large banks in Chicago 12 Reserves held...................................... 1,740 1,632 1,731 1,624 1,610 1,629 1,637 1,662 1,573 1,647 13 1,758 1,641 1,698 1,624 1,611 1,634 1,634 1,627 1,606 1,621 14 Excess.............................................. -18 -9 33 -1 -5 3 35 -33 26 15 Borrowings2....................................... 4 2 3 * 4 15 6 5 Other large banks 16 Reserves held...................................... 13,249 13,117 13,556 12,683 12,779 13,090 13,067 12,869 13,438 13,220 17 13,160 13,053 13,427 12,765 12,705 13,110 12,996 12,943 13,286 13,271 18 Excess.............................................. 89 64 129 -82 74 -20 71 -74 152 -51 19 Borrowings2........................................ 26 14 25 4 29 23 62 80 79 531 All other banks 20 Reserves held...................................... 13,188 13,867 13,927 13,450 13,415 13,630 13,718 13,634 14,021 13,955 21 13,061 13,668 13,723 13,308 13,295 13,507 13,551 13,535 13,809 13,851 22 Excess.............................................. 127 199 204 142 120 123 167 99 212 104 23 Borrowings2........................................ 38 29 28 28 34 34 116 131 177 378 Weekly averages of daily figures for weeks ending— 1977 June 29 July 6 July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24^ Aug. 31*> All member banks Reserves: At F.R. Banks..................... 26,290 26,815 25,572 27,569 26,265 26,887 25,796 26,510 26,511 26,499 Currency and coin............. 8,623 8,676 8,964 7,849 8,829 8,932 8,993 8,789 8,222 8,764 Total held1........................... 35,064 35,619 34,635 35,519 35,195 35,919 34,890 35,401 34,826 35,356 Required........................... 34,914 35,125 34,371 35,307 35,121 35,495 34,787 35,199 34,789 34,969 Excess1.............................. 150 494 264 212 74 424 103 202 37 387 Borrowings at F.R. Banks:2 Total...................................... 334 265 160 406 295 598 585 901 1,665 1,392 Seasonal................................ 70 61 51 56 68 69 72 99 116 131 Large banks in New York City 31 Reserves held............................ 6,394 6,368 6,297 6,392 6,296 6,408 6,386 6,306 6,062 6,159 32 Required............................... 6,315 6,438 6,211 6,473 6,205 6,439 6,270 6,428 6,110 6,099 33 Excess.................................... 79 -70 86 -81 91 -31 116 -122 -48 60 34 Borrowings2............................. 208 119 225 443 25 Large banks in Chicago Reserves held............... 1,629 1,665 1,542 1,664 1,571 1,631 1,611 1,659 1,533 1,710 Required................... 1,637 1,626 1,568 1,642 1,582 1,618 1,623 1,645 1,585 1,631 Excess....................... 39 -26 22 -11 13 -12 14 -52 79 Borrowings2................ 25 21 Other large banks 39 Reserves held. .. 13,147 13,542 13,042 13,573 13,170 13,719 13,037 13,441 12,948 13,317 40 Required........ 13,184 13,240 13,048 13,430 13,302 13,488 13,151 13,326 13,176 13,337 41 Excess............. -37 302 -6 143 -132 231 -114 115 -228 -20 42 Borrowings 2.... 126 102 20 53 81 165 410 350 799 729 All other banks 43 Reserves held. 13,894 14,044 13,754 13,890 14,158 14,161 13,856 13,995 14,063 14,000 44 Required... 13,778 13,821 13,544 13,762 14,032 13,950 13,743 13,800 13,918 13,902 45 Excess......... 116 223 210 128 126 211 113 195 145 98 46 Borrowings2.. 208 163 115 145 214 293 175 326 423 836 1 Adjusted to include waivers of penalties for reserve deficiencies in nonmember bank joins the Federal Reserve System. For weeks for which accordance with Board policy, effective Nov. 19, 1975, of permitting figures are preliminary, figures by class of bank do not add to total transitional relief on a graduated basis over a 24-month period when a because adjusted data by class are not available. nonmember bank merges into an existing member bank, or when a 2 Based on closing figures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Financial Statistics □ September 1977 1.13 FEDERAL FUNDS TRANSACTIONS of Money Market Banks Millions of dollars, except as noted 1977, week ending Wednesday— Type July 6 July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 Total, 46 banks Basic reserve position 1 Excess reserves1............................ 171 109 147 41 157 121 24 -38 156 Less: 2 Borrowings at F.R. Banks. .. 3 26 228 12 156 248 416 925 225 3 Net interbank Federal funds transactions....................... 14,896 20,249 18,601 16,218 16,468 18,096 17,454 16,166 15,102 Equals : Net surplus, or deficit ( —): 4 Amount...................................... -14,728 -20,166 -18,683 -16,189 -16,467 -18,223 -17,847 -17,129 -15,171 5 Per cent of average required reserves............................... 97.4 136.4 121.9 108.9 107.7 122.3 117.4 116.5 102.2 Interbank Federal funds transactions Gross transactions: Purchases....................................... 23,693 27,180 26,631 23,596 24,439 24,885 24,449 22,528 22,411 Sales................................................. 8,797 6,930 8,030 7,379 7,971 6,788 6,994 6,361 7,309 Two-way transactions2................... 5,822 4,971 6,489 4,990 5,187 4,738 5,536 4,857 4,788 Net transactions: Purchases of net buying banks.. 17,871 22,209 20,142 18,606 19,252 20,147 18,912 17,671 17,624 Sales of net selling banks............ 2,974 1,960 1,541 2,388 2,784 2,050 1,458 1,505 2,522 Related transactions with U.S. Govt, securities dealers 11 Loans to dealers3................. 2,665 3,233 2,906 2,387 2,533 4,177 4,465 3,777 3,497 12 Borrowing from dealers4. .. 1,715 998 1,386 1,644 2,019 2,122 2,231 1,921 1,629 13 Net loans.................................. 950 2,235 1,520 743 514 2,056 2,234 1,856 1,868 8 banks in New York City Basic reserve position 14 Excess reserves1............................ -16 66 -20 71 24 122 -57 25 62 Less: 15 Borrowings at F.R. Banks... 208 107 225 430 26 16 Net interbank Federal funds transactions....................... 5,873 7,698 5,847 5,806 6,591 6,579 5,252 4,564 4,927 Equals : Net surplus, or deficit (—): 17 Amount...................................... -5,889 -7,632 -6,075 -5,735 -6,675 -6,458 -5,534 -4,969 -4,892 18 Per cent of average required reserves............................... 100.5 135.2 103.5 102.3 114.4 113.5 95.1 90.0 88.8 Interbank Federal funds transactions Gross transactions: Purchases........................................ 7,335 8,427 7,685 6,534 7,525 7,446 6,498 5,582 5,835 Sales................................................. 1.462 728 1.838 728 934 866 1.246 1,018 908 Two-way transactions2................... 1.462 728 1.838 728 934 866 1.246 1,018 908 Net transactions: Purchases of net buying banks.. 5,873 7,698 5,847 5,806 6,591 6,580 5,252 4,564 4,927 Sales of net selling banks........... Related transactions with U.S. Govt, securities dealers 24 Loans to dealers3................... 1,369 1,937 1,620 1,190 1,282 2,464 2,408 1,990 1,690 25 Borrowing from dealers4. . . 548 524 643 657 916 950 1,093 975 791 26 Net loans.................................. 821 1,414 977 533 366 1,515 1,315 1,015 899 38 banks outside New York City Basic reserve position 27 Excess reserves1............................ 188 43 167 -30 133 81 -63 95 Less: 28 Borrowings at F.R. Banks... 3 26 20 12 49 248 191 495 199 29 Net interbank Federal funds transactions....................... 9,023 12,551 12,754 10,412 9,877 11,517 12,202 11,603 10,175 Equals : Net surplus, or deficit (—): 30 Amount...................................... -8,839 -12,534 -12,608 -10,453 -9,792 -11,765 -12,313 -12,161 -10,279 31 Per cent of average required reserves............................... 95.5 137.1 133.4 112.8 103.6 127.8 131.2 132.5 110.1 Interbank Federal funds transactions Gross transactions: Purchases....................................... 16,358 18,753 18,947 17,062 16,913 17,439 17,951 16,946 16,576 Sales................................................. 7,334 6,202 6,192 6,651 7,037 5,922 5,749 5,343 6,401 Two-way transactions2................... 4,360 4,243 4,651 4,263 4,253 3,872 4,291 3,839 3,880 Net transactions: Purchases of net buying banks.. 11,998 14,511 14,295 12,800 12,661 13,567 13,660 13,107 12,696 Sales of net selling banks........... 2,974 1,960 1,541 2,388 2,784 2,050 1,458 1,505 2,522 Related transactions with U.S. Govt, securities dealers 37 Loans to dealers3................... 1,296 1,296 1,286 1,197 1,251 1,713 2,057 1,787 1,806 38 Borrowing from dealers4.... 1,167 475 743 987 1,103 1,172 1,138 947 837 39 Net loans.................................. 129 822 543 210 147 541 919 841 969 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Funds A l 1.13 Continued 1977, week ending Wednesday— Type July 6 July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aub. 31 5 banks in City of Chicago Basic reserve position 40 Excess reserves1............................ 34 -7 59 13 16 -13 19 48 41 Le B ss o : rrowings at F.R. Banks... 25 21 42 Net interbank Federal funds transactions....................... 4,874 6,552 6,770 5,964 5,578 5,833 5,854 5,614 Equals: Net surplus, or deficit (—): 43 Amount.................................... -4,840 -6,583 -6,711 -5,951 -5,584 -5,846 -6,384 -5,848 -5,566 44 Per cent of average required reserves............................ 318.3 449.6 439.0 403.3 369.9 385.8 415.2 395.3 364.7 Interbank Federal funds transactions Gross transactions: 45 Purchases........................................ 5,988 7,444 7,812 7,108 6,786 6,923 7,599 6,873 6,763 46 Sales................................................ 1.114 892 1.042 1.144 1,208 1.090 1.196 1.019 1.149 47 Two-way transactions2................... 1.114 892 1.042 1.144 1,208 1.090 1.196 1.019 1.149 Net transactions: 48 Purchases of net buying banks.. 4,874 6,552 6,770 5,964 5,578 5,833 6,403 5,854 5,613 49 Sales of net selling banks........... Related transactions with U.S. Govt, securities dealers 50 Loans to dealers3................... 289 385 258 220 188 265 343 292 281 51 Borrowing from dealers4... 374 53 144 283 363 322 172 145 125 52 Net loans................................. -85 332 114 -63 -175 -57 172 147 156 33 other banks Basic reserve position 53 Excess reserves1............................ 153 50 108 -42 117 13 62 -69 47 54 Le B ss o : rrowings at F.R. Banks... 3 1 20 12 27 248 191 495 199 55 Net interbank Federal funds transactions....................... 4,150 5,999 5,985 4,448 4,299 5,684 5,799 5,749 4,561 Equals: Net surplus, or deficit (—): 56 Amount.................................... -3,999 -5,950 -5,897 -4,502 -4,208 -5,919 -5,928 -6,313 -4,713 57 Per cent of average required reserves ............................ 51.7 77.5 74.4 57.8 53.0 76.9 75.5 82.0 60.3 Interbank Federal funds transactions Gross transactions: 58 Purchases........................................ 10,370 11,310 11,135 9,955 10,127 10,517 10,352 10,073 9,813 59 Sales................................................. 6,220 5,310 5,150 5,507 5,829 4,832 4,553 4,325 5,252 50 Two-way transactions2................... 3,246 3,351 3,609 3,118 3,045 2,782 3,095 2,820 2,730 Net transactions: 51 Purchases of net buying banks.. 7,124 7.959 7,526 6,836 7,083 7,734 7,257 7,253 7,083 62 Sales of net selling banks........... 2,974 1.960 1,541 2,388 2,784 2,050 1,458 1,505 2,522 Related transactions with U.S. Govt, securities dealers 63 Loans to dealers3................... 1,008 911 1,028 977 1,063 1,448 1,714 1,496 1,525 64 Borrowing from dealers4... 793 422 599 704 740 850 967 802 713 ^ Npt Inane 214 489 429 273 322 598 747 694 813 1 Based on reserve balances, including adjustments to include waivers 4 Federal funds borrowed, net funds acquired from each dealer by of penalties for reserve deficiencies in accordance with changes in Board clearing banks, reverse repurchase agreements (sales of securities to policy effective Nov. 19, 1975. dealers subject to repurchase), resale agreements, and borrowings secured 2 Derived from averages for individual banks for entire week. Figure by U.S. Govt, or other securities. for each bank indicates extent to which the bank’s average purchases and sales are offsetting. Note.—Weekly averages of daily figures. For description of series, 3 Federal funds loaned, net funds supplied to each dealer by clearing see Federal Reserve Bulletin for August 1964, pp. 944-53. Back data for banks, repurchase agreements (purchases from dealers subject to resale), 46 banks appear in the Board’s Annual Statistical Digest, 1971-1975, or other lending arrangements. Table 3. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Financial Statistics □ September 1977 1.14 FEDERAL RESERVE BANK INTEREST RATES Per cent per annum Current and previous levels Loans to member banks— Loans to all others Under Se;c. 10(b)2 under Sec. 13, last par.4 Federal Reserve Under Secs. 13 and 13a1 Bank Regular rate Special rate3 Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous 8/31/77 date rate 8/31/77 date rate 8/31/77 date rate 8/31/77 date rate Boston.................... ’ 5% 11/22/76 51/2 53/4 11/22/76 6 61/4 11/22/76 61/2 814 11/22/76 81/2 New York............. Sy4 8/31/77 51/4 61/4 8/31/77 5Va 63K 8/31/77 614 83/4 8/31/77 81/4 Philadelphia.......... 53£ 8/30/77 51/4 6Va 8/30/77 534 63/4 8/30/77 61/4 834 8/30/77 814 Cleveland............... 5 Va 8/30/77 51/4 61/4 8/30/77 534 6% 8/30/77 614 834 8/30/77 814 Richmond............. 5Va 8/30/77 5*4 61/4 8/30/77 53Va 63ft 8/30/77 61/4 83/4 8/30/77 814 Atlanta................... 5 Va 8/30/77 51/4 61/4 8/30/77 5Va 634 8/30/77 614 834 8/30/77 81/4 Chicago.................. 5Va 8/30/77 51/4 61/4 8/30/77 5Va 634 8/30/77 614 83/4 8/30/77 81/4 St. Louis................ 5Va 8/30/77 SV4 6*4 8/30/77 53Va 634 8/30/77 614 834 8/30/77 81/4 Minneapolis.......... 5 Va 8/30/77 51/4 61/4 8/30/77 5Va 63/4 8/30/77 614 834 8/30/77 814 Kansas City........... 51/4 11/22/76 51/2 534 11/22/76 6 614 11/22/76 61/2 81/4 11/22/76 81/2 Dallas..................... 5% 11/22/76 51/2 53Va 11/22/76 6 614 11/22/76 61/2 81/4 11/22/76 81/2 San Francisco.... 514 11/22/76 51/2 53/4 11/22/76 6 61/4 11/22/76 61/2 814 11/22/76 81/2 Range of rates in recent years5 Range F.R. Range F.R. Range F.R. Effective date (or level)— Bank Effective date (or level)- Bank Effective date (or level)— Bank All F.R. of All F.R. of All F.R. of Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1970........ 51/2 51/2 1973—Jan. 15................... 5 5 1975—Jan. 6........... 714-734 734 Feb. 26................... 5-51/z 5*4 10................... 7*4-734 71/4 1971 —Jan. 8..................... 5*4-5% 514 Mar. 2................... 51/2 5*4 24................... 7*4 71/4 15.................... 514 51/4 Apr. 23................... 51/2-534 51/2 Feb. 5................... 634-7*4 63/4 19..................... 5 -51/4 51/4 May 4................... 53/4 53/4 7................... 63/4 63/4 22..................... 5 -514 5 11................... 6 Mar. 10................... 61/4-634 6*4 29..................... 5 5 18................... 53/4 66 6 14................... 6*4 6*4 Feb. 13..................... 434-5 5 June 11................... 6-61/2 6*4 May 16................... 6-6 % 6 19..................... 434 434 15................... 6*4 6*4 23................... 6 6 July 16..................... 434-5 5 July 2................... 7 7 23..................... 5 5 Aug. 14................... 7-7 Vi 7*4 1976—Jan. 19................... 5*4-6 5*4 Nov. 11..................... 434-5 5 23................... 7*4 7*4 23................... 51/2 5*4 19..................... 434 434 Dec. 13..................... 4*4-4% 434 1974—Apr. 25................... 71/2-8 8 Nov. 22................... 514-5*4 51/4 17..................... 41/2-434 41/2 30................... 8 8 26................... 51/4 51/4 24..................... 4V4 4*4 Dec. 9................... 73/4-8 734 16................... IVa 734 1977—Aug. 30................... 514-534 51/4 31................... 51/4-534 53/4 In effect Aug. 31, 1977 . . . 5*4-534 534 1 Discounts of eligible paper and advances secured by such paper or by 4 Advances to individuals, partnerships, or corporations other than U.S. Govt, obligations or any other obligations eligible for F.R. Bank member banks secured by direct obligations of, or obligations fully purchase. guaranteed as to principal and interest by, the U.S. Govt, or any agency 2 Advances secured to the satisfaction of the F.R. Bank. Advances thereof. secured by mortgages on 1- to 4-family residential property are made at 5 Rates under Secs. 13 and 13a (as described above). For description the Section 13 rate. and earlier data, see the following publications of the Board of Governors: 3 Applicable to special advances described in Section 201.2(e)(2) of Banking and Monetary Statistics, 1914-1941, Banking and Monetary Regulation A. Statistics, 1941-1970, and Annual Statistical Digest, 1971-75. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A 9 1.15 MEMBER BANK RESERVE REQUIREMENTS1 Per cent of deposits Requirements in effect Previous requirements August 31, 1977 Type of deposit, and deposit interval in millions of dollars Per cent Effective date Per cent Effective date Net demand:2 0-2............................................................................................................ 7 12/30/76 m 2/13/75 2-10.......................................................................................................... 9% 12/30/76 10 2/13/75 10-100..................................................................................................... 113/4 12/30/76 12 2/13/75 100-400................................................................................................... 12*4 12/30/76 13 2/13/75 Over 400................................................................................................. 161/4 12/30/76 161/z 2/13/75 Time:2,3 Savings..................................................................................................... 3 3/16/67 3% 3/2/67 Other time: 0-5, maturing in— 30-179 days................................................................................... 3 3/16/67 Wi 3/2/67 180 days to 4 years...................................................................... 4 2% 1/8/76 3 3/16/67 4 years or more............................................................................ 4 1 10/30/75 3 3/16/67 Over 5, maturing in— 30-179 days.................................................................................... 6 12/12/74 5 10/1/70 180 days to 4 years...................................................................... 42i/z 1/8/76 3 12/12/74 4 years or more............................................................................ 4 1 10/30/75 3 12/12/74 Legal limits, August 31, 1977 Minimum Maximum Net demand: Reserve city banks................................................................................ 10 22 Other banks........................................................................................... 7 14 3 10 1 For changes in reserve requirements beginning 1963, see Board’s (c) Member banks are required under the Board’s Regulation M to Annual Statistical Digest, 1971-1975 and for prior changes, see Board’s maintain reserves against foreign branch deposits computed on the basis Annual Report for 1976, Table 13. of net balances due from domestic offices to their foreign branches and 2 (a) Requirement schedules are graduated, and each deposit interval against foreign branch loans to U.S. residents. Loans aggregating $100,000 applies to that part of the deposits of each bank. Demand deposits or less to any U.S. resident are excluded from computations, as are total subject to reserve requirements are gross demand deposits minus cash loans of a bank to U.S. residents if not exceeding $1 million. Regulation D items in process of collection and demand balances due from domestic imposes a similar reserve requirement on borrowings from foreign banks banks. by domestic offices of a member bank. A reserve of 4 per cent is required (b) The Federal Reserve Act specifies different ranges of requirements for each of these classifications. for reserve city banks and for other banks. Reserve cities are designated 3 Negotiable orders of withdrawal (NOW) accounts and time deposits under a criterion adopted effective Nov. 9, 1972, by which a bank having such as Christmas and vacation club accounts are subject to the same net demand deposits of more than $400 million is considered to have the requirements as savings deposits. character of business of a reserve city bank. The presence of the head 4 The average of reserves on savings and other time deposits must be office of such a bank constitutes designation of that place as a reserve at least 3 per cent, the minimum specified by law. city. Cities in which there are F.R. Banks or branches are also reserve cities. Any banks having net demand deposits of $400 million or less Note.—Required reserves must be held in the form of deposits with are considered to have the character of business of banks outside of F.R. Banks or vault cash. reserve cities and are permitted to maintain reserves at ratios set for banks not in reserve cities. For details, see the Board’s Regulation D. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 10 Domestic Financial Statistics □ September 1977 1.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions Per cent per annum Commercial banks Savings and loan associations and mutual savings banks Type and maturity of deposit In effect August 31,1977 Previous maximum In effect August 31,1977 Previous maximum Per cent Effective Per cent Effective Per cent Effective Per cent Effective date date date date 1 Savings................................................... 5 7/1/73 4Vi 1/21/70 51/4 (6) 5 (7) 2 Negotiable order of withdrawal (NOW) accounts1......................................... 5 1/1/74 5 1/1/74 Time (multiple- and single-maturity unless otherwise indicated):2 30-89 days: 4 3 S M in u g lt l i e p - l m e- a m tu a r t i u ty ri .. t . y .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . / 1 5 7/1/73 / I 4 5 1/2 9 1 / / 2 2 6 1 / / 6 7 6 0 } (8) (8) 90 days to 1 year: 5 6 S M in u g lt l i e p - l m e- a m tu a r t i u ty ri . t .. y .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . } 514 7/1/73 5 { 9 7 / / 2 2 6 0 / / 6 6 6 6 } 3 534 (6) 5V4 1/21/70 7 8 2 1 t t o o 2 2 V y i e a y r e s a 3 rs .. 3 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . } 6 7/1/73 I 1 5 5 V 3/4 i 1 1 / / 2 2 1 1 / / 7 7 0 0 } 6 Vi (6) / I 6 s y4 1 1 / / 2 2 1 1 / / 7 7 0 0 9 2Vi to 4 years3......................................... 6 Vi 7/1/73 5V4 1/21/70 6V4 (6) 6 1/21/70 10 4 to 6 years4............................................. m 11/1/73 (9) 7 Vi 11/1/73 (9) 11 6 years or more4...................................... m 12/23/74 71/4 11/1/73 m 12/23/74 7Vi 11/1/73 12 Governmental units (all maturities)... 7% 12/23/74 7Vi 11/27/74 m 12/23/74 7 Vi U121 13 Individual retirement accounts and Keogh (H.R. 10) plans 5............. 7% 7/6/77 (8) m 7/6/77 (8) 1 For authorized States only. Federally insured commercial banks, 9 Between July 1, 1973, and Oct. 31, 1973, there was no ceiling for savings and loan associations, cooperative banks, and mutual savings certificates maturing in 4 years or more with minimum denominations banks were first permitted to offer NOW accounts on Jan. 1, 1974. of $1,000; however, the amount of such certificates that an institution Authorization to issue NOW accounts was extended to similar institu­ could issue was limited to 5 per cent of its total time and savings deposits. tions throughout New England on Feb. 27, 1976. Sales in excess of that amount, as well as certificates of less than $1,000, 2 For exceptions with respect to certain foreign time deposits see the were limited to the 6 Vi per cent ceiling on time deposits maturing in 2V£ Federal Reserve Bulletin for October 1962 (p. 1279), August 1965 (p. years or more. 1094), and February 1968 (p. 167). Effective Nov. 1, 1973, the present ceilings were imposed on certificates 3 A minimum of $1,000 is required for savings and loan associations, maturing in 4 years or more with minimum denominations of $1,000. except in areas where mutual savings banks permit lower minimum de­ There is no limitation on the amount of these certificates that banks can nominations. This restriction was removed for deposits maturing in less issue. than 1 year, effective Nov. 1, 1973. 4 $1,000 minimum except for deposits representing funds contributed Note—Maximum rates that can be paid by Federally insured commer­ to an Individual Retirement Account (IRA) or a Keogh (H.R. 10) Plan es­ cial banks, mutual savings banks, and savings and loan associations are tablished pursuant to the Internal Revenue Code. The $1,000 minimum established by the Board of Governors of the Federal Reserve System, requirement was removed for such accounts in December 1975 and No­ the Board of Directors of the Federal Deposit Insurance Corporation, vember 1976, respectively. and the Federal Home Loan Bank Board under the provisions of 12 5 3-year minimum maturity. CFR 217, 329, and 526, respectively. The maximum rates on time de­ <5 July 1, 1973, for mutual savings banks; July 6, 1973, for savings and posits in denominations of $100,000 or more were suspended in midloan associations. 1973. For information regarding previous interest rate ceilings on all 7 Oct. 1, 1966, for mutual savings banks; Jan. 21, 1970, for savings and types of accounts, see earlier issues of the Federal Reserve Bulletin, loan associations. the Federal Home Loan Bank Board Journal, and the Annual Report 8 No separate account category. of the Federal Deposit Insurance Corporation. 1.161 MARGIN REQUIREMENTS Per cent of market value; effective dates shown. Type of security on sale Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 1 Margin stocks............................................................ 70 80 65 55 65 50 2 Convertible bonds..................................................... 50 60 50 50 50 50 3 Short sales................................................................... 70 80 65 55 65 50 Note.—Regulations G, T, and U of the Federal Reserve Board of difference between the market value (100 per cent) and the maximum Governors, prescribed in accordance with the Securities Exchange Act of loan value. The term “margin stocks” is defined in the corresponding 1934, limit the amount of credit to purchase and carry margin stocks regulation. that may be extended on securities as collateral by prescribing a maximum Regulation G and special margin requirements for bonds convertible loan value, which is a specified percentage of the market value of the into stocks were adopted by the Board of Governors effective Mar. 11, collateral at the time the credit is extended. Margin requirements are the 1968. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A l 1 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1977 Type of transaction 1974 1975 1976 Jan. Feb. Mar. Apr. May June July U.S. GOVT. SECURITIES Outright transactions (excl. matched salepurchase transactions) Treasury bills: 1 Gross purchases. 11,660 11,562 14,343 2,535 110 1,671 681 2,696 118 2 Gross sales.......... 5,830 5,599 8,462 313 801 368 260 489 1,154 753 3 Redemptions 4,550 26,431 25,017 19 400 600 500 Others within 1 year:1 Gross purchases.................... 450 3,886 472 45 107 41 20 89 Gross sales............................... Exchange, or maturity shift. -1,183 -4 792 ’252' ”63 -266 374 -1,209 478 238 Redemptions......................... 131 3,549 1 to 5 years: 8 Gross purchases................... 797 2 3,284 2 3,202 475 348 174 327 200 9 Gross sales............................. 177 10 Exchange, or maturity shift. -697 3,854 -2,588 -252' -880' 266 -374 -865 -478 -238 5 to 10 years: 11 Gross purchases.................... 434 1,510 1,048 128 151 46 104 68 12 Gross sales............................. 13 Exchange, or maturity shift. 1,675 -4,697 1,572 * 5 i 7 1,174 Over 10 years: 14 Gross purchases..................... 196 1,070 642 48 81 37 38 114 15 Gross sales............................... 16 Exchange, or maturity shift. 205 848 225 300 900 All maturities:1 17 Gross purchases. 13,537 221,313 219,707 3,229 797 298 2,160 681 3,167 118 18 Gross sales........... 5,830 5,599 8,639 313 801 368 260 489 1,154 753 19 Redemptions 4,682 29,980 25,017 19 400 600 500 Matched sale-purchase transactions 20 Gross sales........................................ 64,229 151,205 196,078 24,595 22,674 30,115 32,287 28,532 36,258 27,947 21 Gross purchases.............................. 62,801 152,132 196,579 22,544 23,447 30,828 32,852 27,306 36,449 27,301 Repurchase agreements 22 Gross purchases 71,333 140,311 232,891 23,820 13,853 14,368 13,397 29,308 14,748 13,973 23 Gross sales.................. 70,947 139,538 230,355 27,573 12,921 14,860 11,862 30,448 11,506 15,719 24 Net change in U.S. Govt, securities.......... 1,984 7,434 9,087 -2,887 1,702 151 3,980 -2,573 4,845 -3,528 FEDERAL AGENCY OBLIGATIONS Outright transactions: 25 Gross purchases............................................. 3,087 1,616 891 346 380 26 Gross sales....................................................... 27 Redemptions................................................... 322 246 169 24 36 "33 Repurchase agreements: 28 Gross purchases............................................. 23,204 15,179 10,520 930 689 523 709 2,164 1,656 1,672 29 Gross sales...................................................... 22,735 15,566 10,360 1,208 612 546 639 2,278 1,056 1,938 BANKERS ACCEPTANCES 30 Outright transactions, net................. 511 163 -545 -5 -18 -19 -51 -45 -15 -24 31 Repurchase agreements, net............. 420 -35 410 -795 149 -23 653 -729 528 -204 32 Net change in total System Account. 6,149 8,539 9,833 -3,969 1,886 50 4,998 -3,461 6,305 -4,020 1 Both gross purchases and redemptions include special certificates amounting to $189 million. Acquisition of these notes is treated as a created when the Treasury borrows directly from the Federal Reserve, purchase; the run-off of bills, as a redemption. as follows (millions of dollars): 1974,131; 1975, 3,549; and 1976 to present, none. Note.—Sales, redemptions, and negative figures reduce holdings of 2 in I975t the System obtained $421 million of 2-year Treasury notes the System Open Market Account; all other figures increase such holdings. in exchange tor maturing bills. In 1976 there was a similar transaction Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics □ September 1977 1.18 FEDERAL RESERVE BANKS Condition and F.R. Note Statements Millions of dollars Wednesday End of Month Account 1977 1977 Aug. 3 Aug. 10 Aug. 17 Aug. 24^ Aug. 3133 June July Consolidated condition statement ASSETS Gold certificate account.................................. 11,595 11,595 11,595 11,595 11,595 11,620 11,595 Special Drawing Rights certificate account. 1,200 1,200 1,200 1,200 1,200 1,200 1,200 3 Coin1. 300 299 296 293 284 315 317 Loans: 4 Member bank borrowings................... 605 917 1,010 2,323 1,267 260 788 5 Other......................................................... Acceptances: 6 Bought outright...................................... 17 9 7 6 4 43 19 7 Held under repurchase agreements... 127 578 374 Federal agency obligations: 8 Bought outright...................................... 7,411 7,411 7,411 7,411 7,354 7,423 7,423 9 Held under repurchase agreements... 151 610 345 U.S. Govt, securities Bought outright: 10 Bills....................................................... 39,506 34,727 38,523 37,495 40,021 40,827 39,045 11 Certificates—Special......................... 12 Other............................ 13 Notes.................................................... 49,088 49,088 48,963 48,963 48,963 49,088 49,088 14 Bonds.................................................... 8,248 8,248 8,373 8,373 8,373 8,248 8,248 15 Total2........................................................ 96,842 92,063 95,859 94,831 97,357 98,163 96,381 16 Held under repurchase agreements... 1,079 4,076 2,330 17 Total U.S. Govt, securities. 96,842 92,063 95,859 94,831 98,436 102,239 98,711 18 Total loans and securities.. 104,875 100,400 104,287 104,571 107,339 111,153 107,660 19 Cash items in process of collection— 10,864 9,206 10,622 8,737 9,522 8,886 7,590 20 Bank premises.......................................... 375 375 375 375 377 371 372 Other assets: 21 Denominated in foreign currencies. 32 40 61 56 55 57 20 22 All other................................................ 3,326 2,889 1,882 1,957 2,030 2,494 3,321 23 Total assets. 132,567 126,004 130,318 128,784 132,402 136,096 132,075 LIABILITIES 24 F.R. notes.............................................. 87,381 87,897 87,710 87,299 87,506 86,326 86,674 Deposits: 25 Member bank reserves....................... 27,659 24,164 25,527 24,964 28,071 24,562 26,912 26 U.S. Treasury—General account. 7,195 4,523 6,516 6,562 6,115 15,183 8,789 27 Foreign.............................................. 301 250 281 351 535 379 469 28 Other3................................................ 725 560 543 532 679 748 578 29 Total deposits. 35,880 29,497 32,867 32,409 35,400 40,872 36,748 30 Deferred availability cash items............ 6,143 5,436 6,451 5,641 5,873 5,282 5,047 31 Other liabilities and accrued dividends. 1,091 992 994 1,019 1,089 1,165 1,083 32 Total liabilities...................................... 130,495 123,822 128,022 126,368 129,868 133,645 129,552 CAPITAL ACCOUNTS 33 Capital paid in............................................................. 1,006 1,008 1,012 1,011 1,011 1,000 1,006 34 Surplus.......................................................................... 983 983 983 983 983 983 983 35 Other capital accounts.............................................. 83 191 301 422 540 468 534 36 Total liabilities and capital accounts....................... 132,567 126,004 130,318 128,784 132,402 136,096 132,075 37 Memo: Marketable U.S. Govt, securities held in custody for foreign and inti, account............... 60,058 60,303 60,298 60,356 60,717 57,867 60,359 Federal Reserve note statement 38 F.R. notes outstanding (issued to Bank)........ 92,652 93,002 93,082 93,197 93,289 91,250 92,648 93,289 Collateral held against notes outstanding: 39 Gold certificate account........................................ 11,591 11,591 11,591 11,590 11,591 11,616 11,591 11,591 40 Special Drawing Rights certificate account.... 752 752 752 752 752 752 752 752 41 Acceptances............................................................. 42 U.S. Govt, securities.............................................. 81,585 81,785 81,785 8i,885 82,135 80,015 81,585 82,135 43 Total collateral. 93,928 94,128 94,128 94,227 94,478 92,383 93,928 94,478 1 Effective Jan. 1, 1977, Federal Reserve notes of other Federal Reserve owned banking institutions voluntarily held with member banks and Banks were merged into the liability account for Federal Reserve notes. redeposited in full with F.R. Banks. 2 Includes securities loaned—fully guaranteed by U.S. Govt, securities pledged with F.R. Banks—and excludes (if any) securities sold and Note.—Beginning Jan. 1, 1977, “Operating equipment” was transferred scheduled to be bought back under matched sale-purchase transactions. to “Other assets.” 3 Includes certain deposits of domestic nonmember banks and foreign- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Reserve Banks A 13 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month Type and maturity 1977 1977 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 June 30 July 31 Aug. 31 1Loans 514 605 916 1,011 2,323 258 788 1,267 2 Within 15 days.......................................................... 508 567 872 979 2,286 236 768 1,224 3 16 days to 90 days.................................................... 6 38 44 32 37 22 20 43 A 268 17 9 7 6 621 393 131 6 Within 15 days.......................................................... 258 11 3 3 2 591 384 127 7 16 days to 90 days................................................... 9 6 6 4 4 26 8 4 8 1 4 1 9 98,397 96,842 92,063 95,859 94,831 102,239 98,711 98,436 10 Within 15 daysi........................................................ 4,887 4,016 4,623 4,012 1,732 6,195 4,849 3,989 11 17,231 16,700 11,358 16,958 17,729 17,712 17,589 18,881 12 28,928 28,948 28,904 30,047 30,528 30,981 28,922 30,774 13 Over 1 year to 5 years............................................. 29,652 29,479 29,479 27,800 27,800 29,652 29,652 27,750 14 Over 5 years to 10 years......................................... 11,233 11,233 11,233 10,451 10,451 11,233 11,233 10,451 15 Over 10 years............................................................ 6,466 6,466 6,466 6,591 6,591 6,466 6,466 6,591 16 Federal agency obligations.......................................... 7,628 7,411 7,411 7,411 7,411 8,033 7,768 7,505 17 Within 15 days1........................................................ 235 135 186 186 657 375 305 18 16 days to 90 days ................................................. 410 452 317 267 267 393 410 209 19 91 days to 1 year...................................................... 1,000 976 976 979 979 1,025 1,000 915 20 Over 1 year to 5 years............................................. 3,648 3,648 3,648 3,644 3,644 3,636 3,648 3,711 21 Over 5 years to 10 years................................ 1,512 1,512 1,512 1,512 1,512 1,499 1,512 1,542 22 Over 10 years............................................................. 823 823 823 823 823 823 823 823 1 Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements. 1.20 DEMAND DEPOSIT ACCOUNTS Debits and Rate of Turnover Seasonally adjusted data 1977 Standard metropolitan statistical area 1974 1975 1976 Feb. Mar. Apr. May June Debits (billions of dollars)2 1 All 233 SMSA’s............................................................ 22,192.2 23,565.1 28,911.0 30,145.4 30,421.7 30,585.5 32,028.5 32,394.9 2 New York City............................................................. 9,931.8 10,970.9 13,835.0 14,898.0 14,612.1 14,988.9 15,739.7 15,516.6 3 232 SMSA’s................................................................... 12,260.6 12,594.2 15,076.1 15,247.4 15,809.6 15,956.5 16,288.8 16,878.5 4 6 leading SMSA’s other than N.Y.C.1............... 5,152.7 4,937.5 5,917.1 5,887.1 6,155.7 6,055.5 6,420.4 6,213.1 5 226 others................................................................... 7,107.9 7,661.8 9,159.0 9,360.2 9,653.9 9,541.1 9,868.4 10,665.4 Turnover of deposits (annual rate) 6 All 233 SMSA’s............................................................ 128.0 131.0 153.5 153.3 155.2 158.2 160.2 160.6 7 New York City............................................................. 312.8 351.8 419.8 437.3 436.0 465.2 474.9 452.1 8 232 SMSA’s................................................................... 86.6 84.7 97.0 93.8 97.3 96.3 97.7 100.8 9 6 leading SMSA’s other than N.Y.C.1............... 131.8 118.4 136.9 129.9 135.2 134.7 139.8 135.5 10 226 others................................................................... 69.3 71.6 81.7 79.8 82.5 82.1 81.7 87.7 1 Boston, Philadelphia, Chicago, Detroit, San Francisco-Oakland, and Note.—Total SMSA’s includes some cities and counties not designated Los Angeles-Long Beach. as SMSA’s. 2 Excludes interbank and U.S. Govt, demand deposit accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 14 Domestic Financial Statistics □ September 1977 1.21 MONEY STOCK MEASURES AND COMPONENTS Billions of dollars, averages of daily figures 1977 1973 1974 1975 1976 Dec. Dec. Dec. Dec. Item Feb. Mar. Apr. May June July Seasonally adjusted MEASURES i 1 M-l.......................................... 270.5 283.1 294.8 312.4 314.0 315.4 320.5 320.7 r321.9 326.8 2 M-2.......................................... 571.4 612.4 664.3 740.3 750.7 756.1 764.6 767.6 r772.8 783.5 3 M-3.......................................... 919.6 981.5 1.092.6 1,237.1 1,258.2 1,268.1 1,281.2 1,289.0 rl ,299.5 1,316.9 4 M-4.......................................... 634.4 701.4 746.5 803.5 814.0 818.2 826.2 829.9 836.8 846.3 5 M-5.......................................... 982.5 1,070.5 1.174.7 1,300.3 1,321.5 1,330.3 1,342.8 1,351.3 1,363.4 1,379.7 COMPONENTS 6 Currency................................. 61.5 67.8 73.7 80.5 81.8 82.2 83.1 83.6 84.0 85.1 Commercial bank deposits: 7 Demand.............................. 209.0 215.3 221.0 231.9 232.1 233.2 237.4 237.1 238.0 241.6 8 Time and savings............... 363.9 418.3 451.7 491.1 500.0 502.8 505.7 509.2 514.8 519.5 9 Negotiable CD’s2......... 63.0 89.0 82.1 63.3 63.3 62.2 61.6 62.3 63.9 62.8 10 Other............................... 300.9 329.3 369.6 427.9 436.7 440.6 444.1 446.9 450.9 456.7 11 Nonbank thrift institutions3 348.1 369.1 428.3 496.8 507.5 512.1 516.6 521.4 r526.6 533.4 Not seasonally adjusted MEASURES i 12 M-l......................................................... 278.3 291.3 303.2 321.3 309.9 312.4 322.3 315.5 321.4 327.2 13 M-2......................................................... 576.5 617.5 669.3 745.3 747.2 756.2 770.0 766.2 >774.5 784.0 14 M-3......................................................... 921.8 983.8 1,094.3 1,237.9 1,253.1 1,269.8 1.290.2 1.290.3 rl ,305.6 1,322.0 15 M-4......................................................... 640.5 708.0 752.8 809.5 808.5 817.0 830.1 827.4 837.5 846.8 16 M-5......................................................... 985.8 1,074.3 1,177.7 1,302.1 1,314.4 1,330.7 1.350.3 1.351.4 rl, 368.6 1,384.8 COMPONENTS 17 Currency................................................ 62.7 69.0 75.1 82.0 80.8 81.6 82.8 83.4 84.2 85.7 Commercial bank deposits: 18 Demand.............................................. 215.7 222.2 228.1 239.3 229.1 230.9 239.6 232.1 r237.1 241.4 19 Member......................................... 156.5 159.7 162.1 168.5 161.0 162.1 167.6 161.8 165.1 167.7 20 Domestic nonmember................ 56.3 58.5 62.6 67.3 64.6 65.2 68.3 66.6 68.3 69.5 21 Time and savings.............................. 362.2 416.7 449.6 488.2 498.6 504.6 507.7 511.8 516.1 519.6 22 Negotiable CD’s2....................... 64.0 90.5 83.5 64.3 61.3 60.8 60.1 61.2 63.0 62.8 23 Other............................................. 298.2 326.3 366.2 423.9 437.3 443.8 447.7 450.7 453.2 456.9 24 Nonbank thrift institutions3............. 345.3 366.3 424.9 492.6 505.9 513.6 520.2 524.1 ’’531.1 538.0 25 U.S. Govt, deposits (all commercial banks)............................................ 6.3 4.9 4.1 4.7 4.4 4.5 5.6 3.8 5.2 3.9 i Composition of the money stock measures is as follows: M-4: M-2 plus large negotiable CD’s. M-5: M-3 plus large negotiable CD’s. M-l: Averages of daily figures for (1) demand deposits of commercial For a description of the latest revisions in the money stock measures banks other than domestic interbank and U.S. Govt., less cash items in see “Money Stock Measures: Revision” on pp. 305 and 306 of the process of collection and F.R. float; (2) foreign demand balances at F.R. March 1977 Bulletin. Banks; and (3) currency outside the Treasury, F.R. Banks, and vaults Latest monthly and weekly figures are available from the Board’s H.6 of commercial banks. release. Back data are available from the Banking Section, Division of M-2: M-l plus savings deposits, time deposits open account, and time Research and Statistics. certificates of deposit (CD’s) other than negotiable CD’s of $100,000 or 2 Negotiable time CD’s issued in denominations of $100,000 or more more of large weekly reporting banks. by large weekly reporting commercial banks. M-3: M-2 plus the average of the beginning- and end-of-month deposits 3 Average of the beginning- and end-of-month figures for deposits of of mutual savings banks, savings and loan shares, and credit union shares mutual savings banks, for savings capital at savings and loan associations, (nonbank thrift). and for credit union shares. NOTES TO TABLE 1.23: 1 Adjusted to exclude domestic commercial interbank loans. As of Oct. 31, 1974, “Total loans and investments” of all commercial 2 Loans sold are those sold outright to banks’ own foreign branches, banks were reduced by $1.5 billion in connection with the liquidation nonconsolidated nonbank affiliates of the bank, the banks’ holding of one large bank. Reductions in other items were: “Total loans,” $1.0 company (if not a bank), and nonconsolidated nonbank subsidiaries of billion (of which $0.6 billion was in “Commercial and industrial loans”), the holding company. Prior to Aug. 28, 1974, the institutions included and “Other securities,” $0.5 billion. In late November “Commercial and had been defined somewhat differently, and the reporting panel of banks industrial loans” were increased by $0.1 billion as a result of loan re­ was also different. On the new basis, both “Total loans” and “Com­ classifications at another large bank. mercial and industrial loans” were reduced by about $100 million. 3 Reclassification of loans reduced these loans by about $1.2 billion Note.—Data are for last Wednesday of month except for June 30 as of Mar. 31, 1976. and Dec. 31; data are partly or wholly estimated except when June 30 4 Data beginning June 30, 1974, include one large mutual savings and Dec. 31 are call dates. bank that merged with a nonmember commercial bank. As of that date there were increases of about $500 million in loans, $100 million in “Other” securities, and $600 million in “Total loans and investments.” Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

