Federal Reserve Bulletin, 1977-10

OCTOBER 1977 FEDERAL RESERVE BULLETIN Consumption and Fixed Investment in Economic Recovery Abroad Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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NUMBER 10 • VOLUME 63 • OCTOBER 1977 FEDERAL RESERVE BULLETIN Board of Governors of the Federal Reserve System Washington, D.C. PUBLICATIONS COMMITTEE 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 871 CONSUMPTION AND Monetary Policy of the Committee on FIXED INVESTMENT IN Banking, Finance and Urban Affairs, THE ECONOMIC RECOVERY ABROAD U.S. House of Representatives, September 27, 1977. In most of the major foreign industrial countries, economic activity is 891 Philip E. Coldwell, Member of the recovering slowly and sluggishly from Board of Governors, testifies on the the 1974-75 recession. Two important Safe Banking Act of 1977, stating that factors contributing to the weak re- some of the provisions are construccovery abroad have been the behavior tive and necessary but others must of personal consumption and fixed undergo extensive study to establish nonresidential investment expendi- their necessity and desirability, before tures. the Subcommittee on Financial Institutions Supervision, Regulation and Insurance of the Committee on Banking, Finance and Urban Affairs, U.S. 882 STATEMENTS TO CONGRESS House of Representatives, September Stephen S. Gardner, Vice Chairman 28, 1977. of the Board of Governors, offers the 898 Vice Chairman Gardner expresses Board's support for many of the the Board's support of many of the consumer safeguards for electronic consumer safeguards under the profund transfer systems as outlined in a posed "Electronic Fund Transfer bill under consideration by the Sub- Consumer Protection Act" but urges committee on Consumer Affairs of further study of the proposed act's the Committee on Banking, Finance possible anticompetitive effects and and Urban Affairs, U.S. House of increased costs to the consumer, Representatives, September 22, 1977. before the Subcommittee on Con- 886 Vice Chairman Gardner presents sumer Affairs of the Committee on the views of the Board of Governors Banking, Housing and Urban Affairs, on the need for additional statutory U.S. Senate, October 4, 1977. and regulatory safeguards on over- 902 Governor Coldwell describes the sight and regulation of the banking scope of participation of the Federal industry, before the Committee on Reserve System in the Nation's pay- Banking, Housing and Urban Affairs, ments mechanism and how that par- U.S. Senate, September 26, 1977. ticipation serves the public interest, at 889 J. Charles Partee, Member of the the same time stressing the effects on Board of Governors, presents an the payments mechanism of the eroupdate of recent monetary develop- sion of bank membership in the ments (supplementing Chairman System, before the Committee on Burns' statement on July 29, 1977), Banking, Housing and Urban Affairs, before the Subcommittee on Domestic U.S. Senate, October 11, 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

909 RECORD OF POLICY ACTIONS OF THE inition pf adverse action that requires FEDERAL OPEN MARKET COMMITTEE notification to the consumer that an application for credit has been refused In the meeting held on August 16, and to Regulation Z (Truth in Lend- 1977, the Committee decided that ing) relating to billing for cash-adrates of growth in M-\ and M-2 over vance check transactions. the August-September period at annual rates within ranges of 0 to 5 per Revision of Board's series on bank cent and 3 to 8 per cent, respectively, debits and deposit turnover. would be appropriate. The weekly- Two State banks were admitted to average Federal funds rate likely to be membership in the Federal Reserve associated with these ranges for the System. monetary aggregates would be about 6 per cent. The Committee agreed that it could be modified within a range of 964 INDUSTRIAL PRODUCTION 5% to 6V4 per cent, depending on the Output increased by an estimated growth rate of the aggregates. 0.4 per cent in September. 920 LAW DEPARTMENT Amendments to Regulations H and A1 FINANCIAL AND BUSINESS STATISTICS Y and various rules and bank holding A3 Domestic Financial Statistics company and bank merger orders. A46 Domestic Nonfmancial Statistics A54 International Statistics 962 ANNOUNCEMENTS Amendments to Regulation H A69 GUIDE TO TABULAR PRESENTATION (Membership of State Banks in the AND STATISTICAL RELEASES Federal Reserve System) and Regulation Y (Bank Holding Companies) A70 BOARD OF GOVERNORS AND STAFF relative to operations of certain clearing agencies for stock market transac- A72 OPEN MARKET COMMITTEE AND tions. (See Law Department.) STAFF; FEDERAL ADVISORY COUNCIL The Board acted to encourage bank A73 FEDERAL RESERVE BANKS, holding companies that are required to BRANCHES, AND OFFICES carry out divestitures by the end of 1980 under Regulation Y to submit A74 FEDERAL RESERVE BOARD plans for doing so no later than June PUBLICATIONS 30, 1978. Proposed for public comment are A76 INDEX TO STATISTICAL TABLES amendments to Regulation B (Equal Credit Opportunity) affecting the def- A78 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumption and Fixed Investment in the Economic Recovery Abroad This article was prepared by David H. Howard because it is the largest component of aggreand Raymond Lubitz of the World Payments gate demand but also because personal saving and Economic Activity Section, Division of rates have been exceptionally high in recent International Finance. years, thus dampening consumption expenditures during the present recovery period. Fixed nonresidential investment has been Economic activity in most of the major foreign lagging more than it had in some past cycles. industrial countries is recovering from the Investment expenditures typically are more 1974-75 recession, although the recovery has volatile than consumption expenditures and been hesitant and somewhat sluggish. Unemplay a key role in business-cycle behavior. ployment rates are still high—and indeed are Moreover, since investment creates future rising in some countries—and in all but a few productive capacity, the rate of investment in of the major countries industrial production an economy has an importance beyond its role remains below its pre-recession peaks. In adas a component of aggregate demand. dition, rates of wage and price inflation remain high. Contributing to the lack of a strong and sustained economic recovery abroad has been PERSONAL CONSUMPTION the behavior of personal consumption and of fixed nonresidential investment expenditures. Recent rates of growth in real personal con- In this article, only these two major compo- sumption in the major foreign industrial counnents of aggregate demand will be discussed. tries are shown in Table 1. Of these countries, Personal consumption is important not only only Canada, which is not a net oil importer. 1. Real personal consumption and disposable income Ratio scale, Q1 1973=100 1973 1974 1975 1976 1977 1973 1974 1975 1976 1977 Data from national sources. Japanese personal disposable income data seasonally adjusted by F.R. staff. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A872 Federal Reserve Bulletin • October 1976 1. Rates of growth of real personal consumption Percentage change from previous perioa, seasonally adjusted annual rate AAnnnnuuaall 1975 1976 1977 aavveerraaggee,, CCoouunnttrryy ll%%00--7722 11997733 11997744 11997755 11997766 HI H2 HI H2 HI Canada 4.9 6.8 5.0 6.7 6.1 5.1 10.6 6.4 6.3 1.1 France '5.4 5.5 2.2 3.1 4.9 2.8 9.0 2.3 3.5 Germany 4.9 2.5 0.3 2.5 3.6 2.4 3.5 4.2 2.7 3.0 Italy 5.6 5.9 2.5 -1.4 3.2 -3.0 5.8 1.6 4.1 2-8.1 Japan 8.9 8.3 1.4 6.1 4.4 6.7 4.7 5.3 2.3 3.7 United Kingdom 2.7 4.5 -1.1 -0.9 0.4 -0.6 -5.3 2.8 1.7 -3.9 M%2-72. ^Based on change between the fourth quarter of 1976 and the first quarter of 1977. NOTE.—Data from national sources; the Italian data were seasonally adjusted by F.R. staff. The French annual and semiannual data are not necessarily consistent due to revisions in the former series not yet reflected in the latter. did not experience a sharp cutback in con- personal saving rate—the ratio of personal sumption growth in 1974 following the in- saving to personal disposable income. Thus, crease in the price of oil. Although consump- along with movements in personal disposable tion has recovered somewhat since 1974 in most income, factors that influence the saving rate of the countries—the United Kingdom being the are important for determining the level of exception—the latest data available indicate consumption expenditures. that some weakening occurred in the first half Indexes of real personal consumption and of this year. real personal disposable income for Canada, To a large extent, movements in personal Germany, Japan, and the United Kingdom are consumption are determined by movements in plotted in Chart 1. Two features stand out: the personal disposable income, and the pattern in strong relationship between movements in inconsumption, therefore, can be attributed in com,e and consumption, and the fact that conpart to the depressing effect of the oil-price sumption appears to move more smoothly increase on real incomes. However, house- than income over time—^perhaps because the holds determine how much of their disposable household sector takes into account some income is spent on consumption and how notion of its normal income when making much is saved; that is, they determine the consumption plans. For example, in the first 2. Personal saving, inflation, and unemployment Annual rate, per cent FRANCE GERMANY 20 10 '68 72 76 The annual inflation rate is measured as fourth quarter over fourth quarter of previous year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumption and Fixed Investment Abroad 873 quarter of 1974 Japanese consumers did not The course of personal income taxation has adjust their consumption by as much as their had an important influence on personal disincome fell because at least some of the in- posable income and hence on personal concome decline may have been viewed as tem- sumption. For example, in the United Kingporary. dom tax rebates were mainly responsible for The four countries have experienced differing the increase in disposable income in the third consumption patterns. In Canada, where ac- quarter of 1976. In Germany the reduction in tivity was less affected by the oil-price in- income tax rates and the increase in personal crease, consumption has increased rather exemptions that became effective at the besteadily since 1973, broadly in line with dis- ginning of 1975 contributed to an upturn in posable income. In Germany real consump- personal disposable income and thus affected tion and disposable income were flat in 1973 consumption. after the first quarter, in part because of Deliberate tax changes are not the only increases in personal income taxes early in the channel through which taxes influence peryear. Although income began to recover in sonal disposable income, however. Inflation 1974, consumption did not resume its growth raises the money value of income, and if the until 1975. In the first quarter of 1974 following tax system is progressive but is not indexed to the oil-price increase, Japan experienced a take into account the effects of inflation, effecsharp drop in disposable income and tive tax rates will rise. In Canada the income tax consumption—attributable to production cut- system has been indexed since January 1, 1974, backs and to a sharp increase in prices—but but in the other countries discussed in this both rebounded quickly. In sharp contrast to article, inflation's tax-raising effect has inhibited the experience in these three countries, con- growth in real personal disposable incomes sumption in the United Kingdom has been and in personal consumption. In some more or less flat or even declining since 1973, countries—^for example, Japan and France— although the decline is exaggerated by the high this effect has been at least partially offset level of consumption in the first quarter of from time to time by tax reductions. In addi- 1973 in anticipation of the introduction of a tion, government transfer payments have sales tax. Personal disposable income in the helped to sustain personal incomes and con- United Kingdom also has been flat or declining, sumption in the face of high unemployment. except for a temporary bulge in late 1974 and The faster rise of income compared with early 1975. consumption shown in Chart 1 indicates a rise Annual rate, per cent JAPAN UNITED KINGDOM A 20 10 1 1 t 1 1 1 t 1 1 1 Data from national sources. International Financial Statistics, and OECD. The Italian personal saving rate data before 1974 are not strictly comparable with later data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A874 Federal Reserve Bulletin • October 1976 in the personal saving rate. In all four countries, personal saving rates during the 1970's in all personal saving rates have increased since the six countries, and the apparent relationship first quarter of 1973. The increase, partly between the increases in saving rates and the reversed in recent quarters, remains substan- increases in the rates of inflation and unemtial in Canada, Japan, and the United King- ployment. dom, although, again, comparison with the first Another factor that influences the housequarter of 1973 is somewhat misleading for the hold sector's consumption is its net wealth. As United Kingdom. already mentioned, inflation affects one part of One possible explanation for the increase in household wealth by eroding the real value of saving rates may be the increase in the rates of (net) assets fixed in nominal value. Weakness in inflation experienced during recent years. In- equity values—another important component of flation can be expected to increase the rate of household wealth—also has tended to dissaving in two important ways. First, it reduces courage consumption. The high nominal rates the real value of the household sector's finan- of interest prevailing in recent years also may cial assets, such as savings deposits, that are have contributed to the increased personal fixed in money value. In order to restore the saving rates, by depressing the value of bonds real value of their holdings of these assets, held by the household sector and perhaps by consumers cut down on their consumption- increasing the expected real rate of return on expenditure plans and increase their saving. saving. However, the latter effect cannot read- Second, it has been argued that inflation ily be detected because of the difficulties increates a feeling of uncertainty and pessimism volved in measuring inflation expectations and about the future that leads consumers to save a thus the real rate of return. greater proportion of their income. On the Finally, there are special factors in each other hand, by increasing the expected rate of country that have influenced the behavior of return on real assets—including stocks of con- personal consumption expenditures. In the sumer goods—relative to that on assets fixed United Kingdom, for example, controls on in money value, expectations of inflation ac- wages since the third quarter of 1975 probably tually might encourage consumption expendi- have dampened the growth of personal distures. In any event, the data from the six major posable income. In Italy the wage-indexation foreign industrial countries shown in Chart 2 scheme (the scala mobile) probably has kept are broadly consistent with a net positive nominal personal income higher than it would relationship between inflation and personal otherwise have been and may have also saving rates. boosted real personal income. Theoretical arguments suggest that unem- In summary, personal consumption expendployment can have either a positive or a itures in the major foreign industrial counnegative effect on the personal saving rate. tries have been influenced by the behavior of Since periods of unemployment usually repre- personal disposable income and probably by sent temporary shortfalls in income, the un- the relatively high rates of inflation and unememployed can be expected to finance some ployment that have been experienced abroad. consumption out of past savings accumulated These last two factors may have contributed to for just such a situation; thus the aggregate sav- the exceptionally high personal saving rates ing rate would decline. However, unemploy- that have persisted during the 1970's. These ment, and particularly increasing unemploy- high saving rates have tended to restrain perment, can be expected to create uncertainty sonal consumption demand and the economic about the future and to increase precau- recovery abroad. The combination of exceptionary saving on the part of those still holding tionally high rates of personal saving, inflajobs, thereby raising the aggregate saving rate. tion, and unemployment has made the present The data are consistent with the view that the cycle unique and has complicated greatly the latter effect has been dominant in recent current recovery process as compared with years. Thus, Chart 2 points out the increase in that in previous postwar cycles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumption and Fixed Investment Abroad 875 2. Real gross fixed investment Annual data, percentage change from preceding year. Annual Category, by country average, 1974 1975 1976 l%0-73 Canada-^Total 5.8 5.5 3.9 0.8 Residential construction 8.1 -0.4 -6.7 17.6 Nonresidential fixed investment 5.6 7.4 7.1 -3.6 Nonresidential construction 4.3 7.6 13.5 -6.4 Machinery and equipment 7.7 8.2 3.4 -0.4 France—Total n.a. 0.9 -3.4 4.5 Residential construction n.a. 5.0 -3.8 1.4- Nonresidential fixed investment n.a. -0.7 -3.2 5.8^ Germany Total 4.5 -9.9 -4.2 5.1 Residential construction 3.4 -16.8 -10.4 6.7 Nonresidential fixed investment 5.2 -7.0 -1.8 4.5 Nonresidential construction 4.2 -3.2 -4.2 1.4 Machinery and equipment 5.5 -10.2 0.4 7.3 Italy—Total 5.5 3.5 -13.0 2.3 Residential construction n.a. 2.7 -10.9 -1.2 Nonresidential fixed investment n.a. 3.9 -13.8 3.7 Nonresidential construction n.a. -0.2 -5.6 -1.1 Machinery and equipment 6.4 6.6 -18.9 7.2 Japan—Total 14.1 -10.2 -2.8 4.5 Residential construction (private) 14.9 -12.8 7.2 10.4 Nonresidential fixed investment (private) 14.5 -10.8 -13.1 2.1 Public investment 13.8 -6.7 11.1 4.3 United Kingdom—Total 4.5 -1.9 -1.2 -4.1 Residential construction 4.0 -3.2 6.8 -I.O Nonresidential fixed investment 4.6 -1.6 -2.8 -4.8 Nonresidential construction 4.1 -1.1 4.3 -8.8 Machinery and equipment 5.0 -1.9 -7.5 -1.8 NOTE.—Data from national sources and OECD national accounts statistics. Canada—total fixed investment and nonresidential fixed investment are public and private, other items, private (including government enterprises); France—^public and private; Germany—all items are public and private except residential construction, private only; Italy—public and private; Japan—total, public and private, others as indicated, with government enterprises in public, data prior to 1970 are partially estimated by F.R. staff; United Kingdom—public and private, n.a.—Not available. ®Estimated. FIXED INVESTMENT than in 1973 because public investment (excluding nationalized enterprises) rose over 6 Total real fixed investment generally increased per cent, more than offsetting a 1.4 per cent in the major industrial countries in 1976 except decline in private investment (including nafor the United Kingdom, where it declined for tionalized enterprises). a third consecutive year, and Canada, where it Fixed investment rose in the first half of was flat after having risen for 2 years (Table 1977 in Japan, Germany, Italy, and Canada 2). Nonresidential fixed investment—the focus and continued to decline in the United Kingof this discussion—has in general followed a dom. The annual rate of increase (1977 HI similar path. The pace of recovery has been compared with 1976 H2) of total fixed investslower than in previous cyclical upswings, and ment in Germany was nearly 4 per cent and the 1976 rate of nonresidential fixed invest- was more than 7 per cent in Italy. In Japan ment (public and private) was still generally private nonresidential fixed investment rose below its 1973 levels—by 4.6 per cent in 5V2 per cent and in Canada total nonresidential Germany, 7.2 per cent in Italy, and 9.0 per investment increased by more than 7 per cent. cent in the United Kingdom. Private invest- In the United Kingdom total fixed investment ment in Japan in 1976 was 20.1 per cent below fell at an annual rate of more than 13 per cent. Its 1973 level; in France total nonresidential A striking indicator of investment weakness investment in 1976 was 1.7 per cent higher has been the widespread fall since the early Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A876 Federal Reserve Bulletin • October 1976 3. Nonresidential fixed investment as per cent of GNP Per cent Per cent UNITED KINGDOM JAPAN Current prices i i 16 Constant prices t i-.a^a .J- .J t 1 f r -t ITALY 16 Data from national sources, OECD national accounts, and F.R. comparable with later data. Data for Japan for 1976 are staff estimates. Gross domestic product (GDP) for Italy and partially estimated. Constant price series are on 1970 base ex- United Kingdom. Data for Italy before 1970 are not strictly cept 1971 for Canada. 1970's in the ratio of nonresidential fixed in- relative to the price of manufactured goodsvestment to gross national product, as shown the investment ratio expressed in current in Chart 3. This ratio (measured in constant prices has fallen relative to that in constant prices) fell from a peak of more than 29 per prices. This pattern is most clearly evident in cent in 1973 in Japan to about 24 per cent in Germany and Japan. 1976—the most prolonged decline in this ratio A fall in the investment ratio is a normal since 1960; the German ratio (also in constant concomitant of weak economic activity and in prices) dropped from 18.5 per cent in 1972 to itself, unless prolonged, is not a matter of about 16 per cent in 1976. serious concern. In the normal course of eco- The 1976 investment ratios in Japan and nomic growth, capital accumulation will rise Germany also are weak in terms of a longer- above and fall below trend rates, and shortfalls term comparison—the 1965-73 average level of capital in periods of recession tend to be for the ratio was 26.3 per cent in Japan and made up during upswings. However, lower 17.8 per cent in Germany. The Italian and investment will even in the short run reduce British ratios also have been weak recently; aggregate demand, and a permanently lowered the French investment ratios (not shown in investment ratio will lead in the longer run to Chart 3 because of a lack of data prior to 1970 slower growth of the capital stock. If the rate consistent with more recent data) have dis- of capital accumulation falls and if capitalplayed less weakness. labor ratios do not decline, the growth of Movements in the investment ratio differ employment will also slow. If labor markets when measured in constant and current prices. adjusted smoothly, real wages would fall, en- Because the price of capital goods generally couraging more labor-intensive methods of has fallen relative to the GNP deflator—since production and allowing a greater growth of the price of services, included in GNP, has risen labor demand for a given growth of capital. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumption and Fixed Investment Abroad 877 However, such real wage adjustments, even real resources available for investment may be relative to productivity growth stemming from reduced by the interaction of inflation and technological advances, may occur only with generally used accounting procedures. difficulty. With these cautions in mind, there does seem to be a clear pattern for all the major industrial economies—except Canada—of falling shares of profits (or property income) and rising shares of I N V E S T M E NT D E M A ND labor income during 1970-75, with a reversal in The influences acting on investment behavior most cases in 1976. Thus, in Germany gross reflect both the incentives to invest and the property income fell as a share of gross value cost and availability of funds for investment. added in the private-enterprise sector from On the investment-demand side one might more than 32 per cent in 1970 to 29 per cent in categorize the forces at work as follows: (1) 1975; in the United Kingdom the gross profit the rate of return or profitability of invest- share in the corporate sector fell from 20 per ment; (2) higher capital requirements; (3) the cent in 1970 to nearly 14 per cent in 1975. In effects of the degree of capacity utilization; both countries, data for shares in the corpoand (4) the uncertainty pertaining to the rate of rate sector are not available for 1976, but other return. data from the national accounts indicate a reversal of the trend in 1976. In France gross operating surplus fell as a share of corporate PROFITABILITY value added from nearly 29 per cent in 1970 to Although reliable data on rates of profit on 24 per cent in 1975 before rising to 25 per cent capital are not available for most foreign coun- in 1976. Only aggregate national accounts data tries, there are some indications from data on are available for Japan and Italy, but they profit shares and labor costs that there was a indicate a similar pattern: in Japan income of general cyclical decline in profitability during private corporations plus interest payments the 1970's. This decline was slightly reversed fell as a share of national income from more in 1976 although the data on shares suggest than 20 per cent in 1970 to more than 15 per that the level of profitability prevailing in 1970 cent in 1975 before rising in the first quarter of has not been regained. These share data must 1976. In Italy net property and business inbe used cautiously because, among other rea- come fell from more than 40 per cent of sons, movements in profit shares do not trans- national income in 1970 to 30 per cent in 1975. late directly into movements in profit rates A further indication of a shift toward wages unless capital-output ratios are constant. from profits comes from data on unit labor Also, recorded data may recently have costs and manufacturing selling prices. During overstated profitability because of the failure 1970-75 unit labor costs rose faster than sellto adequately account for inflation. Under ing prices in all of the major industrial counaccounting procedures used by many firms, tries except Canada. In 1976 unit labor costs the increase in the value of inventories may be for manufacturing either fell or rose less rapidly improperly counted as profits. Moreover, de- than selling prices. preciation allowances often are based on his- A reduction in the profitability of investtorical rather than replacement costs of plant ment resulting from higher real wages will and equipment. Since corporate taxes are lower the desired amount of productive often based on accounting profits uncorrected capacity (determined by labor and other infor inflation, real after-tax profits may be puts as well as capital). However, raising the reduced by inflation. Also, if firms do not cost of labor relative to capital will increase adequately account for inflation, dividend the capital-intensity of production and thereby payouts may be higher than desired if a truer may lead to higher investment levels. The profit picture were available. Consequently, direction of the effect on investment of an Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A878 Federal Reserve Bulletin • October 1976 increase in the real wage is thus ambiguous. Little quantitative work on this question has However, even if the effect of an increase in been done outside the United States. The rereal wages on investment is positive, it will be sults of a study, published in the 1976 Annual associated with lower levels of employment. Report of the Council of Economic Advisers, tentatively suggest that if "the legal, technological and energy-related factors that raise HIGHER CAPITAL REQUIREMENTS capital requirements" are allowed for, the ratio There has been a good deal of discussion in the of business fixed investment to GNP over the past few years suggesting that the industrial period 1971-80 would rise from the 9.9 per economies face higher capital requirements— cent—that would otherwise have been needed that is, more capital is needed to produce a to meet a specified full employment output in given amount of final output. These higher 1980—to 11.4 per cent. Higher capital requirecapital requirements arise inter alia from en- ments, defined as greater capital needs per unit vironmental regulations requiring capital of output, do not imply that investment ratios spending on pollution control and from the will rise in proportion to the greater requireincrease in energy prices, causing a shift to- ments. Since higher capital requirements imply ward more capital-intensive technology. At higher capital-output ratios and a shift in the the same time, the political objective of demand for capital, some substitution toward greater energy self-sufficiency will require less capital-intensive techniques and output more investment in the capital-intensive en- might take place. ergy sector. Also, the sharp shift in relative factor prices, it is conjectured, has increased CAPACITY UTILIZATION the rate of obsolescence in energy-intensive industries and therefore has raised the rate of The factor that is perhaps most frequently capital scrapping. advanced to explain the weakness of invest- 4. Nonresidential fixed investment and capacity utilization Percentage change Per cent CANADA Utilization j^^^Annual rate ^^ ^^960-70 avg. Investment^ . i r t 1 t -i-r-"-''-! f - -r. 1972 1974 1976 1972 1974 1976 1972 1974 1976 Capacity utilization index from Wharton Economic Forecast- enterprises except for Japan; Italy and United Kingdom—public ing Associates; Germany, Japan, France, and Canada—private and private, nonresidential fixed investment which includes government Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumption and Fixed Investment Abroad 879 ment is the historically low levels of capacity UNCERTAINTY utilization. Capacity utilization indexes have Another consideration often cited to explain been subject to a great deal of criticism, and investment weakness is a rise in the degree of the various methods used to construct uncertainty, although this influence is not easthem—statistical production functions, the fitily measured. Greater uncertainty reflects ting of trends to output peaks, or survey several factors. First, because of shocks to the data—all have drawbacks. In addition, as economic system since 1973, there is a lack of noted, factor-price increases, especially relaconfidence in the sustainability and strength of tive increases in the price of energy, may have economic growth. For example, a recent surreduced capacity by accelerating capital scrapvey of German firms indicated that future ping. Thus capacity indexes may overstate growth is expected to be significantly lower the true margin of excess capacity. Indeed, than previous German experience. Second, as pointed out in the "McCracken Report" to there may be uncertainty over future relative the Organization for Economic Cooperation factor prices—particularly for energy and and Development (OECD), Towards Full Emlabor—that will affect the expected profitployment and Price Stability, there seems to be ability of different production techniques. a growing divergence between "judgmental" Third, the rate of inflation may—as in the and "nonjudgmental" estimates of capacity; case of consumption—be acting to reduce the former, presumably reflecting business investment, although it conventionally has estimates of increased obsolescence, shows been thought that inflation would stimulate the progressively smaller estimates relative to the acquisition of real assets. Higher rates of latter. However, these data should be treated inflation might increase the variance of exwith caution since judgmental estimates of capected returns from investment if the variance pacity in general tend to fall more than nonof selling prices and costs is increased; in turn judgmental estimates during recessions, and this may lower investment. Finally, economic the depressed economic activity of the past policy may be more restrictive because of high few years may have produced this result. inflation and will probably be more unpredict- Despite the caution one must exercise in able in an environment of stagnation and using these indexes, there is still a similarity in inflation. the movements of different capacity utilization indexes in the major foreign OECD countries. Investment might be expected to respond to FINANCING I N V E S T M E NT capacity pressures with a lag, but in Chart 4, which contains annual data, investment behavior The forces continuing to depress investment does rather closely parallel the movement in do not seem in general to arise from financcapacity utilization as measured by the index ing difficulties, although such difficulties published by Wharton Economic Forecast- may have existed earlier and some financial ing Associates. Thus, in 1975 nonresidential constraints on investment may still be signififixed investment fell in all the major foreign in- cant in a few countries. dustrial economies while capacity utilization Internal funds available for investment dealso fell that year (and generally in 1974 as pend in significant part on the profits earned well); in 1976 nonresidential fixed investment by business; the total volume of profits is rose in Japan, France, Germany, and Italy mir- related to profitability and the level of ecororing the rise in utilization. Utilization rates nomic activity. In 1975 a low level of total have been historically low, as shown in Chart profits may have inhibited investment, but 4. This reflects the over-all weakness of re- profitability and economic activity generally covery; only in Germany and Canada did recovered in 1976, and profits have recovered industrial production exceed previous peaks as well. Similarly, businesses faced severe in mid-1977 and in those countries by less liquidity problems in 1974, but since then, than 2 per cent. according to the OECD, balance-sheet restruc- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A880 Federal Reserve Bulletin • October 1976 turing appears to have taken place. OECD cal- dividend-price ratio to a large extent have culations {Economic Outlook, July 1977) indi- reflected stock market movements. In Italy, cate that liquidity positions have improved according to survey data, the dividend-price since 1974. For example, there have been sub- ratio rose steadily from 1971-75 due to the stantial increases in the ratio of internal continuing fall of equity prices and declined in funds to total capital outlays in Japan, Ger- 1976 because dividends fell even more sharply many, France, and the United Kingdom; re- than equity prices. ductions in the ratio of short-term debt to total debt in Japan, Germany, and the United Kingdom; and increases in the ratio of liquid assets POLICIES AFFECTING to short-term debt in Germany, France, and CONSUMPTION AND INVESTMENT the United Kingdom. The cost of capital, as indicated by nominal A wide range of policy measures can affect the interest rates and dividend-price ratios for behavior of consumption and investment. equities, has declined since 1974 in most of the Many of these policies encourage one while major countries, reinforcing the view that discouraging the other. For example, an infinancing is not a major constraint on capital comes policy, in which wages, profits, and prices formation. Although nominal long-term inter- are subject to direct government influence, est rates are still quite high, they have fallen in can alter the distribution of income between Japan and Germany since 1974, in Canada wages and profits and thus can change the since 1975, and in the United Kingdom since relative levels of consumption and investment 1976. The German rate declined from more spending. On the other hand, policies that enthan 10 per cent in 1974 to less than 6 per courage consumption may, by increasing prescent currently. In France rates fell from 1974 sure on productive capacity, also encourage to early last year but have risen since; in Italy investment. long-term rates climbed from 1973 until mid- Of the measures available to influence con- 1977. Since the decline in nominal interest sumption, perhaps the most important is tax rates in part reflects a decline in inflation policy. Recent examples include the German expectations, expected real rates of interest and British income tax measures mentioned may not have fallen. But, expected real rates do earlier and the Italian Government's increases not appear high given inflation expectations in various indirect taxes and in prices for and mid-1977 nominal interest rates in the 6 to public-sector services. As an example of 8 per cent range in Germany, Japan, and another way in which public policy can en- Canada, and 10 to 14 per cent range in France, courage investment and discourage consumpthe United Kingdom, and Italy. However, tion, the British authorities have issued high nominal interest rates—even if expected guidelines that favor bank lending to industry. real rates are low—may discourage invest- In many countries, tax and credit policies ment by imposing cash-flow problems in the are intended to encourage investment, both early stages of an investment project, before over all and in specific sectors and regions. In returns are forthcoming. addition, investment policy can be varied for The cost of equity capital, as measured by cycUcal demand-management purposes. Inavailable dividend-price ratios, also has de- vestment can be increased directly by the clined since 1974. These ratios had peaked at public administration or by nationalized industhe end of 1974 in Canada, Japan, Germany, tries. For example, the German Government France, and the United Kingdom, and in mid- this year announced its Medium-term Program 1977 were below those levels, although in to Improve Infrastructure involving 16 billion Canada, Germany, and France the ratios have marks of investment expenditure spread over risen since mid-1976. With the exception of several years. In Japan, among the various Japan, the ratios are still higher than pre-reces- steps taken to increase investment is a prosion levels. These movements in the gram for larger public works expenditures; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumption and Fixed Investment Abroad 881 and in France the government has increased few years—and because inflation rates have nationalized enterprise investments in 1976 remained high despite several years of ecoand 1977. nomic slack. Both consumption and invest- In addition, governments can provide incen- ment behavior appear to have been affected tives to the private sector—such as investment adversely by this environment of uncertainty tax credits, accelerated depreciation allow- and high inflation. Moreover, the restrained ances, and interest rate subsidies, all of which growth of consumption demand, in turn, has have the effect of either increasing the after- contributed to the low level of pressure on tax return on investment or reducing the cost existing capacity, which is discouraging inof capital—as well as direct loans. Recent vestment. examples include the extension of the invest- The increase in the household sector's ment tax credits in Canada and a special propensity to save, coupled with reluctance on investment tax credit in France, more gener- the part of potential investors to invest, means ous accelerated depreciation allowances in that some adjustment must have taken place in France and Germany, interest rate subsidies in order to match saving and investment, since the United Kingdom, and government loans at personal saving and fixed investment are imsubsidized rates in France. Governments also portant components of total saving and incan try to influence the amount of investment vestment. In the absence of changes in govat a given level of total output by choosing a ernmental and external stimuli, economic mix of fiscal and monetary policy that is theory would suggest that this process would intended to result in an interest rate that will take the form either of an adjustment—in the produce the desired level of investment. present case, downward—in the rate of return on saving and in the rate of return necessary to make an investment profitable and/or an adjustment—again, in the present case, downward—in income. These factors have CONCLUSION tended to depress real rates of return (as measured by actual rates of return adjusted for The increases in the propensity to save in the realized inflation) and incomes in the major major foreign industrial countries in recent foreign countries during recent years, alyears have lowered personal consumption exthough there has been some offset to this penditures relative to what they would have process due to changes in government policy. been, given the level of personal disposable income. In addition, investment expenditures The prospects for a stronger recovery in have been slow to recover from the past consumption and especially in investment recession. Thus, two of the major elements of appear to rest heavily on reducing the rate of final domestic demand have been sluggish, inflation and reducing the degree of prevailing and investment expenditures, in particular, uncertainty. It is true that, as the investment have recovered more slowly than in previous slowdown is prolonged, the need for replacecycles. ment investment will probably provide some The present recovery differs in character incentive for higher over-all gross investment. from previous recoveries because of the Nevertheless, sustainable growth requires exgreater amount of uncertainty that exists—due tensions to capacity, and businesses would be in part to the economic shocks sustained by more likely to expand if future growth were the international economic system in the past more assured. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

882 Statements to Congress Statement by Stephen S, Gardner, Vice dicted. The major reasons for this slow de- Chairman, Board of Governors of the Federal velopment are found in the many uncertainties Reserve System, before the Subcommittee on that surround the substitution of electronic Consumer Affairs of the Committee on Bank- systems for the traditional use of paper bills, ing, Finance and Urban Affairs, U.S. House checks, receipts, and ledgers. Consumers, of Representatives, September 22, 1977. businessmen, and depositary institutions are unsure of their rights and liabilities in EFT Mr. Chairman, I am glad to have this opportu- systems. There also may be antitrust quesnity to participate on behalf of the Board of tions that need to be clarified since coopera- Governors in your committee's hearings on tion among competing depositary institutions consumer safeguards for electronic funds may be necessary in many markets to successtransfer systems. The need for such fully introduce the new technology. It is not safeguards has been recognized by the Con- surprising, then, that we are applying only a gress, the Board of Governors of the Federal fraction of the technology we possess and that Reserve System, the National Commission on businesses are reluctant to make the substan- Electronic Fund Transfers, and many other tial investment necessary to utilize present representatives of the general public. The knowhow. Board commends your committee for under- Clearly, the work of this committee can taking this essential work. These issues are of speed the process by which we can realize the vital importance to consumers. cost savings and conveniences that our inven- The new world of electronics provides op- tive technology can bring to the simple, norportunities to broaden consumer payment al- mal daily tasks of life. ternatives and to improve consumer conveni- H.R. 8753 addresses consumer rights and ence and service while reducing the costs of interests and is directed at quieting many of making payments. Direct deposit of Govern- these fears. The Board endorses the intent of ment payroll and social security benefit pay- the proposed EFT consumer legislation. EFT ments through automated clearinghouses has can deliver substantial public benefits. Many helped people receiving funds by improving of the issues covered by H.R. 8753, as you the security and convenience of such pay- know, have also been considered by the Naments and has resulted in substantial cost tional Commission on Electronic Fund savings to the Government. Installation of Transfers in that Commission's detailed teller machines by the financial institutions deliberations. has offered consumers longer banking hours While the proposed bill has benefited and more convenient banking facilities at costs from the Commission's earlier Interim Report, much less than regular branches. The retailing I am sure the committee will want to review industry has successfully installed electronic carefully the Commission's final recomcash registers that have demonstrated the mendations on consumer issues. As you convenience and cost savings expected of know, these have been completed within the electronic fund transfers (EFT) at the point of past 2 weeks. Finally, H.R. 8753 recognizes purchase. but does not appear to address consumer Nonetheless, EFT is developing at a more privacy, a most important issue. The Commismoderate and cautious pace than many pre- sion has considered the privacy issue exten- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 883 sively, and I suspect this committee will want many of the functions now being provided by to study the subject carefully. cancelled checks. The Board believes that consumer protec- The Board also approves of H.R. 8753's tion legislation should start with the premise definition of certain inherent consumer rights, that keen competition is an aid to consumers such as a limit on liabihty for unauthorized use when both suppliers and purchasers are of funds transfer cards, the right to stop paynumerous. Competition is most hkely to de- ment on a purchase transaction, as well as the velop when there are many participants in the right to require prompt correction of errors. marketplace. Therefore, legislation establish- The Board endorses the limit proposed in ing a legal framework for EFT should make it H.R. 8753 on a consumer's liability for unaupossible for any and all depositary institutions thorized transfers by means of an EFT card. to set up EFT plans for their customers. The This provision parallels the earlier Board recgoal should be to afford individuals, small ommendations. Unauthorized uses of EFT businesses, and other users of EFT at least the cards, beyond minimal amounts, represent same breadth of choice among alternative avoidable or insurable risks that the Board suppliers of EFT services that they now have beheves institutions, not consumers, are betamong alternative suppliers of checking ac- ter able to bear. counts. If every depositary institution can The Board similarly approves the provision provide EFT capabiHties to its depositors, in H.R. 8753 that makes the institution liable every depositary institution can compete ef- for consequential damages suffered by the fectively, and competition will generate a consumer as a result of a failure to carry out broad choice of alternatives for the public. transactions ordered by the consumer. Under Limits on the ability of institutions to offer the present check payment system, a bank ''is EFT plans, whether imposed by legislation or liable to its customers for damages proxiby the nature of EFT technology, could result mately caused by the wrong dishonor of" a in the same sort of highly concentrated market check.^ Thus, if the consumer writes a check that characterizes the bank credit card indus- to pay for a fire insurance premium on a home, try. Such an outcome would probably not be the bank erroneously refuses to pay it, the in the public interest. insurance coverage lapses for nonpayment, H.R. 8753's most important provisions deal and the home burns down, the bank is liable with the information the institution supplies to for the damages incurred by its customer, not the consumer and the substantive rights of the just for the amount of the check. This same consumer. The Board particularly supports the principle should apply to consequential damadvance disclosure of EFT terms in readily ages suffered because of EFT lapses by the understandable language. Disclosure would institution. cover both the consumer's right to obtain The Board further supports the provision in information from the institution and the con- H.R. 8753 that gives the customer the right to sumer's rights when something goes wrong. stop EFT transactions. The EFT customer's The Board beUeves disclosure of transaction right to stop payment on purchase transactions terms is necessary as it will facilitate the is quite similar to the customer's present right consumer's control over his personal finances. to stop payment on a check. The stop payment The Board also endorses the concept of de- right was originally included in the Uniform scriptive periodic statements describing the Commercial Code on the grounds that deactivity that has taken place in the consumer's positors ''expect and are entitled to receive account and recommends that the statements (this right) . . . notwithstanding its difficulty, should include the transaction date, amount, inconvenience, and expense."^ The same ralocation, means of transfer, type of transac- tionale applies to EFT transactions. However, tion, other parties to the transaction, and transaction number. These statements are par- ^ U.C.C. § 4-402 ticularly important because they will serve 2U.C.C. § 4-403, n.2. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A884 Federal Reserve Bulletin • October 1976 stop payment transactions will probably occur attractive. In urging reconsideration of the ban infrequently, and significant costs to the con- on unsolicited credit card distribution, I want sumer may be associated with them. There- to point out that the abuses that occurred in fore, the Congress may want to consider alter- the mid-1960's when regional, three-party natives, such as ''value dating," a system that credit-card systems were being established can permits the consumer and the merchant to now be controlled. Consumers enjoy the proagree on a future date on which a payment will tection of error resolution and strictly limited become final. liability. We should not recreate the extreme No one doubts that both mechanical and concentration that presently exists in the human errors will occur under an EFT system. credit card industry in ''debit" or EFT cards. Consumers have a particular reason under I hope the committee will revisit this issue, EFT to expect prompt error correction. Errors which has been so controversial. Under the may reduce or deplete the funds in the con- bill the consumer bears no liability for unausumer's account needed for day-to-day living thorized use of an EFT card unless the conexpenses. The Board, therefore, favors the sumer requested and received the card. Thus, provisions of H.R. 8753 concerning error reso- all liabiUty for unauthorized use of unsolicited lution and the requirement that statements con- cards appropriately rests with the institution tain sufficient identifying information to enable instead of the consumer. Further, there may the consumer to detect mistakes. The error be a worthy compromise in permitting the resolution procedure derives in part from the unsoHcited distribution of EFT cards, while Fair Credit Billing Act. requiring that the access code necessary for In H.R. 8753 the institution must acknowl- the card's use be sent only if the customer edge alleged errors within 7 days and correct accepts the plan. such errors within 30 days. That may not be Of equal importance is the resolution of feasible for EFT. In the case of credit errors questions that will be raised governing the use the consumer must decide only whether or not of shared systems. While it is not in H.R. to pay an erroneous bill. When the consumer 8753, surely the Congress will want to give is confronted with errors in his deposit ac- considerable attention to this issue. EFT count, however, he may be temporarily with- should serve the consumer by presenting as out funds. The Board believes that 37 days is few barriers as possible to the consumer's too long for a consumer to be without his access to all advantages of the network. Confunds, and that the error resolution period sumers should be able to make a purchase should be substantially shortened. from any merchant willing to accept their EFT I also want to bring to the committee's card, regardless of which institution has issued attention other basic concerns of the Board. the card. The consumer can get little benefit They are the risk that the bill could have from his EFT account if he cannot use his card anticompetitive effects and could increase in a store having a terminal because the costs that EFT systems should reduce. switching network will not accept the transac- Vigorous competition between financial in- tion. stitutions constitutes an important form of con- H.R. 8753 seeks to assure that the check sumer protection. The prohibition of H.R. 8753 payment system will continue as an alternative upon circulation of EFT cards that consumers to EFT. The Board supports the retention of have not requested can impose a substantial the checking alternative, but opposes the probarrier to supplier entry into the EFT market. visions in the bill that require institutions to The new EFT institution faces more difficult charge as much for their EFT services as for start-up problems than even that experienced checks. Both consumer protection and overby a credit-card issuer. A large base of card- all competition will be better served if price holders is essential to attract merchant par- competition remains unrestricted so that conticipants. Without such a base of participating sumers can realize any cost savings available merchants, consumers will not find the system through EFT. A poHcy of competitive pricing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 885 would parallel the recent interest in unbundling notice to the effect that Federal law prohibits of bank charges and Truth in Lending's the distribution of unsolicited cards. Even if authorization of discounts for cash. this committee decides not to reconsider the The Board's concern about legislation pro- Board's recommendation that the Congress hibiting price competition requires me to repeal or alter the^ ban on unsolicited cards, comment on the provision that affects charges the Board believes that the very slight degree for credit. We are opposed to this type of of protection conferred on consumers by this Federal price fixing. It invades the business- notice requirement may not justify the exdecision flexibility of sellers and would pense, confusion, and paperwork associated supplant or conflict with much State legisla- with printing, enclosing, and mailing the tion. notices. Another issue of particular interest to the The Board's interest in the reduction of Board is the effect of the proposed bill on the costs also applies to recent proposals to recost of electronic payment services to the place descriptive billing for open-end credit consumer. H.R. 8753 would require that EFT with a requirement that the creditor enclose generate written documentation of virtually all copies of written receipts with periodic statetransactions: sales, loans, debits, and credits. ments. The Board has experience with some The cost of this broad requirement could nul- consumer complaints about descriptive billing lify the benefits and conveniences EFT offers. such as inadequate or misleading identification A requirement of such records at the point of of transactions. On balance, the Board besale or loan appears reasonable. Simply hand- lieves that the loss of information by noning a receipt to the consumer presents few return of receipts and the occasional inconlogistical problems, entails no mailing costs, venience at having to request copies will not and permits the EFT institution to obtain the outweigh the increased paperwork and cost user's signature for potential comparison with involved in their automatic collection, sorting, the account holder's in the event of a disputed and return. transaction. However, concurrent mailing of a Many people feel that EFT proponents have record of a nonpoint-of-sale or loan transac- focused attention upon EFT issues involving tion to the consumer involves significant technology and marketing and have not paid costs. Since the transaction will generate no sufficient heed to safeguarding consumers. consumer signature, the degree of protection H.R. 8753 is a most important step in balancafforded the consumer by this procedure has ing these concerns. That is the reason I have hmits. The Board, therefore, wonders if the offered the Board's strong support for the nonpoint-of-sale or loan transaction, particu- work of this committee on many of the key larly a periodic deposit or preauthorized trans- provisions in the bill. Comments urging fer, warrants the expense of concurrent doc- further study on consumer privacy issues, the umentation, when it may result in so little possible anticompetitive effects of shared sysadditional consumer protection but will add tems, and the costs to the consumer of producsubstantially to costs. The Board suggests that ing duphcate records are offered in the spirit of negative notice, failure by an institution to helping the committee improve the legislation. receive a regular automatic deposit, for exam- The Board believes that many of these probple, would provide sufficient consumer pro- lems can be resolved after further careful tection against missed transfers at greatly re- study. With your approval, Mr. Chairman, I duced cost. plan to submit a technical appendix for the The Board's interest in reducing the cost of record offering appropriate suggestions for electronic payment services to the consumer some of the points I have raised this morning. also extends to notice requirements. H.R. I hope these comments have been helpful, 8753 would compel institutions and credit-card and I will be pleased to try to answer whatever issuers to include with their respective cards a questions you may have. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A886 Federal Reserve Bulletin • October 1976 Statement by Stephen S. Gardner, Vice more than 10 per cent of a bank's stock are Chairman, Board of Governors of the Federal made at rates below prime and in amounts in Reserve System, before the Committee on excess of the purchase price of the shares. A Banking, Housing and Urban Affairs, U.S. study of 163 banks where changes in control in Senate, September 26, 1977. 1975 were financed by stock loans, however, shows that no over-all deterioration has oc- I am pleased to appear before the committee curred in the condition of those banks. While on behalf of the Board of Governors of the these preliminary indications are consistent Federal Reserve System to assist you in with Federal Reserve experience, they may be gathering information on banking practices qualified when the complete study is finished. and to express the Board's judgment on the In discussing bank stock loans, I want to need for additional statutory and regulatory examine the underlying civic and economic safeguards. It is important to have a full and benefits that derive from such credit. There balanced evaluation of this question. We have are some 14,500 commercial banks in the a great deal of statutory restrictions and regu- United States, and almost all of these corporalations levied on domestic depositary institu- tions are small businesses judged by any tions in this country, and this oversight legisla- standard of bank measurement. The larger tion and regulation is very effective. Further, shareholders are typically successful small the Board has proposed, as you know, addi- businessmen or women or farmers or profestions to its regulatory powers for a number of sionals, including doctors, dentists, lawyers, years. This committee, to its great credit, and and their families or heirs. The local market for the Senate have recently enacted most of the such bank stock is extremely limited, but local Board's proposals in S. 71. House action on ownership is prized as a civic asset. When that supervisory powers bill is expected soon. owners' estates must be settled or retirement The proposals in S. 71 grew out of years of plans met, financing that permits local regulatory experience and they will strengthen ownership to continue is often essential as the agencies' ability to deal with unsafe and with any similar business transaction. Since a unsound banking practices. In addition, the bank is prohibited from lending on its own Board is ready to support some other im- stock, the small banker as with so much of his provements in regulatory powers. But we regular business transactions turns first to his must not prohibit legitimate practices or crush city correspondents for assistance. The printhe vitality of an industry so essential to our cipal correspondent is most familiar with the economy. bank's affairs, condition, and principals. In accordance with the committee's rules, Further, to gain such a relationship the corremy testimony will consist of summary com- spondent has routinely helped the smaller ments on the series of questions contained in bank with any problem within its capacity, and your letters. Detailed answers to the questions it does it, of course, because the smaller bank also appear in the appendix to this statement.' is a prime customer. This process clearly As the appendix states, we are in the midst of improves the marketability of small bank a definitive study, in response to your request, stock, enhances the attractiveness of such of banking practices related to bank stock stock as an investment, and provides for conloans. All the Federal bank regulators are tinuity of local ownership. participating in this work, and the study is Violations of law or good procedure can expected to be completed by December 1. The occur in any lending practice, and bank stock preliminary data that we have drawn from this loans are subject to particular scrutiny in our study indicate that some loans to purchase examiners' instructions because of the difficult evaluation an examiner must make of ^ The appendix to this statement is available on request three troublesome possibiHties. First, it is at from Publications Services, Division of Administrative least a breach of fiduciary duty for a bank Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. official to obtain preferential terms on a bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 887 stock loan by utilizing his bank's deposits in a supervisory powers to deal with the subject of correspondent bank. Second, bank stock ''preferential treatment." Competition for loans can be a vehicle for circumventing profitable bank business is no less common branching and holding company restrictions than competition in all other types of business. when the purchase of stock by "straw men" Legitimate and effective marketing strategy acting on behalf of a larger lending bank are guides banks in offering as many services as financed by that bank. Finally, when an indi- possible to customers. The prime rate is ofvidual finances the purchase or control of a fered to the most creditworthy borrowers that bank, his loan amortization may require that maintain relationships that the banks find large dividends and salary be paid to him. most profitable. Plans offering group rates for Through the examination process, and the banking services to the employees as well as requirements surrounding formations of bank the officers of large business customers of holding companies and acquisitions of new banks are just as normal as benefits employbanks by bank holding companies, the Federal ees, as a group, may obtain from a group Reserve has dealt with these problems. As insurance contract with an insurance firm. explained in my letter to you of September 7, There is no reason to "curb" such normal 1977, we have taken a number of steps to banking practices, and the term "favored cusprevent such problems. These have ranged tomer" needs very careful definition if it is from Chairman Burns' 1970 letter to the chief meant to imply the existence of practices that executive officer of each State member bank are harmful to the bank or to the economy. setting forth the view of the Justice Department As the appendix indicates, a small survey of that the use of interbank deposits as compensat- commercial bank overdrafts at 41 State ing balances for loans to individuals could con- member banks indicates that only 8 such stitute a violation of criminal law, to the referral banks had overdrafts outstanding to officers, to the Justice Department or U.S. Attorney of directors, and major shareholders, and the 37 cases of possible misapplication of bank aggregate amount of such overdrafts was less funds through loans to officers of other banks than two-thirds of 1 per cent of the total overand loans on bank stock. We have sufficient drafts reported by the same banks. Overdraft supervisory and regulatory powers to deal practices varied at the banks. Eight had fairly with ''straw men" and excessive dividends liberal standards, but we found no evidence and salaries, but the issue of correspondent in that preliminary study that the application balances is more difficult. None of the cases of overdraft policies could be termed diswe have referred to the Justice Department criminatory. have been prosecuted. Because of the nature Under Section 22g of the Federal Reserve of correspondent accounts, it is extremely Act, which imposes ceiHngs on loans to execudifficult to prove that there has been a misap- tive officers, overdrafts are considered to be plication of bank funds connected with loans unsecured extensions of credit and hmited by to officers or controlling shareholders of a that regulation to $5,000 for an executive smaller bank, and in most cases there has officer. We believe there are sufficient bank probably been no violation. But alternative regulatory procedures in place to administer approaches clearly deserve consideration by proper oversight of overdraft policies and the Committee in order to prevent real abuses, practices at banks. However, the Federal Deand I will submit Board recommendations cov- posit Insurance Corporation is making a more ering disclosure and margin requirements and comprehensive survey of overdraft policies at the requirement that bank stock loans be made selected banks and we will, of course, careat market rates and terms, in response to three fully review the results of that study before of the suggestions made in paragraph I.G. of expressing a final conclusion on that subject. your outline. It is our oversight experience that the majority As the statement in the appendix indicates, of banks conscientiously endeavor to comply the regulatory authorities have adequate with applicable banking laws and regulations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A888 Federal Reserve Bulletin • October 1976 Earlier this year at hearings before House I have included in the appendix a complete committees, we testified that the General Ac- list of 35 orders and agreements executed by counting Office (GAO) study on Federal bank the Board during the last 5 years under the supervision quite correctly pointed out that powers granted in the Financial Institutions the majority of violations of law and regula- Supervisory Act of 1966. In addition, 14 tions uncovered by bank examiners were of a agreements have been entered into by Reserve technical nature and had little or no impact on Banks and State member banks during this the financial soundness of the institution. This period. is entirely germane to your inquiry about the There are specific and sufficient laws coverextent to which banks comply with appropri- ing the liability of directors for improper ate law and regulation. As the appendix indi- banking practices. In addition, directors recates, in providing specific answers to your ceiving excessive salaries or dividends or misquestions about violations of provisions limit- using bank assets are subject to proceedings ing loans to executive officers and requiring under the Financial Institutions Supervisory disclosure of loans from other banks, we are Act since such practices would appear to confident that the provisions of S. 71 will constitute "unsound banking practice." The provide the base for even better compliance in Board has taken action to terminate excessive the future. salaries and dividends paid to a director and The payment of insurance premiums to controlling shareholder by a bank holding bank officials on credit-related health and company. These same conditions would most life insurance arising from credit extensions probably invite civil suit by other corporate is covered in detail in the appendix. This is shareholders as well. a common practice of smaller, rural banks, I want to point out also that two of the especially in the Midwest, and particularly Board proposals incorporated in S. 71 will in States that have statutes and regulations clarify the Board's authority to issue ceasethat prohibit banks from receiving such in- and-desist orders against individual officers surance commissions. The Board's staff is and directors. Further, the criteria for removengaged in a detailed study and evaluation of ing an officer or director that is expanded to the merits and difficulty of such procedures. cover gross negligence in S. 71 will expedite On the one hand, the practice permits small Federal Reserve action in the case of directors banks to supplement salaries and attract more who flagrantly ignore their fiduciary responcompetent management. In addition, such sibilities. premium income frequently assists in servic- Comments are included in the appendix ing and retiring bank stock loans that are not citing Title 18 in Secfion 411(b) of the United criticizable. On the other hand, it appears to States Code, which deals with impermissible be a diversion of income from the bank. I bank pohtical activities. cannot report that the Board has taken a While there is no specific prohibition against position on this practice generally, but it has pledging the same collateral for different loans carefully administered the provisions of S. at different financial institutions, it is our 106(b) of the Bank Holding Company Act to opinion that none is needed. The Uniform assure that no impermissible tie-in provisions Commercial Code with great detail and speciare present in bank lending practices. Further, ficity sets up the rights and priorities bewe have no evidence that unsound loans are tween creditors to collateral pledged to secure made by member banks in an effort to gener- loans. ate insurance income. This would be a self- I have also provided an answer to your defeating practice in that bad loans could have question about the application of conflict-ofa serious impact on an institution many times interest regulations affecting examiners who larger than the mere receipt of insurance may take positions after their Federal service commissions. with banks. The GAO reviewed this question Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 889 in the study mentioned previously in my tes- recommend that the acquiring shareholder be timony and concluded ''since few examiners required to file the disclosure report. left to work for banks they examined, we see In summary, the complex and comprehenno threat to their objectivity as long as the sive Federal oversight and regulation of the agencies continue rotating examiners-in- banking industry has effectively served the charge among banks examined and review public purpose of stopping all but an incrediexamination reports at regional offices and bly small number of bank failures in the District banks." Professional bank examiners United States. No other private industry is have in the past been a source of good man- subject to such detailed Federal and State agement talent for the banking industry. They financial oversight. This system has evolved are subject to careful conflict-of-interest and has met changing conditions in our econpolicy governing any dealings with banks omy. I believe the passage of S. 71 is part of while they are examiners. Their work and this careful development of regulatory restricrecommendations are reviewed by the Federal tions aimed at controlling unsafe and unsound Reserve Bank senior staff as well as senior banking practices. I beheve some modest ad- Board officials. We do not believe any addi- ditional measures, as indicated in this testion to the current protections are necessary. timony, will be helpful today. I reject the The issue of whether or not there should be concept that we need to propose pervasive a Federal statute requiring supervisory ap- and severely Hmiting broader restrictions on proval for the transfer of control of banks has banking institutions and their managers. I been examined carefully by the Board. Such cannot resist pointing out one anachronism. requirements are presently necessary for the All of our Federal laws governing banking chartering of new banks or the acquisition or institutions cover only domestic banks. We control of banks by corporations or partner- have no such Federal oversight for the growships. However, there is no prior approval ing and significant population of foreign banks required of individuals who purchase control- operating in this country. This committee in ling interests in banks. In the suggestions for the past has considered such legislation. The new authority that I will send you, we will House is presently deliberating over an Interinclude a strengthening of disclosure and re- national Banking Act, and I can say categoriporting requirements covering the acquisition cally that the one area where some form of fair of 25 per cent or more of the ownership of a and comparable regulation is needed is that bank by an individual. At present the institu- which addresses the powers and oversight of tion must make such a report, but since it may foreign institutions operating in the United not be aware of such changes, the Board will States. • Statement by J. Charles Partee, Member, velopments. As I understand it, the purpose of Board of Governors of the Federal Reserve this hearing is to provide an updating of the System, before the Subcommittee on Domes- recent monetary oversight hearings of your tic Monetary Policy of the Committee on parent committee at which Chairman Burns Banking, Finance and Urban Affairs, U.S. appeared. My remarks therefore will supple- House of Representatives, September 27, 1977. ment his, and I think it would be appropriate to include a copy of the Chairman's testimony I am pleased to appear before this committee on that occasion as an attachment to my much today to present the views of the Board of briefer statement. (August 1977 BULLETIN, Governors of the Federal Reserve System pp. 721-28.) with respect to recent monetary de- As Chairman Burns indicated at the July 29 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A890 Federal Reserve Bulletin • October 1976 hearings, the Federal Open Market Committee aggregates tended to run above the FOMC's (FOMC) at its July meeting adopted new expectations. System operations have been longer-run growth ranges for the monetary directed toward holding down on the provision aggregates that it expected to be appropriate of bank reserves needed to support the larger to the needs of the economy over the coming monetary totals. Just as in any other market, year. These growth rate ranges were 4 to 6V2 the more limited availability of reserve per cent for M-1 (defined to include currency supplies relative to demands has meant that and demand deposits at banks), 7 to Wi per prices—in this case, interest rates—have gone cent for M-2 (which is M-1 plus savings and up on day-to-day bank borrowings (Federal time deposits—except for large negotiable funds) and other very short-term sources of certificates of deposit (CD's)—at the banks), financing. The rate paid on Federal funds, for and SV2 to 11 per cent for M-3 (which is M-2 plus example, is up about IVi percentage points deposits at the thrift institutions). The Chair- from the lows prevailing early this year, with man also noted that implicit in these projec- almost all of the rise taking place during and tions for monetary growth was the expectation after the April and July run-ups in the narrow that the velocity of M-1 would continue to in- money supply. Other short-term market intercrease at a faster rate than it had during com- est rates also have been affected, but longerparable periods of previous business-cycle term interest rates, which are of much greater expansions, and that, because of heightened significance to the economy, have not inuncertainty as to the relationship between rates creased on balance despite the firming since of monetary expansion and the performance of April in short-term market conditions. the economy, the Federal Reserve would con- Some would argue that the Federal Reserve tinue to maintain a posture of vigilance and should have responded more forcefully to the flexibility in the period ahead. April and July bulges in the money supply. The fact is that the pace of monetary expan- Indeed, a few would say that the reserves sion now appears to have been unusually rapid necessary to support the deposit expansion during recent months. This is especially true simply should not have been provided, letting of the narrowly defined money supply, where financial markets and the economy suffer the increase over the past 6 months—from whatever consequences might result. But the February to August—is indicated to have been FOMC continues to believe that the wiser at an annual rate of 9.1 per cent. This rate of course is to limit the speed with which money expansion, of course, is well above the market conditions are adjusted to changing FOMC's stated longer-run range of projec- monetary growth rates. We believe this partly tions. Broader measures of the money supply, because the monetary aggregates— on the other hand, have grown at rates only a particularly M-1—have proved to be inherlittle above the upper end of the Committee's ently unstable in the short run. Bulges of a projected ranges. During the past 6 months, month or two in duration are often reversed M-2 and M-3 have increased at annual rates of subsequently, as was the case in the spring 9.9 per cent and 11.3 per cent, respectively. I and summer of 1975 and again in 1976. Prumight note that over longer time periods—the dence in our actions is dictated also by the fact past year, for example—growth in M-1 has that the relationship between the various measbeen more moderate while the increases in ures of monetary growth and the perform- M-2 and M-3 have been somewhat higher than ance of the economy is loose and unreliable, those I have just cited. And over all of the since it is subject to rather abrupt shifts as the period of economic recovery, dating from result of changing financial practices and ecothe first quarter of 1975, the expansion in the nomic conditions. narrow money supply has averaged just over 6 In the current situation, for example, there per cent per annum. are a number of ambiguities for which we do As the recent expansion in the monetary not yet have the answers. Until there is more Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 891 information, it seems to me that one should be months, following acceleration earlier in the very cautious about prescribing a policy of year. stern monetary restraint. This has been true also abroad, where First, the excessive growth in the narrow most developed countries to date have shown money supply this year has been concentrated only rather sluggish recoveries. Nor has there in just two 1-month periods—April and July. been a rush of business borrowing at the We do not have a good explanation for these banks, though credit demands in general have bulges. It may be that they reflect in part a been well sustained. Thus the current ecoshift in the seasonal pattern of money demand. nomic data do not suggest that businesses and If so, it is entirely possible that a period of households are building up cash balances with adjustment in money growth could lie ahead, a view to increasing abruptly their rate of just as it has in the latter part of other recent expenditure. Since sizable unused resources years. still exist in this and other economies, Second, the abnormal expansion that has moreover, there is no immediate need to reoccurred over the past 6 months has been strain excessive expansion, and there should concentrated in the narrow money supply, be time to check any speculative surge in while the growth in broader monetary spending and investment that might develop. measures—though substantial—has been I can assure you that the Federal Reserve much closer to our expectations. One reason has been concerned about the recently accelfor this development may be that the acceler- erated growth in the narrow money supply and ated pace at which other forms of deposit and that we are monitoring this development liquid asset instruments were being substi- closely. And I want to emphasize that we have tuted for bank checking account balances has by no means given up on our views as to the now slowed, at least temporarily. That would ranges of growth for the family of monetary modify the meaning of the changed relative aggregates that are appropriate in the longer growth rates of the various monetary aggre- run to the needs of the economy. The recent gates, in terms of probable impact on future tendency toward excess has proceeded in fits economic performance, since it would simply and starts, however, and we cannot yet be reflect a shift in holder preference from one sure how durable—or meaningful—these inform of deposit to another. creases are likely to be. Our efforts to restrain Third, the behavior of the economy this the monetary expansion must therefore be spring and summer, though generally satisfac- judicious. With the unemployment rate natory, does not suggest that a major new boom tionally still hovering around 7 per cent, we is in the process of developing. Indeed, both would not want to contribute to conditions in the growth in real activity and the pace of credit markets that might imperil the prospects inflation have slowed somewhat in recent for sustained economic recovery. • Statement by Philip E. Coldwell, Member, the Board of Governors of the Federal Re- Board of Governors of the Federal Reserve serve System on H.R. 9086, the Safe Banking System, before the Subcommittee on Finan- Act of 1977. Before I address some of the cial Institutions Supervision, Regulation and more important provisions of the bill directly, Insurance of the Committee on Banking, Fi- the Board believes that it is important to place nance and Urban Affairs, U.S. House of the bill in the context of prior efforts. Representatives, September 28, 1977. As you are aware, Mr. Chairman, in September 1975 the Board proposed legislation on Mr. Chairman, I appreciate the opportunity to behalf of the three bank regulatory agencies testify before this subcommittee on behalf of designed to improve supervisory effective- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A892 Federal Reserve Bulletin • October 1976 ness. These proposals arose from a study by needed. However, if such practices appear to the agencies subsequent to the Franklin Na- be sometimes beneficial or reflected in only a tional Bank failure of possible legislative ac- few banks, then examination, supervisory, tions to aid the agencies in their goal of and perhaps regulatory action reinforced by preventing or ameliorating difficult bank situa- the additional tools of S. 71 would appear to be tions. adequate to meet the problem. The legislation recommended by the agen- The combination of the existing provisions cies was included in the Financial Reform Act of S. 71 with the additional restrictions in H.R. and was in large part embodied in S. 2304, 9086 are excessive in light of existing knowlwhich was reported out of the Senate Commit- edge of the problem and too severely restrict tee on Banking, Housing and Urban Affairs in the ability of banks to provide loans to the 94th Congress. This legislation was sub- creditworthy local businesses. Furthermore, sequently found to be necessary and was sup- the legislation will severely interfere with the ported by the General Accounting Office in its ability of financial institutions to obtain qualstudy entitled Federal Supervision of State ified outside directors. The provisions relating and National Banks. In this session of the to transfers of bank stock by individuals are Congress, the majority of these proposals too restrictive in view of the known nature of were reported out of the Senate Banking the problem and would interfere with the Committee as S. 71 and, in fact, recently ability of banks to obtain capable successor passed the full Senate. management through which it would serve the The Board believes that the proposals em- community. Again, substantial revisions are bodied in S. 71 are relatively noncontroversial proposed in the bank holding company area and are needed in our ongoing supervisory without a demonstration that there is a probwork. As you are aware, H.R. 9086 contains a lem needing to be remedied. These portions of large number of provisions that are unrelated the bill should not be enacted without extento the basic supervisory thrust of S. 71 or raise sive analysis and study of the problems innew issues. Furthermore, many of these pro- volved. visions are likely to be controversial, and we For these reasons, we urge that the subare frankly concerned that such controversy committee go forward with those noncontrowill interfere with the passage of the other versial provisions of H.R. 9086 that are emnecessary, noncontroversial provisions. bodied in S. 71 and for which the agencies Many of the additional titles, which go be- have an ongoing need, and separate out other yond the basic supervisory thrust of S. 71, portions of the bill for further study and conrepresent a potential overreaction to recent sideration. Board testimony on S. 71 reflects pubHc discussion of certain practices. The many of the prime reasons for this supervisory Board does not condone abuse of a bank for thrust, and I ask that it be placed in the record the benefit of insiders. In fact, the majority of on these hearings. (Statement, September 26, the proposals reflected in the Board's original 1977, by Governor Gardner.) legislative recommendations in the supervis- I would now like to turn to the Board's ory field are designed to curb such abuses and comments on some of the specific provisions enable the agencies to take more effective of the bill. The bill is, as I have already noted, supervisory action when such abuses are dis- so extensive and touches on so many imporcovered. However, we believe that the adop- tant areas that, in the time allowed, I will only tion of additional restrictions without the ben- be able to provide the Board's comments on efit of a full factual analysis could result in some of the major issues raised by the bill. I significant harm to the business of banking and am submitting for the record a section-byinterfere with the provision of credit to the section analysis of the bill, which sets forth the economy. If the practices sought to be cor- Board's comments on those provisions of rected are indeed potentially harmful and concern to the Board. widespread, then legislative action may be I will now turn to Title I of the bill, which Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 893 incorporates many of the proposed im- The requirement that the aggregate loan provements in the bank supervisory and regu- limitation on loans to covered insiders be set latory area that passed the Senate in S. 71. at 50 per cent of the statutory loan limit to an As I have noted earlier, the Board strongly individual borrower will again provide a strong supports these provisions and urges their im- disincentive for outside directors to serve on mediate enactment. However, the Board bank boards. Once the statute has been questions the need for some of the changes amended to aggregate all loans for a particular that have been made. In the area of 'insider insider and his related interests, it does not lending" particularly, the changes to S. 71 that appear that there is any substantial decrease in are made in Title I are too restrictive and risk to the bank's safety or solvency by movwould unduly constrain legitimate lending ing from 10 per cent to 5 per cent of the total practices without measurable countervailing capital and surplus of the bank. public benefit. The net result of these provi- Title I further places a ceiling on aggregate sions would be to prevent many businessmen lending to all insiders. We do not believe such from lending their expertise to bank boards a provision to be necessary or appropriate. of directors. The aggregation of loans to the interests of any Title I would modify the aggregate lending one insider is based on the premise that such a provisions of S. 71 so that they would apply concentration is more risky in the case of an to a director and his related companies whether insider because those loans might be made on or not that director was an officer or a 10 less than an arm's-length basis. While an arper cent shareholder. The Board believes that gument might be made that similar considersuch a provision would severely limit the ations of risk would support an additional Hmavailability of qualified directors for banks, itation on the aggregate of a bank's loans to all particularly in smaller communities. In such insiders and their interests, our experience smaller communities, it is not at all unusual for has not shown that an additional limitation an outside director to control more than one is necessary. In cases that have come to our local business. This bill would force the out- attention involving insider lending abuses, side director to choose between the local those abuses have been limited to one or a availability of credit for those businesses and few, generally controlling, individuals and his service as a bank director. The result of have not typically involved the entire board, such a choice could be to deprive the bank of particularly its outside directors. An additional experience and advice. limitation on the aggregate of loans to insiders In our view, the requirement elsewhere in and their interests, which would rule out the Title I—that loans to insiders be approved by major portion of such loans, would be a serious two-thirds of the board of directors and that deterrent to the ability of banks to attract indesuch loans not be extended unless they are pendent outside directors. In addition, it would made on substantially the same terms, includ- restrict a bank's ability to lend to companies ing interest rates and collateral, as those pre- and individuals best known by the bank to be vailing at the time for comparable transactions creditworthy and would require banks to rawith other persons and do not involve more tion credit among the directors and companies than the normal risk of repayment or present they control. other unfavorable features—adequately pro- In closing the Board's comments on Title I tects against possible abuses. Unless a di- of the bill, we believe that it is necessary to rector were also an officer or a 10-per-cent-or- consider the cumulative effect of the proposals greater shareholder, it is unlikely that he that have been made. In sum, if the proposals would be able to induce the other directors to are adopted as proposed, a bank may find it make a questionable loan, particularly in view impossible to obtain qualified outside diof the liability to which the other directors rectors as is required by a subsequent title would subject themselves under the civil pen- of this bill. Such, almost punitive, provisions alty provisions. should not be imposed since there is no show- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A894 Federal Reserve Bulletin • October 1976 ing of any significant number of instances are instances in which changes of control have where outside directors have abused their led or will lead to adverse impacts on the bank positions. Again, with respect to other insid- involved. However, the Board seriously quesers, the harshness of the remedy far exceeds tions whether the approval process conthe frequency of demonstrated abuses. templated would prevent enough of these The next major portion of the bill on which instances to justify the costs involved. Addithe Board wishes to comment is Title VI, tionally, we are concerned whether appropriwhich would radically change the ground rules ate standards for the exercise of discretion to for the transfer of ownership of bank stock by permit or deny individual ownership can be requiring prior approval of the Federal De- drafted that will adequately balance the indiposit Insurance Corporation (with input from vidual's rights with the protection of the inthe Comptroller of the Currency or the Board, stitution. We believe the standards imposed in as the case may be) before any individual the title as drafted are too indefinite and would could acquire control of an insured bank. give too much authority to the supervisory Since 1956 in its consideration of the Bank authority. Further, a conflict could arise be- Holding Company Act and the various tween the standards applied for individual amendments thereto, the Congress has care- ownership under this title and those imposed fully drawn a distinction between corporate for corporate ownership under the Bank Holdand individual ownership. In fact, it was not ing Company Act. until 1970 that the Congress expanded the In this regard, the Board believes that there coverage of the Bank Holding Company Act is a less disruptive method by which the goal to partnerships owning bank stocks. Similar of attempting to prevent adverse impacts of distinctions have been consistently drawn bank ownership changes can be achieved. under the Savings and Loan Holding Com- Section 7(j) of the Federal Deposit Insurance pany Act. These previous actions on the part Act presently requires that reports of change of the Congress have basically reflected a of control of financial institutions be filed by concern for the marketability of bank stocks, a the institution when it realizes that such a desire not to unduly discourage changes in the change has occurred. The Board beheves that control of banks, and a respect for the indi- it might be appropriate to require filing of a vidual's rights to buy or sell stock. Particularly report by the acquiring person no later than in the Nation's smaller communities, succes- the date of consummation of any change of 25 sor ownership and management have to be per cent or more ownership. Civil penalties readily available, and many changes in control should apply for the failure to file such a and management of banks result in more effec- report, and the report should contain much of tive and responsible ownership, are highly the information required by Title VI. In this desirable, and should be encouraged. manner, if there were any circumstances re- Any regulatory requirement for prior ap- garding such a substantial ownership change proval would necessarily impose burdens, as to give rise to a suspicion by the bank costs, and delays that would hinder such regulatory agency that the bank involved changes, desirable as well as undesirable, re- might be abused as a result of such change, the strict the marketability of bank stock, and bank regulatory agency would be in a position discourage some young persons of promise to have its personnel monitor developments at from entering the banking industry. The costs the bank and take action before the bank and burdens of this type of Federal legislation suffered any serious adverse impact. We beshould not be imposed on the more than 14,400 lieve that such an approach would adequately insured banks in the country without better balance supervisory concerns with individual demonstration that there is a compelling need rights and the necessity for the marketability for the legislation or that the goals of bank safe- of bank stock. ty and soundness cannot be reached through The Board believes that under certain cirless obtrusive legislation. Undoubtedly there cumstances there is some merit to the concept Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 895 introduced in the bill of applying a margin spondent accounts or the size of the accounts requirement to all bank stocks whether or not not justified by services rendered. In addition, they are publicly traded. However, we believe we believe that a requirement for no preferena requirement of a 50 per cent margin as tial treatment should be imposed on all bank proposed by the bill would make it extremely stock loans whether or not a correspondent difficult to provide for successor ownership balance exists. Such requirements should be and management at smaller institutions in backed up with civil penalties, and the comsmaller communities. Rather, we believe a mittee may wish to consider the desirability of more appropriate margin would be 25 per cent such a provision in conjunction with the and that there should be regulatory exemptive aforementioned margin requirement as an alauthority depending on the circumstances. ternative to the prohibitions of Title VIII. Such a margin requirement should apply when The bill, however, would also reach ''outcontrol is being acquired and where the loan side directors" and will prevent creditworthy involved is from a commercial bank. Other- loans by banks that have correspondent wise, such bank stock loans should be set on relationships with the bank on whose board the same terms and conditions as other bank they sit. It must be remembered that in many loans. instances a correspondent bank is in the best With respect to the provisions relating to position to judge the credit of people in a correspondent balances, the basic purpose of downstream correspondent. In view of the Title VIII of the bill appears to be to prevent restrictions proposed in Title I relating to an insider of one bank from influencing the insiders borrowing from their own institutions, placement of such balances as a means of the provision is overly broad and would unobtaining loans, probably at preferential fairly restrict the ability of these individuals to terms, from another bank. To this end the title obtain credit. The Board, therefore, beheves would prohibit bank A, which has a corre- that outside directors, that is, directors who spondent account from bank B, from lending are not otherwise officers or 10 per cent to insiders of bank B, or if bank A has lent to shareholders, should be removed from the insiders at bank B, from opening up a corre- prohibitions of Title VIII and that only the spondent account for bank B. requirement of nonpreferential treatment be The title goes on to prohibit a bank keeping instituted with respect to loans to such individuals. That is, the loans should be required a correspondent balance with another bank to be on no more favorable terms and present from making a loan to an insider of that no more risk of collectability than comparable correspondent or a bank having such a loan loans to third parties. from opening up a correspondent account at such bank. With respect to the latter prohibi- As it has in the past, the Board favors tion, there appear to be few, if any, known enactment of a right to financial privacy bill cases where banks providing correspondent and one that would, as would Title XI, accounts were abused in the manner that the extend the disclosure prohibition to any perprovision is apparently designed to prevent, son rather than just covering disclosure to and we question its necessity. governmental agencies. We are somewhat The Board strongly supports the purpose of concerned, however, that there may be certain preventing insiders from profiting through the technical details in this bill that would impede placement of correspondent balances, and we the Board's ability to carry out its statutory have previously taken action to attempt to functions. insure that such abuses do not occur. The Section 1110(e) should be amended to make exposure to such abuse is particularly high in it clear that the title does not authorize withthe case of an officer or controlling stock- holding of financial information that regulaholder of a bank. However, rather than pro- tory agencies have a statutory right to collect hibit such relationships, the Board believes whether or not a statute specifically requires that limits could be imposed on shifts of corre- the information to be reported. Furthermore, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A896 Federal Reserve Bulletin • October 1976 we believe that 1110(b) should be amended to Board to promulgate regulations requiring that include not only supervisory but also each bank holding company and its banking monetary and regulatory functions. subsidiaries include on its board a ''reason- Section 1109 could have the unintended able" number of persons who are not affiliated effect of disabling the bank supervisory agen- with the holding company or its subsidiaries. cies from exchanging information among them- The Board believes such a provision preselves or from making relevant information empts the prerogative of shareholders under available to the Department of Justice and both national and State law. To our knowlthe Securities and Exchange Commission for edge such a requirement is without precedent, enforcement purposes. We therefore believe and we are aware of no showing of a compelling that a sentence should be added at the end of need to interfere with the rights of shareholders 1109 that states: in this regard. Title XIII of the bill also contains, in Sec- Nothing in this title prohibits any supervisory tions 1308 through 1313, provisions that would agency from exchanging examination reports or other information. with another supervi- drastically alter the present regulatory scheme sory agency, or from supplying information to for bank holding companies contained in the a prosecutorial or enforcement agency con- Bank Holding Company Act of 1956, as cerning a possible violation of a regulation or amended. As I noted in my introduction, the statute administered by the supervisory Board is quite concerned that, due to the size agency. and complexity of H.R. 9086 and the number We are concerned, however, with section of important issues covered therein, adequate 1104 of the bill relating to the nonauthorized consideration may not be given as to the use of terminals and disclosure of a customer's desirability of these amendments. transactions at those terminals. While the The amendments would prohibit any bank Board is generally in favor of such precau- acquisition by a bank holding company if it tions, we believe that this portion of the bill is would result in the bank holding company overly vague. Any provisions relating to holding more than 20 per cent of the total EFT systems security should set forth stan- assets held by all banks and bank holding dards and methods of security with great speci- companies in the State in which the bank is ficity in order to enable financial institutions located. We seriously question the desirabihty to properly comply with the section. For this of such a rigid asset limitation and do not reason, we recommend that this section of the beheve any need has been shown to impose bill be deleted so that it may be later con- such a hmitation. Recent studies have shown sidered in greater detail. no trend, on a nationwide basis, toward in- The title of the bill relating to holding com- creased concentration during 1968 through panies incorporates a number of provisions, 1975. In fact, aggregate concentration dewhich were embodied in S. 71, that would im- clined. Further, during the period 1960-74 prove the Board's supervisory