M onetary Aggregates A15 1.22 AGGREGATE RESERVES AND DEPOSITS Member Banks Billions of dollars, averages of daily figures 1976 1977 Item 1973 1974 1975 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June July Seasonally adjusted 1 Reserves 1...................................................... 34.94 36.60 34.73 34.95 34.78 34.40 34.31 34.68 34.72 34.86 35.35 2 Nonborrowed........................................... 33.64 35.87 34.60 34.90 34.71 34.33 34,20 34.61 34.52 34.60 35.03 3 Required.................................................... 34.64 36.34 34.47 34.68 34.51 34.20 34,09 34.49 34.51 34.71 35.08 4 Deposits subject to reserve requirements 2 442.3 486.2 505.4 529.6 532.5 532.0 535.2 538.4 537.6 544.5 547.7 5 Time and savings..................................... 279.2 322.1 337.9 355.0 357.3 360.1 361.3 361.4 363.1 367.0 369.2 Demand: 6 Private.................................................... 158.1 160.6 164.5 171.4 172.5 169.5 171.1 173.4 172.3 173.8 175.8 7 U.S. Govt.............................................. 5.0 3.5 3.0 3.2 2.7 2.5 2.8 3.6 2.1 3.7 2.8 Not sea;sonally atdjusted 8 Deposits subject to reserve requirements 2 447.5 491.8 510.9 534.8 537.7 528.7 534.0 541.3 535.8 544.5 547.6 9 Time and savings..................................... 278.5 321.7 337.2 353.6 357.0 358.4 361.7 362.3 364.7 367.8 369.5 Demand: 10 Private.................................................... 164.0 166.6 170.7 177.9 177.8 167.2 169.1 175.0 168.5 173.0 175.6 11 U.S. Govt.............................................. 5.0 3.4 3.1 3.3 2.9 3.1 3.2 4.0 2.5 3.7 2.6 1 Series reflects actual reserve requirement percentages with no adjust­ 2 Includes total time and savings deposits and net demand deposits as ment to eliminate the effect of changes in Regulations D and M. There defined by Regulation D. Private demand deposits include all demand are breaks in series because of changes in reserve requirements effective deposits except those due to the U.S. Govt., less cash items in process of Dec. 12, 1974; Feb. 13, May 22, and Oct. 30,1975; Jan. 8, and Dec. 30,1976. collection and demand balances due from domestic commercial banks. In addition, effective Jan. 1, 1976, statewide branching in New York was instituted. The subsequent merger of a number of banks raised Note.—Back data and estimates of the impact on required reserves required reserves because of higher reserve requirements on aggregate and changes in reserve requirements are shown in Table 14 of the Board’s deposits at these banks. Annual Statistical Digest, 1971-1975. 1.23 LOANS AND INVESTMENTS All Commercial Banks Billions of dollars; last Wednesday of month except for June 30 and Dec. 31 1977 1973 1974 4 1975 1976 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Category Mar. 30 Apr. 27 May 25 June 30 July 27 Aug. 31 p p p p p p Seasonally adjusted 1 Loans and investments1............................................. 633.4 690.4 721.1 784.4 803.0 812.4 819.4 825.5 831.8 840.4 2 Including loans sold outright2............................ 637.7 695.2 725.5 788.2 807.0 816.4 823.4 829.5 835.9 844.5 Loans: 3 Total.......................................................................... 449.0 500.2 496.9 538.9 551.0 557.7 562.1 567.0 574.5 582.4 4 Including loans sold outright2........................ 453.3 505.0 501.3 542.7 555.0 561.7 566.1 571.0 578.6 586.5 5 Commercial and industrial3................................ 156.4 183.3 176.0 179.5 182.9 184.9 185.9 188.3 189.6 191.6 6 Including loans sold outright2,3.................... 159.0 186.0 178.5 181.9 185.6 187.7 188.7 191.1 192.4 194.4 Investments: 7 U.S. Treasury.......................................................... 54.5 50.4 79.4 97.3 103.6 102.8 104.6 105.3 102.9 102.6 8 Other......................................................................... 129.9 139.8 144.8 148.2 148.4 151.9 152.7 153.2 154.4 155.4 Not seasonally adjusted 9 Loans and investments1............................................. 647.3 705.6 737.0 801.6 801.1 809.6 816.6 830.5 829.1 837.6 10 Including loans sold outright. . .......................... 651.6 710.4 741.4 805.4 805.1 813.6 820.6 834.5 833.2 841.7 Loans: 11 Total1........................................................................ 458.5 510.7 507.4 550.2 547.7 553.5 561.3 574.4 575.4 583.6 12 Including loans sold outright2........................ 462.8 515.5 511.8 554.0 551.7 557.5 565.3 578.4 579.5 587.7 13 Commercial and industrial3................................ 159.4 186.8 179.3 182.9 182.8 185.1 186.1 190.7 189.6 190.6 14 Including loans sold outright2,3..................... 162.0 189.5 181.8 185.3 185.5 187.9 188.9 193.5 192.4 , 195.4 Investments: 15 U.S. Treasury.......................................................... 58.3 54.5 84.1 102.5 104.7 103.0 101.9 101.7 99.5 98.9 16 Other......................................................................... 130.6 140.5 145.5 148.9 148.7 153.1 153.4 154.4 154.2 155.1 For notes see bottom of opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 16 Domestic Financial Statistics n September 1977 1.24 COMMERCIAL BANK ASSETS AND LIABILITIES Last-Wednesday~of-Month Series Billions of dollars except for number of banks 1975 19763 1977 Account Dec. 31 Nov. Dec. Jan. Feb. Mar. AprJ’ May? June?5 JulyP Aug. All commercial 1 Loans and investments.................. 775.8 817.6 846.4 824.2 831.6 840.4 846.5 853.1 864.5 866.2 877.8 2 Loans, gross............................. 546.2 571.0 594.9 575.3 580.4 587.0 590.4 597.8 609.5 612.5 623.8 Investments: 3 U.S. Treasury securities . . 84.1 98.0 102.5 101.1 102.6 104.7 103.0 101.9 101.3 99.5 98.9 4 Other...................................... 145.5 148.6 148.9 147.9 148.5 148.7 153.1 153.4 153.7 154.2 155. 1 5 Cash assets.................................... 133.6 127.0 136.1 120.1 127.1 122.8 122.7 119.4 124.5 124.7 134.0 6 Currency and coin.................. 12.3 11.9 12.1 12.8 12.5 12.9 13.3 13.1 13.6 13.3 13.6 7 Reserves with F.R. Banks.. 2.6.8 29. 1 26.1 28.6 28.6 26.9 28.2 24.0 23.5 27. 1 28.2 8 Balances with banks.............. 47.3 42.5 49.6 39.2 41.5 41.9 40.1 41.3 42.9 40.4 44.0 9 Cash items in process of collection.. 47.3 43.5 48.4 39.6 44.4 41.1 41.0 41.0 44.4 43.9 48.3 10 Total assets/total liabilities and capitaU....................................... 964.9 995.7 1,030.7 996.7 1,011.6 1,018.2 1,024.8 1,026.9 1,044.9 1,047.4 1,068.2 11 Deposits.......................................... 786.3 796.5 838.2 801.0 809.3 817.1 819.4 818.9 833.7 836.4 850.5 Demand: 12 Interbank.............................. 41.8 39.1 45.4 35.3 36.6 37.6 33.9 35.2 37.3 37.7 39.0 13 U.S. Govt.............................. 3.1 3.4 3.0 4.0 3.8 3.1 7.4 3.6 3.0 3.8 2.5 14 Other...................................... 278.7 264.0 288.4 260.6 264.5 263.1 267.9 262.8 272.5 272.3 282.7 Time: 15 Interbank................................. 12.0 9.1 9.2 8.8 8.6 8.9 8.6 8.5 8.9 8.3 8.0 16 Other........................................ 450.6 481.0 492.2 492.3 495.9 504.4 501.6 508.8 511.9 514.4 518.4 17 Borrowings...................................... 60.2 84.6 80.2 82.5 87.6 84.5 88.2 87.6 90.2 90.6 93.1 18 Total capital accounts2................ 69.1 74.8 78.1 76.3 76.8 77.1 77.5 78.1 78.7 78.9 79.4 19 Memo: Number of banks........... 14.633 14,674 14,671 14,667 14,688 14,685 14,690 14,695 14,702 14,709 14,702 Member 20 Loans and investments................. 578.6 597.6 620.5 600.9 605.9 611.8 614.8 620.2 629.1 628.9 637.9 21 Loans, gross................................ 416.4 424.1 442.9 426.3 429.9 434.6 435.9 441.5 450.1 451.3 459.9 Investments: 22 U.S. Treasury securities . . . 61.5 70.8 74.6 72.6 73.7 74.9 73.0 72.6 72.6 70.8 70.5 23 Other......................................... 100.7 102.7 103.1 102.0 102.3 102.3 105.8 106.1 106.4 106.7 107.5 24 Cash assets, total........................... 108.5 103.0 108.9 97.7 102.8 100.0 99.4 95.7 100.5 101.1 108.5 25 Currency and coin.................... 9.2 8.9 9.1 9.5 9.3 9.6 9.9 9.7 10.0 9.9 10.0 26 Reserves with F.R. Banks. . , 26.8 29. 1 26.0 28.6 28.6 26.9 28.2 24.0 23.5 27. 1 28.2 27 Balances with banks................ 26.9 23.3 27.4 21.5 22.2 24.0 21.9 22.6 24.2 21.9 23.9 28 Cash items in process of collection.. 45.5 41.8 46.5 38.1 42.7 39.5 39.4 39.3 42.7 42.2 46.4 29 Total assets/total liabilities and capital1......................................... 733.6 744.8 772.9 744.6 755.1 759.7 762.7 763.9 778.9 780.1 796.2 30 Deposits............................................ 590.8 584.8 618.7 587.0 592.0 598.1 597.8 597.4 609.4 610.6 622.1 Demand: 31 38.6 37.2 42.4 33.1 34.1 35.3 31.6 32.9 34.9 35.3 36.6 32 U.S. Govt................................ 3.2 2.4 2.1 3.0 2.7 2.1 5.9 2.7 2.2 2.8 1.7 33 Other........................................ 210.8 196.0 215.5 193.7 196.6 195.9 199.0 195.1 202.7 202.1 211.0 Time: 34 Interbank................................. 10.0 7.0 7.2 6.8 6.6 6.9 6.6 6.5 6.9 6.3 6.0 35 Other........................................ 329.1 342.1 351.5 350.3 351.9 357.9 354.7 360.3 362.7 364.1 366.9 36 Borrowings...................................... 53.6 76.4 71.7 73.6 78.0 75.3 78.1 77.5 80.0 80.4 82.5 37 Total capital accounts2................ 52.1 56.6 58.6 57.7 57.9 58.1 58.3 58.8 59.2 59.5 59.9 38 Memo: Number of banks. 5,788 5,767 5,759 5,739 5,740 5,739 5,726 5,708 5,721 5,701 5,701 1 Includes items not shown separately. Note.—Figures include all bank-premises subsidiaries and other sig­ Effective Mar. 31, 1976, some of the item “reserve for loan losses” nificant majority-owned domestic subsidiaries. and all of the item “unearned income on loans” are no longer reported Commercial banks: All such banks in the United States, including as liabilities. As of that date the “valuation” portion of “reserve for member and nonmember banks, stock savings banks, nondeposit trust loan losses” and the “unearned income on loans” have been netted companies, and U.S. branches of foreign banks, but excluding one na­ against “other assets,” and against “total assets” as well. tional bank in Puerto Rico and one in the Virgin Islands. Total liabilities continue to include the deferred income tax portion of Member banks: The following numbers of noninsured trust companies “reserve for loan losses.” that are members of the Federal Reserve System are excluded from mem­ 2 Effective Mar. 31, 1976, includes “reserves for securities” and the ber banks in Tables 1.24 and 1.25 and are included with noninsured banks contingency portion (which is small) of “reserve for loan losses.” in Table 1.25: 1974—June, 2; December, 3; 1975—June and December, 3 Figures partly estimated except on call dates. 4; 1976 (beginning month shown)—July, 5, December, 7; 1977-January 8. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Comm ercial Banks A17 1.25 COMMERCIAL BANK ASSETS AND LIABILITIES Call Date Series Millions of dollars except for number of banks 1975 1976 1975 1976 Account June 30 Dec. 31 June 30 Dec. 31 June 30 Dec. 31 June 30 Dec. 31 Total insured National (all insured) 1 736,164 762,400 773,696 827,692 428,167 441,135 443,955 476,602 Loans: 2 Gross..................................................................... 526,272 535,170 539,017 578,712 312,229 315.738 315,624 340,679 3 Net......................................................................... (2) (2) 520,970 560,069 (2) (2) 305,275 329,968 Investments: 4 U.S. Treasury securities................................... 67,833 83,629 90,947 101,459 37,606 46,799 49,688 55,729 5 142,060 143,602 143,731 147,520 78,331 78,598 78,642 80,193 6 Cash assets.................................................................... 125,181 128,256 124,072 129,578 75,686 78,026 75,488 76,074 7 Total assets/total liabilities1...................................... 914,781 944,654 942,510 1,004,020 536,836 553,285 548,697 583,315 8 746,348 775,209 776,957 825,001 431,646 447,590 444,251 469,378 Demand: 9 U.S. Govt............................................................. 3,106 3,108 4,622 3,020 1,723 1,788 2,858 1,674 10 Interbank............................................................. 41,244 40,259 37,503 44,072 21,096 22,305 20,329 23,148 11 261,903 276,384 265,670 285,190 152,576 159,840 152,382 163,347 Time: 12 Interbank............................................................. 10,252 10,733 9,407 8,250 6,804 7,302 5,532 4,909 13 429,844 444,725 459,754 484,468 249,446 256,355 263,148 276,298 14 Borrowings................................................................... 59,310 56,775 63,823 75,308 41,954 40,875 45,183 54,420 15 Total capital accounts................................................ 65,986 68,474 68,989 72,070 37,483 38,969 39,502 41,323 16 Memo: Number of banks........................................ 14,320 14,372 14,373 14,397 4,730 4,741 4,747 4,735 State member (all insured) Insured nonmember 17 134,759 137,620 136,915 144,000 173,238 183,645 192,825 207,089 Loans: 18 Gross..................................................................... 100,968 100,823 98,889 102,278 113,074 118,609 124,503 135,754 19 Net......................................................................... (2) (2) 96,037 99,475 (2) (2) 119,658 130,626 Investments: 20 U.S. Treasury securities.................................... 12,004 14,720 16,323 18,847 18,223 22,109 24,934 26,882 21 21,787 22,077 21,702 22,874 41,942 42,927 43,387 44,451 22 31,466 30,451 30,422 32,859 18,029 19,778 18,161 20,644 23 179,787 180,495 179,645 189,573 198,157 210,874 214,167 231,130 24 141,995 143,409 142,061 149,481 172,707 184,210 190,644 206,141 Demand: 25 U.S. Govt............................................................. 443 467 869 429 940 853 894 917 26 Interbank.............................................................. 18,751 16,265 15,834 19,296 1,397 1,689 1,339 1,627 27 Other...................................................................... 48,621 50,984 49,658 52,194 60,706 65,560 63,629 69,648 Time: 28 Interbank.............................................................. 2,771 2,712 3,074 2,384 676 719 799 957 29 71,409 72,981 72,624 75,177 108,989 115,389 123,980 132,991 30 14,380 12,771 15,300 17,318 2,976 3,128 3,339 3,569 31 Total capital accounts................................................. 12,773 13,105 12,791 13,199 15,730 16,400 16,696 17,547 32 Memo: Number of banks........................................ 1,064 1,046 1,029 1,023 8,526 8,585 8,597 8,639 Noninsured nonmember Total nonmember 33 11,725 13,674 15,905 18,819 184,963 197,319 208,730 225,908 Loans: 34 Gross..................................................................... 9,559 11,283 13,209 16,336 122,633 129,892 137,712 152,091 35 Net......................................................................... (2) (2) 13,092 16,209 (2) (2) 132,751 146,836 Investments: 36 U.S. Treasury securities.................................... 358 490 472 1,054 18,581 22,599 25,407 27,936 37 1,808 1,902 2,223 1,428 43,750 44,829 45,610 45,880 38 3,534 5,359 4,362 6,496 21,563 25,137 22,524 27,141 39 16,277 20,544 21,271 26,790 214,434 231,418 235,439 257,921 40 Deposits......................................................................... 8,314 11,323 11,735 13,325 181,021 195,533 202,380 219,467 Demand: 41 U.S. Govt............................................................. 11 6 4 4 951 859 899 921 42 Interbank.............................................................. 1,338 1,552 1,006 1,277 2,735 3,241 2,346 2,904 43 Other...................................................................... 2,124 2,308 2,555 3,236 62,830 67,868 66,184 72,884 Time: 44 957 1,291 1,292 1,041 1,633 2,010 2,092 1,998 45 Other..................................................................... 3,883 6,167 6,876 7,766 112,872 121,556 130,857 140,758 46 Borrowings................................................................... 3,110 3,449 3,372 4,842 6,086 6,577 6,711 8,412 47 Total capital accounts................................................. 570 651 663 818 16,300 17,051 17,359 18,366 48 Memo: Number of banks........................................ 253 261 270 275 8,779 8,846 8,867 8,914 1 Includes items not shown separately. For Note see Table 1.24. 2 Not available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics □ September 1977 1.26 COMMERCIAL BANK ASSETS AND LIABILITIES Detailed Balance Sheet, March 31, 1977 Asset and liability items are shown in millions of dollars. Member banks1 Insured Non- Asset account commercial Large banks member banks banks1 Total All other New York City of Other City Chicago large 1 Cash bank balances, items in process............................................ 125,193 106,148 31,527 3,960 38,001 32,660 19,049 2 Currency and coin......................................................................... 12,118 8,974 923 162 2,880 5,009 3,144 3 Reserves with F.R. Banks........................................................... 28,031 28,031 6,025 1,724 10,410 9,872 1 4 Demand balances with banks in United States....................... 29,261 17,608 6,655 114 3,217 7,622 11,656 5 Other balances with banks in United States........................... 5,184 3,033 27 21 1,085 1,900 2,152 6 Balances with banks in foreign countries................................ 4,171 3,688 578 59 2,030 1,022 482 7 Cash items in process of collection............................................ 46,428 44,814 17,320 1,880 18,380 7,234 1,614 8 Total securities held—Book value................................................... 249,841 176,540 20,197 8,116 56,924 91,304 73,304 9 U.S. Treasury................................................................................. 103,675 75,386 11,526 3,771 25,543 34,546 28,292 10 Other U.S. Govt, agencies........................................................... 34,315 21,052 1,172 471 5,317 14,092 13,264 11 States and political subdivisions................................................ 105,615 75,865 7,210 3,598 24,841 40,216 29,751 12 6,143 4,181 290 276 1,201 2,415 1,962 n 92 57 22 35 35 14 5,339 5,233 2,075 687 2,251 220 106 15 3,168 3,155 1,470 434 1,172 80 13 16 Other U.S. Govt, agencies....................................................... 566 561 211 33 292 25 5 17 States and political subdivisions............................................ 1,104 1,073 369 95 536 73 31 18 All other trading acct. securities............................................ 409 388 25 125 230 7 21 19 92 57 22 35 35 20 Bank investment portfolios........................................................... 244,502 171,307 18,122 7,429 54,672 91,084 73,198 21 U.S. Treasury............................................................................. 100,507 72,231 10,057 3,337 24,371 34,466 28,279 22 Other U.S. Govt, agencies....................................................... 33,750 20,491 961 438 5,025 14,067 13,259 23 States and political subdivisions............................................ 104,512 74,792 6,841 3,503 24,305 40,143 29,720 24 All other portfolio securities.................................................. 5,733 3,793 264 151 971 2,407 1,941 25 1,544 1,302 291 83 483 445 243 26 Federal funds sold and securities resale agreement....................... 44,703 35,244 2,497 2,152 18,742 11,853 9,514 27 Commercial banks......................................................................... 37,369 28,124 705 1,441 14,689 11,289 9,300 28 Brokers and dealers....................................................................... 4,362 4,208 399 672 2,699 438 154 29 Others.............................................................................................. 2,972 2,912 1,393 39 1,354 126 60 536,794 405,594 70,710 21,530 149,631 163,722 131,200 31 Less: Unearned income on loans.............................................. 12,704 8,660 546 80 2,860 5,175 4,045 32 Reserves for loan loss....................................................... 6,306 5,038 1,191 316 1,826 1,706 1,267 33 517,784 391,896 68,974 21,135 144,945 156,842 125,888 Other loans, gross, by category 34 Real estate loans............................................................................ 153,309 106,810 9,315 1,966 38,372 57,156 46,499 35 Construction and land development..................................... 17,215 13,442 2,590 414 6,309 4,128 3,773 36 Secured by farmland................................................................. 6,979 2,981 17 10 293 2,661 3,998 37 Secured by residential............................................................... 86,655 61,444 4,460 963 22,314 33,707 25,211 38 82,250 58,255 4,028 859 21,161 32,206 23,995 39 FHA-insured or VA-guaranteed.................................... 7,887 6,843 598 47 3,666 2,532 1,043 40 Conventional..................................................................... 74,364 51,412 3,430 812 17,495 29,674 22,952 41 Multifamily residences.......................................................... 4,405 3,189 432 104 1,153 1,501 1,216 42 370 305 116 25 85 78 66 43 4,035 2,884 315 78 1,068 1,423 1,150 44 Secured by other properties.................................................... 42,459 28,943 2,248 579 9,456 16,660 13,517 45 Loans to financial institutions...................................................... 33,501 31,511 11,103 4,254 13,380 2,774 1,990 46 To REIT’s and mortgage companies.................................... 9,793 9,453 3,250 1,230 4,330 644 339 47 To domestic commercial banks.............................................. 2,524 1,879 531 118 946 284 645 48 5,925 5,777 2,636 216 2,383 483 147 49 1,085 977 115 24 684 154 107 50 To other financial institutions................................................ 14,175 13,424 4,571 2,606 5,038 1,208 751 51 Loans to security brokers and dealers...................................... 9,632 9,409 5,566 1,424 2,186 232 223 52 Other loans to purch./carry securities...................................... 4,060 3,375 386 310 1,734 945 685 53 Loans to farmers—except real estate........................................ 23,667 13,080 120 154 3,033 9,773 10,586 54 Commercial and industrial loans............................................... 178,765 146,103 36,184 10,658 56,061 43,201 32,662 55 Loans to individuals..................................................................... 119,885 83,380 5,839 1,750 29,298 46,493 36,505 56 Instalment loans.............................................................................. 95,312 66,110 4,339 1,029 23,584 37,158 29,201 57 Passenger automobiles......................................................... 41,171 26,478 792 133 7,680 17,874 14,692 58 Residential-repair/modernize.............................................. 6,528 4,518 308 52 1,793 2,365 2,010 59 Credit cards and related plans........................................... 14,094 12,380 1,668 667 6,764 3,281 1,713 60 Charge-account credit cards.......................................... 10,978 9,803 1,146 633 5,518 2,507 1,175 61 Check and revolving credit plans.................................. 3,116 2,578 522 34 1,247 775 538 62 Other retail consumer goods.............................................. 15,970 10,952 331 72 3,882 6,668 5,017 63 8,697 6,163 111 28 2,205 3,753 2,534 64 Other.................................................................................... 7,273 4,789 154 44 1,676 2,915 2,483 65 Other instalment loans......................................................... 17,549 11,781 1,239 106 3,465 6,971 5,768 66 Single-payment loans to individuals...................................... 24,573 17,270 1,499 721 5,714 9,335 7,303 67 All other loans............................................................................... 13,975 11,926 2,197 1,015 5,565 3,148 2,050 68 Total loans and securities, net......................................................... 813,872 604,982 91,959 31,486 221,094 260,444 208,949 69 Direct lease financing....................................................................... 5,119 4,829 1,072 130 2,850 111 290 70 Fixed assets—Buildings, furniture, real estate............................ 19,815 14,809 1,994 650 5,759 6,406 5,008 71 Investment in unconsolidated subsidiaries................................... 2,Ml 2,438 1,097 213 1,042 85 34 72 Customer acceptances outstanding................................................ 11,661 11,303 5,737 629 4,623 313 358 73 Other assets......................................................................................... 33,351 30,164 12,619 1,508 11,775 4,262 3,255 74 Total assets.......................................................................................... 1,011,482 774,673 146,005 38,576 285,143 304,948 236,942 For notes see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Comm ercial Banks A19 1.26 Continued M[ember bankIS1 Insured Non- Liability or capitalaccount commercial Large banks member banks banks1 Total All other New York City of Other City Chicago large 316,260 246,707 59,781 9,454 86,536 90,936 69,571 76 1,203 1,057 517 1 254 284 145 77 Other individuals, partnerships, and corporations............... 241,902 182,142 31,068 6,798 68,453 75,823 59,760 78 U.S. Govt...................................................................................... 3,422 2,283 112 31 623 1,517 1,140 79 16,238 11,212 626 242 3,340 7,004 5,027 80 1,270 1,249 988 19 212 30 20 81 Commercial banks in United States........................................ 34,890 33,781 18,080 1,955 10,125 3,621 1,128 82 Banks in foreign countries......................................................... 6,140 5,979 4,741 150 969 118 161 83 Certified and officers’ checks, etc............................................. 11,194 9,004 3,648 258 2,560 2,538 2,190 293,127 212,408 32,154 12,333 72,420 95,502 80,719 85 137 112 10 102 25 86 352 331 128 43 139 21 21 87 Other individuals, partnerships, and corporations............... 230,513 165,815 23,878 8,781 55,372 77,784 64,698 88 U.S. Govt...................................................................................... 689 536 68 28 230 211 152 89 States and political subdivisions.............................................. 46,368 31,771 1,388 1,182 12,804 16,397 14,597 90 Foreign governments, central banks, etc................................ 7,401 7,126 3,942 1,207 1,929 48 275 91 6,384 5,512 1,996 1,013 1,703 800 872 92 Banks in foreign countries......................................................... 1,284 1,206 754 79 233 140 78 213,702 152,966 12,072 3,275 56,721 80,898 60,737 94 Individuals and nonprofit organizations................................ 197,632 141,168 10,868 2,945 52,604 74,751 56,464 95 Corporations and other profit organizations......................... 9,651 7,143 583 248 3,016 3,296 2,508 96 U.S. Govt...................................................................................... 6,294 4,540 539 82 1,076 2,844 1,754 97 126 115 82 1 25 8 11 823,090 612,081 104,006 25,063 215,676 267,336 211,027 99 Federal funds purchased and securities sold under agreements to repurchase............................................................................ 73,846 70,496 15,854 9,249 35,905 9,489 - 3,350 100 Commercial banks....................................................................... 40,778 39,292 6,646 6,303 21,715 4,628 1,486 101 Brokers and dealers..................................................................... 8,472 8,145 1,454 1,335 4,484 870 327 102 Others............................................................................................ 24,597 23,060 7,754 1,610 9,705 3,991 1,537 103 Other liabilities for borrowed money.......................................... 5,229 4,977 2,373 102 2,119 383 252 104 Mortgage indebtedness................................................................... 797 570 58 4 307 202 228 105 Bank acceptances outstanding...................................................... 12,278 11,920 6,340 632 4,634 314 358 106 Other liabilities................................................................................ 17,433 15,097 4,939 807 6,049 3,303 2,442 107 Total liabilities.................................................................................. 932,674 715,142 133,570 35,856 264,689 281,027 217,656 108 Subordinated notes and debentures............................................ 5,145 4,095 1,120 82 1,826 1,066 1,051 73,662 55,436 11,315 2,638 18,628 22,855 18,236 110 Preferred stock............................................................................. 67 25 2 23 42 111 Common stock............................................................................. 16,419 11,994 2,453 570 3,847 5,124 4,430 112 Surplus.......................................................................................... 29,165 21,497 4,230 1,243 7,686 8,338 7,671 113 Undivided profits......................................................................... 26,266 20,706 4,594 772 6,670 8,671 5,562 114 Other capital reserves................................................................. 1,745 1,215 38 53 424 700 531 115 Total liabilities and equity capital................................................ 1,011,482 774,673 146,005 38,576 285,143 304,948 236,942 Memo items : 116 Demand deposits adjusted2...................................................................... 231,519 165,830 24,269 5,588 57,408 78,564 65,690 Average for last 15 or 30 days: 117 Cash and due from bank........................................................... 121,842 103,888 29,188 4,578 38,072 32,050 17,956 118 Federal funds sold and securities purchased under agree­ ments to resell..................................................................... 42,908 33,274 3,121 1,384 16,897 11,873 9,675 119 Total loans.................................................................................... 521,907 395,321 70,296 21,429 145,777 157,820 126,586 120 Time deposits of $100,000 or more......................................... 129,513 105,527 26,714 9,715 41,042 28,056 23,986 121 Total deposits............................................................................... 805,559 596,858 95,782 25,106 211,304 264,665 208,712 122 Federal funds purchased and securities sold under agree­ ments to repurchase........................................................... 76,919 73,461 19,126 9,305 35,188 9,842 3,458 123 Other liabilities for borrowed money...................................... 4,489 4,231 2,052 90 1,739 350 258 124 Standby letters of credit outstanding.......................................... 12,593 11,931 6,925 996 3,242 768 662 125 Time deposits of $100,000 or more............................................. 131,851 107,632 26,650 9,501 42,859 28,621 24,219 126 Certificates of deposit................................................................. 109,696 88,947 22,351 8,270 34,294 24,033 20,749 127 Other time deposits..................................................................... 22,155 18,685 4,299 1,231 8,565 4,589 3,470 128 Number of banks............................................................................ 14,405 5,737 12 9 154 5,562 8,678 1 Member banks exclude and nonmember banks include 10 noninsured Note.—Data include consolidated reports, including figures for all trust companies that are members of the Federal Reserve System, and bank-premises subsidiaries and other significant majority-owned do­ member banks exclude 2 national banks outside the continental United mestic subsidiaries. Securities are reported on a gross basis before deduc­ States. tions of valuation reserves. Holdings by type of security will be reported 2 Demand deposits adjusted are demand deposits other than domestic as soon as they become available. commercial interbank and U.S. Govt., less cash items reported as in Back data in lesser detail were shown in previous Bulletins. Details process of collection. may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics □ September 1977 1.27 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1977 Account July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 1 Total loans and investments........................................ 425,072 425,456 422,237 427,160 428,233 428,622 425,702 428,120 Loans: 2 Federal funds sold1...................................................... 23,170 22,840 21,614 24,359 25,638 24,096 22,960 24,007 3 To commercial banks.......................................... 18,063 18,304 16,914 18,755 17,218 17,121 16,864 18,331 To brokers and dealers involving— 4 U.S. Treasury securities.................................. 3,062 2,253 2,543 2,809 4,964 3,779 3,289 2,989 5 Other securities................................................. 332 402 424 542 561 526 486 482 6 To others................................................................ 1,713 1,881 1,733 2,253 2,895 2,670 2,321 2,205 7 Other, gross.................................................................... 298,202 298,978 298,948 301,240 301,365 302,068 300,899 301,968 8 Commercial and industrial................................ 118,592 118,441 118,863 119,308 119,043 118,901 119,036 119,076 4,715 4,739 4,745 4,785 4,800 4,804 4,752 4,758 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities............................. 1,735 1,146 972 1,570 1,875 1,635 1,612 1,126 11 Other securities............................................ 8,576 9,306 8,841 9,458 9,057 9,414 8,471 9,031 To others: 12 U.S. Treasury securities............................. 77 73 72 70 70 83 74 74 13 Other securities............................................ 2,556 2,548 2,574 2,569 2,583 2,582 2,578 2,603 To nonbank financial institutions: 14 Personal and sales finance cos., etc.............. 7,411 7,175 7,220 7,231 7,663 7,364 1,314 7,463 15 Other................................................................... 15,362 15,305 15,295 15,230 15,302 15,250 14,941 15,022 68,303 68,538 68,748 68,964 69,243 69,447 69,656 69,898 To commercial banks: 2,013 1,972 1,912 1,838 1,721 1,941 1,837 1,800 5,765 6,152 5,911 6,156 5,784 5,834 5,851 6,056 41,849 42,018 42,265 42,380 42,557 42,748 43,024 43,195 20 Foreign governments, official institutions, etc.. 1,539 1,538 1,624 1,564 1,632 1,574 1,560 1,590 21 All other loans...................................................... 19,709 20,027 19,906 20,117 20,035 20,491 20,133 20,276 22 Less: Loan loss reserve and unearned income 8,996 9,050 9,082 9,099 9,180 9,227 9,265 9,282 289,206 289,928 289,866 292,141 292,185 292,841 291,634 292,686 Investments: 24 U.S. Treasury securities............................................. 47,816 47,889 46,565 46,726 45,930 47,209 46,718 46,636 25 Bills.......................................................................... 8,885 8,886 8,060 8,025 7,813 8,094 8,285 8,245 Notes and bonds, by maturity: 9,113 9,283 9,233 9,248 9,175 9,010 8,921 9,094 25,667 25,680 25,331 25,679 25,244 26,000 25,546 25,222 4,151 4,040 3,941 3,774 3,698 4,105 3,966 4,075 64,880 64,799 64,192 63,934 64,480 64,476 64,390 64,791 Obligations of States and political subdivisions: 30 Tax warrants, short-term notes, and 9,234 8,865 8,662 8,624 9,212 9,050 8,885 9,008 41,888 41,930 41,771 41,725 41,716 41,773 41,697 41,872 Other bonds, corporate stocks, and securities: 32 Certificates of participation 2......................... 2,063 2,105 2,057 2,050 2,048 2,017 1,985 2,066 33 All other, including corporate stocks.......... 11,695 11,899 11,702 11,535 11,444 11,636 11,823 11,845 38,665 41,353 38,362 40,722 35,519 37,922 34,544 41,051 18,779 22,048 20,584 21,268 17,878 18,889 18,371 20,254 6,047 5,945 6,028 5,152 5,710 5,862 6,013 6,060 12,785 12,976 12,603 13,024 12,741 12,977 12,661 13,854 38 Investments in subsidiaries not consolidated......... 2,672 2,738 2,767 2,771 2,688 2,308 2,326 2,325 56,569 55,412 54,709 55,626 54,635 53,433 53,041 54,667 560,589 565,928 557,191 565,723 557,404 560,013 552,658 566,331 Deposits: 177,853 181,059 175,902 179,973 171,688 175,002 168,704 180,908 42 Individuals, partnerships, and corporations .. 130,141 129,877 126,417 128,296 124,918 127,719 122,941 129,253 5,634 5,966 5,815 6,079 5,361 5,740 5,495 6,065 44 U.S. Govt............................................................... 1,305 2,610 1,902 2,111 1,653 1,465 1,075 1,019 Domestic interbank: 25,410 25,374 25,088 26,049 24,341 25,137 24,394 26,645 926 956 897 1,032 958 946 827 969 Foreign: 47 Governments, official institutions, etc......... 1,091 1,316 1,567 1,272 1,390 937 1,228 1,706 6,145 6,814 7,044 6,651 6,018 6,091 6,190 6,589 7,201 8,145 7,172 7,817 7,049 6,967 6,554 8,662 237,138 237,099 237, 766 238,498 238,751 238,899 239,228 239,361 94,380 94,370 94,351 94,329 94,301 94,131 93,914 93,715 Time: 142,758 142,729 143,415 144,169 144,450 144,768 145,314 145,646 52 Individuals, partnerships, and corporations 108,996 109,268 109,651 110,462 110,807 111,353 111,785 111,938 53 States and political subdivisions................... 20,343 20,474 20,666 20,569 20,642 20,810 21,040 21,218 4,421 4,416 4,388 4,332 4,223 4,126 4,065 4,109 55 Foreign govts., official institutions, etc........ 7,386 6,971 7,122 7,212 7,201 6,882 6,853 6,839 73,166 74,537 71,381 73,473 72,453 71,211 69,015 70,744 Borrowings from: 263 68 289 435 736 738 1,938 858 3,785 3,627 3,553 3,579 3,643 3,994 3,964 4,088 25,340 26,535 25,236 26,475 26,806 26,903 26,490 26,742 60 Total equity capital and subordinated 43,044 43,003 43,064 43,290 43,327 43,266 43,319 43,630 1 Includes securities purchased under agreements to resell. 5 Includes securities sold under agreements to repurchase. 2 Federal agencies only. 6 Includes minority interest in consolidated subsidiaries and deferred 3 Includes time deposits of U.S. Govt, and of foreign banks, which are tax portion of reserves for loans. not shown separately. 7 Includes reserves for securities and contingency portion of reserves 4 For amounts of these deposits by ownership categories, see Table 1.30. for loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

W eekly Reporting Banks A21 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1977 Account July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 1 Total loans and investments. 92,160 92,739 90,171 92,099 92,150 93,331 91,490 92,806 Loans: Federal funds sold 1.................................. 3,417 3,760 2,761 3,966 4,657 4,909 4,109 4,803 To commercial banks......................... 1,906 2,339 1,465 1,992 2,295 2,586 2,468 3,303 To brokers and dealers involving— U.S. Treasury securities................. 884 469 636 835 1,056 1,146 714 674 Other securities................................ 3 0 0 20 0 0 0 0 To others............................................... 624 952 660 1,119 1,306 1,177 927 826 Other, gross.............................................................. 67,892 68,036 67,435 68,950 68,566 68,644 67,724 68,121 Commercial and industrial.............................. 33,840 33,677 33,897 34,034 33,938 33,792 33,818 33,906 Agricultural......................................................... 148 146 145 142 145 144 122 123 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities............................ 1,444 927 826 1,408 1,709 1,436 1,322 964 11 Other securities.......................................... 4,324 4,920 4,557 5,190 4,780 5,136 4,596 4,906 To others: 12 U.S. Treasury securities........................... 25 24 23 23 24 29 28 25 13 Other securities.......................................... 347 341 376 375 378 383 380 383 To nonbank financial institutions: 14 Personal and sales finance cos., etc............ 2,527 2,351 2,390 2,425 2,753 2,577 2,542 2,534 15 Other................................................................. 4,727 4,747 4,758 4,745 4,757 4,739 4,655 4,667 16 Real estate............................................................ 8,701 8,685 8,680 8,684 8,687 8,671 8,688 8,696 To commercial banks: 17 Domestic.......................................................... 752 743 708 635 543 631 614 603 18 Foreign............................................................. 2,689 2,933 2,777 2,907 2,506 2,641 2,623 2,863 19 Consumer instalment........................................ 4,144 4,152 4,159 4,091 4,117 4,134 4,158 4,170 20 Foreign governments, official institutions, etc. 365 375 418 372 438 356 341 381 21 All other loans.................................................... 3,859 4,015 3,721 3,919 3,791 3,975 3,837 3,900 22 Less: Loan loss reserve and unearned income on loans................................................... 1,626 1,642 1,634 1,647 1,688 1,695 1,683 1,716 23 Other loans, net....................................................... 66,266 66,394 65,801 67,303 66,878 66,949 66,041 66,405 Investments: U.S. Treasury securities......................................... 12,002 12,070 11,310 10,712 10,278 11,198 11,137 11,285 Bills........................................................................ 3,686 3,739 3,083 2,669 2,529 3,024 3,166 3,184 Notes and bonds, by maturity: Within 1 year.................................................. 1,355 1,412 1,440 1,356 1,374 1,356 1,314 1,486 1 to 5 years...................................................... 5,914 5,898 5,918 5,869 5,583 5,835 5,811 5,805 After 5 years................................................... 1,147 1,021 968 818 792 983 846 810 Other securities........................................................ 10,475 10,515 10,299 10,118 10,337 10,275 10,203 10,313 Obligations of States and political subdivisions: Tax warrants, short-term notes, and bills. 2,525 2,443 2,334 2,259 2,565 2,431 2,320 2,319 All other........................................................... 6,298 6,338 6,323 6,268 6,231 6,203 6,214 6,231 Other bonds, corporate stocks, and securities: Certificates of participation2....................... 200 196 195 194 194 193 193 193 All other, including corporate stocks........ 1,452 1,538 1,447 1,397 1,347 1,448 1,476 1,570 34 Cash items in process of collection.................. 12,457 15,930 14,161 14,281 12,461 12,278 11,843 16,243 35 Reserves with F.R. Banks.................................. 5,871 5,134 5,288 6,306 5,810 5,318 6,228 5,687 36 Currency and coin............................................... 865 825 857 827 837 831 843 856 37 Balances with domestic banks........................... 5,630 6,210 5,571 5,979 6,042 6,068 6,002 6,861 38 Investments in subsidiaries not consolidated. 1,302 1,312 1,307 1,308 1,310 1,313 1,311 1,311 39 Other assets........................................................... 20,170 20,096 20,212 19,707 19,069 17,910 17,809 18,774 40 Total assets/total liabilities. 138,455 142,246 137,567 140,507 137,679 137,049 135,526 142,538 Deposits: Demand deposits........................................................ 49,390 53,777 50,927 51,631 48,574 48,767 47,304 54,891 Individuals, partnerships, and corporations.. 27,314 29,190 27,035 28,015 26,419 27,192 25,714 29,332 States and political subdivisions....................... 491 519 474 499 485 531 497 840 U.S. Govt............................................................... 97 514 298 469 280 173 102 101 Domestic interbank: Commercial....................................................... 12,066 12,166 12,245 12,024 11,735 11,784 12,095 13,004 Mutual savings................................................. 496 510 480 550 533 514 432 531 Foreign: Governments, official institutions, etc......... 811 1,060 1,282 1,043 1,161 725 918 1,473 Commercial banks........................................... 4,598 5,369 5,544 5,169 4,584 4,666 4,596 4,993 Certified and officers’ checks............................. 3,517 4,449 3,569 3,862 3,377 3,182 2,950 4,617 Time and savings deposits3...................................... 41,562 41,466 41,486 41,799 42,026 42,027 41,857 41, 746 Savings4................................................................. 10,663 10,671 10,634 10,598 10,598 10,581 10,510 10,449 Time: 30,899 30,795 30,852 31,201 31,428 31,446 31,347 31,297 Individuals, partnerships, and corporations 23,072 23,071 23,028 23,220 23,475 23,750 23,635 23,604 States and political subdivisions................... 1,256 1,281 1,303 1,369 1,410 1,452 1,451 1,403 Domestic interbank......................................... 1,636 1,613 1,587 1,585 1,549 1,512 1,516 1,547 Foreign govts., official institutions, etc........ 4,060 3,969 4,071 4,162 4,139 3,862 3,902 3,899 56 Federal funds purchased, etc. 5............. 22,267 21,054 20,130 20,810 20,785 20,035 19,376 19,815 Borrowings from: 57 F.R. Banks............................................ 1,018 58 Others..................................................... 1,552 1,483 1,409 1,486 1,456 1,509 1,453 1,652 59 Other liabilities, etc.6.............................. 11,500 12,295 11,435 12,540 12,574 12,451 12,253 12,035 60 Total equity capital and subordinated notes/debentures7............................ 12,184 12,171 12,180 12,241 12,264 12,260 12,265 12,399 1 Includes securities purchased under agreements to resell. 5 Includes securities sold under agreements to repurchase. 2 Federal agencies only. 6 Includes minority interest in consolidated subsidiaries and deferred 3 Includes time deposits of U.S. Govt, and of foreign banks, which tax portion of reserves for loans. are not shown separately. 7 Includes reserves for securities and contingency portion of reserves 4 For amounts of these deposits by ownership categories, see Table 1.30. for loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Financial Statistics □ September 1977 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS OUTSIDE NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1977 July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 1Total loans and investments........................................ 332,912 332,717 332,066 335,061 336,083 335,291 334,122 335,314 Loans: 2 Federal funds sold1................................................... 19,753 19,080 18,853 20,393 20,981 19,187 18,851 19,204 3 To commercial banks.......................................... 16,157 15,965 15,449 16,763 14,923 14,535 14,396 15,028 To brokers and dealers involving— 4 U.S. Treasury securities.................................. 2,178 1,784 1,907 1,974 3,908 2,633 2,575 2,315 5 Other securities................................................. 329 402 424 522 561 526 486 482 6 To others................................................................ 1,089 929 1,073 1,134 1,589 1,493 1,394 1,379 7 Other, gross............................................................... 230,310 230,942 231,513 232,290 232,799 233,424 233,175 233,847 8 Commercial and industrial................................ 84,752 84,764 84,966 85,274 85,105 85,109 85,218 85,170 9 Agricultural........................................................... 4,567 4,593 4,600 4,643 4,655 4,660 4,630 4,635 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities............................. 291 219 146 162 166 199 290 162 11 Other securities............................................ 4,252 4,386 4,284 4,268 A,211 4,278 3,875 4,125 To others: 12 U.S. Treasury securities............................. 52 49 49 Al 46 54 46 49 13 Other securities............................................ 2,209 2,207 2,198 2,194 2,205 2,199 2,198 2,220 To nonbank financial institutions: 14 Personal and sales finance cos., etc.............. 4,884 4,824 4,830 4,806 4,910 4,787 4,832 4,929 15 Other................................................................... 10,635 10,558 10,537 10,485 10,545 10,511 10,286 10,355 16 Real estate.............................................................. 59,602 59,853 60,068 60,280 60,556 60,776 60,968 61,202 To commercial banks: 17 Domestic............................................................ 1,261 1,229 1,204 1,203 1,178 1,310 1,223 1,197 18 Foreign............................................................... 3,076 3,219 3,134 3,249 3,278 3,193 3,228 3,193 19 Consumer instalment.......................................... 37,705 37,866 38,106 38,289 38,440 38,614 38,866 39,025 20 Foreign governments, official institutions, etc. 1,174 1,163 1,206 1,192 1,194 1,218 1,219 1,209 21 All other loans...................................................... 15,850 16,012 16,185 16,198 16,244 16,516 16,296 16,376 22 Less : Loan reserve and unearned income on loans........................................................ 7,370 7,408 7,448 7,452 7,492 7,532 7,582 7,566 23 222,940 223,534 224,065 224,838 225,307 225,892 225,593 226,281 Investments: 24 U.S. Treasury securities........................................... 35,814 35,819 35,255 36,014 35,652 36,011 35,581 35,351 25 Bills......................................................................... 5,199 5,147 4,977 5,356 5,284 5,070 5,119 5,061 Notes and bonds, by maturity: 26 Within 1 year.................................................... 7,758 7,871 7,793 7,892 7,801 7,654 7,607 7,608 27 19,853 19,782 19,512 19,810 19,661 20,165 19,735 19,417 28 After 5 years..................................................... 3,004 3,019 2,973 2,956 2,906 3,122 3,120 3,265 29 Other securities.......................................................... 54,405 54,284 53,893 53,816 54,143 54,201 54,187 54,478 Obligations of States and political subdivisions: 30 Tax warrants, short-term notes, and bills.. 6,709 6,422 6,328 6,365 6,707 6,619 6,565 6,689 31 35,590 35,592 35,448 35,457 35,485 35,570 35,483 35,641 Other bonds, corporate stocks, and securities: 32 Certificates of participation2......................... 1,863 1,909 1,862 1,856 1,854 1,824 1,792 1,873 33 All other, including corporate stocks.......... 10,243 10,361 10,255 10,138 10,097 10,188 10,347 10,275 34 Cash items in process of collection.......................... 26,208 25,423 24,201 26,441 23,058 25,644 22,701 24,808 35 Reserves with F. R. Banks.......................................... 12,908 16,914 15,197 14,962 12,068 13,571 12,143 14,567 36 Currency and coin........................................................ 5,182 5,120 5,171 4,325 4,873 5,031 5,170 5,204 37 Balances with domestic banks.................................... 7,155 6,766 7,032 7,045 6,699 6,909 6,659 6,993 38 Investments in subsidiaries not consolidated......... 1,370 1,426 1,460 1,463 1,378 995 1,015 1,014 39 Other assets.................................................................... 36,399 35,316 34,497 35,919 35,566 35,523 35,232 35,893 422,134 423,682 419,624 425,216 419,725 422,964 417,132 423,793 Deposits: 41 Demand deposits......................................................... 128,463 127,282 124,975 128,342 123,114 126,235 121,400 126,017 42 Individuals, partnerships, and corporations.. 102,827 100,687 99,382 100,281 98,499 100,527 97,227 99,921 43 States and political subdivisions....................... 5,143 5,447 5,341 5,580 4,876 5,209 4,998 5,225 44 U.S. Govt............................................................... 1,208 2,096 1,604 2,308 1,373 1,292 973 918 Domestic interbank: 45 Commercial....................................................... 13,344 13,208 12,843 14,025 12,606 13,353 12,299 13,641 46 430 446 417 482 425 432 395 438 Foreign: 47 Governments, official institutions, etc......... 280 256 285 229 229 212 310 233 48 Commercial banks........................................... 1,547 1,446 1,500 1,482 1,434 1,425 1,594 1,596 49 Certified and officers’ checks............................. 3,684 3,696 3,603 3,955 3,672 3,785 3,604 4,045 50 Time and savings deposits3...................................... 195,576 195,633 196,280 196,699 196,725 196,872 197,371 197,615 51 Savings4................................................................. 83,717 83,699 83,717 83,731 83,703 83,550 83,404 83,266 Time: 111,859 111,934 112,563 112,968 113,022 113,322 113,967 114,349 52 Individuals, partnerships, and corporations 85,924 86,197 86,623 87,242 87,332 87,603 88,150 88,334 53 States and political subdivisions................... 19,087 19,193 19,363 19,200 19,232 19,358 19,589 19,815 54 Domestic interbank......................................... 2,785 2,803 2,801 2,747 2,674 2,614 2,549 2,562 55 Foreign govts., official institutions, etc........ 3,326 3,002 3,051 3,050 3,062 3,020 2,951 2,940 56 Federal funds purchased, etc.5.................................. 50,899 53,483 51,251 52,663 51,668 51,176 49,639 50,929 Borrowings from : 57 F. R. Banks................................................................ 263 68 289 435 736 738 920 858 58 Others.......................................................................... 2,233 2,144 2,144 2,093 2,187 2,485 2,511 2,436 59 Other liabilities, etc.6................................................... 13,840 14,240 13,801 13,935 14,232 14,452 14,237 14,707 60 Total equity capital and subordinated notes/debentures 7................................................. 30,860 30,832 30,884 31,049 31,063 31,006 31,054 31,231 1 Includes securities purchased under agreements to resell. 5 Includes securities sold under agreements to repurchase. 2 Federal agencies only. 6 Includes minority interest in consolidated subsidiaries and deferred 3 Includes time deposits of U.S. Govt, and of foreign banks, which tax portion of reserves for loans. are not shown separately. 7 Includes reserves for securities and contingency portion of reserves 4 For amounts of these deposits by ownership categories, see Table 1.30. for loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