authority over there was no over-all trend toward increased bank holding companies, and the Board urges Statewide concentration. the immediate enactment of these. In addition, As a general matter, a requirement of this this title would authorize the waiver of the nature could lead to anticompetitive market 30-day notice requirement in the Bank Hold- protection for some banks. Furthermore, as ing Company Act in the case of emergency or drafted, the limitation might have inequitable faihng bank situations. The Board believes results between various banking organizations that enactment of this provision is extremely depending on whether the assets were interimportant, and while it was not incorporated State or intra-State or perhaps derived from in S. 71, the Board beheves it to be completely an international business, or State deposits noncontroversial and recommends its im- that may fluctuate. The focus on the total mediate enactment. assets approach also overlooks the impact of Section 1307 of the title would require the present and future bank-type authority Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 897 granted nonbank financial intermediaries that be based on substantial factual evidence that might intensify competition to commercial the change is needed. The Board's staff is banks for some banking services. currently preparing a rather comprehensive Further, no single percentage figure would study and review of bank holding company be appropriate for all the States due to a activity that would assist in determining number of factors, including, among others, whether any change in the present standards the number of bank and nonbank competitors, for permissible activities would be in the pubcompetition from out-of-State institutions, the lic interest. We believe a major change such as existing size distribution of competitors, the suggested in Section 1310 should await the recent history of bank expansion, and legal or outcome of this study and other factual evieconomic impediments to unrestrained com- dence. petition such as home office protection laws. The Board believes that Section 1311 of the The provision further interferes with the right bill relating to "sound and competitive financof a State to determine the desirable banking ing of nonbanking activities" is generally constructure for that State. sistent with existing Board authority and prac- We note, however, that section 1308 would tices under the Bank Holding Company Act. allow the Board to deny a bank acquisition We do, however, object to the requirement that was not in the public interest even though that intercompany transaction reports be the anticompetitive effects of the acquisition made available to the public, as these reports would not rise to the level of a violation of the contain sensitive information comparable in antitrust laws. We believe that this would some respects to bank examination reports. constitute a desirable clarification of existing The Board strongly objects to the additional law. hearing and administrative procedures con- The bill also makes numerous changes in tained in Section 1312 et seq. The Board's section 4(c)(8) of the Bank Holding Company present procedures under the Bank Holding Act. A number of these changes are consistent Company Act are consistent with the Adwith present Board practices or make minor ministrative Procedure Act and provide for an changes in emphasis that would have no sub- adjudicative hearing on individual applications stantial effect on the administration of the act. when there are disputed questions of fact. We would note, however, that the proposed Section 1312 would depart from the Adminisrevised standards delete the provision of pres- trative Procedure Act by requiring a formal ent law that permits the Board to differentiate hearing for the promulgation of regulations between activities undertaken de novo and and all individual case determinations whether activities commenced by the acquisition of a or not there are factual matters in controversy. going concern. We beheve the authority to The courts and other authorities on adminisencourage de novo acquisitions has promoted trative law have long recognized the discompetition, and we strongly recommend that tinction established by the Administrative it be retained. Procedure Act between rulemaking and adjudi- The Board is quite concerned with the re- cation. Adjudication and a formal hearing are quirement that a nonbank activity be not only required to determine facts about particular closely related to banking but also ''directly" parties, their activities, businesses, and related and that it be not only a proper incident property. On the other hand, a rule-making thereto, but a ''necessary" incident. All of the proceeding is less formal because typically the nonbanking activities presently permitted by issues do not relate to evidentiary facts as to the Board were carefully considered under the which the veracity and demeanor of witnesses guidance furnished by the legislative history of would be important. We believe that the precthe 1970 amendments and after obtaining ex- edents in administrative law demonstrate that tensive public comment. A major change in the public interest is safeguarded and best the standards for permissible activities such as served by avoiding the cumbersome procethat contemplated in Section 1309 should only dures of formal adversary hearings. In connec- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A898 Federal Reserve Bulletin • October 1976 tion with rulemaking, the experience of those The continuing possibility of unfounded atfew agencies who use formal hearings is that tacks could deter many bank holding comsuch rule-making proceedings are unrea- panies from engaging in nonbanking activities. sonably lengthy. Accordingly, we beHeve that This in turn would result in the curtailment of the Board's present procedures should be con- the possible benefits obtained under the Bank tinued. Holding Company Act from more innovative Finally, we are concerned with the provi- and competitive services in bank-related sions requiring the Board to process a petition fields. to commence a proceeding to consider the In conclusion, Mr. Chairman, I would again issuance, amendment, or repeal of any order like to emphasize that the Board believes that or regulation relating to nonbank activities. the provisions of H.R. 9086, which were origi- We note that under the Administrative Proce- nally embodied in S. 71, are constructive and dure Act there is a present right for any person necessary. We commend the committee on to petition the Board for the adoption or having included them in this bill and recomamendment of a regulation. Additionally, the mend their immediate adoption. While the Board recognizes its responsibility to continu- Board is in sympathy with a number of objecally review its regulations and supervise on an tives of the additional provisions and might ongoing basis the operation of nonbank ac- support modified versions of some of the tivities by bank holding companies. However, proposals, we believe extensive study should we believe that the procedure established to establish the necessity and desirability of any challenge the operation of individual com- additional legislation. The Board would be panies provides a continuing possibility of happy to cooperate with and assist the comcollateral attacks on a bank holding company mittee in any such study it may wish to wishing to engage in a bank-related activity. undertake. • Statement by Stephen S. Gardner, Vice commends your committee for undertaking Chairman, Board of Governors of the Federal this essential work. Reserve System before the Subcommittee on I will begin today as I did in my House Consumer Affairs of the Committee on Bank- testimony by mentioning the public benefits ing, Housing and Urban Affairs, U.S. Sen- that EFT can provide to our society. The ate, October 4, 1977. electronic fund transfer systems open up opportunities to broaden consumer payment al- Mr. Chairman, the Board of Governors of the ternatives and to improve consumer conveni- Federal Reserve System is pleased to partici- ence and service while reducing the costs of pate in your committee's hearings on con- making payments. Direct deposit of Governsumer safeguards under the proposed "Elec- ment payroll and social security benefit paytronic Fund Transfer Consumer Protection ments through automated clearinghouses has Act." As you may know, I recently testified already helped people receiving funds by imon a similar bill before the Subcommittee on proving the security and convenience of such Consumer Affairs of the House Banking, Fi- payments and has resulted in substantial cost nance and Urban Affairs Committee. It is savings to the Government. Installation of clear that the need for such consumer teller machines by the financial institutions safeguards in electronic fund transfers (EFT) has offered consumers longer banking hours has been widely recognized—by the Con- and more convenient banking facilities at costs gress, the Board, the National Commission on much less than regular branches. The retailing Electronic Fund Transfers, and many repre- industry has successfully installed electronic sentatives of the general public. The Board cash registers that have demonstrated the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 899 convenience and cost savings expected of broad choice of alternatives for the public. EFT at the point of purchase. Limits on the ability of institutions to offer But EFT is developing at a more moderate EFT plans, whether imposed by legislation or and cautious pace than many predicted. The by the nature of EFT technology including major reasons for this slow development are economies of scale, could result in the same found in the many uncertainties that surround sort of highly concentrated market that the substitution of electronic systems for the characterizes the bank credit-card industry. traditional use of paper in bills, checks, re- Such an outcome would probably not be in the ceipts, and ledgers. Consumers, businessmen, public interest. and depositary institutions are unsure of their The most important provisions of S. 2065 rights and HabiHties in EFT systems. There are would prescribe the information the institution antitrust questions that need to be clarified supplies to the consumer as well as the subsince cooperation among competing deposi- stantive rights of the consumers. The Board tary institutions may be necessary in many particularly supports the advance disclosure markets to successfully introduce the new of EFT terms. The Board believes that this technology. It is not surprising, then, that we disclosure should be in easily understood lanare applying only a fraction of the technology guage and should include a list of all of the we possess and that businesses are reluctant consumer's rights and remedies that concern to make the substantial investment necessary his EFT account. The bill's requirement for to utiHze present know-how. semiannual disclosure of EFT terms, how- Clearly, the work of this committee can ever, would increase EFT costs, and it is speed the process by which we can realize the doubtful that repeated disclosures will cost savings and conveniences that our inven- heighten consumer awareness. tive technology can bring to the simple, nor- The Board is also concerned about the promal daily tasks of life by helping establish a vision requiring semiannual renewal of legal framework for the rights, liabilities, and preauthorized transfers. This would add subresponsibihties of participants in EFT. S. 2065 stantially to the costs of providing such transaddresses consumer rights and interests and is fers and burden consumers by requiring directed at quieting many of the fears. The periodic attention to a variety of authorization Board endorses the intent of the proposed dates at the peril of having an unplanned EFT consumer legislation. interruption of automatic payments such as for The Board believes that consumer protec- rent, utihties, insurance premiums, and so tion legislation should start with the premise forth. that keen competition is an aid to consumers The Board also endorses the concept of when both suppliers and purchasers are descriptive periodic statements describing the numerous. Competition is most Hkely to de- activity that has taken place in the consumer's velop when there are many participants in the account. The Board recommends that the marketplace. Therefore, legislation establish- statements include the transaction date, ing a legal framework for EFT should make it amount, location, means of transfer, type of possible for any and all depositary institutions transaction, other parties to the transaction, to set up EFT plans for their customers. The and transaction number. An appropriate degoal should be to afford individuals, small scriptive statement is particularly important businesses, and other users of EFT at least the because it will serve many functions now being same breadth of choice among alternative provided by cancelled checks. supphers of EFT services that they now have S. 2065 would also require that EFT generamong alternative suppliers of checking ac- ate written documentation of virtually all counts. If every depositary institution can transactions: sales, loans, debits, and credits. provide EFT capabilities to its depositors, The cost of this broad requirement could nulevery depositary institution can compete ef- lify the benefits and conveniences EFT offers. fectively, and competition will generate a A requirement of such records at the point of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A900 Federal Reserve Bulletin • October 1976 sale or loan appears reasonable. Simply hand- The bill would provide that a financial ining a receipt to the consumer presents few stitution shall reverse an electronic funds logistical problems, entails no mailing costs, transfer upon request of the consumer within and permits the EFT institution to obtain the three business days after the transfer. The user's signature for potential comparison with provision in the bill for reversing purchase the account holder's in the event of a disputed transactions is quite similar to the customer's transaction. present right to stop payment on a check. The However, concurrent mailing of a record Board supports the intent of this provision. of a nonpoint-of-sale or loan transaction However, there may be other worthy alternato the consumer involves significant costs. tives to an arbitrary reversal period such as Since the transaction will generate no value dating, a system that permits the conconsumer signature, the degree of protection sumer and the merchant to agree on a future afforded the consumer by this procedure has date on which a payment will become final. limits. The Board, therefore, questions Mechanical and human errors will occur whether the nonpoint-of-sale or loan transac- under an EFT system as they do in the paper tion, particularly a periodic deposit or payments system. Consumers have a particupreauthorized transfer, warrants the expense lar reason under EFT to expect prompt error of concurrent documentation when it may correction. Errors may reduce or deplete the result in so Httle additional consumer protec- funds in the consumer's account needed for tion and will add substantially to costs. day-to-day living expenses. The Board, there- The Board commends the negative notice fore, favors rapid error resolution and the provisions of S. 2065 for regular credits to an requirement of S. 2065 that statements contain EFT account as a partial solution to the docu- sufficient identifying information to enable the mentation cost problem. The committee may consumer to detect rnistakes. The bill would also wish to extend this approach to regular set different resolution deadlines depending on debits. when the consumer brings the error to the The Board also approves of the bill's provi- institution's attention. The Board questions sions on liability, error resolution, and the the need for this distinction. prohibitions against compulsory use of EFT. The bill would provide that financial institu- The Board endorses the limit proposed in S. tions have a fiduciary duty to protect and 2065 on a consumer's liability for unau- safeguard EFT deposit account information. thorized transfers by means of an EFT card. ''Fiduciary duty" is a legal term of art encom- This provision roughly parallels an earlier passing a good deal of unstated meaning. Board recommendation. Unauthorized uses of Applying this concept to EFT could change EFT cards, beyond minimal amounts, repre- the existing relationship between depositary sent avoidable or insurable risks that the institutions and depositors from that of debtor Board believes institutions, not consumers, and creditor to one of trustee and beneficiary. are better able to bear. Thus, for example, a trustee is not permitted The Board similarly approves of the provi- to mingle the beneficiary's funds with his own, sion in S. 2065 that makes financial institutions whereas a depositary institution routinely solely liable for consequential damages suf- does so. The Board believes that a better fered by the consumer as a result of a failure of approach may be to prescribe with specificity the financial institution to carry out transac- the scope of any institutional duty to protect tions as ordered by the consumer, except the consumer's privacy. where the failure resulted from a technical Another concern of the Board is that the bill malfunction caused by an act of God or other could have anticompetitive consequences. circumstances beyond the institution's con- Vigorous competition between financial introl. This provision parallels a similar provi- stitutions constitutes an important form of sion for checks in the Uniform Commercial consumer protection. The prohibition of S. Code. 2065 upon circulation of EFT cards that con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 901 sumers have not requested can impose a sub- its final recommendations, and the Commisstantial barrier to entry into the EFT market. sion appears to have taken a somewhat differ- The new EFT institution faces more difficult ent view. start-up problems even than those experi- Finally, the Board notes that S. 2065 covers enced by a credit-card issuer. A large base of EFT accounts held by nondepositary insitucardholders is essential to attract merchant tions. Thus, if the consumer uses EFT to participants. Without such a base of par- access his balance at a securities brokerage ticipating merchants, consumers will not house, mutual fund, or retail seller, he enjoys find the system attractive. We should not the same safeguards as for his EFT balance at recreate the extreme concentration that pre- a depositary institution. The Board endorses sently exists in the credit card industry in the concept of uniform protection but hopes ''debit" or EFT cards. that this bill will avoid becoming accidentally EFT cards are inherently safer than credit embroiled in the controversy over what incards. Depositary institutions and consumers stitutions may offer banking services. As this are not exposed to any liability from the committee knows, the definition of a deposit, unsolicited issuance of EFT cards because the the institutions holding deposits, and the card cannot be used without an access code— means by which depositors obtain access to that is, the personal identification number their funds have become increasingly flexible. (PIN)—or if the consumer does not have a The Board supports competition in deposit deposit account with the issuer. Moreover, the services, but believes that legislation should bill properly provides that the depositary in- address this issue separately from EFT constitution is fully liable for unauthorized uses of sumer protection; indeed, separately from an unaccepted card, that is, one that the EFT. consumer has not affirmatively requested. Many people feel that EFT proponents have Thus, the consumer gains from enhanced focused attention upon EFT issues involving competition would seem to outweigh any addi- technology and marketing and have not paid tional consumer protections that a ban on sufficient heed to safeguarding consumers. S. unsolicited issuance might provide. Further, 2065 is a most important step to balance these there may be a worthy compromise in permit- concerns. That is the reason I have offered the ting the unsolicited distribution of EFT cards, Board's strong support for the work of this while requiring that the access code necessary committee on many of the key provisions in for the card's use be sent only if the customer the bill. Comments urging further study of the accepts the plan. possible anticompetitive effects of the bill and Of equal importance is the resolution of the increased costs to the consumer are ofquestions that will be raised governing the use fered in the spirit of helping the committee of shared point-of-sale systems. While it is not improve the legislation. The Board believes in S. 2065, surely the Congress will want to that many of these problems can be resolved give considerable attention to this issue. EFT after further careful study. With your apshould serve the consumer by presenting as proval, Mr. Chairman, I plan to submit a technifew barriers as possible to the consumer's cal appendix for the record offering appropriate access to all advantages of the network. Con- suggestions for some of the points I have sumers should be able to make a purchase raised this morning.^ from any merchant willing to accept their EFT I hope these comments have been helpful, card, regardless of which institution issued the and I will be pleased to try to answer whatever card. The consumer can get little benefit from questions you may have. • this EFT account if he cannot use his card in a store having a terminal because the switching network will not accept the transaction. This ^ The appendix to this statement is available on request from Publications Services, Division of Administrative sharing issue was addressed by the National Services, Board of Governors of the Federal Reserve Commission on Electronic Fund Transfers in System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A902 Federal Reserve Bulletin • October 1976 Statement by Philip E. Coldwell, Member, one major role of the System is that of provid- Board of Governors of the Federal Reserve ing a largely voluntary, nationwide, govern- System, before the Committee on Banking, mentally controlled clearing bank of question- Housing and Urban Affairs, U.S. Senate, able solvency. The other major payments role October 11, 1977. of the System is to carry on functions of the Subtreasuries, such as issuing Federal Re- I am pleased to be able to discuss with this serve notes and serving as fiscal agent of the distinguished committee the role that the Fed- United States. The Federal Reserve Act has eral Reserve System plays in the Nation's been amended on several occasions since the payments mechanism. My testimony will de- System's role in the payments mechanism was scribe the scope of Federal Reserve participa- defined, but those sections dealing with the tion in the payments mechanism, and how that payments role have hardly been altered. participation serves the public interest. In As a consequence of carrying out its charaddition, I shall address the issues of pricing ter, the Reserve System exerts a pervasive and access and their relationship to the and beneficial influence on the Nation's paydeepening problem of- member bank with- ments mechanism. This influence is exerted drawal from the Reserve System. through four payments activities: cash, check The Federal Reserve System provides a processing, wire transfers of funds, and autopublic alternative to private check collection mated clearinghouses. I should like to dearrangements that ensures the safety, scribe each activity briefly. solvency, and certainty of the national check The cash operations of the Reserve Banks collection system. This operational role exerts involve the distribution of the supply of cura public regulatory presence that protects the rency and coin for the economy. Since 1920 interests of the general public in using checks. when the functions of the Assistant Treasurers Before the Federal Reserve System was estab- of the United States were transferred to the lished, private arrangements cleared all Reserve Banks, the System has been auchecks and drafts, but these arrangements thorized and directed by the Treasury to diswere judged by the Congress and by the tribute available suppHes of currency and coin designers of the Reserve System to be ineffi- directly to commercial banks. Important pubcient and a burden on commerce. These clear- He service activities of the System's cash ing arrangements also were inextricably in- operations include counterfeit detection and tertwined with the pyramiding of balances at maintenance of a high quality of money in correspondent banks—a primary contributing circulation. factor to recurring money panics like the one Currently, 37 Federal Reserve offices prothat occurred in 1907. The National Monetary vide cash services to approximately 25,000 Commission that was set up in 1910 to study banking offices served by armored carrier for solutions to the problem of money panics currency and coin pick-up and delivery. Durrecommended that an association of banks be ing 1976, 7.0 billion pieces of currency and organized that would provide a nationwide, 12.6 billion pieces of coin were processed, and centralized clearing union supported by the 2.6 billion pieces of unfit currency were de- Federal Government. stroyed. Including the cost of printing Federal The Federal Reserve Act was passed in 1913 Reserve notes, amounting to $45.3 million, at least partly to accomplish this objective, System direct expenses for cash operations although the Congress substantially altered were approximately $113 million during 1976. this original proposal—principally to require Check collection operations comprise the membership by national banks and to increase largest single activity of the Reserve Banks. governmental oversight. Later, the Act was Although the Federal Reserve actually proamended to assign to the Federal Reserve cesses less than 40 per cent of all checks many of the payments functions that were then written, the System is the major participant in performed by the Subtreasuries. As a result. check clearing, having worked in cooperation Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 903 with the banking industry over the years agency securities; and administrative and through its operations and regulations to pro- monetary policy-related information. vide a smoothly functioning and efficient Reserve balances are transferred by check-clearing system. Last year the public member banks to purchase or sell Federal and private check collection systems handled funds, to move correspondent bank balances an estimated 28 billion checks, drawn on ap- from one bank to another, and to shift funds to proximately 106 million accounts. other members on behalf of customers. The Each day some 50 million checks are trans- communications network is used by the Treasported in timely fashion by contract courier ury Department and Government agencies to and U.S. Postal Service facilities from Federal disburse and collect monies and to transfer Reserve processing sites to the institutions Treasury and Government agency securities. upon which they are drawn or the payer In 1976, 21 million such reserve balance transbanks' designated processing centers. Fully 95 fers took place, amounting in the aggregate to per cent of the checks processed by the Sys- about $35.6 triUion. In the same year 2.3 tem are deposited by member banks; the re- million securities transfers for $7 trilHon were maining 5 per cent are received from non- processed. The direct expense of transfers of member banks depositing at Federal Reserve reserve-account balances between member Regional Check Processing Centers. Because banks totaled $5.7 milHon. some 40 per cent of the checks processed by The fourth payments mechanism activity of the System are deposited originally in banks the Federal Reserve System is operation of outside the Federal Reserve territory in which automated clearinghouses. The automated they are payable, the System also employs an clearinghouse (ACH) concept was originated extensive air charter network to move checks by the banking industry to utilize new among Federal Reserve offices. During 1976 technology to slow or even to reverse the the 48 Federal Reserve offices that process growing volume and increased cost of processchecks handled more than 12 billion items; ing paper checks. Over the past 5 years processed approximately 2.8 million adjust- bankers and thrift industry representatives ment cases; and returned almost 143 milhon have formed associations to implement the dishonored or uncollectible checks to the ACH concept in their regions. All but 2 of the banks depositing them with the Federal Re- 29 ACH associations have requested Federal serve. In 1976 the direct expense to the Fed- Reserve assistance—use of clearing and seteral Reserve of check collection totaled $131.1 tlement facilities—in processing payments million. contained on magnetic tapes. The two privately The third major payments mechanism activ- operated ACH facilities use the transportation ity is the Federal Reserve Communications network and reserve-account settlement facili- System. The need to move financial and ad- ties of the Federal Reserve. Currently the ministrative data rapidly between offices has volume of commercial payments processed by existed since the early days of the Federal Federal Reserve ACH operations approxi- Reserve System. To meet that need, the Sys- mates 800,000 items per month. Federal Retem operates communications facilities inter- serve operation of automated clearinghouses connecting Federal Reserve offices, the Board has been endorsed by the National Commisof Governors, member banks, the Treasury sion on Electronic Fund Transfers. Department, and other Government agencies. The Treasury Department uses the elec- The speed and sophistication of these facilities tronic payments processing capabilities of the have improved through the years as communi- Federal Reserve, including the same general cations technology has advanced. Three types procedures and computer systems used for of messages are handled through the com- commercial ACH processing, for its program munications facilities: transfer of reserve- of direct deposit of Federal recurring payaccount balances between member banks; ments. Currently the volume of payments transfer of U.S. Government and Federal made under the Government's direct deposit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A904 Federal Reserve Bulletin • October 1976 program is approximately 7.3 million items Federal Reserve involvement and assistmonthly. By 1980 it is estimated that this ance. program will save the Treasury approximately The presence of the Reserve Banks in the $25 million annually in reduced disbursement payments mechanism also benefits commercosts. The total direct expense to the Federal cial banks, particularly smaller and more re- Reserve to provide both commercial ACH and mote ones, because the System stands ready Government direct-deposit processing was to collect checks at par for any member bank $1.6 million during 1976. on the same terms. The Reserve Banks pro- System participation in the payments mech- vide an alternative to the services provided by anism provides significant benefits to consumers the correspondent banks. The private clearing and to business. For example, the acceptability network processes 60 per cent of the checks of consumers' checks is greatly enhanced written in the country. But the existence of the by the nationwide network of Federal Re- public alternative, which will clear all checks serve offices and the speed with which those on equal terms, has eliminated some of the offices process checks..In addition, the Sys- abuses that existed prior to 1914. tem grants uniform availability of credit for The Board holds the view that the difficulchecks drawn on similarly situated banks. ties characterizing the check-clearing system These facets of System participation in and prior to 1914 are inherent in the nature of the regulation of the payments mechanism reduce clearing process, and that a valuable discipline the impact of the geographic location of the is imposed by a centralized nationwide clearbanks on which the checks are drawn. Fur- ing authority—public or quasi-public— thermore, obligations of all sizes can be settled performing a par-clearing role similar to that by check because the System collects all now assumed by the Reserve Banks. There items, large or small, at par on the same terms. does not appear to be any essential difference in By reducing the time required to collect funds, this respect between paper and electronic by passing credit on a uniform schedule, and clearing systems. Traditionally, enterprises of by collecting at par, the System reduces the such a centralized nature either are operated risk taken by merchants that accept checks. by the Government or are governmentally Expeditious clearing also improves the func- regulated. tioning of financial markets generally by en- Federal Reserve participation ensures that suring that funds in the clearing process are the entire Nation has the benefit of a uniform, immobilized for a relatively short time. basic level of payments mechanism services. Finally, the presence of the System as a Banks that are remote from the financial cenmajor factor in the check-clearing process ters or that have low volume are afforded very permits the Nation's clearing arrangements to nearly the same payments services by the be regulated in the public interest. The Uni- System that are available to the large city form Commercial Code permits the regula- banks. Only a centralized nationwide cleartions of the Board and the operating circulars inghouse can provide for such uniformity of of the Federal Reserve Banks to govern many service in check collection. of the terms and conditions for collection of In recent years changes in law and regulachecks. By this mechanism, the System can tion have broadened the classes of institutions readily make desirable changes in the check- capable of offering third-party payments acclearing process. In the past decade many of counts to their customers and have authorized the innovations in the check collection mech- new types of payments instruments, such as anism, such as the Regional Check Processing negotiable order of withdrawal (NOW) drafts Centers—which have reduced the time re- and credit union share drafts. Many of these quired to collect checks—have been spon- institutions can offer electronic payments servsored or implemented by the Federal Reserve ices as well. The emergence of thrift institu- System. Similarly, establishment of the auto- tions as participants in third-party payments mated clearinghouses was achieved partly by mechanisms has created a demand for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 905 broadened access to Federal Reserve pay- maintaining interest-free reserves. Over-all ments services. terms for use of the services would still not be In the past the question of access was not the same. pressing. If a bank wanted direct access to Finally, the System could charge for its System services, it could simply become a services in order to encourage private compemember bank. However, this option is by law tition. But even assuming that private compenot available to most of the new participants in tition could develop, it is by no means evident the payments mechanism. With the exception that the outcome—including the effect on the of mutual savings banks, thrift institutions efficiency of the payments mechanism on the cannot become members of the System. At whole, on the level of service available to least partly to circumvent this prohibition, we individual consumers and businesses, and on have recently seen groups of credit unions the erosion of membership in the System— purchasing banks, thereby obtaining access to would be in the public interest. Federal Reserve services. Similarly, a group Recognizing the possibility that charging for of mutual savings banks in the State of Wash- payments mechanism services might have benington formed a bank and applied for member- eficial effects under some circumstances, the ship. A group of nonmember commercial Board stated in conjunction with the ''interbanks in Minnesota has done the same thing. im" access poHcy that it intended to pubHsh a Thrift institutions also have sought direct ac- pricing schedule for comment. Since that time cess to Federal Reserve-operated automated the problem of establishing charges has been clearinghouse facilities, and the Board has investigated in much greater detail, and the responded with its 'interim" access policy of benefits of charging have been seriously ques- January 1976, granting such access. tioned. One cannot know for certain the We previously have suppHed the committee ramifications of charges by the Federal Rewith a description of the current access ar- serve upon the present level of services prorangements for the System's payments serv- vided by correspondent banks, upon the poices. We believe these access arrangements tentially differing impact on institutions of are equitable, and we do not believe that any different size, volume, and location, or upon depositary institution has suffered serious the competitive effects of the significant shifts competitive disadvantage because of this ac- in payment flows that might result from imposcess policy. ing charges. Furthermore, the administrative The policy attempts to balance a number of costs of operating a system of charges would conflicting considerations. First, services pro- lessen any possible benefits. duced by a quasi-public organization should Our studies show that the benefits of chargbe available to all depositary institutions on the ing would be minimal if charges were not same terms. But because most thrift institu- imposed upon all users of the services. Betions cannot become members, access cannot cause the overwhelming majority of the Sysbe provided on cost and benefit terms equal to tem's volume is deposited by member banks, those afforded members. Institutions that are any approach omitting the member banks from not eligible for membership cannot receive the such charges would have very little impact on full benefits or bear all of the costs of member- improving efficiency, would quite probably be ship. inequitable, and would probably not induce Second, if the System were to charge for its private sector competition. Member banks alservices and to equaHze other terms of access ready pay indirectly for the payments services between members and nonmembers, any in- they receive, and imposing additional charges equities in costs and benefits arising solely upon them would be inequitable. from usage of payments mechanism services The compensation member banks provide could be ehminated. However, charging for to the System for these and other services they services would inequitably impose another receive takes the form of earnings foregone on cost on member banks over and above that of required reserve balances held on deposit with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A906 Federal Reserve Bulletin • October 1976 the Reserve Banks. These reserves are partly rect access to payments services. Second, analogous to the balances that correspondent institutions could be charged for the services banks require from their respondents. Reserve used, either by holding compensating balances balances total well in excess of $25 billion. Our at the Reserve Banks or by fees paid in cash. studies have shown that these balances are Third, any depositary institution could be larger than necessary to compensate the Sys- permitted to open a clearing account at Fedtem for the services member banks receive, eral Reserve Banks for use in settling transacand they also are larger than the compensating tions with the Reserve Banks. The balance balances that would be required if all of these required in such an account—in addition to services could be and were provided by the any compensating balances the institution may correspondent banking system. Of course, the choose to hold—would have to be sufficient to balances required of members serve many pay for the amount of the checks and other other functions, including those related to items that the Reserve Bank would charge to monetary policy. the account each day. Otherwise, overdrafts Imposition of additional charges related to on the reserve account might occur. System services would have the effect of As to the schedule of charges to be imposed increasing the operating costs of member under these principles, many difficult poHcy banks by comparison with the costs of non- issues as well as some complex accounting member institutions. The relationship between questions must be dealt with before the the value of services received by members schedule can be determined. It may appear from the System and the earnings foregone on easy to compute prices for the services; member reserve balances would become theoretically one need only add up the total further distorted. Thus, the erosion of System cost of providing the service, divide by the membership that has been under way in recent amount of service provided, and add whatever years would be Hkely to accelerate. mark-up is appropriate for the situation. In The Board beHeves that its responsibility to practice, there are many unresolved questhe public interest under the Federal Reserve tions. To what service should we assign a Act does not permit it to take actions that specific portion of costs incurred to carry out aggravate the loss of membership. For that multiple functions? Should long-run or shortreason, the Board is not inclined to change its run costs be employed? Over what geographic present access and pricing policy unless and area—local or national—should prices be uniuntil the special costs of belonging to the form? Other technical questions involve cost Nation's central banking system are recog- accounting. The expense data collected by the nized and offset. If S. 2055 is enacted, the System are adequate for auditing and expendi- Board has stated that it will make provision for ture control purposes, and they suffice for equitable access to System clearing services management information about the efficiency for all institutions holding NOW reserves. of Reserve Bank operations; but for purposes However, the Board does not believe that it of charging, they may not be comparable with would be prudent to impose upon depositary cost information collected by private industry. institutions another major change, such as the Further examples of questions to be resolved introduction of additional charges for System include: Should System prices include a return services, until the transition costs arising from on the capital employed, and if so, at what the introduction of NOW accounts have been rate? Should capital be valued at historical or largely assimilated. replacement cost? How should taxes be Once the burden of membership has been treated? A myriad of such issues have been eliminated and the transition to nationwide identified and are being studied prior to con- NOW accounts is well under way, the Board sideration by the Board. These difficulties are could consider introduction of full access and technical, but the Reserve System could repricing based upon three principles. First, all solve them in one way or another. They are depositary institutions could be permitted di- not the principal impediment to introduction of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 907 charges for System services. The main imped- Corporation (FDIC) are just beginning to proiment is the fact that charging would exacer- vide a flow of data from a sample of nonbate the membership problem. member banks. As thrift institutions take on The Congress created the Reserve System bank-like payments powers, their actions will to be a largely voluntary association of banks, have an increasing impact upon monetary attracting membership broadly from the entire management. With respect to balances providindustry. In this way the widest variety of ing such bank-Hke transactions services, thrift viewpoints, interests, and needs could be institutions should provide the same data and brought to the attention of the Board in the be subject to the same reserve requirements as formulation of monetary policy, discount and commercial banks. Perhaps an equally imporloan policy, and operating policy toward the tant aspect of membership is its relationship to payments mechanism. Continuing erosion of the safety and soundness of the banking sysmembership threatens to alter the very nature tem. Only member banks have ready access to of the System, cutting off this broad interac- the discount window and to the Federal Retion with the banking industry, and through serve counsel and assistance that accompany the industry, with its customers. Because the use of the window. Ready access to adjustburden of membership falls more heavily on ment credit cannot be guaranteed by the corsmaller banks, the erosion of membership is respondent banking system—especially in most pronounced among those institutions. times of stress in financial markets. Access to There is a very real danger that if the erosion the discount window may be a major benefit to continues, the Nation's central bank will be- member banks; but more important, it is the come an organization to which only the larger ultimate guardian of our banking system banks belong. I hope we can all agree that against Hquidity crises. Less obviously, the such an outcome is not in the best interests of mere holding of deposits at Reserve Banks monetary policy formation nor of the public increases the soundness of the banking system. generally. Reserve balances are essentially demand deposits held in riskfree form. The same bal- There are other cogent reasons in the public ances held at correspondent banks would be interest to prefer the Reserve System to have subject to some risk, however small. Thereas many members as possible. One of these fore, the greater the portion of the banking reasons is the part that the member banks play system's assets that is held at Reserve Banks, in monetary management. Balances held at the the lower the riskiness of the banking system Reserve Banks serve as the fulcrum for the as a whole. economic stabilization actions of the central I have dwelt at length this morning on the bank. Required reserve balances enable the reasons that broad membership in the Federal Federal Reserve to gauge the Hkely effect of Reserve is in the public interest. It is for those its monetary management actions on the supreasons that the Board is so concerned about ply of money and of bank credit. As more and the accelerating erosion of membership. Bamore transactions balances are held by the sically the cause of the loss of members is the public at institutions that are not subject to burden of earnings foregone by members on reserve requirements, monetary policy inevithe sterile reserves that they hold at the Retably becomes less precise, and prediction of serve Banks. the effect of particular policy alternatives becomes more uncertain. There are a number of techniques that could Furthermore, the implementation of mone- be employed to equalize the costs of reserve tary policy is critically dependent upon timely requirements between member and nonand accurate data flowing to the System's member depositary institutions. Uniform remoney managers. At the present time, only serve requirements would be the best and the member banks provide the needed data in the simplest solution. It would impose the costs of time frame to make it most useful Coopera- sterile reserves equally on all depositary intive efforts with the Federal Deposit Insurance stitutions and provide significant benefits for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A908 Federal Reserve Bulletin • October 1976 monetary management. And it could do so The Board believes that Title II of S. 2055 is without weakening our dual banking system or the best presently available alternative for independent thrift institutions. However, the resolving the membership problem, and we Congress has not been convinced of the ulti- trust that it will be enacted. If nationwide mate need for such complete coverage. NOW accounts are authorized, the banks of- Another way to equalize costs is to lower fering such accounts will face immediate cost reserve requirements to the degree necessary increases that will reduce net earnings and to offset the costs of the excess of reserves force further consideration of the costs of a over the value of services received. Such sterile reserve requirement. Moreover, with action would require lowering of the legal new competition for transaction accounts, limits for reserve requirements. This solution banks may feel it necessary to protect against has the disadvantage that the "insurance" a loss of deposits. These forces could bring value of reserves would be reduced because a even greater pressure on membership, and the smaller proportion of the total assets of the provisions of Title II will be essential to prebanking system would be held in risk-free vent an acceleration of withdrawals. Whether reserve balances. or not NOW accounts are extended nation- Yet another way in which benefits could be wide, however, the Board beheves that the equated with costs is by increasing the type, case for rehef of the burden of membership is quantity, and quality of services provided by overwhelming and urges the adoption of Title the Reserve Banks. Providing additional serv- II of S. 2055. ices, particularly to smaller banks, could My testimony today has been lengthy and upset traditional banking patterns; in any case, somewhat technical. I apologize for both of the System might not be able to provide attrac- these shortcomings. But the issue of the Fedtive services in sufficient quantity to offset the eral Reserve's role in the payments mechaearnings lost on the sterile reserves. Finally, nism is a complex and technical one. Because this lost income could be offset by the pay- the System's role is justified by the benefits ment of interest on reserve balances. Interest provided to the public interest, costs arising on reserves affords the greatest flexibility, from that role should not be imposed mostly while interfering least with the existing institu- upon the minority of banks that are members tional arrangements in the banking industry. of the System. I hope I have been able to Furthermore, it makes explicit the fact that the convey to this committee some of the sense of System is offsetting the special costs of mem- urgency that the Board feels about the risks bership. posed by the decline in System membership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

909 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON AUGUST 16, 1977 Domestic Policy Directive The information reviewed at this meeting suggested that real output of goods and services—which had increased at an annual rate of 6.4 per cent in the second quarter, according to preliminary estimates of the Commerce Department—was growing less rapidly in the current quarter. At the same time the rise in average prices, as measured by the fixed-weighted price index for gross domestic business product, appeared to be slowing from that of the second quarter, estimated to have been at a 7.0 per cent annual rate. Staff projections suggested that growth in real GNP was likely to remain less rapid over the remainder of 1977, and to slow a little further in 1978. The projections also suggested that the rate of increase in prices would moderate from that in the first half, but would still remain high. According to the staff projections, rising activity in a number of sectors would contribute to a continuation of the economic expansion over the year. Growth in consumer spending, which had slowed appreciably in the second quarter, was projected to pick up gradually. Relatively strong growth was anticipated in business capital outlays, and inventory investment seemed likely to continue as an expansive factor, although much less so than in the first half of 1977. Increases in Federal purchases of goods and services were expected to remain substantial. Spending by State and local governments was projected to continue rising briskly, in part because of the stimulus of expanded Federal pubHc works and job-related grant programs. On the negative side, slow export growth and rising imports seemed likely to exert a drag on economic activity over much of the projection period. And the increase in residential construction activity was expected to level off as the period progressed. In July industrial production rose by 0.5 per cent, a little less than in June and roughly half of the substantial increase in May. The rate of capacity utilization in manufacturing edged higher, to an esti- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A910 Federal Reserve Bulletin • October 1976 mated 83.7 per cent. The July rise in production reflected sizable increases in the output of consumer durable goods and business equipment. Production of nondurable consumer goods changed little, and steel output declined. Auto assemblies rose slightly, but it was expected that production schedules would be reduced more than usual in August by the beginning of the changeover to the new model year. Nonfarm payroll employment expanded by more than a quarter of a million in July, half again as much as in June, with factory jobs rising by 70,000. According to the household survey data, however, total employment—after increasing million between December and June—declined in July, due to a sharp reduction in agricultural jobs. The labor force also contracted in July, almost wholly as a result of reduced participation by teenagers, and the unemployment rate decHned 0.2 of a percentage point, returning to the May level of 6.9 per cent. Personal income had advanced briskly during the first half of 1977 as a result of the large gains in employment. The rise in wage and salary payments slowed in June, but for the second quarter as a whole the increase was the largest since the tlrst quarter of 1976. In July wage and salary payments apparently rose at a moderate rate, and growth in personal income was bolstered by a cost-of-living increase for social security recipients. Available reports suggested that corporate profits had improved during the second quarter. Although comprehensive data were not yet available, the information at hand implied a second-quarter level of corporate profits that was significantly above the relatively low levels recorded in the third and fourth quarters of 1976 and the first quarter of 1977. As a proportion of GNP, however, corporate profits still remained below their longer-run average and well below previous postwar peaks. The dollar value of retail sales had increased 0.5 per cent in July, according to the advance report. However, data for June—which had initially indicated no change from May—had been revised to show a decline of 1.3 per cent. For the second quarter as a whole the value of retail sales was now estimated to have risen 1.6 per cent, down from the eariier estimate of 2.1 per cent. In July there were sizable advances in sales at stores in the GAF (general merchandise, apparel, furniture and appliance) grouping. But auto sales fell to an Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 911 annual rate of 10.8 million units, from the near-record pace of 11.8 million units in June. Businesses appeared to be making prompt adjustments to evidence of developing imbalances in inventories of nondurable goods. In June the book value of such inventories declined at both manufacturers and wholesalers—at the latter, for the second consecutive month—^following large increases earlier in the year. Inventories of durable goods continued to rise at a relatively rapid rate at both manufacturers and wholesalers, but the growth was about in line with the advance in sales. Private housing starts declined to an annual rate of about 1.8 million units in June, the latest month for which data were available. This was close to the average rate that had prevailed since late 1976. In the second quarter as a whole, single-family starts—at an annual rate of 1.4 million units—were the highest for any quarter on record. Mortgage lending activity had remained strong in recent months; the rate of growth in mortgage debt outstanding was estimated to have been at a record during the second quarter, and it appeared to have risen somewhat further in July. New orders for nondefense capital goods increased by about 5 per cent in June. Contract awards for commercial and industrial buildings—as measured in terms of floor space—edged off from the high May level; for the second quarter as a whole, however, they were 4.5 per cent above their level in the first quarter. The index of average hourly earnings for private nonfarm production workers rose in July at an annual rate of per cent—close to the average rise over the preceding 18 months. Major collective bargaining settlements in the first half of 1977 provided for first-year wage increases averaging 8.0 per cent, compared with an average of 8.4 per cent under contracts negotiated in 1976. On the other hand, compensation per hour in the private nonfarm business sector rose at an annual rate of about 9.5 per cent in the first half, a little faster than in 1976. The wholesale price index for all commodities, which had decHned in June, was about unchanged in July. Average prices for farm products and foods—after having risen sharply in the early months of 1977—declined for the second successive month. Average prices for industrial commodities continued to advance but at a more moderate pace than in the earlier months of the year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A912 Federal Reserve Bulletin • October 1976 The consumer price index in June rose 0.6 per cent—about the same as in the preceding 3 months. While the advance for commodities other than foods slowed to 0.2 per cent, the increases for foods and for services edged up to 0.8 per cent. By the time of this Committee meeting, the average value of the dollar against leading foreign currencies had recoverd more than 1 per cent from the low reached on July 25, but it was still below its late-June level. The strengthening of the dollar since late July reflected reaction in the foreign exchange markets to statements by U.S. officials indicating the importance that the United States attaches to maintaining the strength of the dollar, and also to the recent relative rise in interest rates on dollar-denominated assets. The dollar appreciated most sharply against the German mark and the Japanese yen. It depreciated against sterling, however, after authorities in the United Kingdom elected to discontinue their earlier policy of maintaining a target ceiling rate for sterling defined exclusively in terms of the U.S. dollar. The U.S. trade deficit rose sharply in June as imports rebounded from the somewhat reduced level in May and exports declined. For the second quarter as a whole, the trade deficit as measured in the international accounts was at an annual rate of $31 billion. At U.S. commercial banks, total credit expanded slightly faster in July than in June, but the pace in July remained below the average for the first half of the year. Holdings by banks of U.S. Treasury securities declined sharply in July, while their holdings of other securities increased moderately. Total loans rose more rapidly than in any other month since last October, reflecting strength in most major categories. However, business loans grew considerably less than in June, when corporations had borrowed to finance an unusually large volume of Federal income tax payments. Also, the outstanding volume of commercial paper issued by nonfinancial corporations declined slightly in July. Growth in the narrowly defined money stock (M-1) accelerated to an annual rate of about 18 per cent in July. While much of the increase apparently was temporary, part seemed to reflect rising transactions demands for money. For the 7 months ending with July, M-1 grew at an annual rate of nearly 8 per cent. Growth in the more broadly defined measures of money (M-2 and M-3) also accelerated sharply in July, to annual rates of about 17 and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 913 16 per cent, respectively. The high rates of expansion in these measures were due primarily to the large increases in M-1, but inflows of the time and savings deposits included in M-2 and M-3 also picked up from their reduced rates in June. For the 7 months ending with July, M-2 and M-3 grew at annual rates of 10 and 11 per cent, respectively. At its July meeting the Committee had decided that growth in M-1 and M-2 in the July-August period within ranges of W2 to IV2 per cent and 6V2 to lOVi per cent, respectively, would be appropriate. It had judged that these growth rates were likely to be associated with a weekly-average Federal funds rate of about 5% per cent. The Committee had agreed that if growth rates in 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 SVA to 5% per cent. Data that had become available in the days immediately following the July meeting suggested that over the July-August period both M-1 and M-2 would grow at rates in the upper parts of their specified ranges. These data were considered especially tentative, however, because unusual patterns in the figures received just after the power failure in New York City suggested that the failure might have introduced statistical distortions. The System Account Manager, therefore, continued to seek a Federal funds rate of about 5% per cent. Later, however, when new data not only confirmed the initial signs of strength but also suggested that growth in the aggregates would be somewhat above the upper limits of the specified ranges. System operations were directed at achieving a higher Federal funds rate. During the statement week ending August 3, the funds rate averaged 5.80 per cent, approximately equal to the 5% per cent upper limit of the Committee's range. Information that became available on August 4 suggested that the growth rates in the aggregates in the July-August period would be well above the ranges specified by the Committee, and on August 5 the Committee voted to increase the upper limit of the range for the funds rate to 6 per cent. It was understood that the Manager would use this additional leeway very gradually and only in the event that the aggregates continued to register values far in excess of the Committee's objectives. When such strength in the aggregates did Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A914 Federal Reserve Bulletin • October 1976 persist, the Account Manager aimed at a Federal funds rate of about 6 per cent. In markets for short- and medium-term securities, interest rates generally rose by % to Vi of a percentage point over the intermeeting period. Yields on corporate and municipal bonds, however, showed little change over the period, and those on Treasury bonds posted only small advances. During the 4 weeks of the inter-meeting period the U.S. Treasury raised about $4.0 biUion of new money in securities markets, including $3.0 billion obtained in connection with its mid-August refinancing. Issues offered in the refinancing consisted of $3.0 billion of 3-year notes, $2.25 billion of 7-year notes, and $1.0 billion of (reopened) IWi year bonds. In July the volume of new publicly offered corporate bonds was slightly larger than in June and was above the monthly average for the second quarter. Offerings by industrial issuers—which had been exceptionally low in June—were at their highest level since December 1976, while new issues by utilities were below their advanced second-quarter pace. The volume of new State and local government bonds dropped more than seasonally during July, following a record supply of new issues both in June and for the second quarter as a whole. The heavy volume of new municipal offerings in recent months included a large number of advance refundings, as well as issues offered earlier than originally planned, apparently in the expectation that interest costs would rise later in the year. Average prices of common stocks traded on the New York Stock Exchange declined during the inter-meeting period- -in the case of one widely used index, to the lowest level since early 1976. Indexes of issues traded on the American Stock Exchange and over the counter also declined somewhat during the period, but they remained near their highest levels since 1973. In markets for home mortgages, average interest rates on new commitments for conventional loans were relatively stable in the weeks just prior to this meeting, following small advances in late June and early July. Meanwhile, yields in the secondary market for home mortgages generally edged higher. In the Committee's discussion of the economic situation, the members agreed that the expansion was likely to continue for some time. Several members suggested that the apparent moderation in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 915 economic growth from the rapid pace of the first half of the year was an essentially healthy adjustment; continued expansion at the earlier pace might well have led in time to a reacceleration of inflation and created price distortions that would have brought the expansion to an early end. It was observed that the economy was experiencing few imbalances at present and that needed adjustments in business inventories were being made promptly. The view was widespread among members that the upward trend of business capital investment would persist and very likely would strengthen. While the members agreed that the economic expansion was likely to continue, they differed regarding its probable profile over the quarters ahead. Specifically, several members thought that the rate of economic growth was likely to be slower in the second half of 1977, and faster in the first half of 1978, than suggested by the staff projections. With respect to the second half of 1977, these members thought that spending on consumer goods and housing would rise less than indicated, and they found it difficult to identify offsetting sources of strength. For the longer run, however, they believed that economic growth would be fostered by sustained increases in business capital outlays and in spending by Federal and State and local governments. It was suggested that such a pattern might well be associated with a slower rate of price advance than that projected by the staff. Other members of the Committee indicated that, while they expected more strength in the economy in the second half of 1977 than their colleagues did, they were not persuaded that the rate of growth would rise after the turn of the year. In this connection they identified several potential problems. One was the possibility that the recent upcreep in unit costs of production relative to selling prices might continue, with a consequent further narrowing of profit margins. It was noted that when this process had developed in the past, an economic downturn had typically occurred within 1 to 2 years. Other potential problems mentioned were the recent rapid increase in consumer credit and the evidence of speculation in some real estate markets. One member of the Committee, in commenting on the erosion of profit margins, observed that businesses did not appear to be pressing as actively as they might to hold labor costs down, fearing the impact of strikes and assuming that inflation would continue. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A916 Federal Reserve Bulletin • October 1976 In the discussion of the outlook for business investment, it was noted that outlays were falling short of what might have been expected on the basis of past cyclical expansions, even in industries where the need for increased plant and equipment spending was clearly evident. A number of members expressed the view that narrow profit margins were tending to constrain investment spending. One member offered the hypothesis that a more typical increase in such spending might continue to be delayed until profit margins were widened by increases in product prices as capacity limits were approached. Among other factors mentioned as inhibiting investment was the unusual degree of uncertainty prevailing in business circles, particularly with respect to public policy on such matters as inflation control, energy, and tax reform. Several members of the Committee cited the recent declines in stock prices as evidence of uncertainties about the prospects for corporate profits. In the discussion Committee members identified other factors they believed might help to account for some of the weakness in stock prices. One was the restructuring of investment portfolios being undertaken by many institutional investors to increase emphasis on fixed-rate instruments. Another was efforts by stockholders to realize accumulated capital gains, as a precaution against the possible enactment of legislation limiting the special tax treatment of capital gains. At its July meeting the Committee had agreed that from the second quarter of 1977 to the second quarter of 1978 average rates of growth in the monetary aggregates within the following ranges appeared to be consistent with broad economic aims: M-1, 4 to 6V2 per cent; M-2, 7 to 9V2 per cent; and M-3, SV2 to 11 per cent. The associated range for the rate of growth in commercial bank credit was 7 to 10 per cent. 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 modification at subsequent meetings. In considering policy for the period immediately ahead, members of the Committee noted that growth in the monetary aggregates was expected to slow markedly in August and September. Because of the sharp increases in July, however, expansion in the third quarter as a whole—particularly in M-1—would be relatively rapid. It was observed that considerably slower growth rates would be needed in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 917 subsequent quarters if monetary growth for the year ending with the second quarter of 1978 was to be kept within the ranges that the Committee had decided upon in July. While the views of members on appropriate short-run policy did not differ greatly, a number of members placed particular stress on the need to resist further sizable increases in the monetary aggregates, noting that continued rapid growth would foster inflationary expectations and weakening of confidence within the business community. Other members put more emphasis on the sizable increase that had occurred since late April in the Federal funds rate and other short-terrn interest rates, and some expressed reluctance to seek further tightening in the money market at a time when growth in economic activity was showing signs of moderating. These members suggested that, in the absence of unusual behavior in the monetary aggregates, it would be desirable to maintain relatively stable conditions in the money market for the time being. The members agreed that, in view of the July bulge in the monetary aggregates, no easing of money market conditions should be sought in the coming interval even if growth rates in the aggregates during the August-September period appeared to be quite low. For M-1, most members favored a growth range for the August-September period of 0 to 5 per cent or 0 to 6 per cent; a few preferred slightly higher ranges. ForM-2, most members favored a range of 3 to 8 per cent. All members of the Committee favored directing inter-meeting operations initially toward the objective of maintaining the Federal funds rate at about the prevailing level of 6 per cent. Views differed somewhat with respect to the degree of leeway for operations during the inter-meeting period in the event that the aggregates appeared to be deviating significantly from the midpoints of the specified ranges, but most members preferred ranges for the funds rate of to 6V4 per cent or to 6V2 per cent. Some members suggested that more weight than usual should be placed on money market conditions in the directive to be issued to the Federal Reserve Bank of New York, but a majority preferred to continue to stress the monetary aggregates. At the conclusion of the discussion the Committee decided that growth inM-1 andM-2 over the August-September period at annual rates within ranges of 0 to 5 per cent and 3 to 8 per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A918 Federal Reserve Bulletin • October 1976 respectively, would be appropriate. It was understood that in assessing the behavior of these aggregates the Manager should continue to give approximately equal weight to the behavior of M-1 and M-2. It was the Committee's judgment that such growth rates were Hkely to be associated with a weekly-average Federal funds rate of about 6 per cent. The members 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% to 614 per cent. 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 is growing less rapidly in the current quarter than in the second quarter. In July industrial output rose a little less than in June. The rise in payroll employment in nonfarm establishments was substantial. According to the household survey data, total nonagricultural employment was unchanged and the unemployment rate edged down to 6.9 per cent, the same as in May. The dollar value of total retail sales rose somewhat, after 2 months of decline. The wholesale price index for all commodities was about unchanged in July; average prices of farm products and foods declined sharply further, and average prices of industrial commodities continued to rise at a more moderate pace than in the early months of 1977. The index of average hourly earnings has continued to advance at about the same pace that it had on the average during 1976. The weighted average exchange rate for the dollar against leading foreign currencies has recovered more than 1 per cent from the low point reached in late July. In June the U.S. foreign trade deficit rose sharply, and the deficit was larger for the second quarter as a whole than for the first. The increase in M-1 was exceptionally large in July. Inflows to banks of the time and savings deposits included in the broader monetary aggregates strengthened, and growth in M-2 and M-3 also accelerated sharply. Business short-term borrowing moderated from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 919 the rapid pace in June. Interest rates on short- and intermediate-term market instruments have risen appreciably in recent weeks, while yields on longer-term bonds have changed little. 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. At its meeting on July 19, 1977, the Committee agreed that growth of M-1, M-2, and M-3 within ranges of 4 to 6V2 per cent, 7 to 9V2 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-1 and M-2 on a path beheved 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 August-September period to be within the ranges of 0 to 5 per cent for M-1 and 3 to 8 per cent for M-2. In the judgment of the Committee such growth rates are hkely to be associated with a weeklyaverage Federal funds rate of about 6 per cent. If, giving approximately equal weight to M-1 and M-2, it appears that growth rates over the 2month period will deviate significantly from the midpoints of the indicated ranges, the operadonal objective for the Federal funds rate shall be modified in an orderly fashion within a range of 5% to 6V4 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 acfion: Messrs. Burns, Volcker, Coldwell, Gardner, Guffey, Jackson, Lilly, Mayo, Morris, Partee, Roos, and Wallich. Votes against this action: None. * * * 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 BULLETIN. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

920 Law Department Statutes, regulations, interpretations, and decisions MEMBERSHIP OF STATE § 17A(b)(3)(G) of the Act or other action of a BANKING INSTITUTIONS IN registered clearing agency which, after notice and THE FEDERAL RESERVE SYSTEM; opportunity for hearing, results in any final disposi- BANK HOLDING COMPANIES tion of charges of: (A) one or more violations of the rules of such The Board of Governors has amended its Regula- registered clearing agency; or tions H and Y to provide for notices by State (B) acts or practices constituting a statutory member bank clearing agencies of disciplinary disqualification of a type defined in subparagraph sanctions and for stays and appeals of such actions. (D) or (E) (except prior convictions) of Section Effective October 3, 1977, section 208.8 is 3(a)(39) of the Act. amended by adding the following new paragraphs However, if a registered clearing agency fee (g), (h), and (i) as follows: schedule specifies certain charges for errors made SECTION 208.8—BANKING PRACTICES by its participants in giving instructions to the registered clearing agency which are de minimis on a per error basis and whose purpose is in part to provide revenues to the registered clearing agency (g) STATE MEMBER BANKS AS REGISTERED CLEARING AGENCIES to compensate it for effort expended in beginning to process an erroneous instruction, such error (1) Requirement of notice. Any State charges shall not be considered a 'Tmal disciplinary member bank or any of its subsidiaries that is a action" for purposes of this paragraph. registered clearing agency pursuant to Section (3) Content of notice required by subparagraph 17A(b) of the Securities Exchange Act of 1934 (the (2). Any notice filed pursuant to sub- 'Act"), which imposes any final discipHnary sancparagraph (2) of this paragraph shall consist of tion on any participant therein, denies participation the following, as appropriate: to any applicant or prohibits or limits any person in respect to access to services offered by such regis- (A) the name of the respondent concerned tered clearing agency, shall file with the Board and together with the respondent's last known address the appropriate regulatory agency (if other than the as reflected on the records of the registered clearing Board) for a participant or applicant notice thereof agency and the name of the person, committee, or in the manner prescribed herein. other organizational unit that brought the charges involved; except that, as to any respondent who has (2) Notice of final disciplinary action. been found not to have violated a provision covered Any registered clearing agency for which the by a charge, identifying information with respect to Board is the appropriate regulatory agency that such person may be deleted insofar as the notice takes any final disciplinary action with respect to reports the disposition of that charge and, prior to any participant shall promptly file a notice thereof the fiHng of the notice, the respondent does not with the Board in accordance with subparagraph (3) request that identifying information be included in of this paragraph. For the purposes of this para- the notice; graph 'Tmal disciplinary action" shall mean the (B) a statement describing the investigative or imposition of any disciplinary sanction pursuant to other origin of the action; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 921 (C) as charged in the proceeding, the specific ing a hearing, or otherwise exhausted his adminisprovision or provisions of the rules of the registered trative remedies within the registered clearing clearing agency violated by such person or the agency with respect to such a matter. statutory disqualification referred to in clause (B) of subparagraph (2) of this paragraph and a statement (5) Content of notice required by subdescribing the answer of the respondent to the paragraph (4). Any notice filed pursuant to subcharges; paragraph (4) of this paragraph shall consist of the (D) a statement setting forth findings of fact following, as appropriate: with respect to any act or practice in which such respondent was charged with having engaged in or (A) the name of each person concerned toomitted; the conclusion of the registered clearing gether with each such person's last known address agency as to whether such respondent violated any as reflected in the records of the registered clearing rule or was subject to a statutory disqualification as agency; charged; and a statement of the registered clearing (B) the specific grounds upon which the action agency in support of its resolution of the principal of the registered clearing agency was based, and a issues raised in the proceedings; statement describing the answer of the person concerned; (E) a statement describing any sanction im- (C) a statement setting forth findings of fact posed, the reasons therefor, and the date upon and conclusions as to each alleged failure of the which such sanction has or will become effective; person to comply with qualification standards, or and comply with administrative obligations, and a (F) such other matters as the registered clear- statement of the registered clearing agency in suping agency may deem relevant. port of the resolution of the principal issues raised in the proceeding; (4) Notice affinal denial, prohibition, termina- (D) the date upon which such action has or will tion or limitation based on qualification or ad- become effective; and ministrative rules. Any registered clearing agency (E) such other matters as the registered clearfor which the Board is the appropriate regulatory ing agency deems relevant. agency that takes any final action which denies participation to, or conditions the participation of, (6) Notice of final action based upon prior any person or prohibits or limits any person with adjudicated statutory disqualifications. Any respect to access to services offered by the registered clearing agency for which the Board clearing agency based on an alleged failure of such is the appropriate regulatory agency that takes person to: any final action with respect to any person that: (A) comply with the qualification standards (A) denies or conditions participation to any prescribed by the rules of such registered clearing person or prohibits or limits access to services agency pursuant to Section 17A(b)(4)(B) of the Act; offered by such registered clearing agency; and or (B) is based upon a statutory disqualification (B) comply with any administrative requireof a type defined in subparagraph (A), (B) or (C) of ments of such registered clearing agency (including Section 3(a) (39) of the Act or consisting of a prior failure to pay entry or other dues or fees or to file conviction as described in subparagraph (E) of said prescribed forms or reports) not involving charges Section 3(a) (39) of violations which may lead to a disciplinary shall promptly file notice thereof with the Board sanction and the appropriate regulatory agency (if other shall not be considered a ^Tmal disciplinary acfion" than the Board) for the affected person in accorfor purposes of subparagraph (2), but notice thereof dance with subparagraph (7) of this paragraph; shall be promptly filed with the Board and the provided, however, that no such action shall be appropriate regulatory agency (if other than the considered "final" pursuant to this subparagraph Board) for the affected person in accordance with which results merely from a notice of such failure subparagraph (5); provided however, that no such to the person affected, if such person has not action shall be considered 'tinal" pursuant to this sought an adjudication of the matter, includsubparagraph that results merely from a notice of ing a hearing, or otherwise exhausted his adminissuch failure to the person affected, if such person trative remedies within the registered clearing has not sought an adjudication of the matter, includ- agency with respect to such a matter. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A922 Federal Reserve Bulletin • October 1976 (7) Content of notice required by (D) if such summary action is based upon the subparagraph (6). Any notice filed pursuant to provisions of Section 17A(b)(5)(C)(ii) of the Act, a subparagraph (6) of this paragraph shall consist of statement describing the default of any delivery of the following, as appropriate: funds or securities to the registered clearing agency. (A) the name of the person concerned, to- (E) if such summary action is based upon the gether with each such person's last known address provisions of Section 17A(b)(5)(C)(iii) of the Act, a as reflected in the records of the registered clearing statement describing the financial or operating difagency; ficulty of the participant based upon which the (B) a statement setting forth the principal isregistered clearing agency determined that such sues raised, the answer of any person concerned, suspension and closing of accounts was necessary and a statement of the registered clearing agency in for the protection of the clearing agency, its particisupport of its resolution of the principal issues pants, creditors or investors; raised in the proceeding; (F) the nature and effective date of the suspen- (C) any description furnished by or on behalf sion; and of the person concerned of the activities engaged in (G) such other matters as the registered clearby the person since the adjudication upon which the ing agency deems relevant. disqualification is based; (D) a copy of the order or decision of the (h) APPLICATIONS FOR STAYS OF DISCIPLIcourt, the appropriate regulatory agency or the NARY SANCTIONS OR SUMMARY SUSPENSIONS self-regulatory organization which adjudicated the BY A REGISTERED CLEARING AGENCY matter giving rise to such statutory disqualification; If a registered clearing agency for which the (E) the nature of the action taken and the date Securities and Exchange Commission is not the upon which such action is to be made effective; and appropriate regulatory agency imposes any final (F) such other matters as the registered clear- disciplinary sanction pursuant to Section ing agency deems relevant. 17A(b)(3)(G) of the Act, or summarily suspends or limits or prohibits access pursuant to Section (8) Notice of summary suspension of 17A(b)(5)(C) of the Act, any participant aggrieved participation. Any registered clearing agency thereby for which the Board is the appropriate for which the Board is the appropriate regulatory regulatory agency may file with the Board, by agency that summarily suspends or closes the ac- telegram or otherwise, a request for a stay of counts of a participant pursuant to the provisions of imposition of such action. Such request shall be in Section 17A(b)(5)(C) of the Act, shall within one writing and shall include a statement as to why such business day after the effectiveness of such action stay should be granted. file notice thereof with the Board and the appropriate regulatory agency for the participant (if other (i) APPLICATION FOR REVIEW OF FINAL DISthan the Board) of such action in accordance with CIPLINARY SANCTIONS, DENIALS OF PARTICIsubparagraph (9) of this paragraph. PATION OR PROHIBITIONS OR LIMITATIONS OF ACCESS TO SERVICES IMPOSED BY REGISTERED CLEARING AGENCIES (9) Content of notice of summary suspension of participation. Any notice pur- (1) Scope. Proceedings on an application to the suant to subparagraph (8) of this paragraph shall Board under Section 19(d)(2) of the Act by a person contain at least the following information, as ap- that is subject to the Board's jurisdiction for review propriate: of any action by a registered clearing agency for which the Securities and Exchange Commission is (A) the name of the participant concerned tonot the appropriate regulatory agency shall be govgether with the participant's last known address as erned by this paragraph. reflected in the records of the registered clearing agency; (2) Procedure. (B) the date upon which such summary action (A) An application for review pursuant to Sechas or will become effective; tion 19(d)(2) of the Act shall be filed with the Board (C) if such summary action is based upon the within 30 days after notice is filed by the registered provisions of Section 17A(b)(5)(C)(i) of the Act, a clearing agency pursuant to Section 19(d)(1) of the copy of the relevant order or decision of the self- Act and received by the aggrieved person applying regulatory organization if available to the registered for review, or within such longer period as the clearing agency; Board may determine. The Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 923 shall serve a copy of the application on the regis- (F) The Board's Rules of Practice for Formal tered clearing agency, which shall, within ten days Hearings shall apply to review proceedings under after receipt of the application, certify and file with this rule to the extent that they are not inconsistent the Board one copy of the record upon which the with this rule. Attention is directed particularly to action complained was taken, together with three Section 263.21 of the Rules of Practice relating to copies of an index to such a record. The Secretary formal requirements as to the papers filed. shall serve upon the parties copies of such index and any papers subsequently filed. Effective October 3, 1977, section 225.5 is (B) Within 20 days after receipt of a copy of amended by adding the following new paragraphs the index, the applicant shall file a brief or other (d) and (e) as follows: statement in support of his application which shall state the specific grounds on which the application SECTION 225.5—ADMINISTRATION is based, the particular findings of the registered clearing agency to which objection is taken, and the relief sought. Any application not perfected by such timely brief or statement may be dismissed as (d) APPLICATIONS FOR STAYS OF DISCIPLIabandoned. NARY SANCTIONS OR SUMMARY SUSPENSIONS (C) Within 20 days after receipt of the appli- BY A REGISTERED CLEARING AGENCY cant's brief or statement the registered clearing If a registered clearing agency for which the agency may file an answer thereto, and within 10 Securities and Exchange Commission is not the days of receipt of any such answer the applicant appropriate regulatory agency, imposes any final may file a reply. Any such papers not filed within disciplinary sanction pursuant to Section the time provided by items (A), (B), or (C) will not 17A(b)(3)(G) of the Act, or summarily suspends or be received except upon special permission of the hmits or prohibits access pursuant to Section Board. 17A(b)(5)(C) of the Act, any participant aggrieved (D) On its own motion, the Board may direct thereby for which the Board is the appropriate that the record under review be supplemented with regulatory agency may file with the Board, by such additional evidence as it may deem relevant. telegram or otherwise, a request for a stay of Nevertheless, the registered clearing agency and imposition of such action. Such request shall be in persons who may be aggrieved by such clearing writing and shall include a statement as to why such agency's action shall not be entitled to adduce stay should be granted. evidence not presented in the proceedings before the registered clearing agency unless it is shown to (e) APPLICATIONS FOR REVIEW OF FINAL DISthe satisfaction of the Board that such additional CIPLINARY SANCTIONS, DENIALS OF PARTICIevidence is material and that there were reasonable PATION OR PROHIBITIONS OR LIMITATIONS OF ACCESS TO SERVICES IMPOSED BY REGISTERED grounds for failure to present such evidence in the CLEARING AGENCIES proceedings before the registered clearing agency. Any request for leave to adduce additional evidence (1) Scope. Proceedings on an application to the shall be filed promptly so as not to delay the Board under Section 19(d)(2) of the Act by a person disposition of the proceeding. that is subject to the Board's jurisdiction for review of any action by a registered clearing agency for (E) Oral argument before the Board may be which the Securities and Exchange Commission is requested by the applicant or the registered clearing not the appropriate regulatory agency shall be govagency as follows: erned by this paragraph. (i) by the applicant with his brief or state- (2) Procedure. ment or within 10 days after receipt of the regis- (A) An application for review pursuant to Sectered clearing agency's answer, or tion 19(d)(2) of the Act shall be filed with the Board (ii) by the registered clearing agency with its within 30 days after notice is filed by the registered answer. clearing agency pursuant to Section 19(d)(1) of the The Board, in its discretion, may grant or deny any^ Act and received by the aggrieved person applying request for oral argument and, where it deems it for review, or within such longer period as the appropriate to do so, the Board will consider an Board may determine. The Secretary of the Board application on the basis of the papers filed by the shall serve a copy of the application on the regisparties, without oral argument. tered clearing agency, which shall, within ten days Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A924 Federal Reserve Bulletin • October 1976 after receipt of the application, certify and file with this rule to the extent that they are not inconsistent the Board one copy of the record upon which the with this rule. Attention is directed particularly to action complained was taken, together with three Section 263.21 of the Rules of Practice relating to copies of an index to such record. The Secretary formal requirements as to papers filed. shall serve upon the parties copies of such index and any papers subsequently filed. (B) Within 20 days after receipt of a copy of the index, the applicant shall file a brief or other statement in support of his application which shall state the specific grounds on which the application is based, the particular findings of the registered clearing agency to which objection is taken, and the relief sought. Any application not perfected by such timely brief or statement may be dismissed as abandoned. RULES REGARDING (C) Within 20 days ^fter receipt of the appli- DELEGATION OF AUTHORITY cant's brief or statement the registered clearing agency may file an answer thereto, and within 10 The Board of Governors has delegated to the days of receipt of any such answer the applicant Secretary of the Board authority to permit member may file a reply. Any such pcipers not filed within banks to waive the penalty for early withdrawal of a the time provided by items (A), (B), or (C) will not time deposit in § 217.4(d) of Regulation Q for be received except upon special permission of the depositors suffering disaster-related losses in areas Board. declared a major disaster area by the President. Effective September 27, 1977, a new paragraph (D) On its own motion, the Board may direct 265.2(a)(18) is added to read as follows: that the record under review be supplemented with such additional evidence as it may deem relevant. Nevertheless, the registered clearing agency and SECTION 265.2—SPECIFIC FUNCTIONS persons who may be aggrieved by such clearing DELEGATED TO BOARD EMPLOYEES agency's action shall not be entitled to adduce AND TO FEDERAL RESERVE BANKS evidence not presented in the proceedings before the registered clearing agency unless it is shown to (a) The Secretary of the Board (or, in the Secrethe satisfaction of the Board that such additional tary's absence, the Acting Secretary) is authorized: evidence is material and that there were reasonable grounds for failure to present such evidence in the * ^ * * proceedings before the registered clearing agency. Any request for leave to adduce additional evidence (18) Under the provisions of section 19(j) of the shall be filed promptly so as not to delay the Federal Reserve Act (12 U.S.C. § 371b) and disposition of the proceeding. §§ 217.4(a) and (d) of Regulation Q (12 CFR (E) Oral argument before the Board may be §§ 217.4(a) and (d)) to permit member banks to requested by the applicant or the registered clearing waive the penalty for early withdrawal of a time agency as follows: deposit in § 217.4(d) if all of the following conditions are met: (i) by the applicant with his brief or state- (1) The President of the United States declares ment or within 10 days after receipt of the regisan area a major disaster area pursuant to section tered clearing agency's answer, or 301 of the Disaster Relief Act of 1974 (42 U.S.C. (ii) by the registered clearing agency with its § 5141) and Executive Order No. 11795 of July 11, answer. 1974. The Board, in its discretion, may grant or deny any (2) A waiver is limited in effectiveness to derequest for oral argument and, where it deems it positors suffering disaster-related losses in the offiappropriate to do so, the Board will consider an cially designated disaster area. application on the basis of the papers filed by the (3) The appropriate Reserve Bank recommends parties, without oral argument., approval. (F) The Board's Rules of Practice for Formal (4) All relevant divisions of the Board's staff Hearings shall apply to review proceedings under recommend approval. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 925 B A NK HOLDING COMPANY A ND B A NK MERGER ORDERS ISSUED BY THE BOARD OF GOVERNORS ORDERS UNDER SECTION 3 adverse effect on existing or potential competition, OF BANK HOLDING COMPANY ACT nor would it increase the concentration of banking resources or have an adverse effect on other banks Daniels Insurance Agency, Inc., in the area. Competitive considerations, therefore, Hobbs, New Mexico are consistent with approval of the application. Order Approving Acquisition of Bank Shares The financial and managerial resources and future prospects of Applicant appear favorable. The Daniels Insurance Agency, Inc., Hobbs, New same considerations with respect to Bank are re- Mexico, a bank holding company within the mean- garded as generally satisfactory. Thus, the banking ing of the Bank Holding Company Act, has applied factors with respect to both Applicant and Bank are for the Board's approval under § 3(a)(3) of the Act consistent with approval of the application. Al- (12 U.S.C. § 1842(a)(3)) to exercise rights to acquire though there will be no immediate increase in the voting shares of First National Bank of Lea County, services offered by Bank as a result of the proposed Hobbs, New Mexico (''Bank"). As a result of the transaction, and considerations relating to the conexercise of these rights, Applicant would continue venience and needs of the community to be served to hold directly or indirectly 38.5 per cent of the are consistent with approval of the application. It is voting shares of Bank. Applicant has also applied the Board's judgment that the proposed transaction to retain 6,221 shares of Bank previously acquired would be consistent with the public interest and without prior approval of the Board. The shares that the application should be approved. acquired without prior Board approval represent On the basis of the record, the application is 4.25 per cent of Bank's voting shares. approved for the reasons summarized above, but Notice of the application, affording opportunity with the distinct understanding that Applicant will for interested persons to submit comments and take steps to maintain compliance with the Act and views, has been given in accordance with § 3(b) of the Board's regulations. The transaction shall not the Act. The time for filing comments and views has be made (a) before the thirtieth calendar day followexpired, and the Board has considered the applica- ing the effective date of this Order or (b) later than tion and all comments received in light of the three months after the effective date of this Order, factors set forth in § 3(c) of the Act (12 U.S.C. unless such period is extended for good cause by § 1842(c)). the Board, or by the Federal Reserve Bank of Bank, the largest of three banks in the relevant Dallas pursuant to delegated authority. banking market,^ holds deposits of approximately By order of the Board of Governors, effective $96.9 million, representing 44.2 per cent of the total September 19, 1977. deposits in commercial banks in the market. Applicant presently owns directly or indirectly 38.5 per Voting for this action: Chairman Burns and Governors cent of the voting shares of Bank.^ In view of the Gardner, Wallich, Coldwell, Jackson, Partee, and Lilly. fact that Applicant presently controls Bank, consummation of the proposal would not have any (Signed) GRIFFITH L. GARWOOD, [SEAL] Deputy Secretary of the Board. 'The relevant banking market is approximated by Lea County. Hn 1975 and 1976 Applicant, without the prior approval of the Board, acquired additional shares of Bank. The 1975 acquisition Applicant's acquisition of additional shares of Bank without involved the repurchase by Applicant of shares that it had recently prior Board approval violated the Act. It appears, however, that sold to a third party. The 1976 acquisition consisted of Applicant's such violations resulted from a misunderstanding of the applicabilparticipation in a rights offering by Bank. As a result of these ity of § 3(a)(B) of the Act and were inadvertent. The Board has acquisitions, Applicant's interest in Bank increased by less than scrutinized the underlying facts surrounding the acquisition of one per cent. Prior to 1973 Applicant owned more than 50 per cent shares of Bank without the Board's prior approval. In particular, of the voting shares of Bank. At that time, because it owned a the Board notes that Applicant has taken prompt action to bring its majority of the voting shares of Bank, Applicant could have investment in Bank into conformity with the Act and has taken acquired additional shares of Bank without the prior approval of steps to insure that such violations will not occur in the future. The the Board, in view of § 3(a)(B) of the Act. In 1973 Applicant's Board is of the opinion that the above violations, in view of the interest in Bank was reduced to less than 50 per cent. It appears facts surrounding them and the entire record on this application, that at the time that it made the above acquisitions. Applicant do not reflect so adversely on management of Applicant as to mistakenly believed that § 3(a)(B) was still available to it. warrant denial of the subject application. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A926 Federal Reserve Bulletin • October 1976 DETROITBANK Corporation, result in the elimination of potential competition Detroit, Michigan and decrease the likelihood of the market becoming less concentrated in the future. While it appears Order Approving Merger that consummation of the proposal would result in of Bank Holding Companies some slight adverse effects on potential competition, for the reasons discussed below, the Board is DETROITBANK Corporation, Detroit, Michigan unable to conclude that consummation of the pro- ("DETROITBANK"), a bank holding company posal would result in a significant loss of potential within the meaning of the Bank Holding Company competition. Act, has appHed for the Board's approval under Bank is the largest of six banking organizations in § 3(a)(5) of the Act (12 U.S.C. § 1842(a)(5)) to ac- the Muskegon banking market.^ Bank holds total quire all of the voting shares of the successor by deposits of $188 million, representing approximerger to Lake Shore Financial Corporation, Mus- mately 33.5 per cent of the total deposits in comkegon, Michigan, and thereby indirectly acquire mercial banks in the Muskegon market. The Board shares of Hackley Union National Bank and Trust has previously found that the Muskegon market, Company of Muskegan, Muskegon, Michigan with the exception of the Norton Shores area, was ("Bank"). not attractive for de novo entry.