W eekly Reporting Banks A23 1.30 LARGE WEEKLY REPORTING COMMERCIAL BANKS Balance Sheet Memoranda Millions of dollars, Wednesday figures 1977 Account and bank group July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 Total loans (gross) and investments, adjusted1 1 Large banks........................................................... 413,992 414,230 412,493 415,666 418.474 418,787 416,266 417,271 2 New York City banks..................................... 91,128 91,299 89,632 91,119 91,000 91,809 90,091 90,616 3 Banks outside New York City...................... 322,864 322,931 322,861 324,547 327.474 326,978 326,175 326,655 Total loans (gross), adjusted 4 Large banks........................................................... 301,296 301,542 301,736 305,006 308,064 307,102 305,158 305,844 5 New York City banks................................... 68,651 68,714 68,023 70,289 70,385 70,336 68,751 69,018 6 Banks outside New York City...................... 232,645 232,828 233,713 234,717 237,679 236,766 236,407 236,826 Demand deposits, adjusted2 7 Large banks........................................................... 112,473 111,722 110,550 110,425 110,175 110,478 108,691 112,193 8 New York City banks.................................... 24,770 25,167 24,223 24,857 24,098 24,532 23,264 25,543 9 Banks outside New York City...................... 87,703 86,555 86,327 85,568 86,077 85,946 85,427 86,650 Large negotiable time CD’s included in time and savings deposits3 Total: 10 Large banks............................................................... 62,544 62,329 63,082 63,914 64,272 64,510 64,943 64,741 11 New York City................................................ 20,056 19,976 20,018 20,232 20,455 20,466 20,428 20,251 12 Banks outside New York City...................... 42,488 42,353 43,064 43,682 43,817 44,044 44,515 44,490 Issued to IPC’s: 13 Large banks........................................................... 41,585 41,704 42,144 42,840 43,229 43,683 44,087 43,865 14 New York City Banks.................................... 13,696 13,691 13,657 13,725 14,003 14,261 14,201 13,979 15 Banks outside New York City...................... 27,889 28,013 28,487 29,115 29,226 29,422 29,886 29,886 Issued to others: 16 Large banks........................................................... 20,959 20,625 20,938 21,074 21,043 20,827 20,856 20,876 17 New York City banks.................................... 6,360 6,285 6,361 6,507 6,452 6,205 6,227 6,272 18 Banks outside New York City...................... 14,599 14,340 14,577 14,567 14,591 14,622 14,629 14,604 All .other large time deposits4 Total: 19 Large banks................................................................ 26,788 26,999 27,098 27,060 26,965 26,983 27,130 27,419 20 New York City banks.................................... 5,500 5,462 5,468 5,560 5,588 5,574 5,610 5,589 21 Banks outside New York City...................... 21,288 21,537 21,630 21,500 21,377 21,409 21,520 21,830 Issued to IPC’s: 22 Large banks........................................................... 14, 761 14,927 14,997 15,128 15,087 15,099 15,173 15,347 23 New York City banks.................................... 4,093 4,084 4,081 4,151 4,157 4,150 4,187 4,235 24 Banks outside New York City...................... 10,668 10,843 10,916 10,977 10,930 10,949 10,986 11,112 Issued to others: 25 Large banks........................................................... 12,027 12,072 12,101 11,932 11,878 11,884 11,957 12,072 26 New York City banks.................................... 1,407 1,378 1,387 1,409 1,431 1,424 1,423 1,354 27 Banks outside New York City...................... 10,620 10,694 10,714 10,523 10,447 10,460 10,534 10,718 Savings deposits, by ownership category Individuals and nonprofit organizations: 28 Large banks........................................................... 87,373 87,358 87,357 87,325 87,244 87,156 86,967 86,783 29 New York City banks..................................... 9,734 9,733 9,720 9,690 9,686 9,679 9,648 9,583 30 Banks outside New York City...................... 77,639 77,625 77,637 77,635 77,558 77,477 77,319 77,200 Partnerships and corporations for profit:5 31 Large banks........................................................... 5,077 5,086 5,132 5,108 5,167 5,158 5,191 5,163 32 New York City banks.................................... 573 570 573 573 575 572 573 563 33 Banks outside New York City...................... 4,504 4,516 4,559 4,535 4,592 4,586 4,618 4,600 Domestic governmental units: 34 Large banks........................................................... 1,886 1,884 1,820 1,856 1,828 1,760 1,712 1,723 35 New York City banks..................................... 332 347 320 313 293 291 262 275 36 Banks outside New York City...................... 1,554 1,537 1,500 1,543 1,535 1,469 1,450 1,448 All other:6 37 Large banks........................................................... 44 42 42 40 62 57 44 46 38 New York City banks.................................... 24 21 21 22 44 39 27 28 39 Banks outside New York City..................... 20 21 21 18 18 18 17 18 Gross liabilities of banks to their foreign branches 40 Large banks........................................................... 3,426 4,725 3,431 3,073 3,542 3,930 3,579 4,294 41 New York City banks.................................... 2,160 3,083 1,613 1,844 2,007 2,070 1,922 2,322 42 Banks outside New York City...................... 1,266 1,642 1,818 1,229 1,535 1,860 1,657 1,972 Loans sold outright to selected institutions by all large banks7 43 Commercial and industrial................................ 2,827 2,829 2,839 2,839 2,832 2,807 2,851 N.A. 44 Real estate............................................................. 195 209 196 211 212 215 217 N.A. 45 Allother.................................................................. 1,011 1,006 1,015 1,019 1,013 1,014 1,025 N.A. 1 Exclusive of loans and Federal funds transactions with domestic 5 Other than commercial banks. commercial banks. 6 Domestic and foreign commercial banks, and official international 2 All demand deposits except U.S. Govt, and domestic commercial organizations. banks, less cash items in process of collection. 7 To bank’s own foreign branches, nonconsolidated nonbank af­ 3 Certificates of deposit (CD’s) issued in denominations of $100,000 or filiates of the bank, the bank’s holding company (if not a bank), and more. nonconsolidated nonbank subsidiaries of the holding company. 4 All other time deposits issued in denominations of $100,000 or more (not included in large negotiable CD’s). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Financial Statistics □ September 1977 1.31 LARGE WEEKLY REPORTING COMMERCIAL BANKS Commercial and Industrial Loans Millions of dollars Outstanding Net change during— Industry classification 1977 1977 1977 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 Ql Q2 June July Aug. Total loans classified2 1 Total......................................................... 97,030 96,812 96,703 96,864 96,868 -916 1,542 rl,542 -602 213 Durable goods manufacturing: 2 Primary metals................................... 2,308 2,316 2,406 2,389 2,392 377 -161 10 -93 69 3 Machinery........................................... 4,763 4,783 4,649 4,560 4,513 108 38 56 -60 -231 4 Transportation equipment............... 2,384 2,375 2,362 2,336 2,322 74 94 -18 23 -99 5 Other fabricated metal products... 1,969 1,946 1,917 1,884 1,845 181 70 72 -25 -91 6 Other durable goods........................ 3,645 3,671 3,659 3,658 3,659 90 323 228 -65 57 Nondurable goods manufacturing : 7 Food, liquor, and tobacco.............. 3,179 3,202 3,300 3,319 3,302 -151 -21 43 -151 125 8 Textiles, apparel, and leather......... 4,076 4,122 4,036 4,031 4,035 381 475 226 '193 -10 9 Petroleum refining............................ 2,693 2,655 2,650 2,682 2,702 -305 285 134 10 71 10 Chemicals and rubber...................... 2,765 2,791 2,809 2,814 2,792 131 68 32 11 24 11 Other nondurable goods................. 2,098 2,129 2,087 2,091 2,091 147 -22 -33 -8 77 12 Mining, including crude petroleum and natural gas.............................. 8,128 8,129 8,179 8,175 8,182 94 767 403 -12 22 Trade: 13 Commodity dealers........................... 1,597 1,490 1,428 1,409 1,387 204 -434 -86 -207 -109 14 Other wholesale................................. 6,786 6,771 6,676 6,692 6,735 465 36 40 r — 31 5 15 Retail................................................... 7,159 7,088 7,040 7,149 7,141 405 380 140 282 -28 16 Transportation....................................... 4,911 4,918 4,947 4,992 4,978 -140 -128 27 -123 64 17 Communication..................................... 1,283 1,246 1,261 1,241 1,255 -10 -152 -107 36 23 18 Other public utilities............................. 5,250 5,130 5,129 5,141 5,128 -61 12 167 -314 -110 19 Construction........................................... 4,356 4,413 4,397 4,420 4,397 64 294 148 114 16 20 Services..................................................... 11,202 11,157 11,168 11,149 11,159 398 331 23 -147 22 21 All other domestic loans..................... 7,731 7,803 7,834 7,833 7,863 -303 105 69 -32 174 22 Bankers acceptances............................. 3,567 3,521 3,605 3,688 3,770 -2,770 -263 6 11 79 23 Foreign commercial and industrial loans................................................ 5,180 5,156 5,164 5,211 5,220 -135 -545 -99 -14 -16 Memo: 24 Commercial paper included in total classified loans *................... 105 -216 -34 70 -75 -138 25 Total commercial and industrial loans of all large weekly reporting banks.............................. 119,308 119,043 118,901 119,036 119,076 203 2,648 1,819 -576 213 1977 1977 1977 Apr. 27 May 25 June 29 July 27 Aug. 31 Ql Q2 June July Aug. “Term” loans classified3 26 Total......................................................... 45,893 46,107 46,516 45,901 46,009 630 675 409 -615 108 Durable goods manufacturing: 1,344 1,342 1,388 1,323 1,392 204 -133 46 -65 69 28 Machinery........................................... 2,499 2,490 2,520 2,414 2,303 -33 -32 30 -106 -111 29 Transportation equipment.......... 1,383 1.386 1,382 1,404 1,382 -13 43 -4 22 -22 30 Other fabricated metal products... 841 826 832 813 784 44 12 6 -19 -29 31 Other durable goods......................... 1,630 1,647 1,722 1,719 1,731 97 75 -3 12 Nondurable goods manufacturing: 32 Food, liquor, and tobacco.............. 1,374 1,438 1.435 1,363 1,367 14 23 -3 -72 4 33 Textiles, apparel, and leather......... 1,099 1,163 1,150 1.204 1,147 -27 79 -13 54 -57 34 Petroleum refining............................ 1,805 1,824 1,938 1,975 1,988 -202 168 114 37 13 35 Chemicals and rubber...................... 1,589 1,615 1,646 1,677 1,705 103 99 31 31 28 36 Other nondurable goods................. 1,101 1,172 1,128 1,118 1,083 78 96 -44 -10 -35 37 Mining, including crude petroleum and natural gas............................. 6,015 6,043 6,375 6,250 6,295 173 519 332 -125 45 Trade: 38 Commodity dealers........................... 199 202 171 180 209 -1 -28 -31 9 29 39 Other wholesale................................. 1,489 1,519 1,483 1,478 1,487 16 4 -36 -5 9 40 Retail................................................... 2,274 2,353 2,325 2,331 2,382 223 57 -28 6 51 41 Transportation....................................... 3,695 3,604 3,649 3,607 3,627 -164 -124 45 -42 20 42 Communication..................................... 802 793 748 764 781 -68 -31 -45 16 17 43 Other public utilities............................. 3,796 3,796 3,771 3,416 3,358 243 -136 -25 -355 -58 44 Construction........................................... 1,720 1,722 1,833 1,873 1,895 32 172 111 40 22 45 Services.................................................... 5,188 5,283 5,301 5,247 5.276 113 190 18 -54 29 46 All other domestic loans..................... 2,408 2,465 2,432 2,464 2,699 -167 -1 -33 32 235 47 Foreign commercial and industrial loans................................................. 3,642 3,424 3,287 3,281 3,118 62 -399 -137 -6 -163 1 Reported for the last Wednesday of each month. all outstanding loans granted under a formal agreement—revolving credit 2 Includes “term” loans, shown below. or standby—on which the original maturity of the commitment was in 3 Outstanding loans with an original maturity of more than 1 year and excess of 1 year. 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Deposits and Commercial Paper A25 1.32 GROSS DEMAND DEPOSITS of Individuals, Partnerships, and Corporations Billions of dollars, estimated daily-average balances At commercial banks Type of holder 1976 1977 1972 1973 1974 1975 Dec. Dec. Dec. Dec. Mar. June Sept. Dec. Mar. June 1 All holders, IPC......................................................... 208.0 220.1 225.0 236.9 227.9 234.2 236.1 250.1 242.3 253.8 18.9 19.1 19.0 20.1 19.9 20.3 19.7 22.3 21.6 25.9 3 Nonfinancial business................................................ 109.9 116.2 118.8 125.1 116.9 121.2 122.6 130.2 125.1 129.2 65.4 70.1 73.3 78.0 77.2 78.8 80.0 82.6 81.6 84.1 1.5 2.4 2.3 2.4 2.4 2.5 2.3 2.7 2.4 2.5 12.3 12.4 11.7 11.3 11.4 11.4 11.5 12.4 11.6 12.2 At weekly reporting banks 1977 1973 1974 1975 1976 Dec. Dec. Dec. Dec. Feb. Mar. Apr. May June July? 7 All holders, IPC......................................................... 118.1 119.7 124.4 128.5 123.0 124.7 127.5 124.4 128.7 131.0 14.9 14.8 15.6 17.5 15.6 16.7 16.7 17.0 17.8 18.9 66.2 66.9 69.9 69.7 67.4 67.8 68.5 67.2 69.5 70.7 28.0 29.0 29.9 31.7 31.1 31.5 33.5 31.5 32.3 32.6 2.2 2.2 2.3 2.6 2.4 2.2 2.3 2.4 2.4 2.2 12 Other............................................................................. 6.8 6.8 6.6 7.1 6.5 6.5 6.6 6.4 6.7 6.7 Note.—Figures include cash items in process of collection. Estimates of Data for August 1976 have been revised as follows: All holders, ipc, gross deposits are based on reports supplied by a sample of commercial 119.4; financial business, 15.3; nonfinancial business, 65.5; consumer, banks. Types of depositors in each category are described in the June 1971 30.0; foreign, 2.5; all other, 6.1. Bulletin, p. 466. 1.33 COMMERCIAL PAPER AND BANKERS ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1977 1974 1975 1976 Instrument Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June July Commercial paper (seasonally adjusted) 1All issuers...................................................................... 49,742 48,145 52,623 52,778 52,775 54,546 56,715 57,434 61,237 60,323 Financial companies:1 Dealer-placed paper:2 2 Total...................................................................... 4,599 6,220 7,271 7,053 6,931 7,196 7,286 7,555 8,196 8,261 3 Bank-related........................................................ 1,814 1,762 1,900 1,895 1,929 1,839 1,778 1,805 1,894 1,744 Directly-placed paper: 3 4 Total...................................................................... 31,801 31,230 32,365 32,726 32,073 33,873 34,753 34,949 37,593 36,773 5 Bank-related........................................................ 6,518 6,892 5,959 5,637 5,502 6,126 5,703 5,999 6,636 6,344 6 Nonfinancial companies4.......................................... 13,342 10,695 12,987 12,999 13,771 13,475 14,676 14,930 15,538 15,289 Dollar acceptances (not seasonally adjusted) 7 Total.............................................................................. 18,484 18,727 22,523 22,362 22,187 22,694 22,899 23,201 23,440 23,499 Held by: 8 Accepting banks....................................................... 4,226 7,333 10,442 8,183 7,991 7,787 7,761 7,326 7,630 7,601 9 Own bills.............................................................. 3,685 5,899 8,769 7,011 6,654 6,367 6,309 6,218 6,356 6,464 10 Bills bought......................................................... 542 1,435 1,673 1,172 1,337 1,421 1,381 1,108 1,273 1,137 F.R. Banks: 11 Own account....................................................... 999 1,126 991 191 322 280 881 108 228 213 12 Foreign correspondents.................................... 1,109 293 375 374 440 435 394 385 360 296 13 Others........................................................................ 12,150 9,975 13,447 13,615 13,434 14,191 13,863 15,382 15,222 15,389 Based on: 14 Imports into United States.................................. 4,023 3,726 4,992 4,992 5,138 4,983 5,114 5,124 5,635 5,570 15 Exports from United States................................. 4,067 4,001 4,818 5,137 5,074 5,222 5,376 5,642 5,729 5,842 16 All other................................................................... 10,394 11,000 12,713 12,233 11,974 12,489 12,410 12,436 12,076 12,088 1 Institutions engaged primarily in activities such as, but not limited to, 3 As reported by financial companies that place their paper directly commercial, savings, and mortgage banking; sales, personal, and mortgage with investors. financing; factoring, finance leasing, and other business lending; insurance 4 Includes public utilities and firms engaged primarily in activities such underwriting; and other investment activities. as communications, construction, manufacturing, mining, wholesale and 2 Includes all financial company paper sold by dealers in the open retail trade, transportation, and services. market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Financial Statistics □ September 1977 1.34 PRIME RATE CHARGED BY BANKS on Short-term Business Loans Per cent per annum Month Average Month Average Effective date Rate Effective date Rate rate rate 1976—Jan. 12.............. 7 1976—Nov. 1............ 6 a 1976—June....................... 7.20 1977—Jan.......................... 6.25 21.............. 6% July........................ 7.25 Feb......................... 6.25 Dec. 13............ 6% Aug........................ 7.01 Mar........................ 6.25 June 1.............. 7 Sept........................ 7.00 Apr........................ 6.25 7.............. m 1977—May 13............ 6 Vi Oct......................... 6.78 May........................ 6.41 31............ 6Y4 Nov........................ 6.50 June........................ 6.75 Aug. 2.............. 7 Dec......................... 6.35 July........................ 6 75 Aug. 22............ 7 Aus......................... 6.83 Oct. 4.............. 6y4 1.35 TERMS OF LENDING AT COMMERCIAL BANKS May 2-7, 1977, Survey Per cent per annum Size of loan (in thousands of dollars) All Item sizes 1,000 1-24 25-49 50-99 100-499 500-999 and over Short-term commercial and industrial loans 1 Amount of loans (thousands of dollars)........................ 6,652,747 806,754 431,421 504,177 1,247,257 605,755 3,057,385 2 Number of loans................................................................... 144,391 113,551 13,447 7,967 7,316 962 1,148 3 Weighted-average maturity (months).............................. 2.9 3.2 3.7 3.8 2.7 2.7 2.7 4 Weighted-average interest rate (per cent)....................... 7.37 9.04 8.39 8.04 7.57 7.11 6.65 5 Interquartile range 1....................................................... 6.40-8.14 8.03-9.50 7.71-9.20 7.25-8.97 6.50-8.30 6.40-7.54 6.25-6.92 Percentage of amount of loans: 6 With floating rate............................................................. 47.2 12.6 18.3 34.1 40.7 49.8 64.6 7 Made under commitment.............................................. 52.4 23.0 33.5 36.1 51.3 61.0 64.2 Long-term commercial and industrial loans 8 Amount of loans (thousands of dollars). 1,651,267 439,081 175,761 183,375 188,678 74,981 589,391 9 Number of loans......................................... 59,524 49,530 5,398 3,157 1,172 119 150 10 Weighted-average maturity (months). .. 35.0 18.8 23.1 46.8 49.1 42.9 41.5 11 Weighted-average interest rate (per cent) 8.24 9.31 8.95 8.71 8.03 8.03 7.18 12 Interquartile range 1.............................. 7.20-9.25 7.50-9.50 7.26-9.38 7.25-10.20 6.98-9.00 6.84-8.84 6.51-7.45 Percentage of amount of loans: 13 With floating rate.................................... 36.7 3.0 7.3 9.1 42.1 68.3 73.4 14 Made under commitment..................... 45.1 9.4 8.5 19.0 37.3 68.9 90.2 Construction and land development loans 15 Amount of loans (thousands of dollars). 863,318 167,107 87,280 331,708 145,933 131,289 16 Number of loans......................................... 28,820 19,843 2,763 5,100 1,017 98 17 Weighted-average maturity (months).. . 7.5 8.0 5.7 4.8 9.5 12.7 18 Weighted-average interest rate (per cent) 8.72 9.28 8.95 8.79 8.46 7.97 19 Interquartile range 1.............................. 8.16-9.25 8.25-9.92 8.00-9.73 8.71-8.71 8.00-9.00 7.43--8.91 Percentage of amount of loans: 20 With floating rate.................................... 20.0 8.4 9.9 3.7 32.2 69.1 21 Secured by real estate............................ 81.4 81.9 82.5 82.7 63.1 97.0 22 Made under commitment..................... 39.4 46.4 56.3 13.6 45.5 77.4 23 Type of construction: 1-4-family.......... 55.9 75.9 74.6 61.4 23.6 39.9 24 Multifamily............................................... 11.9 4.3 1.0 18.6 7.9 16.7 25 Nonresidential......................................... 32.2 19.8 24.4 20.0 68.5 43.4 All 250 sizes 1-9 10-24 25-49 50-99 100-249 and over Loans to farmers 26 Amount of loans (thousands of dollars).. 924,826 196,521 212,922 140,441 145,491 102,271 127,180 27 Number of loans........................................... 77,543 56,467 13,784 4,109 2,219 765 199 28 Weighted-average maturity (months).... 8.3 8.1 7.9 11.5 6.6 5.9 9.6 29 Weighted-average interest rate (per cent). r8.72 9.06 8.98 r8.92 8.73 8.58 7.67 30 Interquartile range 1................................ 8.25-9.20 8.62-9.34 8.50-9.24 8.45-9.20 8.31-9.20 8.16-9.07 6.27-8.68 31 By purpose of loan: 32 Feeder livestock.................................... 8.42 8.84 8.80 8.65 8.55 8.19 7.68 33 Other livestock...................................... ’■8.14 8.89 8.91 r8.85 8.81 8.47 6.77 34 Other current operating expenses... 8.84 9.01 8.95 8.81 8.91 8.59 8.01 35 Farm machinery and equipment.... 9.40 9.47 9.44 9.74 8.96 8.58 8.72 36 Other....................................................... 8.82 9.04 8.90 9.04 8.66 8.73 8.78 i Interest rate range that covers the middle 50 per cent of the total Note.—For more detail, see the Board’s G.14 statistical release, dollar amount of loans made. 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Securities M arkets A ll 1.36 INTEREST RATES Money and Capital Markets Averages, per cent per annum 1977 1977, week ending— Instrument 1974 1975 1976 May June July Aug. Aug. 6 Aug. 13Aug. 20Aug. 27 Sept. 3 Money market rates Prime commercial paper 1 1 90- to 119-day.............................................. 10.05 6.26 5.24 5.26 5.42 5.38 5.75 5.54 5.65 5.88 5.88 5.88 2 4- to 6-month............................................... 9.87 6.33 5.35 5.35 5.49 5.41 5.84 5.61 5.75 5.95 5.95 6.00 3 Finance company paper, directly placed, 3- to 6-month 2........................................ 8.62 6.16 5.22 5.13 5.38 5.38 5.71 5.50 5.53 5.83 5.88 5.88 4 Prime bankers acceptances, 90-day 3.......... 9.92 6.30 5.19 5.34 5.39 5.43 5.88 5.70 5.83 6.02 5.95 5.93 5 Federal funds 4................................................ 10.51 5.82 5.05 5.35 5.39 5.42 5.90 5.80 5.70 5.94 5.99 6.02 Large negotiable certificates of deposit 6 3-month, secondary market 5................... 10.27 6.43 5.26 5.20 5.42 5.46 5.91 5.76 5.97 6.01 5.98 5.97 7 3-month, primary market 6....................... 5.15 5.13 5.35 5.32 5.82 5.65 5.88 5.88 5.88 5.84 8 Euro-dollar deposits, 3-month 7.................. 10.96 6.97 5.57 5.70 5.78 5.80 6.30 6.14 6.29 6.45 6.34 6.11 LT.S. Govt, securities Bills: 8 Market yields: 9 3-month................................................ 7.84 5.80 4.98 4.96 5.02 5.19 5.49 5.35 5.47 5.56 5.53 5.56 10 6-month................................................ 7.95 6.11 5.26 5.20 5.21 5.40 5.83 5.69 5.81 5.92 5.87 5.86 11 1-year..................................................... 7.71 6.30 5.52 5.43 5.41 5.57 5.97 5.83 5.94 6.07 6.02 5.98 Rates on new issue: 12 3-month................................................. 7.886 5.838 4.989 4.942 5.004 5.146 5.500 5.424 5.353 5.669 5.553 5.574 13 ' 6-month................................................. 7.926 6.122 5.266 5.193 5.198 5.351 5.810 5.691 5.679 5.978 5.891 5.849 Notes and bonds maturing in 14 9 to 12 months^...................................... 8.25 6.70 5.84 5.81 5.76 5.89 6.35 6.23 6.29 6.50 6.39 6.35 Constant maturities:10 15 1-year......................................................... 8.18 6.76 5.88 5.84 5.80 '5.94 6.37 6.24 6.34 6.48 6.42 6.35 Capital market rates Government notes and bonds U.S. Treasury: Constant maturities:1 o 2-yea r 6.31 6.25 6.13 6.27 6.61 6.52 6.60 6.70 6.64 6.56 3-yea r 7.82 7.49 6.77 6.55 6.39 6.51 6.79 6.74 6.81 6.85 6.78 6.72 5-year............................ 7.80 7.77 7.18 6.94 6.76 6.84 7.03 7.03 7.06 7.08 7.00 6.93 7-year............................ 7.71 7.90 7.42 7.26 7.05 7.12 7.24 7.27 7.30 7.29 7.18 7.11 10-year.......................... 7.56 7.99 7.61 7.46 7.28 7.33 7.40 7.43 7.45 7.44 7.34 7.27 20-year.......................... 8.05 8.19 7.86 7.74 7.64 7.60 7.64 7.66 7.69 7.68 7.58 7.52 30-year.......................... 7.80 7.64 7.64 7.68 7.71 7.73 7.72 7.63 7.59 Notes and bonds maturing in 9- 23 3 to 5 years.............................. 7.81 7.55 6.94 6.76 6.58 6.67 6.90 6.86 6.90 6.97 6.89 6.84 24 Over 10 years (long-term)... 6.99 6.98 6.78 7.17 6.99 6.97 7.00 7.03 7.04 7.03 6.95 6.90 State and local: Moody’s series:11 25 5.89 6.42 5.66 5.23 5.21 5.21 5.28 5.25 5.30 5.30 5.27 5.27 26 Baa..................... 6.53 7.62 7.49 6.23 6.05 6.00 5.95 6.00 5.95 5.95 5.90 5.85 27 Bond Buyer series ] 6.17 7.05 6.64 5.75 5.62 5.63 5.62 5.63 5.63 5.63 5.58 5.54 Corporate bonds Seasoned issues 13 All industries......... 9.03 9.57 9.01 8.47 8.38 8.33 8.34 8.35 8.35 8.35 8.34 8.31 By rating groups: Aaa..................... 8.57 8.83 8.43 8.05 7.95 7.94 7.98 8.00 8.00 7.99 7.96 7.92 Aa....................... 8.84 9.17 8.75 8.28 8.19 8.12 8.17 8.15 8.18 8.18 8.17 8.14 A......................... 9.20 9.65 9.09 8.55 8.46 8.40 8.40 8.40 8.40 8.40 8.40 8.39 Baa..................... 9.50 10.61 9.75 9.01 8.91 8.87 8.82 8.85 8.82 8.81 8.81 8.80 Aaa utility bonds:14 33 New issue....................... 9.33 9.40 8.48 8.33 '8.08 8.14 8.04 8.07 8.11 8.01 7.97 34 Recently offered issues. 9.34 9.41 8.49 8.31 8.12 8.12 8.05 8.10 8.05 8.04 8.03 8.02 Dividend/price ratio 35 Preferred stocks., 8.23 8.38 7.97 7.63 7.62 7.51 7.55 7.52 7.57 7.41 7.64 7.60 36 Common stocks. 4.47 4.31 3.77 4.39 4.60 4.59 4.72 4.68 4.67 4.72 4.75 4.72 1 Averages of the most representative daily offering rate quoted by 7 Averages of daily quotations for the week ending Wednesday. dealers. 8 Except for new bill issues, yields are computed from daily closing 2 Averages of the most representative daily offering rates published by bid prices. Yields for all bills are quoted on a bank-discount basis. finance companies for varying maturities in this range. 9 Unweighted averages for all outstanding notes and bonds in maturity 3 Beginning Aug. 15, 1974, the rate is the average of the midpoint of ranges shown, based on daily closing bid prices. “Long-term” includes the range of daily dealer closing rates offered for domestic issues; prior all bonds neither due nor callable in less than 10 years. data are averages of the most representative daily offering rate quoted by I o Yields on the more actively traded issues adjusted to constant dealers. maturities by the U.S. Treasury, based on daily closing bid prices. 4 Weekly figures are 7-day averages of daily effective rates for the week II General obligations only, based on figures for Thursday, from ending Wednesday; the daily effective rate is an average of the rates on Moody’s Investors Service. a given day weighted by the volume of transactions at these rates. 12 Twenty issues of mixed quality. 5 Weekly figures are 7-day averages of the daily midpoints as determined 13 Averages^of daily figures from Moody’s Investors Service. from the range of offering rates; monthly figures are averages of total days 14 Compilation of the Board of Governors of the Federal Reserve in the month. System. 6 Posted rates, which are the annual interest rates most often quoted Issues included are long-term (20 years or more). New-issue yields are on new offerings of negotiable CD’s in denominations of $100,000 or based on quotations on date of offering; those on recently offered issues more. Rates prior to 1976 not available. Weekly figures are for Wednes­ (included only for first 4 weeks after termination of underwriter price Digitizedd afyo rd aFteRs.ASER restrictions), on Friday close-of-business quotations. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Financial Statistics □ September 1977 1.37 STOCK MARKET Selected Statistics 1977 Indicator 1974 1975 1976 Feb. Mar. Apr. May June July Aug. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31,1965 = 50). 43.84 45.73 54.45 54.93 54.67 53.92 53,96 54.31 54.94 53.51 2 Industrial................................................................. 48.08 51.88 60.44 59.65 59.56 58.47 58.13 58.44 58.90 57.30 3 Transportation....................................................... 31.89 30.73 39.57 40.59 40.52 41.51 43.25 43.29 43.52 41.04 4 Utility....................................................................... 29.82 31.45 36.97 40.86 40.18 40.24 41.14 41.59 42.44 41.50 5 Finance..................................................................... 49.67 46.62 52.94 55.65 54.84 54.30 54.80 55.15 57.29 56.52 6 Standard & Poor’s Corporation (1941-43 = 10)1.. 82.85 85.17 102.01 100.96 100.57 99.05 98.76 99.29 100.19 97.75 7 American Stock Exchange (Aug. 31,1973 = 100). 79.97 83.15 101.63 112.17 111.77 111.70 113.72 116.28 122.03 119.33 Volume of trading (thousands of shares)2 8 New York Stock Exchange.................................. 13,883 18,568 21,189 20,971 18,900 21.214 20,277 22,007 23,656 18,831 9 American Stock Exchange................................... 1,908 2,150 2,565 2,830 2,580 2,500 2,440 2,720 2,880 2,140 Customer financing (end-of-period balances, in millions of dollars) 10 Regulated margin credit at brokers/dealers and banks3................................................ 4,836 6,500 9,011 9,523 9,701 r9,885 10,068 10,255 10,490 11 Brokers, total...................................... 3,980 5,540 8,166 8,679 8,891 9,078 9,267 9,432 9,667 12 Margin stock4................................................. 3,840 5,390 7,960 8,480 8,690 8,880 9,070 9,230 9,460 13 Convertible bonds.......................................... 137 147 204 197 199 196 196 198 204 14 Subscription issues.........................!............. 3 3 2 2 2 2 1 4 3 15 Banks, total....................................................... 856 960 845 844 810 r807 801 823 823 16 Margin stocks.................................................. 815 909 800 799 767 r764 761 779 780 17 Convertible bonds.......................................... 30 36 30 28 25 25 25 25 24 18 Subscription issues........................................ 11 15 15 17 18 18 15 19 19 19 Unregulated nonmargin stock credit at banks5 2,064 2,281 2,817 '2,319 r2,312 '2,350 '2,345 2,403 2,419 Memo: Free credit balances at brokers6 20 Margin-account................................................... 410 475 585 605 605 615 625 595 600 21 Cash-account........................................................ 1,425 1,525 1,855 1,815 1,720 1,715 1,710 1,805 1,860 Margin-account debt at brokers (percentage distribution, end of period) 22 Total.......................................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 By equity class (in per cent): 23 Under 40............................... 45.4 24.0 12.0 17.6 16.5 16.5 17.8 12.9 16.2 24 40-49..................................... 23.0 28.8 23.0 34.9 36.8 34.1 35.6 27.0 32.9 25 50-59..................................... 13.9 22.3 35.0 23.4 23.2 25.4 23.0 33.0 26.4 26 60-69..................................... 8.8 11.6 15.0 11.3 11.6 11.8 11.0 13.3 12.0 27 70-79..................................... 4.6 6.9 8.7 7.3 6.7 6.8 7.0 8.0 7.0 28 80 or more........................... 4.3 5.3 6.0 5.5 5.3 5.4 5.0 5.8 5.5 Special miscellaneous-account balances at brokers (end of period) 29 Total balances (millions of dollars) 8 ... 7,010 7,290 8,776 9,170 9,350 9,300 9,360 9,470 9,730 Distribution by equity status (per cent) 30 Net credit status.................................... 41.1 43.8 41.3 42.9 42.3 41.4 41.0 41.0 40.9 Debit status, equity of— 31 60 per cent or more.......................... 32.4 40.8 47.8 45.5 46.0 46.3 46.3 47.8 47.1 32 Less than 60 per cent....................... 26.5 15.4 10.9 11.6 11.7 12.4 12.6 11.2 12.0 1 Effective July 1976 includes a new financial group, banks and in­ 5 Nonmargin stocks are those not listed on a national securities exsurance companies. With this change the index includes 400 industrial change and not included on the Federal Reserve System’s list of over-thestocks (formerly 425), 20 transportation (formerly 15 rail), 40 public counter margin stocks. At banks, loans to purchase or carry nonmargin utility (formerly 60), and 40 financial. stocks are unregulated; at brokers, such stocks have no loan value. 2 Based on trading for a S^-hour day. 6 Free credit balances are in accounts with no unfulfilled commitments 3 Margin credit includes all credit extended to purchase or carry to the brokers and are subject to withdrawal by customers on demand. stocks or related equity instruments and secured at least in part by stock. 7 Each customer’s equity in his collateral (market value of collateral Credit extended by brokers is end-of-month data for member firms of less net debit balance) is expressed as a percentage of current collateral the New York Stock Exchange; June data for banks are universe totals; values. all other data for banks are estimates for all commercial banks based on 8 Balances that may be used by customers as the margin deposit re­ data from a sample of reporting banks. quired for additional purchases. Balances may arise as transfers based In addition to assigning a current loan value to margin stock generally, on loan values of other collateral in the customer’s margin account or Regulations T and U permit special loan values for convertible bonds deposits of cash (usually sales proceeds) occur. and stock acquired through exercise of subscription rights. 4 A distribution of this total by equity class is shown below. Note.—For table on “Margin Requirements” see p. A-10, Table 1.161. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Thrift Institutions A29 1.38 SAVINGS INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1976 1977 1974 1975 1976 Account Nov. Dec. Jan. Feb. Mar. Apr. May June July Savings and loan associations 1 Assets........................................... 295,545 338,233 391,999 389,173 391,999 398,299 403,591 409,357 414,436 421,865 427,041 433,822 2 Mortgages.................................. 249,301 278,590 323,130 319,273 323,130 326,056 329,086 333,703 338,984 344,631 350.765 355,978 3 Cash and investment securities1............................... 23,251 30,853 35,660 36,605 35,660 38,252 39,505 39,656 39,061 40,461 39,626 40,996 4 Other............................................ 22,993 28,790 33,209 33,295 33,209 33,991 35,000 35,998 36,391 36,773 36,650 36,848 5 Liabilities and net worth......... 295,545 338,233 391,999 389,173 391,999 398,299 403,591 409,357 414,436 421,865 427,041 433,822 6 Savings capital.......................... 242,974 285,743 336,030 329,833 336,030 341,211 344,616 352,194 354,318 357,965 364,349 368,520 7 Borrowed money....................... 24,780 20,634 19,087 18,715 19,087 18,455 18,256 18,283 18,880 19,804 20,558 20,961 8 FHLBB................................... 21,508 17,524 15,708 15,571 15,708 15,029 14,661 14,325 14,809 15,000 15,595 15,723 9 Other........................................ 3,272 3,110 3,379 3,144 3,379 3,426 3,595 3,958 4,071 4,804 4,963 5,238 10 Loans in process....................... 3.244 5,128 6,836 6,753 6,836 6,718 6,783 7,351 7,899 8,505 9,123 9,329 11 Other............................................ 6,105 6,949 8,015 11,918 8,015 9,667 11,418 8,833 10,360 12,287 9,515 11,213 12 Net worth2................................. 18,442 19,779 22,031 21,954 22,031 22,248 22,518 22,696 22,979 23,304 23,496 23,799 13 Memo: Mortgage loan com­ mitments outstanding3.. 7,454 10,673 14,828 15,467 14,828 15,079 16,796 19,304 21,242 22,274 22,037 21,916 Mutual savings banks 14 Assets........................................... 109,550 121,056 134,812 133,361 134,812 135,906 137,307 138,901 139,496 140,593 141,657 Loans: 15 Mortgage............................... 74,891 77,221 81,630 80,884 81,630 81,826 81,982 82,273 82,687 83.075 83,937 16 Other........................................ 3,812 4,023 5,183 5,801 5,183 5,956 6,254 6,389 6,050 6,650 6,818 Securities: 17 U.S. Govt............................... 2.555 4,740 5,840 5,836 5,840 5,917 6,096 6,360 6,323 6,248 6.135 18 State and local government. 930 1,545 2.417 2,466 2,417 2,295 2,366 2,431 2,504 2,539 2.546 19 Corporate and other4........ 22,550 27,992 33.793 33,074 33,793 34,475 35,088 35,928 36,322 36,455 36;420 20 Cash............................................. 2,167 2,330 2,355 1,668 2.355 1,800 1,835 1,823 1,900 1,922 2,083 21 Other assets................................ 2,645 3,205 3,593 3,632 3,593 3,637 3,686 3,668 3,709 3,703 3,719 22 Liabilities.................................... 109,550 121,056 134,812 133,361 134,812 135,906 137,307 138,901 139,496 140,593 141,657 23 Deposits....................................... 98,701 109,873 122,877 120,971 122,877 123,864 124,728 126,687 126,938 127,791 129,200 24 Regular:5............................... 98,221 109,291 121,961 120,125 121,961 122,874 123,721 125,624 125.731 126,587 127,955 25 Ordinary savings............. 64,286 69,653 74,535 73,857 74,535 74,621 75,038 76,260 76,336 76.384 76.976 26 Time and other................ 33,935 39,639 47,426 46,268 47,426 48,253 48,683 49,364 49,395 50,203 50,979 27 Other........................................ 480 582 916 846 916 989 1,007 1,063 1,207 1,204 1.245 28 Other liabilities......................... 2,888 2,755 2,884 3,376 2,884 2,940 3,368 2,939 3,230 3,381 2,955 29 General reserve accounts.. . . 7,961 8,428 9,052 9,015 9,052 9,102 9,211 9,275 9,329 9,422 9,502 30 Memo: Mortgage loan com­ mitments outstanding6.. 2,040 1,803 2,439 2,553 2,439 2,584 2,840 3,161 3,287 3,521 4,079 Life insurance companies 31 Assets....................... 263,349 289,304 321,552 317,499 321,552 323,407 325,094 326,753 328,786 331,028 334,386 Securities: 32 Government.......... 10,900 13,758 17,942 18,390 17,942 18,198 18,443 18,470 18,500 18,475 18,579 33 United States7 3,372 4,736 5,368 5,992 5,368 5,537 5,592 5,546 5,544 5,396 5.400 34 State and local 3,667 4,508 5,594 5,533 5,594 5,657 5,709 5,732 5,758 5,797 5,813 35 Foreign8........... 3,861 4,514 6,980 6,865 6,980 7,004 7,142 7,192 7,198 7,282 7,366 36 Business................ 119,637 135,317 157,246 154,382 157,246 159,213 160,463 161,214 162,816 164,126 166,859 37 Bonds................ 97,717 107,256 122,984 121,763 122,984 125,910 127,603 128,596 130,057 131,568 133,497 38 Stocks................ 21,920 28,061 34,262 32,619 34,262 33,303 32,860 32,618 32,759 32,558 33,362 39 Mortgages................ 86,234 89,167 91,552 90,794 91,552 91,566 91,585 91,786 92,200 92,358 92.854 40 Real estate................ 8,331 9,621 10,476 10,244 10,476 10,556 10,629 10,738 10.802 10,822 10,897 41 Policy loans.............. 22,862 24,467 25,834 25,695 25,834 25,911 26,034 26,207 26,364 26,500 26,657 42 Other assets.............. 15,385 16,971 18,502 17,994 18,502 17,963 17,940 18,338 18,104 18,747 18,540 Credit unions 43 Total assets/liabilities and capital................................. 31,948 38,037 44,897 44,089 44,835 44,906 45,798 47,111 47,348 48,322 49,479 49,501 44 Federal.................................... 16,715 20,209 24,164 23,668 24,164 24,188 24,756 25,596 25,697 26,259 27.017 26,951 45 State........................................ 15,233 17,828 20,733 20,421 20,671 20,718 21,042 21,515 21,651 22,063 22,462 22,550 46 Loans outstanding.................... 24,432 28,169 34,033 33,732 34,293 34,188 34,549 35,411 36,019 36,936 38,134 38,597 47 Federal.................................... 12,730 14,869 18,022 17,786 18,202 18,081 18,275 18,776 19,050 19,583 20,303 20,456 48 State........................................ 11,702 13,300 16,011 15,946 16,091 16,107 16,274 16,635 16,969 17,353 17,831 18,141 49 Savings........................................ 27,518 33,013 39,264 38,281 38,968 39,344 39,981 41,161 41,394 42,125 43,196 43,294 50 Federal (shares).................... 14,370 17,530 21,149 20,597 20,980 21,165 21,559 22,346 22,524 22,955 23,608 23,661 51 State (shares and deposits). 13,148 15,483 18,115 17,684 17,988 18,179 18,442 18,815 18,870 19,170 19,588 19,633 For notes see bottom of page A30. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Financial Statistics □ September 1977 1.39 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year Transition quarter Type of account or operation (July- 1976 1977 1977 1975 1976 Sept. 1976) HI H2 HI May June July U.S. Budget 1 Receipts 1.......................................... 280,997 299,197 81,686 159,742 157,868 189,410 27,549 43,075 24,952 2 Outlays 1,2,3.................................... 326,105 365,658 94,659 180,559 193,626 199,482 33,592 32,881 33,630 3 Surplus, or deficit (—)................. -45,108 -66,461 -12,973 -20,816 -35,758 -10,072 -6,043 10,194 -8,678 4 Trust funds.................................... 7,419 2,409 -1,952 5,503 -4,621 7,332 7,542 1,829 -3,348 5 Federal funds 4............................. -52,526 -68,870 -11,021 -26,320 -31,137 -17,405 -13,584 8,365 -5,330 Off-budget entities surplus, or deficit (—) 6 Federal Financing Bank outlays. . -6,389 -5,915 -2,575 -3,222 -5,176 -2,075 -299 -45 -1,606 7 Other 2,5............................................ -1,652 -1,355 793 -1,119 3,809 -2,086 245 -262 -122 U.S. Budget plus off-budget, in­ cluding Federal Financing Bank 8 Surplus, or deficit (—)..................... -53,149 -73,731 -14,755 -25,158 -37,125 -14,233 -6,097 9,888 -10,406 Financed by: 9 Borrowing from the public 3. . . 50,867 82,922 18,027 33,561 35,457 16,480 -2,871 518 1,803 10 Cash and monetary assets (de­ crease, or increase (—)).... -320 -7,796 -2,899 -7,909 2,153 -4,666 11,268 -9,345 6,730 11 Other 6............................................ 2,602 -1,396 -373 -495 -485 2,420 -2,300 -1,061 1,874 Memo items : 12 Treasury operating balance (level, end of period)........................................ 7,591 14,836 17,418 14,836 11,670 77,311 6,992 '16,255 10,154 13 F.R. Banks........................................ 5,773 11,975 13,299 11,975 10,393 65,372 5,836 15,183 8,789 14 Tax and loan accounts................... 1,475 2,854 4,119 2,854 1,277 11,940 1,156 '1,072 1,365 15 Other demand accounts 7............... 343 7 7 1 Effective June 1977, earned income credit payments in excess of an Electrification and Telephone Revolving Fund, Rural Telephone Bank, individual’s tax liability, formerly treated as outlays, are classified as and Housing for the Elderly or Handicapped Fund. income tax refunds retroactive to January 1976. 6 Includes: Public debt accrued interest payable to the public; deposit 2 Outlay totals reflect the reclassification of the Export-import Bank funds; miscellaneous liability (including checks outstanding) and asset from off-budget status to unified budget status. accounts; seignorage; increment on gold; net gain/loss for U.S. currency 3 Export-import Bank certificates of beneficial interest (effective July valuation adjustment; net gain/loss for IMF valuation adjustment. 1, 1975) and loans to the Private Export Funding Corp. (PEFCO), a wholly 7 Excludes the gold balance but includes deposits in certain commercial owned subsidiary of the Export-import Bank are treated as debt rather depositories that have been converted from a time deposit to a demand than asset sales. deposit basis to permit greater flexibility in Treasury cash management. 4 Half years calculated as a residual of total surplus/deficit and trust fund surplus/deficit. Source.—“Monthly Treasury Statement of Receipts and Outlays of 5 Includes Pension Benefit Guaranty Corp., Postal Service Fund, Rural the U.S. Government,” Treasury Bulletin, and U.S. Budget, Fiscal Year 1978. NOTES TO TABLE 1.38 1 Stock of the Federal Home Loan Bank Board (FHLBB) is included Even when revised, data for current and preceding year are subject to in “other assets.” further revision. 2 Includes net undistributed income, which is accrued by most, but not Mutual savings banks: Estimates of National Association of Mutual all, associations. Savings Banks for all savings banks in the United States. Data are re­ 3 Excludes figures for loans in process, which are shown as a liability. ported on a gross-of-valuation-reserves basis. 4 Includes securities of foreign governments and international organiza­ Life insurance companies: Estimates of the Institute of Life Insurance tions and nonguaranteed issues of U.S. Govt, agencies. for all life insurance companies in the United States. Annual figures are 5 Excludes checking, club, and school accounts. annual-statement asset values, with bonds carried on an amortized basis 6 Commitments outstanding (including loans in process) of banks in and stocks at year-end market value. Adjustments for interest due and New York State as reported to the Savings Banks Assn. of the State of accrued and for differences between market and book values are not New York. made on each item separately but are included, in total, in “other assets.” 7 Direct and guaranteed obligations. Excludes Federal agency issues Credit unions: Estimates by the National Credit Union Administration not guaranteed, which are shown in this table under “business” securities. for a group of Federal and State-chartered credit unions that account for 8 Issues of foreign governments and their subdivisions and bonds of the about 30 per cent of credit union assets. Figures are preliminary and International Bank for Reconstruction and Development. revised annually to incorporate recent benchmark data. Note.—Savings and loan associations: Estimates by the FHLBB for all associations in the United States. Data are based on monthly reports of Federally insured associations and annual reports of other associations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.40 U.S. BUDGET RECEIPTS AND OUTLAYS Millions of dollars Fiscal year Calendar year Transition quarter Source or type (July- 1976 1977 1977 1975 1976 Sept. 1976) HI H2 HI May June July Receipts 1 All sources 1........................................... 280,997 300,005 81,773 160,552 157,961 190,238 27,672 43,075 24,952 2 Individual income taxes, net............... 122,386 131,603 38,801 65,767 75,094 78,775 9,413 17,949 12,438 3 Withheld............................................ 122,071 123,408 32,949 63,859 68,023 73,303 12,993 12,175 12,240 4 Presidential Election Campaign 32 34 1 33 1 28 6 4 5 Nonwithheld...................................... 34,296 35,528 6,809 27,879 8,426 32,967 2,092 6,272 923 6 Refunds 1........................................... 34,013 27,367 958 26,004 1,356 27,521 5,678 501 726 7 Corporation income taxes: 8 Gross receipts................................... 45,747 46,783 9,808 27,973 20,706 37,133 1,465 14,758 1,968 9 Refunds.............................................. 