^ Since that finding Notice of the application, affording opportunity was made, an application for a charter for a de novo for interested persons to submit comments and bank in Norton Shores has been filed with charterviews, has been given in accordance with § 3(b) of ing authorities and, if that application is granted, the Act. The time for filing comments and views has the attractiveness of the Norton Shores area for de expired, and the Board has considered the applica- novo entry by others will be lessened. tion and all comments received including those of Moreover, it appears that the overall Muskegon the United States Department of Justice and those market continues to be generally unattractive for de of National Lumberman's Bank and Trust Com- novo entry. The deposits per banking office ratio pany, Muskegon, Michigan ("Protestant"), in light for the Muskegon Standard Metropolitan Statistical of the factors set forth in § 3(c) of the Act (12 Area is below the State average. Population of the U.S.C. § 1842(c)). Muskegon County portion of the market increased DETROITBANK controls six banks with aggre- 0.2 per cent between 1970 and 1975, ranking fifgate deposits of $2.8 billion, representing 8.8 per teenth in population growth among the 17 Michigan cent of the total deposits in commercial banks in counties with population in excess of 100,000. It is Michigan, and is the third largest banking organiza- anticipated that Muskegon County's population tion in the State. ^ Consummation of the proposed growth will continue to lag behind that of the other merger would increase Applicant's share of de- Michigan counties at least until 1980. In view of the posits in commercial banks in Michigan by 0.6 per apparent lack of attractiveness of the Muskegon cent and would have no appreciable effect upon the area for de novo entry,^ particularly vis-a-vis other concentration of banking resources in Michigan. areas in Michigan in which Applicant is not cur- All but one of Applicant's subsidiary banks are rently represented, the Board is unable to conclude located in the Detroit banking market, approxi- that Applicant is one of the most likely de novo mately 170 miles from Muskegon.^ Approval of this entrants into the Muskegon area. application would not eliminate any significant Of the six banks currently represented in the amount of existing competition. Muskegon market, three are affiliated with multi- With respect to potential competition, the Department of Justice and Protestant have expressed the opinion that Applicant is a likely entrant into the =^The Muskegon banking market, the relevant market, is approxmarket and that approval of the application would imated by all of Muskegon County, except for Casnovia Township, plus Grand Haven, Spring Lake, and Crockery Townships in Ottawa County. ^Banking data are as of December 31, 1976. ^See Board's Order of March 26, 1975, denying application of 2Applicant recently entered western Michigan by acquiring Old Kent Financial Corporation, Grand Rapids, Michigan, 61 Fed. Kentwood Bank located 40 miles from Muskegon in a suburb of Res. Bull. 247 (1975) and Board's Order of January 25, 1974, Grand Rapids. The application under the Bank Holding Company denying application of Old Kent Financial Corporation, Grand Act to acquire that bank was approved under delegated authority Rapids, Michigan, 60 Federal Reserve BULLETIN 133 (1974). by the Federal Reserve Bank of Chicago on July 7, 1977. •^Applicant's subsidiary banks are barred by Michigan's restric- Kentwood Bank is not located in the relevant market, but rather tive branching law (Mich. Stat. Ann. § 23.710 (171)) from branchcompetes in the adjacent Grand Rapids market. Bank derives only ing into Muskegon. However, Michigan law does not prohibit the a nominal amount of deposits and loans from the Grand Rapids formation of de novo banks by Applicant and it is this form of de market. novo entry referred to in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 927 bank holding companies.^ While "foothold" entry Voting for this action: Chairman Burns and Governors into the market would be preferable to Applicant's Caldwell, Partee, and Lilly. Voting against this action: Governor Wallich. Absent and not voting: Governors acquisition of the largest bank in the market, only Gardner and Jackson. two possibilities exist for Applicant to acquire an established bank as a means of entry into the market and neither of those appears feasible. The (Signed) ROBERT E. MATTHEWS, two banks that might be available for acquisition [SEAL] Assistant Secretary of the Board. are Protestant, the second largest bank in Muskegon, and a bank located in the town of Coopersville that is prohibited by Michigan law from branching into the city of Muskegon and conducts its operations primarily in the Grand Rapids banking market. The former would not constitute a true "foot- Dissenting Statement of Governor Wallich hold" entry in view of its size and market share. Acquisition of the latter would not be likely to I would deny the application of DETROITB ANK produce any significant procompetitive benefit in to merge with Lake Shore Financial Corporation, the Muskegon market. Muskegon, Michigan and thereby acquire Hackley Considerations relating to the financial and man- Union National Bank and Trust Company of agerial resources and future prospects of Bank, Muskegon ("Bank"), Muskegon, Michigan. My Applicant, and Applicant's subsidiaries are re- reasons are those that were set forth in my Dissentgarded as generally satisfactory. Although Appli- ing Statements in the recent Texas Commerce cant would incur some debt as a result of this Bancshares, Inc. and the First City Bancorporation acquisition, it appears that dividends from Bank of Texas, Inc. decisions.' would be sufficient to retire that debt. My dissent in this case rests again on the adverse Applicant has stated its intention to augment the effects of this proposal on potential competition. services of Bank by providing equipment leasing, Bank is the largest of six commercial banking accounts receivable financing, international ser- organizations in the concentrated Muskegon marvices, cash management services, money market ket, with 33.5 per cent of the commercial bank services, and real estate trust services. Bank does deposits in the market. I regard DETROITBANK not currently provide many of these services. In as one of the most likely potential entrants into the addition, affiliation with Applicant would increase market given the financial resources and expressed bank's lending limits at a time when there appears intent of Applicant to expand into western Michito be an increasing demand by local industries for gan. So long as Applicant remains poised in the large loans. Thus, considerations relating to the "wings" of the Muskegon market, this potential convenience and needs of the community to be competition exerts a beneficial effect on the served lend weight toward approval of the applica- Muskegon market. If and when this "wings" effect tion and outweigh any slight adverse competitive is eliminated by actual enry of Applicant into the effects that may result from the proposal. market, it should be by a route that offsets elimina- On the basis of the record, the application is tion of this effect by deconcentrating that market, approved for the reasons summarized above. The through de novo entry or by means of a "foothold transaction shall not be made (a) before the thirtieth acquisition." calendar day following the effective date of this In my opinion, this application represents a con- Order or (b) later than three months after the tinuation of the trend established in the Texas effective date of this Order, unless such period is decisions noted above. The majority is in danger of extended for good cause by the Board, or by the being misinterpreted as indicating that de novo Federal Reserve Bank of Chicago pursuant to dele- entry or foothold entry into highly concentrated gated authority. markets is no longer expected of those organiza- By order of the Board of Governors, effective September 1, 1977. ^See the Dissenting Statements of Governor Wallich accompanying the Board Orders approving the applications of Texas ®A pending de novo charter application, if approved, would Commerce Bancshares, Inc., Houston, Texas to merge with The enable a fourth multibank holding company, Old Kent Financial BanCapital Financial Corporation, Austin, Texas (63 Federal Corporation, Grand Rapids, Michigan, to enter this market and Reserve BULLETIN 500 (1977)) and First City Bancorporation of would thus increase the number of banking organizations in the Texas, Inc., Houston, Texas to acquire City National Bank of market from six to seven. Austin, Austin, Texas (63 Federal Reserve BULLETIN 674 (1977)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A928 Federal Reserve Bulletin • October 1976 tions that are most capable of entering new markets sition of Bank, which holds deposits of $54.8 milin that manner. Such an approach would increase lion, would increase Applicant's share of total the disparity in size between the largest banking deposits in commercial banks in the State by 0.1 per organizations of a State and the rest of the State's cent. organizations, leading to an increase in concentra- Bank is the second largest of six banks in the tion ratios and a decrease in the number of effective relevant geographic market.^ Its $54.8 million in competitors and competition within the State. deposits represent 25.1 per cent of market deposits. The present decision is an unfortunate outgrowth The largest bank in the market holds 27 per cent of of the Board's Texas Commerce decision. That the market deposits. The third, fourth, and fifth decision, I believe, had an anticompetitive effect largest banks in the market hold, respectively 19.6 upon the Austin market and the structure of com- per cent, 14.1 per cent, and 13.2 per cent of market mercial banking in Texas. Approval of this applica- deposits. The smallest bank in the market, ortion may well have the same effects upon the ganized in 1976, controls just under 1 per cent of Muskegon market and the structure of commercial market deposits. It appears that none of the banks banking in Michigan. in the market is currently held by a bank holding For the foregoing reasons, I would deny this company. application. Applicant's nearest subsidiary is located 90 miles south of Bank in Wallis, Texas. Several subsidiaries of Applicant derive only marginal amounts of business from the relevant market and none derives any substantial amounts. Thus, and in view of the local First City Bancorporation of Texas, Inc. nature of banking markets, consummation of Ap- Houston, Texas plicant's proposal would not have any significant adverse effects on existing competition within the Order Approving Acquisition of Bank relevant market. First City Bancorporation of Texas, Inc., Hous- Although the market's ratio of population to ton, Texas ("Applicant"), a bank holding company banking offices is 1.4 times the State average, per within the meaning of the Bank Holding Company capita deposits in the market are only 67 per cent of Act, has appHed for the Board's approval under the State average. The market has experienced § 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to considerable population growth since 1970. The acquire 100 per cent (less directors' qualifying market, on balance, appears slightly attractive for shares) of the voting shares of the successor by de novo entry. Although Applicant may be conmerger to The City National Bank of Bryan, Bryan, sidered a potential entrant into this market, it Texas C'Bank"). The bank into which Bank is to be should be noted that no other bank holding commerged has no significance except as a means to panies are represented in the Bryan market. Thus, facilitate the acquisition of the voting shares of the loss of Applicant as a potential entrant is not Bank. Accordingly, the proposed acquisition of the considered significant in view of the relatively large successor organization is treated herein as the number of remaining bank holding companies that proposed acquisition of the shares of Bank. are potential entrants into the market. Bank holds Notice of the application, affording opportunity approximately $12 million more in market deposits for interested persons to submit comments and (5.5 per cent of market deposits) than the third views, has been given in accordance with § 3(b) of largest bank and approximately $4 million less the Act. The time for filing comments and views has (about 2 per cent) than the largest bank in the expired, and the Board has considered the applica- market. The similarity in size of the five largest of tion and all comments received in light of the the six banks in the market suggests the absence of factors set forth in § 3(c) of the Act (12 U.S.C. alternative foothold means of entry into the market § 1842(c)). since it does not appear that the smallest bank in the Applicant, the largest banking organization in Texas, controls 28 banks with aggregate deposits of $4.14 billion, representing 7.81 per cent of total ^The relevant geographic market is approximated by the Bryan-College Station Standard Metropolitan Statistical Area deposits in commercial banks in the State.^ Acquiwhich encompasses all of Brazos County. The January 1, 1977 population estimated for the market was 76,700 persons, an increase of 32.2 per cent over 1970. The recent expansion of Texas ^All banking data are as of December 31, 1976 and reflect bank A&M University, located at College Station, contributed signifiholding company formations and acquisitions approved through cantly to this increase. Texas population growth Statewide was June 30, 1977. estimated at 12 per cent for the same period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 929 market is available for acquisition. For the forego- First National Holding Corp. ing reasons, approval of this application will have Atlanta, Georgia only a slightly adverse effect, if any, on potential competition. Order Approving Acquisition of Banks The financial and managerial resources of Applicant and its subsidiaries and of Bank are considered First National Holding Corp., Atlanta, Georgia, a generally satisfactory and the future prospects of all bank holding company within the meaning of the appear favorable. Thus, the Board believes that the Bank Holding Company Act, has applied for the banking factors involved in the proposal are consis- Board's approval under section 3(a)(3) of the Act tent with approval. (12 U.S.C. § 1842(a)(3)) to acquire 100 per cent of the voting shares of First Bank of Savannah Information contained in the record indicates that (''Savannah"), Savannah, Georgia, and approximost of the banking needs of the area are currently mately 78 per cent of the voting shares of The First being met. However, the growth in the area has National Bank of Dalton ("Dalton"), Dalton, Georcreated demands for new services not currently gia. In acquiring Dalton, Applicant would formally available within the market. Applicant through acquire indirect ownership of 64.4 per cent of the Bank has the capability of providing these services. voting shares of The Bank of Dalton, Dalton, Bank has maintained a quite conservative loan to Georgia. These shares are held by National Loan deposit ratio; Applicant intends to infuse capital Company, Dalton, Georgia, a wholly-owned subinto Bank to increase commercial and consumer sidiary of Dalton. lending. It plans within two years of acquisition to Notice of the applications, affording opportunity for interested persons to submit comments and provide credit related insurance through Apphviews, has been given in accordance with section 3 cant's subsidiary. First City Life Insurance Comof the Act (41 Fed, Reg. 46059; 42 Fed. Reg. pany, at rates less than those currently charged by 12236). The time for fihng comments and views has an affiliate of Bank. Applicant also intends to expired, and the Board has considered the appHcaexpand mortgage lending services. In light of these tions and all comments received in light of the factors the Board regards considerations of the factors specified in section 3(c) of the Act. convenience and needs of the community to be The applications are consolidated because of a served as lending weight in favor of approval of the set of facts common to them. In both instances application. AppHcant seeks the Board's permission to acquire On the basis of the record, the appHcation is bank shares held by, or subject to a contractual right to acquire held by, former directors of AppHapproved for the reasons summarized above. The cant's subsidiary bank, The First National Bank of transaction shall not be made (a) before the thirtieth Atlanta ("Atlanta Bank"), Atlanta, Georgia, purcalendar day following the effective date of this suant to arrangements made in 1969 and 1970. Under Order or (b) later than three months after the those arrangements Atlanta Bank financed the ultieffective date of this Order, unless such period is mate acquisition of controlling interests in Savannah extended for good cause by the Board, or by the and Dalton by persons affiliated with Atlanta Bank Federal Reserve Bank of Dallas pursuant to dele- at preferenfial terms and without risk of loss to the gated authority. borrowers. The Board has previously determined By order of the Board of Governors, effective that similar arrangements may evidence indirect September 1, 1977. control of bank shares by a company and, if undertaken without prior Board approval, may constitute violations of the Bank Holding Company Act.^ In connection with these proposals, the Board has scrutinized the underlying facts surrounding the acquisitions of shares of Dalton and Savannah and the acquisition of rights to acquire shares of Dalton by Applicant's subsidiary bank acting through per- Voting for this action: Vice Chairman Gardner and sons related to it, and has concluded that Atlanta Governors Wallich, Coldwell, Jackson, Partee, and Lilly. Bank, by virtue of these arrangements, acquired Absent and not voting: Chairman Burns. indirect ownership and control of more than 25 per ^See, e.g., The Jacobus Company and Inland Financial Corporation, 60 Federal Reserve BULLETIN 130 (1974); MidAmerica Bancorporation, 60 Federal Reserve BULLETIN 131 (1974); First (Signed) ROBERT E. MATTHEWS, United Bancorporation, Inc., 61 Federal Reserve BULLETIN 889 [SEAL] Assistant Secretary of the Board. (1975). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A930 Federal Reserve Bulletin • October 1976 cent of the shares of both banks without the deposits in commercial banks in that market. Dal- Board's prior approval in violation of section 3 of ton is the largest of six banks in the Dalton banking the Act.2 In accordance with its policy regarding market,® and holds deposits of $74 million, or violations of the Act, and, upon its examination of approximately 46 per cent of the deposits in comall the facts of record, the Board is of the view that mercial banks in that market. The Bank of Dalton, the specific facts involved in the original indirect which also is located in the Dalton banking market, acquisitions, even viewed in isolation and absent holds deposits of $20.8 million (11 per cent of other adverse considerations, might require denial market deposits), and is the third largest commerof the applications but for Applicant's thorough and cial bank in that market. Taken together, Dalton definite undertakings to guard against violations in and The Bank of Dalton control approximately 51 the future.^ per cent of the market's commercial bank deposits. Applicant, the second largest banking organiza- Applicant's direct subsidiary bank is located in tion in Georgia, controls one bank other than Dal- the Adanta banking market,^ which is approxiton and Savannah, holding total deposits of $1.2 mately 250 miles from Savannah and over 50 miles billion, or approximately 10 per cent of the total from Dalton, and Applicant's nonbank subsidiaries deposits in commercial banks in the State.^ Savan- are not significant competitors in either the Savannah is the fourth largest of nine commercial banks nah or Dalton banking markets. Viewing the comlocated in the Savannah banking market, ' and holds petitive situation as it existed in 1969 and 1970 when deposits of $33.4 million,, or 6 per cent of the Adanta Bank arranged to obtain control of Dalton and Savannah, it appears that, in light of the fact that Dalton, Savannah, and Atlanta Bank serve separate ^The material facts, summarized here, are undisputed. In the banking markets, the acquisitions eliminated and, case of Savannah, Atlanta Bank in March 1969 lent, without viewed as present acquisitions would ehminate, no interest, $2.7 million to an unrelated individual to acquire all but the directors' qualifying shares of that bank. In April 1970, the existing banking competition in the relevant marbank shares and loan were transferred to the former chairman of kets. Furthermore, consummation of the Dalton Atlanta Bank's executive committee. This loan was structured so proposal may have a procompetitive effect, inasthat the borrower assumed no personal liability on his debt to much as Apphcant has committed, if its application Atlanta Bank beyond the shares of Savannah pledged as collateral for that loan, and so that interest would equal dividends paid by is approved, to sever the affiliation between Dalton Savannah. In September 1971, Atlanta Bank lent this individual on and The Bank of Dalton that has existed since the same basis an additional $500,000 to acquire additional shares 1918.« This would estabhsh The Bank of Dalton as of Savannah. Since 1971 Applicant has invested an additional $4.4 an independent new competitor in a relatively conmillion directly in Savannah's preferred shares and capital notes. Since 1972, Savannah's executive committee has voted the shares centrated market. Moreover, continued affiliation of Savannah held by Atlanta Bank's former director pursuant to between Applicant and Savannah may preserve proxies executed by him. Savannah's ability to compete with the larger or- In the case of Dalton, several individual shareholders of Dalton, ganizations in the market.-' The Board accordingly unrelated to Atlanta Bank, placed shares of Dalton in a trust in concludes that competitive considerations are con- January 1969, with a view to preventing another Georgia bank from gaining control of Dalton. Under the terms of the trust four sistent with approval of both applications and lend directors and former directors of Atlanta Bank agreed to buy from weight to approval of the application to acquire the trust shares of any shareholder-beneficiary who died or who Dalton. decided to sell, at a formula price, if the remaining shareholderbeneficiaries declined to do so. At the same time Atlanta Bank Considerations relating to the convenience and agreed to lend to its designated directors the funds necessary to needs of the communities to be served are also buy shares from the trust, without personal liability and at interest consistent with approval of both applications. Apequal to dividends. Over time additional shares were placed in plicant states that it will provide a number of new trust. These arrangements involved about 78 per cent of Dalton's voting shares, 39 per cent that are still held in trust and another 39 services to both banks, and Applicant has provided per cent that passed through the trust to Atlanta Bank's former assistance to both banks under its present relationdirectors between 1969 and 1976. ship with them. ^The record also reflects that before initiating these transactions Atlanta Bank had reason to believe them lawful, and that Applicant openly disclosed its transactions regarding Dalton and ®The Dalton banking market is approximated by Whitfield and Savannah to its shareholders and to the Board as soon as those Murray Counties. transactions were questioned and cooperated with efforts by the n^he Atlanta banking market is approximated by Fulton, De- Board's staff to resolve the violations question. Applicant's coop- Kalb, Cobb, Gwinnett, Clayton, Douglas, Henry, and Rockdale eration, the nature of the violations, the fact that the transactions Counties. originated before the Board publicized its policy on such transac- ^Applicant has filed a written commitment that upon consumtions and that management has changed since the transactions mation of the proposed acquisition of shares held by Atlanta's originated, coupled with Applicant's undertaking a definite pro- former directors it will cause director and officer interlocks gram regarding its future conduct, together persuade the Board between Dalton and The Bank of Dalton to be severed, and cause that the violations do not reflect so adversely on Applicant's termination of Applicant's direct and indirect ownership and management as to require denial of these applications, though no control of, and power to vote, voting shares of The Bank of Dalton one of those considerations standing alone might be persuasive. at the earliest practicable time and in any event within two years. ''Banking data are as of December 31, 1976. ^The two largest banking organizations in the Savannah banking ^The Savannah banking market is approximated by Chatham market control approximately 70 per cent of the market's deposits, and Effingham Counties and those portions of Liberty and Bryan and a majority of the market's deposits are controlled by the Counties that lie east of Fort Stewart. State's largest and third largest banking organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

931 The financial and managerial resources and fu- earlier than Applicant proposes, and authority is ture prospects of Dalton and Savannah are viewed hereby delegated to the Board's General Counsel to as generally satisfactory. Applicant's managerial order such earher divestiture, and to impose condiresources and future prospects are also considered tions that will insure that the divestiture is complete generally satisfactory. Its financial resources, and effective, if the reasons submitted in his judgwhich suffered during the downturn in the real ment warrant such action. The transactions hereby estate industry in the Southeast, are improving. approved shall not be made before the thirtieth There is no indication in the record that Applicant's calendar day following the effective date of this recovery is progressing at an unsatisfactory rate, Order, or later than three months after the effective but the Board believes that Applicant should con- date of this Order unless such period is extended for tinue to strengthen those financial resources before good cause by the Board or by the Federal Reserve it attempts to expand through proposals involving a Bank of Atlanta pursuant to delegated authority. diversion of its existing resources. By order of the Board of Governors, effective These proposed transactions, however, represent September 28, 1977. essentially the reorganization of existing indirect investments, one that would have only a minimal or Voting for this action: Chairman Burns and Governors conceivably a positive effect on the financial re- Gardner, Wallich, and Partee. Voting against this action: sources of Applicant. Applicant made most of its Governors Coldwell, Jackson, and Lilly. proposed investments in Dalton and Savannah beginning in 1969. In the case of Savannah, converting Applicant's indirect investment to a direct invest- (Signed) GRIFFITH L. GARWOOD, ment requires an additional outlay of only $10,000. [SEAL] Deputy Secretary of the Board. Acquisition of 39 per cent of the shares of Dalton can Hkewise be accompHshed at negligible cost, and the Board is satisfied that Apphcant's commitments regarding the circumstances under which it will Dissenting Statement of acquire additional shares of Dalton sufficiently in- Governors Coldwell and Jackson sure that the acquisition will not have any materially adverse effect on Applicant or Atlanta Bank. We would deny the applications by First National Moreover, Applicant's ability to consolidate the Holding Corp. to acquire The First National Bank of earnings of Savannah after consummation of that Dalton 'Dalton") and First Bank of Savannah proposed transaction should enhance its financial ("Savannah"), In our view, any other action would resources. On the other hand, divestiture of the result in a reward of Applicant's violations of the shares and rights held by Atlanta's former directors Bank Holding Company Act and would be contrary could involve adverse financial consequences to to the standards the Board normally applies to bank Applicant. Having considered all aspects of the holding company appHcations. The subject applicaproposed transactions, including Applicant's most tions propose that a bank holding company whose recent financial information, the Board concludes financial resources do not meet the Board's normal that on balance considerations relating to Appli- standards for expansion acquire directly shares of cant's financial resources are consistent with ap- two banks that it acquired indirectly several years proval of these applications.'® ago in violation of law. We do not agree that the Accordingly, based on the record and for the Board should permit this to happen. reasons summarized herein, these applications are In essence the Board's Order in these cases turns approved. Approval of the application to acquire Applicant's violations of the Act into a positive Dalton is subject to the condition that Applicant factor favoring approval. It is our view that if the cause complete divestiture of The Bank of Dalton in violations had not occurred the Board would probaccordance with its commitment, subject to con- ably have denied these applications. If that is true tinuing review and the imposition of such further the logical conclusion is that the violations have lent terms as the Board or its General Counsel may weight toward approval of these applications. We direct. Applicant is directed to submit to the might be willing to agree under the special circum- Board's General Counsel within 30 days after the stances of supervisory authorities' actions in these effective date of this Order reasons why the divesti- cases that the violations should be a neutral factor, ture of The Bank of Dalton should not be ordered but we cannot agree that they should be a positive one. We believe the Board's majority has attached ^"There is nothing in the record to show that Atlanta Bank's undue weight to the estimates of financial injury financial resources at the time it arranged to obtain control of which divestiture might cause Applicant, Dalton, or Savannah and Dalton were incompatible with those investments at Savannah. Any damage will unlikely be severe. To the time they were made. Instead it appears that the problems a large extent "bookkeeping" losses that could be Apphcant has experienced were chiefly those common to other banking organizations and arose several years later. incurred as a result of divestiture already exist in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A932 Federal Reserve Bulletin • October 1976 Applicant's consolidated financial resources, and the Department of Justice, in light of the factors set divestiture of Dalton might enhance Applicant's forth in § 3(c) of the Act (12 U.S.C. § 1842(c)). financial resources rather than injure them. Fur- Applicant, the seventh largest banking organizathermore, divestiture, once complete, should allow tion in Ohio, controls twelve banking subsidiaries^ Applicant to focus its managerial resources more with aggregate deposits of approximately $1.4 bilcompletely on its existing organization, which we lion, representing 4.1 per cent of total commercial consider a material benefit. On the other side, we bank deposits in Ohio.^ Acquisition of Bank ($24.8 do not see that retention of Dalton or Savannah will million in deposits) would increase Applicant's improve Applicant's financial resources in any important way. While the bulk of Applicant's present share of Statewide commercial bank deposits by investments in Savannah and Dalton were made 0.07 per cent and would have no appreciable effect several years ago, its proposed additional invest- upon the concentration of banking resources in ment in Dalton may involve a diversion of existing Ohio. financial resources, and a complex, uncertain plan Bank is headquartered in the city of London, for purchase of the additional shares. Ohio, about 25 miles west of downtown Columbus, A bank holding company may by various means and is the twelfth largest of 27 commercial banking and for various reasons seek to avoid or postpone organizations (with 193 banking offices) located in review by the Board of its investments in banks and the Columbus banking market controlling approxiother enterprises as Applicant did. A company that mately 0.7 per cent of the total commercial bank elects to pursue such a course, and particularly if deposits in the market.^ Applicant is the second undertaken in circumvention of the Act's require- largest banking organization in the relevant market ments, should run the risk, however, that approval with approximately 23.2 per cent of market demay be foreclosed by the violation itself or by posits. While acquisition of Bank would increase events occurring between the time the investment is Applicant's market share, Applicant would remain made and the time it is presented to the Board for the second largest banking organization in the marevaluation. ket, since the largest in the market (and the second For the foregoing reasons, we would deny these largest banking organization in the State) controls applications. 43 per cent of market deposits. Also located in the relevant market are banking subsidiaries of four other Ohio multibank holding companies, all ranked Huntington Bancshares Incorporated within the top eight banking organizations in the Columbus, Ohio State. Even though Applicant and Bank operate in the same market and some existing competition Order Approving Acquisition of Bank would be eliminated. Applicant's banking office Huntington Bancshares Incorporated, Colum- closest to Bank is located 8.3 miles east of Bank, in bus, Ohio ("Applicant"), a bank holding company Franklin County, and is separated from Bank by within the meaning of the Bank Holding Company seven intervening banking offices. Based upon the Act, has applied for the Board's approval under above and other facts of record, it appears to the § 3(a)(3) of the Bank Holding Company Act (12 Board that approval of the application would have U.S.C. § 1842(a)(3)) C'Act') to acquire 100 per only a slightly adverse effect upon existing competicent of the voting shares (less directors' qualifying tion. shares) of the successor by merger to The Central In assessing the effects of the proposal upon National Bank of London, London, Ohio future competition, the Board is of the view that ("Bank"). The bank into which Bank is to be although Applicant may possess the capabilities to merged has no significance except as a means to facilitate the acquisition of the voting shares of Bank. Accordingly, the proposed acquisition of ^By action of August 31, 1977, the Board approved the acquisishares of the successor organization is treated tion by Applicant of the successor by merger to Bellefontaine herein as the proposed acquisition of the shares of National Bank, Bellefontaine, Ohio. ^All banking data other than market deposit data are as of Bank. December 31, 1976, and reflect bank holding company formations Notice of the application, affording opportunity and acquisitions approved as of June 30, 1977. All market data are for interested persons to submit comments and as of June 30, 1976. ^The relevant market is the Columbus banking market which is views, has been given in accordance with § 3(b) of approximated by the five-county Columbus SMS A. It includes all the Act. The time for filing comments and views has of Franklin and Fairfield Counties, all of Pickaway County except Perry and Salt Creek Townships, the southern two-thirds of expired, and the Board has considered the applica- Madison County, all of Delaware County except the northernmost tion and all comments received, including those of townships, and the western half of Licking County. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 933 enter Madison County de novo and acquisition of sition would be in the public interest and that the Bank would eliminate one independent banking application should be approved. alternative in the relevant market, there are other During its consideration of this application the facts of record that mitigate these slightly adverse Board noted that, as a result of management and competitive effects. Ohio's restrictive branching director interlocks and other indicia of a close law, which limits branching to home office coun- relationship between Bank and The London Home ties, prohibits Applicant's present subsidiaries from and Savings Company, acquisition of Bank might branching into the Madison County portion of the cause Applicant, following consummafion of the market. Moreover, it appears unlikely that Appli- subject proposal, to be indirectly engaging in the cant would enter Madison County de novo since the activity of operating a savings and loan association population and deposits-per-banking-office ratios (See Board Order of February 22, 1977, denying the are below State averages and the area of growth in application of D. H. Baldwin Company, Cincinnati, the Columbus Metropolitan Area is primarily north Ohio, to retain Empire Savings, Building and Loan and east of Columbus rather than southwest where Association, Denver, Colorado (63 Federal Reserve Bank is located. Furthermore, following approval BULLETIN 280 (1977) . Accordingly, The Board's acthere would remain 20 other independent banks as tion herein is conditioned upon Applicant complypossible entry points into the market. Accordingly, ing with its commitment to take steps following on the basis of the above and other facts of record, acquisition of Bank which will result in the severit is concluded that consummation of the proposal ance of the above interlocks, and the establishment would have only slightly adverse effects upon po- within one year after the acquisifion of Bank of The tential competition. London Home and Savings Company as a completely independent financial institution in the In analyzing the competitive consequences of the Columbus banking market. subject proposal, the Board has considered the On the basis of the record, and for the reasons comments by the Department of Justice that consummarized herein, the application is approved summation would have adverse competitive efsubject to the condition set forth above. The transfects. However, in light of the Board's findings action shall not be made (a) before the thirtieth described above, it does not appear that such calendar day following the effective date of this effects would be significant, and, balanced against Order or (b) later than three months after the the convenience and needs considerations diseffective date of this Order, unless such period is cussed below, the Board is of the view that denial of extended for good cause by the Board, or by the the applicafion is not warranted. Federal Reserve Bank of Cleveland pursuant to The financial and managerial resources and fu- delegated authority. ture prospects of Applicant, its subsidiaries and By order of the Board of Governors, effective Bank are regarded as generally satisfactory and September 14, 1977. consistent with approval. Affiliafion with Applicant will enable Bank to provide its customers a much Voting for this action: Vice Chairman Gardner and greater variety of banking services beyond those it Governors Jackson and Partee. Voting against this action: currently offers and thereby increase its competi- Governor Coldwell. Absent and not voting: Chairman tiveness in the market. The services Applicant has Burns and Governors Wallich and Lilly. indicated Bank will be able to provide its customers which are not now offered by Bank include time (Signed) GRIFFITH L. GARW^OOD, and savings deposits offering a wide range of [SEAL] Deputy Secretary of the Board. maturities, compounding of interest daily, expanded checking services to include Applicant's '^All-in-One Account," and a bank credit card Dissenting Statement of Governor Coldwell service. Applicant will also make available to Bank's customers more specialized and diversified As noted in the majority's opinion, the instant trust and data processing services. The Board finds, proposal involves the acquisifion of a bank in the therefore, that considerations relating to the con- Columbus banking market by the second largest venience and needs of the community to be served banking organizafion in the market, Huntington lend such weight toward approval as to outweigh Bancshares, Inc. Where a banking organization is any slightly adverse competitive effects that might already represented in the market, a horizontal result from approval of the proposal. Accordingly, acquisition such as the one proposed here results in it is the Board's judgment that the proposed acqui- some elimination of exisfing competifion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A934 Federal Reserve Bulletin • October 1976 In view of the absolute size of Huntington Applicant has no other subsidiaries, consummation Bancshares and its position in the market, it is my of the proposal would not have any adverse effect opinion that the effects of the proposal on existing upon existing or potential competition nor would it competition are adverse. The Bank Holding Com- increase the concentration of banking resources. pany Act requires the Board to deny the proposed Thus, the Board concludes that the competitive horizontal acquisition unless its anticompetitive ef- effects of the instant proposal are not adverse and fects are outweighed by other factors in the record. are consistent with approval. It appears to me that the other factors are not The Board has indicated on previous occasions sufficient to outweigh the anticompetitive effects that a holding company should constitute a present in this proposal. Therefore, I would deny source of financial and managerial strength to its this application. subsidiary bank(s), and that the Board will closely examine the condition of an applicant in each case with this consideration in mind.^ Having examined Jackson Hole Banking Corporation such factors in light of the record in this application, Jackson, Wyoming the Board concludes that the record presents adverse considerations as they relate to the applicant Order Denying bank holding company that warrant denial of the Formation of Bank Holding Company proposal to place the ownership of Bank into corpo- Jackson Hole Banking Corporation, Jackson, rate form. Wyoming, has applied for the Board's approval The president of Bank, along with members of under § 3(a)(1) of the Bank Holding Company Act his family, are the principal shareholders of Bank (12 U.S.C. § 1842(a)(1)) of formation of a bank and, under this proposal, would become the presiholding company through acquisition of 91.3 per dent and principal shareholders of Applicant. The cent of the common voting shares of The Jackson president of Bank has served in that capacity for State Bank, Jackson, Wyoming ("Bank"). Appli- approximately ten years. Material in the record cant also proposes to acquire nonvoting preferred reflects that Bank's earnings and capital position shares of Bank. have generally been lower than those of similarly Notice of the application, affording opportunity situated banks in the State. Such results appear to for interested persons to submit comments and be attributable to the policies and practices curviews, has been given in accordance with § 3(b) of rently in evidence in Bank's operations. Inasmuch the Act. The time for filing comments and views has as no management changes are contemplated by expired, and the Board has considered the applica- Applicant and this proposal would continue and tion and all comments received in light of the enhance management's control of Bank, the Board factors set forth in § 3(c) of the Act (12 U.S.C. is of the view that the record of Bank's operations § 1842(c)). indicates that managerial factors are an adverse Applicant is a nonoperating Wyoming corpora- consideration. tion organized for the purpose of becoming a bank With respect to financial considerations, the holding company through the acquisition of Bank Board notes that Applicant would incur a sizable ($44.2 million in deposits).' Upon acquisition of debt in connection with the proposed acquisition of Bank, Applicant would control the 10th largest Bank's shares. Applicant proposes to service this banking organization in the State of Wyoming and debt over a 12-year period through dividends to be approximately 2.4 per cent of total deposits in declared by Bank and tax benefits to be derived commercial banks in the State. from filing consolidated tax returns. The projected Bank is the larger of the two banks located in Teton County, which approximates the relevant banking market, and holds approximately 81.7 per ^The Bank Holding Company Act is clear in its mandate that the cent of the total commercial bank deposits in the Board, in acting on an apphcation to acquire a bank, inquire into the financial and managerial resources of an applicant. While this market. The proposed transaction involves the proposal involves the transfer of the ownership of Bank from transfer of ownership of Bank from individuals to a individuals to a corporation owned by essentially the same individuals, the Act requires that before an organization is permitted corporation owned by the same individuals. Since to become a bank holding company and thus obtain the benefits associated with the holding company structure, it must secure the Board's approval. Section 3(c) of the Act provides that the Board must, in every case, consider, among other things, the financial and managerial resources of both the applicant company and the 'Unless otherwise indicated, all banking data are as of Decem- bank to be acquired. The Board's action in this case is based on a ber 31, 1976. consideration of such factors. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 935 earnings for Bank contained in the application are Metropolitan Bank and Trust Company, higher than Bank has generally enjoyed in the past, Philippine Securities Corporation and as well as being higher than other banks in the area. Tytana Corporation In addition, the projected asset growth of Bank is Mikati, Rizal, Philippines much less than that experienced in recent years. Based upon more realistic earnings and growth Amendment to Order Approving projections, it is the Board's judgment that AppH- Formation of Bank Holding Companies cant would not have the necessary financial re- By Order dated August 10, 1977, the Board sources to meet its annual debt servicing requireapproved the applications of Metropolitan Bank ments, maintain adequate capital at Bank, and meet and Trust Company ("Metropolitan"), Philippine any unexpected problems that might arise at Bank. Securities Corporafion and Tytana Corporation, all It is true that Applicant's plan calls for it to incur of Makati, Rizal, PhiHppines, to become bank holddebt for the purpose of injecting capital into Bank; ing companies through the direct or indirect acquihowever, a more appropriate means of achieving sition of up to 35 per cent of the voting shares of capital improvement considering Bank's present Internafional Bank of California ("Bank"), Los condition would be a retention of earnings and a Angeles, California. Applicants have indicated that curtaiHng of dividends. In sum, the Board does not Metropolitan intends to enter into a voting trust view Applicant's overall financial plan as one that agreement with shareholders of Bank, which voting would enable it to serve as a source of strength to trust would be controlled by Metropolitan. The Bank or one that would enhance Bank's prospects. shares in the voting trust would consist of the Therefore, the Board concludes that considerations shares to be owned by Applicants and such addirelating to financial resources and future prospects tional shares as are necessary for the voting trust to weigh against approval of this application. control more than 50 per cent of the voting shares of No significant changes in Bank's operations or in Bank. As a result of the voting trust. Applicants the services offered to customers are anticipated to would directly or indirectly control voting shares of follow from consummation of the proposed acquisi- Bank in addition to the 35 per cent for which prior tion. Consequently, convenience and needs factors Board approval was previously requested and aplend no weight towards approval of this proposal. proved. Applicants have amended their applica- On the basis of the circumstances concerning this tions to reflect the fact that they intend to acquire application, the Board concludes that the banking directly or indirectly ownership or control of more considerations involved in this proposal present than 50 per cent of the voting shares of Bank and adverse factors bearing upon the financial and have requested that the Board amend its Order of managerial resources and future prospects of Ap- August 10, 1977, accordingly. plicant and Bank. Such adverse factors are not Notice of the amended applications, affording outweighed by any procompetitive effects or by opportunity for interested persons to submit combenefits that would result in better serving the ments and views, has been given in accordance convenience and needs of the community. Accordwith § 3(b) of the Act. The time for filing comments ingly, it is the Board's judgment that approval of the and views has expired, and the Board has conapplication would not be in the public interest and sidered the amended applications and all comments that the application should be denied. received in light of the factors set forth in § 3(c) of On the basis of the facts of record, the application the Act (12 U.S.C. 1842(c)). is denied for the reasons summarized above. The request for amendment of the Board's previ- By order of the Board of Governors, effective ous Order presents no significant issues, and the September 30, 1977. Board finds that the statutory considerations discussed in the Board's Order of August 10, 1977, continue to be consistent with approval of the Voting for this action: Vice Chairman Gardner and applications for the reasons discussed therein. Ac- Governors Jackson, Partee, and Lilly. Absent and not cordingly, it is the Board's judgment that approval voting: Chairman Burns and Governors Wallich and of Applicants' requests would be in the pubhc Cold well. interest and that the request for amendment to the Board's previous Order should be approved. On the basis of the record, Apphcants' requests (Signed) GRIFFITH L. GARWOOD, are approved for the reasons summarized above. [SEAL] Deputy Secretary of the Board. The Board's Order of August 10, 1977, is hereby Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