5,125 5,374 1,348 2,639 2,886 2,324 369 379 430 10 Social insurance taxes and contribu­ tions, net........................................ 86,441 92,714 25,760 51,828 47,596 58,098 14,203 7,696 7,961 11 Payroll employment taxes and contributions 2......................... 71,789 76,391 21,534 40,947 40,427 45,241 9,912 6,709 6,725 12 Self-employment taxes and contributions 2......................... 3,417 3,518 269 3,250 286 3,688 248 335 13 Unemployment insurance............... 6,771 8,054 2,698 5,193 4,379 6,576 3,582 228 800 14 Other net receipts 3......................... 4,466 4,752 1,259 2,438 2,504 2,594 461 424 437 15 Excise taxes............................................ 16,551 16,963 4,473 8,204 8,910 8,431 1,485 1,530 1,567 16 Customs.................................................. 3,676 4,074 1,212 2,147 2,361 2,518 All 504 446 17 Estate and gift...................................... 4,611 5,216 1,455 2,643 2,943 4,333 501 437 505 18 Miscellaneous receipts 4..................... 6,711 8,026 1,612 4,630 3,236 3,269 548 581 498 Outlays 19 AH types 1, 5.......................................... 326,105 366,466 94,746 181,369 193,719 200,310 33,715 32,881 33,630 20 National defense................................... 86,585 89,996 22,518 44,052 45,002 48,721 8,555 8,404 8,004 21 International affairs 5......................... 5,862 5,067 1,997 2,668 3,028 2,522 284 439 463 22 General science, space, and technology...................................... 3,989 4,370 1,161 1,708 2,377 2,108 350 362 357 23 Natural resources, environment, and energy..................................... 9,537 11,282 3,324 6,900 7,206 6,855 1,239 1,421 1,266 24 Agriculture............................................. 1,660 2,502 584 417 2,019 2,628 138 256 334 25 Commerce and transportation........... 16,010 17,248 4,700 5,766 9,643 5,945 1,586 1,419 978 26 Community and regional development.................................. 4,431 5,300 1,530 2,411 3,192 3,149 525 670 627 27 Education, training, employment, and social services....................... 15,248 18,167 5,013 9,116 9,083 9,775 1,628 1,772 1,656 28 Health..................................................... 27,647 33,448 8,720 17,008 19,329 18,654 3,317 3,398 3,115 29 Income security 1................................. 108,605 127,406 32,796 65,336 65,456 70,745 11,568 11,129 11,590 30 Veterans benefits and services........... 16,597 18,432 3,962 9,450 8,542 9,382 1,625 1,225 1,338 31 Law enforcement and justice............. 2,942 3,320 859 1,784 1,839 1,783 285 316 291 32 General government............................ 3,089 2,927 878 870 1,734 1,587 488 324 198 33 Revenue sharing and general purpose fiscal assistance............. 7,005 7,119 2,024 3,664 4,729 4,333 45 47 2,257 34 Interest 6................................................. 30,974 34,589 7,246 18,560 18,409 18,927 2,690 5,908 2,494 35 Undistributed offsetting receipts 6,7 -14,075 -14,704 -2,567 -8,340 -7,869 -6,803 -609 -4,211 -1,338 1 Effective June 1977, earned income credit payments in excess of an certificates of beneficial interest (effective July 1, 1975) and loans to the individual’s tax liability, formerly treated as outlays, are classified as in­ Private Export Funding Corp. (PEFCO), a wholly owned subsidiary of come tax refunds retroactive to January 1976. the Export-Import Bank, are treated as debt rather than asset sales. 2 Old-age, disability and hospital insurance, and Railroad Retirement 6 Effective September 1976, “Interest” and “Undistributed Offsetting accounts. Receipts” reflect the accounting conversion for the interest on special 3 Supplementary medical insurance premiums, Federal employee re­ issues for U.S. Govt, accounts from an accrual basis to a cash basis. tirement contributions, and Civil Service retirement and disability fund. 7 Consists of interest received by trust funds, rents and royalties on 4 Deposits of earnings by F.R. Banks and other miscellaneous receipts. the Outer Continental Shelf, and U.S. Govt, contributions for em­ 5 Outlay totals reflect the reclassification of the Export-Import Bank ployee retirement. from off-budget status to unified budget status. Export-Import Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Financial Statistics □ September 1977 1.41 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1974 1975 1976 1977 Item June 30 Dec. 31 June 30 Dec. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 1 Federal debt outstanding....................... 486.2 504.0 544.1 587.6 631.9 2 646.4 665.5 680.1 685.2 2 Public debt securities.............................. 474.2 492.7 533.7 576.6 620.4 634.7 653.5 669.2 674.4 3 Held by public.................................... 336.0 351.5 387.9 437.3 470.8 488.6 506.4 524.3 523.2 138.2 141.2 145.3 139.3 149.6 146.1 147.1 144.9 151.2 5 Agency securities..................................... 12.0 11.3 10.9 10.9 11.5 11.6 12.0 10.9 10.8 6 Held by public.................................... 10.0 9.3 9.0 8.9 9.5 29.7 10.0 9.1 9.0 7 Held by agencies................................ 2.0 2.0 1.9 2.0 2.0 1.9 1.9 1.8 1.8 8 Debt subject to statutory limit.............. 476.0 493.0 534.2 577.8 621.6 635.8 654.7 670.3 675.6 9 Public debt securities............................. 473.6 490.5 532.6 576.0 619.8 634.1 652.9 668.6 673.8 10 Other debt i.............................................. 2.4 2.4 1.6 1.7 1.7 1.7 1.7 1.7 1.7 11 Memo: Statutory debt limit................. 495.0 495.0 577.0 595.0 636.0 636.0 682.0 682.0 700.0 1 Includes guaranteed debt of Govt, agencies, specified participation $0.5 billion due to a retroactive reclassification of the Export-import Bank certificates, notes to international lending organizations, and District of certificates of beneficial interest from loan asset sales to debt, effective Columbia stadium bonds. July 1, 1975. 2 Gross Federal debt and Agency debt held by the public increased Note.—Data from Treasury Bulletin (U.S. Treasury Dept.). 1.42 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1977 Type and holder 1973 1974 1975 1976 Apr. May June July Aug. 1 Total gross public debt1........................................... 469.9 492.7 576.6 653.5 671.0 672.1 674.4 673.9 685.2 By type: 2 Interest-bearing debt.................................................. 467.8 491.6 575.7 652.5 668.5 671.0 673.4 671.4 684.1 3 Marketable............................................................. 270.2 282.9 363.2 421.3 434.1 431.5 431.1 430.2 438.1 4 Bills...................................................................... 107.8 119.7 157.5 164.0 162.0 157.9 155.1 154.2 154.3 5 Notes................................................................... 124.6 129.8 167.1 216.7 230.7 230.2 232.9 231.4 238.1 6 Bonds................................................................... 37.8 33.4 38.6 40.6 41.4 43.3 43.2 44.7 45.8 7 Nonmarketable2..................................................... 197.6 208.7 212.5 231.2 234.4 239.5 242.2 241.1 245.9 8 Convertible bonds3.......................................... 2.3 2.3 2.3 2.3 2.2 2.2 2.2 2.2 2.2 9 Foreign issues4................................................... 26.0 22.8 21.6 22.3 21.9 21.8 21.7 21.5 21.4 10 Savings bonds and notes................................. 60.8 63.8 67.9 72.3 73.9 74.3 74.7 75.2 75.5 11 Govt, account series5...................................... 108.0 119.1 119.4 129.7 129.0 133.0 134.8 132.4 136.3 By holder:6 12 U.S. Govt, agencies and trust funds................. 129.6 141.2 139.3 147.1 145.5 149.4 151.2 13 F.R. Banks............................................................. 78.5 80.5 87.9 97.0 99.8 97.4 102.2 14 Private investors.................................................... 261.7 271.0 349.4 409.5 425.7 425.3 421.0 15 Commercial banks............................................ 60.3 55.6 85.1 '103.8 103.5 102.2 104.9 16 Mutual savings banks...................................... 2.9 2.5 4.5 '5.7 6.2 '6.1 6.0 17 Insurance companies........................................ 6.4 6.1 9.3 '12.5 12.6 '12.9 14.2 18 Other corporations........................................... 10.9 11.0 20.2 '26.5 26.3 25.8 23.8 19 State and local governments.......................... 29.2 29.2 33.8 41.6 46.9 '49.1 48.4 Individuals: 20 Savings bonds................................................ 60.3 63.4 67.3 72.0 73.2 73.7 74.0 21 Other securities.............................................. 16.9 21.5 24.0 28.8 29.0 '29.0 29.0 22 Foreign and international7.-........................... 55.5 58.4 66.5 78.1 85.9 86.0 86.8 23 19.3 23.2 38,6 '40.5 39.3 '40.7 33.8 1 Includes $1.1 billion of non-interest-bearing debt (of which $611 6 Data for F.R. Banks and U.S. Govt, agencies and trust funds are million on August 31,1977, was not subject to statutory debt limitations). actual holdings; data for other groups are Treasury estimates. 2 Includes (not shown separately): Securities issued to the Rural 7 Consists of the investments of foreign balances and international Electrification Administration and to State and local governments, de­ accounts in the United States. Beginning with 1974, the figures exclude positary bonds, retirement plan bonds, and individual retirement bonds. non-interest-bearing notes issued to the International Monetary Fund. 3 These nonmarketable bonds, also known as Investment Series B 8 Includes savings and loan associations, nonprofit institutions, cor­ Bonds, may be exchanged (or converted) at the owner’s option for V/i porate pension trust funds, dealers and brokers, certain Govt, deposit per cent, 5-year marketable Treasury notes. Convertible bonds that have accounts, and Govt.-sponsored agencies. been so exchanged are removed from this category and recorded in the notes category above. Note.—Gross public debt excludes guaranteed agency securities and, 4 Nonmarketable certificates of indebtedness, notes, and bonds in the beginning in July 1974, includes Federal Financing Bank security issues. Treasury foreign series and foreign-currency series. Data by type of security from Monthly Statement of the Public Debt of 5 Held only by U.S. Govt, agencies and trust funds. the United States, U.S. Treasury Dept.; data by holder from Treasury Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A33 1.43 U.S. GOVERNMENT MARKETABLE SECURITIES Ownership, by maturity Par value; millions of dollars, end of period 1977 1977 Type of holder 1975 1976 1975 1976 June July June July All maturities 1 to 5 years 1All holders...................................................................................... 363,191 All,lie 431,149 430,248 112,270 141,132 144,503 141,650 2 19,397 16,485 15,425 15,425 7,058 6,141 5,949 5,951 3 F. R. Banks.................................................................................... 87,934 96,971 102,239 98,646 30,518 31,249 31,554 30,443 4 Private investors............................................................................. 255,860 307,820 313,485 316,357 74,694 103,742 107,000 105,256 5 Commercial banks.................................................................... 64,398 78,262 79,059 75,749 29,629 40,005 41,725 39,389 6 3,300 4,072 4,390 4,382 1,524 2,010 2,118 2,109 7 7,565 10,284 11,372 11,196 2,359 3,885 4,274 4,358 8 Nonfinancial corporations...................................................... 9,365 14,193 12,487 11,835 1,967 2,618 2,972 3,142 9 Savings and loan associations................................................ 2,793 4,576 4,827 5,069 1,558 2,360 2,588 2,648 10 State and local governments.................................................. 9,285 12,252 14.522 14,064 1,761 2,543 3,826 3,794 11 159,154 184,182 186,828 193,882 35,894 50,321 49,497 49,816 Total, within 1 year 5 to 10 years i 12 AH holders....................................................................................... 199,692 211,035 211,955 212,457 26,436 43,045 45,955 141,650 13 U.S. Govt, agencies and trust funds......................................... 2,769 2,012 1,811 1,811 3,283 2,879 2,141 2,139 14 F. R. Banks.................................................................................... 46,845 51,569 52,792 50,314 6,463 9,148 11,371 11,285 15 Private investors............................................................................. 150,078 157,454 157,353 160,332 16,690 31,018 32,443 32,521 16 29,875 31,213 29,633 28,932 4,071 6,278 7,063 6,514 17 Mutual savings banks............................................................... 983 1,214 1,319 1,297 448 567 662 662 18 Insurance companies................................................................ 2,024 2,191 1,705 1,750 1,592 2,546 2,884 2,999 19 7,105 11,009 9,064 8,186 175 370 262 310 20 914 1,984 2,030 2,199 216 155 139 145 21 5,288 6,622 7,530 7,190 782 1,465 1,345 1,291 22 103,889 103,220 106,071 110,777 9,405 19,637 20,086 20,600 Bills, within 1 year 10 to 20 years 157,483 163,992 155,064 154,227 14,264 11,865 11,607 13,076 24 U.S. Govt, agencies and trust funds......................................... 207 449 270 270 4,233 3,102 3,102 3,102 25 F. R. Banks.................................................................................... 38,018 41,279 42,388 39,700 1,507 1,363 1,413 1,534 26 119,258 122,264 112,406 114,257 8,524 7,400 7,092 8,440 27 Commercial banks.................................................................... 17,481 17,303 11,669 10,883 552 339 314 585 28 554 454 397 428 232 139 135 150 29 Insurance companies................................................................. 1,513 1,463 732 773 1,154 1,114 1,577 1,255 30 Nonfinancial corporations....................................................... 5,829 9,939 7,576 6,449 61 142 146 149 31 518 1,266 1,013 1,090 82 64 56 63 32 State and local governments.................................................. 4,566 5,556 5,886 5,645 896 718 634 620 33 88,797 86,282 85,133 88,989 5,546 4,884 4,230 5,618 Other, within 1 year Over 20 years 34 All holders....................................................................................... 42,209 47,043 56,891 58,230 10,530 14,200 17,129 17,119 35 U.S. Govt, agencies and trust funds......................................... 2,562 1,563 1,541 1,541 2,053 2,350 2,421 2,421 36 8,827 10,290 10,404 10,614 2,601 3,642 5,110 5,070 37 Private investors............................................................................. 30,820 35,190 44,947 46,075 5,876 8,208 9,598 9,628 38 12,394 13,910 17,964 18,049 111 All 324 329 39 429 760 922 869 112 143 157 163 40 511 728 973 977 436 548 931 835 41 1,276 1,070 1,488 1,737 57 55 42 48 42 396 718 1,017 1,109 22 13 13 13 43 722 1,066 1,644 1,545 558 904 1,186 1,169 44 15,092 16,938 20,938 21,788 4,420 6,120 6,945 7,071 Note.—Direct public issues only. Based on Treasury Survey of Owner­ banks, 466 mutual savings banks, and 727 insurance companies, each ship from Treasury Bulletin (U.S. Treasury Dept.). about 90 per cent; (2) 441 nonfinancial corporations and 486 savings Data complete for U.S. Govt, agencies and trust funds and F.R. Banks, and loan assns., each about 50 per cent; and (3) 496 State and local but data for other groups include only holdings of those institutions govts., about 40 per cent. that report. The following figures show, for each category, the number “All others,” a residual, includes holdings of all those not reporting and proportion reporting as of July 31, 1977; (1) 5,492 commercial in the Treasury Survey, including investor groups not listed separately. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Financial Statistics □ September 1977 1.44 U.S. GOVERNMENT SECURITIES DEALERS Transactions Par value; averages of daily figures, in millions of dollars 1977 1977, week ending Wednesday— Item 1974 1975 1976 May June July July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 1 U.S. Govt, securities............... 3,579 6,027 10,449 10,306 8,683 9,078 8,797 10,026 11,667 10,632 10,195 9,961 By maturity: 2 Bills........................................ 2,550 3,889 6,676 6,495 5,021 5,905 5,579 6,874 7,351 6,050 6,704 6,310 3 Other within 1 year........... 250 223 210 183 215 194 220 192 320 322 343 331 465 1,414 2,317 1,981 2,059 1,790 1,977 2,019 2,600 2,236 1,900 1,993 5 5-10 years............................ 256 363 1,019 1,322 952 752 698 648 982 1,501 931 913 6 Over 10 years...................... 58 138 229 325 436 438 322 293 414 524 318 413 By type of customer: 7 U.S. Govt, securities dealers.......................... 652 885 1,360 1,059 1,030 962 899 1,047 975 1,052 914 1,116 8 U.S. Govt, securities brokers......................... 965 1,750 3,407 3,975 2,529 3,007 2,690 3,355 4,110 3,799 3,831 3,015 9 Commercial banks............. 998 1,451 2,426 2,095 1,965 2,124 2,378 2,260 2,627 2,256 2,396 2,238 964 1,941 3,257 3,177 3,159 2,986 2,830 3,365 3,955 3,526 3,055 3,542 11 Federal agency securities.... 965 1,043 1,548 1,786 2,138 1,540 1,697 1,404 1,180 1,481 1,499 2,642 1 Includes—among others—all other dealers and brokers in commodi­ Transactions are market purchases and sales of U.S. Govt, securities ties and securities, foreign banking agencies, and the F.R. System. dealers reporting to the F.R. Bank of New York. The figures exclude allotments of, and exchanges for, new U.S. Govt, securities, redemptions Note.—Averages for transactions are based on number of trading days of called or matured securities, or purchases or sales of securities under in the period. repurchase, reverse repurchase (resale), or similar contracts. 1.45 U.S. GOVERNMENT SECURITIES DEALERS Positions and Sources of Financing Par value; averages of daily figures, in millions of dollars 1977 1977, week ending Wednesday— Item 1974 1975 1976 May June July June 22 June 29 July 6 July 13 July 20 July 27 Positions2 1 U.S. Govt, securities............... 2,580 5,884 7,592 3,900 5,757 4,724 4,612 6,351 6,109 5,563 4,787 4,800 2 Bills........................................ 1,932 4,297 6,290 3,786 5,538 5,034 4,528 5,081 5,617 5,675 5,196 5,468 3 Other within 1 year........... -6 265 188 198 15 -7 -36 8 63 18 -40 -52 4 1-5 years.............................. 265 886 515 -101 82 -291 205 299 -13 -211 -117 -404 5 5-10 years............................ 302 300 402 -70 23 -192 -30 146 1 -119 -308 -232 6 Over 10 years...................... 88 136 198 87 99 181 -55 817 441 201 56 20 7 Federal agency securities.... 1,212 943 729 539 1,027 766 848 1,276 734 971 827 793 Sources of financing3 8 All sources................................ 3,977 6,666 8,715 9,351 10,791 9,532 10,489 8,781 10,118 10,156 10,092 8,826 Commercial banks: 9 New York City................... 1,032 1,621 1,896 881 1,583 1,289 1,492 692 1,436 2,086 1,533 960 10 Outside New York City... 1,064 1,466 1,660 1,735 2,179 1,574 2,070 1,187 1,469 1,658 1,801 1,456 11 Corporations1......................... 459 842 1,479 1,806 2,769 2,307 2,888 2,272 1,972 2,331 2,435 2,403 12 All others................................ 1,423 2,738 3,681 4,929 4,261 4,361 4,038 4,631 5,241 4,080 4,324 4,007 1 All business corporations except commercial banks and insurance firms and dealer departments of commercial banks against U.S. Govt, companies. and Federal agency securities (through both collateral loans and sales 2 Net amounts (in terms of par values) of securities owned by nonbank under agreements tc repurchase), plus internal funds used by bank dealer dealer firms and dealer departments of commercial banks on a commit­ departments to finance positions in such securities. Borrowings against ment, that is, trade-date basis, including any such securities that have been securities held under agreement to resell are excluded where the borrowing sold under agreements to repurchase. The maturities of some repurchase contract and the agreement to resell are equal in amount and maturity, agreements are sufficiently long, however, to suggest that the securities that is, a matched agreement. involved are not available for trading purposes. Securities owned, and hence dealer positions, do not include securities purchased under agree­ Note.—Averages for positions are based on number of trading days ments to resell. in the period; those for financing, on the number of calendar days in the 3 Total amounts outstanding of funds borrowed by nonbank dealer period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A35 1.46 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1977 Agency 1973 1974 1975 Jan. Feb. Mar. Apr. May June 1 Federal and Federally sponsored agencies............ 71,594 89,381 97,680 103,489 102,961 103,673 105,579 105,823 107,152 2 Federal agencies......................................................... 11,554 12,719 19,046 22,168 22,307 22,413 22,462 22,316 22,220 3 Defense Department1.......................................... 1,439 1,312 1,220 1,095 1,086 1,077 1,068' 1,059 1,044 4 Export-import Bank 2,3....................................... 2,625 2,893 7,188 8,557 8,580 8,615 8,610s 8,596 8,742 5 Federal Housing Administration4..................... 415 440 564 579 581 592 598 594 588 6 Government National Mortgage Association participation certificates5............................ 4,390 4,280 4,200 3 3,845 3 3,845 3,845 3,803 3,803 3,803 7 Postal Service 6....................................................... 250 721 1,750 2,998 2,998 2,998 2,998 2,856 2,431 8 Tennessee Valley Authority................................ 2,435 3,070 3,915 4,985 5,005 5,070 5,155 5,175 5,370 9 United States Railway Association6................. 3 209 109 212 216 230 233 242 10 Federallv sponsored agencies.................................... 60,040 76,662 78,634 81,321 80,654 81,260 83,117 '84,248 84,932 11 Federal home loan banks.................................... 15,362 21,890 18,900 16,805 16,587 16,626 16,678 16,851 16,921 12 Federal Home Loan Mortgage Corporation.. 1,784 1,551 1,550 1,350 9^7 957 957 rl ,698 1,698 13 Federal National Mortgage Association........ 23,002 28,167 29,963 30,394 30,143 30,392 30,684 30,843 31,378 14 Federal land banks............................................... 10,062 12,653 15,000 17,304 17,304 17,304 18,137 18,137 18,137 15 Federal intermediate credit banks..................... 6,932 8,589 9,254 10,631 10,556 10,670 10,990 11,174 11,418 16 Banks for cooperatives........................................ 2,695 3,589 3,655 4,425 4,695 4,899 5,254 5,113 4,948 17 Student Loan Marketing Association7............. 200 220 310 410 410 410 415 430 430 18 Other....................................................................... 3 3 2 2 2 2 2 2 2 Memo items : 19 Federal Financing Bank debt6,8............................. 4,474 17,154 29,848 30,328 31,312 30,823 31,007 30,820 Lending to Federal and Federally sponsored agencies: 20 Export-import Bank3.......................................... 4,595 5,208 5,237 5,273 5,273 5,273 5,420 21 Postal Service6....................................................... 500 1,500 2,748 2,748 2,748 2,748 2,606 2,181 22 Student Loan Marketing Association7............ 220 310 410 410 410 415 430 430 23 Tennessee Valley Authority................................ 895 1,840 3,160 3,180 3,245 3,330 3,350 3,545 24 United States Railway Association6................. 3 209 109 212 216 230 233 242 Other lending:9 25 Farmers Home Administration......................... 2,500 7,000 11,450 11,450 11,750 11,750 12,250 12,900 26 Rural Electrification Administration............... 566 1,509 1,584 1,677 1,806 1,864 2,042 27 Other........................................................................ 356 1,134 5,254 5,507 5,993 5,271 5,001 4,060 1 Consists of mortgages assumed by the Defense Department between 7 Unlike other Federally sponsored agencies, the Student Loan 1957 and 1963 under family housing and homeowners assistance programs. Marketing Association may borrow from the Federal Financing Bank 2 Includes participation certificates reclassified as debt beginning (FFB) since its obligations are guaranteed by the Department of Health, Oct. 1, 1976. Education, and Welfare. 3 Off-budget Aug. 17,1974 through Sept. 30, 1976; on-budget thereafter. 8 The FFB, which began operations in 1974, is authorized to purchase 4 Consists of debentures issued in payment of Federal Housing Ad­ or sell obligations issued, sold, or guaranteed by other Federal agencies. ministration insurance claims. Once issued, these securities may be sold Since FFB incurs debt solely for the purpose of lending to other agencies, privately on the securities market. its debt is not included in the main portion of the table in order to avoid 5 Certificates of participation issued prior to fiscal 1969 by the Govern­ double counting. ment National Mortgage Association acting as trustee for the Farmers 9 Includes FFB purchases of agency assets and guaranteed loans; Home Administration; Department of Health, Education, and Welfare; the latter contain loans guaranteed by numerous agencies with the Department of Housing and Urban Development; Small Business Ad­ guarantees of any particular agency being generally small. The Farmers ministration; and the Veterans Administration. Home Administration item consists exclusively of agency assets, while the 6 Off-budget. Rural Electrification Administration entry contains both agency assets and guaranteed loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Financial Statistics □ September 1977 1.47 NEW SECURITY ISSUES State and Local Government and Corporate Millions of dollars 1977 Type of issue or issuer, 1974 1975 1976 or use Jan. Feb. Mar. Apr. May June State and local government 1 24,315 30,607 35,313 3,429 3,150 4,140 3,566 4,308 5,347 By type of issue: 2 13,563 16,020 18,040 1,867 1,624 1,812 1,701 2,032 2,265 3 10,212 14,511 17,140 1,552 1,518 2,323 1,862 2,272 3,079 4 Housing Assistance Administration 2 ............................... 461 5 U.S. Govt, loans...................................................................... 79 76 133 10 8 5 3 4 3 By type of issuer: 6 4,784 7,438 7,054 468 441 705 769 875 1,476 7 Special district and statutory authority.............................. 8,638 12,441 15,304 1,786 1,335 1,818 1,388 1,836 1,873 8 Municipalities, counties, townships, school districts.... 10,817 10,660 12,845 1,166 1,367 1,612 1,407 1,593 1.994 23,508 29,495 32,108 3,084 3,019 3,209 2,939 3,781 4,456 By use of proceeds: 10 4,730 4,689 4,900 489 502 472 249 497 807 11 1,712 2,208 2,586 104 410 180 119 508 218 12 Utilities and conservation...................................................... 5,634 7,209 9,594 1,050 935 804 703 1,235 1,202 13 Social welfare............................................................................ 3,820 4,392 6,566 483 580 600 658 438 816 14 494 445 483 15 12 38 42 130 23 15 7,118 10,552 7,979 943 580 1,115 1,168 973 1,390 Corporate 16 All issues 3.......................................... 38,313 53,619 53,356 3,989 2,708 5,495 3,639 17 Bonds.................................................. 32,066 42,756 42,262 3,387 1,888 4,300 3,048 By type of offering: 18 Public.............................................. 25,903 32.583 26,453 2,786 1,102 2,610 1,961 19 Private placement......................... 6,160 10,172 15,808 601 786 1,690 1,087 By industry group: 20 Manufacturing.............................. 9,867 16,980 13,243 817 568 1,049 1,128 21 Commercial and miscellaneous. 1,845 2,750 4,361 743 346 454 180 22 Transportation.............................. 1,550 3,439 4,357 165 47 243 129 23 Public utility.................................. 8,873 9,658 8,297 634 210 756 602 24 Communication............................ 3,710 3,464 2,787 50 290 808 324 25 Real estate and financial............ 6,218 6,469 9,222 979 426 991 684 26 Stocks................................................. 6,247 10,863 11,094 602 820 1,195 591 By type: 27 Preferred........................................ 2,253 3,458 2,789 103 128 520 163 28 Common........................................ 3,994 7,405 8,305 499 692 675 428 By industry group: 29 Manufacturing.............................. 544 1,670 2,237 89 175 76 220 30 Commercial and miscellaneous. 940 1,470 1,183 136 94 114 114 31 Transportation.............................. 22 1 24 125 32 Public utility.................................. 3,964 6,235 6,101 352 225 842 172 33 Communication............................ 217 1,002 776 267 10 34 Real estate and financial............. 562 488 771 25 60 38 75 1 Par amounts of long-term issues based on date of sale. than $100,000, secondary offerings, undefined or exempted issues as 2 Only bonds sold pursuant to the 1949 Housing Act, which are secured defined in the Securities Act of 1933, employee stock plans, investment by contract requiring the Housing Assistance Administration to make companies other than closed-end, intracorporate transactions, and sales to annual contributions to the local authority. foreigners. 3 Figures, which represent gross proceeds of issues maturing in more Sources.—State and local government securities, Securities Industry than 1 year, sold for cash in the United States, are principal amount or Association; corporate securities, Securities and Exchange Commission. number of units multiplied by offering price. Excludes offerings of less Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Corporate Finance A37 1.48 CORPORATE SECURITIES Net Change in Amounts Outstanding Millions of dollars 1975 1976 Source of change, or industry 1974 1975 1976 Q2 Q3 Q4 Ql Q2 Q3 Q4 All issues1 1 New issues................................................................... 39,344 53,255 53,123 15,602 9,079 13,363 13,671 14,229 11,385 13,838 2 Retirements................................................................. 9,935 10,991 12,184 3,211 2,576 3,116 2,315 3,668 2,478 3,723 3 Net change................................................................... 29,399 42,263 40,939 12,390 6,503 10,247 11,356 10,561 8,907 10,115 Bonds and notes 4 New issues................................................................... 31,354 40,468 38,994 11,460 6,654 9,595 9,404 10,244 8,701 10,645 6,255 8,583 9,109 2,336 2,111 2,549 1,403 3,159 1,826 2,721 6 Net change: Total....................................................... 25,098 31,886 29,884 9,124 4,543 7,047 8,001 7,084 6,875 7,924 By industry: 7,404 13,219 8,978 4,574 1,442 2,069 2,966 1,529 1,551 2,932 8 Commercial and other2........................................ 1,116 1,605 2,259 483 221 528 203 726 610 720 9 Transportation, including railroad..................... 341 2,165 3,078 429 147 1,588 985 488 1,092 513 10 Public utility........................................................... 7,308 7,236 6,829 1,977 1,395 1,211 1,820 1,260 2,109 1,640 3,499 2,980 1,687 810 472 429 498 953 335 -99 12 Real estate and financial...................................... 5,428 4,682 7,054 852 866 1,222 1,530 2,128 1,178 2,218 Common and preferred stock 13 New issues................................................................... 7,980 12,787 14,129 4,142 2,425 3,768 4,267 3,985 2,684 3,193 3,678 2,408 3,075 875 465 567 912 509 652 1,002 15 Net change: Total....................................................... 4,302 10,377 11,055 3,266 1,960 3,200 3,355 3,477 2,032 2,191 By industry: 17 1,607 2,634 500 412 433 838 1,120 744 -68 17 Commercial and other2........................................ -135 1,137 762 490 108 462 88 318 117 239 18 Transportation, including railroad..................... -20 65 96 7 53 4 5 25 17 49 3,834 6,015 6,171 1,866 1,043 1,537 2,174 1,300 932 1,765 20 Communication...................................................... 398 1,084 854 359 97 604 47 735 19 53 21 Real estate and financial...................................... 207 468 538 43 247 160 203 -21 203 153 1 Excludes issues of investment companies. New issues and retirements exclude foreign sales and include sales of 2 Extractive and commercial and miscellaneous companies. securities held by affiliated companies, special offerings to employees, new stock issues and cash proceeds connected with conversions of bonds Note.—Securities and Exchange Commission estimates of cash trans­ into stocks. Retirements, defined in the same way, include securities actions only, as published in the Commission’s Statistical Bulletin. retired with internal funds or with proceeds of issues for that purpose. 1.49 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position Millions of dollars 1977 Item 1975 1976 Jan. Feb. Mar. Apr. May June July INVESTMENT COMPANIES excluding money market funds 1 Sales of own shares1........................... 3,302 4,226 655 423 463 558 421 '639 573 2 Redemptions of own shares2........... 3,686 6,802 628 463 553 468 531 510 515 3 Net sales................................................ -384 2,496 141 -40 -90 63 -110 r129 58 4 Assets3................................................... 42,179 47,537 45,760 45,040 44,516 44,862 44,403 '46,255 45,651 5 Cash position4................................. 3,748 2,747 2,958 3,260 3,474 2,776 2,859 2,901 3,068 6 Other.................................................. 38,431 44,790 42,802 41,780 41,042 42,086 41,544 '43,354 42,583 1 Includes reinvestment of investment income dividends. Excludes 4 Also includes all U.S. Govt, securities and other short-term debt reinvestment of capital gains distributions and share issue of conversions securities. from one fund to another in the same group. 2 Excludes share redemption resulting from conversions from one fund Note.—Investment Company Institute data based on reports of mem­ to another in the same group. bers, which comprise substantially all open-end investment companies 3 Market value at end of period, less current liabilities. registered with the Securities and Exchange Commission. Data reflect newly formed companies after their initial offering of securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Financial Statistics □ September 1977 1.50 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1975 1976 1977 Account 1974 1975 1976 Q4 Ql Q2 Q3 Q4 Ql Q2*> 1 Profits before tax.......................................................... 126.9 123.5 156.9 141.0 153.5 159.2 159.9 154.8 161.7 173.4 2 Profits tax liability....................................................... 52.4 50.2 64.7 57.9 63. 1 66.1 65.9 63.9 64.4 69.3 3 Profits after tax............................................................. 74.5 73.3 92.2 83.1 90.4 93.1 94.0 90.9 97.3 104.1 31.0 32.4 35.8 32.5 33.6 35.0 36.0 38.4 38.4 40.3 5 Undistributed profits................................................... 43.5 40.9 56.4 50.6 56.8 58.1 58.0 52.5 58.9 63.8 6 Capital consumption allowances............................... 81.6 89.5 97.2 92.2 94.1 95.9 98.2 100.4 102.0 103.5 125.1 130.4 153.6 142.8 150.9 154.0 156.2 152.9 160.9 167.3 Source.—U.S. Dept, of Commerce, Survey of Current Business. 1.51 NONFINANCIAL CORPORATIONS Current Assets and Liabilities Billions of dollars, end of period 1975 1976 1977 Account 1971 1972 1973 1974 Q4 Ql Q2 Q3 Q4 Ql 1 529.4 574.4 643.2 712.2 731.6 753.5 775.4 791.8 816.8 845.3 2 53.3 57.5 61.6 62.7 68.1 68.4 70.8 71.1 77.0 75.0 3 U.S. Govt, securities............................................. 11.0 10.2 11.0 11.7 19.4 21.7 23.3 23.9 26.4 27.3 4 Notes and accounts receivable.............................. 221.1 243.4 269.6 293.2 298.2 310.9 321.8 328.5 328.2 346.6 5 U.S. Govt.1......................................................... 3.5 3.4 3.5 3.5 3.6 3.6 3.7 4.3 4.3 4.7 6 Other..................................................................... 217.6 240.0 266.1 289.7 294.6 307.3 318.1 324.2 323.9 342.0 7 200.4 215.2 246.7 288.0 285.8 288.8 295.6 302.1 315.4 322.1 8 Other......................................................................... 43.8 48.1 54.4 56.6 60.0 63.6 63.9 66.3 69.8 74.3 9 Current liabilities......................................................... 326.0 352.2 401.0 450.6 457.5 465.9 475.9 484.1 499.9 516.6 10 220.5 234.4 265.9 292.7 288.0 286.9 293.8 291.7 302.9 309.0 11 U.S. Govt.1......................................................... 4.9 4.0 4.3 5.2 6.4 6.4 6.8 7.0 7.0 6.8 12 Other.................................................................... 215.6 230.4 261.6 287.5 281.6 280.5 287.0 284.7 295.9 302.2 13 Accrued Federal income taxes............................ 13. 1 15.1 18.1 23.2 20.7 23.9 22.0 24.9 26.8 28.6 14 Other........................................................................ 92.4 102.6 117.0 134.8 148.8 155.0 160.1 167.5 170.2 179.0 203.6 222.2 242.3 261.5 274.1 287.6 299.5 307.7 316.9 328.7 i Receivables from, and payables to, the U.S. Govt, exclude amounts Source.—Securities and Exchange Commission estimates published offset against each other on corporations’ books. in the Commission’s Statistical Bulletin. 1.52 BUSINESS EXPENDITURES on New Plant and Equipment Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1975 1976 1977 Industry 1975 1976 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 1All industries............................................................... 112.75 120.82 111.80 114.72 118.12 122.55 125.22 130.16 134.46 136.91 Manufacturing 2 Durable goods industries...................................... 21.88 23.50 21.07 21.63 22.54 24.59 25.50 26.30 26.42 28.30 3 Nondurable goods industries.............................. 26.13 29.22 25.75 27.58 28.09 30.20 28.93 30.13 32.20 33.46 Nonmanufacturing 4 Mining...................................................................... 3.80 3.98 3.82 3.83 3.83 4.21 4.13 4.24 4.42 4.54 Transportation: 5 Railroad............................................................... 2.56 2.35 2.39 2.08 2.64 2.69 2.63 2.71 2.69 2.37 6 Air......................................................................... 1.87 1.31 1.65 1.18 1.44 1.12 1.41 1.62 1.52 1.94 7 Other..................................................................... 3.03 3.56 3.56 3.29 4.16 3.44 3.49 2.96 2.39 2.43 Public utilities: 8 Electric................................................................. 16.99 18.90 17.92 18.56 18.82 18.22 19.49 21.19 21.09 21.58 9 Gas and other..................................................... 3.14 3.47 3.00 3.36 3.03 3.45 3.96 4.16 4.56 4.14 1 11 0 C C o o m mm m e u r n c i i c a a l t a io n n d . .. o .. t . h ... e .. r .. 1 .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 2 1 0 2 . . 6 7 1 6 2 1 0 2 . . 8 9 7 3 2 1 0 2 . . 4 2 4 2 2 1 0 2 . . 6 5 8 4 2 1 0 2 . . 9 6 4 2 2 1 0 3 . . 9 6 9 4 2 1 1 4 . . 3 3 6 0 2 1 2 4 . . 6 1 7 9 } 39.16 38.14 1 Includes trade, service, construction, finance, and insurance. agriculture; real estate operators; medical, legal, educational, and cultural service; and nonprofit organizations. Note.—Estimates for corporate and noncorporate business, excluding Source.—U.S. Dept, of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Corporate Finance A39 1.521 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period 1975 1976 1977 Account 1972 1973 1974 Q4 Ql Q2 Q3 Q4 Ql Q2 ASSETS Accounts receivable, gross 1 Consumer................................................................. 31.9 35.4 36.1 36.0 35.7 36.7 37.6 38.6 39.2 40.7 2 Business.................................................................... 27.4 32.3 37.2 39.3 41.2 42.4 42.4 44.7 47.5 50.4 3 Total...................................................................... 59.3 67.7 73.3 75.3 76.9 79.2 80.0 83.4 86.7 91.2 4 Less: Reserves for unearned income and losses 7.4 8.4 9.0 9.4 9.4 9.8 10.2 10.5 10.6 11.1 5 Accounts receivable, net........................................... 51.9 59.3 64.2 65.9 67.4 69.4 69.9 72.9 76.1 80.1 6 Cash and bank deposits............................................ 2.8 2.6 3.0 2.9 2.8 2.7 2.6 2.6 2.7 2.5 7 Securities...................................................................... .9 .8 .4 1.0 .8 .8 1.2 1.1 1.0 1.2 8 All other........................................................................ 10.0 10.6 12.0 11.8 12.5 12.4 12.7 12.6 13.0 13.7 9 Total assets................................................................... 65.6 73.2 79.6 81.6 83.5 85.3 86.4 89.2 92.8 97.5 LIABILITIES 10 Bank loans.................................................................... 5.6 7.2 9.7 8.0 7.4 6.9 5.5 6.3 6.1 5.7 11 Commercial paper...................................................... 17.3 19.7 20.7 22.2 22.2 22.2 21.7 23.7 24.8 27.5 Debt: 12 Short-term, n.e.c..................................................... 4.3 4.6 4.9 4.5 4.9 5.0 5.2 5.4 4.5 5.5 13 Long-term, n.e.c...................................................... 22.7 24.6 26.5 27.6 28.4 30.1 31.0 32.3 34.0 35.0 14 Other......................................................................... 4.8 5.6 5.5 6.8 7.8 7.8 9.5 8.1 9.5 9.4 15 Capital, surplus, and undivided profits................. 10.9 11.5 12.4 12.5 12.8 13.2 13.4 13.4 13.9 14.4 16 Total liabilities and capital....................................... 65.6 73.2 79.6 81.6 83.5 85.3 86.4 89.2 92.8 97.5 Note.—Components may not add to totals due to rounding. 1.522 DOMESTIC FINANCE COMPANIES Business Credit Millions of dollars, seasonally adjusted except as noted Changes in accounts Extensions Repayments Accounts receivable during— receivable Type outstand­ ing July 31, 1977 1977 1977 1977 i May June July May June July May June July 1 Retail automotive (commercial vehicles)........ 10,988 229 340 296 943 1,042 1,030 714 702 734 2 Wholesale automotive........................................ 10,510 361 137 686 5,120 5,049 5,493 4,759 4,912 4,807 3 Retail paper on business, industrial, and farm equipment............................................ 12,911 113 238 197 731 694 788 618 456 591 4 Loans on commercial accounts receivable.. . 3,921 37 115 28 2,333 2,483 2,301 2,296 2,368 2,273 5 Factored commercial accounts receivable.... 2,236 -14 -50 -120 1,541 1,347 1,261 1,555 1,397 1,381 6 All other business credit.................................... 10,063 273 202 16 1,392 1,346 1,279 1,119 1,144 1,263 i Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Financial Statistics □ September 1977 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1977 Item 1974 1975 1976 Feb. Mar. Apr. May June July Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms:1 1 Purchase price (thous. dollars)....................... 40.1 44.6 48.4 53.1 53.8 53.4 52.8 r53.1 53.7 2 Amount of loan (thous. dollars)................... 29.8 33.3 35.9 39.3 40.9 39.6 39.9 r39.5 40.0 3 Loan/price ratio (per cent).............................. 74.3 74.7 74.2 75.8 77.5 75.5 77.4 >•76.0 76.2 4 Maturity (years)................................................ 26.3 26.8 27.2 27.8 28.0 27.3 27.9 >•27.2 27.9 5 Fees and charges (per cent of loan amount)2. 1.30 1.54 1.44 1.31 1.34 1.30 1.34 1.25 1.31 6 Contract rate (per cent per annum)............. 8.71 8.75 8.76 8.78 8.74 8.73 8.74 r8.78 8.79 Yield (per cent per annum): 7 FHLBB series 3.................................................. 8.92 9.01 8.99 8.99 8.95 8.94 8.96 8.98 9.00 8 HUD series4....................................................... 9.22 9.10 8.99 8.80 8.85 8.90 8.95 9.00 9.00 SECONDARY MARKETS Yields (per cent per annum) on— 9 FHA mortgages (HUD series)5..................... 9.55 9.19 8.82 8.50 8.58 8.57 8.74 8.74 10 GNMA securities6............................................ 8.72 8.52 8.17 7.98 8.06 7.96 8.04 7.95 7.95 FNMA auctions:7 11 Government-underwritten loans............... 9.31 9.26 8.99 8.55 8.68 8.67 8.74 8.75 8.72 12 Conventional loans...................................... 9.43 9.37 9.11 8.86 8.91 8.97 9.08 9.12 9.07 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 13 Total......................................................................... 29,578 31,824 32,904 32,792 32,830 32,938 33,580 33,918 33,954 14 FHA-insured...................................................... 19,189 19,732 18,916 18,771 18,739 18,745 18,939 18,974 18,887 15 VA-guaranteed.................................................. 8,310 9,573 9,212 9,115 9.099 9,125 9,399 9,509 9,449 16 Conventional...................................................... 2,080 2,519 4,776 4,906 4.992 5,069 5,241 5,435 5,618 Mortgage transactions (during period) 17 Purchases................................................................. 6,953 4,263 3,606 150 283 391 947 656 322 18 Sales.......................................................................... 4 2 86 7 Mortgage commitments:8 19 Contracted (during period)............................... 10,765 6,106 6,247 968 1,119 716 1,452 999 357 20 Outstanding (end of period)............................... 7,960 4,126 3,398 4,707 5,184 5,411 5,773 5,854 5,062 Auction of 4-month commitments to buy— Government-underwritten loans: 21 Offered ^............................................................... 5,462.6 7,042.6 4,929.8 868.4 1,138.2 456.1 1,842.8 278.9 206.4 22 Accepted............................................................. 2,371.4 3,848.3 2,787.2 484.7 612.0 269.8 1,027.4 127.8 131.4 Conventional loans: 23 Offered 9............................................................... 1,195.4 1,401.3 2,595.7 300.0 373.9 348.1 1,164.6 371.1 286.8 24 Accepted............................................................. 656.5 765.0 1,879.2 235.8 268.1 280.7 751.7 263.0 184.4 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period) 1(> 25 Total......................................................................... 4,586 4,987 4,269 3,672 3,557 3,355 3,285 3,389 3,483 26 FHA/VA............................................................. 1,904 1,824 1,618 1,580 1,564 1,542 1,523 rl,502 1,481 27 Conventional...................................................... 2,682 3,163 2,651 2,092 1,993 1,813 C1,763 rl ,887 2,001 Mortgage transactions (during period) 28 Purchases................................................................. 2,191 1,716 1,175 98 200 235 310 >•379 236 29 Sales.......................................................................... 52 1,020 1,396 290 285 388 329 >•336 79 Mortgage commitments:11 30 Contracted (during period)................................ 4,553 982 1,477 170 459 606 525 r511 511 31 Outstanding (end of period)............................... 2,390 111 333 533 760 1,112 1,314 >•1,293 1,350 1 Weighted averages based on sample surveys of mortgages originated securities, assuming prepayment in 12 years on pools of 30-year FHA/VA by major institutional lender groups. Compiled by the Federal Home Loan mortgages carrying the prevailing ceiling rate. Monthly figures are Bank Board in cooperation with the Federal Deposit Insurance Cor­ unweighted averages of Monday quotations for the month. poration. 7 Average gross yields (before deduction of 38 basis points for mortgage 2 Includes all fees, commissions, discounts, and “points” paid (by servicing) on accepted bids in Federal National Mortgage Association’s the borrower or the seller) in order to obtain a loan. auctions of 4-month commitments to purchase home mortgages, assuming 3 Average effective interest rates on loans closed, assuming prepayment prepayment in 12 years for 30-year mortgages. No adjustments are made at the end of 10 years. for FNMA commitment fees or stock related requirements. Monthly 4 Average contract rates on new commitments for conventional first figures are unweighted averages for auctions conducted within the month. mortgages, rounded to the nearest 5 basis points; from Dept, of Housing 8 Includes some multifamily and nonprofit hospital loan commitments and Urban Development. in addition to 1- to 4-family loan commitments accepted in FNMA’s 5 Average gross yields on 30-year, minimum-downpayment, Federal free market auction system, and through the FNMA-GNMA Tandem Housing Administration-insured first mortgages for immediate delivery plans. in the private secondary market. Any gaps in data are due to periods of 9 Mortgage amounts offered by bidders are total bids received. adjustment to changes in maximum permissible contract rates. 10 Includes participations as well as whole loans. 6 Average net yields to investors on Government National Mortgage 11 Includes conventional and Government-underwritten loans. Association-guaranteed, mortgage-backed, fully-modified pass-through Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

R eal Estate D ebt A41 1.54 MORTGAGE DEBT OUTSTANDING Millions of dollars, end of period 1976 1977 Type of holder, and type of property 1972 1973 1974 1975 Q3 04 Ql Q2 v 1 603,417 682,321 '742,512 801,537 865,733 889,039 910,941 946,761 2 1- to 4-family............................................ *■372,154 '416,211 '449,371 490,761 538,847 556,443 572,517 598,069 3 Multifamily............................................... '82,840 '93,132 '99,976 100,601 103,882 104,283 104,342 106,057 4 Commercial.............................................. rl12,294 '131,725 '146,877 159,298 167,539 171,259 174,763 181,216 5 Farm........................................................... 35,758 41,253 46,288 50,877 55,465 57,054 59,319 61,419 6 Maior financial institutions......................... 450,000 505,400 '542,560 581,193 630,103 647,627 662,272 687,968 7 Commercial banks1.................................. 99,314 119,068 132,105 136,186 147,805 151,208 154,510 161,109 8 1- to 4-family........................................ 57,004 67,998 74,758 77,018 83,938 86,205 88,086 91,849 9 Multifamily........................................... 5,778 6,932 7,619 5,915 8,144 8,100 8,282 8,635 10 Commercial.......................................... 31,751 38,696 43,619 46,882 49,160 50,175 51,266 53,456 11 Farm....................................................... 4,781 5,442 6,049 6,371 6,563 6,728 6,876 7,169 12 Mutual savings banks.............................. 67,556 73,230 74,920 77,249 80,249 81,734 82,273 83,469 13 1- to 4-family........................................ 46,229 48,811 49,213 50,025 52,250 53.217 53,568 54,355 14 Multifamily........................................... 10,910 12,343 12,923 13,792 13,915 14,173 14,266 14,465 15 Commercial......................................... 10,355 12,012 12,722 13,373 14,028 14,287 14,381 14,590 16 62 64 62 59 56 57 58 59 17 Savings and loan associations................. 206,182 231, 733 '249,301 ' 278,590 C311,847 323,130 333,703 350,777 18 1- to 4-family........................................ '166,410 '187,078 '200,987 223,903 251,629 260,895 270,100 283,920 19 Multifamily........................................... '21,051 '22,779 '23,808 25,547 27,505 28,436 29,032 30,517 20 Commercial.......................................... '18,721 '21,876 '24,506 29,140 32,713 33,799 34,571 36,340 21 Life insurance companies........................ 76,948 81,369 86,234 89,168 90,202 91,555 91,786 92,613 22 1- to 4-family....................................... 22,315 20,426 19,026 17,590 16,448 16,088 15,699 15,291 23 Multifamily........................................... 17,347 18,451 19,625 19,629 19,234 19,178 18,921 18,846 24 Commercial.......................................... 31,608 36,496 41,256 45,196 47,336 48,864 49,526 50,616 25 Farm....................................................... 5,678 5,996 6,327 6,753 7,184 7,425 7,640 7,860 26 Federal and related agencies...................... 40,157 46,721 58,320 66,891 67,314 66,753 66,248 68,609 27 Government National Mortgage Assn... 5,113 4,029 4,846 7,438 5,068 4,241 4,013 3,912 28 1- to 4-family........................................ 2,513 1,455 2,248 4,728 2,486 1,970 1,670 1,654 29 Multifamily........................................... 2,600 2,574 2,598 2,710 2,582 2,271 2,343 2,258 30 Farmers Home Admin.............................. 1,019 1,366 1,432 1,109 1,355 1,064 500 1,043 31 1- to 4-family........................................ 279 743 159 208 154 454 98 410 32 Multifamily........................................... 29 29 167 215 143 218 28 97 33 Commercial........................................... 320 218 156 190 133 72 64 126 34 Farm....................................................... 391 376 350 496 325 320 310 410 35 Federal Housing and Veterans Admin... 3,338 3,476 4,015 4,970 5,092 5,150 5,406 5,530 36 1- to 4-family........................................ 2,199 2,013 2,009 1,990 1,716 1,676 1,732 1,706 37 Multifamily............................................ 1,139 1,463 2,006 2,980 3,376 3,474 3,674 3,824 38 Federal National Mortgage Assn........... 19,791 24,175 29,578 31,824 32,962 32,904 32,830 33,918 39 1- to 4-family........................................ 17,697 20,370 23,778 25,813 27,030 26,934 26,836 27,933 40 Multifamily........................................... 2,094 3,805 5,800 6,011 5,932 5,970 5,994 5,985 41 Federal land banks.................................... 9,107 11,071 13,863 16,563 18,568 19,125 19,942 20,818 42 1- to 4-family........................................ 13 123 406 549 586 601 611 628 43 Farm....................................................... 9,094 10,948 13,457 16,014 17,982 18,524 19,331 20,190 44 Federal Home Loan Mortgage Corp.... 1,789 2,604 4,586 4,987 4,269 4,269 3,557 3,388 45 1- to 4-family........................................ 1,754 2,446 4,217 4,588 3,917 3,889 3,200 2,901 46 Multifamily........................................... 35 158 369 399 352 380 357 487 14,404 18,040 23,799 34,138 44,960 49,801 54,811 58,748 48 Government National Mortgage Assn... 5,504 7,890 11,769 18,257 26,725 30,572 34,260 36,573 49 1- to 4-family........................................ 5,353 7,561 11,249 17,538 25,841 29,583 33,190 35,467 50 Multifamily........................................... 151 329 520 719 884 989 1,070 1,106 51 Federal Home Loan Mortgage Corp... 441 766 757 1,598 2,506 2,671 3,570 4,460 52 1- to 4-family........................................ 331 617 608 1,349 2,141 2,282 3,112 3,938 53 Multifamily............................................ 110 149 149 249 365 389 458 522 54 Farmers Home Admin.............................. 8,459 9,384 11,273 14,283 15,729 16,558 16,981 17,715 55 1- to 4-family........................................ 5,017 5,458 6,782 9,194 9,587 10,219 10,423 10,814 56 Multifamily............................................ 131 138 1)6 295 535 532 530 111 57 Commercial........................................... 867 1,124 1,473 1,948 2,291 2,440 2,560 2,680 58 Farm....................................................... 2,444 2,664 2,902 2,846 3,316 3,367 3,468 3,444 59 Individuals and others3................................ 98,856 112,160 117,833 119,315 123,356 124,858 127,610 131,436 60 1- to 4-family........................................ 45,040 51 ,112 53,331 56,268 60,524 62,430 64,192 67,203 61 Multifamily............................................ 21,465 23,982 24,276 22,140 20,915 20,173 19,387 18,538 62 Commercial........................................... 19,043 21,303 23,085 22,569 21,878 21,622 22,395 23,408 63 Farm....................................................... 13,308 15,763 17,141 18,338 20,039 20,633 21,636 22,287 1 Includes loans held by nondeposit trust companies but not bank trust Note.—Based on data from various institutional and Govt, sources, departments. with some quarters estimated in part by Federal Reserve in conjunction 2 Outstanding principal balances of mortgages backing securities in­ with the Federal Home Loan Bank Board and the Dept, of Commerce. sured or guaranteed by the agency indicated. Separation of nonfarm mortgage debt by type of property, if not re­ 3 Other holders include mortgage companies, real estate investment ported directly, and interpolations and extrapolations where required, are trusts, State and local credit agencies, State and local retirement funds, estimated mainly by Federal Reserve. Multifamily debt refers to loans on noninsured pension funds, credit unions, and U.S. agencies for which structures of 5 or more units. amounts are small or separate data are not readily available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Financial Statistics □ September 1977 1.55 CONSUMER INSTALMENT CREDIT Total Outstanding, and Net Change Millions of dollars 1977 Holder, and type of credit 1975 1976 1976 Jan. Feb. Mar. Apr. May June July Amounts outstanding (end of period) 1 164,955 185,489 185,489 184,597 184,504 186,379 189,187 192,143 196,157 198,973 By holder: 2 78,667 89,511 89,511 89,262 89,223 90,187 91,837 93,190 95,307 96,797 3 35,994 38,639 38,639 38,790 38,868 39,188 39,561 40,127 40,712 41,398 4 25,666 30,546 30,546 30,410 30,701 31,448 31,912 32,704 33,750 34,122 5 18,002 19,052 19,052 18,378 17,860 17,585 17,734 17,911 18,032 18,137 6 6,626 7,741 7,741 7,757 7,852 7,971 8,142 8,211 8,355 8,520 By type of credit: 7 55,879 66,116 66,116 65,874 66,361 67,678 69,064 70,557 72,459 73,863 8 31,553 37,984 37,984 37,948 38,110 38,962 39,940 40,760 41,937 42,770 9 18,353 21,176 21,176 21,091 21,170 21,563 22,059 22,442 23,054 23,493 10 13,200 16,808 16,808 16,857 17,000 17,399 17,881 18,319 18,883 19,277 11 Finance companies....................... 11,155 12,489 12,489 12,367 12,450 12,593 12,757 13,023 13,219 13,597 12 Credit unions.................................. 12,741 15,163 15,163 15,096 15,240 15,611 15,841 16,234 16,754 16,938 13 Others............................................... 430 480 480 464 501 513 525 540 549 558 Mobile homes...................................... 14,423 14,572 14,572 14,466 14,396 14,409 14,471 14,477 14,551 14,623 14 Commercial banks........................ 8,649 8,734 8,734 8,644 8,590 8,571 8,591 8,617 8,646 8,671 15 Finance companies........................ 3,451 3,273 3,273 3,244 3,202 3,190 3,170 3,149 3,136 3,126 16 Home improvement............................ 9,405 10,990 10,990 10,948 10,962 11,097 11,287 11,465 11,742 11,964 17 Commercial banks........................ 4,965 5,554 5,554 5,510 5,474 5,510 5,594 5,702 5,838 5,960 Revolving credit: 18 Bank credit cards.......................... 9,501 11,351 11,351 11,269 11,090 10,971 11,149 11,205 11,462 11,634 19 Bank check credit.......................... 2,810 3,041 3,041 3,062 3,071 3,061 3,076 3,125 3,202 3,261 20 All other............................................... 72,937 79,418 79,418 78,978 78,624 79,162 80,139 81,313 82,742 83,628 21 Commercial banks, total............. 21,188 22,847 22,847 22,830 22,828 23,112 23,481 23,780 24,224 24,499 22 Personal loans............................ 14,629 15,669 15,669 15,732 15,153 15,932 16,168 16,344 16,602 16,749 23 Finance companies, total............. 21,238 22,749 22,749 23,054 23,088 23,277 23,506 23,827 24,223 24,538 24 Personal loans............................ 17,263 18,554 18,554 18,531 18,567 18,751 18,938 19,214 19,540 19,808 25 Credit unions.................................. 10,754 12,799 12,799 12,742 12,864 13,177 13,371 13,703 14,141 14,297 26 Retailers.......................................... 18,002 19,052 19,052 18,378 17,860 17,585 17,734 17,911 18,032 18,137 27 Others............................................... 1,755 1,971 1,971 1,974 1,984 2,011 2,047 2,092 2,121 2,157 Net change (during period) 3 28 Total......................................................... 7,504 20,533 2,442 1,990 1,824 2,848 2,770 2,519 2,282 2,319 By holder: 29 Commercial banks............................ 2,821 10,845 1,269 627 858 1,434 1,328 1,100 1,283 1,005 30 Finance companies............................ -90 2,644 409 627 349 585 392 460 182 524 31 Credit unions...................................... 3,771 4,880 511 501 517 611 634 665 519 368 32 Retailers............................................... 69 1,050 159 200 14 113 223 210 144 286 33 Others................................................... 933 1,115 94 35 86 106 192 84 154 136 By type of credit: 34 Automobile........................................... 3,007 10,238 1,201 732 955 1,326 1,155 1,188 898 1,005 35 Commercial banks........................ 559 6,431 784 428 491 790 693 561 681 521 36 Indirect........................................ -334 2,823 409 178 217 396 355 241 328 255 37 Direct........................................... 894 3,608 376 249 274 394 338 320 353 266 38 Finance companies....................... 532 1,334 152 61 174 244 135 258 -28 275 39 Credit unions.................................. 1,872 2,422 259 250 266 294 298 352 244 208 40 Other................................................ 44 50 6 -7 24 -2 29 17 2 2 Mobile homes...................................... -195 150 85 -48 -48 48 56 -18 23 45 41 Commercial banks........................ -323 85 80 -54 -38 5 11 -1 1 42 Finance companies....................... -73 -177 -17 -18 -40 -1 -14 -24 -21 -12 43 Home improvement............................ 881 1,585 161 95 87 160 181 126 174 156 44 Commercial banks........................ 271 588 69 38 20 71 64 58 67 68 Revolving credit: 45 Bank credit cards.......................... 1,220 1,850 69 -10 186 245 259 173 219 164 46 Bank check credit.......................... 14 231 26 39 39 50 54 98 85 34 47 All other............................................... 2,577 6,479 899 1,182 605 1,019 1,065 952 883 914 48 Commercial banks, total............. 1,080 1,659 239 186 160 212 248 209 231 211 49 Personal loans............................ 858 1,040 132 189 126 200 182 146 156 117 50 Finance companies, total............. -348 1,509 274 585 212 341 270 227 226 260 51 Personal loans............................ 279 1,290 128 185 178 280 219 184 185 228 52 Credit unions.................................. 1,580 2,045 206 204 204 264 281 258 239 129 53 Retailers.......................................... 69 1,050 159 200 14 113 223 210 144 286 54 Others.............................................. 196 217 20 7 15 29 43 48 36 28 1 Excludes 30-day charge credit held by retailers, oil and gas companies, Note.—Total consumer noninstalment credit outstanding—credit and travel and entertainment companies. scheduled to be repaid in a lump sum, including single-payment loans, 2 Mutual savings banks, savings and loan associations, and auto dealers. charge accounts, and service credit—amounted to $38.7 billion at the 3 Net change equals extensions minus liquidations (repayments, charge- end of 1976, $35.7 billion at the end of 1975, and $33.8 billion at the end offs, and other credits); figures for all months are seasonally adjusted. of 1974. Comparable data for Dec. 31, 1977, will be published in the Bulletin for February 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer D ebt A43 1.56 CONSUMER INSTALMENT CREDIT Extensions and Liquidations Millions of dollars 1977 Holder, and type of credit 1975 1976 1976 Jan. Feb. Mar. Apr. May June July Extensions 3 1Total......................................................... 164,169 193,328 17,677 17,072 17,418 18,351 18,609 18,322 18,613 18,416 By holder: 2 77,312 94,220 8,721 8,010 8,399 8,927 9,008 8,888 9,036 8,928 3 31,173 36,028 3,247 3,477 3,301 3,528 3,445 3,359 3,443 3,335 4 24,096 28,587 2,625 2,536 2,674 2,787 2,859 2,860 2,769 2,663 5 27,049 29,188 2,620 2,643 2,580 2,615 2,721 2,728 2,806 2,951 6 4,539 5,305 465 406 464 494 576 485 559 540 By type of credit: 7 51,413 62,988 5,869 5,440 5,747 6,135 6,037 5,973 5,978 5,877 8 Commercial banks........................ 28,573 36,585 3,476 3,115 3,278 3,563 3,462 3,341 3,442 3,464 9 Indirect........................................ 15,766 19,882 1,889 1,668 1,730 1,923 1,850 1,751 1,817 1,856 10 12,807 16,704 1,587 1,447 1,547 1,640 1,612 1,590 1,625 1,608 11 Finance companies....................... 9,674 11,209 999 1,000 1,014 1,112 1,074 1,114 1,099 963 12 Credit unions.................................. 12,683 14,675 1,348 1,292 1,392 1,418 1,431 1,457 1,390 1,402 13 Others.............................................. 483 518 46 33 64 42 70 60 47 48 Mobile homes..................................... 4,323 4,841 470 352 367 434 463 402 408 440 14 Commercial banks........................ 2,622 3,071 324 204 210 251 269 262 232 253 15 Finance companies....................... 764 690 52 50 53 56 58 50 48 55 16 Home improvement............................ 5,556 6,736 624 558 564 638 660 627 677 661 17 Commercial banks........................ 2,122 3,245 306 274 262 310 308 308 319 320 Revolving credit: 18 Bank credit cards.......................... 20,428 25,862 2,297 2,166 2,384 2,381 2,547 2,589 2,604 2,525 19 Bank check credit......................... 4,024 4,783 441 460 459 470 467 498 512 489 20 All other.............................................. 78,425 88,117 7,977 8,096 7,897 8,292 8,436 8,233 8,434 8,424 21 Commercial banks, total............. 18,944 20,673 1,877 1,791 1,806 1,945 1,956 1,891 1,927 1,876 22 Personal loans............................ 13,386 14,480 1,303 1,337 1,302 1,392 1,406 1,365 1,380 1,314 23 Finance companies, total............. 20,657 24,087 2,191 2,423 2,228 2,354 2,307 2,188 2,289 2,309 24 Personal loans........................... 16,944 19,579 1,722 1,737 1,755 1,863 1,833 1,744 1,850 1,836 25 Credit unions................................. 10,134 12,340 1,128 1,094 1,127 1,207 1,264 1,233 1,225 1,113 26 Retailers.......................................... 27,049 29,188 2,620 2,643 2,580 2,615 2,721 2,728 2,806 2,951 27 Others.............................................. 1,642 1,830 161 146 156 171 188 193 187 175 Liquidations3 28 Total......................................................... 156,665 172,795 15,236 15,082 15,594 15,503 15,840 15,803 16,331 16,098 By holder: 29 Commercial banks............................ 74,491 83,376 7,452 7,383 7,540 7,493 7,680 7,789 7,753 7,923 30 Finance companies........................... 31,263 33,384 2,838 2,850 2,952 2,943 3,053 2,899 3,261 2,811 31 Credit unions...................................... 20,325 23,707 2,114 2,035 2,157 2,176 2,225 2,195 2,250 2,295 32 Retailers1............................................ 26,980 28,138 2,461 2,443 2,566 2,502 2,497 2,518 2,662 2,665 33 Others2................................................. 3,606 4,191 371 371 378 389 384 401 405 404 By type of credit: 34 Automobile.......................................... 48,406 52,750 4,667 4,708 4,792 4,809 4,882 4,785 5,080 4,871 35 28,014 30,154 2,692 2,688 2,787 2,773 2,769 2,780 2,761 2,943 36 Indirect........................................ 16,101 17,059 1,480 1,490 1,513 1,527 1,495 1,509 1,489 1,601 37 11,913 13,095 1,212 1,198 1,274 1,246 1,274 1,271 1,272 1,342 38 Finance companies....................... 9,142 9,875 847 939 840 868 939 856 1,127 688 39 Credit unions.................................. 10,811 12,253 1,089 1,042 1,126 1,124 1,133 1,106 1,146 1,194 40 Others.............................................. 439 468 40 40 40 44 41 43 45 46 Mobile homes...................................... 4,517 4,691 385 400 415 386 407 420 385 395 41 Commercial banks........................ 2,944 2,986 244 258 248 252 258 262 239 245 42 Finance companies....................... 837 867 69 68 93 57 72 74 68 68 43 4,675 5,151 463 463 477 478 479 501 503 504 44 Commercial banks........................ 2,451 2,657 236 237 241 238 244 250 252 252 Revolving credit: 45 Bank credit cards.......................... 19,208 24,012 2,228 2,176 2,198 2,136 2,288 2,416 2,385 2,361 46 Bank check credit......................... 4,010 4,552 415 421 420 420 413 400 427 455 47 75,849 81,638 7,078 6,914 7,292 7,273 7,371 7,282 7,551 7,510 48 Commercial banks, total............. 17,864 19,014 1,638 1,604 1,646 1,673 1,708 1,682 1,689 1,666 49 Personal loans........................... 12,528 13,439 1,171 1,148 1,176 1,192 1,224 1,219 1,224 1,197 50 Finance companies, total............. 21,005 22,578 1,917 1,838 2,016 2,013 2,037 1,961 2,063 2,049 51 Personal loans........................... 16,665 18,289 1,594 1,552 1,577 1,583 1,614 1,560 1,666 1,609 52 Credit unions.................................. 8,554 10,295 921 890 922 943 983 975 986 984 53 Retailers.......................................... 26,980 28,138 2,461 2,443 2,566 2,502 2,497 2,518 2,662 2,665 54 Others.............................................. 1,446 1,613 141 139 141 143 145 146 151 146 1 Excludes 30-day charge credit held by retailers, oil and gas companies, 2 Mutual savings banks, savings and loan associations, and auto dealers. and travel and entertainment companies. 3 Monthly figures are seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Financial Statistics □ September 1977 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-year data are at seasonally adjusted annual rates. 1975 1976 Transaction category, or sector 1971 1972 1973 1974 1975 1976 HI H2 HI H2 Nonfinancial sectors 1Total funds raised.................................................. 153.5 177.8 202.0 189.6 205.6 268.3 180.8 230.4 254.5 282.1 1 2 Excluding equities.............................................. 142.1 167.2 194.3 185.8 195.5 257.8 170.3 220.8 241.1 274.4 2 By sector and instrument: 3 U.S. Govt............................................................. 24.9 15.1 8.3 11.8 85.4 69.0 79.6 91.2 73.1 64.9 3 4 Public debt securities.................................... 26.0 14.3 7.9 12.0 85.8 69.1 80.4 91.3 73.0 65.3 4 5 Agency issues and mortgages..................... -1.1 .8 .4 -.2 -.4 -.1 -.8 -.1 .1 -.3 5 6 All other nonfinancial sectors........................... 128.6 162.7 193.8 177.8 120.2 199.2 101.1 139.2 181.4 217.1 6 7 Corporate equities......................................... 11.5 10.5 7.7 3.8 10.0 10.5 10.5 9.6 13.3 7.6 7 8 Debt instruments........................................... 117.2 152.2 186.1 174.0 110.1 188.8 90.7 129.6 168.0 209.5 8 9 Private domestic nonfinancial sectors......... 123.5 158.7 187.5 162.4 107.0 179.0 93.1 120.9 166.2 191.7 9 10 Corporate equities..................................... 11.4 10.9 7.9 4.1 9.9 10.5 10.3 9.5 13.3 7.7 10 11 Debt instruments........................................ 112.0 147.8 179.7 158.3 97.1 168.4 82.8 111.4 152.9 184.0 11 12 Debt capital instruments....................... 86.8 102.3 105.0 98.7 95.8 122.7 93.8 97.8 111.7 133.7 12 13 State and local obligations............. 17.4 14.7 14.7 17.1 13.6 15.1 12.3 14.9 14.7 15.5 13 14 Corporate bonds............................... 18.8 12.2 9.2 19.7 27.2 22.8 32.6 21.8 19.8 25.8 14 Mortgages: 15 Home............................................... 28.6 42.6 46.4 34.8 39.5 63.6 33.4 45.6 57.1 70.2 15 16 Multifamily residential................. 9.7 12.7 10.4 6.9 * 1.6 .4 -.4 .6 2.6 16 17 Commercial.................................... 9.8 16.5 18.9 15.1 11.0 13.4 9.4 12.6 13.9 12.9 17 18 Farm................................................ 2.4 3.6 5.5 5.0 4.6 6.1 5.1 4.0 5.0 7.3 18 19 Other debt instruments......................... 25.3 45.5 74.6 59.6 1.3 45.7 -11.0 13.6 41.2 50.3 19 20 Consumer credit................................ 13.1 18.9 22.0 10.2 9.4 23.6 2.2 16.6 22.9 24.2 20 21 Bank loans n.e.c................................. 8.1 18.9 39.8 29.1 -14.5 3.7 -20.9 -8.2 -.3 7.8 21 22 Open market paper........................... -.4 .8 2.5 6.6 -2.6 4.0 -1.4 -3.8 6.4 1.6 22 23 Other................................................... 4.4 6.9 10.3 13.7 9.0 14.4 9.0 9.0 12.2 16.7 23 24 By borrowing sector................................... 123.5 158.7 187.5 162.4 107.0 179.0 93.1 120.9 166.2 191.7 24 25 State and local governments............... 17.7 14.5 13.2 16.2 11.2 14.6 10.0 12.3 13.0 16.3 25 26 Households............................................. 45.2 66.6 79.0 49.2 48.6 89.8 37.3 59.9 83.9 95.6 26 27 Farm......................................................... 4.5 5.8 9.7 7.9 8.7 11.0 8.7 8.8 10.6 11.6 27 28 Nonfarm noncorporate........................ 11.6 14.1 12.9 7.4 2.0 5.2 -1.1 5.1 2.7 7.6 28 29 Corporate................................................ 44.5 57.7 72.7 81.8 36.6 58.3 38.3 34.8 56.1 60.5 29 30 Foreign............................................................. 5.2 4.0 6.2 15.4 13.2 20.3 8.0 18.3 15.2 25.4 30 31 Corporate equities..................................... * -.4 -.2 -.2 .1 * .1 .1 * -.1 31 32 Debt instruments........................................ 5.2 4.4 6.4 15.7 13.0 20.3 7.9 18.2 15.1 25.5 32 33 Bonds....................................................... .9 1.0 1.0 2.1 6.2 8.4 5.1 6.8 7.3 9.5 33 34 Bank loans n.e.c..................................... 2.1 3.0 2.8 4.7 3.7 6.7 -A 7.8 3.4 10.0 34 35 Open market paper.............................. .3 -1.0 .9 7.3 .3 1.9 -.8 1.4 1.5 2.4 35 36 U.S. Govt, loans.................................... 1.8 1.5 1.7 1.6 2.8 3.3 3.4 2.2 2.9 3.6 36 Financial sectors 37 Total funds raised................................................... 15.4 28.3 51.6 39.4 14.0 28.6 15.1 12.8 27.8 29.4 37 By instrument: 38 U.S. Govt, related.............................................. 5.9 8.4 19.9 23.1 13.5 18.6 14.5 12.6 18.6 18.6 38 39 Sponsored credit agency securities............. 1.1 3.5 16.3 16.6 2.3 3.3 1.9 2.8 4.5 2.1 39 40 Mortgage pool securities............................. 4.8 4.9 3.6 5.8 10.3 15.7 11.5 9.2 14.2 17.2 40 41 Loans from U.S. Govt.................................. .7 .9 -.4 1.1 .6 * -.7 41 42 Private financial sectors.................................... 9.5 19.9 31.7 16.3 .4 10.0 .6 .2 9.1 10.8 42 43 Corporate equities......................................... 3.5 2.8 1.5 .3 * .1 .1 -.1 -.7 2.2 43 44 Debt instruments............................................ 6.0 17.1 30.2 16.0 .4 9.2 .6 .3 9.8 8.6 44 45 Corporate bonds........................................ 3.8 5.1 3.5 2.1 2.9 5.8 2.3 3.5 7.0 4.5 45 46 Mortgages................................................... 2.1 1.7 -1.2 -1.3 2.3 2.1 1.4 3.2 1.4 2.8 46 47 Bank loans n.e.c......................................... 1.9 5.9 8.9 4.6 -3.6 -3.7 -4.7 -2.5 -3.0 -4.4 47 48 Open market paper and Rp’s................. .9 4.4 11.8 3.9 2.8 7.1 8.2 -2.6 6.1 8.1 48 49 Loans from FHLB’s.................................. -2.7 * 7.2 6.7 -4.0 -2.0 -6.6 -1.3 -1.6 -2.4 49 By sector: 50 Sponsored credit agencies................................ 1.1 3.5 16.3 17.3 3.2 2.9 3.0 3.4 4.5 1.4 50 51 4.8 4.9 3.6 5.8 10.3 15.7 11.5 9.2 14.2 17.2 51 52 Private financial sectors.................................... 9.5 19.9 31.7 16.3 .4 10.0 .6 .2 9.1 10.8 52 53 2.4 4.8 8.1 -1.1 1.7 IA 5.7 -2.3 9.0 5.9 53 54 Bank affiliates................................................. -.4 .7 2.2 3.5 .3 -.8 .9 -.3 -1.3 -.3 54 55 Foreign banking agencies............................ 1.6 .8 5.1 2.9 -.3 .4 -.9 .2 -1.5 2.4 55 56 Savings and loan associations..................... -.1 2.0 6.0 6.3 -2.2 * -6.8 2.3 .5 -.5 56 57 Other insurance companies......................... .6 .5 .5 .9 1.0 1.0 .9 1.0 1.0 1.0 57 58 Finance companies........................................ 2.7 6.2 9.4 4.5 .5 6.4 -1.4 2.4 5.7 7.1 58 59 REIT’s............................................................. 2.9 6.3 6.5 .6 -2.0 -2.8 -2.0 -1.9 -2.5 -3.0 59 60 1.3 -.5 -1.2 -.7 -.1 -1.0 .7 -.9 -2.5 .5 60 61 Money market funds.................................... 2.4 1.3 -.3 2.6 * -.7 .2 61 All sectors 62 Total funds raised, by instrument....................... 168.9 206.1 253.7 229.0 219.5 296.8 195.9 243.2 282.2 311.4 62 63 Investment company shares............................ 1.3 -.5 -1.2 -.7 -.1 -1.0 .7 -.9 -2.5 .5 63 64 Other corporate equities.................................. 13.7 13.8 10.4 4.8 10.2 12.2 9.8 10.5 15.1 9.3 64 65 154.0 192.8 244.5 224.9 209.5 285.6 185.4 233.6 269.6 301.6 65 66 U.S. Govt, securities..................................... 30.9 23.6 28.3 34.3 98.2 88.1 93.1 103.2 91.9 84.3 66 67 State and local obligations.......................... 17.4 14.7 14.7 17.1 13.6 15.1 12.3 14.9 14.7 15.5 67 68 Corporate and foreign bonds..................... 23.5 18.4 13.6 23.9 36.3 37.0 41.3 31.3 34.7 39.3 68 69 52.6 77.0 79.9 60.5 57.2 86.8 49.5 65.0 77.9 95.7 69 70 Consumer credit............................................ 13.1 18.9 22.0 10.2 9.4 23.6 2.2 16.6 22.9 24.2 70 71 12.1 27.8 51.6 38.4 -14.4 6.7 -25.9 -2.9 .1 13.4 71 72 Open market paper and Rp’s..................... .8 4.1 15.2 17.8 .5 13.0 6.1 -5.0 14.0 12.0 72 73 3.5 8.4 19.1 22.7 8.7 15.3 6.9 10.5 13.4 17.2 73 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A45 1.58 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS Billions of dollars, except as noted; half-year data are at seasonally adjusted annual rates. 1975 1976 Transaction category or sector 1971 1972 1973 1974 1975 1976 HI H2 HI H2 1 Total funds advanced in credit markets to nonfinancial sectors........................................ 142.1 167.2 194.3 185.8 195.5 257.8 170.3 220.8 241.1 274.4 1 By public agencies and foreign: 2 Total net advances.................................................. 43.4 19.8 34.1 52.7 44.3 54.6 55.0 33.6 53.2 56.0 2 3 U.S. Govt, securities......................................... 34.4 7.6 9.5 11.9 22.5 26.8 33.4 11.6 27.1 26.5 3 4 Residential mortgages...................................... 7.0 7.0 8.2 14.7 16.2 12.8 16.9 15.5 12.1 13.5 4 5 FHLB advances to S&L’s................................ -2.7 * 7.2 6.7 -4.0 -2.0 -6.6 -1.3 -1.6 -2.4 5 6 Other loans and securities................................ 4.6 5.1 9.2 19.5 9.5 16.9 11.3 7.8 15.6 18.3 6 Totals advanced, by sector 7 U.S. Govt............................................................ 2.8 1.8 2.8 9.8 15.1 8.9 15.9 14.3 6.4 11.4 7 8 Sponsored credit agencies................................ 5.2 9.2 21.4 25.6 14.5 20.6 16.5 12.6 20.7 20.6 8 9 Monetary authorities........................................ 8.9 .3 9.2 6.2 8.5 9.8 7.6 9.5 14.5 5.2 9 10 Foreign................................................................. 26.4 8.4 .6 11.2 6.1 15.2 15.0 -2.7 11.6 18.8 10 11 Agency borrowing not included in line 1......... 5.9 8.4 19.9 23.1 13.5 18.6 14.5 12.6 18.6 18.6 11 Private domestic funds advanced 12 Total net advances.................................................. 104.6 155.9 180.2 156.1 164.8 221.8 '129.8 199.7 206.6 237.0 12 13 U.S. Govt, securities......................................... -3.6 16.0 18.8 22.4 75.7 61.3 f 59.7 91.6 64.8 57.8 13 14 State and local obligations.............................. 17.4 14.7 14.7 17.1 13.6 15.1 12.3 14.9 14.7 15.5 14 15 Corporate and foreign bonds......................... 19.5 13.1 10.0 20.9 32.8 30.3 38.8 26.8 26.8 33.9 15 16 Residential mortgages...................................... 31.2 48.2 48.4 26.9 23.2 52.4 16.7 29.6 45.5 59.2 16 17 Other mortgages and loans............................. 37.4 63.9 95.4 75.4 15.6 60.8 -4.3 35.5 53.2 68.3 17 18 Less: FHLB advances...................................... -2.7 * 7.2 6.7 -4.0 -2.0 -6.6 -1.3 -1.6 -2.4 18 Private financial intermediation 19 Credit market funds advanced by private 110.3 149.7 164.9 126.3 119.9 187.3 99.8 140.0 167.6 207.1 19 50.6 70.5 86.5 64.6 27.6 58.0 14.4 40.7 44.5 71.5 20 39.9 48.2 36.9 26.9 52.0 71.9 48.5 55.4 71.8 72.0 21 22 Insurance and pension funds.......................... 13.7 17.2 23.9 30.0 41.5 47.6 38". 3 44.7 47.8 47.3 22 23 Other finance...................................................... 6.1 13.9 17.5 4.7 -1.1 9.9 —1.4 -.7 3.4 16.3 23 24 Sources of funds...................................................... 110.3 149.7 164.9 126.3 119.9 187.3 99.8 140.0 167.6 207.1 24 89.4 100.8 86.5 69.4 90.9 123.0 90.3 91.5 106.1 139.8 25 26 Credit market borrowing................................. 6.0 17.1 30.2 16.0 .4 9.2 .6 .3 9.8 8.6 26 27 Other sources...................................................... 14.9 31.8 48.2 40.9 28.6 55.1 9.0 48.2 51.7 58.7 27 -3.9 5.3 6.9 14.5 -.4 3.1 -5.6 4.8 -2.6 8.8 28 29 Treasury balances.......................................... 2.2 .7 -1.0 -5.1 -1.7 -.1 -3.5 .1 2.9 -3.1 29 30 Insurance and pension reserves.................. 8.6 11.6 18.4 26.0 29.0 35.8 26.4 31.5 35.1 36.5 30 7.9 14.1 23.9 5.4 1.7 16.4 -8.3 11.7 16.2 16.6 31 Private domestic nonfinancial investors 32 Direct lending in credit markets........................... .3 23.3 45.5 45.9 45.3 43.7 30.6 60.0 48.8 38.6 32 33 U.S. Govt, securities......................................... -10.7 3.9 19.5 18.2 22.2 19.2 6.0 38.4 22.6 15.9 33 34 State and local obligations.............................. .8 3.0 5.4 10.0 6.3 4.7 7.2 5.5 3.9 5.5 34 35 Corporate and foreign bonds......................... 8.3 4.4 1.3 4.7 8.2 4.0 10.8 5.6 4.9 3.1 35 36 Commercial paper............................................. -1.1 2.9 12.5 4.8 3.1 4.0 1.5 4.7 6.7 1.3 36 3.0 9.1 6.8 8.2 5.5 11.8 5.1 6.0 10.8 12.8 37 38 Deposits and currency............................................ 92.8 105.2 90.4 75.7 97.1 130.3 96.0 98.2 111.0 149.5 38 39 Time and savings accounts................................ 79 A 83.8 76.1 66.7 84.8 113.0 73.0 96.5 98.3 127.6 39 40 Large negotiable CD’s................................. 6.3 7.7 18.1 18.8 -14.0 -14.2 -27.8 -.2 -18.0 -10.4 40 41 Other at commercial banks......................... 33.2 30.6 29.6 26.1 39.4 58.1 39.3 39.4 50.2 66.0 41 42 At savings institutions.................................. 39.6 45.4 28.5 21.8 59.4 69.1 61.5 57.4 66.1 72.1 42 43 Money................................................................... 13.7 21.4 14.3 8.9 12.3 17.3 23.0 1.7 12.7 21.9 43 44 Demand deposits........................................... 10.4 17.0 10.3 2.6 6.1 10.0 17.3 -5.0 7.8 12.1 44 45 Currency.......................................................... 3.4 4.4 3.9 6.3 6.2 7.3 5.7 6.7 4.9 9.8 45 46 Total of credit market instruments, deposits 93.2 128.5 136.0 121.5 142.4 174.0 126.6 158.2 159.8 188.1 46 47 Public support rate (in per cent)..................... 30.5 11.8 17.5 28.4 22.7 21.2 32.3 15.2 22.1 20.4 47 48 Private financial intermediation (in per cent) 105.4 96.1 91.5 80.9 72.8 84.5 76.9 70.1 81.1 87.4 48 49 Total foreign funds............................................ 22.5 13.7 7.5 25.7 5.8 18.3 9.4 2.1 9.0 27.6 49 Memo: Corporate equities not included above 15.0 13.3 9.2 4.1 10.0 11.2 10.5 9.5 12.6 9.8 50 51 Mutual fund shares........................................... 1.3 -.5 -1.2 -.7 -.1 -1.0 .7 -.9 -2.5 .5 51 13.7 13.8 10.4 4.8 10.2 12.2 9.8 10.5 15.1 9.3 52 53 Acquisitions by financial institutions................. 19.2 15.3 13.3 5.8 9.4 12.3 10.7 8.1 12.6 12.0 53 54 Other net purchases.............................................. -4.3 -2.1 -4.1 — 1.6 .6 -1.1 -.2 1.4 * -2.2 54 Notes by line no. 29. Demand deposits at commercial banks. 1. Line 2 of p. A-44. 30. Excludes net investment of these reserves in corporate equities. 2. Sum of lines 3-6 or 7-10. 31. Mainly retained earnings and net miscellaneous liabilities. 6. Includes farm and commercial mortgages. 32. Line 12 less line 19 plus line 26. 11. Credit market funds raised by Federally sponsored credit agencies, 33-37. Lines 13-17 less amounts acquired by private finance. Line 37 and net issues of Federally related mortgage pool securities. Included includes mortgages. below in lines 3, 13, and 33. 45. Mainly an offset to line 9. 12. Line 1 less line 2 plus line 11. Also line 19 less line 26 plus line 32. 46. Lines 32 plus 38 or line 12 less line 27 plus line 45. Also sum of lines 27, 32, 39, and 44. 47. Line 2/line 1. 17. Includes farm and commercial mortgages. 48. Line 19/line 12. 25. Lines 39 plus 44. 49. Lines 10 plus 28. 26. Excludes equity issues and investment company shares. Includes 50. 52. Includes issues by financial institutions. line 18. Note.—Full statements for sectors and transaction types quarterly, 28. Foreign deposits at commercial banks, bank borrowings from foreign and annually for flows and for amounts outstanding, may be obtained branches, and liabilities of foreign banking agencies to foreign af­ from Flow of Funds Section, Division of Research and Statistics, Board filiates. of Governors of the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics □ September 1977 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1977 Measure 1974 1975 1976' Jan.r Feb.r Mar.' Apr.' May' June' July' Aug. 129.3 117.8 129.8 132.3 133.2 135.3 136.1 137.0 137.9 138.9 138.2 Market groupings: 2 Products, total......................................................... 129.3 119.3 129.3 133.1 133.6 135 J 135.8 136.5 137.5 138.8 137.9 3 Final, total........................................................... 125.1 118.2 127.2 130.8 131.6 133.3 134.1 134.7 135.5 136.9 135.7 4 Consumer goods............................................ 128.9 124.0 136.2 139.9 140.5 142.9 142.9 143.1 143.7 145.5 144.1 5 Equipment....................................................... 120.0 110.2 114.6 118.4 119.2 120.0 122.1 123.2 124.2 124.9 124.5 6 Intermediate......................................................... 135.3 123.1 137.2 142.2 141.6 141.8 142.3 143.5 144.5 145.9 145.8 7 Materials................................................................... 132.4 115.5 130.6 131.1 132.7 135.5 136.5 137.8 138.5 138.9 138.7 Industry groupings: 8 Manufacturing......................................................... 129.4 116.3 129.5 131.6 132.6 135.1 135.8 137.1 137.6 138.7 138.3 Capacity utilization (per cent)1 in— 9 Manufacturing............................................................. 84.2 73.6 80.2 80.4 80.9 82.1 82.2 82.8 82.9 83.2 82.7 10 Industrial materials industries.................................. 87.7 73.6 80.4 79.4 80.2 81.6 82.1 82.7 82.9 82.9 82.7 11 Construction contracts2................................................... 173.9 162.3 190.2 203.0 '212.0 207.0 250.0 317.0 284.0 218.0 12 Nonagricultural employment, total3............................... 119.1 116.9 120.6 122.3 122.7 123.6 124.0 124.4 124.7 125.1 125.2 13 Goods-producing, total............................................. 106.2 96.9 100.3 101.4 101.9 103.2 104.1 104.5 104.7 104.9 104.5 14 Manufacturing, total.............................................. 103.1 94.3 97.5 98.8 98.9 99.8 100.4 100.8 100.9 101.1 100.8 15 Manufacturing, production-worker.................... 102.1 91.3 95.2 96.5 96.5 97.6 98.3 98.9 98.9 99.0 98.3 16 Service-producing....................................................... 126.1 127.8 131.7 133.8 134.1 134.8 134.9 135.3 135.6 136.1 136.5 17 Personal income, total4.................................................. 184.3 200.0 220.7 232.1 235.7 239.2 241.0 242.1 243.3 245.6 246.9 18 178.9 188.5 208.6 219.3 222.6 225.7 227.9 229.7 230.8 232.3 232.8 19 Manufacturing............................................................. 157.6 157.3 177.7 186.7 190.4 194.4 196.0 198.5 200.4 201.2 200.8 20 Disposable nersonal income............................................ 180.8 199.2 217.8 235.4 239.4 21 Retail sales5..................................................................... 171.2 186.0 206.6 216.5 222.3 227.4 227.2 226.1 223.1 225.2 228.9 Prices:6 22 Consumer..................................................................... 147.7 161.2 170.5 175.3 177.1 178.2 179.6 180.6 181.8 182.6 183.3 23 Wholesale..................................................................... 160.1 174.1 182.9 188.0 190.0 191.9 194.3 195.2 194.4 '194.9 194.6 1 Ratios of indexes of production to indexes of capacity. Based on data 5 Based on Bureau of Census data published in Survey of Current from Federal Reserve, McGraw-Hill Economics Department, and De­ Business (U.S. Dept, of Commerce). partment of Commerce. 6 Data without seasonal adjustment, as published in Monthly Labor 2 Index of dollar value of total construction contracts, including Review (U.S. Dept, of Labor). Seasonally adjusted data for changes in residential, nonresidential, and heavy engineering, from McGraw-Hill the price indexes may be obtained from the Bureau of Labor Statistics, Informations Systems Company, F. W. Dodge Division. U.S. Dept, of Labor. 3 Based on data in Employment and Earnings (U.S. Dept, of Labor). Series covers employees only, excluding personnel in the Armed Forces. Note.—Basic data (not index numbers) for series mentioned in notes 4 Based on data in Survey of Current Business (U.S. Dept, of Com­ 3, 4. and 5, and indexes for series mentioned in notes 2 and 6 may also be merce). Series for disposable income is quarterly. found in the Survey of Current Business (U.S. Dept, of Commerce). 2.11 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1976' 1977' 1976 1977 1976' 1977' Series Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 Output (1967 = 100) Capacity (per cent of 1967 output) Utilization rate (per cent) 1 Manufacturing.................................................. 130.8 131.2 133.1 136.8 '161.9 '162.8 '164.0 '165.6 80.8 80.6 81.2 82.6 2 Primary processing...................................... 139.3 138.9 140.1 146.2 '167.6 '168.8 '170.2 '171.8 83.1 82.3 82.3 85.1 3 Advanced processing............................ 126.3 127.2 129.4 132.0 '158.9 '159.6 '160.7 '162.2 79.5 79.7 80.5 81.3 132.5 131.9 133.1 137.6 163.1 164.3 165.5 166.6 81.2 80.3 80.4 82.6 5 Durable goods.............................................. 130.8 128.4 129.2 135.0 166.7 167.8 169.0 170.3 78.4 76.5 76.5 79.3 6 Basic metal............................................... 117.4 107.4 108.6 116.4 143.7 144.4 144.8 145.1 81.7 74.4 75.0 80.2 7 Nondurable goods...................................... 146.3 146.9 149.5 154.7 172.5 174.1 175.6 177.2 84.8 84.4 85.1 87.3 8 Textile, paper, and chemical................ 150.8 151.4 153.9 160.1 180.1 182.0 183.6 185.4 83.7 83.2 83.8 86.3 9 Textile................................................... 115.1 112.1 111.3 110.9 139.8 140.6 141.4 141.9 82.4 79.7 78.7 78.1 10 Paper..................................................... 130.8 130.2 131.7 134.3 146.7 147.9 148.9 150.1 89.2 88.1 88.4 89.4 11 Chemical............................................... 174.5 177.3 181.6 192.1 211.2 213.7 216.2 218.7 82.6 83.0 84.0 87.9 12 Energy........................................................... 119.6 122.0 122.0 122.5 142.7 143.9 144.3 144.7 83.8 84.8 84.5 84.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Labor M arket A47 2.12 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1977 Category 1974 1975 1976 Feb. Mar. Apr. May June July Aug. Household survey data 1 Noninstitutional population1................ 150,827 153,449 156,048 157,584 157,782 157,986 158,228 158,456 158,682 158,899 2 Labor force (including Armed Forces)1........................................... 93,240 94,793 96,917 98,282 98,677 98,892 99,286 99,770 99,440 99,834 3 Civilian labor force............................... 91,011 92,613 94,773 96,145 96,539 96,760 97,158 97,641 97,305 97,697 Employment: 4 Nonagricultural industries2........ 82,443 81,403 84,188 85,872 86,359 86,763 87,022 87,341 87,348 87,519 5 Agriculture...................................... 3,492 3,380 3,297 3,090 3,116 3,260 3,386 3,338 3,213 3,252 Unemployment: 6 Number........................................... 5,076 7,830 7,288 7,183 7,064 6,737 6,750 6,962 6,744 6,926 7 Rate (per cent of civilian labor force)....................................... 5.6 8.5 7.7 7.5 7.3 7.0 6.9 7.1 6.9 7.1 57,587 58,655 59,130 59,302 59,104 59,094 58,943 58,686 59,242 59,064 Establishment survey data 9 Nonagricultural payroll employment3 78,413 77,050 79,443 80,824 81,395 81,686 81,921 '82,121 82,356 82,448 10 Manufacturing................................... 20,046 18,347 18,958 19,233 19,404 19,528 '19,600 '19,622 19,666 19,602 11 Mining................................................. 694 745 783 823 842 847 '845 '855 827 819 12 Contract construction....................... 3,957 3,515 3,593 3,645 3,759 3,842 '3,861 '3,876 3,916 3,886 13 Transportation and public utilities. 4,696 4,499 4,508 4,553 4,568 4,575 '4,586 '4,579 4,569 4,567 14 Trade.................................................... 17,017 16,997 17,694 18,067 18,189 18,203 '18,235 '18,247 18,295 18,359 15 Finance................................................ 4,208 4,222 4,315 4,431 4,453 4,463 '4,480 '4,489 4,505 4,525 16 13,617 14,008 14,645 15,068 15,149 15,182 '15,197 '15,245 15,342 15,418 17 14,177 14,773 14,947 15,004 15,031 15,046 '15,117 '15,208 15,236 15,272 1 Persons 16 years of age and over. Monthly figures, which are based 3 Data include all full- and part-time employees who worked during, on sample data, relate to the calendar week that contains the 12th day; or received pay for, the pay period that includes the 12th day of the annual data are averages of monthly figures. By definition, seasonality month, and exclude proprietors, self-employed persons, domestic servants, does not exist in population figures. Based on data from Employment unpaid family workers, and members of the Armed Forces. Data are and Earnings (U.S. Dept, of Labor). adjusted to the February 1977 benchmark. Based on data from Employ- 2 Includes self-employed, unpaid family, and domestic service workers. ment and Earnings (U.S. Dept, of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics □ September 1977 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value Monthly data are seasonally adjusted. 1967 1976r 1977 Grouping pro­ 1976 por­ aver­ tion age r June July Jan.r Feb.' Mar Apr.r May June July? Aug.* Index (1967 = 100) MAJOR MARKET 1Total index........................................................ 100.00 129.8 129.8 130.7 132.3 133.2 135.3 136.1 137.0 137.9 138.9 138.2 2 Products............................................................. 60.71 129.3 129.0 129.7 133.1 133.6 135.1 135.8 136.5 137.5 138.8 137.9 3 Final products............................................... 47.82 127.2 126.8 127.4 130.8 131.6 133.3 134.1 134.7 135.5 136.9 135.7 4 Consumer goods...................................... 27.68 136.2 136.0 136.1 139.9 140.5 142.9 142.9 143.1 143.7 145.5 144.1 5 Equipment................................................ 20.14 114.6 114.2 115.3 118.4 119.2 120.0 122.1 123.2 124.2 124.9 124.5 6 Intermediate products................................ 12.89 137.2 136.7 138.4 142.2 141.6 141.8 142.3 143.5 144.5 145.9 145.8 7 Materials........................................................... 39.29 130.6 131.0 132.1 131.1 132.7 135.5 136.5 137.8 138.5 138.9 138.7 Consumer goods 8 Durable consumer goods............................. 7.89 141.4 142.7 141.5 145.4 146.1 152.4 151.5 152.2 155.5 158.1 155.5 9 Automotive products............................. 2.83 154.8 155.9 156.1 164.2 161.7 178.3 173.9 172.8 179.5 185.3 178.5 10 Autos and utility vehicles................. 2.03 149.8 155.6 155.3 155.8 152.7 176.1 171.2 167.4 175.8 183.5 174.0 11 Autos................................................. 1.90 132.0 136.3 134.4 136.9 132.8 155.8 150.6 148.5 156.8 161.4 150.9 12 Auto parts and allied goods............. .80 167.6 156.9 158.3 185.6 184.3 184.1 181.3 186.6 189.1 190.0 190.3 13 Home goods............................................. 5.06 133.9 135.3 133.4 134.8 137.3 137.9 138.8 140.6 142.1 142.8 142.7 14 Appliances, A/C, and TV................. 1.40 114.6 116.3 106.9 113.4 118.5 124.1 126.4 131.0 133.1 130.2 132.6 15 Appliances and TV......................... 1.33 117.2 118.8 110.4 116.0 121.1 126.5 129.9 134.8 136.8 134.5 16 1.07 144.1 142.5 142.7 143.7 146.0 144.6 145.0 147.3 150.2 153.3 17 Misc. home goods.............................. 2.59 140.1 142.6 143.9 142.7 144.0 142.7 143.0 143.1 143.6 145.3 144.5 18 Nondurable consumer goods....................... 19.79 134.1 133.2 134.0 137.7 138.3 139.1 139.4 139.5 139.0 140.5 139.5 19 Clothing.................................................... 4.29 124.0 175.8 123.4 123.7 123.6 123.9 124.4 125.5 125.7 20 Consumer staples.................................... 15.50 136.9 135.4 136.9 141.7 142.2 143.3 143.6 143.4 142.7 144.4 143.6 ?1 Consumer foods and tobacco........... 8.33 130.7 179.1 131.6 131.5 133.3 136.0 136.1 135.0 135.0 136.9 22 Nonfood staples.................................. 7.17 144.1 142.8 143.2 153.4 152.6 151.8 152.5 153.2 151.7 153.2 152.0 23 Consumer chemical products.... 2.63 166.4 165.3 164.5 178.5 175.7 175.9 178.1 180.8 179.3 179.7 24 Consumer paper products............. 1.92 113.3 111.9 112.8 116.0 113.3 117.4 116.6 118.4 116.3 116.2 25 Consumer energy products........... 2.62 144.4 143.1 144.0 155.8 158.3 152.8 153.0 150.8 149.7 153.6 26 Residential utilities..................... 1.45 151.1 147.6 150.7 166.7 167.1 Equipment 27 Business equipment...................................... 12.63 136.3 136.2 137.9 142.3 143.5 144.8 147.1 148.9 150.3 151.6 151.0 28 Industrial equipment.............................. 6.77 128.0 128.4 128.7 131.3 133.2 134.4 136.3 138.4 139.6 140.9 140.7 29 Building and mining equip............... 1.44 177.7 177.7 179.1 187.4 192.9 197.9 200.5 205.3 208.1 210.5 209.5 30 Manufacturing equipment................ 3.85 106.5 107.0 107.5 107.8 108.5 109.0 112.0 112.8 114.0 115.0 114.8 31 Power equipment................................ 1.47 135.3 135.4 134.9 137.5 139.3 138.3 136.7 139.9 139.5 140.2 141.0 32 Commercial transit, farm equip.......... 5.86 145.8 145.2 148.7 155.0 155.3 156.9 159.5 161.2 162.5 163.9 163.1 33 Commercial equipment..................... 3.26 173.5 171.4 174.9 185.2 185.6 186.1 189.7 191.1 191.9 192.7 192.5 34 Transit equipment............................... 1.93 104.1 106.1 108.4 108.4 108.7 113.0 115.2 116.5 119.7 122.0 119.7 35 Farm equipment.................................. .67 131.4 131.0 137.5 142.5 142.5 141.8 141.0 144.4 143.2 144.7 36 Defense and space equipment..................... 7.51 78.4 77.5 77.5 78.0 78.5 78.5 79.9 80.0 80.3 80.2 80.1 Intermediate products 37 Construction supplies................................. 6.42 132.6 132.9 134.1 136.2 135.6 136.4 137.2 138.7 139.2 140.4 140.6 38 Business supplies.......................................... 6.47 141.8 140.4 142.7 148.0 147.6 147.3 147.5 148.4 149.6 151.4 39 Commercial energy products............... 1.14 157.1 155.7 159.2 164.9 164.9 163.6 164.6 165.8 164.4 167.7 Materials 40 20.35 126.8 128.0 131.0 127.4 128.4 131.9 133.8 135.2 136.1 136.6 136.4 41 Durable consumer parts.................... 