936 Federal Reserve Bulletin • October 1977 amended such that Applicants may acquire directly cant would control approximately 0.15 per cent of or indirectly ownership or control of more than 50 total deposits in commercial banks in the State. per cent of the voting shares of Bank. The transac- Bank, located in Holyoke, Colorado, is the tions shall not be made (a) before the thirtieth largest of three commercial banks in the relevant calendar day following the effective date of this banking market and holds approximately 55.9 per Order or (b) later than three months after the cent of the total commercial bank deposits in the effective date of this Order, unless such period is market.2 It was recently purchased by Applicant's extended for good cause by the Board, or by the principals. One of the principals of AppHcant is also Federal Reserve Bank of San Francisco pursuant to a director of a large Colorado multibank holding delegated authority. company and an officer and director of one of its By order of the Board of Governors, effective subsidiary banks. However, that company cur- September 22, 1977. rently has no subsidiaries in the relevant market, and, therefore, there is no significant competition between that company and Bank at this time. In Voting for this action: Chairman Burns and Governors addition, it appears unlikely that consummation of Gardner, Wallich, Coldwell, Jackson, Partee, and Lilly. this proposal would have any adverse effect upon potential competition or increase the concentration of banking resources in any relevant area. Thus, the (Signed) GRIFFITH L. GARWOOD, Board concludes that the competitive effects of the [SEAL] Deputy Secretary of the Board. proposal are consistent with approval of the application. On February 15, 1977, Applicant agreed to acquire, subject to Board approval, shares of Bank that Applicant's principals had purchased two months earlier. In originally purchasing the shares that are the subject of this application, those princi- Phillipsco, Inc. pals incurred debt which, if this application is Denver, Colorado approved and the proposed transaction consummated, will be assumed by Applicant. Order Approving Upon consideration of the size and terms of this Formation of Bank Holding Company debt, service of which will be dependent upon Phillipsco, Inc., Denver, Colorado (''Appli- Bank's earnings, the historic growth of the relevant cant"), has applied for the Board's approval under banking market in particular and Colorado banks in § 3(a)(1) of the Bank Holding Company Act ('^the general. Bank's historical earnings and the operat- Act") (12 U. S. C. § 1842(a)( 1)) of formation of a bank ing results of other banks located in the same holding company by acquiring 97.5 per cent of the geographic area, the Board believes that Applivoting shares of The First National Bank of cant's acquisition debt, the debt temporarily as- Holyoke, Holyoke, Colorado ("Bank"). sumed by its principals in anticipation of Appli- Notice of the application, affording opportunity cant's formation, can be serviced without adversely for interested persons to submit comments and affecting the financial resources of Bank, which are views, has been given in accordance with § 3(b) of considered generally satisfactory. In reaching this the Act. The time for filing comments and views has conclusion, the Board is influenced by several expired, and the application and all comments facts. First, Applicant will be able to service its received have been considered in light of the factors debt if Bank achieves earnings equal to the average set forth in § 3(c) of the Act (12 U.S.C. § 1842(c)). of banks in its area, and current Bank earnings are Applicant is a recently chartered, nonoperating well ahead of Applicant's projections. Second, corporation, organized for the purpose of becoming while Applicant is somewhat leveraged, the india bank holding company by acquiring Bank, which vidual investors incurred no personal debt in makholds deposits of $12.8 million.^ Upon acquisition of Bank, Applicant would control the 139th largest commercial bank in the State of Colorado. Appli- ^The relevant banking market is approximated by Phillips County. Holyoke is the County Seat. Phillips County is in northeastern Colorado. Population of this agricultural county declined 7 per cent between l%Oand 1970 to 4,131. However, the population of Holyoke increased 5.5 per cent in this same period to 'All banking data are as of December 31, 1976. 1,646. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 937 ing a substantial capital contribution to Applicant. suant to delegated authority. Third, the principals of Applicant have many years By order of the Board of Governors, effective of banking experience. Finally, Applicant does not September 27, 1977. plan any immediate expansion of its operations and intends to limit its activities in the near future solely Voting for this action: Governors Coldwell, Jackson, to the ownership and management of Bank, thereby Partee, and Lilly. Absent and not voting: Chairman Burns and Governors Gardner and Wallich. permitting its entire resources to be devoted to Bank. The Board therefore concludes that the fi- (Signed) GRIFFITH L. GARWOOD, nancial resources and future prospects of Bank and [SEAL] Deputy Secretary of the Board. Applicant lend weight toward approval of the Application. The Board also concludes that considerations relating to the managerial resources of Bank and Twin Lakes Financial Corporation Applicant lend weight toward approval of this Wichita. Kansas application. Applicant's managerial resources are Order Approving considered satisfactory and Applicant's principals Formation of Bank Holding Company in the brief period they have controlled Bank pending disposition of this application have actively Twin Lakes Financial Corporation, Wichita, strengthened Bank's managerial resources. Before Kansas, has applied for the Board's approval under Applicant's principals acquired Bank, Bank had no § 3(a)(1) of the Bank Holding Company Act (12 middle management and no plans for succession, U.S.C. § 1842 (a)(1)) of formation of a bank holding and the two senior officers were near or above company through acquisition of 98.9 per cent of the retirement age. Applicant's principals have sub- voting shares of Twin Lakes State Bank, Wichita, stantial banking experience and have provided Kansas ("Bank"). Bank with experienced management which will Notice of the application, affording opportunity ensure management succession which was lacking for interested persons to submit comments and before. views, has been given in accordance with § 3(b) of Regarding convenience and needs factors. Appli- the Act. The time for fiHng comments and views has cant states that there are no plans for significant expired, and the Board has considered the applicachanges in the kinds of services provided by Bank. tion and all comments received, in light of the Under new ownership, however. Applicant's prin- factors set forth in § 3(c) of the Act (12 U.S.C. cipals have initiated a more aggressive loan policy, § 1842(c)). with the result that Bank has become more respon- Applicant is a newly formed corporation orsive to the borrowing needs of the area. In this ganized under the laws of Kansas for the purpose of connection. Bank has been able to increase its loan becoming a bank holding company through the to deposit ratio without injury to the quality of its acquisition of Bank. Bank ($28.4 million in deloan portfolio. The Board regards the expansion of posits) ranks 84th among the 616 commercial banks Bank's lending services as a positive factor and, in Kansas and controls 0.3 per cent of the total therefore, concludes that convenience and needs commercial bank deposits in the State.' Bank is the considerations lend weight toward approval of the 14th largest of 28 commercial banks in the Wichita application. banking market (the relevant market) and controls For the reasons discussed above, the Board approximately 1.9 per cent of the total deposits held concludes that approval of the application to be- by commercial banks in that market.^ In addition to come a bank holding company would be in the Bank, there are two other banks in the Wichita public interest and that the application should be banking market affiliated with Applicant's princiapproved. pals."^ Applicant's principals also are affiliated with On the basis of the facts of record and for the reasons summarized above, the application is ap- ^All banking data are as of December 31, 1976, and reflect bank proved. The transaction shall not be made (a) holding company formations and acquisitions approved as of July before the thirtieth calendar day following the effec- 31, 1977. ^The Wichita banking market is approximated by Sedgwick tive date of this Order or (b) later than three months County, Kansas. after the effective date of this Order unless such 3Wichita State Bank ($28.5 million in deposits) and United period is extended for good cause by the Board or American Bank & Trust Company ($29.9 million in deposits), with 1.9 and 2.0 per cent, respectively, of the total commercial bank by the Federal Reserve Bank of Kansas City pur- deposits in the Wichita banking market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A938 Federal Reserve Bulletin • October 1976 a bank in lola, Kansas, Allen County State Bank thirtieth calendar day following the effective date of ($30.7 million in deposits), which is located over this Order or (b) later than three months after the 100 miles east of Wichita, in a separate banking effective date of this Order, unless such period is market. It appears that the proposal would result in extended for good cause by the Board or by the some elimination of existing competition; however, Federal Reserve Bank of Kansas City pursuant to on the basis of all the facts of record, including the delegated authority. relative size of the affiliated banking organizations By order of the Board of Governors, effective in the Wichita market (in the aggregate they control September 29, 1977. 5.75 per cent of total market deposits and together would rank as the fifth largest banking organization Voting for this action: Governors Wallich, Jackson, Partee, and Lilly. Voting against this action: Governor therein), the number of banking alternatives re- Cold well. Absent and not voting: Chairman Burns and maining in the market, the fact that consummation Governor Gardner. of the proposal would not alter the competitive relationship between Bank and the two other af- (Signed) GRIFFITH L. GARWOOD, filiated banks in the Wichita market, and the pro- [SEAL] Deputy Secretary of the Board. posed transaction is essentially a reorganization of existing ownership interests, the Board concludes that consummation of this proposal would not have any significant adverse effects upon either existing Sierra Petroleum Co. Inc. or potential competition within the relevant market. K&B Producers, Inc. Applicant proposes to sell 24.9 per cent of its Order Approving Acquisition of voting shares to Sierra Petroleum Co., Inc., Shares of a Bank Holding Company Wichita, Kansas, and 24.9 per cent of its voting shares to K & B Producers, Inc., Wichita, Kansas.^ Sierra Petroleum Co., Inc., Wichita, Kansas As a result, Applicant will receive additional fund- C'Sierra"), a bank holding company by virtue of its ing which it appears will allow Applicant to have ownership of 87.2 per cent of the voting shares of the necessary financial resources available to ser- United American Bank & Trust Company, Wichita, vice its debt without impairing the financial condi- Kansas C'United Bank"), and K&B Producers, tion of Bank."' In addition, as part of this proposal. Inc., Wichita, Kansas ("K&B"), a bank holding Bank's capital will be increased. Accordingly, the company by virtue of its ownership of 95.8 per cent financial and managerial resources and future pros- of the voting shares of Allen County State Bank, pects of Applicant and Bank are considered to be lola, Kansas C'Allen Bank"), have applied for the satisfactory and consistent with approval of the Board's approval under § 3(a)(3) of the Bank Holdapplication. ing Company Act (12 U.S.C. § 1842(a)(3)) for each Although there will be no immediate changes in to acquire 24.9 per cent of the voting shares of Twin the operations or services of Bank as a result of this Lakes Financial Corporation, Wichita, Kansas proposal, considerations relating to the conveni- ("Twin Lakes"), a proposed bank holding comence and needs of the community to be served are pany with respect to Twin Lakes State Bank, consistent with approval of the application. Based Wichita, Kansas ('Twin Lakes Bank").^ upon the foregoing and other considerations re- Notice of the applications, affording opportunity flected in the record, it is the Board's judgment that for interested persons to submit comments and the proposed acquisition is in the public interest and views, has been given in accordance with § 3(b) of that the apphcation should be approved. the Act.^ The time for filing comments and views On the basis of the record, the application is has expired, and the applications and all comments approved for the reasons summarized above. The and views received have been considered by the acquisition of Bank shall not be made (a) before the Board in light of the factors set forth in § 3(c) of the Act (12 U.S.C. § 1842(c)). ^Applicant's principals are also controlling shareholders in Sierra Petroleum Co. Inc., and K. & B Producers, Inc., registered ^In a related action, the Board approved today an application by bank holding companies by virtue of their control, respectively, of Twin Lakes to become a bank holding company through the United American Bank & Trust Company and Allen County State acquisition of 98.9 per cent of the voting shares of Twin Lakes Bank. Bank. ^In a related action, the Board today approved the applications ^Pursuant to the Supreme Court's holding in Whitney National by Sierra Petroleum Co., Inc., Wichita, Kansas, and K & B Bank of Jefferson Parish v. Bank of New Orleans and Trust Producers, Inc., Wichita, Kansas, to acquire 24.9 per cent each of Company, 379 U.S. 411, 419 (1965) the Board may not approve an the voting shares of Applicant. application by a bank holding company if Board approval of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 939 Twin Lakes Bank ($28.4 million in deposits) and K&B and its subsidiary bank are considered ranks 84th among 616 commercial banks in Kansas satisfactory and consistent with approval. The acand controls 0.3 per cent of the total commercial quisition of Twin Lakes' shares by Sierra and bank deposits in the State.^ Twin Lakes Bank is the K&B will not adversely affect the overall financial I4th largest of 28 commercial banks in the Wichita conditions of Sierra, United Bank, K&B, Allen banking market (the relevant market) and controls Bank, or Twin Lakes Bank. To the contrary, the approximately 1.9 per cent of the total deposits held proposals would have the effect of enabling Twin by commercial banks in that market.^ Sierra's sub- Lakes to reduce the debt incurred in connection sidiary bank, United Bank ($29.9 million in de- with the acquisition of Twin Lakes Bank. Considposits), controls 2.0 per cent of the total deposits erations relating to the convenience and needs of held by commercial banks in the relevant market the communities to be served also appear to be and is the eighth largest commercial bank in that consistent with approval of the applications. It is market. K&B's subsidiary bank, Allen Bank ($30.7 the Board's judgment that the proposed transacmillion in deposits), is located in lola, Kansas, over tions would be consistent with the public interest, 100 miles east of Wichita, in a separate banking and that the applications to acquire shares of Twin market. United Bank and Twin Lakes Bank are Lakes should be approved.® located in the same banking market, along with a Based upon the foregoing and other considerathird commercial bank' also controlled by the prin- tions reflected in the record, the applications are cipals of Sierra and K&B; thus, consummation of approved for the reasons summarized above. The the proposals would result in some elimination of transactions to acquire shares of Twin Lakes shall existing competition. However, it appears that the not be made (a) before the thirtieth calendar day proposed transactions will not have any significant following the effective date of this Order or (b) adverse competitive effects due to the relative size later than three months after the effective date of of these banking organizations in the Wichita mar- this Order, unless such period is extended for good ket (in aggregate they control only 5.75 per cent of cause by the Board or by the Federal Reserve the total deposits in commercial banks in the mar- Bank of Kansas City, pursuant to delegated auket, and together would rank as the fifth largest thority. organization therein), the number of remaining By order of the Board of Governors, effective banking alternatives in the market, and the common September 29, 1977. ownership ties between the three institutions. Accordingly, on the basis of the facts of record, the Voting for this section: Governors Wallich, Jackson, Board concludes that consummation of the propo- Partee, and Lilly. Voting against this action: Governor sals would not have any significant adverse com- Coldwell. Absent and not voting: Chairman Burns and Governor Gardner. petitive effects in any relevant area. The financial and managerial resources and fu- (Signed) GRIFFITH L. GARWOOD, ture prospects of Sierra and its subsidiary bank [SEAL] Deputy Secretary of the Board. proposal contemplated by such application would result in the Dissenting Statement of Governor Coldwell violation of a valid State law. Kansas law prohibits the formation of multi-bank holding companies. The relevant statute generally I would deny the companion applications of defines a bank holding company as any company that directly or indirectly owns, controls, or holds with power to vote, 25 per cent Twin Lakes Financial Corporation ("Twin or more of the voting shares of each of two or more banks; or controls in any manner the election of a majority of the directors of each of two or more banks (K.S.A. § 9-504). Notice of the subject proposals has been given to the Kansas Banking Commissioner, as Hn connection with its consideration of the subject proposals, required by § 3(b) of the Bank Holding Company Act (12 U.S.C. the Board has by letters of today's date notified both Sierra and § 1842(b)). The Banking Commissioner has indicated that consum- K&B that, upon consummation of the proposals, the Board has mation of the proposals, which involve the direct acquisition by determined, on the basis of the record, that Sierra and K&B would Sierra and K&B of 24.9 per cent each of the voting shares of Twin be capable of exercising a "controlling influence" over the Lakes, would not contravene the provisions of Kansas law. management or policies of Twin Lakes within the meaning of ^All banking data are as of December 31, 1976, and reflect bank § 2(a)(c)(C) of the Act. Accordingly, upon consummation of the holding company formations and acquisitions approved as of July proposals. Sierra and K&B are required to report Twin Lakes, as 31, 1977. well as its subsidiaries, as subsidiaries of Sierra and K&B and to ^The relevant market is the Wichita banking market, approxi- comply with the applicable provisions of the Act with respect to mated by Sedgwick County, Kansas. such subsidiaries. Sierra and K&B have waived the requirement •'Wichita State Bank, Wichita, Kansas ($28.5 million in deposits) of notice and opportunity for a hearing provided in the statute, and controls 1.9 per cent of total commercial bank deposits and ranks this determination becomes final upon consummation of the 13th in the relevant banking market. proposals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A940 Federal Reserve Bulletin • October 1976 Lakes"), Sierra Petroleum Co., Inc. ("Sierra"), standing voting shares of Florida National. Purand K&B, which are not outweighed by an bene- suant to the Plan, custody, title and voting rights fit to the public. In connection with an earlier to the Shares were transferred to the Peoples First cations involves a pyramiding arrangement and National Bank of Miami Shores, Miami Shores, entails an unsound debt structure that may have Florida ("Miami Bank"), as Trustee under an adverse effects upon the subsidiary banks of Sierra Irrevocable Living Trust Agreement, dated and K&B, which are not outweighed by an bene- December 23, 1974 (the 'irrevocable Trust"). fit to the pubhc. In connection with an earlier Under the terms of the Irrevocable Trust, the application involving a practically identical debt Miami Bank is required to sell the Shares at $18 financing method,^ I expressed concerns which I per share or the publicly quoted bid price per share feel are also presented by these applications. for such stock on a date 60 days after the day on The public benefit to be derived from these which the sale of such stock by the Trust pursuant arrangements has not, in my opinion, been made to the Plan was approved by the Board, whichever apparent and may even be regarded as negative. In price is greater,^ to Florida National Associates, summary, it is my view that the basic financial Inc. ("FNA"), a corporation organized by the position of Sierra and K&B, as a result of the presidents of five of Florida National's subsidiary proposal, would be such as to lessen the ability of banks, provided FNA qualified within 33 months each to resolve unforseen financial problems that after the effective date of the Irrevocable Trust as may occur in their respective subsidiary banks, financially able to purchase the Florida National and, thereby might reduce those banks' overall Shares. ability to continue to serve the needs of their Under the Plan, the stock of FNA was to be offered respective communities. Further, the Hkelihood to officers, directors and employees of Florida that Twin Lakes would serve as a source of National and its subsidiaries and certain customers strength for Twin Lakes State Bank would be of Florida National's subsidiaries. However, FNA lessened in light of the fact that upon consumma- has the right under the Plan to elect not to purtion of the proposal Twin Lakes would be owned chase the Shares itself and instead to designate a in part by bank holding companies which would person or persons to purchase the Shares by "prihave the interests of their banking subsidiaries to vate placement," provided that such purchaser is consider. The public benefits, if any, that may be approved by the Board within the 33 month present are not sufficient to outweigh the negative period. If FNA fails to qualify as financially able to financial effects that will result from approval of purchase the Shares or fails to designate a purthe applications. chaser approved by the Board within that period, For the above reasons, I would deny the appli- FNA's rights under the Plan terminate and the cations. terms of the Irrevocable Trust provide that the Miami Bank as trustee must sell the Shares at public sale by a registered secondary offering. By letter dated August 25, 1977, FNA advised ORDER APPROVING the Board that FNA had designated Florida Na- DESIGNATION OF PURCHASER OF SHARES tional as the purchaser of the Shares, and FNA requested the Board's approval of its designation. The Alfred I. Dupont Testamentary Trust Florida National proposes to purchase the Shares, Florida National Banks of Florida, Inc. which will be held in its treasury, for $18 per share, or an aggregate of approximately $42 million By letter dated December 10, 1974, the Board cash, as required by the Plan.^ In connection with approved a plan of divestiture ('Tlan") proposed by the Alfred I. duPont Testamentary Trust C'duPont Trust") to divest all of its 2,330,638 'Since the quoted market price of Florida National stock has at shares (''Shares") of Florida National Banks of no time been as high as $18 per share since the Board's approval of Florida, Inc., Jacksonville, Florida ("Florida Na- the Plan, $18 is the minimum sale price fixed by the Irrevocable Trust. tional"), representing 23.7 per cent of the out- 2By letter dated August 26, 1977, Florida National notified the Federal Reserve Bank of Atlanta, pursuant to § 225.6(a) of Regulation Y (12 C.F.R. § 225.6(a)), that Florida National in- ^See dissenting statement to the Board's Order of September 15, tended to purchase 2,330, 638 shares of its own common stock and 1975, approving the application of Valley View Bancshares, Inc., it requested a waiver of the 45-day waiting period required by that Overland Park, Kansas, to acquire shares of Industrial section. Because the Board has already examined and approved Bancshares, Inc., Kansas City, Kansas (61 Federal Reserve the proposed purchase of the Shares by Florida National, it hereby BULLETIN. 676, at 678 (1975)). waives the 45-day period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 941 the Board's consideration of FNA's designation of tors of or to serve as an officer or policy-making Florida National, Florida National has indicated to employee of Florida National or any of its bank or the Board its willingness to take certain actions nonbank subsidiaries. designed to insure an effective and complete 3. No person indebted to the Trust, or to any termination of any control relationship between subsidiary or (affiliate of the Trust, or to any the duPont Trust and Florida National and the person described in paragraph 1 or 2 above, shall complete separation of Florida National's banking be eligible for election to the board of directors of and related interests from the nonbanking interests or to serve as an officer or policy-making of the duPont Trust. employee of Florida National or any of its bank or On the basis of the record before it, including nonbank subsidiaries. the above-mentioned commitments by Florida Na- 4. Commencing not later than the next regular tional, the Board has determined that the acquisi- meetings of shareholders in 1978, at least twotion of the Shares by Florida National pursuant to thirds of the board of directors of Florida National the terms of this Order is consistent with the and two-thirds of the board of directors of Florida Board's objectives in approving the Plan and will First National Bank of Jacksonville, Jacksonville, fully and effectively implement the intent of Con- Florida, shall be persons who are unconnected gress as reflected in the 1966 Amendments to the with management and who are not officers or Bank Holding Company Act to separate the bank- employees of Florida National or any of its subing and nonbanking interests then held by the sidiaries or affiliates ("outside directors"). duPont Trust. Accordingly, the application by 5. Florida First National Bank of Jacksonville, FNA for approval of its designation of Florida Jacksonville, Florida, shall resign (or be removed) National as the purchaser of the Shares is hereby as Corporate Trustee of the Alfred I. duPont Tesapproved. Any provision of the Plan that may be tamentary Trust as soon as possible, but in no inconsistent with the Board's action herein is event later than June 30, 1978. Thereafter, neither deemed to be modified to conform with this action the Florida First National Bank of Jacksonville nor of the Board. any other subsidiary or affiliate of Florida National In connection with its approval of FNA's desig- shall serve as a trustee of the duPont Trust. nation of Florida National as the purchaser of the 6. If Florida National or any of its bank or Shares, and pursuant to the Board's power under nonbank subsidiaries wishes to retain or continue section 5(b) of the Act (12 U.S.C. § 1844(b)) to to retain any attorney or law firm that has in the issue orders to administer and carry out the pur- past represented or at this time represents the poses of the Act and to prevent evasions thereof, duPont Trust, or any subsidiary or individual trusthe Board hereby further orders as follows: tee of the Trust, such action must be approved by 1. No past, present or successor individual trus- a majority vote of the outside directors of Florida tee, policy-making employee or agent of the du- National or the subsidiary wishing to retain such Pont Trust nor any director, officer or policymaking counsel. employee of any subsidiary or affiliate of the Trust 7. No director, officer, employee or agent of (or any person related to, partner of or associated Florida National or any bank or nonbank subor affiliated with, subject to influence by, or re- sidiary or affiliate thereof shall communicate in lated by blood or marriage to any such individual) any manner with any trustee, policy-making shall be eligible for election to the board of direc- employee, agent or representative of the duPont tors or to serve as an officer or policy-making Trust or any of its subsidiaries concerning any employee of Florida National or any of its bank or matter relating to the management, policies or nonbank subsidiaries. operations of Florida National or any bank or 2. No person who is serving, or who has in the nonbank subsidiary or affiliate thereof, except in preceding three years served, as legal counsel to the same manner and under the same cirthe Trust or any subsidiary or affiliate of the Trust cumstances as communications are made to all or to any individual trustee, agent or policy- shareholders of Florida National. making employee of the duPont Trust (or any 8. Florida National and each of its subsidiary person related to, partner of, or associated or banks will provide a certified copy of a resolution affiliated with, or subject to influence by or related adopted by their respective boards of directors to by blood or marriage to any such individuals), or the effect that neither the duPont Trust nor any of to any person described in paragraph 1 above, its subsidiaries or affiliates nor any individual trusshall be eligible for election to the board of direc- tee of the duPont Trust presently controls or exer- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A942 Federal Reserve Bulletin • October 1976 cises a controlling influence over the management Statement or policies of such company or its subsidiary bank, By letter dated August 25, 1977, Florida Naand that such company or subsidiary will not in the tional Associates, Inc., Jacksonville, Florida future permit the exercise over it of control or a ("FNA"), requested, pursuant to the provisions of controlling influence by the Trust, its subsidiaries the Plan of Divestiture ("Plan") submitted by the or affiliates, or individual trustees, either directly Alfred L duPont Testamentary Trust ("duPont or indirectly. Trust") with respect to its 2,330,638 shares (the 9. No person shall be selected by Florida Na- "Shares") of Florida National Banks of Florida, tional to act as proxy for the voting of shares of Inc. Jacksonville, Florida ("Florida National"), Florida National at any meeting of shareholders the approval of the Board of FNA's designation of who is an officer or employee of Florida National Florida National as purchaser of the Shares. The or any subsidiary or affiliate thereof. Plan was approved by the Board on December 10, 10. No director, officer, policymaking 1974. By Order dated September 21, 1977, the employee, or agent of Florida National or any of Board approved FNA's designation of Florida Naits subsidiaries or affiliates (and no person aftional as purchaser of the Shares, and in connecfiliated with, related to by blood or marriage or tion with such approval, and acting pursuant to the indebted to any of the foregoing) shall act or serve Board's authority under section 5(b) of the Bank in any similar capacity with the duPont Trust or Holding Company Act (the "Act") (12 U.S.C. any of its subsidiaries or affiliates or as trustee of § 1844(b)), the Board directed Florida National to the duPont Trust. comply with certain requirements set forth in the 11. All loan and deposit relationships between Order designed to insure the effective and com- Florida National (and its subsidiaries) and the duplete separation of Florida National's banking and Pont Trust or any of its subsidiaries or affiliates related interests from the nonbanking interests of shall be entered into and maintained on substanthe duPont Trust that was mandated by Congress tially the same terms and conditions as those prein 1966. vailing at that time for comparable transactions with other persons. The Alfred I. duPont Testamentary Trust was established in 1935 with assets of about $27 mil- 12. Florida National shall submit such reports Hon, consisting mainly of shares in E.I. duPont under oath, in writing or otherwise as the General de Nemours & Co., Florida real estate and proper- Counsel of the Board or the Federal Reserve Bank ties, and controlling interests in a number of banks of Atlanta may require to insure compliance with in Florida. Mr. Edward Ball, Mr. duPont's the terms and purposes of this Order. brother-in-law, was named as one of the four orig- The foregoing requirements, as well as the reinal trustees of the duPont Trust and continued to quirements contained in the Plan approved by the manage the Florida properties owned by the Trust Board on December 10, 1974, shall remain obligaas he had done prior to Mr. duPont's death. With tory upon Florida National and its subsidiaries and Mr. Ball serving, in effect, as managing trustee, the duPont Trust, its trustees, subsidiaries and the Trust expanded its bank holdings to include affiliates, unless and until the Board of Governors some 30 banks located throughout the State of may determine otherwise. Florida. Together these banks constituted the A full Statement relating to this action will be largest banking organization in Florida prior to issued at a later date. 1970. The Trust's nonbanking interests, which By order of the Board of Governors, effective continued to expand after Mr. duPont's death, September 21, 1977. included among others, the St. Joe Paper Company and the Florida East Coast Railway Company. As originally enacted in 1956, the Bank Holding Company Act did not include testamentary trusts, Voting for this action: Chairman Burns and Governors Gardner, Wallich, Coldwell, Jackson, Partee, and Lilly. such as the duPont Trust, as companies subject to the Act's prohibitions against the ownership of nonbanking interests by firms that controlled banks. In 1966, however, focusing primarily upon the extensive banking and industrial interests in (Signed) THEODORE E. ALLISON, the duPont Trust, Congress amended the Act's [SEAL] Secretary of the Board. definition of "company" to include long-term Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 943 trusts and it removed the Act's exemption for ing officers and directors between the duPont religious, charitable and educational institutions. Trust and its subsidiaries, on the one hand, and The 1966 Amendments to the Act required that Florida National and its subsidiary banks, on the within 5 years, (that is, by July 1, 1971) the duPont other hand, were terminated. Trust either divest its nonbanking interests or In September 1971, the Board adopted, as an cease to be a bank holding company. In 1970, the amendment to its Regulation Y, certain presumpduPont Trust submitted to the Board its plan to tions of control designed to implement the excomply with the 1966 Congressional mandate. It panded definition of "control" brought about by proposed: (1) to transfer the Trust's banking in- the 1970 Amendments to the Act.=^ One of the terests to a newly formed bank holding company in rebuttable presumptions (12 C.F.R. § 225.2(b)(2)) return for stock in the holding company, and (2) provided, in effect, that shares of a bank holding thereafter to reduce the Trust's interest in the new company held by officers, directors or trustees of a holding company to less than 25 per cent of its second company would be considered to be indivoting shares. rectly controlled by the second company where On August 13, 1970, the Board approved, as the the second company itself owned or controlled first step in the Trust's compliance with the 1966 more than 5 per cent of the holding company's Amendments, the application of Florida National shares and the combined stock ownership in the to become a bank holding company through an holding company of the second company and its exchange of its own shares for all of the shares of officers, directors and trustees together amounted the 30 banks owned by the duPont Trust. In its to 25 per cent or more of the holding company's Order approving the reorganization, the Board ad- shares. Under this provision, the duPont Trust's vised the duPont Trust that in order to comply 24.9 per cent interest in Florida National coupled with the Act, the Trust would have to eliminate all with Mr. Ball's 6.4 per cent gave rise to the relationships with Florida National that would en- presumption that the duPont Trust continued to able the Trust to exercise control or a controlling control Florida National, and thus indicated a findinfluence over the holding company or its sub- ing that the duPont Trust's divestiture of its banksidiary banks. ing interest had not been complete or effective. On February 11, 1971, Florida National con- On July 5, 1973, acting pursuant to the procesummated its acquisition of nearly all of the shares dures set forth in Regulation Y, the Board issued a of the 30 banks owned by the duPont Trust. The preliminary determination that the duPont Trust duPont Trust thereby acquired 59.6 per cent of exercised control and/or a controlling influence Florida National's outstanding shares. Officers, di- over the management or policies of Florida Narectors, and employees of the Florida National tional and its subsidiary banks and, therefore, had banks acquired almost 9 per cent. Mr. Ball person- failed to divest control of Florida National and its ally acquired 6.4 per cent, and the estate of Mr. subsidiary banks as required by the 1966 Amend- Ball's sister, Jessie Ball duPont, acquired 4.5 per ments to the Act. The Board's preliminary detercent. On June 24, 1971, the duPont Trust sold over mination was based on six factors: 3 million of its Florida National shares to the 1. The duPont Trust's ownership of over 24 per public, thereby reducing the Trust's holding of cent of Florida National's shares. Florida National's voting shares to 24.9 per cent. 2. The apparent continuation, after July 1, 1971, In May 1971, Mr. Ball resigned his position as of pre-existing relationships between the duPont Coordinator of the Florida National banks,^ as Trust and its trustees and Florida National. well as all other official positions he held with 3. Trustee Ball's service for 20 years as Coor- Florida National and its subsidiary banks, includ- dinator of the Florida National banks. ing his seats on the boards of directors of four of 4. Trustee Ball's ownership of Florida Nationthe subsidiary banks.^ By early 1972, all interlock- al's shares. 5. The ownership of 4.5 per cent of Florida National's shares by the Estate of Mrs. duPont Trior to July 1, 1971, Mr. Ball, through the Coordinator's Office, which he headed, dominated completely the management, (Trustee Ball's sister), the executors of which were operations and policies of the 30 Florida National banks owned by individuals who served as trustees of the duPont the duPont Trust. Trust. ^Mr. Ball did, however, select the president for Florida National (a position equivalent to that of Coordinator held by Mr. Ball until May 1971) and all of its initial directors. The Coordinator's Office formed the nucleus of Florida National, The staff of the =^The 1970 Amendments added § 2(a)(2)(c) to the Act, which Coordinator's Office became basically the staff of Florida Na- defined "control" to include the exercise of a controUing influence tional. over the management or policies of another firm. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A944 Federal Reserve Bulletin • October 1976 6. The fact that no person (other than the Trust designate a purchaser approved by the Board and Trustee Ball) owned more than 5 per cent of within that period, FNA's rights under the Plan the voting shares of Florida National. were to terminate, and the Miami Bank was re- The duPont Trust did not contest the prelimi- quired to sell the Shares at public sale. At such nary determination of control and indicated to the public sale, persons affiliated with the duPont Board its willingness to divest itself of its entire Trust, its trustees or any of the subsidiaries of the interest in Florida National. By Order dated Oc- duPont Trust were to be prohibited from purchastober 15, 1973, the Board made final its determina- ing the Shares. tion that the duPont Trust had continued after July During 1977, it became clear to FNA that it 1, 1971, to exercise control and/or a controlling would not be able to demonstrate its financial influence over Florida National and, therefore, had capacity to purchase the Shares by the time its remained a bank holding company. Accordingly, purchase rights were to expire under the Plan. the Board ordered the duPont Trust to terminate Accordingly, FNA elected to exercise its rights its control and/or controlling influence over under the Plan to designate a purchaser and on Florida National and to divest the 2,330,638 shares August 25, 1977, FNA requested Board approval of Florida National held by the duPont Trust no of its designation of Florida Nafional.-^ Florida later than December 31, -1974. The duPont Trust National proposed to purchase the Shares, which was further ordered to submit a specific plan of will be held in its treasury, for $18 per share, or an divestiture. aggregate of approximately $42 million cash, all of By letter dated December 10, 1974, the Board which will be borrowed. Florida National anticiapproved a plan of divestiture that provided for the pates that approximately $17 million of the princiimmediate and irrevocable transfer of custody, pal amount will be repaid early in 1978 with funds title and voting rights to the Shares to the Peoples available to Florida National as the result of mer- First National Bank of Miami Shores, Miami gers among several of its subsidiary banks. Florida Shores, Florida ("Miami Bank"), as trustee under National, with 32 subsidiary banks having aggregate an Irrevocable Living Trust. Under the terms of assets of $1.6 billion (as of December 31, 1976) is the the Irrevocable Trust, the Miami Bank was re- fourth largest banking organization in Florida. Florida quired to sell the Shares at $18 per share or the National's financial and managerial resources are publicly quoted bid price per share for such stock regarded as safisfactory and its future prospects on a date 60 days after the day on which the sale of appear favorable. While the purchase of the Shares such stock by the duPont Tmst pursuant to the Plan by Florida National will result in a significant was approved by the Board, whichever price was increase in the company's debt, the Board believes greater,^ to FNA, a corporation organized by the that Florida National has sufficient resources to presidents of five of Florida National's subsidiary service the debt and still remain a source of finanbanks, provided FNA qualified within 33 months cial strength to its subsidiary banks. after the effective date of the Irrevocable Trust as Following receipt of FNA's August 25, 1977 financially able to purchase the Florida National designation of Florida National as purchaser of the Shares. Shares, an extensive field investigation was con- Under the Plan, the stock of FNA was to be ducted by staff of the Board and the Federal offered to officers, directors and employees of Reserve Bank of Atlanta to determine the extent to Florida National and its subsidiaries and certain which, if at all, the duPont Trust or any of its customers of Florida National's subsidiaries. trustees or any other person affiliated with the However, FNA had the right under the Plan to duPont Trust may have continued after December elect not to purchase the Shares itself and instead 10, 1974 (the date the Board approved the duPont to designate a person or persons to purchase the Trust Plan of Divesfiture) to exercise control or a Shares by "private placement," provided that such purchaser was approved by the Board within ^In connection with its analysis of FNA's designation of Florida the 33 month period. If FNA failed to qualify as National, Board staff reviewed FNA's designation of Duke Unifinancially able to purchase the Shares or failed to versity, Durham, North Carolina, as alternative purchaser of the Shares, as well as the offers to purchase the Shares submitted to FNA by Combanks Corporation, Winter Park, Florida. However, the Duke designation was withdrawn by FNA, and was in any event not to be considered by the Board unless it disapproved the ^Since the quoted market price of I^lorida National stock has at Florida National designation, and FNA did not accept Comno time been as high as $18 per share since the Board's approval of banks' ofifer. Accordingly, the Board was not called upon to consithe Plan, $18 was, in effect, the minimum sale price fixed by the der the merits of these proposals. However, the documents relating Irrevocable Trust. to these proposals were in the record before the Board. 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Law Department 945 controlling influence over the affairs of Florida chaser's very substantial equity investment in the National and its subsidiary banks, and to assess the Shares would have created a strong incentive on the effect that a purchase of the Shares by Florida part of the purchaser to act in its own interest and National might have with respect to any existing or independent of the duPont Trust. potential control relationship between the duPont Because Florida National's purchase of the Trust and Florida National.® The investigation indi- Shares would eliminate the possible creation of cated that following the transfer of the Shares to the such an independent ownership interest, it was Miami Bank under the Irrevocable Living Trust, necessary, in the Board's view, that an approval of the previous control relationship between the du- that purchase be accompanied by the imposition of Pont Trust and Florida National began to dissipate protective restraints that would assure an effective substantially. Management of Florida National and and permanent separation of Florida National's its subsidiary banks assumed working control over banking and related interests from the duPont Florida National, new directors were added to the Trust's nonbanking interests in order to carry out Florida National board who had no prior affiliation the 1966 mandate of Congress. The requirements with the Trust or its trustees, and substantial opera- imposed in the Baord's Order of September 21, tional and policy changes were effected indepen- 1977, were designed and are intended by the Board dent of and without consultation with, or review, to remove any remaining potential for the duPont influence or control by the duPont Trust, its indi- Trust to exert control or a controlling influence vidual trustees or any subsidiary or affiliate of the over Florida National and its subsidiary banks. duPont Trust. With the exception of the duPont These protective requirements should also Trust's contacts with Florida National's lead bank, strengthen the ability and resolve of the manage- Florida First National Bank of Jacksonville, ment of Florida National to continue to operate the Jacksonville, Florida (''Jacksonville Bank"), in its holding company independent of the duPont Trust. capacity as corporate trustee of the duPont Trust, The Order directs the termination of all remaining the investigation disclosed no evidence of efforts by relationships between the duPont Trust and Florida or on behalf of the Trust to influence the day-to-day National, and prohibits the creation of future relaoperations or policies of Florida National. The lack tionships that offer the potential for a continuation of such evidence, in the Board's view, was signifi- of reestablishment of the duPont Trust in a control cant indication of Florida National's ability to carry relationship with respect to Florida National. on its operations independent of the duPont Trust Significant among the relationships that the or any of its related interests. Board has directed be terminated, is the continued While it thus appeared to the Board that the 1974 service of the Jacksonville Bank as corporate trusdivestiture of the Shares by the duPont Trust to the tee of the duPont Trust. So long as the Jacksonville Miami Bank was substantially effective in terminat- Bank remained a trustee of the duPont Trust it not ing the control relationship between Florida Na- only shared legal title to the nonbanking assets held tional and the duPont Trust, the Board was con- in the Trust, ^ but potentially held a position as the cerned that if Florida National were to purchase the deciding and controlling vote in the event of disagree- Shares, certain other relationships between the ments among the individual trustees. ^In view of the duPont Trust and Florida National might provide continuing disagreement and litigation among the the duPont Trust with the potential ability to influ- individual trustees, the significance of the Jacksonence the affairs of Florida National and its sub- ville Bank's position in this regard could have sidiary banks in a manner inconsistent with the provided an incentive for the Trust or individual objectives sought by Congress in the 1966 Amend- trustees to attempt to exert influence over Florida ments to the Act. This potential would, of course, National with regard to the administration of the have been significantly lessened if the Shares had affairs of the Trust. In the Board's judgment, these been sold to FN A, or to a third party block purchaser because a countervailing ownership force ^Section 4(c)(4) of the Act exempts fi-om the Act's prohibitions would thereby have been created and the puragainst ownership or control of nonbanking assets by a bank holding company shares held in good faith in a fiduciary capacity, except where such shares are held under a trust that itself constitutes a "company" as defined in the Act. Since the duPont ®In the course of the investigation, the Board's representatives Trust is a "company" within the Act's definition, this exemption personally interviewed all of the trustees of the duPont Trust, all is not available to Florida National. of the FNA officers, senior officials and directors of Florida ®As corporate trustee, the Jacksonville Bank had power not National and its subsidiary banks, as well as a number of other only to break a tie vote among the individual trustees, but to vote persons whose interests were known to be adverse to those of the in such a way as to create a tie vote among the trustees and then to duPont Trust, Mr. Ball or FNA. vote again to break the tie. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A946 Federal Reserve Bulletin • October 1976 factors, as well as the desirability in general of acquisition of 87.2 per cent of the voting shares of separating the Jacksonville Bank from involvement the successor by merger to D. H. Baldwin Comwith the business interests of the Trust, weighed pany, Cincinnati, Ohio ("Baldwin-Ohio"),^ and heavily for removal of the Jacksonville Bank as thereby .to acquire indirectly Baldwin-Ohio's direct corporate trustee. and indirect interests in its twelve subsidiary banks. Although the Board's Order does not contain The company into which Baldwin-Ohio is to be provisions addressed directly to the personal stock merged has no significance except as a means to ownership in Florida National of Mr. Ball or the facilitate the acquisition of the voting shares of Estate of Jessie Ball duPont, the Board recognizes Baldwin-Ohio. Therefore, the proposed acquisition that at present these interests together represent the of shares of the successor organization is treated largest single block of stock in Florida National. herein as the proposed acquisition of the shares of The Board believes, however, that the protective Baldwin-Ohio. provisions contained in the Order are fully adequate Applicant has also applied, pursuant to § 4(c)(8) to insure that this stock interest cannot be used to of the Act (12 U.S.C. § 1843(c)(8)) and § 225.4(b)(2) reestablish a control relationship between the du- of the Board's Regulation Y, for permission to Pont Trust and Florida National. indirectly engage in the following nonbanking ac- The Board intends to monitor closely the opera- tivities of Baldwin-Ohio: data processing, mortgage tions of Florida National and relationships between banking, real and personal property leasing, con- Florida National and the duPont Trust and its sumer finance, and credit-related insurance agency representatives and it will not hesitate to take activities. Such activities have been previously action to insure compUance with the terms and determined by the Board to be closely related to purposes of this Order. In this regard, the Board banking (12 CFR § 225.4(a)(1), (3), (6), (8), and emphasizes that the officers and directors of (9)(ii)). Florida National and its subsidiaries, and particu- Notice of the applications, affording opportunity larly those directors who are not also officers, bear for interested persons to submit comments and a heavy responsibility for assuring that both the views, has been given in accordance with §§3 and 4 letter and spirit of the Order are faithfully observed. of the Act (42 Federal Register 33805 (1977)). The Board of Governors of the Federal Reserve Sys- time for filing comments and views has expired, and tem, October 3, 1977. the Board has considered the applications and all comments received in light of the factors set forth in (Signed) THEODORE E. ALLISON, § 3(c) of the Act (12 U.S.C. § 1842(c)), and the [SEAL] Secretary of the Board. considerations specified in § 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)). Applicant, a nonoperating Delaware corporation, was organized as part of a corporate reorganization whereby Applicant will acquire control of an existing multibank holding company, Baldwin-Ohio, with a view toward eventual separation of its bank- ORDER UNDER SECTIONS 3 AND 4 ing and commercial activities in furtherance of the OF THE BANK HOLDING COMPANY ACT purposes of the Act. The proposal involves applicant's direct acquisition of 87.2 per cent of the voting D. H. Baldwin Company shares of Baldwin-Ohio and indirect acquisition of Cincinnati, Ohio Order Approving Formation of Bank Holding Company and Acquisiton of Nonbanking Activities ^Baldwin-Ohio became a bank holding company as a result of the 1970 Amendments to the Bank Holding Company Act of 1956 D. H. Baldwin Company, Cincinnati, Ohio,^ has by virtue of its indirect ownership of more than 25 per cent of the voting shares of The Central Bank and Trust Company, Denver, applied for the Board's approval under § 3(a)(1) Colorado. Baldwin-Ohio has been engaged in the manufacturing of the Bank Holding Company Act (12 U.S.C. and selling of musical instruments for over 100 years and con- § 1842(a)( 1)) to form a bank holding company through tinues to engage in these activities on the basis of permanent grandfather privileges pursuant to the proviso contained in § 4(a)(2) of the Act, Baldwin-Ohio also engages through subsidiaries in the activities of operating a savings and loan association and ^The original application was filed by New Parent Company (a underwriting life and casualty insurance, which may not be Delaware corporation), Cincinnati, Ohio; however, New Parent retained beyond December 31, 1980, pursuant to § 4(a)(2) of the Company's name was changed to D. H. Baldwin Company in Act (see 59 Federal Reserve BULLETIN 536 (1973) and 63 Federal order to protect that name in Delaware. Reserve BULLETIN 280 (1977)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 947 the banking and nonbanking subsidiaries of appear that approval of Applicant's proposal would Baldwin-Ohio. Accordingly, the nature and scope have any significant effect on existing or future of Applicant's banking and nonbanking activities competifion. On the other hand, approval of the will be identical to that of Baldwin-Ohio. applications would assure Baldwin-Ohio's custom- Baldwin-Ohio, the fourth largest commercial ers of the continuation of convenient sources of banking organization in Colorado, controls 12 such nonbanking services. Furthermore, there is no banks with aggregate deposits of $664.5 million, evidence in the record indicating that consummarepresenting approximately 7.9 per cent of the total tion of this proposal would result in any undue deposits held by commercial banks in the State.^ concentrafion of resources, unfair competition, Inasmuch as the proposed transaction is merely a conflicts of interests, unsound banking practices, or corporate reorganization of existing ownership in- other adverse effects upon the public interest. terests, the Board finds that consummation of the Based upon the foregoing and other consideraproposal would not eliminate existing or potential tions reflected in the record, the Board has detercompetition or increase the concentration of bank- mined in accordance with the provisions of § 4(c)(8) ing resources in any relevant market. Accordingly, of the Act that consummafion of this proposal can competitive considerations are consistent with ap- reasonably be expected to produce benefits to the proval of the application. . public that outweigh possible adverse effects and The financial and managerial resources and fu- that the applicafions to engage in certain nonbankture prospects of Applicant, which are dependent ing activities should be approved. upon those of Baldwin-Ohio, are considered to be The proposed acquisition of Baldwin-Ohio by generally satisfactory and their future prospects Applicant also involves the acquisition by the latter appear favorable. Thus, considerations relating to of certain nonbanking activities that are being enbanking factors are consistent with approval. gaged in by Baldwin-Ohio pursuant to the provi- While consummation of the proposal would re- sions of § 4(a)(2) of the Act, including the grandsult in no immediate alterafions of Baldwin-Ohio's father proviso of that section. The Board regards banking operafions and it appears that the needs of Applicant as a "successor" to Baldwin-Ohio within its banking customers are being adequately met, the meaning of § 2(e) of the Act,^ and as such it will considerations relating to convenience and needs of be entitled to all the rights accorded by, and subject the community to be served are consistent with to all the obligations imposed by the Act upon approval. Accordingly, it is the Board's judgment Baldwin-Ohio.^ Accordingly, the Board believes that Applicant's proposal to form a bank holding that Applicant may retain and engage in those company would be consistent with the public in- nonbanking activities to the same extent and duraterest and that the applicafion should be approved. tion that Baldwin-Ohio is presently entitled to In connection with its application to become a engage in such activities. bank holding company, Applicant has also applied On the basis of the record, the applications are to acquire indirectly the following permissible non- approved for the reasons summarized above. The banking activities and subsidiaries of Baldwin- acquisition of Baldvv'in-Ohio's banking subsidiaries Ohio: Computer Congenerics Corporation of Col- shall not be made before the thirtieth calendar day orado (data processing), located in Denver and following the effective date of this Order; and the Grand Junction, Colorado; C. C. Fletcher Mortgage acquisition of neither the banking nor the nonbank- Company (mortgage banking), Cincinnati, Ohio; ing subsidiaries shall be accomplished later than Baldwin Finance Company and its subsidiary. The three months after the effective date of this Order Baldwin Company (real and personal property leas- unless such period is extended for good cause by ing and consumer finance), both located in Cincinnati, Ohio; FMC-Baldwin Leasing Company (personal property leasing), Chicago, Illinois; and ^As a "successor" to Baldwin-Ohio, Applicant is deemed, pursuant to § 2(a)(6) of the Act, to be a bank holding company Louisville Mortgage Service Company (mortgage from the date on which Baldwin-Ohio became a bank holding banking and credit-related insurance), Louisville, company,December 31, 1970. Kentucky. Since the proposed transaction is essen- •'In this connection, the Board notes that Baldwin-Ohio has indicated that it intends to file, upon approval of the subject tially a corporate reorganization and Baldwin-Ohio applications, an irrevocable declaration pursuant to § 4(c)(12) of presently engages in such activities, it does not the Act and § 225.4(d) of Regulation Y that it will cease to be a bank holding company. In the event that such a declaration is filed and the proposed transaction is consummated, the Board would also view Applicant, Baldwin-Ohio's successor pursuant to § 2(e) ^All banking data are as of December 31,1976, unless otherwise of the Act, as a successor to the privileges and commitments indicated. imposed by such declaration. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A948 Federal Reserve Bulletin • October 1976 the Board or by the Federal Reserve Bank of Notice of the application, affording opportunity Kansas City, with respect to the banking sub- for interested persons to submit comments and sidiaries, pursuant to delegated authority, and, with views on the public interest factors, has been duly respect to the nonbanking subsidiaries, pursuant to pubhshed (42 Fed. Reg. 34553 (1977)). The time for authority delegated hereby. The determination as to filing comments and views has expired, and the Apphcant's permissible nonbanking activities is Board has considered the application and all comsubject to the conditions set forth in § 225.4(c) of ments received in light of the public interest factors Regulation Y and to the Board's authority to re- set forth in § 4(c)(8) of the Act (12 U.S.C. § quire reports by, and to make examinations of, 1843(c)(8)). bank holding companies and their subsidiaries and Applicant controls one bank, the ninety-first to require such modification or termination of the largest commercial bank in Illinois, with deposits of activities of a bank holding company or any of its approximately $88 million, representing approxisubsidiaries as the Board fmds necessary to assure mately 0.14 per cent of total deposits in commercial compliance with the provisions and purposes of the banks in the State. ^ Apphcant also controls FSC Act and the Board's regulations and orders issued Money Shops, a consumer finance subsidiary with thereunder, or to prevent evasion thereof. offices in Moline, East MoHne, and Milan, lUinois. By order of the Board of Governors, effective FDC operates its consumer finance business in September 14, 1977. the States of Iowa, Illinois, Wisconsin, Minnesota, and North Dakota, through subsidiaries known as Voting for this action: Vice Chairman Gardner and Thrift Plan, Inc. (Iowa), Community Loan Corpora- Governors Cold well, Jackson, and Partee. Absent and not tion (lUinois), Citizens Loan and Investment Comvoting: Chairman Burns and Governors Wallich and Lilly. pany (Wisconsin and Minnesota), Phoenix Budget (Signed) GRIFFITH L. GARWOOD, Loans, Inc. (Minnesota), Citizens Loan and Fi- [SEAL] Deputy Secretary of the Board. nance Company (Wisconsin), and Phoenix Finance Company (North Dakota). ^ FDC also controls 20.49 per cent of the outstanding stock of Dubuque Bank and Trust Company, Dubuque, Iowa, all of which stock will be distributed to the present common stockholders^ of FDC as part of the acqui- ORDERS UNDER SECTION 4 OF BANK HOLDING COMPANY ACT 'Unless otherwise noted, banking data are as of December 31, 1976. Financial Services Corporation of the Midwest ^FDC and its consumer finance subsidiaries sell short-term Rock Island, IlHnois subordinated invenstment notes and certificates ("thrift notes") to small investors in order to augment their operating funds. As of Order Approving June 30, 1977, the aggregate amount of such thrift notes, excluding Acquisition of a Consumer Finance Company approximately $4.0 million issued in passbook form by two of FDC's subsidiaries licensed as industrial loan companies and examined on a periodic basis by State regulatory authorities, was Financial Services Corporation of the Midwest, $12.0 million, representing approximately 30 per cent of FDC's Rock Island, Illinois, a bank holding company total consolidated assets, less its investments in Life of Midwithin the meaning of the Bank Holding Company America Insurance Company and Dubuque Bank and Trust Company (both of Dubuque, Iowa), which will be divested as part of Act, has applied for the Board's approval under § the acquisition transaction, (a) no sales of thrift notes issued by 4(c)(8) of the Act and § 225.4(b)(2) of the Board's FDC or its finance company subsidiaries would be made by them in the principal service area of Applicant's subsidiary bank; (b) all Regulation Y to acquire, through a recently estabsuch thrift notes would indicate that they are not obligations of or Hshed subsidiary. Federal Discount Company, all guaranteed by any bank and are not covered by federal deposit of the voting shares of Federal Discount Corpora- insurance; (c) the net proceeds from the sale of such notes by FDC and its subsidiaries would be used solely for the purpose of tion, Dubuque, Iowa ("FDC"), a company that providing funds for FDC's consumer finance business; and (d) engages, through seven subsidiary companies, in within a year of consummation of the proposed acquisition, the aggregate principal amount of such notes and certificates would be the activities of making consumer instalment loans, reduced so as not to exceed 25 per cent of FDC's total consolipurchasing consumer instalment sales finance con- dated assets. On the basis of all of the facts of record, the Board tracts, and acting as agent for the sale of credit life has determined that the issuance and sale of such notes by FDC and its subsidiaries subject to the above conditions would not and credit accident and health insurance related to result in a violation of the Banking Act of 1933 (the Glass-Steagall extensions of credit by the subsidiaries of FDC. Act) by reason of the affiliation of Applicant's member bank Such activities have been determined by the Board subsidiary with FDC. ^At no point will Applicant or its recently estabhshed subto be closely related to banking (12 C.F.R. § sidiary, Federal Discount Company, own or control any of such 225.4(a)(1) and (9)(ii)). bank's stock. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 949 sition transaction. In addition, FDC owns all of the acquisition proposal would produce benefits to the capital stock of an insurance company, Life of public that are consistent with and lend weight Mid-America Insurance Company, Dubuque, Iowa, toward approval of this application. which as a part of this application, FDC has com- Based upon the foregoing and other considerations mitted to divest. reflected in the record, the Board has determined, FDC competes in fifty-eight local consumer fi- in accordance with the provisions of § 4(c)(8) of the nance markets, one of which—the "Quad Cities" Act, that Applicant's acquisition of FDC can reaconsumer finance market, the Davenport, Iowa/ sonably be expected to produce benefits to the Rock Island, Illinois Ranally Metropolitan Area, public that outweigh possible adverse effects. Acthe relevant geographic market for purposes of cordingly, the application is hereby approved. This reviewing this application—^is also the primary con- determination is subject to the conditions set forth sumer finance market in which Applicant's sub- in § 225.4(c) of Regulation Y and to the Board's sidiary bank and consumer finance company com- authority to require such modification or terminapete. Applicant holds, through its bank subsidiary tion of the activities of a holding company or any of and three offices of its consumer finance sub- its subsidiaries as the Board finds necessary to sidiary, approximately $16.7 million in consumer assure comphance with the provisions and purfinance receivables originated in the Quad City poses of the Act and the Board's regulations and market area, representing approximately 8.5 per orders issued thereunder, or to prevent evasion cent of the total amount of such receivables origi- thereof. nated by financial institutions in the market. FDC The transaction shall be made not later than three controls, through two offices of its consumer months after the effective date of this Order, unless finance subsidiary operating in Illinois, approxi- such period is extended for good cause by the mately $1.2 million of consumer finance receivables Board or by the Federal Reserve Bank of Chicago, that were originated in the Quad Cities market, pursuant to authority hereby delegated. representing 0.6 per cent of total receivables By order of the Board of Governors, effective originated by financial institutions in the market. ^ September 9, 1977. Thus, upon consummation of the proposed acquisition, AppHcant's share of the Quad Cities consumer Voting for this action: Chairman Burns and Governors finance market would increase only slightly. In Gardner, Wallich, Coldwell, and Lilly. Absent and not voting: Governors Jackson and Partee. view of the insubstantial increase in Applicant's market share and the competitive structure of (Signed) GRIFFITH L. GARWOOD, consumer finance lending in the Quad Cities mar- [SEAL] Deputy Secretary of the Board. ket, it appears that consummation of the proposal would not have any significant adverse effects on existing competition in the relevant area. In that Applicant is not one of the most likely entrants into First Commerce Corporation other consumer finance markets in which FDC New Orleans, Louisiana competes, it does not appear that consummation of the proposed acquisition would eliminate any sub- Order Approving stantial amounts of competition. Furthermore, Acquisition of Downtown Finance Plan, Inc. there is no evidence in the record indicating that consummation of this proposed transaction would First Commerce Corporation, New Orleans, result in any undue concentration of resources, Louisiana, a bank holding company within the unfair competition, conflicts of interests, unsound meaning of the Bank Holding Company Act, has banking practices, or other adverse effects upon the applied for the Board's approval, under section public interest. 4(c)(8) of the Act (12 U.S.C. § 1843(;c)(8)) and Consummation of the proposed acquisition section 225.4(b)(2) of the Board's Regulation Y (12 would facilitate FDC's provision of increased con- C.F.R. § 225.4(b)(2)) to acquire indirectly through sumer services, such as home improvement loans, its wholly-owned subsidiary. First Money, Inc., secondary mortgages on developed real estate, and ("Money") certain consumer promissory note obvehicle financing. Accordingly, it appears that the ligations of Downtown Finance Plan, Inc. ("Company") a company that engages in the activity of making of both secured and unsecured consumer ^Within the Quad Cities market, Applicant and FDC generally extensions of credit and the sale of credit life and compete with 28 consumer finance companies, 27 commercial credit accident and health insurance in connection banks and 125 credit unions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A950 Federal Reserve Bulletin • October 1976 with those extensions of credit. Such activities have As a result of this proposal. Money will be able to been determined by the Board to be closely related offer Company's customers a greater variety of to banking (12 C.F.R. § 225.4(a)(1) and (9)). Al- loans than those now offered by Company and a full though title to the stock of Company will remain in range of other consumer finance services. In the its current shareholders, these shareholders plan to Board's judgment, the slight addition to market liquidate Company after the sale of assets to Appli- concentration that would result from this proposal cant, and, accordingly, the proposed acquisition of is outweighed by the public benefits that will result Company's assets is treated herein as an acquisition from the proposal. of Company. Based upon the foregoing and other con- Notice of the application, affording opportunity siderations reflected in the record, the Board has for interested persons to submit comments and determined that the balance of the public interest views on the public interest factors, has been duly factors the Board is required to consider under published (42 Federal Register 37598 (1977)). The § 4(c)(8) is favorable. Accordingly, the application time for filing comments and views has expired, and is hereby approved. This determination is subject to the Board has considered the application and all the conditions set forth in § 225.4(c) of Regulation comments received in light of the public interest Y and to the Board's authority to require such factors set forth in section 4(c)(8) of the Act (12 modification or termination of the activities of a U.S.C. § 1843(c)(8)). holding company or any of its subsidiaries as the Applicant, the second largest banking organiza- Board finds necessary to assure compliance with tion in Louisiana, controls the First National Bank the provisions and purposes of the Act and the of Commerce, New Orleans, Louisiana, with Board's regulations and orders issued thereunder, aggregate deposits of $611.9 million representing or to prevent evasion thereof. approximately 4.7 per cent of the total deposits in The transaction shall be made not later than three commercial banks in the State. ^ Money engages in months after the effective date of this Order, unless the activities of extending credit to consumers, such period is extended for good cause by the selling credit life and credit accident and health Board or by the Federal Reserve Bank of Atlanta, insurance, and engaging in certain leasing activities. pursuant to authority hereby delegated. Applicant proposes to acquire assets of Company By order of the Board of Governors, effective valued at approximately $145,000 and to serve September 21, 1977. customers of Company affected by the sale from a nearby office of Money. Voting for this action: Chairman Burns and Governors Although Money engages in consumer finance Gardner, Wallich, Coldwell, Jackson, Partee, and Lilly. activities at the present time, it does not appear that (Signed) GRIFFITH L. GARWOOD, any significant existing competition would be elimi- [SEAL] Deputy Secretary of the Board. nated by this acquisition inasmuch as Company is one of 195 finance companies operating in the New Orleans metropolitan area^ and accounts for a small proportion of the business of these companies. Landmark Banking Corporation of Florida Company will close its sole office irrespective of Fort Lauderdale, Florida the Board's action on the instant application and thus the market would lose a competitor in any Order Approving Application to case. Accordingly, the Board finds that Applicant's Engage in the Activity of acquisition of Company would not have any signifi- Providing Management Consulting Advice cant effect upon competition. Landmark Banking Corporation of Florida, Fort It appears that consummation of this proposal Lauderdale, Florida, a bank holding company would not result in any undue concentration of within the meaning of the Bank Holding Company resources, conflicts of interests, unsound banking Act, has applied for the Board's approval, under practices, or any other adverse effects on the public § 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and interest. § 225.4(b)(2) of the Board's Regulation Y (12 CFR § 225.4(b)(2)), to engage de novo in the activity of providing management consulting advice to nonaffiliated commercial banks. Such activity has been 'All banking data are as of December 31, 1976. determined by the Board to be closely related to ^The New Orleans metropolitan area consists of Orleans, Jefferson, St. Bernard, Plaquemines, and St. Tammany Parishes. banking (12 CFR § 225.4(a)(12)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 951 Notice of the application, affording opportunity determined that the balance of the public interest for interested persons to submit comments and factors the Board is required to consider under views on the public interest factors, has been duly § 4(c)(8) is favorable. Accordingly, the application published (42 Fed. Reg. 34554 (1977)). The time for is hereby approved. This determination is subject to filing comments and views has expired, and the the conditions set forth in § 225.4(c) of Regulation Board has considered the application and all com- Y and to the Board's authority to require such ments received, including those submitted by the modification or termination of the activities of a United States Department of Justice, in the light of holding company or any of its subsidiaries as the the public interest factors set forth in § 4(c)(8) of the Board finds necessary to assure compliance with Act (12U.S.C. § 1843(c)(8)). the provisions and purposes of the Act and the Applicant, the eighth largest commercial banking Board's regulations and orders issued thereunder, organization in Florida, controls seventeen banks or to prevent evasion thereof. with aggregate deposits of approximately $869 mil- The transaction shall be made not later than three lion, representing 3.2 per cent of the total deposits months after the effective date of this Order, unless in commercial banks in the State.' Applicant is also such period is extended for good cause by the engaged, through nonbank subsidiaries, in the per- Board or by the Federal Reserve Bank of Atlanta, missible nonbank activities of providing investment pursuant to authority hereby delegated. advisory and mortgage banking services. By order of the Board of Governors, effective Applicant proposes to engage de novo in provid- September 26, 1977. ing management consulting advice to nonaffiliated commercial banks on an explicit fee basis only. Voting for this action: Governors Wallich, Coldwell, Such consulting services would include advice con- Jackson and Partee. Absent and not voting: Chairman Burns and Governors Gardner and Lilly. cerning bank operations, systems and procedures, computer operations and mechanization, cost (Signed) GRIFFITH L. GARWOOD, analysis, and site planning. Since Applicant pro- [SEAL] Deputy Secretary of the Board. poses to engage in these activities de novo, it does not appear that any meaningful competition would be eliminated or potential competition foreclosed as a result of approval of the application. Rather, it Republic New York Corporation appears that Applicant's de novo entry into this New York, New York industry should have a procompetitive effect by Order Approving increasing the number of firms offering this spe- Retention of Republic Clearing Corporation cialized consulting advice. Furthermore, by making this service available on an explicit fee basis rather Republic New York Corporation (''Republic"), than as a correspondent banking service, clients New York, New York, and its five parent bank will be able to analyze more accurately the cost of holding companies have applied, pursuant to secsuch services and may be able to allocate their tion 4(c)(8) of the Bank Holding Company Act (12 funds more efficiently. U.S.C. § 1843(c)(8)) and section § 225.4(a) and There is no evidence in the record to indicate that (b)(2) of the Board's Regulation Y (12 C.F.R. Applicant's engaging in the activity of providing § 225.4(a) and (b)(2)), for permission to retain votmanagement consulting advice would result in any ing shares of their subsidiary, Republic Clearing undue concentration of resources, unfair competi- Corporation C'RCC"), New York, New York, after tion, conflicts of interests or unsound banking prac- that company expands the activities in which it tices.^ engages to include acting as a futures commission Based upon the foregoing and other con- merchant to execute, for the account of persons siderations reflected in the record, the Board has 'Unless otherwise noted,all banking data are as of December company's engaging in this activity. In recognition of this poten- 31, 1976. tial, the Board incorporated in Regulation Y a number of restrictions upon a bank holding company's performance of this activity, ^In connection with the subject application, the United States including the stipulation that any bank holding company providing Department of Justice submitted a letter expressing concern that management consulting advice must disclose to each potential possible conflicts of interests could result from approval of this client bank the names of all banks that are affiliates of the proposal. However, at the time the Board adopted the activity of consulting company and the names of all existing client banks providing management consulting advice to nonaffiliated banks located in the same market area(s) as the potential client. The pursuant to section 4(c)(8) of the Act, the Board considered the Board is of the opinion that these restrictions provide ample potential for conflicts of interests resulting from a bank holding protection against possible conflicts of interests. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A952 Federal Reserve Bulletin • October 1976 whose business is entirely or substantially devoted and has acted as a futures commission merchant^ to trading and dealing in gold and silver bullion and executing futures contracts in gold and silver solely coins ("precious metals professionals"), futures for the account of Bank and Trade Development contracts covering gold and silver bullion and coins Bank, one of its parent bank holding companies." on contract markets of which RCC is a member.^ Applicants now propose that RCC extend this ser- RCC now provides this service for the account of vice to those customers of Bank and Trade Detwo affiliated banks, and the sole purpose of these velopment Bank who are precious metals profesapplications is to permit RCC to extend the same sionals. Such an expansion requires Board approval service to certain customers of those banks. This because RCC would no longer be engaged solely in activity has not been specified by the Board in furnishing or performing services for Bank and its section 225.4(a) of Regulation Y as permissible for parent bank holding companies, and it would acbank holding companies. cordingly lose the benefit of the exemption it cur- Notice of receipt of these applications, affording rently enjoys under section 4(c)(1)(C) of the Act.^ opportunity for interested persons to submit views In order to approve these applications under and comments, has been given in accordance with section 4(c)(8), the Board must determine that the section 4 of the Act (42 Fed. Reg. 31626 and 38015) proposed activity is so closely related to banking or and the time for filing views and comments has managing or controlling banks as to be a proper expired. No request for a hearing has been re- incident thereto. The Board has previously deterceived, but the Board has received a number of mined certain gold and silver coin and bullion comments, favoring and opposing approval, and activities to be closely related to banking. In its has considered the applications and those com- Order of September 27, 1973, the Board, on the ments in light of the considerations specified in basis of that determination, permitted Standard and section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)). Chartered Banking Group, Limited, London, En- Applicants are bank holding companies by virtue gland, a foreign bank holding company, to acquire of their direct and indirect ownership of voting directly 30 per cent of the voting shares of Mocatta shares of Republic National Bank of New York Metals, Inc. ("Mocatta"), New York, New York, ("Bank"), New York, New York.^ RCC is a direct and to acquire indirectly Mocatta's five subwholly owned subsidiary of Republic and is con- sidiaries, one of which was organized to engage in sequendy an indirect subsidiary of the remaining the same activity that is the subject of the present Applicants. RCC was organized in December 1974, applications.^ Bank has been active in international and is held by AppHcants under authority of section banking activities and in the precious metals field 4(c)(1)(C) of the Act, which permits a bank holding for a number of years, and upon examination of the company to own shares of a company engaged facts of record of the present applications, including solely in furnishing or performing services for the the fact that the proposed service appears to be an bank holding company or of its banking sub- integral adjunct to precious metals professionals' sidiaries. In accordance with that limitation, RCC other gold and silver deahngs with Bank and is has become a member of four contract markets^ fundamentally a substitute for or variation of other ^Trade Development Holland Holding B.V., Amsterdam, The Netherlands; Trade Development Finance (Netherlands Antilles) ^A futures commission merchant, as defined in 7 U.S.C. § 2, N.V., Curacao, The Netherlarids Antilles; Trade Development includes a corporation engaged in soliciting or accepting orders for Bank, Geneva, Switzerland; Trade Development Bank Holding the purchase or sale of a commodity for future delivery on or S.A., Luxembourg, Luxembourg; and Saban S.A., Panama, subject to the rules of any contract market and that accepts, in Panama. connection with such business, money or other property (or ^Pursuant to a reorganization approved by the Board June 20, extends credit in lieu thereof) to margin, guarantee, or secure any 1977 (63 Federal Reserve BULLETIN 683), Trade Development resulting trades or contracts. Bank has no actual direct or indirect ownership of Bank's shares, 'RCC also now acts as a futures commission merchant in and a request is now pending before the Board, approval of which executing futures contracts in foreign exchange on behalf of Bank would have the effect of terminating Trade Development Bank's and Trade Development Bank, but under Applicant's proposal status as a bank holding company. RCC would not offer this service to other persons, ^Commodity Exchange, Inc. and New York Mercantile Ex- •^In addition to prior Board approval, RCC must register as a change, New York, New York; Internationa] Money Market futures commission merchant with the Commodity Futures Trad- Division of Chicago Mercantile Exchange, Inc., Chicago, Illinois; ing Commission before it offers its service to precious metals and Winnepeg Commodity Exchange, Winnepeg, Canada. Bank professionals. could itself become a clearing member of an exchange and engage ^38 Fed. Reg. 27552. The Board's Order was based in part on in the activities now engaged in by RCC under section 4(c)(1)(C). the express statutory authority of national banks to purchase and See letter of March 12, 1975, to Bank from J. T. Watson, Deputy sell bullion and coin, and the Order specifically required Mocatta Comptroller of the Currency. RCC is not a clearing member of the to terminate its trading activities in platinum, palladium, and all Winnepeg Commodity Exchange. other commodities not so authorized. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 953 precious metals services Bank currently provides to Accordingly, on the basis of the record and for its customers, the Board has determined that in this the reasons summarized above, the applications are instance acting as a futures commission merchant approved, subject to the limitations specified in the for the execution of futures contracts covering gold applications that Applicants restrict RCC's gold and silver bullion and coins on contract markets is and silver futures commission merchant service to closely related to banking. Bank, Trade Development Bank, and those of their To approve these applications the Board must customers whose business is entirely or substanalso determine that the proposed activity is a proper tially devoted to dealing or trading in gold and silver incident to banking or managing or controlling bullion and coins (including futures contracts perbanks. This test requires the Board to consider taining thereto), and that RCC not solicit or accept whether the performance of the proposed activity such business from other persons or advertise the by RCC in accordance with the terms of these service in the financial press or other mass media. applications "can reasonably be expected to pro- RCC shall commence its proposed activity not later duce benefits to the public, such as greater con- than three months after the effective date of this venience, increased competition, or gains in effi- Order, unless such period is extended for good ciency, that outweigh possible adverse effects, such cause by the Board or by the Federal Reserve Bank as undue concentration of resources, decreased or of New York pursuant to authority hereby deleunfair competition, conflicts of interests, or un- gated. This determination is subject to the condisound banking practices." tions set forth in section 225.4(c) of Regulation Y, and to the Board's authority to require reports by Commencement by RCC of the proposed activity and make examinations of bank holding companies may be expected to serve the convenience of Apand their subsidiaries, and to require such modificaplicants' precious metals customers, and it would tion or termination of the activities of a bank holding have a procompetitive effect in the limited precious company or any of its subsidiaries as the Board metals field, permitting Applicants to compete on a finds necessary to assure compliance with the promore equal footing with their competitors by provisions and purposes of the Act or to prevent viding a full range of precious metals services evasion thereof. required by Applicants' customers and generally By order of the Board of Governors, effective available from their competitors. Approval is ex- September 14, 1977. pected to result as well in certain gains in efficiency, as spreading the fixed costs of RCC's existing operation over a greater volume of business will result in lower costs per transaction. Voting for this action: Vice Chairman Gardner and With respect to possible adverse effects, nothing Governors Wallich and Partee. Voting against this action: in the record indicates that Applicants' proposal Governors Jackson and Lilly. Absent and not voting: would result in any undue concentration of re- Chairman Burns and Governor Coldwell. sources or unfair competition. The Board recognizes there is some potential in the proposal for conflicts of interests and for financial exposure that could lead to unsound banking practices. Both (Signed) GRIFFITH L. GARWOOD, areas of concern, however, are subject to regulation [SEAL] Deputy Secretary of the Board. and safeguards prescribed by the exchanges and the Commodity Futures Trading Commission, and the Board is particularly influenced by Bank's long experience and demonstrated competence in the ®Under section 4(c)(8) the Board may proceed either by Order coin and bullion field in concluding that in this or regulation to determine whether an activity is closely related specific case the public benefits to be derived from and a proper incident to banking. The Board has determined to act Applicant's proposal outweigh these potential ad- on these applications by Order. The record reflects that the financial risks associated with a "wholesale" futures business, verse effects. The Board is also influenced by the such as that specifically proposed, are materially less than those fact that RCC will provide its futures commission inherent in a "retail" futures business, and the Board has not merchant service only to those customers of Bank undertaken to assess generally the balance of public interest factors outside the narrow and limited scope of Applicants' and Trade Development Bank who are precious specific proposal. This balance could be struck differently in the metals professionals, and RCC does not propose to case of any bank holding company less fit than Applicants by experience and by the character of its general banking business to solicit or provide the service to any other unafengage in the activity, or in the case of any proposal to solicit or filiated person.^ serve a broad range of customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A954 Federal Reserve Bulletin • October 1976 Dissenting Statement of Governor Jackson Section 4(a)(2) of the Act provides, inter alia, that the Board of Governors of the Federal Reserve I would not approve these applications because I System may terminate such grandfather privileges do not consider the activity of a futures commission if, having due regard to the purposes of the Act, the merchant business, even limited to gold and silver, Board determines that such action is necessary to closely related or a proper incident to banking or prevent undue concentration of resources, demanaging or controlling banks. While dealing in creased or unfair competition, conflicts of interest, gold and silver is specifically authorized by law, or unsound banking practices. The Board is rebanks in this country do not engage in the business quired to make such a determination with respect to of commodity brokerage. I do not believe that the a company that controls a bank with assets in brokerage function is necessary to perform the excess of $60 million on or after December 31,1970. dealership function. An adverse effect of authoriz- Notice of the Board's proposed review of the ing the brokerage function in addition to the dealer grandfather privileges of Colorado Funding Comfunction is the potential conflict of interest which pany, Denver, Colorado, affording an opportunity would arise when the broker is called upon to for interested persons to submit comments and service the needs of its affiliate banks at the same views or request a hearing, has been given (40 Fed. time outside customers require similar services. Reg. 57398). The time for filing comments, views, This potential for conflict is obvious in commodity and requests has expired, and all those received futures operations, which have daily trading limits. have been considered by the Board in light of the In view of the narrow range of customers that factors set forth in § 4(a)(2) of the Act. Applicant proposes to serve and the availability of On the evidence before it, the Board makes the these services elsewhere, I see insufficient public following findings. Colorado Funding Company, benefits to offset this adverse effect. Denver, Colorado ("Registrant"), became a bank holding company on December 31, 1970, as a result of the 1970 Amendments to the Act, by virtue of Registrant's ownership of approximately 97.5 per cent of the voting shares of The Colorado State Bank of Denver, Denver, Colorado ("Bank") (assets of $66.5 million as of December 31, 1973). Bank, DETERMINATIONS control of which was acquired by Registrant in REGARDING ''GRANDFATHER PRIVILEGES" November 1964, had total deposits of approximately $67.1 million as of December 31, 1976, UNDER BANK HOLDING COMPANY ACT representing 1.3 per cent of the aggregate deposits Colorado Funding Company in commercial banks in the Denver banking mar- Denver, Colorado ket,' and is the eleventh largest banking organization in that market. Bank's managerial and financial Section 4 of the Bank Holding Company Act (12 resources, and its future prospects are regarded as U.S.C. 1843) provides certain privileges (^'grandgenerally satisfactory, and the Board has found no father privileges") with respect to nonbanking acevidence of any unsound banking practices. tivities of a company that, by virtue of the 1970 On June 1, 1967, Registrant purchased Brancucci Amendments to the Bank Holding Company Act, Produce Company, and has operated it as a subbecame subject to the Bank Holding Company Act. sidiary since that time. Brancucci Produce Com- Pursuant to § 4(a)(2) of the Act, a ''company pany is based on Adams City, Colorado, a suburb covered in 1970" may continue to engage, either of Denver, and is engaged in the wholesale processdirectly or through a subsidiary, in nonbanking ing and distribution of produce. In 1976 net income activities that such company was lawfully engaged from this operation was $62,000 representing 6.9 in on June 30, 1968 (or on a date subsequent to June per cent of Registrant's income for that year. Since 30, 1968, in the case of activities carried on as a Registrant has been engaged in this activity conresult of the acquisition by such company or sub- tinuously since prior to June 30, 1968, it appears to sidiary, pursuant to a binding written contract en- be eligible for grandfather privileges. tered into on or before June 30, 1968, of another company engaged in such activities at the time of the acquisition), and has been continuously engaged in since June 30, 1968 (or such subsequent 'The Denver banking market is approximated by Denver, Adams, Arapahoe and Jefferson Counties, Colorado, and the date). Broomfield portion of Boulder County, Colorado. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 955 On June 30, 1968, Registrant was engaged di- imposed by a bank, would constitute an unlawful rectly in the sale of credit life, health and accident tie-in arrangement under section 106 of the Bank insurance in connection with instalment loans Holding Company Act Amendments of 1970. made by Bank. However, since Registrant discon- The determination herein does not preclude a tinued its insurance activities in December 1975, later review by the Board of Registrant's nonbank such activities are not eligible for grandfather activities and a future determination by the Board privileges because Registrant has not been engaged in favor of termination of grandfather benefits of in them continuously since June 30, 1968. Registrant. The determination herein is subject to Registrant owns indirectly through Bank 100 per the Board's authority to require modification or cent of Colorado State Bank Corporation, a limited termination of the activities of Registrant or any of partner in a partnership owning 50 per cent of the its nonbanking subsidiaries as the Board finds necessary to assure compliance with the provisions building occupied by Bank. Since such activities and purposes of the Act and the Board's regulations appear to be exempt from the prohibitions of secand orders issued thereunder, or to prevent evation 4 of the Act by virtue of section 4(c)(1)(A) of sions thereof. the Act, Registrant need not rely on § 4(a)(2) of the Act for authority to continue such activities. By determination of the Board of Governors, effective September 9, 1977. On the basis of the foregoing and all the facts before the Board, it appears that the volume, scope, Voting for this action: Vice Chairman Gardner and and nature of the grandfathered activity of Regis- Governors Wallich, Coldwell, and Jackson. Absent and trant and its subsidiary do not demonstrate an not voting: Chairman Burns and Governors Partee and undue concentration of resources, decreased or Lilly. unfair competition, conflicts of interest or unsound (Signed) GRIFFITH L. GARWOOD, banking practices. [SEAL] Deputy Secretary of the Board. There appears to be no reason to require Registrant to terminate its interest in its grandfathered subsidiary. It is the Board's judgment that, at this time, termination of the grandfather privileges of Registrant is not necessary in order to prevent an General Educational Fund, Inc. undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound Burlington, Vermont banking practices. However, this determination is Section 4 of the Bank Holding Company Act (12 not authority to enter into any activity that was not U.S.C. 1843) provides certain privileges ("grandengaged in on June 30, 1968 and continuously father privileges") with respect to nonbanking acthereafter, or any activity that is not the subject of tivities of a company that, by virtue of the 1970 this determination. Amendments to the Bank Holding Company Act, A significant alteration in the nature or extent of became subject to the Bank Holding Company Act. Registrant's grandfathered activities or a change in Pursuant to § 4(a)(2) of the Act, a "company location thereof (significantly different from that covered in 1970" may continue to engage, either described in this determination) will be cause for a directly or through a subsidiary, in nonbanking re-evaluation by the Board of Registrant's activities activities that such company was lawfully engaged under the provisions of § 4(a)(2) of the Act, that is, in on June 30, 1968 (or on a date subsequent to June whenever the alteration or change is such that the 30, 1968, in the case of activities carried on as a Board finds that a termination of the grandfather result of the acquisition by such company or subprivileges is necessary to prevent an undue concen- sidiary, pursuant to a binding written contract entration of resources or any of the other adverse tered into on or before June 30, 1968, of another effects designated in the Act. No merger, consoli- company engaged in such activities at the time of dation, acquisition of assets other than in the ordi- the acquisition), and has been continuously ennary course of business, or acquisition of any gaged in since June 30, 1968 (or such subsequent interest in a going concern, to which the Registrant date). or its nonbank subsidiary is a party, may be con- Section 4(a)(2) of the Act provides, inter alia, summated without prior approval of the Board. that the Board of Governors of the Federal Reserve Further, the provision of any credit, property, or System may terminate such grandfather privileges service by the Registrant or any subsidiary thereof if, having due regard to the purposes of the Act, the shall not be subject to any condition which, if Board determines that such action is necessary to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A956 Federal Reserve Bulletin • October 1976 prevent undue concentration of resources, de- withdraw on demand and does not engage in the creased or unfair competition, conflicts of interests, business of making commercial loans, it is not a or unsound banking practices. The Board is re- "bank" as defined in the Act. Accordingly, Regisquired to make such a determination with respect to trant's ownership of the shares of Trust Company a company that controls a bank with assets in must be treated as an interest in a nonbanking excess of $60 million on or after December 31, 1970. organization. Since Registrant has controlled di- Notice of the Board's proposed review of the rectiy or indirecdy 100 per cent of the shares of grandfather privileges of General Educational Trust Company continuously since prior to June 30, Fund, Inc., Burlington, Vermont, affording an op- 1968, it would appear to be eligible for grandfather portunity for interested persons to submit com- privileges for the activities of Trust Company. ments and views or request a hearing, has been Trust Company is a State-chartered trust comgiven (40 Fed. Reg. 57398). The time for filing pany with total assets of $17.4 million as of Decemcomments, views, and requests has expired, and all ber 31, 1973. Registrant's activities, investments those received have been considered by the Board and supervision are managed in a fiduciary capacity in light of the factors set forth in § 4(a)(2) of the Act. of Trust Company. Trust Company also functions On the evidence before it, the Board makes the as the trust department of the Bank and over the following findings. General Educational Fund, Inc., years, several proposals have been made to merge BurHngton, Vermont (''Registrant"), became a the two. In view of the longstanding relationship bank holding company on December 31, 1970, as a between Bank and Trust Company, as well as the result of the 1970 Amendments to the Act, by virtue fact that Bank engages in its trust activities through of Registrant's ownership of more than 25 per cent Trust Company, continuation of the existing relaof the outstanding voting shares of The Merchants tionship would not present any serious anti- Bank (formerly The Merchants National Bank of competitive effects. Burlington), Burlington, Vermont ("Bank") (assets Registrant indirectly through Bank has two of $64 million as of December 31, 1972). As of wholly-owned subsidiaries. Merchants Properties, December 31, 1976, Bank was the fifth largest Inc., and Batreal, Inc., each of which owns the land commercial bank in Vermont, controlling deposits and buildings occupied by Bank. Additionally, Regof $86.7 million representing 5.8 per cent of total istrant indirectly through Bank owns 50 per cent of commercial bank deposits in the State. It is the the shares of Vermont Realty, Inc., which owns a smallest of three banks in the Chittenden County parking lot used for and by Bank. The activities of banking market, and controls 18.5 per cent of these companies appear to be exempt from the deposits in commercial banks in that market. prohibitions of section 4 of the Act by virtue of Bank's managerial and financial resources and its section 4(c)(1)(A) of the Act, and Registrant need future prospects are regarded as generally satisfac- not rely on section 4(a)(2) of the Act to continue to tory, and the Board has found no evidence of any engage in these activities. unsound banking practices. On the basis of the foregoing and all the facts Registrant is a charitable trust incorporated in before the Board, it appears that the volume, scope, 1918 under the laws of the State of Vermont "... and nature of the grandfathered activities of Regisfor the purpose of aiding young men and women to trant and its subsidiary do not demonstrate an obtain a common school or University Education, undue concentration of resources, decreased or or both, or to learn a trade . . . provided that only unfair competition, conflicts of interest or unsound those persons be aided, who, in the best judgment banking pracfices. of the trustees of said corporation or their succes- There appears to be no reason to require Regissors are worthy to receive such aid and are in need trant to cease engaging in the activities it engages in of same." Since Registrant has conducted these directly nor to require Registrant to terminate its charitable activities continuously since prior to interest in its grandfathered subsidiary. It is the June 30, 1968, it would appear to be eligible for Board's judgment that, at this time, termination of grandfather privileges for its charitable activities. the grandfather privileges of Registrant is not During the 1920's Registrant received as a dona- necessary in order to prevent an undue concentration over 50 per cent of the common stock of Bank tion of resources, decreased or unfair competition, and all of the common stock of The Farmers Trust conflicts of interest, or unsound banking practices. Company, Burhngton, Vermont ("Trust Com- However, this determination is not authority to pany"). Since Trust Company does not accept enter into any activity that was not engaged in on deposits that the depositor has a legal right to June 30, 1968 and continuously thereafter, or any Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 957 activity that is not the subject of this determination. Valley Financial Services, Inc. A significant alteration in the nature or extent of Elkhart, Indiana Registrant's grandfathered activities or a change in Determination location thereof (significantly different from that Regarding ''Grandfather Privileges'' described in this determination) will be cause for a Under Bank Holding Company Act re-evaluation by the Board of Registrant's activities under the provisions of § 4(a)(2) of the Act, that is, Section 4 of the Bank Holding Company Act (12 whenever the alteration or change is such that the U.S.C. 1843) provides certain privileges ("grand- Board finds that a termination of the grandfather father privileges") with respect to nonbanking acprivileges is necessary to prevent an undue concentivities of a company that, by virtue of the 1970 tration of resources or any of the other harmful Amendments to the Bank Holding Company Act, effects designated in the Act. No merger, consolibecame subject to the Bank Holding Company Act. dation, acquisition of assets other than in the ordi- Pursuant to § 4(a)(2) of the Act, a "company nary course of business, or acquisition of any covered in 1970" may continue to engage, either interest in a going concern, to which the Registrant directly or through a subsidiary, in nonbanking or its nonbank subsidiary is a party, may be conactivities that such company was lawfully engaged summated without prior approval of the Board. in on June 30, 1968 (or on a date subsequent to June Further, the provision of any credit, property, or 30, 1968, in the case of activities carried on as a service by the Registrant or any subsidiary thereof result of the acquisition by such company or subshall not be subject to any condition which, if sidiary, pursuant to a binding written contract enimposed by a bank, would constitute an unlawful tered into on or before June 30, 1968, of another tie-in arrangement under section 106 of the Bank company engaged in such activities at the time of Holding Company Act Amendments of 1970. the acquisition), and has been continuously en- The determination herein does not preclude a gaged in since June 30, 1968 (or such subsequent later review by the Board of Registrant's nonbank date). activities and a future determination by the Board Section 4(a)(2) of the Act provides, inter alia, in favor of termination of grandfather benefits of that the Board of Governors of the Federal Reserve Registrant. The determination herein is subject to System may terminate such grandfather privileges the Board's authority to require modification or if, having due regard to the purposes of the Act, the termination of the activities of Registrant or any of Board determines that such action is necessary to its nonbanking subsidiaries as the Board finds prevent undue concentration of resources, denecessary to assure compliance with the provisions creased or unfair competition, conflicts of interests, and purposes of the Act and the Board's regulations or unsound banking practices. The Board is reand orders issued thereunder, or to prevent evaquired to make such a determination with respect to sions thereof. a company that controls a bank with assets in By determination of the Board of Governors, excess of $60 million on or after December 31, 1970. effective September 13, 1977. Notice of the Board's proposed review of the grandfather privileges of Valley Financial Services, Inc., Elkhart, Indiana, affording an opportunity for interested persons to submit comments and views or request a hearing, has been given (40 Fed. Reg. 57398). The time for filing comments, views, and requests has expired, and all those received have Voting for this action: Vice Chairman Gardner, Gover- been considered by the Board in light of the factors nors Wallich, Coldwell, and Jackson. Absent and not set forth in § 4(a)(2) of the Act. voting: Chairman Burns and Governors Partee and Lilly. On the evidence before it, the Board makes the following findings. Valley Financial Services, Inc., Elkhart, Indiana ("Registrant"), became a bank holding company on December 31, 1970, as a result of the 1970 Amendments to the Act, by virtue of Registrant's ownership of approximately 81 per cent of the voting shares of Valley Bank and Trust (Signed) GRIFFITH L. GARWOOD, Company, Mishawaka, Indiana ("Bank") (assets of $67.5 million as of December 31, 1974). Bank, Deputy Secretary of the Board. [SEAL] Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A958 Federal Reserve Bulletin • October 1976 control of which was acquired by Registrant in industry. Cast Products Corporation, with sales of January, 1966, had total deposits of approximately $2.4 million in 1975, accounts for approximately 0.2 $77.4 million as of December 31, 1976, representing per cent of the total industry volume of $1.5 billion. 