4.58 121.6 123.1 126.1 121.8 124.1 126.8 129.4 132.0 132.6 135.3 134.1 42 5.44 133.9 134.4 136.3 135.1 137.3 137.8 140.7 141.7 143.2 145.7 146.0 43 Durable materials n.e.c.......................... 10.34 125.5 126.9 130.4 125.9 125.5 131.1 132.2 133.2 133.8 132.3 132.4 44 Basic metal materials......................... 5.57 110.9 114.9 118.6 106.6 105.5 113.6 115.0 117.8 116.3 112.6 45 10.47 146.3 146.5 145.1 144.8 150.4 153.3 153.7 155.4 155.1 155.1 154.9 46 7.62 151.1 151.2 149.3 149.3 153.9 158.4 159.0 160.7 160.4 160.5 160.3 47 Textile materials . . . . • • 1.85 115.1 115.4 115.9 111.0 109.8 113.2 111.8 111.8 109.0 110.3 48 Paper materials • • 1.62 130.8 132.1 129.1 127.6 133.5 133.9 132.2 136.2 134.4 133.7 49 Chemical materials. .................•. 4.15 175.1 174.5 172.2 175.1 181.6 188.0 190.6 192.2 193.6 193.4 50 Containers nondurable . • • 1.70 142.7 144.3 142.8 139.5 150.2 148.9 148.5 152.3 152.4 152.7 51 Nondurable materials nec. 1.14 119.9 118.5 120.4 122.6 126.8 126.1 125.6 123.1 122.9 123.2 52 Energy materials • • 8.48 120.2 119.1 118.8 123.3 120.8 121.8 121.3 122.3 123.8 124.3 53 Primary energy. ........... 4.65 107.1 107.4 106.7 102.9 103.1 107.0 106.0 106.6 109.4 109.2 54 Converted fuel materials . .. 3.82 136.2 133.4 133.5 148.1 142.4 139.9 140.1 141.4 141.2 142.6 Supplementary groups 55 Home goods and clothing......................... 9.35 129.4 130.9 128.8 129.7 131.0 131.5 132.2 133.6 134.6 135.2 134.5 56 12.23 128.8 127.6 128.0 134.1 132.9 132.3 132.1 132.5 133.1 134.5 133.9 57 Products.................................................... 3.76 148.2 146.8 148.5 158.5 160.3 156.0 156.5 155.3 154.2 157.8 58 8.48 120.2 119.1 118.8 123.3 120.8 121.8 121.3 122.3 123.8 124.3 For Note see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Output A49 2.13 Continued 1967 1976' 1977 Grouping SIC pro­ 1976 code por­ aver­ tion age' June July Jan.' Feb.' Mar.' Apr.' May June July? Aug.* Index (1967 = 100) MAJOR INDUSTRY 12.05 131.6 130.8 130.3 137.0 137.1 136.6 135.7 137.1 138.8 139.3 136.7 ? Mining........................................... 6.36 114.2 114.6 112.7 112.8 116.3 120.6 119.2 119.5 122.5 119.5 117.8 3 Utilities.......................................... 5.69 151.0 148.7 150.0 163.8 160.3 154.8 154.0 156.7 157.1 161.5 158.0 4 Electric.................................. 3.88 167.6 165.1 166.8 183.6 179.1 87.95 129.5 129.8 130.7 131.6 132.6 135.1 135.8 137.1 137.6 138.7 138.3 6 Nondurable.................................. 35.97 140.9 140.6 140.3 143.4 145.3 147.0 147.0 148.5 148.3 148.9 148.4 7 Durable.......................................... 51.98 121.7 122.4 124.0 123.4 124.0 126.8 128.0 129.3 130.4 131.6 131.2 Mining 8 10 .51 122.8 120.6 124.2 130.6 128.5 133.8 126.1 120.5 121.3 101.7 9 Coal................................................ 11,12 .69 117.2 122.7 104.8 95.3 100.8 124.1 118.4 122.4 133.4 120.9 113.6 10 Oil and gas extraction................ 13 4.40 112.0 112.3 111 .9 112.0 115.8 117.5 117.5 118.3 120.9 120.5 122.0 11 Stone and earth minerals.......... 14 .75 118.3 116.5 116.5 121.6 124.9 126.1 124.0 123.0 122.5 125.6 Nondurable manufactures 12 Foods............................................. 20 8.75 132.3 131.4 134.5 134.2 136.4 138.7 138.0 138.3 136.5 138.0 13 Tobacco products....................... 21 .67 117.9 122.4 114.5 114.8 116.8 104.3 112.1 105.2 119.7 14 Textile mill products.................. 22 2.68 136.4 137.7 137.7 132.2 132.3 134.4 134.6 136.0 135.4 137.4 15 Apparel products........................ 23 3.31 122.2 124.5 120.2 123.0 124.4 122.2 121.4 123.5 122.1 16 Paper and products..................... 26 3.21 133.0 136.2 131.0 130.6 136.5 135.5 136.3 139.5 139.3 138.8 137.2 17 Printing and publishing............. 27 4.72 120.6 119.7 121.2 124.7 122.4 124.8 123.4 124.4 124.1 123.8 124.0 18 Chemicals and products............ 28 7.74 169.3 169.2 167.6 172.2 174.9 180.0 180.6 182.8 183.5 182.9 19 Petroleum products..................... 29 1.79 133.1 135.0 134.1 139.7 145.2 143.3 143.4 142.4 140.1 140.9 139.4 20 Rubber & plastic products........ 30 2.24 200.2 189.1 191.2 218.9 220.3 225.6 226.0 232.4 234.4 237.1 21 Leather and products................. 31 .86 80.9 81.4 81.1 74.8 75.0 73.8 74.7 76.2 74.1 74.2 Durable manufactures 22 Ordnance, pvt. & govt............... 19,91 3.64 72.7 71.5 72.9 72.6 72.6 72.8 74.6 74.4 74.1 75.1 75.6 23 Lumber and products................. 24 1.64 125.1 120.3 124.6 132.7 132.2 132.1 130.6 133.0 131.3 134.5 24 Furniture and fixtures................ 25 1.37 132.7 130.1 131.6 135.1 137.1 135.1 135.4 137.5 139.9 141.0 25 Clay, glass, stone prod............... 32 2.74 137.1 138.9 137.5 137.1 139.0 143.7 145.0 145.0 147.6 147.0 26 Primary metals............................. 33 6.57 108.9 113.5 117.7 100.8 100.2 108.3 112.2 117.1 114.7 114.7 115.3 27 Iron and steel........................... 331,2 4.21 104.9 112.5 115.0 89.7 91.3 97.9 103.9 111.0 109.2 112.3 28 Fabricated metal prod............... 34 5.93 123.3 124.0 124.6 125.7 125.8 127.5 127.6 128.2 130.7 131.2 132.5 29 Nonelectrical machinery............ 35 9.15 135.0 134.1 137.9 139.9 139.8 139.8 142.9 142.6 144.0 146.0 145.8 30 Electrical machinery................... 36 8.05 131.6 131.5 131.4 134.0 137.6 137.6 139.6 141.8 142.6 143.8 145.0 31 Transportation equip................. 37 9.27 110.6 112.8 112.8 113.5 113.4 120.5 119.8 120.3 123.5 125.0 121.1 32 Motor vehicles & pts.............. 371 4.50 140.7 146.9 147.5 145.5 145.4 161.2 158.1 157.7 162.6 166.3 159.9 33 Aerospace & misc. tr. eq. ... 372-9 4.77 82.2 80.7 80.2 83.4 83.3 82.3 83.8 85.2 86.6 86.1 84.5 34 Instruments................................... 38 2.11 148.2 149.5 151.3 153.7 157.0 156.9 157.8 157.4 158.2 159.5 158.5 35 Miscellaneous mfrs..................... 39 1.51 143.5 145.9 148.4 147.8 147.9 147.4 145.6 148.0 148.4 149.6 149.0 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products. tntal................................. 1507.4 550.4 550.4 552.7 564.8 569.4 578.2 578.3 582.2 584.9 590.8 588.4 37 Final products............................... 1390.9 425.7 425.9 427.1 436.7 441.1 449.0 448.5 451.0 453.8 458.3 455.2 38 Consumer goods..................... 1277.5 301.6 302.1 301.4 308.8 312.2 316.8 316.1 316.3 318.6 321.2 317.9 39 Equipment................................ 1113.4 124.0 124.0 125.7 127.9 128.9 132.1 132.6 134.6 135.0 137.0 137.5 40 Intermediate products................ 1116.6 124.8 124.7 125.5 128.2 128.4 129.1 130.1 131.4 131.4 132.5 132.9 1 1972 dollars. The industrial production indexes have been revised back to January 1976, on the basis of more complete information now available. A complete Note.—Published groupings include some series and subtotals not shown set of the revised 1976 series is attached to the September G.12.3 release separately. For summary description and historical data, see Bulletin for which may be obtained from the Publications Section, Board of Governors June 1976, pp. 470-79. Availability of detailed descriptive and historical of the Federal Reserve System, Washington, D.C. 20551. data will be announced in a forthcoming Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics □ September 1977 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates. Exceptions noted. 1977 i Item 1974 1975 1976 Jan.' Feb.' Mar.' Apr.' May' June' July33 1 Private residential real estate activity (thousands of units) NEW UNITS 2 1 Pe 1 r - m fa it m s i a l u y. t . h .. o ... r . i .. z . e .. d ... . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 1,0 6 7 4 4 4 9 66 2 9 7 ' 1, ' 2 89 9 4 6 1,3 9 3 3 3 0 1 1 , , 5 0 2 60 6 1 1 , , 6 18 8 8 7 1 1, , 0 6 5 0 1 5 1 1 , , 6 0 1 77 5 1 1 , , 6 10 7 5 8 1 1 , , 6 1 3 39 0 3 2-or-more-family........................... 431 278 '402 403 466 499 554 538 573 491 4 Started.................................................. 1,338 1,160 1,540 1,384 1,802 2,089 1,880 1,937 1,910 2,064 56 2 1 - o fa rm m i o ly r . e .. - .. f . a .. m .... i .. l . y .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 8 5 8 0 8 2 8 6 9 8 2 1,1 3 6 7 3 7 1,0 3 0 7 6 8 1,4 3 2 7 4 8 1,5 5 0 8 3 6 1,4 4 1 6 3 7 1,4 4 5 8 5 2 1,4 5 0 1 0 0 1,4 6 6 0 2 2 78 Un 1 d e fa r m co i n ly s . t . r .. u .. c .. t . i .. o .. n .. , . .. e .. n .. d .. .. o .. f .. . p .. e .. r .. i . o .. d ... . 1 1,1 5 8 1 9 6 1,0 5 0 31 3 1,1 6 5 56 7 1,1 6 9 9 8 2 1,2 7 1 1 5 0 1,2 7 3 3 7 2 1,2 7 6 4 8 8 1,3 1 0 11 3 1,3 1 2 9 9 2 9 2-or-more-family........................... 673 472 501 506 505 505 520 532 537 1 1 1 1 2 0 Co 2 1 m - - f o p a r l m - e m te il o d y r . . . e . . . . . - . . . f . . . a . . . . m . . . . . . . . i . . l . . y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,6 7 9 9 3 6 1 2 0 1,2 4 8 9 3 6 7 0 6 1 1 , , 0 3 3 2 6 3 6 2 6 1 1 , , 4 1 3 0 1 1 3 6 3 1 1 , , 6 2 3 4 3 9 2 5 7 1 1 , , 7 2 4 3 0 71 6 7 1 1 , , 5 2 3 4 2 1 6 0 4 1 1 , , 5 1 3 6 2 5 7 4 7 1 1 , , 6 1 4 7 2 4 7 0 3 13 Mobile homes shipped.................... 329 213 250 258 275 275 252 251 264 249 Merc1hant builder activity in -family units: 14 Number sold....................................... 501 544 639 827 893 867 780 760 797 15 Number for sale, end of period i.. 407 383 433 431 434 435 441 442 444 Price (thous. of dollars)2 Median: 16 Units sold.................................... 35.9 39.3 44.2 45.5 Al A 46.2 48.8 49.5 49.0 17 Units for sale............................. 36.2 38.9 41.6 41.9 42.1 42.9 43.3 43.9 44.4 Average: 18 Units sold.................................... 38.9 42.5 48.1 50.7 52.6 51.6 54.6 54.5 54.3 54.4 EXISTING UNITS (1-family) 19 Number sold...................................... 2,272 2,452 3,002 3,190 3,080 3,410 3,300 3,450 3,420 3,510 Price of units sold (thous. of dollars):2 20 Median............................................. 32.0 35.3 38.1 39.6 40.7 41.0 42.0 42.2 43.4 43.7 21 Average............................................ 35.8 39.0 42.2 44.0 45.1 45.5 46.5 46.8 47.7 48.0 Value of new construction 3 (millions of dollars) CONSTRUCTION 22 Total put in place.................................. 138,499 134,293 147,481 148,393 157,117 163,346 166,147 170,069 171,710 170,732 23 Private..................................................... 100,165 93,624 109,499 116,410 122,634 127,942 129,963 131,647 132,363 132,099 24 Residential.......................................... 50,377 46,472 60,519 66,785 72,378 76,209 77,976 80,159 79,624 79,832 25 Nonresidential, total........................ 49,788 47,152 48,980 49,625 50,256 51,733 51,987 51,488 52,739 52,267 Buildings: 26 Industrial.................................... 7,902 8,017 7,182 6,157 6,262 7,162 7,279 7,184 7,066 6,893 27 Commercial................................ 15,945 12,804 12,757 12,537 12,542 13,677 13,851 13,760 15,235 15,404 28 Other............................................ 5,797 5,585 6,155 6,068 6,061 5,850 6,271 6,077 6,206 6,528 29 Public utilities and other............. 20,144 20,746 22,886 24,863 25,391 25,044 24,586 24,467 24,232 23,442 30 Public....................................................... 38,333 40,669 37,982 31,983 34,483 35,403 36,184 38,423 39,348 38,633 31 Military................................................ 1,188 1,392 1,508 1,498 1,552 1,452 1,494 1,642 1,561 1,537 32 Highway.............................................. 12,066 10,861 9,756 7,191 8,416 9,153 9,052 9,533 33 Conservation and development. . . 2,740 3,256 3,722 3,344 3,871 3,675 4,013 3.609 34 Other4.................................................. 22,339 25,160 22,996 19,950 20,644 21,123 21,625 23,639 1 Not at annual rates. Note.—Census Bureau estimates for all series except (a) mobile 2 Not seasonally adjusted. homes, which are private, domestic shipments as reported by the Manu­ 3 Value of new construction data in recent periods may not be strictly factured Housing Institute and seasonally adjusted by the Census Bureau, comparable with data in prior periods due to changes by the Bureau of and (b) sales and prices of existing units, which are published by the the Census in its estimating techniques. For a description of these changes National Association of Realtors. All back and current figures are avail­ see Construction Reports (C-30-76-5), issued by the Bureau in July 1976. able from originating agency. Permit authorizations are for 14,000 4 Beginning Jan. 1977 Highway imputations are included in Other. jurisdictions reporting to the Census Bureau. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Prices A51 2.15 CONSUMER AND WHOLESALE PRICES Percentage changes based on seasonally adjusted data, except as noted. 12 months to— 3 months (at annual rate) to— 1 month to— Index level 1976 1977 1977 July 1976 1977 1977 July July (1967 Sept. Dec. Mar. June Mar. Apr. May June July = 100)1 Consumer prices 5.4 6.7 5.3 4.2 10.0 8.1 .6 .8 .6 .6 .4 182.6 3.7 5.9 3.9 3.4 10.4 7.4 .5 .8 .5 .5 .1 175.8 2.0 6.9 1.6 14.6 12.7 .6 1.5 .7 .8 .1 194.6 4.8 5.4 5.5 5.7 7.4 4.2 .4 .4 .4 .2 .1 165.6 5 Durable..................................................... 6.1 5.5 5.0 6.0 10.5 2.5 .6 .5 .2 -.1 0.0 164.3 6 Nondurable.............................................. 3.9 5.4 6.0 5.4 5.5 5.2 .3 .3 .5 .4 *3 166.6 8.5 8.1 7.5 5.1 9.8 9.4 .8 .8 .7 .5 .5 195.3 8 Rent................................................................ 5.6 5.9 5.4 5.3 6.3 6.3 .5 .7 .4 .5 .6 153.6 8.9 8.3 7.7 5.4 10.4 9.7 .8 .8 .7 .8 .8 202.8 Other groupings: 10 All items less food1.................................... 6.5 6.7 7.4 5.3 6.9 7.8 .6 .7 .6 .6 .4 179.2 11 All items less shelter1................................ 5.4 6.6 5.6 4.3 9.4 8.4 .6 .8 .5 .7 .3 180.2 12 Homeo wnership1......................................... 5.4 7.3 8.0 1.2 9.1 9.6 .6 .9 .6 .8 1.1 206.2 Wholesale prices 13 All commodities................................................ 5.0 5.7 3.5 7.1 10.2 3.6 1.1 1.1 .4 -.7 -.1 194.9 14 Farm products, and processed foods and -.1 .6 - 12.0 6.6 19.1 -2.5 2.1 2.9 .3 -3.6 -2.1 189.3 15 Farm products............................................. 1.7 -3.3 -11.9 5.8 26.0 -21.6 2.5 3.4 -2.3 -6.8 -1.8 190.5 16 Processed foods and feeds......................... -1.1 2.8 -11.8 6.5 15.6 10.8 1.9 2.5 1.8 -1.7 -2.4 187.8 6.7 7.2 8.0 7.6 7.9 5.3 .8 .6 .4 .i .5 195.8 Materials, supplies, and components of which: 18 Crude materials 2..................................... 13.8 9.8 10.6 21.6 21.9 -2.0 2.3 .3 .8 -1.6 0.0 279.2 19 Intermediate materials3......................... 6.6 7.2 8.3 7.1 8.0 4.7 .9 .6 .3 .2 .6 203.7 Finished goods, excluding foods: 20 Consumer.................................................. 5.7 6.7 7.7 5.2 8.5 6.5 .8 .7 .5 .4 .2 172.4 21 Durable................................................. 4.5 5.4 5.1 3.3 7.0 6.0 .4 .7 .4 .3 .3 151.4 6.4 7.4 9.1 6.5 9.5 7.0 1.0 .7 .5 .5 .2 186.5 6.3 6.5 4.7 9.5 5.3 6.3 .4 .6 .6 .4 .4 183.8 Memo: 24 Consumer foods............................................... -1.4 5.5 -13.1 8.4 12.7 13.8 1.1 2.5 2.1 -1.3 -.7 192.3 1 Not seasonally adjusted. 3 Excludes intermediate materials for food manufacturing and manu- 2 Excludes crude foodstuffs and feedstuffs, plant and animal fibers, factured animal feeds. oilseeds, and leaf tobacco. Source.—Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics □ September 1977 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1976 1977 Account 1974 1975 ! 1976 i Ql Q2 Q3 Q4 Ql Q2 Gross national product 1 1,412.9 1,528.8 1,706.5 1,651.2 1,691.9 1,727.3 1,755.4 1,810.8 1,869.7 By source: 2 Personal consumption expenditures.................... 889.6 980.4 1,094.0 1,056.0 1,078.5 1,102.2 1,139.0 1,172.4 1,194.0 3 Durable goods................................................... 122.0 132.9 158.9 153.3 156.7 159.3 166.3 177.0 178.6 4 Nondurable goods............................................ 376.3 409.3 442.7 430.4 437.1 444.7 458.8 466.6 474.4 5 Services............................................................... 391.3 438.2 492.3 472.4 484.6 498.2 513.9 528.8 541.1 6 Gross private domestic investment...................... 214.6 189.1 243.3 231.3 244.4 254.3 243.4 271.8 294.9 7 Fixed investment............................................... 205.7 200.6 230.0 216.8 226.1 232.8 244.3 258.0 273.2 8 Nonresidential................................................ 150.6 149.1 161.9 155.4 159.8 164.9 167.6 177.0 182.4 9 Structures.................................................... 54.5 52.9 55.8 54.7 55.8 56.0 57.0 57.9 61.0 10 Producers’ durable equipment............... 96.2 96.3 106.1 100.8 104.0 109.0 110.6 119.2 121.4 11 Residential structures.................................. 55.1 51.5 68.0 61.4 66.3 67.8 76.7 81.0 90.8 12 52.7 49.5 65.7 58.9 64.1 65.7 74.3 78.5 88.2 13 Change in business inventories..................... 8.9 -11.5 13.3 14.5 18.3 21.5 -.9 13.8 21.7 14 Nonfarm......................................................... 10.8 -15.1 14.9 15.9 20.4 22.0 1.4 14.1 22.4 15 Net exports of goods and services....................... 6.0 2.0 7.8 10.2 10.2 7.9 3.0 -8.2 -9.8 16 Exports................................................................ 137.9 147.3 162.9 153.9 160.6 168.4 168.5 170.4 178.0 17 Imports............................................................... 131.9 126.9 155.1 143.7 150.4 160.6 165.6 178.6 187.8 18 Govt, purchases of goods and services............... 302.7 338.9 361.4 353.6 358.9 363.0 370.0 374.9 390.6 19 Federal................................................................. 111.1 123.3 130.1 127.6 128.5 130.2 134.2 136.3 143.6 20 191.5 215.6 231.2 225.9 230.4 232.7 235.8 238.5 247.0 By major type of product: 21 Final sales, total.................................................... 1,404.0 1,540.3 1,693.1 1,636.7 1,673.7 1,705.8 1,756.3 1,797.0 1,848.0 22 638.6 686.2 764.2 744.6 761.7 746.0 774.7 805.9 827.1 23 247.8 258.2 303.4 285.6 301.9 313.4 312.6 334.4 341.0 24 390.8 428.0 460.9 459.0 459.7 464.1 460.6 471.5 486.1 25 Services............................................................... 626.8 699.2 782.0 751.6 770.8 791.8 813.8 833.7 855.2 26 Structures........................................................... 147.4 143.5 160.2 155.0 159.4 159.6 166.9 171.2 187.5 27 Change in business inventories.......................... 8.9 -11.5 13.3 14.5 18.3 21.5 -.9 13.8 21.7 28 Durable goods................................................... 7.1 -9.2 4.1 -2.0 7.0 10.7 .6 7.8 11.5 29 Nondurable goods............................................ 1.8 -2.2 9.3 16.6 11.2 12.4 -3.1 6.0 10.2 30 Memo: Total GNP in 1972 dollars..................... 1,217.8 1,202.1 1,274.7 1,256.0 1,271.5 1,283.7 1,287.4 1,311.0 1,330.6 National income 31 Total......................................................................... 1,136.0 1,217.0 1,364.1 1,321.0 1.353.9 1,379.6 1.402.1 1,450.2 1,505.1 32 Compensation of employees............................... 875.8 930.3 1,036.3 999.6 1.024.9 1,046.5 1.074.2 1,109.9 1,144.7 33 Wages and salaries............................................ 764.1 805.7 891.8 861.5 882.4 900.2 923.2 951.3 980.9 34 Government and Government enterprises 160.0 175.4 187.2 182.7 185.4 188.2 192.5 194.8 197.2 35 Other............................................................... 604.1 630.3 704.6 678.8 697.0 712.0 730.7 756.4 783.6 36 Supplement to wages and salaries................... 111.7 124.6 144.5 138.1 142.5 146.3 150.9 158.6 163.8 37 Employer contributions for social insurance................................................ 56.1 59.8 68.6 66.4 68.0 69.1 70.9 75.4 77.1 38 Other labor income...................................... 55.6 64.9 75.9 71.7 74.5 77.3 80.0 83.2 86.7 39 Proprietors' income1............................................. 86.4 86.0 88.0 86.9 90.4 86.2 88.7 95.1 97.0 40 Business and professional1............................. 60.9 62.8 69.4 66.9 68.8 70.0 72.0 74.3 77.3 41 Farm1.................................................................. 25.4 23.2 18.6 20.0 21.6 16.2 16.6 20.7 19.7 42 Rental income of persons2.................................. 21.4 22.3 23.3 23.0 22.9 23.3 24.1 24.5 24.9 43 Corporate profits1................................................ 83.6 99.3 128.1 126.5 129.2 133.5 123.1 125.4 139.7 44 Profits before tax3............................................ 126.9 123.5 156.9 153.5 159.2 159.9 154.8 161.7 173.4 45 Inventory valuation adjustment..................... -40.4 -12.0 -14.1 -12.4 -15.5 -11.7 -16.9 -20.6 -17.8 46 Capital consumption adjustment................... -2.9 -12.2 -14.7 -14.6 -14.6 -14.7 -14.8 -15.6 -15.9 47 Net interest............................................................. 69.0 79.1 85.0 86.5 90.1 92.0 95.3 98.9 1 With inventory valuation and capital consumption adjustments. 3 For after-tax profits, dividends, etc., see Table 1.50. 2 With capital consumption adjustments. Source.—Survey of Current Business (U.S. Dept, of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

National Income Accounts A53 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1976 1977 1974 1975 1976 Ql Q2 Q3 Q4 Ql Q2 Personal income and saving 1 Total personal income. 1.154.9 1.253.4 1.382.7 1.338.1 1.366.7 1.393.9 1.432.2 1.476.8 1.517.2 2 Wage and salary disbursements........................ 764.6 805.7 891.8 861.5 882.4 900.2 923.2 951.3 980.9 3 Commodity-producing industries.............. 274.6 275.0 308.4 298.6 306.7 310.8 317.7 328.9 345.4 4 Manufacturing........................................... 211.4 211.0 238.2 230.6 236.7 240.2 245.1 255.4 265.9 5 Distributive industries................................... 184.3 195.4 217.1 208.2 213.7 220.2 226.4 234.5 240.5 6 Service industries........................................... 145.1 159.9 179.0 172.0 176.6 180.9 186.7 193.0 197.7 7 Government and government enterprises. 160.5 175.4 187.2 182.7 185.4 188.2 192.5 194.8 197.2 8 Other labor income........................................... 55.6 64.9 75.9 71.7 74.5 77.3 80.0 83.2 86.7 9 Proprietors' income1.............. 86.2 86.0 88.0 86.9 90.4 86.2 88.7 95.1 97.0 10 Business and professional1 60.9 62.8 69.4 66.9 68.8 70.0 72.0 74.3 77.3 11 Farm1.................................. 25.4 23.2 18.6 20.0 21.6 16.2 16.6 20.7 19.7 12 Rental income of persons2. 21.4 22.3 23.3 23.0 22.9 23.3 24.1 24.5 24.9 13 Dividends.............................. 31.0 32.4 35.8 33.6 35.0 36.0 38.4 38.5 40.3 14 Personal interest income... 103.0 115.6 130.3 125.0 127.5 132.2 136.4 140.3 145.4 15 Transfer payments............................................ 140.8 176.8 192.8 190.3 188.7 194.3 198.0 203.5 203.0 16 Old-age survivors, disability, and health insurance benefits.................................. 70.1 81.4 92.9 88.1 89.3 95.8 98.4 99.9 101.8 17 Less: Personal contributions for social insurance................................................. 47.7 50.4 55.2 53.9 54.8 55.6 56.6 59.6 60.8 18 Equals: Personal income....................................... 1.154.9 1.253.4 1.382.7 1.338.1 1.366.7 1.393.9 1.432.2 1.476.8 1.517.2 19 Less: Personal tax and nontax payments. . . . 170.3 169.0 196.9 184.8 192.6 200.6 209.5 224.4 224.8 20 Equals : Disposable personal income.................. 984.6 1.084.4 1.185.8 1,153.3 1,174.1 1,193.3 1,222.6 1,252.4 1,292.5 21 Less: Personal outlays........................................ 913.0 1,004.2 1.119.9 1,080.9 1.103.8 1,128.5 1.166.3 1,201.0 1,223.9 22 Equals : Personal saving......................................... 71.7 80.2 65.9 72.4 70.3 64.8 56.3 51.4 68.5 Memo items : Per capita (1972 dollars): 23 Gross national product....................... 5,746 5.629 5,924 5,853 5,916 5,961 5,966 6,064 6,143 24 Personal consumption expenditures. 3,589 3.629 3,817 3,761 3,794 3,820 3,892 3,934 3,943 25 Disposable personal income.............. 3,973 4,014 4,137 4,107 4,130 4,135 4,177 4,202 4,268 26 Saving rate (per cent).............................. 7.3 7.4 5.6 6.3 6.0 5.4 4.6 4.1 5.3 Gross saving 209.5 259.4 272.5 276.0 275.4 277.2 261.6 262.9 291.9 28 Personal saving...................................................... 71.7 80.2 65.9 72.4 70.3 64.8 56.3 51.4 68.5 29 Undistributed corporate profits1....................... .2 16.7 27.6 29.8 28.0 31.6 20.8 22.5 30.1 30 Corporate inventory valuation adjustment---- -40.4 -12.0 -14.1 -12.4 -15.5 -11.7 -16.9 -20.6 -17.8 Capital consumption allowances: 31 Corporate........................................................... 84.6 101.7 111.8 108.7 110.4 112.9 115.2 117.6 119.4 32 Noncorporate.................................................... 53.1 60.8 67.2 65.1 66.6 68.0 69.2 71.4 73.8 33 Wage accruals less disbursements..................... 34 Government surplus, or deficit (—), national income and product accounts........................... -3.2 -64.3 -35.6 -47.1 -33.3 -32.4 -29.4 -11.5 -15.2 35 Federal.................................................................... -10.7 -70.2 -54.0 -60.3 -46.2 -53.5 -55.9 -38.8 -40.6 36 State and local....................................................... 7.6 5.9 18.4 13.3 12.9 21.1 26.5 27.3 25.4 37 Capital grants received by the United States, net........................................................................ 38 Investment................................................................... 210.1 201.0 242.5 233.1 246.5 252.8 237.5 254.7 276.0 39 Gross private domestic........................................ 214.6 189.1 243.3 231.3 244.4 254.1 243.3 271.8 294.9 40 Net foreign............................................................. -4.5 11.8 -.9 1.8 2.2 -1.5 -5.9 -17.1 -18.9 41 Statistical discrepancy.............................................. 5.8 5.9 5.5 4.2 4.5 8.0 5.3 3.3 -.7 1 With inventory valuation and capital consumption adjustments. Source.—Survey of Current Business (U.S. Dept, of Commerce). 2 With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics □ September 1977 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1976 1977 Item credits or debits 1974 1975 1976 Ql Q2 Q3 Q4 Ql 1 Merchandise exports.......................................................................... 98,306 107,088 114,700 26,998 28,379 29,603 29,720 29,476 2 Merchandise imports......................................................................... 103,673 98,043 123,917 28,324 29,914 32,387 33,292 36,456 3 Merchandise trade balance2....................................................... -5,367 9,045 -9,217 -1,326 -1,535 -2,784 -3,572 -6,980 4 Military transactions, net................................................................. -2,083 -876 366 -65 -39 235 235 82 5 Investment income, net..................................................................... 8,744 5,954 9,808 2,437 2,280 2,667 2,424 3,170 6 Other service transactions, net....................................................... 865 2,042 2,743 523 839 781 598 556 7 Balance on goods and services3...................................................... 2,160 16,164 3,699 1,569 1,545 889 -315 -3,172 8 Remittances, pensions, and other transfers............................... -1,714 -1,719 -1,878 -485 -459 -461 -473 -518 9 U.S. Govt, grants (excluding military)........................................ -5,475 -2,893 -3,146 -544 -556 -1,475 -572 -627 10 Balance on current account............................................................... -5,028 11,552 -1,324 540 530 -1,037 -1,360 -4,317 11 1,475 661 -3,785 325 -3,622 12 Change in U.S. Govt, assets, other than official reserve assets, net (increase, —).......................................................... 365 -3,463 -4,213 -723 -944 -1,405 -1,142 -895 13 Change in U.S. official reserve assets (increase, —)................. -1,434 -607 -2,530 -773 -1,578 -407 228 -388 14 Gold................................................................................................... -58 15 SDR’s................................................................................................. -172 -66 -78 -45 Va -18 -29 16 Reserve position in IMF............................................................. -1,265 -466 -2,212 -237 -798 -716 -461 -389 17 Foreign currencies.......................................................................... 3 -75 -240 -491 -794 327 718 59 18 Change in U.S. private assets abroad (increase, — ).................. -25,960 -27,478 -36,216 -9,254 -7,257 -6,597 -13,108 1,734 19 Bank-reported claims..................................................................... -19,516 -13,532 -20,904 -3,630 - 4,754 -3,372 -9,148 2,374 20 Long-term..................................................................................... -1,183 -2,357 -2,124 -289 -377 -978 -480 -541 21 Short-term.................................................................................... -18,333 -11,175 -18,780 -3,341 -4,377 -2,394 -8,668 3,815 22 Nonbank-reported claims.............................................................. -3,221 -1,447 -1,986 -738 -1,004 723 -967 -359 23 Long-term..................................................................................... -474 -432 10 -191 145 66 -10 38 24 Short-term.................................................................................... -2,747 -1,015 -1,996 -547 -1,149 657 -957 -397 25 U.S. purchase of foreign securities, net.................................. -1,854 -6,236 -8,730 -2,460 -1,357 -2,743 -2,171 -649 26 U.S. direct investments abroad, net........................................ -1,368 -6,264 -4,596 -2,427 -142 -1,205 -822 -532 27 Change in foreign official assets in the United States (increase, +)..................................................................................... 10,981 6,960 17,945 3,847 4,051 3,070 6,977 5,852 28 U.S. Treasury securities............................................................... 3,282 4,408 9,333 1,998 2,166 1,260 3,909 4,980 29 Other U.S. Govt, obligations..................................................... 902 905 566 68 316 66 116 99 30 Other U.S. Govt, liabilities4...................................................... 724 1,701 4,938 1,524 743 1,819 852 1,005 31 Other U.S. liabilities reported by U.S. banks...................... 5,818 -2,158 893 -412 135 -599 1,769 -405 32 Other foreign official assets5...................................................... 254 2,104 2,215 669 691 524 331 173 33 Change in foreign private assets in the United States (increase, -f )....................................................................................... 22,631 7,376 16,575 3,009 3,333 5,131 5,102 -2,785 34 U.S. bank-reported liabilities...................................................... 16,017 628 10,982 672 3,528 1,774 5,008 -5,249 35 Long-term..................................................................................... 9 -280 175 -105 -16 75 221 96 36 Short-term.................................................................................... 16,008 908 10,807 111 3,544 1,699 4,787 -5,345 37 U.S. nonbank-reported liabilities............................................... 1,844 240 -616 161 -238 -297 -242 -433 38 Long-term..................................................................................... -90 334 -947 -233 -162 -241 -311 -238 39 Short-term.................................................................................... 1,934 -94 331 394 -76 -56 69 -195 40 Foreign private purchases of U.S. Treasury securities, net. 697 2,590 2,783 437 -592 3,026 -88 1,191 41 Foreign purchases of other U.S. securities, net................... 378 2,503 1,250 1,030 131 68 21 879 42 Foreign direct investments in the United States, net......... 3,695 1,414 2,176 709 504 561 403 827 43 Allocation*? of SDR’s........................................................................ 44 Discrepancy........................................................................................... -1,555 5,660 9,763 3,355 1,865 1,244 3,303 799 45 Owing to seasonal adjustments................................................. 111 129 -2,622 1,780 470 46 Statistical discrepancy in recorded data before seasonal adjustment............................................................................... -1,555 5,660 9,763 2,638 1,736 3,866 1,523 329 Memo items: Changes in official assets: 47 U.S. official reserve assets (increase,—).................................. -1,434 -607 -2,530 -773 -1,578 -407 228 -388 48 Foreign official assets in the U.S. (increase,+)................... 10,257 5,259 13,007 2,323 3,308 1,251 6,125 4,847 49 Changes in OPEC official assets in the U.S. (part of line 27 above)............................................................................................ 10,841 7,092 9,324 3,482 3,263 1,774 805 3,178 50 Transfers under military grant programs (excluded from lines 1, 4, and 9 above)............................................................ 1,817 2,217 386 50 86 156 94 32 1 Seasonal factors are no longer calculated for lines 13 through 50. excludes certain military sales to Israel from exports and excludes U.S. 2 Data are on an international accounts (IA) basis. Differs from the Govt, interest payments from imports. Census basis primarily because the IA basis includes imports into the 4 Primarily associated with military sales contracts and other transac­ U.S. Virgin Islands, and it excludes military exports, which are part of tions arranged with or through foreign official agencies. Line 4. 5 Consists of investments in U.S. corporate stocks and in debt securi­ 3 Differs from the definition of “net exports of goods and services” in ties of private corporations and state and local governments. the national income and product (GNP) account. The GNP definition Note.—Data are from Bureau of Economic Analysis, Survey of Cur­ rent Business (U.S. Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trade and Reserve Assets A55 3.11 U.S. FOREIGN TRADE Millions of dollars; monthly data are seasonally adjusted. 1977 Item 1974 1975 1976 Jan. Feb. Mar. Apr. May June July 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments............................................ 97,908 107,130 114,802 9,599 9,808 10,072 9,970 10,395 10,112 10,150 2 GENERAL IMPORTS including merchandise for immediate con­ sumption plus entries into bonded 100,252 96,115 120,678 11,269 11,674 12,459 12,593 11,616 12,932 12,476 -2,344 + 11,014 -5,876 -1,670 -1,866 -2,387 -2,623 -1,221 -2,820 -2,326 Note.—Bureau of Census data reported on a free-alongside-ship exports (which are combined with other military transactions and are (f.a.s.) value basis. Before 1974 imports were reported on a customs reported separately in the “service account”). On the import side, the import value basis. For calendar year 1974 the f.a.s. import value was largest single adjustment is the addition of imports into the Virgin Islands $100.3 billion, about 0.7 per cent less than the corresponding customs (largely oil for a refinery on St. Croix), which are not included in Census import value. The international-accounts-basis data shown in Table 3.10 statistics. adjust the Census basis data for reasons of coverage and timing. On the export side, the largest adjustments are: (a) the addition of exports to Source.—U.S. Dept, of Commerce, Bureau of the Census, Summary Canada not covered in Census statistics, and (b) the exclusion of military of U.S. Export and Import Merchandise Trade (FT 900). 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1977 Type 1974 1975 1976 Feb. Mar. Apr. May June July Aug.P 1 Total......................................................... 15,883 16,226 18,747 19,122 19,120 18,868 19,195 19,156 18,927 319,055 2 Gold stock, including Exchange 11,652 11,599 11,598 11,658 11,658 11,658 11,658 11,658 11,658 11,658 3 Special Drawing Rights2..................... 2,374 2,335 2,395 2,383 2,389 2,384 2,470 2,486 2,498 2 2,483 4 Reserve position in International 1,852 2,212 4,434 4,819 4,812 4,720 4,972 4,920 4,716 34,859 5 Convertible foreign currencies........... 5 80 320 262 261 106 95 92 55 55 1 Gold held under earmark at F.R. Banks for foreign and international SDR based on a weighted average of exchange rates for the currencies accounts is not included in the gold stock of the United States; see Table of 16 member countries. The U.S. SDR holdings and reserve position in 3.24. the IMF also are valued on this basis beginning July 1974. At valuation 2 Includes allocations by the International Monetary Fund of SDR’s used prior to July 1974 (SDR1 = $1.20635) total U.S. reserve assets as follows: $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; at end of July amounted to $19,210; SDR holdings, $2,578, and reserve and $710 million on Jan. 1, 1972; plus net transactions in SDR’s. position in IMF, $4,919. 3 Beginning July 1974, the IMF adopted a technique for valuing the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics □ September 1977 3.13 SELECTED U.S. LIABILITIES TO FOREIGNERS Millions of dollars, end of period 1977 Holder, and type of liability 1974 1975 1976r Jan.1 Feb.1 Mar.r Apr. May JuneP July^ 1 Total..................... 119,164 126,552 151,356 147,857 149,241 151,871 157,020 161,224 163,089 167,520 2 Foreign countries. 115,842 120,929 142,873 139,938 141,256 143,770 149,306 152,532 154,906 161,099 3 Official institutions1............................... 76,823 80,712 91,975 93,121 93,972 96,788 99,748 101,546 103,093 106,814 4 Short-term, reported by banks in the United States.2................... 53,079 49,530 53,619 54,616 54,910 56,046 57,486 58,260 57,412 59,714 U.S. Treasury bonds and notes: 56 N M o a n rk m e a ta rk b e le ta 3 b ... l . e .. 4 ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5 6 , , 0 3 5 3 9 9 1 6 9 , , 6 9 7 7 1 6 2 1 0 1 , , 6 7 4 8 8 8 2 1 0 2 , , 6 0 2 1 2 7 2 1 0 2 , , 4 7 9 2 5 5 2 1 1 3 , , 1 7 0 7 6 2 2 1 0 4 , , 9 6 7 9 6 4 2 1 0 5 , , 9 8 5 4 0 6 2 1 0 7 , , 9 8 1 0 7 8 2 1 0 8 , , 8 8 3 5 7 6 7 Other readily marketable liabilities5............................... 2,346 4,535 5,920 5,866 5,842 5,864 6,592 6,490 6,956 7,407 Commercial banks abroad: Short-term, reported by banks in the United States2,6................. 30,106 29,516 37,329 33,384 33,116 32,816 35,356 36,239 36,677 39,330 9 Other foreigners...................................... 8,913 10,701 13,569 13,433 14,141 14,166 14,202 14,747 15,136 14,955 10 Short-term, reported by banks in the United States2.................... 8,415 10,000 12,592 12,436 13,120 13,008 12,873 13,393 13,614 13,373 11 Marketable U.S. Treasury bonds and notes3,7............................... 498 701 977 997 1,021 1,158 1,329 1,354 1,522 1,582 12 Nonmonetary international and regional organization8................... 3,322 5,623 8,483 7,919 7,985 8,101 7,714 8,692 8,183 6,421 13 Short-term, reported by banks in the United States2........... 3,171 5,292 5,450 4,625 3,918 4,282 5,287 6,557 5,727 3,835 14 Marketable U.S. Treasury bonds and notes3................. 151 331 3,033 3,294 4,067 3,819 2 All 2,135 2,456 2,586 1 Includes Bank for International Settlements. 8 Principally the International Bank for Reconstruction and Develop­ 2 Includes Treasury bills as shown in Table 3.15. ment and the Inter-American and Asian Development Banks. 3 Derived by applying reported transactions to benchmark data. 4 Excludes notes issued to foreign official nonreserve agencies. Note.—Based on Treasury Dept, data and on data reported to the 5 Includes long-term liabilities reported by banks in the United States Treasury Dept, by banks (including Federal Reserve banks) and brokers and debt securities of U.S. Federally sponsored agencies and U.S. cor­ in the United States. Data exclude the holdings of dollars of the Inter­ porations. national Monetary Fund derived from payments of the U.S. subscription, 6 Includes short-term liabilities payable in foreign currencies to com­ and from the exchange transactions and other operations of the IMF. mercial banks abroad and to other foreigners. Data also exclude U.S. Treasury letters of credit and nonnegotiable, non- 7 Includes marketable U.S. Treasury bonds and notes held by com­ interest-bearing special U.S. notes held by nonmonetary international mercial banks abroad and other foreigners. and regional organizations. 3.14 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1977 Area 1974 1975 1976 ' Jan.r Feb.r Mar.r Apr. May JuneP JulyP 1 76,823 80,712 91,975 93,121 93,972 96,788 99,748 101,546 103,093 106,814 2 Western Europe 1.............................. 44,328 45,701 45,882 45,954 46,136 47,929 48,733 50,048 52,787 55,240 3 Canada................................................ 3,662 3,132 3,406 3,197 2,844 2,684 2,752 2,798 2,699 2,653 4 Latin American republics............... 4,419 4,450 4,906 4,599 4,595 4,834 4,396 4,672 4,238 4,338 5 18,627 22,551 34,108 35,553 36,474 37,730 39,946 40,331 39,830 41,098 6 Africa................................................... 3,160 2,983 1,893 1,757 1,770 1,628 1,883 1,821 1,938 2,168 7 Other countries 2............................... 2,627 1,895 1,780 2,061 2,153 1,983 2,038 1,876 1,601 1,370 1 Includes Bank for International Settlements. Note.—Data represent breakdown by area of line 3, Table 3.13. 2 Includes countries in Oceania and Eastern Europe, and Western European dependencies in Latin America. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-reported Data A57 3.15 SHORT-TERM LIABILITIES TO FOREIGNERS Reported by Banks in the United States By Holder and by Type of Liability Millions of dollars, end of period 1977 Holder, and type of liability 1974 1975 1976r Jan.r Feb. r Mar.r Apr.r May JuneP July? 1All foreigners, excluding the International Monetary Fund................................................... 94,771 94,338 108,990 105,061 105,064 106,152 111,002 114,449 113,430 116,252 2 Payable in dollars...................................................... 94,004 93,780 108,266 104,329 104,249 105,291 110,194 113,796 112,755 115,292 Deposits: 3 Demand........................................................... 14,051 13,564 16,803 15,314 16,098 15,101 15,382 16,732 16,126 17,129 4 Time1............................................................... 9,932 10,250 11,316 11,415 11,319 11,244 11,282 11,612 12,098 11,889 5 U.S. Treasury bills and certificates2.............. 35,662 37,414 40,744 41,275 42,669 43,498 44,661 45,463 44,110 44,417 6 Other short-term liabilities3............................ 34,359 32,552 39,403 36,325 34,164 35,448 38,869 39,990 40,286 41,857 7 Payable in foreign currencies.................................. 766 558 724 732 815 861 809 653 675 960 8 Nonmonetary international and regional organizations4..................................................... 3,171 5,293 5,450 4,625 3,918 4,283 5,287 6,557 5,728 3,834 9 Payable in dollars...................................................... 3,171 5,284 5,445 4,621 3,912 4,279 5,284 6,551 5,715 3,819 Deposits: 1 11 0 D Ti e m m e a 1 n .. d ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 11 3 1 9 1 1 3 4 9 8 2 2 0 9 5 0 2 1 3 6 0 6 2 2 1 37 6 2 24 0 1 3 2 1 0 1 7 9 1 1 6 7 7 2 2 1 2 5 8 6 1 1 2 5 2 4 12 U.S. Treasury bills and certificates................ 497 2,554 2,701 2,890 2,779 2,743 2,849 2,977 2,521 2,191 13 Other short-term liabilities5............................ 2,424 2,443 2,250 1,335 680 1,093 2,109 3,234 2,811 1,352 14 Payable in foreign currencies........................... 8 5 4 6 3 3 6 13 15 15 Official institutions, banks, and other foreigners.. 91,600 89,046 103,540 100,436 101,146 101,870 105,715 107,892 107,703 112,417 16 Payable in dollars...................................................... 90,834 88,497 102,821 99,709 100,337 101,012 104,910 107,246 107,040 111,473 Deposits: 1 1 8 7 T D i e m m e a 1 n .. d ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 9 3 , , 7 9 9 1 6 2 1 1 3 0 , ,1 4 0 26 2 1 1 6 1 , , 5 1 1 1 3 2 1 11 5 , , 1 1 8 4 5 8 1 11 5 , , 0 8 8 8 1 2 1 1 1 4 , , 0 8 0 9 3 8 1 1 1 5 , , 0 2 7 6 6 2 1 1 1 6 , , 4 5 4 5 5 9 1 1 6 1 , , 0 94 3 2 4 1 1 1 7 , , 7 0 3 0 5 7 19 U.S. Treasury bills and certificates2.............. 35,165 34,860 38,042 38,386 39,889 40,755 41,812 42,485 41,589 42,226 20 Other short-term liabilities3............................ 31,961 30,109 37,153 34,990 33,484 34,355 36,760 36,756 37,475 40,505 21 Payable in foreign currencies.................................. 766 549 719 728 809 858 805 647 662 945 22Official institutions6................................................... 53,079 49,530 53,619 54,617 54,910 56,046 57,486 58,260 57,412 59,714 23 Payable in dollars...................................................... 52,952 49,530 53,619 54,617 54,910 56,046 57,486 58,260 57,412 59,714 Deposits: 24 Demand........................................................... 2,951 2,644 3,394 2,931 2,406 2,638 2,747 2,676 2,703 3,285 25 Time1............................................................... 4,167 3,423 2,321 2,488 2,408 2,266 2,335 2,441 2,506 2,401 26 U.S. Treasury bills and certificates2.............. 34,656 34,199 37,725 38,081 39,559 40,399 41,508 42,197 41,322 41,926 27 Other short-term liabilities5............................ 11,178 9,264 10,179 11,117 10,537 10,744 10,896 10,947 10,880 12,102 28 Pnvnhlp in fnrp.ivn n1rrp.nri.0s................ 127 29 Banks and other foreigners........................................ 38,520 39,515 49,921 45,820 46,236 45,824 48,230 49,362 50,291 52,704 30 Payable in dollars...................................................... 37,881 38,966 49,202 45,092 45,427 44,966 47,424 48,985 49,629 51,759 31 Banks7.................................................................. 29,467 28,966 36,610 32,656 32,307 31,958 34,551 35,592 36,015 38,386 Deposits: 32 Demand....................................................... 8,231 7,534 9,104 8,475 9,385 8,392 8,712 9,772 9,542 10,128 3 3 3 4 U. T S. i m Tr e e 1 a .. s . u ... r . y ... . b .. i . l .. l . s . .. a .. n .. d .. .. c .. e .. r .. t . i . f . i .. c . a ... t . e .. s . . . . . . . . . . . . . . . . . . . . . . . . . 1,8 2 8 3 5 2 1,8 3 5 3 6 5 2,2 1 6 1 7 9 2,0 1 6 2 2 2 1,7 1 9 0 7 2 1,7 1 4 0 2 8 1,6 1 7 0 5 4 1,8 1 0 0 8 8 2,1 1 4 0 4 0 1,8 1 8 4 6 4 35 Other short-term liabilities3........................ 19,119 19,241 25,120 21,997 21,023 21,716 24,060 23,904 24,229 26,229 36 Other foreigners................................................. 8,414 10,000 12,592 12,436 13,120 13,008 12,873 13,393 13,614 13,374 Deposits: 37 Demand....................................................... 2,730 3,248 4,015 3,741 4,091 3,868 3,803 4,111 3,788 3,595 3 39 8 U. T S. i m Tr e e 1 a . s . u '. r .. y .. .. b .. i . l . l . s .. . a .. n ... d .. . c .. e .. r .. t . i .. f . i . c .. a .. t . e .. s .. . . . . . . . . . . . . . . . . . . . . . . . . 3,7 2 4 7 4 7 4,8 3 2 2 3 5 6,5 1 2 9 4 8 6,6 1 3 8 6 3 6,8 2 7 2 7 9 6,9 2 9 4 6 8 7,0 2 6 0 5 1 7,1 1 9 8 6 0 7,2 1 9 6 2 7 7,4 1 4 5 9 6 40 Other short-term liabilities 5........................ 1,664 1,604 1,854 1,876 1,924 1,896 1,804 1,906 2,367 2,174 41 Payable in foreign currencies.................................. 639 549 719 728 809 858 805 647 j 662 945 1 Excludes negotiable time certificates of deposit, which are included 5 Principally bankers acceptances, commercial paper, and negotiable in 2 “ O In t c h l e u r d s e h s or n t o -t n e m rm ar l k ia et b a i b li l t e ie s c . e ” rtificates of indebtedness and Treasury tim 6 e F c o e r r e t i i g fi n ca t c e e s n o tr f a d l e b p a o n si k t. s and foreign central governments and their bills issued to official institutions of foreign countries. agencies, and Bank for International Settlements. 3 Includes liabilities of U.S. banks to their foreign branches, liabilities 7 Excludes central banks, which are included in “Official institutions.” of U.S. agencies and branches of foreign banks to their head offices and foreign branches of their head offices, bankers acceptances, commercial Note.—“Short-term obligations” are those payable on demand, or paper, and negotiable time certificates of deposit. having an original maturity of 1 year or less. 4 Principally the International Bank for Reconstruction and Develop­ ment, and the Inter-American and Asian Development Banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics □ September 1977 3.16 SHORT-TERM LIABILITIES TO FOREIGNERS Reported by Banks in the United States By Country Millions of dollars, end of period 1977 Area and country 1974 1975 1976r Jan.r Feb.r Mar.r Apr.r May Junep JulyP 1 94,771 94,338 108,990 105,061 105,064 106,152 111,002 114,449 113,430 116,252 2 Foreign countries......................................................... 91,600 89,046 103,540 100,436 101,146 101,870 105,715 107,892 107,703 112,417 3 48,813 43,988 46,938 43,780 43,630 44,363 45,049 48,232 49,628 51,600 4 607 754 348 373 401 499 506 409 465 455 5 2,506 2,898 2,275 2,383 2,419 2,566 2,609 2,641 2,673 2,822 6 Denmark.............................................................. 369 332 363 419 419 569 809 974 1,208 1,154 7 Finland................................................................. 266 391 422 392 370 312 306 242 258 209 8 4,287 7,733 4,875 4,701 4,610 4,817 4,748 4,920 5,090 4,745 9 9,429 4,357 5,965 5,304 5,495 4,677 4,490 4,825 4,270 4,937 10 248 284 403 421 346 302 350 409 556 573 11 2,577 1,072 3,206 2,858 2,703 2,361 2,625 3,509 4,636 5,422 12 Netherlands......................................................... 3,234 3,411 3,007 2,832 2,817 3,181 2,924 3,111 3,545 3,397 13 1,040 996 785 566 793 746 906 999 1,195 1,203 14 310 195 239 172 228 209 184 238 163 222 15 382 426 561 488 542 555 501 586 667 642 16 Sweden................................................................. 1,138 2,286 1,693 1,613 1,593 1,717 2,047 2,431 2,389 1,963 17 Switzerland . . . >................................................ 10,139 8,514 9,458 9,576 9,634 8,927 8,798 8,436 9,323 9,162 18 152 118 166 85 82 88 81 68 127 101 19 7,584 6,886 10,004 9,001 8,715 10,368 10,704 11,959 10,703 11,249 20 Yugoslavia........................................................... 183 126 188 113 121 96 111 102 115 125 21 Other Western Europe1.................................... 4,073 2,970 2,672 2,263 2,136 2,144 2,132 2,136 2,009 1,970 22 U.S.S.R................................................................. 82 40 51 47 45 50 41 66 73 88 23 Other Eastern Europe...................................... 206 200 255 171 162 178 176 172 162 160 24 Canada............................................................ 3,520 3,076 4,784 4,460 4,815 4,324 4,823 4,869 4,255 4,456 25 11,754 14,942 19,026 17,844 18,656 19,052 20,437 19,944 20,753 22,374 26 Argentina............................................................. 886 1,147 1,538 1,648 1,820 1,890 1.845 1,971 1,699 1,754 27 Bahamas............................................................... 1,054 1,827 2,750 1,974 2,434 2,184 4,001 2,744 3,772 4,780 28 1,034 1,227 1,432 1,292 1,272 1,108 1,225 1,175 1,357 1,393 29 Chile...................................................................... 276 317 335 325 302 403 329 432 393 373 30 Colombia............................................................. 305 417 1,017 1,090 1,152 1,201 1,253 1,172 1,196 1,220 31 Cuba...................................................................... 7 6 6 6 6 6 6 8 7 6 32 1,770 2,066 2,848 2,710 2,782 2,747 2,699 2,764 2,819 2,872 33 510 1,099 1,140 909 1,002 1,001 1,008 984 941 1,014 34 Peru....................................................................... 272 244 257 244 228 246 255 219 224 241 35 Uruguay............................................................... 165 172 245 250 239 241 263 251 234 242 36 Venezuela............................................................. 3,413 3,289 3,095 3,021 3,038 2,927 2,440 2,992 2,463 2,516 37 Other Latin American republics..................... 1,316 1,494 2,081 2,056 2,258 2,429 2,284 2,270 2,376 2,238 38 Netherlands Antilles2........................................ 158 129 140 151 157 162 173 215 207 158 39 Other Latin America........................................ 589 1,507 2,142 2,167 1,966 2,508 2,656 2,745 3,066 3,567 40 Asia................................................................. 21,130 21,539 28,472 29,806 29,285 29,614 30,459 29,933 28,470 30,293 41 China, People’s Republic of (Mainland).... 50 123 47 47 47 52 52 53 44 49 42 818 1,025 989 1,063 1,163 1,067 1,138 1,210 1,196 1,258 43 Hong Kong......................................................... 530 623 892 941 1,039 1,018 993 950 931 1,028 44 261 126 648 508 558 537 648 721 814 746 45 1,221 369 340 695 546 480 887 531 282 782 46 Israel..................................................................... 389 386 391 442 559 509 436 503 547 484 47 10,931 10,218 14,380 14,481 13,358 13,271 13,071 12,481 12,383 12,838 48 Korea.................................................................... 384 390 437 448 483 382 430 472 551 626 49 Philippines........................................................... 747 698 627 602 554 652 624 634 614 671 50 Thailand............................................................... 333 252 275 301 313 312 308 275 257 281 51 Middle East oil-exporting countries3............ 4,623 6,461 8,073 9,030 9,287 9,988 10,399 10,447 9,283 9,961 52 Other4................................................................... 844 867 1,372 1,246 1,377 1,346 1,473 1,655 1,568 1,568 53 Africa.............................................................. 3,551 3,373 2,300 2,207 2,413 2,285 2,587 2,753 2,671 2,992 54 Egypt.................................................................... 103 343 333 209 251 251 245 360 314 400 55 Morocco.............................................................. 38 68 88 97 105 94 91 93 81 73 56 130 169 143 211 155 136 176 184 237 264 57 Zaire..................................................................... 84 63 35 48 41 39 28 30 30 40 58 Oil-exporting countries 5................................... 2,814 2,239 1,116 1,033 1,132 964 1,151 1,205 1,145 1,251 59 Other4.................................................................. 383 491 585 610 728 802 896 881 866 965 60 Other countries................................................ 2,831 2,128 2,019 2,339 2,348 2,231 2,361 2,162 1,926 1,704 61 2,742 2,014 1,911 2,224 2,231 2,101 2,223 2,026 1,800 1,553 62 All other............................................................... 89 114 108 116 118 130 138 135 126 151 63 Nonmonetary international and regional 3,171 5,293 5,450 4,625 3,918 4,283 5,287 6,557 5,728 3,834 64 2,900 5,064 5,091 4,275 3,599 3,960 4,995 6,230 5,365 3,484 65 202 187 136 160 132 136 110 118 144 165 66 Other regional6....................................................... 69 42 223 189 187 187 182 209 218 186 For notes see bottom of p. A59. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-reported Data A 59 3.17 SHORT-TERM LIABILITIES TO FOREIGNERS Reported by Banks in the United States Supplemental “Other” Countries 1 Millions of dollars, end of period 1975 1976 1975 1977 Area and country Area and country Apr. Dec. Apr. Dec. Apr. Apr. Dec. Apr. Dec, Apr. Other Western Europe Other Asia Cyprus.......................... r58 25 Afghanistan.................. 19 41 57 55 90 Iceland......................... 40 32 26 Bangladesh.................... 50 54 44 54 Ireland, Republic of. 236 131 27 Burma............................. 49 31 34 13 28 Cambodia...................... 4 4 3 4 Other Eastern Europe 29 Jordan............................ 30 39 23 37 23 Bulgaria...................................... 19 30 Laos................................ 5 2 2 1 Czechoslovakia............................ 32 31 Lebanon......................... 180 117 132 140 133 German Democratic Republic, 17 32 Malaysia........................ 92 77 130 394 511 Hungary...................................... 13 33 Nepal............................... 22 28 34 32 35 Poland........................................... 66 34 Pakistan......................... 118 74 92 188 135 Rumania...................................... 44 35 Singapore....................... 215 256 344 280 300 36 Sri Lanka (Ceylon)... 13 13 10 22 27 Other Latin American republics 37 Vietnam........................... 70 62 66 50 50 Bolivia......................................... 93 110 117 121 135 Costa Rica.................................. 120 124 134 134 170 Other Africa Dominican Republic................ 214 169 170 274 280 38 Ethiopia (incl. Eritrea) 76 60 72 41 48 Ecuador....................................... 157 120 150 319 311 39 Ghana............................... 13 23 45 27 37 El Salvador................................ 144 171 212 176 214 40 Ivory Coast.................... 11 18 17 10 26 Guatemala.................................. 255 260 368 340 392 41 Kenya............................... 32 19 39 46 185 Haiti............................................ 34 38 48 46 68 42 Liberia............................. 33 53 63 76 95 Honduras.................................... 92 99 137 134 210 43 Southern Rhodesia.. . . 3 1 1 1 1 Jamaica....................................... 62 41 59 34 43 44 Sudan............................... 14 12 17 22 30 Nicaragua.................................. 126 133 158 113 133 45 Tanzania......................... 21 30 20 48 57 Paraguay.................................... 38 43 50 47 60 46 Tunisia............................. 23 29 34 19 15 Surinam 2................................... 13 29 17 47 Uganda............................. 38 22 50 43 Trinidad and Tobago.............. 31 131 44 167 85 48 Zambia............................. 18 78 14 35 55 Other Latin America: All Other 23 Bermuda.................. 100 170 197 177 199 49 New Zealand.................. 36 75 24 British West Indies. 627 1,311 2,284 1,874 2,377 1 Represents a partial breakdown of the amounts shown in the “Other” 2 Surinam included with Netherlands Antilles until January 1976, categories on Table 3.16. 3.18 LONG-TERM LIABILITIES TO FOREIGNERS Reported by Banks in the United States Millions of dollars, end of period 1977 Holder, and area or country 1974 1975 1976' Jan.' Feb.' Mar.r Apr.r May June? July** 1Total.............................................................................. 1,285 1,812 2,427 2,361 2,307 2,300 2,505 2,214 2,365 2,332 2 Nonmonetary international and regional 822 415 264 263 258 267 250 261 274 269 3 Foreign countries......................................................... 464 1,397 2,163 2,098 2,049 2,033 2,256 1,953 2,091 2,064 4 Official institutions, including central banks. .. 124 931 1,337 1,237 1,192 1,163 1,358 1,069 1,130 1,196 5 261 366 621 637 627 648 631 615 650 538 6 Other foreigners..................................................... 79 100 204 224 230 222 267 270 311 329 Area or country: 7 226 330 570 589 580 571 583 579 627 634 8 146 214 346 346 296 354 304 297 312 307 9 59 66 124 135 122 103 131 133 147 162 10 Canada...................................................................... 19 23 29 31 29 37 35 34 35 33 11 Latin America......................................................... 115 140 230 244 267 263 264 254 280 287 12 Middle East oil-exporting countries1................. 94 894 1,236 1,161 1,104 1,091 1,304 1,015 1,075 1,085 13 7 8 96 67 67 67 68 69 68 18 14 African oil-exporting countries3......................... * * * * * * * * * * 15 1 1 * 1 1 2 2 2 6 6 16 * * 1 4 1 1 1 1 1 1 1 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, 4 Includes African oil-exporting countries until December 1974. and United Arab Emirates (Trucial States). 2 Includes Middle East oil-exporting countries until December 1974. Note.—Long-term obligations are those having an original maturity 3 Comprises Algeria, Gabon, Libya, and Nigeria. of more than 1 year. NOTES TO TABLE 3.16: 1 Includes Bank for International Settlements. 4 Includes oil-exporting countries until December 1974. 2 Surinam included with Netherlands Antilles until January 1976. 5 Comprises Algeria, Gabon, Libya, and Nigeria. 3 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, 6 Asian, African, and European regional organizations, except BIS, and United Arab Emirates (Trucial States). which is included in “Other Western Europe.” Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics □ September 1977 3.19 SHORT-TERM CLAIMS ON FOREIGNERS Reported by Banks in the United States By Country Millions of dollars, end of period 1977 Area and country 1974 1975 1976r Jan.r Feb.r Mar. r Apr. May^ Juner July23 1 39,056 50,231 68,908 63,699 63,191 65,156 65,874 68,160 70,554 68,237 2 Foreign countries......................................................... 39,055 50,229 68,903 63,692 63,186 65,150 65,869 68,156 70,541 68,227 6,255 8,987 12,122 10,498 10,695 10,896 12,033 12,913 13,742 12,677 4 21 15 44 41 42 58 63 43 53 63 5 384 352 662 554 611 570 470 589 759 505 6 46 49 85 72 64 67 84 84 83 86 7 122 128 139 137 131 141 126 130 113 101 8 673 1,471 1,445 1,246 1,372 1,337 1,511 1,546 1,457 1,447 9 589 416 517 466 623 535 550 503 575 636 10 64 49 79 57 85 54 70 65 51 66 11 345 370 929 875 802 870 946 979 875 971 12 348 300 304 246 510 252 385 362 480 471 13 119 71 98 124 139 133 142 148 124 121 14 20 16 65 81 90 98 90 100 97 110 15 196 249 373 303 315 291 363 302 284 319 16 180 167 180 112 85 77 116 79 101 153 17 335 237 485 544 530 496 496 473 484 488 18 15 86 176 199 207 274 291 322 333 333 19 United Kingdom.................................................... 2,580 4,718 6,179 5,034 4,658 5,230 5,939 6,803 7,458 6,458 20 Yugoslavia............................................................... 22 38 41 56 60 37 31 55 58 49 21 Other Western Europe.......................................... 22 27 52 53 60 56 51 40 51 42 22 U.S.S.R..................................................................... 46 103 99 82 95 104 108 82 90 88 23 131 108 171 218 215 218 203 209 216 169 24 2,776 2,817 3,049 3,012 3,461 3,737 3,701 3,554 3,607 3,727 25 12,377 20,532 34,039 31,363 31,391 32,017 31,789 32,560 33,432 32,157 26 720 1,203 964 938 867 914 873 886 906 842 27 Bahamas................................................................... 3,405 7,570 15,336 13,848 14,099 15,431 14,157 15,127 16,074 13,835 28 Brazil......................................................................... 1,418 2,221 3,322 3,400 3,089 2,948 3,186 3,061 3,030 2,979 29 Chile......................................................................... 290 360 387 362 371 357 420 362 349 373 30 713 689 586 596 598 544 565 505 495 513 31 14 13 13 13 13 13 13 13 13 13 32 1,972 2,80'. 3,432 3,375 3,333 3,295 3,302 3,249 3,207 3,469 33 505 1,052 1,026 764 869 849 753 840 905 1,278 34 518 583 704 747 748 733 756 741 797 796 35 Uruguay................................................................... 63 51 38 41 39 39 35 36 32 38 36 Venezuela................................................................. 704 1,086 1,564 1,303 1,265 1,241 1,197 1,359 1,348 1,419 37 Other Latin American republics......................... 852 967 1,125 1,115 1,108 1,132 1,079 1,176 1,144 1,181 38 Netherlands Antilles1............................................ 62 49 40 45 41 41 54 36 67 64 39 1,142 1,885 5,503 4,817 4,953 4,482 5,401 5,170 5,065 5,356 40 16,226 16,057 17,672 16,691 15,442 16,118 15,760 16,606 16,979 16,999 41 China, People’s Republic of (Mainland)......... 4 22 3 4 30 5 3 15 54 13 42 China, Republic of (Taiwan)............................... 500 736 991 1,024 1,086 1,124 1,099 1,221 1,235 1,275 43 223 258 271 229 265 317 337 298 337 357 44 14 21 41 28 23 32 24 34 39 25 45 157 102 76 54 55 53 41 39 72 65 46 Israel......................................................................... 255 491 551 341 334 328 287 280 334 311 47 12,518 10,776 10,997 10,608 9,471 9,486 9,397 9,591 9,936 9,694 48 Korea........................................................................ 955 1,561 1,714 1,698 1,562 1,736 1,807 1,912 1,861 1,959 49 372 384 559 592 479 463 490 498 418 372 50 458 499 422 421 446 491 468 519 558 584 51 Middle East oil-exporting countries2................ 330 524 1,312 982 1,040 1,389 1,170 1,469 1,275 1,476 52 Other3....................................................................... 441 684 735 708 651 693 638 730 860 866 53 Africa............................................................................ 855 1,228 1,481 1,522 1,480 1,603 1,572 1,559 1,773 1,658 54 Egypt......................................................................... 111 101 127 151 126 149 146 152 141 158 55 18 9 13 19 13 26 35 34 36 46 56 329 545 763 798 797 792 783 778 810 821 57 98 34 29 16 11 10 8 7 9 8 58 115 231 253 235 246 343 291 243 422 290 59 185 308 296 303 286 283 309 344 355 333 60 Other countries............................................................ 565 609 540 606 717 779 1,013 963 1,009 1,010 61 466 535 441 500 592 663 894 846 877 861 62 99 73 99 105 125 116 119 117 132 150 63 Nonmonetary international and regional * 1 5 7 5 6 5 4 13 10 ! 1 Includes Surinam until January 1976. 3 Includes oil-exporting countries until December 1974. 2 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, 4 Comprises Algeria, Gabon, Libya, and Nigeria, and United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-reported Data A61 3.20 SHORT-TERM CLAIMS ON FOREIGNERS Reported by Banks in the United States By Type of Claim Millions of dollars, end of period 1977 Type 1974 1975 1976' Jan.' Feb.' Mar.' Apr. May June? JulyP 1Total.............................................................................. 39,056 50,231 68,908 63,699 63,191 65,156 65,874 68,160 70,554 68,237 2 Payable in dollars....................................................... 37,859 '48,888 67,263 61,967 61,232 63,259 64,188 66,396 68,775 66,574 3 Loans, total............................................................. 11,287 '13,200 18,141 15,928 15,989 15,766 16,396 16,647 16,105 17,564 4 Official institutions, including central banks. 381 613 1,448 1,256 943 784 741 967 986 852 5 Banks, excluding central banks...................... 7,332 7,665 11,142 9,409 9,755 9,740 10,550 10,638 10,013 11,482 6 All other, including nonmonetary interna­ tional and regional organizations............... 3,574 '4,921 5,552 5,263 5,291 5,241 5,105 5,041 5,105 5,230 7 Collections outstanding........................................ 5,637 5,467 5,756 5,833 5,868 6,190 6,316 6,317 6,414 6,350 8 Acceptances made for accounts of foreigners.. . 11,237 11,147 12,358 12,047 12,009 12,790 12,976 13,045 13,166 13,390 9 Other claims1.......................................................... 9,694 '19,075 31,007 28,159 27,367 28,513 28,499 30,387 33,091 29,270 10 Payable in foreign currencies.................................... 1,196 '1,342 1,645 1,732 1,959 1,897 1,686 1,764 1,779 1,663 11 Deposits with foreigners....................................... 669 656 1,063 1,126 1,091 1,100 918 864 862 836 12 Foreign government securities, commercial and finance paper.............................................. 289 '314 89 145 272 323 332 377 302 277 13 Other claims............................................................ 238 372 493 460 596 474 436 522 614 550 1 Includes claims of U.S. banks on their foreign branches and claims made to, and acceptances made for, foreigners; drafts drawn against of U.S. agencies and branches of foreign banks on their head offices and foreigners, where collection is being made by banks and bankers for foreign branches of their head offices. their own account or for account of their customers in the United States; and foreign currency balances held abroad by banks and bankers and Note.—Short-term claims are principally the following items payable their customers in the United States. Excludes foreign currencies held on demand or with a contractual maturity of not more than 1 year: loans by U.S. monetary authorities. 3.21 LONG-TERM CLAIMS ON FOREIGNERS Reported by Banks in the United States Millions of dollars, end of period 1977 Type, and area or country 1974 1975 1976' Jan.' Feb.' Mar.' Apr. May June? July*> 1Total.............................................................................. 7,179 9,536 11,898 11,919 12,065 12,204 12,458 12,294 12,232 12,271 By type: 2 Payable in dollars................................................... 7,099 9,419 11,750 11,735 11,855 12,015 12,257 12,091 12,032 12,069 3 Loans, total......................................................... 6,490 8,316 10,097 10,119 10,329 10,411 10,534 10,399 10,339 10,366 4 Official institutions, including central banks 1,324 1,351 1,407 1,404 1,531 1,625 1,647 1,642 1,645 1,671 5 Banks, excluding central banks.................. 929 1,567 2,232 2,184 2,231 2,194 2,193 2,273 2,245 2,228 6 All other, including nonmonetary interna­ tional and regional organizations.......... 4,237 5,399 6,458 6,530 6,567 6,591 6,693 6,484 6,449 6,467 7 Other long-term claims......................................... 609 1,103 1,653 1,616 1,526 1,604 1,723 1,693 1,693 1,703 8 Payable in foreign currencies................................ 80 116 148 184 211 190 201 202 200 202 By area or country: 9 Europe...................................................................... 1,908 2,704 3,314 3,377 3,444 3,616 3,698 3,650 3,666 3,606 10 Canada..................................................................... 501 555 637 569 587 566 558 501 483 485 11 Latin America......................................................... 2,614 3,468 4,870 4,923 4,966 4,911 4,990 5,042 5,079 5,104 12 Asia............................................................................ 1,619 1,795 1,904 1,860 1,874 1,896 1,933 1,884 1,830 1,865 13 Japan.................................................................... 258 296 382 382 367 417 416 420 409 420 14 Middle East oil-exporting countries i............ 384 220 146 123 133 152 149 149 151 156 15 Other Asia2......................................................... 977 1,279 1,376 1,354 1,374 1,327 1,368 1,316 1,271 1,288 16 Africa........................................................................ 366 747 890 856 875 890 953 898 860 857 17 Oil-exporting countries3................................... 62 151 271 209 210 211 228 213 213 191 18 Other4................................................................... 305 596 619 647 665 678 725 685 647 666 19 All other countries 5............................................... 171 267 282 333 319 327 327 319 313 353 1 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, 3 Comprises Algeria, Gabon, Libya, and Nigeria. and United Arab Emirates (Trucial States). 4 Includes oil-exporting countries until December 1974. 2 Includes Middle East oil-exporting countries until December 1974. 5 Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 62 International Statistics o September 1977 3.22 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1976 1977 Asset account 1973 1974 1975 Dec. r Jan. r Feb. r Mar.r Apr.r May June33 All foreign countries 1Total, all currencies.............................. 121,866 151,905 176,493 219,476 212,427 215,934 223,239 223,014 229,542 236,352 2 5,091 6,900 6,743 7,999 6,529 7,031 7,267 8,830 7,359 7,442 3 Parent bank.................................... 1,886 4,464 3,665 4,435 2,966 3,725 3,622 5,432 3,928 3,612 4 Other................................................ 3,205 2,435 3,078 3,564 3,563 3,306 3,645 3,398 3,430 3,830 5 Claims on foreigners........................... 111,974 138,712 163,391 204,433 198,285 201,466 208,552 207,211 214,786 221,496 6 Other branches of parent bank.. 19,177 27,559 34,508 45,894 46,086 47,767 48,645 47,826 49,489 52,375 7 Other banks.................................... 56,368 60,283 69,206 83,765 77,415 77,923 81,668 79,756 83,912 86,753 8 Official institutions....................... 2,693 4,077 5,792 10,609 10,837 11,190 11,768 12,400 12,728 13,197 9 Nonbank foreigners..................... 33,736 46,793 53,886 64,164 63,947 64,587 66,471 67,230 68,657 69,171 10 Other assets........................................ 4,802 6,294 6,359 7,045 7,613 7,437 7,421 6,973 7,397 7,414 11 Total payable in U.S. dollars.............. 79,445 105,969 132,901 167,751 163,028 165,472 172,360 171,926 176,603 182,437 12 Claims on United States.................... 4,599 6,603 6,408 7,705 6,250 6,743 6,868 8,456 6,949 7,026 13 Parent bank.................................... 1,848 4,428 3,628 4,375 2,927 3,680 3,574 5,388 3,903 3,590 14 Other................................................ 2,751 2,175 2,780 3,330 3,323 3,063 3,293 3,068 3,047 3,435 15 Claims on foreigners........................... 73,018 96,209 123,496 156,842 152,866 155,106 161,966 160,167 166,162 172,010 16 Other branches of parent bank.. 12,799 19,688 28,478 37,848 38,362 39,822 40,922 39,960 41,373 43,919 17 Other banks.................................... 39,527 45,067 55,319 66,331 60,816 60,909 64,591 63,037 66,297 68,687 18 Official institutions....................... 1,777 3,289 4,864 9,018 9,469 9,854 10,470 11,056 11,364 11,891 19 Nonbank foreigners..................... 18,915 28,164 34,835 43,645 44,219 44,521 45,983 46,113 47,128 47,513 20 Other assets........................................ 1,828 3,157 2,997 3,204 3,912 3,623 3,527 3,303 3,492 3,401 United Kingdom 21 Total, all currencies............................... 61,732 69,804 74,883 81,466 76,482 78,708 81,268 80,150 83,178 84,734 22 Claims on United States.................... 1,789 3,248 2,392 3,354 2,262 1,772 2,311 2,541 2,714 2,450 23 Parent bank.................................... 738 2,472 1,449 2,376 1,377 1,011 1,302 1,698 1,850 1,553 24 Other................................................ 1,051 lie 943 978 885 761 1,009 843 863 897 25 Claims of foreigners............................ 57,761 64,111 70,331 75,859 71,995 74,713 76,865 75,559 78,333 80,087 26 Other branches of parent bank.. 8,773 12,724 17,557 19,753 19,483 21,450 21,115 21,733 21,122 22,104 27 Other banks.................................... 34,442 32,701 35,904 38,089 34,827 35,517 37,074 35,559 38,635 39,174 28 Official institutions....................... 735 788 881 1,274 1,377 1,615 1,606 1,611 1,631 1,764 29 Nonbank foreigners..................... 13,811 17,898 15,990 16,743 16,309 16,130 17,070 16,656 16,945 17,045 30 Other assets........................................ 2,183 2,445 2,159 2,253 2,225 2,224 2,092 2,050 2,131 2,197 31 Total payable in U.S. dollars.............. 40,323 49,211 57,361 61,587 57,758 60,038 62,353 61,179 63,481 64,841 32 Claims on United States.................... 1,642 3,146 2,273 3,275 2,185 1,684 2,173 2,430 2,590 2,338 33 Parent bank.................................... 730 2,468 1,445 2,374 1,372 1,008 1,297 1,690 1,842 1,547 34 Other................................................ 912 678 828 902 813 676 876 740 748 791 35 Claims on foreigners........................... 37,817 44,694 54,121 57,488 54,735 57,492 59,342 57,894 60,030 61,582 36 Other branches of parent bank.. 6,509 10,265 15,645 17,249 17,183 19,114 18,712 19,256 18,642 19,519 37 Other banks.................................... 23,389 23,716 28,224 28,983 26,184 26,767 28,352 26,917 29,498 29,949 38 Official institutions....................... 510 610 648 846 1,110 1,340 1,310 1,297 1,306 1,437 39 7,409 10,102 9,604 10,410 10,258 10,271 10,968 10,424 10,584 10,676 40 Other assets........................................ 865 1,372 967 824 838 862 839 855 861 922 Bahamas and Caymans 41 Total, all currencies.............................. 23,771 31,733 45,203 66,774 66,445 66,100 69,526 70,950 71,540 74,853 42 Claims on United States.................... 2,210 2,464 3,229 3,506 3,158 3,687 3,409 4,996 3,540 3,966 43 Parent bank.................................... 317 1,081 1,477 1,141 778 1,384 1,037 2,703 1,251 1,394 44 Other................................................ 1,893 1,383 1,752 2,365 2,381 2,303 2,372 2,293 2,290 2,572 45 Claims on foreigners............................ 21,041 28,453 41,040 62,050 61,539 60,999 64,783 64,654 66,581 69,532 46 Other branches of parent bank.. 1,928 3,478 5,411 8,144 8,463 7,815 9,060 8,095 8,703 9,638 47 Other banks.................................... 9,895 11,354 16,298 25,354 23,836 23,435 25,339 25,234 25,588 27,344 48 Official institutions....................... 1,151 2,022 3,576 7,101 7,004 7,225 7,495 7,784 8,062 8,348 49 Nonbank foreigners..................... 8,068 11,599 15,756 21,451 22,236 22,523 22,890 23,540 24,228 24,202 50 Other assets........................................ 520 815 933 1,217 1,748 1,413 1,333 1,300 1,419 1,356 51 Total payable in U.S. dollars.............. 21,937 28,726 41,887 62,705 62,232 61,571 64,946 66,366 66,550 69,933 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overseas Branches A63 3.22 Continued 1976 1977 Liability account 1973 1974 1975 Dec. r Jan.r Feb.r Mar. r Apr.r May June** All foreign countries 52 Total, all currencies............................. 121,866 151,905 176,493 219,476 212,427 215,934 223,239 223,014 229,542 236,352 53 To United States............................. 5,610 11,982 20,221 32,837 30,379 30,482 34,420 33,082 34,768 37,232 54 Parent bank................................. 1,642 5,809 12,165 19,895 18,696 19,229 21,017 18,312 20,497 22,821 55 Other.............................................. 3,968 6,173 8,057 12,942 11,683 11,253 13,403 14,770 14,270 14,411 56 To foreigners.................................... 111,615 132,990 149,815 179,893 175,155 178,570 181,926 182,966 187,537 191,707 57 Other branches of parent bank. 18,213 26,941 34,111 44,310 44,289 46,328 47,444 46,175 48,032 50,292 58 Other banks.................................. 65,389 65,675 72,259 83,878 79,512 78,320 80,046 82,668 84,143 84,173 59 Official institutions..................... 10,330 20,185 22,773 25,829 25,771 26,631 26,418 26,125 27,298 28,167 60 Nonbank foreigners................... 17,683 20,189 20,672 25,877 25,583 27,291 28,018 27,998 28,065 29,075 61 Other liabilities................................ 4,641 6,933 6,456 6,747 6,894 6,882 6,893 6,965 7,237 7,414 62 Total payable in U.S. dollars............ 80,374 107,890 135,907 173,127 167,591 170,544 177,255 177,062 181,798 187,552 63 To United States............................. 5,027 11,437 19,503 32,050 29,443 29,568 33,477 32,118 33,882 36,174 64 Parent bank.................................. 1,411 5,641 11,939 19,681 18,447 18,983 20,764 18,067 20,241 22,378 65 Other.............................................. 3,550 5,795 7,564 12,369 10,996 10,585 12,713 14,051 13,640 13,797 66 To foreigners.................................... 73,189 92,503 112,879 137,550 134,375 137,313 140,179 141,220 144,098 147,211 67 Other branches of parent bank. 12,554 19,330 28,217 37,038 37,707 39,373 40,474 39,096 40,572 42,740 68 Other banks.................................. 43,641 43,656 51,583 60,617 56,791 56,116 57,770 60,513 60,960 60,207 69 Official institutions..................... 7,491 17,444 19,982 22,878 23,038 23,599 23,630 23,216 24,324 25,219 70 Nonbank foreigners................... 9,502 12,072 13,097 17,017 16,838 18,225 18,305 18,395 18,242 19,045 71 Other liabilities................................ 2,158 3,951 3,526 3,527 3,773 3,664 3,600 3,724 3,819 4,167 United Kingdom 72 Total, all currencies............................. 61,732 69,804 74,883 81,466 76,482 78,708 81,268 80,150 83,178 84,734 73 To United States.............................. 2,431 3,978 5,646 5,997 5,101 4,871 6,365 6,272 5,845 6,894 74 Parent bank.................................. 136 510 2,122 1,198 1,211 1,191 1,537 1,515 1,460 2,150 75 Other.............................................. 2,295 3,468 3,523 4,798 3,889 3,681 4,828 4,756 4,386 4,743 76 To foreigners.................................... 57,311 63,409 67,240 73,228 69,202 71,523 72,665 71,787 75,145 75,683 77 Other branches of parent bank. 3,944 4,762 6,494 7,092 7,663 7,981 8,252 7,764 8,570 8,937 78 Other banks.................................. 34,979 32,040 32,964 36,259 32,336 32,097 33,830 33,747 35,932 34,959 79 Official institutions..................... 8,140 15,258 16,553 17,273 16,975 18,204 17,711 17,260 17,538 18,086 80 Nonbank foreigners................... 10,248 11,349 11,229 12,605 12,228 13,242 12,872 13,016 13,106 13,701 81 Other liabilities................................ 1,990 2,418 1,997 2,241 2,179 2,313 2,238 2,091 2,187 2,157 82 Total payable in U.S. dollars............ 39,689 49,666 57,820 63,174 59,009 61,331 63,346 62,373 64,343 65,735 83 To United States.............................. 2,173 3,744 5,415 5,849 4,876 4,704 6,189 6,108 5,688 6,679 84 Parent bank.................................. 113 484 2,083 1,182 1,195 1,166 1,506 1,498 1,438 2,083 85 Other.............................................. 2,060 3,261 3,332 4,666 3,681 3,538 4,683 4,610 4,250 4,596 86 To foreigners.................................... 36,646 44,594 51,447 56,372 53,230 55,675 56,283 55,390 57,720 58,136 87 Other branches of parent bank. 2,519 3,256 5,442 5,874 6,573 6,906 7,188 6,563 7,333 7,661 88 Other banks.................................. 22,051 20,526 23,330 25,527 22,137 22,211 23,841 23,815 25,171 24,134 89 Official institutions..................... 5,923 13,225 14,498 15,423 15,184 16,345 15,817 15,394 15,674 16,301 90 Nonbank foreigners................... 6,152 7,587 8,176 9,547 9,336 10,213 9,437 9,617 9,541 10,040 91 Other liabilities................................ 870 1,328 959 953 903 953 874 875 936 920 Bahamas and Caymans 92 Total, all currencies............................. 23,771 31,733 45,203 66,774 66,445 66,100 69,526 70,950 71,540 74,853 93 To United States.............................. 1,573 4,815 11,147 22,723 21,656 21,638 24,277 23,060 25,137 26,625 94 Parent bank.................................. 307 2,636 7,628 16,163 15,157 15,207 17,110 14,514 16,426 18,366 95 Other.............................................. 1,266 2,180 3,520 6,560 6,499 6,431 7,167 8,545 8,710 8,259 96 To foreigners.................................... 21,747 26,140 32,949 42,897 43,376 43,166 43,863 46,641 45,054 46,476 97 Other branches of parent bank. 5,508 7,702 10,569 13,801 13,551 14,406 14,714 14,123 13,894 14,662 98 Other banks.................................. 14,071 14,050 16,825 21,758 22,256 21,006 20,475 23,780 22,326 22,668 99 Official institutions..................... 492 2,377 3,308 3,573 3,607 3,314 3,520 3,892 4,100 4,186 100 Nonbank foreigners................... 1,676 2,011 2,248 3,765 3,963 4,439 5,155 4,845 4,734 4,960 101 Other liabilities................................ 451 778 1,106 1,154 1,413 1,295 1,385 1,249 1,350 1,751 102 Total payable in U.S. dollars............ 22,328 28,840 42,197 63,417 62,818 62,382 65,755 67,168 67,518 70,816 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics □ September 1977 3.23 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions Millions of dollars 1977 1977 Country or area 1975 1976 Jan.— JulyP Feb. Mar. Apr. May June** Julyp Holdings (end of period) 4 1 Estimated total............................................ 7,703 15,798 16,307 17,813 18,748 18,450 19,335 21,787 23,024 2 Foreign countries........................................ 7,372 12,765 13,014 13,746 14,929 16,024 17,200 19,331 20,439 3 Europe............................................... 1,085 2,330 2,300 2,504 2,870 3,505 3,624 4,862 5,815 4 Belgium-Luxembourg......................... 13 14 14 14 14 14 16 18 19 5 6 N G e e t r h m e a r n la y n .. d ... s .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 1 5 6 2 7 8 6 8 4 2 7 8 6 7 4 7 3 8 6 9 7 8 3 9 88 4 1,1 3 1 8 2 8 1,1 4 1 18 2 1,2 4 6 9 2 2 1,2 5 6 0 6 3 7 Sweden.................................................... 276 191 191 188 188 188 148 149 149 8 Switzerland............................................ 55 261 271 324 317 397 429 439 485 9 United Kingdom................................. 363 485 476 512 713 1,069 1,181 2,190 3,068 10 Other Western Europe...................... 143 323 293 306 354 332 316 312 322 11 Eastern Europe.................................... 4 4 4 4 4 4 4 4 4 12 Canada........................................................ 395 256 256 261 270 268 271 279 283 13 Latin America........................................... 200 312 314 295 405 448 All 481 481 14 Venezuela............................................... 4 149 149 149 258 193 193 193 193 15 Other Latin America republics.... 29 35 21 21 26 21 21 18 18 16 Netherlands Antilles 1....................... 161 118 125 121 120 119 113 114 114 17 Asia.............................................................. 5,370 9,323 9,637 10,330 11,068 11,476 12,528 13,407 13,567 18 Japan....................................................... 3,271 2,687 2,682 2,806 3,123 3,174 3,773 4,290 4,314 19 Africa.......................................................... 321 543 506 356 305 305 279 279 279 20 All other................................................. * * * * 11 23 27 23 13 21 Nonmonetary international and regional organizations...................................... 331 3,033 3,294 4,068 3,819 2,426 2,135 2,456 2,586 22 International............................................. 322 2,905 3,180 3,948 3,700 2,318 2,032 2,353 2,440 23 Latin American regional....................... 9 128 114 119 118 108 103 103 146 Transactions (net ]purchases,, or sales (— ), during period) 24 Total............................................................. 1,994 8,095 7,227 510 1,505 936 -298 885 2,451 1,238 25 Foreign countries....................................... 1,814 5,393 7,674 249 732 1,184 1,094 1,176 2,131 1,108 26 Official institutions.................................. 1,612 5,116 7,033 229 709 1,047 922 1,152 1,927 1,048 27 Other foreign............................................. 202 276 640 21 23 137 172 24 203 60 28 Nonmonetary international and regional organizations....................................... 180 2,702 -447 261 773 -248 -1,392 -291 321 130 Memo: Oil-exporting countries 29 Middle East 2........................................... 1,797 3,887 2,280 254 505 408 338 392 397 -14 30 Africa 3........................................................ 170 221 -264 -37 -150 -51 -26 1 Includes Surinam until January 1976. 4 Estimated official and private holdings of marketable U.S. Treasury 2 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, securities with an original maturity of more than 1 year. Data are based and United Arab Emirates (Trucial States). Data not available until 1975. on a benchmark survey of holdings as of Jan. 31, 1971, and monthly 3 Comprises Algeria, Gabon, Libya, and Nigeria. Data not available transactions reports. Excludes nonmarketable U.S. Treasury bonds and until 1975. notes held by official institutions of foreign countries. 3.24 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS Millions of dollars, end of period 1977 Assets 1974 1975 1976 Feb. Mar. Apr. May June July Aug. 1 Deposits....................................................................... 418 353 352 361 349 305 436 379 468 534 Assets held in custody: 2 U.S. Treasury securities1...................................... 55,600 60,019 66,532 68,653 71,435 73,261 73,964 74,098 75,443 75,976 3 Earmarked gold2.................................................... 16,838 16,745 16,414 16,304 16,271 16,282 16,221 16,184 16,179 16,117 1 Marketable U.S. Treasury bills, certificates of indebtedness, notes, Note.—Excludes deposits and U.S. Treasury securities held for inter­ and bonds; and nonmarketable U.S. Treasury securities payable in dollars national and regional organizations. Earmarked gold is gold held for and in foreign currencies. foreign and international accounts and is not included in the gold stock 2 The value of earmarked gold increased because of the changes in of the United States. par value of the U.S. dollar in May 1972 and in October 1973. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Investment transactions A65 3.25 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1977 1977 Transactions, and area or country 1975 1976r Jan.- Jan. r Feb. Mar. Apr. May June?5 Julyp JulyP U.S. corporate securities ! Stocks 1 Foreign purchases............................................ 15,347 18,227 8,599 1,425 1,162 1,101 1,135 1,207 1,196 1,373 2 Foreign sales........................................................... 10,678 15,474 7,142 1,137 1,036 980 913 978 936 1,162 3 Net purchases, or sales ( —).................................. 4,669 2,752 1,457 288 126 121 222 229 260 211 4 Foreign countries.................................................... 4,651 2,740 1,436 290 124 116 222 209 266 209 5 Europe................................................................. 2,491 336 642 130 47 72 105 128 79 81 6 France............................................................... 262 256 9 27 -10 4 -6 -3 21 -24 7 Germany......................................................... 251 68 97 1 -7 -4 38 37 12 20 8 Netherlands.................................................... 359 -199 18 24 -5 -10 -7 27 * -10 9 Switzerland...................................................... 899 -100 119 39 23 30 38 4 -20 5 10 United Kingdom............................................ 594 340 422 39 36 55 47 67 69 109 11 Canada................................................................. 361 325 18 8 30 9 -5 -33 -3 12 12 Latin America.................................................... -7 155 91 4 14 14 21 17 17 4 13 Middle East1....................................................... 1,640 1,803 635 100 50 17 97 92 160 119 14 Other Asia2........................................................ 142 117 45 46 -17 3 5 4 10 -6 15 Africa................................................................... 10 7 * * * * * * * 16 Other countries.................................................. 15 -4 6 2 1 1 -1 1 2 * 17 Nonmonetary international and regional organizations................................................... 18 12 20 -2 1 5 1 20 -7 2 Bonds3 18 Foreign purchases.................................................. 5,408 5,529 4,475 400 534 348 856 609 976 752 19 Foreign sales........................................................... 4,642 4,322 2,000 322 214 208 245 332 394 285 20 Net purchases, or sales ( —)................................. 766 1,207 2,475 78 320 140 611 277 582 467 21 Foreign countries..................................................... 1,795 1,248 2,456 73 329 112 566 308 569 499 22 Europe.................................................................. 113 92 1,109 8 281 75 100 99 314 232 23 France............................................................... 82 40 -24 -5 -3 -2 -5 -7 -3 1 24 Germany.......................................................... -6 -50 33 -4 4 * -4 13 12 12 25 Netherlands.................................................... -8 -29 30 2 -2 -3 -7 -28 57 11 26 Switzerland..................................................... 117 158 145 15 32 31 -4 19 17 35 27 United Kingdom............................................ -52 23 904 8 225 43 106 102 223 197 28 Canada................................................................. 128 96 107 11 55 -3 6 1 7 30 29 Latin America.................................................... 31 94 21 -5 8 1 3 * 2 12 30 Middle East1....................................................... 1,553 1,179 1,134 59 -7 48 454 192 235 153 31 Other Asia2......................................................... -35 -165 90 1 -8 -6 4 17 10 72 32 Africa.................................................................... 5 -25 -2 * * -2 * * * * 33 Other countries.................................................. 1 -21 * * * * * * * * 34 Nonmonetary international and regional organizations................................................... -1,030 -41 17 4 -9 27 45 -31 13 -32 Foreign securities 35 Stocks, net purchases, or sales ( —)........................ -189 -322 -551 -18 -109 -62 -40 -7 -56 -259 36 Foreign purchases.................................................. 1,541 1,937 1,194 181 130 187 157 204 173 162 37 Foreign sales........................................................... 1,730 2,259 1,744 199 238 249 197 211 229 421 38 Bonds, net purchases, or sales ( —)......................... -6,325 -8,729 3,050 -73 -374 -56 -11 -866 765 -905 39 Foreign purchases.................................................. 2,383 4,932 4,662 818 581 628 606 607 636 786 40 Foreign sales........................................................... 8,708 13,661 7,712 891 955 684 617 1,473 1,401 1,691 41 Net purchases, or sales ( —) of stocks and bonds. . -6,515 -9,050 -3,601 -92 -483 -118 -51 -873 -821 -1,164 42 Foreign countries......................................................... -4,323 -7,155 -2,295 -382 -488 -149 4 -201 -692 -387 43 Europe...................................................................... -53 -844 -834 -21 -207 54 2 -124 -271 -267 44 Canada..................................................................... -3,202 -5,246 -1,445 -342 -265 -83 -94 -128 -292 -241 45 Latin America......................................................... -306 1 175 25 42 35 69 -13 -39 56 46 Asia........................................................................... -622 -700 -217 -53 -61 -155 25 62 -94 59 47 Africa....................................................................... 15 48 5 -1 2 * * * 3 1 48 Other countries....................................................... -155 -416 21 9 1 * 2 2 2 5 49 Nonmonetary international and regional organizations....................................................... -2,192 -1,898 -1,307 290 5 31 -55 -673 -129 -776 1 Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, 3 Includes State and local government securities, and securities of U.S. Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial Govt, agencies and corporations. Also includes issues of new debt securities States). sold abroad by U.S. corporations organized to finance direct investments 2 Includes Middle East oil-exporting countries until 1975. abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics □ September 1977 3.26 SHORT-TERM LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Nonbanking Concerns in the United States Millions of dollars, end of period 1976 1977 1976 1977 Type, and area or country Mar. June Sept. Dec. Mar.p Mar. June Sept. Dec. Mar.P Liabilities to foreigners Claims on foreigners 1 6,365 6,307 6,449 6,654 6,632 12,699 13,847 13,172 14,188 14,956 By type: 2 Payable in dollars................................................... 5,715 5,683 5,715 5,943 5,871 11,712 12,850 12,111 13,205 14,004 3 Payable in foreign currencies................................ 650 625 734 710 762 988 997 1,060 984 952 4 Deposits with banks abroad in reporter’s 480' 558 592 442 387 5 508 439 468 541 565 By area or country: 6 Foreign countries......................................................... 6,146 6,061 6,263 6,445 6,441 12,697 13,846 13,170 14,187 14,953 7 Europe....................................................................... 2,337 2,271 2,386 2,227 2,124 4,932 5,326 5,151 5,271 5,217 8 Austria................................................................. 6 13 15 10 9 17 17 21 21 23 9 Belgium-Luxembourg........................................ 296 233 183 166 169 116 193 195 164 170 10 Denmark.............................................................. 12 12 13 7 15 35 30 26 56 49 11 5 1 17 2 2 31 131 135 77 40 12 France................................................................... 205 159 185 200 163 355 363 413 426 422 13 152 228 256 174 173 305 358 492 378 366 14 Greece................................................................... 25 29 28 48 80 41 Al 56 51 90 15 125 116 148 131 135 406 335 358 384 473 16 Netherlands......................................................... 162 170 141 141 168 176 146 142 166 172 17 Norway................................................................ 23 22 24 29 37 58 52 43 51 42 18 Portugal............................................................... 3 3 5 13 23 45 22 28 40 35 19 Spain..................................................................... 68 51 36 40 52 516 432 336 369 325 20 Sweden................................................................. 25 24 35 34 35 80 84 62 90 92 21 Switzerland.......................................................... 162 213 243 190 214 207 270 253 241 154 22 Turkey.................................................................. 14 20 16 13 12 26 31 23 25 32 23 United Kingdom................................................ 924 837 888 879 689 2,282 2,602 2,365 2,445 2,476 24 Yugoslavia........................................................... 91 108 113 123 113 30 28 30 26 30 25 Other Western Europe...................................... 6 7 8 7 6 18 14 17 20 18 26 U.S.S.R................................................................. 23 10 19 9 15 106 96 81 156 104 27 Other Eastern Europe....................................... 10 16 14 13 13 80 75 79 85 36 28 Canada...................................................................... 315 373 328 380 404 2,234 2,202 2,197 2,465 2,428 29 Latin America......................................................... 1,194 1,095 1,028 1,036 1,117 2,565 3,055 2,816 3,563 4,358 30 Argentina............................................................. 49 49 48 44 42 48 43 39 44 Al 31 Bahamas.............................................................. 376 330 251 260 256 883 1,150 925 1,367 1,824 32 Brazil.................................................................... 97 97 58 72 49 475 462 417 683 536 33 Chile..................................................................... 11 15 16 17 16 27 46 26 34 35 34 Colombia............................................................. 16 19 11 13 18 47 57 66 59 75 35 Cuba..................................................................... * * * * * 1 1 1 1 1 36 Mexico................................................................. 92 72 74 98 117 332 332 352 332 317 37 Panama................................................................. 