6.5 per cent of the total deposits in the South Bend Since Registrant has engaged in the activity of banking market,^ and is the seventh largest of distributing plumbing supplies for mobile homes fifteen banking organizations in that banking mar- continuously since January 1%9 as a result of an ket. Bank's managerial and financial resources and acquisition made by it pursuant to a binding written future prospects are regarded as generally satisfac- contract entered into prior to June 30, 1968, of a tory, and the Board has found no evidence of any company engaging in that activity on the date of unsound banking practices. acquisition, such activity appears to be eligible for Registrant is a finance company and engages grandfather privileges. direcdy in sales finance and secured and unsecured On the basis of the foregoing and all the facts direct instalment lending, and apparently has en- before the Board, it appears that the volume, scope, gaged in such activities continuously since before and nature of the grandfathered activities of Regis- June 30, 1968. In addition. Registrant has three trant and its subsidiaries do not demonstrate an wholly-owned subsidiary finance companies which undue concentration of resources, decreased or also engage in sales finance and direct instalment unfair competition, conflicts of interest or unsound lending: Owners Discount Corporation of Nap- banking practices. panee, Nappanee, Indiana (organized in March There appears to be no reason to require Regis- 1959); Owners Discount Corporation of Goshen, trant to cease engaging in the activities it engages in Goshen, Indiana (organized in July 1959); and directly nor to require Registrant to terminate its O.D.C. Corporation of Elkhart, Elkhart, Indiana interest in its grandfathered subsidiaries. It is the (organized in November 1967). Goods financed Board's judgment that, at this time, termination of directly by Registrant and its subsidiaries are the grandfather privileges of Registrant is not primarily autos and other consumer-type pur- necessary in order to prevent an undue concentrachases. Registrant and its subsidiary finance com- tion of resources, decreased or unfair competition, panies also provide funds to auto dealers. As of De- conflicts of interest, or unsound banking practices. cember 31, 1975, Registrant and the finance company However, this determinafion is not authority to subsidiaries had total loan receivables of $5.8 million. enter into any activity that was not engaged in on Numerous other finance companies and lenders June 30, 1968 and continuously thereafter, or any providing similar services compete with Registrant activity that is not the subject of this determination. and its subsidiaries in their respective markets. A significant alteration in the nature or extent of Since Registrant has been engaged, directly and Registrant's grandfathered activities or a change in indirectly through its subsidiaries, in sales finance location thereof (significandy different from that activities continuously since June 30, 1968, these described in this determination) will be cause for a activities appear to be eligible for grandfather re-evaluation by the Board of Registrant's activities privileges. under the provisions of § 4(a)(2) of the Act, that is, Registrant, through its wholly-owned subsidiary, whenever the alteration or change is such that the Michiana Life Insurance Company, Elkhart, In- Board finds that a termination of the grandfather diana, engages in underwriting as reinsurer credit privileges is necessary to prevent an undue concenlife insurance related to extensions of credit by tration of resources of any of the other adverse Registrant and its credit granting subsidiaries. In- effects designated in the Act. No merger, consolisurance premium income in 1975 was $153,000. dation, acquisition of assets other than in the ordi- Michiana Life Insurance Company was organized nary course of business, or acquisition of any by Registrant in 1956, and has been continuously interest in a going concern, to which the Registrant engaged in its insurance acfivities since that time. or its nonbank subsidiaries is a party, may be Accordingly, such activities appear to be eligible consummated without prior approval of the Board. for grandfather privileges. Further, the provision of any credit, property, or In January 1969 Registrant acquired, as a result service by the Registrant or any subsidiary thereof of a binding written contract entered into before shall not be subject to any condition which, if June 30, 1968, Cast Products Corporadon, a dis- imposed by a bank, would constitute an unlawful tributor of plumbing supplies for the mobile home tie-in arrangement under section 106 of the Bank Holding Company Act Amendments of 1970. ^The South Bend banking market consists of the South Bend The determinafion herein does not preclude a SMSA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 959 later review by the Board of Registrant's nonbank By determination of the Board of Governors, activities and a future determination by the Board effective September 9, 1977. in favor of termination of grandfather benefits of Registrant. The determination herein is subject to the Board's authority to require modification or (Signed) GRIFFITH L. GARWOOD, termination of the activities of Registrant or any of [SEAL] Deputy Secretary of the Board. its nonbanking subsidiaries as the Board finds necessary to assure compliance with the provisions Voting for this action: Vice Chairman Gardner and and purposes of the Act and the Board's regulations Governors Wallich, Coldwell and Jackson. Absent and and orders issued thereunder, or to prevent evanot voting: Chairman Burns and Governors Partee and sions thereof. Lilly. ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT BY THE BOARD OF GOVERNORS During September, 1977, the Board of Governors approved the appUcations 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 Barnett Banks of Florida, Amelia Island Bank, Fernan- 9/28/77 42 F.R. 53997 Inc., Jacksonville, Florida dina Beach, Florida 10/4/77 The Hinsdale Capital Corpora- The First National Bank of 9/23/77 42 F.R. 52486 tion, Chicago, Illinois Hinsdale, Hinsdale, Illinois moni Holt County Investment, St. Zook and Roecker State Bank, mini 42 F.R. 54000 Joseph, Missouri Oregon, Missouri 10/4/77 Landmark Bancshares Corpora- Fidelity Bank and Trust Co., 9/29/77 42 F.R. 54466 tion, St. Louis, Missouri Creve Coeur, Missouri 10/6/77 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A960 Federal Reserve Bulletin • October 1976 Section 4 Board action Federal Nonbanking company (effective Register Applicant {or activity) date) citation CleveTrust Corporation, Cleve- Lake Life Insurance Company, 9/26/77 42 F.R. 53998 land, Ohio Wilmington, Delaware 10/4/77 First Security National Corpora- F.S.N. Life Insurance Company, 9/1/77 42 F.R. 95373 tion, Beaumont, Texas Beaumont, Texas 9/9/77 Sections 3 and 4 Nonbanking Federal company Reserve Effective Register Applicant Bank(s) (or activity) Bank date citation Platte Valley Saratoga Bank- Credit-related Kansas City 9/20/77 42 F.R. 49843 Bancorpora- shares, Inc., insurance 9/28/77 tion, Saratoga, Saratoga, agency Wyoming Wyoming activities PENDING CASES INVOLVING THE BOARD OF GOVERNORS^ Plaza Bank of West Port v. Board of Governors, Farmers State Bank of Crosby v. Board of Govfiled September 1977, U.S.C.A. for the Eighth ernors, fiXtd January 1977, U.S.C.A. for the Eighth Circuit. Circuit. First State Bank of Abilene, Texas v. Board of National Automobile Dealers Association, Inc. Governors, filed August 1977, U.S.C.A. for the V. Board of Governors, filed November 1976, District of Columbia. U.S.C.A. for the District of Columbia. BankAmerica Corporation v. Board of Gover- First Security Corporation v. Board of Governors, filed May 1977, U.S.D.C. for the Northern nors, filed August 1976, U.S.C.A. for the Tenth District of California. Circuit. BankAmerica Corporation v. Board of Gover- Central Wisconsin Bankshares, Inc. v. Board of nors, filed May 1977, U.S.CA. for the Ninth Cir- Governors, filed June 1976, U.S.C.A. for the cuit. Seventh Circuit. First Security Corporation v. Board of Gover- National Urban League, et al. v. Office of the nors, filed March 1977, U.S.C.A. for the Tenth Comptroller of the Currency, et al., filed April Circuit. 1976, U.S.D.C. for the District of Columbia Circuit. Farmers & Merchants Bank of Las Cruces, New *This list of pending cases does not include suits against the Mexico V. Board of Governors, filed April 1976, Federal Reserve Banks in which the Board of Governors is not named a party. U.S.C.A. for the District of Columbia Circuit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 961 Grandview Bank & Trust Company v. Board of -ftDavid R. Merrill, et al. v. Federal Open Mar- Governors, filed March 1976, U.S.C.A. for the ket Committee of the Federal Reserve System, filed Eighth Circuit. May 1975, U.S.D.C for the District of Columbia, Association of Bank Travel Bureaus, Inc. v. appeal pending, U.S.D.A. for the District of Co- Board of Governors Jilcd February 1976, U.S.C.A. lumbia. for the Seventh Circuit. Louis J. Roussel v. Board of Governors, filed Memphis Trust Company v. Board of Governors, April 1975, U.S.D.C. for the Eastern District of filed February 1976, U.S.D.C. for the Western Louisiana. District of Tennessee. Georgia Association of Insurance Agents, et al. First Lincolnwood Corporation v. Board of Gov- V. Board of Governors, filed October 1974, ernors, filed February 1976, U.S.C.A. for the U.S.C.A. for the Fifth Circuit. Seventh Circuit. Alabama Association of Insurance Agents, et al. Roberts Farms, Inc. v. Comptroller of the Cur- V. Board of Governors, filed July 1974, U.S.C.A. rency, et al., filed November 1975, U.S.D.C. for for the Fifth Circuit. the Southern District of California. Bankers Trust New York Corporation v. Board of Florida Association of Insurance Agents, Inc. v. Governors, filed May 1973, U.S.C.A. for the Sec- Board of Governors, and National Association of ond Circuit. Insurance Agents, Inc. v. Board of Governors, filed tDecisions have been handed down in these cases, subject to August 1975, actions consolidated in U.S.C.A. for appeals noted. the Fifth Circuit. $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

962 Announcements REGULATIONS H AND Y: properties at a disadvantage to meet a legal deadline AMENDMENTS set by the Bank Holding Company Amendments of 1970. The Board of Governors of the Federal Reserve The 1970 amendments provided, among other System has adopted, without substantial change, things, that companies that became bank holding proposed revisions of two of its regulations relative companies by virtue of these amendments (that is, to the operations of certain clearing agencies for one-bank holding companies) and that had nonbank stock market transactions. activities acquired between June 30, 1968, and The changes, which became effective October 3, December 30, 1970, had until December 31, 1980, to 1977, were made in conformity with requirements (1) divest such nonbank activities or (2) obtain Board of the Securities Acts Amendments of 1975. They approval for keeping them. Alternatively, such a were proposed by the Board in June 1976. company could cease to be a bank holding com- The Board's actions affect State member banks, pany by divesting its bank holdings by the end of or their subsidiaries, that are registered clearing 1980. agencies, and State member banks, bank holding Since the December 31, 1980, deadhne cannot be companies, and nonbank subsidi-aries of bank hold- extended, the Board designated June 30, 1978, as a ing companies that are participants in bank clearing voluntary target date for bank holding companies agencies. affected by the deadline to submit applications or The Board amended Regulation H (Membership divestiture plans for Federal Reserve approval. The of State Banking Institutions in the Federal Reserve Board added that it intends to establish a later, System) to require that State member banks or their mandatory date for submitting such plans or applisubsidiaries that are registered clearing agencies cations to assure that the actions required by Demust file notice with the Board of all final discipli- cember 31, 1980, can be carried out in timely and nary sanctions imposed by them on any firm partic- orderly fashion. ipating in the operations of the clearing agency. The divestiture deadline does not apply to non- State member banks acting as clearing agencies are banking activities permanently grandfathered under also required to file notice with the Board of any the 1970 amendments. These are subsidiaries that denials of applications to participate in their clear- were held by the bank holding company on June 30, ing operations. 1968, and have been held continuously since. The Board amended Regulation Y (Bank Holding The Board's present action follows up a general Companies) and Regulation H to establish proce- policy statement on divestitures issued February 15 dures for requesting stays and review by the Board of this year. This urged early action on the divestiof disciplinary sanctions and denials of participa- tures required by December 31, 1980, but set no tion imposed by bank clearing agencies when the dates. Board is the appropriate regulatory agency. PROPOSED AMENDMENTS REGULATION Y: ACTION The Board of Governors announced on September The Board of Governors on October 13, 1977, acted 29, 1977, a proposal to modify existing provisions of to encourage bank holding companies that are re- Regulation Z (Truth in Lending) relating to billing quired to carry out divestitures by the end of 1980 to for cash-advance check transactions. Comments submit plans for doing so not later than June 30, must be received by November 1, 1977. 1978. The Board on October 3, 1977, proposed for The action is designed to avoid situations in public comment two alternative amendments to which bank holding companies may have to sell off Regulation B (Equal Credit Opportunity) affecting Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 963 the definition of adverse action that requires notifi- Back data for the period January 1970 through cation to the customer that an application for credit June 1977 have been estimated for the demand had been refused. The Board requested comment deposit series based on data from the former 233 by November 15, 1977. SMSA series and from member bank deposit reports. Seasonal factors based on these back data will be applied to current estimates for the demand deposit series. The back data are available on REVISION OF BANK DEBITS request from Publications Services. Division of AND DEPOSIT TURNOVER SERIES Administrative Services, Board of Governors of the Federal Reserve System, Washington, D.C., 20551. Data for bank debits and demand deposit turnover, Figures for debits, deposits, and turnover of savpublished in the Board's G.6 statistical release, ings deposits will be available only on an unadhave been revised. The new series, which begins justed basis until sufficient data are available for with July 1977 and is based on reports from a computation of seasonal adjustments. national sample of about 300 member banks, replaces the series for 233 standard metropolitan statistical areas (SMSA's), which was terminated SYSTEM MEMBERSHIP: with the June 1977 data. The new series provides Admission of State Banks monthly estimates of debits, deposits, and deposit turnover at all commercial banks for demand de- The following banks were admitted to membership posits, total savings deposits, business savings dein the Federal Reserve System during the period posits, and savings deposits of all other customers. September 16, 1977, through October 15, 1977: For purposes of the new series, demand deposits include deposits of individuals, partnerships, and Utah corporations and of States and political subdivi- Salina Utah Independent Bank sions in the United States. All debits and turnover Virginia estimates are expressed as annual rates. Ruckersville Bank of Greene Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

964 Industrial Production Released for publication October 14 rials advanced modestly; the production of energy materials surged 1.1 per cent, largely reflecting a Industrial production in September increased by an post-strike increase in coal mining and an increase estimated 0.4 per cent to 138.8 per cent of the 1967 in Alaskan crude oil production. average, offsetting the revised 0.4 per cent decline Seasonally adjusted, ratio scale, 1967=100 during August. About one-third of the September _ TOTAL INDEX MATERIALS CAPACITY rise is attributable to the resumption of production 160 after the end of strikes. Increases were widespread 140 during the month—as declines had been in August. 120 Industrial production in the third quarter of 1977 was 1.2 per cent above that in the second BUSINESS EQUIPMENT MATERIALS: Nondurable quarter—about half the increase from the first to the second quarter. Compared with a year earlier, Energy ^ ^^ industrial production in September was up 6.3 per \ / Durable cent. CONSUMER GOODS: Output of consumer goods in September in- ^i/- 'V^ ^^ Durable^ creased 0.3 per cent, following a decline in August. Auto assemblies were about unchanged at a relatively high annual rate of 9.5 million units, seasonally adjusted. Production of business equipment increased 0.3 per cent in September to a level 10.4 per cent above a year earlier; output of construction products rose 0.5 per cent from August. Production of durable goods materials increased 0.5 per cent last month, with a post-strike increase in copper production more than offsetting a decline F.R. indexes, seasonally adjusted. Latest figures: September. in steel output. Output of nondurable goods mate- * Auto sales and stocks include imports. Seasonally adjusted, 1967 = 100 PPeerr cceenntt cchhaannggeess ffrroomm—— IInndduussttrriiaall pprroodduuccttiioonn 1977 June July Aug^ Sept.^ Month ago Year ago Q2 to Q3 Total 137.8 138.8 138.2 138.8 .4 6.3 1.2 Products, total 137.3 138.6 138.1 138.5 .3 7.0 1.4 Final products 135.4 136.5 136.1 136.4 .2 7.5 1.2 Consumer goods 143.8 145.0 144.2 144.6 .3 6.6 .9 Durable goods 155.8 157.7 154.7 155.1 .3 11.8 1.7 Nondurable goods 139.1 140.1 139.9 140.2 .2 4.2 .6 Business equipment 150.1 151.1 150.9 151.3 .3 10.4 1.6 Intermediate products 144.7 146.2 145.9 146.3 .3 5.5 1.8 Construction supplies 139.9 141.1 140.9 141.6 .5 5.6 1.9 Materials 138.7 139.0 138.5 139.3 .6 5.2 .9 p 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 WEEKLY 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 MARKETS AlO Maximum interest rates payable on time and savings deposits at Federally A25 Commercial paper and bankers insured institutions acceptances outstanding AlO Margin requirements A26 Prime rate charged by banks on All Federal Reserve open market short-term business loans transactions A26 Terms of lending at commercial banks A27 Interest rates in money and capital FEDERAL RESERVE BANKS markets A28 Stock market—Selected statistics A12 Condition and F.R. note statements A13 Maturity distribution of loan and A29 Savings institutions- -Selected assets security holdings and liabilities MONETARY AND CREDIT AGGREGATES FEDERAL FINANCE A13 Demand deposit accounts—Debits and A30 Federal fiscal and financing operations deposit turnover A31 U.S. Budget receipts and outlays A14 Money stock measures and components A32 Federal debt subject to statutory A15 Aggregate reserves and deposits of limitation member banks A32 Gross public debt of U.S. Treasury- A15 Loans and investments of all Types and ownership commercial banks A33 U.S. Government marketable securities—Ownership, by maturity COMMERCIAL BANK ASSETS AND LIABILITIES A34 U.S. Government securities dealers— A16 Last-Wednesday-of-month series Transactions, positions, and financing A17 Call-date series A35 Federal and Federally sponsored credit A18 Detailed balance sheet, Mar. 31, 1977 agencies—Debt outstanding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A2 Federal Reserve Bulletin • October 1976 SECURITIES MARKETS 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 A56 Selected U.S. liabilities to foreigners amounts outstanding and to foreign official institutions A37 Open-end investment companies—Net 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 A69 GUIDE TO TABULAR PRESENTATION gross value AND STATISTICAL RELEASES A50 Housing and construction A51 Consumer and wholesale prices A52 Gross national product and income A53 Personal income and saving Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic 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) 12 Member bank reserves 1 Total 2.7 4.4 2.7 3.0 13.0 1.5 4.8 16.9 9.8 2 Required 2.4 4.0 3.0 3.5 13.9 0.9 6.9 12.5 12.5 3 Nonborrowed 2.6 4.8 2.6 1.9 14.1 -3.1 2.9 14.9 -15.4 Concepts of money i 4 M-1 4.4 6.5 4.2 8.4 19.4 0.7 4.5 18.3 5.5 5 M-2 9.1 12.5 9.9 9.2 13.5 4.7 8.1 16.6 6.4 6 M-3 11.4 14.4 11.3 10.0 12.4 7.3 9.8 '•16.0 11.4 Time and savings deposits Commercial banks: 7 Total 7.0 12.2 12.5 8.3 6.9 8.3 13.2 11.0 6.9 8 Other than large CD's 12.8 17.1 14.0 9.8 9.5 7.6 10.7 15.4 7.1 9 Thrift institutions 2 14.8 17.3 13.4 11.1 10.5 11.2 12.0 15.3 18.7 10 Total loans and investments at commercial banks 3 6.9 10.8 8.8 11.9 14.0 10.3 8.9 9.3 12.3 1976 1977 1977 Q4 Ql Q2 Q3 May June July Aug. Sept. Interest rates (levels, per cent per annum) Short-term rates 11 Federal funds ^ 4.88 4.66 5.16 5.82 5.35 5.39 5.42 5.90 6.14 12 Treasury bills (3-month market yield) 5 4.67 3.63 4.84 5.50 4.96 5.02 5.19 5.49 5.81 13 Commercial paper (90- to 119-day)'6 4.91 4.74 5.15 5.74 5.26 5.42 5.38 5.75 6.09 14 Federal Reserve discount 7 5.39 5.25 5.25 5.42 5.25 5.25 5.25 5.27 5.75 Long-term rates Bonds: 15 U.S. Govt. 8 7.54 7.62 7.68 7.60 7.74 7.64 7.60 7.64 7.57 16 State and local government 9 6.18 5.88 5.70 5.59 5.75 5.62 5.63 5.62 5.51 17 Aaa utility (new issue) i o 8.15 8.17 8.21 8.09 8.33 8.08 8.14 '•8.04 8.07 1188 Conventional mortgages ^ ^ 88..9955 88..8822 88..9955 88..9955 99..0000 99..0000 99..0000 1 M-1 equals currency plus private demand deposits adjusted, 7 Rate for the Federal Reserve Bank of New York. M-2 equals M-1 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 10 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. 11 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

A46 Domestic Nonfinancial Statistics • October 1977 1.11 FACTORS AFFECTING MEMBER BANK RESERVES Millions of dollars Monthly averages of daily Weekly averages of daily figures for weeks ending— figures Factors 1977 1977 July Aug. Sept.f Aug. 17 Aug. 24 Aug. 31 Sept. 7 Sept. 14 Sept. 21 f Sept. 28P SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding... 113,886 110,886 112,251 110,161 111,224 110,752 108,300 109,084 111,992 117,290 U.S. Govt, securities^ 98,359 95,977 97,618 95,201 96,162 96,626 94,226 94,747 96,723 102,860 Bought outright 96,930 95,835 96,All 95,201 96,162 96,All 94,226 94,059 96,723 99,354 Held under repurchase agreement 1,429 142 11,,119911 154 688 33,,550066 Federal agency securities 7,611 7,412 77,,441199 7,411 7,411 7,394 7,354 7,366 7,329 77,,555544 Bought outright 7,423 7,403 77,,333388 7,411 7,411 7,372 7,354 7,343 7,329 77,,332299 Held under repurchase agreement 188 9 81 22 23 225 8 Acceptances 213 34 109 8 6 23 4 74 4 262 9 Loans 336 1,071 635 901 1,665 1,393 636 337 738 719 10 Float 4,005 3,543 3,713 3,745 3,594 2,847 3,588 3,943 4,297 3,085 11 Other Federal Reserve assets 3,362 2,850 2,757 2,896 2,386 2,469 2,494 2,618 2,901 2,810 12 Gold stock 11,609 11,595 11,595 11,595 11,595 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 11,141 11,189 11,228 11,191 11,196 11,200 11,211 11,225 11,229 11,242 ABSORBING RESERVE FUNDS 15 Currency in circulation 91,All 97,780 98,180 98,080 97,719 97,484 98,220 98,704 98,154 97,714 16 Treasury cash holdings 431 433 436 428 434 428 440 440 433 431 Deposits, other than member bank reserves with F.R. Banks: 17 Treasury 8,843 6,025 6,956 A,961 6,271 5,853 3,687 3,842 6,188 12,089 18 Foreign 324 310 368 284 325 367 390 464 283 346 19 Other 2 759 607 668 607 599 604 643 661 733 603 20 Other F.R. liabilities and capital 3,395 3,341 3,434 3,271 3,369 3,541 3,172 3,311 3,545 3,622 21 Member bank reserves with F.R. Banks 26,663 16,'ill, 26,232 26,510 26,498 26,470 25,755 25,683 26,681 26,523 End-of-month figures Wednesday figures 1977 1977 July Aug. Sept.p Aug. 17 Aug. 24 Aug. 31 Sept. 7 Sept. 14 Sept. 21 f Sept. 28f SUPPLYING RESERVE FUNDS 22 Reserve Bank credit outstanding... 113,916 113,641 119,011 110,776 110,434 113,641 105,902 111,945 113,630 120,319 23 U.S. Govt, securities^ 98,711 98,436 104,715 95,859 94,831 98,436 91,486 96,114 96,878 104,275 24 Bought outright 96,381 97,357 102,405 95,859 94,831 97,357 91,486 95,300 96,878 99,595 25 Held under repurchase agreement 22,,333300 11,,007799 2,310 1,079 814 44,,668800 26 Federal agency securities 77,,776688 77,,550055 7,639 7,411 7,411 7,505 7,354 7,370 7,329 77,,668800 27 Bought outright 77,,442233 77,,335544 7,329 7,411 7,411 7,354 7,354 7,329 7,329 77,,332299 28 Held under repurchase agreement 345 151 310 151 41 335511 29 Acceptances 393 131 482 7 6 131 4 150 4 443366 30 Loans 788 1,265 1,069 1,010 2,323 1,265 570 358 2,706 11,,229922 31 Float 2,543 3,842 2,233 4,171 3,475 3,842 3,945 5,270 4,017 33,,663344 32 Other Federal Reserve assets. . . 3,713 2,462 2,873 2,318 2,388 2,462 2,543 2,683 2,696 33,,000022 33 Gold stock 11,595 11,595 11,595 11,595 11,595 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.... 11,119 11,161 11,246 11,194 11,198 11,161 11,213 11,227 11,231 11,246 ABSORBING RESERVE FUNDS 36 Currency in circulation 97,048 97,943 97,866 98,178 97,776 97,943 98,921 98,754 98,091 98,101 37 Treasury cash holdings 426 440 433 430 428 440 442 433 434 429 Deposits, other than member bank reserves with F.R. Banks: 38 Treasury 8,789 6,115 15,740 6,516 6,562 6,115 4,841 3,989 9,803 11,197 39 Foreign 469 535 382 281 351 535 475 324 249 300 40 Other 2 578 679 853 543 532 679 111 616 757 769 41 Other F.R. liabilities and capital. .. 3,606 3,623 3,659 3,290 3,435 3,623 3,108 3,332 3,395 3,696 42 Member bank reserves with F.R. Banks . 26,912 28,262 24,119 25,527 25,343 28,262 21,403 28,519 24,927 29,868 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

Member Banks A5 1.12 RESERVES AND BORROWINGS Member Banks Millions of dollars Monthly averages of daily figures Reserve classification 1976 1977 Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept.f All member banks 1 At F.R. Banks 26,430 27,229 25,725 25,849 26,096 25,970 25,646 26,663 26,373 26,232 2 Currency and coin 8,548 8,913 8,326 8,134 8,368 8,610 8,609 8,622 8,712 8,887 3 Total hem 35,136 36,290 34,199 34,135 34,613 34,732 34,406 35,391 35,186 35,241 4 34,964 35,796 34,234 33,870 34,602 34,460 34,293 35,043 34,987 34,964 5 Excess 1 172 494 -35 265 11 272 113 348 199 211 Borrowings at F.R. Banks:2 6 Total 62 61 79 110 73 220000 262 336 1,071 635 7 Seasonal 12 8 12 13 14 31 55 60 101 113 Large banks in New York City 8 Reserves held 6,520 7,076 6,442 6,331 6,264 6,310 6,241 6,359 6,272 5,920 9 6,602 6,948 6,537 6,259 6,351 6,279 6,188 6,342 6,247 6,022 10 Excess -82 128 -95 72 -87 31 53 17 25 -102 11 15 6 47 44 16 18 36 74 157 75 Large banks in Chicago 12 Reserves held 1,632 1,731 1,624 1,610 1,629 1,637 1,662 1,573 1,653 1,603 13 Required 1,641 1,698 1,624 1,611 1,634 1,634 1,627 1,606 1,622 1,634 14 —9 33 -5 3 35 -33 31 -31 1155 Borrowinas^ 4 2 3 * 4 15 6 5 1111 Other large banks 16 Reserves held 13,117 13,556 12,683 12,779 13,090 13,067 12,869 13,438 13,290 13,118 17 13,053 13,427 12,765 12,705 13,110 12,996 12,943 13,286 13,270 13,352 18 Excess 64 129 -82 74 -20 71 -74 152 20 -234 19 14 25 4 29 23 62 80 79 530 111 All other banks 20 13,867 13,927 13,450 13,415 13,630 13,718 13,634 14,021 13,971 14,069 21 13,668 13,723 13,308 13,295 13,507 13,551 13,535 13,809 13,848 13,956 22 Excess 199 204 142 120 123 167 99 212 123 113 23 29 28 28 34 34 116 131 111 379 372 Weekly averages of daily figures for weeks ending— 1977 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 Sept. 7 Sept. 14 Sept.P 21 Sept.f 28 All member banks Reserves: 24 At F.R. Banks 26,265 26,887 25,796 26,510 26,498 26,470 25,755 25,683 26,681 26,523 25 Currency and coin 8,829 8,932 8,993 8,789 8,201 8,773 8,941 9,281 8,189 9,109 26 Total held^ 35,195 35,919 34,890 35,401 34,800 35,345, 34,797 35,060 34,959 35,820 27 Required 35,121 35,495 34,787 35,199 34,772 34,974 34,566 34,739 34,928 35,381 28 Excess 1 74 424 103 202 28 371 231 321 31 439 Borrowings at F.R. Banks:2 29 Total 295 598 585 901 1,665 1,393 636 337 738 719 30 Seasonal 68 69 72 99 116 130 114 108 110 116 Large banks in New York City 31 Reserves held 6,296 6,408 6,386 6,306 6,178 6,128 5,995 6,202 5,676 5,939 32 Required 6,205 6,439 6,270 6,428 6,110 6,100 6,037 6,046 5,905 6,028 33 Excess 91 -31 116 -122 68 28 -42 156 -229 -89 3344 Borrowings 2 111199 222255 444433 2266 4499 221188 Large banks in Chicago 35 Reserves held 1,571 1,631 1,611 1,659 1,572 1,681 1,612 1,695 1,618 1,468 36 1,582 1,618 1,623 1,645 1,586 1,634 1,611 1,667 1,660 1,597 37 Excess -11 13 -12 14 -14 47 1 28 -42 -129 3388 Borrowings 2 2211 2299 1155 Other large banks 39 Reserves held 13,170 13,719 13,037 13,441 13,052 13,480 13,199 13,243 13,018 13,165 40 Required 13,302 13,488 13,151 13,326 13,167 13,341 13,121 n,Tii 13,392 13,527 41 Excess -132 231 -114 115 -115 139 78 -34 -374 -362 42 Borrowings 2 81 165 410 350 798 729 137 54 171 294 All other banks 43 Reserves held 14,158 14,161 13,856 13,995 13,998 14,056 13,991 13,920 14,045 14,290 44 Required 14,032 13,950 13,743 13,800 13,909 13,899 13,797 13,749 13,971 14,229 45 Excess 126 211 113 195 89 157 194 171 74 61 46 Borrowings 2 214 293 175 326 424 638 450 283 320 410 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

A46 Domestic Nonfinancial Statistics • October 1977 1.13 FEDERAL FUNDS TRANSACTIONS of Money Market Banks Millions of dollars, except as noted 1977, week ending Wednesday— TTyyppee Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 Sept. 7 j Sept. 14 Sept. 21 Sept. 28 Total, 46 banks Basic reserve position 1 Excess reserves i 157 121 24 -38 156 13 210 -17 52 LESS: 2 Borrowings at F.R. Banks 156 248 416 925 225 58 5 264 76 3 Net interbank Federal funds transactions 1166,,446688 1188,,009966 1177,,445544 16,166 15,102 1188,,996688 2211,,117744 1199,,440066 1144,,997788 EQUALS: Net surplus, or deficit (-): 4 Amount --1166,,446677 --1188,,222233 -17,847 -17,129 -15,171 --1199,,001144 --2200,,996688 --1199,,668877 --1155,,000022 5 Per cent of average required reserves 107.7 122.3 117.4 116.5 102.2 129.7 141.1 133.3 100.6 Interbank Federal funds transactions Gross transactions: 6 Purchases 24,439 24,885 24,449 22,528 22,411 26,178 28,075 26,430 23,969 7 Sales 7,971 6,788 6,994 6,361 7,309 7,210 6,902 7,024 8,991 8 Two-way transactions 2 5,187 4,738 5,536 4,857 4,788 4,901 44,,998844 44,,886666 5,156 Net transactions: 9 Purchases of net buying banks.. 19,252 20,147 18,912 17,671 17,624 21,277 23,091 21,564 18,813 10 Sales of net selling banks 2,784 2,050 1,458 1,505 2,522 2,309 1,917 2,159 3,835 Related transactions with U.S. Govt, securities dealers 11 Loans to dealers 3 2,533 4,177 4,465 3,777 3,497 4,230 4,138 3,374 2,594 12 Borrowing from dealers 4 2,019 2,122 2,231 1,921 1,629 1,950 1,865 1,636 2,969 13 Net loans 514 2,056 2,234 1,856 1,868 2,281 2,273 1,739 -375 8 banks in New York City Basic reserve position 14 Excess reserves 1 2244 112222 -57 25 62 -69 100 -24 36 LESS: 15 Borrowings at F R Banks.. . 110077 222255 443300 2266 2299 119999 16 Net interbank Federal funds transactions 6,591 66,,557799 5,252 4,564 44,,992277 7,187 88,,009900 7,218 66,,883322 EQUALS : Net surplus, or deficit (-): 17 Amount -6,675 -6,458 -5,534 -4,969 -4,892 --77,,228855 -7,990 -7,441 --66,,779977 18 Per cent of average required reserves 114.4 111133..55 95.1 90.0 88.8 133.0 145.7 139.0 124.4 Interbank Federal funds transactions Gross transactions: 19 Purchases 7,525 7,446 6,498 5,582 5,835 8,065 8,744 7,808 7,902 20 Sales 934 866 1,246 1,018 908 878 654 590 1,070 21 Two-way transactions 2 934 866 1,246 1,018 908 878 654 590 11,,007700 Net transactions: 22 Purchases of net buying banks... 6,591 6,580 5,252 4,564 A,921 77,,118877 88,,009900 7,218 6,832 2233 Related transactions with U.S. Govt, securities dealers 24 Loans to dealers 3 1,282 22,,446644 22,,440088 1,990 1,690 2,218 2,439 2,107 1,425 25 Borrowing from dealers'^ 916 950 1,093 975 791 859 899 1,083 1,086 26 Net loans 366 1,515 1,315 1,015 899 1,359 1,540 1,024 338 38 banks outside New York City Basic reserve position 2277 Excess reserves 1 133 8811 --6633 9955 8822 111100 4 65 LESS: 28 Borrowings at F.R. Banks 49 248 191 495 199 29 5 6666 7766 29 Net interbank Federal funds transactions 9,877 11,517 12,202 11,603 10,175 1111,,778811 1133,,008844 1122,,118888 88,,114466 EQUALS: Net surplus, or deficit (-): 30 Amount -9,792 -11,765 -12,313 -12,161 --1100,,227799 --1111,,772299 --1122,,997799 --1122,,224499 --88,,115577 31 Per, cent of average required reserves 110033..66 127.8 131.2 132.5 110.1 127.8 138.4 130.1 86.3 Interbank Federal funds transactions Gross transactions: 32 Purchases 1166,,991133 1177,,443399 17,951 16,946 16,576 18,113 19,331 18,622 16,067 33 Sales 7,037 5,922 5,749 5,343 6,401 6,332 6,248 6,434 7,921 34 Two-way transactions 2 4,253 3,872 4,291 3,839 3,880 44,,003322 44,,333300 44,,227766 44,,008866 Net transactions: 35 Purchases of net buying banks... 12,661 13,567 13,660 13,107 12,696 14,090 15,001 14,346 11,981 36 Sales of net selling banks 2,784 2,050 1,458 1,505 2,522 2,309 1,917 2,159 3,835 Related transactions with U.S. Govt, securities dealers 37 Loans to dealers 3 11,,225511 1,713 2,057 1,787 1,806 2,013 1,699 1,267 1,169 38 Borrowing from dealers 4 1,103 1,172 1,138 947 837 1,091 966 553 1,883 39 Net loans 147 541 919 841 969 922 734 714 -714 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Funds A7 1.13 Continued 1977, week ending Wednesday— Type Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aub. 31 Sept. 7 Sept. 14 Sept. 21 Sept. 28 5 banks in City of Chicago Basic reserve position 40 Excess reserves i 16 -13 19 6 48 17 39 4 -3 LESS: 41 Borrowings at F.R. Banks. .. 21 18 42 Net interbank Federal funds transactions 5,578 5,833 6,403 5,854 5,614 6,636 7,035 6,761 4,684 EQUALS: Net surplus, or deficit (-): 43 Amount -5,584 -5,846 -6,384 -5,848 -5,566 -6,619 -6,997 -6,775 -4,687 44 Per cent of average required reserves 369.9 385.8 415.2 395.3 364.7 440.6 448.6 436.2 314.7 Interbank Federal funds transactions Gross transactions: Purchases 6,786 6,923 7,599 6,873 6,763 7,584 7,875 7,720 5,934 Sales 1,208 1,090 1,196 1,019 1,149 948 840 959 1,250 Two-way transactions 2 1,208 1,090 1,196 1,019 1,149 947 838 955 1,208 Net transactions: Purchases of net buying banks.. 5,578 5,833 6,403 5,854 5,613 6,636 7,037 6,765 4,727 Sales of net selling banks 2 4 43 Related transactions with U.S. Govt, securities dealers 50 Loans to dealers 3 188 265 343 292 281 421 330 239 190 51 Borrowing from dealers4. . . 363 322 172 145 125 144 312 108 846 52 Net loans -175 -57 172 147 156 277 18 131 -657 33 other banks Basic reserve position 5 3 Excess reserves i 117 13 62 -69 47 65 71 3 19 LESS: 54 Borrowings at F.R. Banks. .. 27 248 191 495 199 29 5 48 76 55 Net interbank Federal funds transactions 4,299 5,684 5,799 5,749 4,561 5,145 6,048 5,427 3,462 EQUALS : Net surplus, or deficit (-): 56 Amount -4,208 -5,919 -5,928 -6,313 -4,713 -5,110 -5,982 -5,472 -3,519 57 Per cent of average required reserves 53.0 76.9 75.5 82.0 60.3 66.6 76.5 69.6 44.2 Interbank Federal funds transactions Gross transactions: 58 Purchases 10,127 10,517 10,352 10,073 9,813 10,530 11,456 10,902 10,133 59 Sales 5,829 4,832 4,553 4,325 5,252 5,385 5,408 5,475 6,671 60 Two-way transactions 2 3,045 2,782 3,095 2,820 2,730 3,076 3,492 3,321 2,879 Net transactions: 61 Purchases of net buying banks.. 7,083 7,134 7,257 7,253 7,083 7,454 7,964 7,581 7,254 62 Sales of net selling banks 2,784 2,050 1,458 1,505 2,522 2,309 1,915 2,155 3,792 Related transactions with U.S. Govt, securities dealers 63 Loans to dealers 3 1,063 1,448 1,714 1,496 1,525 1,592 1,369 1,028 980 64 Borrowing from dealers'*. . . 740 850 967 802 713 947 654 445 1,037 65 Net loans... 322 598 747 694 813 645 715 583 -57 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 • October 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 Sec. 10(b)2 under Sec. 13, last par.4 Federal Reserve Under Sees. 13 and 13a i Bank Regular rate Special rate 3 Rate on Eflfective Previous Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous 9/30/77 date rate 9/30/77 date rate 9/30/77 date rate 9/30/77 date rate Boston 9/2/77 61/4 9/2/77 634 9/2/77 614 9/2/77 814 P N C h l e e w i v la e d Y la e o n l r p d k h ia... 8 8 8 / / / 3 3 3 1 0 0 / / / 7 7 7 7 7 7 6 66 V 1V/ 4 44 8 8 8 / / / 3 3 3 1 0 0 / / / 7 7 7 7 7 7 6 i 3 ! / 8 8 8 / / / 3 3 3 1 0 0 / / / 7 7 7 7 7 7 614 8 8 8 / / / 3 3 3 1 0 0 / / / 7 7 7 7 7 7 8 8 1 1 4 4 R A C St t h i . c l i a c L h n a o m t g u a o o is n d 5 4 8 8 8 8 / / / / 3 3 3 3 0 0 0 0 / / / / 7 7 7 7 7 7 7 7 5 H V i 4 661V/44 8 8 8 8 / / / / 3 3 3 3 0 0 0 0 / / / / 7 7 7 7 7 7 7 7 6 6 63 3 3 4 4 4 8 8 8 8 / / / / 3 3 3 3 0 0 0 0 / / / / 7 7 7 7 7 7 7 7 6 6 6 6 6 1 1 1 1 1 4 4 4 4 4 8 8 8 8 / / / / 3 3 3 3 0 0 0 0 / / / / 7 7 7 7 7 7 7 7 814 Minneapolis... 5y4 8/30/77 61/4 8/30/77 634 8/30/77 8/30/77 K S D a a a n n ll s a F a s s r a n C c i i t s y c . o .. . i 5 l y t 4 9 9 9 / / / 2 2 2 / / / 7 7 7 7 7 7 51/4 66 6 1 1 1/ / 44 4 9 9 9 / / / 2 2 2 / / / 7 7 7 7 7 7 6 6 6 3 3 3 4 4 4 9 9 9 / / / 2 2 2 / / / 7 7 7 7 7 7 614 9 9 9 / / / 2 2 2 / / / 7 7 7 7 7 7 8 8 1 1 4 4 514 Range of rates in recent years 5 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/i 1973—Jan. 15. 5 5 1975—Jan. 6 714-734 1971—Jan. 1 1 8 5 9 5 5 5 1 1 1 4 4 4 A F M M e p a a b r y r . . . 2 2 4 2 3 6 . . . . 5i/ 5 5 5 i- 3 1 - 5 5 4 /i 3 i 4 /i 5 5 5 5 ^ 1 1 V / / i i i Feb. 2 1 5 7 4 0 71 7 4 1 -7 4 34 2 2 2 9 5 5 1 18 1 . . 534 6 -6 6 6 Mar. 1 1 0 4 6I4 6 - 1 63 4 4 Feb. 13 5 June 11. 6-61/i 61/i May 16 6-614 19 434 15. 61/i 61/2 23 6 July 16 5 July 2. 7 7 2 3 5 Aug. 14, 1-m m 1976—Jan. 19 5i/ 5 i- 1 6 / i Nov. 11 5 23, m m 23 19 Dec. 1 1 3 7 41^ 1974—Apr. 2 3 5 0 , , 7i/ 8 i- 8 8 8 Nov. 2 2 2 6 2 4 41/1 Dec. 9, 734-8 7^ 16, 734 734 1977_Aug. 30 514-534 514-534 31 Sept. 2 5V4 In effect Sept. 30, 1977 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 Sees. 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 A9 1.15 MEMBER BANK RESERVE REQUIREMENTS^ Per cent of deposits Requirements in effect Previous requirements Sept. 30, 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 9y2 12/30/76 10 2/13/75 10-100 12/30/76 12 2/13/75 100-400 113/4 12/30/76 13 2/13/75 Over 400 12/30/76 I6I/2 2/13/75 16% Time: 2,3 Savings 3 3/16/67 3/2/67 Other time: 0-5, maturing in— 30-179 days 3/16/67 31/2 3/2/67 180 days to 4 years. 1/8/76 3 3/16/67 4 years or more. . . . 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. 4 214 1/8/76 3 12/12/74 4 years or more. . . . 4 1 10/30/75 3 12/12/74 Legal limits, Sept. 30, 1977 Net demand: Reserve city banks Other banks Time 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

A46 Domestic Nonfinancial Statistics • October 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 Sept. 30,1977 Previous maximum In effect Sept. 30, 1977 Previous maximum Per cent Effective Per cent Effective Per cent Effective Per cent Effective date date date date 1 Savings 5 7777////1111////77773333 11//2211//7700 5V4 (((666))) 5 ((77)) 2 Negotiable order of withdrawal (NOW) accounts i . . .. . . 5 1111////1111////77774444 5 111///111///777444 Time (multiple- and single-maturity unless otherwise indicated): 2 30-89 days: 4 3 S M i u n l g t l i e p - l m e- a m tu a r t i u ty r ity / I 5 7777////1111////77773333 ! II 55 4 Vi 9999999 1 /////// / 2222222 2 6666666 1 /////// / 6666666 7 666666 0 6 }} ((88)) ((88)) 90 days to 1 year: )) 5 6 S M i u n l g t l i e p - le m - a m tu a r t i u ty r ity 77//11//7733 5 -- 1 ff 9999999 7777777 /////// /////// 2222222 2222222 6666666 0000000 /////// /////// 6666666 6666666 6666666 6666666 )) 335533//44 ((66)) 5511//44 11//2211//7700 7 8 2 1 t t o o 2 2 V y i e y a e rs a 3 rs 3. } ^ 77//11//7733 / 5 5 1 3 / / 2 4 1 1 1 1 1 1 1 1 1 1 1 1 1 1 / / / / / / / / / / / / / / 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 / / / / / / / / / / / / / / 7 7 7 7 7 7 7 7 7 7 7 7 7 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 )) 6611//22 ((66)) {{ 1 1 1 1 1 1 1 1 / / / / / / / / 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 / / / / / / / / 7 7 7 7 7 7 7 7 0 0 0 0 0 0 0 0 9 to 4 years 3 77//11//7733 55^^44 1111111///////22222221111111///////77777770000000 ((66)) 6 1111////22221111////77770000 10 4 to 6 years'* mmm 111111///111///777333 (((999))) 777111///222 111111///111///777333 (((999))) 11 6 years or more^ mmm 111222///222333///777444 777111///444 1111//11//7733 mmm 111222///222333///777444 777111///222 1111//11//7733 12 Governmental units (all maturities) mm 1122//2233//7744 mm 11/27/74 mm 1122//2233//7744 mm 11/27/74 13 Individual retirement accounts and Keogh (H.R. 10) plans 5 mm iiiieeiinn ((88)) mm 77//66//7777 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 6Vi per cent ceiling on time deposits maturing in 2Vi 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 commerto 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- 6 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 A11 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1977 Type of transaction 1974 1975 1976 Feb. Mar. Apr. May June July Aug. U.S. GOVT. SECURITIES Outright transactions (excl. matched salepurchase transactions) Treasury bills: 1 Gross purchases. 11,660 11,562 14,343 110 ,671 681 2,696 118 812 2 Gross sales. 5,830 5,599 8,462 801 368 260 489 1,154 753 176 3 Redemptions. .., 4,550 26,431 25,017 19 400 600 500 Others within 1 year: ^ Gross purchases 450 3,886 472 107 41 20 89 Gross sales Exchange, or maturity shift. -1,183 -4 792 "63' -266 374 -1,209 478 238 2,321 Redemptions 131 3,549 1 to 5 years: 8 Gross purchases 797 2 3,284 2 3,202 348 174 327 200 9 Gross sales 177 10 Exchange, or maturity shift. -697 3,854 -2,588 -880" 266 -374 -865 -478 -238 -1,664 5 to 10 years: 11 Gross purchases 434 1,510 1,048 151 46 104 68 12 Gross sales 13 Exchange, or maturity shift. 1,675 -4,697 1,572 "517 1,174 -782 Over 10 years: 14 Gross purchases 196 1,070 642 81 37 38 114 15 Gross sales 16 Exchange, or maturity shift. 205 848 225 300 900 125 All maturities: i 17 Gross purchases. 13,537 221,313 219,707 797 298 2,160 681 3,167 118 812 18 Gross sales 5,830 5,599 8,639 801 368 260 489 1,154 753 176 19 Redemptions 4,682 2 9,980 25,017 19 400 600 500 Matched sale-purchase transactions 20 Gross sales 64,229 151,205 196,078 22,674 30,115 32,287 28,532 36,258 27,947 45,831 21 Gross purchases 62,801 152,132 196,579 23,447 30,828 32,852 27,306 36,449 27,301 46,170 Repurchase agreements 22 Gross purchases.... 71,333 140,311 232,891 13,853 14,368 13,397 29,308 14,748 13,973 4,397 23 Gross sales 70,947 139,538 230,355 12,921 14,860 11,862 30,448 11,506 15,719 5,648 24 Net change in U.S. Govt, securities 1,984 7,434 9,087 1,702 151 3,980 -2,573 4,845 -3,528 -276 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 -69 Repurchase agreements: 28 Gross purchases 23,204 15,179 10,520 689 523 709 2,164 1,656 1,672 265 29 Gross sales 22,735 15,566 10,360 612 546 639 2,278 1,056 1,938 459 BANKERS ACCEPTANCES 30 Outright transactions, net. .. 511 163 -545 -18 -19 -51 -45 -15 -24 -15 31 Repurchase agreements, net. 420 -35 410 149 ^23 653 -729 528 -204 -247 32 Net change in total System Account. 6,149 8,539 9,833 1,886 50 4,998 -3,461 6,305 -4,020 -801 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 1975, the System obtained $421 million of 2-year Treasury notes the System Open Market Account; all other figures increase such holdings. in exchange for 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

A46 Domestic Nonfinancial Statistics • October 1977 1.18 FEDERAL RESERVE BANKS Condition and F.R. Note Statements Millions of dollars Wednesday End of Month Account 1977 1977 Aug. 31 Sept. 7 Sept. 14 Sept. 21P Sept. 282' July Aug. Sept.P Consolidated condition statement ASSETS J Gold certificate account 11,595 11,595 11,595 11,595 11,595 11,595 11,595 11,595 2 Special Drawing Rights certificate account 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 3 Coini 284 274 281 291 294 317 284 308 Loans: 4 Member bank borrowings 1,265 570 358 2,706 1,292 788 1,265 1,069 5 Other Acceptances: 6 4 4 4 4 4 19 4 4 7 Held under reourchase a&reements 112277 114466 443322 337744 112277 447788 Federal agency obligations: 8 7,354 7,354 7,329 77,,332299 7,329 7,423 7,354 7,329 9 HF»LH IINHFR RFRMIRRVIJI^P AOTPFMENT^ . . . . . 115511 4411 335511 334455 115511 331100 U.S. Govt, securities Bought outright: 10 Bills 4400,,002211 34,150 3377,,996644 333999,,,000444111 41,758 3399,,004455 4400,,002211 41,548 11 Certificates Soecial 22,,550000 12 Other 13 Notes 48,963 48,963 48,963 49,423 49,423 49,088 48,963 49,856 14 8,373 8,373 8,373 8,414 8,414 8,248 8,373 8,501 15 Total2 97,357 91,486 95,300 96,878 99,595 96,381 97,357 102,405 16 NNFLF^R R^RMIRRLIA^FT J^TRR^F^MFTNT^ 1,079 814 4,680 2,330 1,079 2,310 17 98,436 91,486 96,114 96,878 104,275 98,711 98,436 104,715 18 Total loans and securities 107,337 99,414 103,992 106,917 113,683 107,660 107,337 113,905 19 Cash items in process of collection 9,715 10,966 11,741 10,668 9,578 7,590 9,715 7,773 20 377 376 376 378 378 372 377 379 Other assets: 21 55 55 55 64 64 20 55 65 22 All other 2,030 2,112 2,252 2,254 2,560 3,321 2,030 2,429 23 Total assets 132,593 125,992 131,492 133,367 139,352 132,075 132,593 137,654 LIABILITIES 24 F.R. notes 8877,,550066 88,423 88,241 87,585 87,578 86,674 87,506 87,361 Deposits: 25 Member bank reserves 28,262 21,403 28,519 2244,,992277 29,868 26,912 28,262 24,119 26 U.S. Treasury—General account 6,115 4,841 3,989 9,803 11,197 8,789 6,115 15,740 27 Foreign 535 475 324 249 300 469 535 382 28 Other 3 679 721 616 757 769 578 679 853 29 Total deposits 35,591 27,440 33