10 12 10 34 12 84 101 83 74 105 38 Peru....................................................................... 30 31 32 25 24 38 39 35 42 32 39 Uruguay............................................................... 2 3 3 4 4 4 4 22 5 6 40 Venezuela............................................................. 163 184 222 219 260 156 186 215 194 214 41 Other Latin American republics..................... 75 99 104 141 101 170 184 179 276 234 42 Netherlands Antilles 1...................................... 58 55 68 10 11 7 10 9 9 14 43 Other Latin America........................................ 214 130 129 100 160 294 440 447 441 918 44 Asia............................................................................ 1,733 1,752 2,027 2,138 2,154 2,491 2,729 2,421 2,325 2,371 45 China, People’s Republic of (Mainland)___ 5 8 1 20 21 35 23 11 23 30 46 China, Republic of (Taiwan).......................... 110 124 129 112 113 100 215 136 200 130 47 Hong Kong......................................................... 23 28 33 40 42 66 104 88 96 107 48 India..................................................................... 9 10 11 23 39 60 51 53 55 36 49 Indonesia............................................................. 141 133 144 134 137 155 160 193 210 246 50 Israel..................................................................... 26 34 32 39 37 42 53 48 41 50 51 Japan.................................................................... 307 290 275 229 206 1,163 1,170 1,010 908 963 52 Korea................................................................... 53 62 85 77 97 105 131 142 118 130 53 Philippines........................................................... 18 18 28 53 59 106 114 93 86 84 54 Thailand............................................................... 18 11 23 24 19 20 19 23 22 26 55 Other Asia........................................................... 1,022 1,035 1,260 1,385 1,378 638 691 624 566 566 56 Africa........................................................................ 502 527 426 588 574 343 378 406 392 429 57 Egypt.................................................................... 30 22 25 21 29 22 28 36 28 71 58 Morocco............................................................... 7 32 42 43 21 10 12 9 10 12 59 South Africa....................................................... 113 88 65 54 33 80 83 78 87 80 60 Zaire..................................................................... 7 12 24 36 39 23 25 28 21 17 61 Other Africa........................................................ 345 372 270 429 446 207 230 255 247 249 62 Other countries........................................................ 65 44 67 76 68 133 155 178 172 150 63 Australia............................................................... 47 32 59 57 49 91 100 112 107 114 64 All other............................................................... 18 12 18 19 19 36 56 67 65 36 65 Nonmonetary international and regional organizations....................................................... 219 246 186 208 192 1 1 1 1 2 1 Includes Surinam until 1976. mercial concerns and other nonbanking institutions in the United States. Data exclude claims held through U.S. banks and intercompany accounts Note.—Reported by exporters, importers, and industrial and com- between U.S. companies and their affiliates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-reported Data A67 3.27 SHORT-TERM CLAIMS ON FOREIGNERS Reported by Large Nonbanking Concerns in the United States Millions of dollars, end of period 1976 1977 Type and country 1973 1974 1975 Dec. Jan. Feb. Mar. Apr. May June? 1 Total............................................................................. 3,185 3,357 3,799 5,440 5,381 5,590 6,314 6,226 7,370 7,558 By type: 2 Payable in dollars................................................... 2,641 2,660 3,042 4,772 4,676 4,935 5,696 5,555 6,736 6,817 3 Deposits............................................................... 2,604 2,591 2,710 4,399 4,308 4,558 5,241 4,973 6,213 6,352 4 Short-term investments 1.................................. 37 69 332 373 368 377 455 582 523 465 5 Payable in foreign currencies................................ 544 697 757 669 705 654 619 672 634 741 6 Deposits............................................................... 431 429 511 383 397 339 317 362 300 340 7 Short-term investments 1.................................. 113 268 246 286 308 315 302 310 334 401 By country: 8 United Kingdom.................................................... 1,128 1,350 1,306 1,837 1,854 1,846 1,879 1,713 1,889 2,252 9 Canada...................................................................... 775 967 1,156 1,539 1,292 1,338 1,468 1,503 1,642 1,650 10 Bahamas................................................................... 597 391 546 1,247 1,320 1,412 1,709 1,649 2,350 2,064 11 Japan......................................................................... 336 398 343 113 130 165 147 155 158 178 12 All other................................................................... 349 252 446 704 785 829 1,111 1,206 1,331 1,414 i Negotiable and other readily transferable foreign obligations payable Note.—Data represent the assets abroad of large nonbanking conon demand or having a contractural maturity of not more than 1 year cerns in the United States. They are a portion of the total claims on from the date on which the obligation was incurred by the foreigner. foreigners reported by nonbanking concerns in the United States and are included in the figures shown in Table 3.26. 3.28 LONG-TERM LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Nonbanking Concerns in the United States Millions of dollars, end of period 1976 1977 1976 1977 Area and country Mar. June Sept. Dec. Mar.? Mar. June Sept. Dec. Mar.p Liabilities to foreigners Claims on foreigners 1 Total.............................................................................. 4,064 3,928 3,718 3,508 3,438 5,178 5,037 4,974 4,979 4,936 2 Europe.......................................................................... 3,109 2,985 2,813 2,693 2,617 973 984 953 910 897 3 Germany.................................................................. 446 425 406 396 391 34 35 73 72 84 4 Netherlands............................................................. 214 214 270 258 254 22 211 211 156 154 5 Switzerland............................................................... 484 467 327 260 178 56 56 54 57 52 6 United Kingdom.................................................... 1,572 1,486 1,445 1,409 1,372 349 365 298 297 257 7 Canada......................................................................... 144 166 111 89 82 1,468 1,511 1,507 1,530 1,470 8 Latin America............................................................. 248 222 230 243 244 1,776 1,609 1,552 1,521 1,488 9 Bahamas................................................................... 184 157 132 138 139 7 37 37 36 34 10 Brazil........................................................................ 5 5 5 5 5 183 165 172 133 124 11 Chile......................................................................... 1 1 1 1 1 312 306 244 248 210 12 Mexico...................................................................... 6 6 7 17 19 209 187 219 195 180 13 Asia................................................................................ 495 489 498 423 432 685 712 739 773 816 14 Japan........................................................................ 394 388 402 397 413 129 85 80 77 96 2 2 2 2 2 214 163 165 187 198 16 All other 1.................................................................... 65 64 64 58 59 61 59 58 58 67 1 Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics □ September 1977 3.29 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Per cent per annum Rate on Aug. 31, 1977 Rate on Aug. 31, 1977 Rate on Aug. 31, 1977 Country Country Country Per Month Per Month Per Month cent effective cent effective cent effective Argentina 18.0 Feb. 1972 France.............................. 9.5 Aug. 1977 Norway............... 6.0 Sept. 1976 Austria... 5.5 June 1977 Germany, Fed. Rep. of. 3.5 Sept. 1975 Sweden................. 8.0 Oct. 1976 Belgium. . 6.0 June 1977 Italy.................................. 11.5 Aug. 1977 Switzerland......... 1.5 July 1977 Brazil 28.0 May 1976 Japan.............................. 5.0 Apr. 1977 United Kingdom 7.0 Aug. 1977 Canada.. 7.5 May 1977 Mexico........................... 4.5 June 1942 Venezuela............ 5.0 Oct. 1970 Denmark. 9.0 Mar. 1977 Netherlands.................. 3.5 May 1977 Note.—Rates shown are mainly those at which the central bank either more than one rate applicable to such discounts or advances, the rate discounts or makes advances against eligible commercial paper and/or shown is the one at which it is understood the central bank transacts the government securities for commercial banks or brokers. For countries with largest proportion of its credit operations. 3.30 FOREIGN SHORT-TERM INTEREST RATES Per cent per annum, averages of daily figures 1977 Country, or type 1974 1975 1976 Mar. Apr. May June July Aug. 1 Euro-dollars......... 11.01 7.02 5.58 5.13 5.16 5.80 5.78 5.80 6.30 2 United Kingdom. 13.34 10.63 11.35 10.31 8.59 7.63 7.81 7.77 6.91 3 Canada.................. 10.47 8.00 9.39 7.63 7.58 7.44 7.16 7.27 7.44 4 Germany 9.80 4.87 4.19 4.70 4.57 4.43 4.24 4.20 4.04 5 Switzerland. 3.01 1.45 2.88 2.61 3.98 3.80 3.01 2.41 6 Netherlands. 5.17 7.02 5.73 4.89 3.03 2.84 3.05 3.48 7 France......... 7.91 8.65 9.87 9.33 9.13 9.01 8.67 8.51 8 Italy 10.37 16.32 16.57 16.26 15.49 14.65 14.09 13.94 9 Belgium. 6.63 10.25 7.07 7.01 6.94 6.88 6.85 6.20 10 Japan... 11.64 7.70 7.20 6.46 5.75 6.05 6.25 6.24 Note.—Rates are for 3-month interbank loans except for—Canada, over; and Japan, loans and discounts that can be called after being held finance company paper; Belgium, time deposits of 20 million francs and over a minimum of two month-ends. 3.31 FOREIGN EXCHANGE RATES Cents per unit of foreign currency 1977 Country/currency 1974 1975 1976 Mar. Apr. May June July Aug. 1 Australia/dollar................... 143.89 130.77 122.15 109.94 110.53 110.31 110.80 112.20 110.47 2 Austria/shilling..................... 5.3564 5.7467 5.5744 5.8822 5.9252 5.9533 5.9647 6.1691 6.0792 3 Belgium/franc....................... 2.5713 2.7253 2.5921 2.7258 2.7509 2.7700 2.7713 2.8208 2.8107 4 Canada/dollar....................... 102.26 98.30 101.41 95.125 95.103 95.364 94.549 94.230 93.028 5 Denmark/krone................... 16.442 17.437 16.546 17.038 16.710 16.638 16.544 16.769 16.590 6 Finland/markka................... 26.565 27.285 25.938 26.296 24.899 24.530 24.524 24.902 24.801 7 France/franc......................... 20.805 23.354 20.942 20.075 20.133 20.190 20.240 20.607 20.415 8 Germany/deutsche mark... 38.723 40.729 39.737 41.812 42.119 42.394 42.453 43.827 43.168 9 India/rupee........................... 12.460 11.926 11.148 11.313 11.310 11.320 11.286 11.342 11.465 10 Ireland/pound....................... 234.03 222.16 180.48 171.74 171.90 171.85 171.91 172.26 173.97 11 Italy/lira................................. .15372 .15328 .12044 .11276 .11264 .11279 .11295 .11330 .11332 12 Japan/yen.............................. .34302 .33705 .33741 .35687 .36339 .36046 .36652 .37756 .37499 13 Malaysia/ringgit................... 41.682 41.753 39.340 40.152 40.305 40.255 40.270 40.443 40.606 14 Mexico/peso......................... 8.0000 8.0000 6.9161 4.3978 4.4076 4.3890 4.3582 4.3528 4.3629 15 Netherlands/guilder............. 37.267 39.632 37.846 40.079 40.464 40.7009 40.326 40.983 40.831 16 New Zealand/dollar............. 140.02 121.16 99.115 95.689 96.129 96.002 96.264 97.160 96.826 17 Norway/krone...................... 18.119 19.180 18.327 19.035 18.909 18.956 18.915 19.023 18.863 18 Portugal/escudo................... 3.9506 3.9286 3.3159 2.5778 2.5752 2.5818 2.5802 2.5953 2.5678 19 South Africa/rand............... 146.98 136.47 114.85 115.00 114.93 115.00 114.88 114.98 115.00 20 Spain/peseta......................... 1.7337 1.7424 1.4958 1.4530 1.4536 1.4491 1.4404 1.2382 1.1804 21 Sri Lanka/rupee................... 14.978 14.385 11.908 12.820 13.676 13.700 13.664 13.700 13.721 22 Sweden/krona....................... 22.563 24.141 22.957 23.726 23.004 22.962 22.625 22.991 22.472 23 Switzerland/franc................. 33.688 38.743 40.013 39.209 39.582 39.694 40.170 41.487 41.523 24 United Kingdom/pound... 234.03 222.16 180.48 171.74 171.90 171.85 171.91 172.26 173.97 Memo: 25 United States/dollar 1........ 84.11 82.20 89.68 90.45 90.13 89.99 89.91 88.67 89.10 1 Index of weighted-average exchange value of U.S. dollar against cur­ Note.—Averages of certified noon buying rates in New York for cable rencies of other G-10 countries plus Switzerland. May 1970 parities = 100. transfers. Weights are 1972 global trade of each of the 10 countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Business Finance A69 4.10 SALES, REVENUE, PROFITS, AND DIVIDENDS—Large Manufacturing Corporations Millions of dollars 1975 1976 1977 Industry 1976 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql Total (170 corps.) 1 Sales..................................................................... 667,821 138,392 145,898 148,008 154,650 159,311 166,452 161,596 180,462 177,473 ?, Total revenue...................................................... 676,596 140,482 147,811 149,841 157,203 161,461 168,958 164,631 181,546 178,822 3 Profits before taxes............................................ 71,885 12,925 14,875 15,507 17,049 17,502 18,902 16,894 18,587 18,456 4 Profits after taxes.............................................. 34,707 5,566 6,715 7,102 7,657 8,621 9,532 8,442 8,113 8,594 5 Memo: PAT unadj.1.................................... 36,016 5,682 6,603 7,054 8,471 8,636 9,490 8,550 9,340 8,642 6 Dividends............................................................ 14,491 3,132 3,036 3,076 3,214 3,191 3,449 3,480 4,371 3,784 Nondurable goods industries (86 corps.):2 7 Sales..................................................................... 362,935 77,297 78,656 82,361 84,822 86,927 87,404 88,678 99,926 95,879 8 Total revenue...................................................... 368,184 78,616 79,940 83,595 86,351 88,179 88,864 90,967 100,174 96,707 9 42,694 9,378 9,989 10,924 10,614 10,674 10,595 10,632 10,793 11,075 10 Profits after taxes.............................................. 18,571 3,586 3,919 4,441 4,357 4,809 4,833 4,871 4,058 4,838 11 Memo: PAT unadj.1.................................... 19,468 3,572 3,900 4,439 4,808 4,829 4,809 4,962 4,868 4,880 12 Dividends............................................................. 7,910 1,815 1,784 1,803 1,826 1,879 1,947 1,990 2,094 2,140 Durable goods industries (84 corps.):3 n Sales.................................................................... 304,886 61,095 67,242 65,647 69,828 72,384 79,048 72,918 80,536 81,594 14 308,412 61,866 67,871 66,246 70,852 73,282 80,094 73,664 81,372 82,115 IS 29,191 3,547 4,886 4,583 6,435 6,828 8,307 6,262 7,794 7,381 16 Profits after taxes.............................................. 16,136 1,980 2,796 2,661 3,300 3,812 4,699 3,571 4,055 3,756 17 Memo: PAT unadj.1.................................... 16,548 2,110 2,703 2,615 3,663 3,807 4,681 3,588 4,472 3,762 18 6,577 1,317 1,252 1,273 1,388 1,308 1,502 1,490 2,277 1,644 Selected industries: Food and kindred products (28 corps.): 19 62,568 13,490 14,117 14,600 14,942 14,762 15,057 16,048 16,701 15,950 20 Total revenue...................................................... 63,142 13,708 14,356 14,844 15,248 14,993 15,395 16,221 16,533 16,195 21 Profits before taxes............................................ 5,750 1,066 1,190 1,385 1,384 1,471 1,507 1,462 1,310 1,448 22 Profits after taxes.............................................. 2,890 502 607 719 668 665 778 817 630 739 23 Memo: PAT unadj.1.................................... 3,013 526 615 745 715 667 785 827 734 746 24 1,259 268 271 274 287 307 325 309 318 340 Chemical and allied products (22 corps.): 25 Sales..................................................................... 64,125 13,618 14,329 14,660 15,128 15,756 16,081 15,878 16,410 17,103 26 64,837 13,756 14,503 14,791 15,326 15,899 16,242 16,084 16,612 17,271 27 Profits before taxes............................................ 8,197 1,647 1,622 1,858 1,955 2,179 2,117 2,008 1,893 2,115 28 Profits after taxes............................................... 4,511 932 929 1,035 993 1,244 1,208 1,130 929 1,195 29 Memo: PAT unadj.1.................................... 4,622 927 937 1,028 1,123 1,225 1,153 1,163 1,081 1,181 30 Dividends............................................................. 1,918 430 425 429 439 444 445 481 548 474 Petroleum refining (15 corps.): 31 Sales...................................................................... 196,154 41,988 41,342 43,873 45,442 46,656 46,065 46,923 56,510 52,340 32 Total revenue...................................................... 199,688 42,851 42,100 44,633 46,331 47,407 46,888 48,744 56,649 52,891 33 Profits before taxes............................................ 25,857 6,227 6,612 6,961 6,505 6,254 6,210 6,559 6,834 6,746 34 Profits after taxes............................................... 9,555 1,905 2,078 2,300 2,268 2,481 2,383 2,606 2,085 2,497 35 Memo: PAT unadj.1.................................... 10,168 1,871 2,040 2,268 2,533 2,512 2,404 2,635 2,617 2,546 36 Dividends............................................................. 4,089 966 937 949 949 971 1,017 1,036 1,065 1,160 Primary metals and products (23 corps.): 37 Sales...................................................................... 54,044 12,482 12,393 12,274 11,429 12,733 14,441 13,751 13,119 13,773 38 Total revenue...................................................... 54,825 12,782 12,604 12,479 11,669 12,904 14,650 13,958 13,313 13.963 39 Profits before taxes............................................ 2,834 1,015 711 487 708 633 924 701 576 516 40 Profits after taxes............................................... 1,652 633 478 396 315 409 603 513 127 260 41 Memo: PAT unadj.1.................................... 1,947 639 485 381 498 416 610 521 400 274 42 Dividends............................................................. 926 273 227 216 229 218 227 230 251 229 Machinery (27 corps.): 43 Sales...................................................................... 87,274 18,315 19,907 19,786 21,041 20,455 21,627 21,133 24,059 22,727 44 Total revenue...................................................... 88,519 18,535 20,130 19,977 21,358 20,707 22,072 21,280 24,460 23,049 45 Profits before taxes............................................ 11,320 1,757 2,105 2,233 2,640 2,469 2,781 2,700 3,370 2,900 46 Profits after taxes............................................... 6,181 986 1,186 1,232 1,433 1,355 1,528 1,461 1,837 1,573 47 Memo: PAT unadj.1.................................... 6,202 990 1,180 1,239 1,490 1,354 1,517 1,467 1,864 1,571 48 2,383 487 489 523 532 537 581 602 663 708 Motor vehicles and equipment (9 corps.): 49 Sales...................................................................... 107,563 18,866 22,275 21,005 23,717 26,395 28,710 24,250 28,208 31,069 50 Total revenue...................................................... 108,394 19,011 22,341 21,083 24.040 26,702 28,942 24,500 28,250 30,924 51 Profits before taxes............................................ 8,909 -98 854 590 1,731 2,494 3,056 1,272 2,087 2,513 52 Profits after taxes.............................................. 4,870 -127 451 328 819 1,331 1,668 705 1,166 1,138 53 Memo: PAT unadj.1.................................... 4,918 -12 455 280 881 1,337 1,658 704 1,219 1,138 54 Dividends............................................................. 2,062 294 276 274 277 285 422 372 983 392 1 Profits after taxes unadjusted are as reported by the individual com­ of returns, allowances, and discounts, and exclude excise taxes paid di­ panies. These data are not adjusted to eliminate differences in accounting rectly by the company. Total revenue data include, in addition to sales, treatments of special charges, credits, and other nonoperating items. income from nonmanufacturing operations and nonoperating income. 2 Includes 21 corporations in groups not shown separately. Profits are before dividend payments and have been adjusted to exclude 3 Includes 25 corporations in groups not shown separately. special charges and credits to surplus reserves and extraordinary items not related primarily to the current reporting period. Income taxes (not Note.—Data are obtained from published reports of companies and shown) include Federal, State and local government, and foreign. reports made to the Securities and Exchange Commission. Sales are net Previous series last published in June 1972 Bulletin, p. A-50. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Board of Governors of the Federal Reserve System Arthur F. Burns, Chairman Stephen S. Gardner, Vice Chairman Henry C. Wallich Philip E. Coldwell Philip C. Jackson, Jr. J. Charles Partee David M. Lilly OFFICE OF OFFICE OF BOARD MEMBERS OFFICE OF STAFF DIRECTOR FOR MONETARY POLICY STAFF DIRECTOR FOR MANAGEMENT Thomas J. O’Connell, Counsel to the J R o o h D b n e ir r e M t c t . o J . r D L e a n w kl r e e r n , c S e t , a D ff e D pu ir t e y c S to ta r ff Mi C C lt h h o a a i i n r r m m W a a n n . Hudson, Assistant to the A M St r u e t r p h r h u a e r y n L A H . l . B t A m r x o a i i n l d r n a o , , d A D , s e s S p i t u s a t t f a y f n D S t t i t a r o f e f c t h t D o e i r r B ec o t a o r r d Do C n o a n l s d tr u E c . t io A n n d M e a r n s a o g n e , m A en ss t istant Director for J K o e s n ep n h e t R h . A C . o G yn u e e , n A th ss e i r st , a A nt s s t i o s ta th n e t B to o a th rd e Board P S e t t a e n r l e M y . J K . e S i i r g , e l A , ss A is s t s a is n t t a n to t t t o h e t h B e o B ar o d a rd Gordon B. Grimwood, Assistant Director Jay Paul Brenneman, Special Assistant to the Normand R. V. Bernard, Special Assistant to and Program Director for Board the Board Contingency Planning Frank O’Brien, Jr., Special Assistant to the Board Joseph S. Sims, Special Assistant to the Board Donald J. Winn, Special Assistant to the DIVISION OF RESEARCH AND STATISTICS Board James L. Kichline, Director Joseph S. Zeisel, Deputy Director DIVISION OF DATA PROCESSING Edward C. Ettin, Associate Director John H. Kalchbrenner, Associate Director Charles L. Hampton, Director LEGAL DIVISION John J. Mingo, Senior Research Division Bruce M. Beardsley, Associate Director Officer Uyless D. Black, Assistant Director John D. Hawke, Jr., General Counsel Eleanor J. Stockwell, Senior Research Glenn L. Cummins, Assistant Director Baldwin B. Tuttle, Deputy General Division Officer Robert J. Zemel, Assistant Director Counsel James R. Wetzel, Senior Research Division Robert E. Mannion, Assistant General Officer Counsel Robert A. Eisenbeis, Associate Research DIVISION OF PERSONNEL Allen L. Raiken, Assistant General Counsel Division Officer David L. Shannon, Director Charles R. McNeill, Assistant to the J. Cortland G. Peret, Associate Research Charles W. Wood, Assistant Director General Counsel Division Officer A 70 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

OFFICE OF THE CONTROLLER DIVISION OF CONSUMER AFFAIRS $ H elm ut F. W endel, Associate Research Division Officer John K akalec, Controller Janet O. H art, Director James M. Brundy, Assistant Research Tyler E. W illiam s, Jr., Assistant Controller N athaniel E. B utler, Associate Director Division Officer Jerauld C. Kluckman, Associate Director Jared J. Enzler, Assistant Research Division DIVISION OF ADMINISTRATIVE SERVICES Officer Robert M. Fisher, Assistant Research W alter W. Kreimann, Director OFFICE OF THE SECRETARY Division Officer John L. G rizzard, Assistant Director Richard H. Puckett, Assistant Research John D. Smith, Assistant Director Theodore E. A llison, Secretary Division Officer G riffith L. Garwood, Deputy Secretary Stephen P. Taylor, Assistant Research OFFICE OF STAFF DIRECTOR FOR *Robert E. M atthews, Assistant Secretary Division Officer FEDERAL RESERVE BANK ACTIVITIES Levon H. Garabedian, Assistant Director W illiam H. W allace, Staff Director DIVISION OF BANKING SUPERVISION AND REGULATION DIVISION OF FEDERAL RESERVE BANK EXAMINATIONS AND BUDGETS John E. Ryan, Director ■{■Frederick C. Schadrack, Deputy Director DIVISION OF INTERNATIONAL FINANCE A lbert R. H am ilton, Associate Director Frederick R. Dahl, Associate Director Clyde H. Farnsworth, Jr., Assistant Director W illiam W. W iles, Associate Director Edwin M. Truman, Director John F. H oover, Assistant Director Jack M. Egertson, Assistant Director John E. Reynolds, Counselor P. D. Ring, Assistant Director Don E.K line, Assistant Director Robert F. Gemmill, Associate Director Thomas E. Mead, Assistant Director George B. Henry, Associate Director DIVISION OF Robert S. Plotkin, Assistant Director Charles J. Siegman, Associate Director FEDERAL RESERVE BANK OPERATIONS Thomas A. Sidman, Assistant Director Reed J. Irvine, Senior International Samuel H. T alley, Assistant Director Division Officer James R. Kudlinski, Director W illiam Taylor, Assistant Director Samuel Pizer, Senior International Division W alter A lthausen, Assistant Director Officer Brian M. Carey, Assistant Director * On loan from the Federal Reserve Bank of Philadelphia, Harry A. G uinter, Assistant Director t On loan from the Federal Reserve Bank of New York. $ On leave of absence. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Open Market Committee Arthur F. Burns, Chairman Paul A. Volcker, Vice Chairman Philip E. Coldwell Philip C. Jackson, Jr. J. Charles Partee Stephen S. Gardner David M. Lilly Lawrence K. Roos Roger Guffey Robert P. Mayo Henry C. Wallich Frank E. Morris Arthur L. Broida, Secretary A natol Balbach, Associate Economist M urray Altm ann, Deputy Secretary Richard G. Davis, Associate Economist Normand R. V. Bernard, Assistant Thomas Davis, Associate Economist Secretary Robert Eisenmenger, Associate Economist Thomas J. O’C onnell, General Counsel Edward C. Ettin, Associate Economist Edward G. Guy, Deputy General Counsel James L. K ichline, Associate Economist Baldwin B. T uttle, Assistant General John E. Reynolds, Associate Economist Counsel K arl Scheld, Associate Economist Stephen H. Axilrod, Economist Edwin M. Truman, Associate Economist Joseph S. Zeisel, Associate Economist A lan R. Holmes, Manager, System Open Market Account Peter D. Sternlight, Deputy Manager for Domestic Operations Scott E. Pardee, Deputy Manager for Foreign Operations Federal Advisory Council Richard D. H ill, first federal reserve district, President G ilbert F. Bradley, tw elfth federal reserve district, Vice President Walter B. Wriston, second federal Edward Byron Smith, seventh federal reserve district reserve district Roger S. Hill as, third federal Donald E. Lasater, eighth federal reserve district reserve district M. Brock Weir, fourth federal Richard H. Vaughan, ninth federal reserve district reserve district John H. Lumpkin, fifth federal J. W. McLean, tenth federal reserve district reserve district Frank A. Plummer, sixth federal Ben F. Love, eleventh federal reserve district reserve district Herbert V. Prochnow, Secretary W illiam J. Korsvik, Associate Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK, Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* ............... 02106 Louis W. Cabot Frank E. Morris Robert M. Solow James A. McIntosh NEW YORK* 10045 Frank R. Milliken Paul A. Volcker Robert H. Knight Thomas M. Timlen Buffalo ................. 14240 Paul A. Miller John T. Keane PHILADELPHIA 19105 John W. Eckman David P. Eastburn Werner C. Brown Richard L. Smoot CLEVELAND* 44101 Horace A. Shepard Willis J. Winn Robert E. Kirby Walter H. MacDonald Cincinnati ............ 45201 Lawrence H. Rogers, II Robert E. Showalter Pittsburgh .............. 15230 G. Jackson Tankersley Robert D. Duggan RICHMOND* ............23261 E. Angus Powell Robert P. Black E. Craig Wall, Sr. George C. Rankin Baltimore .................21203 I. E. Killian Jimmie R. Monhollon Charlotte .................28230 Robert C. Edwards Stuart P. Fishburne Culpeper Communications and Records Center.. 22701 Albert D. Tinkelenberg ATLANTA ............... 30303 H. G. Pattillo Monroe Kimbrel Clifford M. Kirtland, Jr. Kyle K. Fossum Birmingham ........... 35202 William H. Martin, III Hiram J. Honea Jacksonville ........... 32203 Gert H. W. Schmidt Edward C. Rainey Miami .................... 33152 David G. Robinson W. M. Davis Nashville ................ 37203 John C. Bolinger Jeffrey J. Wells New Orleans ......... 70161 George C. Cortright, Jr. George C. Guynn CHICAGO* .............. 60690 Peter B. Clark Robert P. Mayo Robert H. Strotz Daniel M. Doyle Detroit .................... 48231 Jordan B. Tatter William C. Conrad ST. LOUIS ................ 63166 Edward J. Schnuck Lawrence K. Roos William B. Walton Donald W. Moriarty Little Rock ............ 72203 Ronald W. Bailey John F. Breen Louisville .............. 40201 James C. Hendershot Donald L. Henry Memphis ............... 38101 Frank A. Jones, Jr. L. Terry Britt MINNEAPOLIS 55480 James P. McFarland Mark H. Willes Stephen F. Keating Clement A. Van Nice Helena .................... 59601 Patricia P. Douglas John D. Johnson KANSAS CITY 64198 Harold W. Andersen Roger Guffey Joseph H. Williams Henry R. Czerwinski Denver ................... 80217 A. L. Feldman Wayne W. Martin Oklahoma City ...... 73125 James G. Harlow, Jr. William G. Evans Omaha ................... 68102 Durward B. Varner Robert D. Hamilton DALLAS ................... 75222 Irving A. Mathews Ernest T. Baughman Charles T. Beaird Robert H. Boykin El Paso ................... 79999 Gage Holland Fredric W. Reed Houston ................. 77001 Alvin I. Thomas J. Z. Rowe San Antonio ........... 78295 Marshall Boykin, III Carl H. Moore SAN FRANCISCO ....94120 Joseph F. Alibrandi John J. Balles Cornell C. Maier John B. Williams Los Angeles ........... 90051 Joseph R. Vaughan Richard C. Dunn Portland ................. 97208 Loran L. Stewart Angelo S. Carella Salt Lake City ...... 84110 Sam Bennion A. Grant Holman Seattle .................... 98124 Lloyd E. Cooney James J. Curran ♦Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York 11753; Utica, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 74 Federal Reserve Board Publications Available from Publications Services, Division of Ad­ request and be made payable to the order of the Board ministrative Services, Board of Governors of the Fed­ of Governors of the Federal Reserve System in a form eral Reserve System, Washington, D.C. 20551. Where collectible at par in U.S. currency. (Stamps and a charge is indicated, remittance should accompany coupons are not accepted.) The Federal Reserve System—Purposes and Bank Credit-Card and Check-Credit Plans. 1968. Functions. 1974. 125 pp. 102 pp. $1.00 each; 10 or more to one address, $.85 each. Annual Report Survey of Financial Characteristics of Con­ Federal Reserve Bulletin. Monthly. $20.00 per sumers. 1966. 166 pp. $1.00 each; 10 or more year or $2.00 each in the United States, its posses­ to one address, $.85 each. sions, Canada, and Mexico; 10 or more of same Survey of Changes in Family Finances. 1968. 321 issue to one address, $18.00 per year or $1.75 pp. $1.00 each; 10 or more to one address, $.85 each. Elsewhere, $24.00 per year or $2.50 each. each. Banking and Monetary Statistics, 1914-1941. Report of the Joint Treasury-Federal Reserve (Reprint of Part 1 only) 1976. 682 pp. $5.00. Study of the U.S. Government Securities Banking and Monetary Statistics, 1941-1970. Market. 1969. 48 pp. $.25 each; 10 or more to 1976. 1,168 pp. $15.00. one address, $.20 each. Annual Statistical Digest, 1970-75. 1976. 339 pp. Joint Treasury-Federal Reserve Study of the $4.00 per copy for each paid subscription to Fed­ Government Securities Market: Staff Stud­ eral Reserve Bulletin. All others, $5.00 each. ies—Part 1. 1970. 86 pp. $.50 each; 10 or more Federal Reserve Monthly Chart Book. Subscrip­ to one address, $.40 each. Part 2. 1971. 153 pp. tion includes one issue of Historical Chart Book. and Part 3. 1973. 131 pp. Each volume $1.00; $12.00 per year or $1.25 each in the United States, 10 or more to one address, $.85 each. its possessions, Canada, and Mexico; 10 or more Open Market Policies and Operating Proce­ of same issue to one address, $1.00 each. Else­ dures—Staff Studies. 1971. 218 pp. $2.00 where, $15.00 per year or $1.50 each. each; 10 or more to one address, $1.75 each. Historical Chart Book. Issued annually in Sept. Reappraisal of the Federal Reserve Discount Subscription to Monthly Chart Book includes one Mechanism. Vol. 1. 1971. 276 pp. Vol. 2. 1971. issue. $1.25 each in the United States, its posses­ 173 pp. Vol. 3. 1972. 220 pp. Each volume $3.00; sions, Canada, and Mexico; 10 or more to one 10 or more to one address, $2.50 each. address, $1.00 each. Elsewhere, $1.50 each. The Econometrics of Price Determination Con­ Capital Market Developments. Weekly. $15.00 per ference, October 30-31, 1970, Washington, D.C. year or $.40 each in the United States, its posses­ 1972. 397 pp. Cloth ed. $5.00 each; 10 or more sions, Canada, and Mexico; 10 or more of same to one address, $4.50 each. Paper ed. $4.00 each; issue to one address, $13.50 per year or $.35 each. 10 or more to one address, $3.60 each. Elsewhere, $20.00 per year or $.50 each. Federal Reserve Staff Study: Ways to Moderate Selected Interest and Exchange rates—Weekly Fluctuations in Housing Construction. 1972. Series of Charts. Weekly. $15.00 per year or 487 pp. $4.00 each; 10 or more to one address, $.40 each in the United States, its possessions, $3.60 each. Canada, and Mexico; 10 or more of same issue Lending Functions of the Federal Reserve to one address, $13.50 per year or $.35 each. Banks. 1973. 271 pp. $3.50 each; 10 or more Elsewhere, $20.00 per year or $.50 each. to one address, $3.00 each. The Federal Reserve Act, as amended through De­ Introduction to Flow of Funds. 1975. 64 pp. $.50 cember 1971, with an appendix containing provi­ each; 10 or more to one address, $.40 each. sions of certain other statutes affecting the Federal Improving the Monetary Aggregates (Report of the Reserve System. 252 pp. $1.25. Advisory Committee on Monetary Statistics). Regulations of the Board of Governors of the 1976. 43 pp. $1.00 each; 10 or more to one Federal Reserve System address, $.85 each. Published Interpretations of the Board of Gov­ Annual Percentage Rate Tables (Truth in Lend­ ernors, as of June 30, 1976. $7.50. ing—Regulation Z) Vol. I (Regular Transactions). Industrial Production—1971 Edition. 1972. 383 1969. 100 pp. Vol. II (Irregular Transactions). pp. $4.00 each; 10 or more to one address, $3.50 1969. 116 pp. Each volume $1.00, 10 or more each. of same volume to one address, $.85 each. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Board Publications A 75 CONSUMER EDUCATION PAMPHLETS Assets and Liabilities of Foreign Branches of U.S. Banks. 2/72. (Short pamphlets suitable for classroom use. Multiple Bank Debits, Deposits, and Deposit Turnover— copies available without charge.) Revised Series. 7/72. Yields on Newly Issued Corporate Bonds. 9/72. The Equal Credit Opportunity Act and . . . Age Recent Activities of Foreign Branches of U.S. The Equal Credit Opportunity Act and . . . Banks. 10/72. Doctors, Lawyers, Small Retailers, and Revision of Consumer Credit Statistics. 10/72. Others Who May Provide Incidental Credit One-Bank Holding Companies Before the 1970 The Equal Credit Opportunity Act and . . . Amendments. 12/72. Women Yields on Recently Offered Corporate Bonds. Fair Credit Billing 5/73. If You Borrow To Buy Stock Credit-Card and Check-Credit Plans at Commer­ U.S. Currency cial Banks. 9/73. What Truth in Lending Means to You Rates on Consumer Instalment Loans. 9/73. New Series for Large Manufacturing Corpora­ STAFF ECONOMIC STUDIES tions. 10/73. U.S. Energy Supplies and Uses, Staff Economic Studies and papers on economic and financial subjects Study by Clayton Gehman. 12/73. that are of general interest in the field of economic Inflation and Stagnation in Major Foreign In­ research. dustrial Countries. 10/74. The Structure of Margin Credit. 4/75. Summaries Only Printed in the Bulletin New Statistical Series on Loan Commitments at (Limited supply of mimeographed copies of full text Selected Large Commercial Banks. 4/75. available upon request for single copies.) Recent Trends in Federal Budget Policy. 7/75. Recent Developments in International Financial The Growth of Multibank Holding Companies: Markets. 10/75. 1956-73, by Gregory E. Boczar. Apr. 1976. 27 MINNIE: A Small Version of the pp. MIT-PENN-SSRC Econometric Model, Staff Extending Merger Analysis Beyond the Single- Economic Study by Douglas Battenberg, Jared J. Market Framework, by Stephen A. Rhoades. Enzler, and Arthur M. Havenner. 11/75. May 1976. 25 pp. An Assessment of Bank Holding Companies, Staff Seasonal Adjustment of Mx—Currently Pub­ Economic Study by Robert J. Lawrence and lished and Alternative Methods, by Edward Samuel H. Talley. 1/76. R. Fry. May 1976. 22 pp. Industrial Electric Power Use. 1/76. Effects of NOW Accounts on Costs and Earnings Revision of Money Stock Measures. 2/76. of Commercial Banks in 1974-75, by John D. Survey of Finance Companies, 1975. 3/76. Paulus. Sept. 1976. 49 pp. Revised Series for Member Bank Deposits and Recent Trends in Local Banking Market Struc­ Aggregate Reserves. 4/76. ture, by Samuel H. Talley. May 1977. 26 pp. Industrial Production— 1976 Revision. 6/76. Federal Reserve Operations in Payment Mecha­ nisms: A Summary. 6/76. Printed in Full in the Bulletin Recent Growth in Activities of U.S. Offices of Staff Economic Studies shown in list below. Banks. 10/76. New Estimates of Capacity Utilization: Manu­ facturing and Materials. 11/76. REPRINTS U.S. International Transactions in a Recovering Economy. 4/77. (Except for Staff Papers, Staff Economic Studies, and Bank Holding Company Financial Developments some leading articles, most of the articles reprinted do in 1976. 4/77. not exceed 12 pages.) Changes in Bank Lending Practices, 1976. 4/77. Survey of Terms of Bank Lending—New Series. 5/77. A Revised Index of Manufacturing Capacity, The Commercial Paper Market. 6/77. Staff Economic Study by Frank de Leeuw with The Performance of Bank Holding Company- Frank E. Hopkins and Michael D. Sherman. 11/66. Affiliated Finance Companies, Staff Economic U.S. International Transactions: Trends in Study by Stephen A. Rhoades and Gregory E. 1960-67. 4/68. Boczar. 8/77 Measures of Security Credit. 12/70. Greeley in Perspective, Staff Economic Study by Paul Revised Measures of Manufacturing Capacity Schweitzer and Joshua Greene. 9/77, Utilization. 10/71. Changes in Time and Savings Deposits at Com­ Revision of Bank Credit Series. 12/71. mercial Banks, Jan.-April 1977. 9/77. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Index to Statistical Tables References are to pages A-3 through A-69 although the prefix “A” is omitted in this index ACCEPTANCES, bankers, 11, 25, 27 Demand deposits: Agricultural loans, commercial banks, 18, 20-22, 26 Adjusted, commercial banks, 13, 15, 19 Assets and liabilities (See also Foreigners): Banks, by classes, 16, 17, 19, 20-23 Banks, by classes, 16, 17, 18, 20-23, 29 Ownership by individuals, partnerships, and Domestic finance companies, 39 corporations, 25 Federal Reserve Banks, 12 Subject to reserve requirements, 15 Nonfinancial corporations, current, 38 Turnover, 13 Automobiles: Deposits (See also specific types of deposits): Consumer instalment credit, 42, 43 Banks, by classes, 3, 16, 17, 19, 20-23, 29 Production, 48, 49 Federal Reserve Banks, 4, 12 Subject to reserve requirements, 15 BANKERS balances, 16, 18, 20, 21, 22 Discount rates at F.R. Banks (See Interest rates) (See also Foreigners) Discounts and advances by F.R. Banks (See Loans) Banks for cooperatives, 35 Dividends, corporate, 38, 69 Bonds (See also U.S. Govt, securities): New issues, 36, 37 EMPLOYMENT, 46, 47 Yields, 3 Euro-dollars, 15, 27 Branch banks: Assets and liabilities of foreign branches of U.S. FARM mortgage loans, 41 banks, 62 Farmers Home Administration, 41 Liabilities of U.S. banks to their foreign Federal agency obligations, 4, 11, 12, 13, 34 branches, 23 Federal and Federally sponsored credit agencies, 35 Business activity, 46 Federal finance: Business expenditures on new plant and Debt subject to statutory limitation and equipment, 38 types and ownership of gross debt, 32 Business loans (See Commercial and industrial loans) Receipts and outlays, 30, 31 Treasury operating balance, 30 CAPACITY utilization, 46, 47 Federal Financing Bank, 35 Capital accounts: Federal funds, 3, 6, 18, 20, 21, 22, 27, 30 Banks, by classes, 16, 17, 19, 20 Federal home loan banks, 35 Federal Reserve Banks, 12 Federal Home Loan Mortgage Corp., 35, 40, 41 Central banks, 68 Federal Housing Administration, 35, 40, 41 Certificates of deposit, 23, 27 Federal intermediate credit banks, 35 Commercial and industrial loans: Federal land banks, 35, 41 Commercial banks, 15, 18, 23, 26 Federal National Mortgage Assn., 35, 40, 41 Weekly reporting banks, 20, 21, 22, 23, 24 Federal Reserve Banks: Commercial banks: Condition statement, 12 Assets and liabilities, 3, 15-18, 20-23 Discount rates (See Interest rates) Business loans, 26 U.S. Govt, securities held, 4, 12, 13, 32, 33 Commercial and industrial loans, 24 Federal Reserve credit, 4, 5, 12, 13 Consumer loans held, by type, 42, 43 Federal Reserve notes, 12 Loans sold outright, 23 Federally sponsored credit agencies, 35 Number, by classes, 16, 17, 19 Finance companies: Real estate mortgages held, by type of holder and Assets and liabilities, 39 property, 41 Busines credit, 39 Commercial paper, 3, 24, 25, 27, 39 Loans, 20, 21, 22, 42, 43 Condition statements (See Assets and liabilities) Paper, 25, 27 Construction, 46, 50 Financial institutions, loans to, 18, 20-23 Consumer instalment credit, 42, 43 Float, 4 Consumer prices, 46, 51 Flow of funds, 44, 45 Consumption expenditures, 52, 53 Foreign: Corporations: Currency operations, 12 Profits, taxes, and dividends, 38 Deposits in U.S. banks, 4, 12, 19, 20, 21, 22 Sales, revenue, profits, and dividends of large Exchange rates, 68 manufacturing corporations, 69 Trade, 55 Security issues, 36, 37, 65 Foreigners: Cost of living (See Consumer prices) Claims on, 60, 61, 66, 67 Credit unions, 29, 42, 43 Liabilities to, 23, 56-59, 64-67 Currency and coin, 5, 16, 18 Currency in circulation, 4, 14 GOLD: Customer credit, stock market, 28 Certificates, 12 Stock, 4, 55 DEBITS to deposit accounts, 13 Government National Mortgage Assn., 35, 40, 41 Debt (See specific types of debt or securities) Gross national product, 52, 53 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Bulletin □ September 1977 A77 HOUSING, new and existing units, 50 REAL estate loans: Banks, by classes, 18, 20-23, 29, 41 INCOME, personal and national, 46, 52, 53 Life insurance companies, 29 Industrial production, 46, 48 Mortgage terms, yields, and activity, 3, 40 Instalment loans, 42, 43 Type of holder and property mortgaged, 41 Insurance companies, 29, 32, 33, 41 Reserve position, basic, member banks, 6 Insured commercial banks, 17, 18, 19 Reserve requirements, member banks, 9 Interbank deposits, 16, 17, 20, 21, 22 Reserves: Interest rates: Commercial banks, 16, 17, 18, 20, 21, 22 Bonds, 3 Federal Reserve Banks, 12 Business loans of banks, 26 Member banks, 3, 4, 5, 15, 16, 18 Federal Reserve Banks, 3, 8 U.S. reserve assets, 55 Foreign countries, 68 Residential mortgage loans, 40 Money and capital market rates, 3, 27 Retail credit and retail sales, 42, 43, 46 Mortgages, 3, 40 SALES, revenue, profits, and dividends of large Prime rate, commercial banks, 26 manufacturing corporations, 69 Time and savings deposits, maximum rates, 10 Saving: International capital transactions of the United Flow of funds, 44, 45 States, 56-67 National income accounts, 53 International organizations, 56-61, 65-67 Savings and loan assns., 3, 10, 29, 33, 41, 44 Inventories, 52 Savings deposits (See Time deposits) Investment companies, issues and assets, 37 Savings institutions, selected assets, 29 Investments (See also specific types of investments)’. Securities (See also U.S. Govt, securities): Banks, by classes, 16, 17, 18, 20, 21, 22, 29 Federal and Federally sponsored agencies, 35 Commercial banks, 3, 15, 16, 17, 18 Foreign transactions, 65 Federal Reserve Banks, 12, 13 New issues, 36, 37 Life insurance companies, 29 Prices, 28 Savings and loan assns., 29 Special Drawing Rights, 4, 12, 54, 55 State and local govts.: LABOR force, 47 Deposits, 19, 20, 21, 22 Life insurance companies (See Insurance companies) Holdings of U.S. Govt, securities, 32, 33 Loans (See also specific types of loans): New security issues, 36 Banks, by classes, 16, 17, 18, 20-23, 29 Ownership of securities of, 18, 20, 21, 22, 29 Commercial banks, 3, 15-18, 20-23, 24, 26 Yields of securities, 3 Federal Reserve Banks, 3, 4, 5, 8, 12, 13 State member banks, 17 Insurance companies, 29, 41 Stock market, 28 Insured or guaranteed by U.S., 40, 41 Stocks (See also Securities): Savings and loan assns., 29 New issues, 36, 37 Prices, 28 MANUFACTURERS: TAX receipts, Federal, 31 Capacity utilization, 46, 47 Time deposits, 3, 10, 15, 16, 17, 19, 20, 21, Production, 46, 49 22, 23 Margin requirements, 28 Trade, foreign, 55 Member banks: Treasury currency, Treasury cash, 4 Assets and liabilities, by classes, 16, 17, 18 Treasury deposits, 4, 12, 30 Borrowings at Federal Reserve Banks, 5, 12 Treasury operating balance, 30 Number, by classes, 16, 17, 19 Reserve position, basic, 6 UNEMPLOYMENT, 47 Reserve requirements, 9 U.S. balance of payments, 54 Reserves and related items, 3, 4, 5, 15 U.S. Govt, balances: Mining production, 49 Commercial bank holdings, 19, 20, 21, 22 Mobile home shipments, 50 Member bank holdings, 15 Monetary aggregates, 3, 15 Treasury deposits at Reserve Banks, 4, 12, 30 Money and capital market rates (See Interest rates) U.S. Govt, securities: Money stock measures and components, 3, 14 Bank holdings, 16, 17, 18, 20, 21, 22, 29, Mortgages (See Real estate loans) 32, 33 Mutual funds (See Investment companies) Dealer transactions, positions, and financing, 34 Mutual savings banks, 3, 10, 20-22, 29, 32, 33, 41 Federal Reserve Bank holdings, 4, 12, 13, 32, 33 Foreign and international holdings and NATIONAL banks, 17, 19 transactions, 12, 32, 64 National defense outlays, 31 Open market transactions, 11 National income, 52 Outstanding, by type of security, 32, 33 Nonmember banks, 17, 18, 19 Ownership, 32, 33 Rates in money and capital markets, 27 OPEN market transactions, 11 Yields, 3 Utilities, production, 49 PERSONAL income, 53 VETERANS Administration, 40, 41 Prices: Consumer and wholesale, 46, 51 Stock market, 28 WEEKLY reporting banks, 20-24 Prime rate, commercial banks, 26 Wholesale prices, 46 Production, 46, 48 Profits, corporate, 38, 69 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 78 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories LEGEND — Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities ----- Boundaries of Federal Reserve Branch • Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Guide to Tabular Presentation and Statistical Releases GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations p Preliminary SMSA’s Standard metropolitan statistical areas r Revised REIT’s Real estate investment trusts rp Revised preliminary * Amounts insignificant in terms of the partic­ e Estimated ular unit (e.g., less than 500,000 when c Corrected the unit is millions) n.e.c. Not elsewhere classified ...... (1) Zero, (2) no figure to be expected, or Rp’s Repurchase agreements (3) figure delayed or, (4) no change (when IPC’s Individuals, partnerships, and corporations figures are expected in percentages). General Information Minus signs are used to indicate (1) a decrease, (2) obligations of the Treasury. “State and local govt.” a negative figure, or (3) an outflow. also includes municipalities, special districts, and other “U.S. Govt, securities”, may include guaranteed political subdivisions. issues of U.S. Govt, agencies (the flow of funds figures In some of the tables details do not add to totals also include not fully guaranteed issues) as well as direct because of rounding. statistical releases List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for individual releases ...................................... June 1977 A-78 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis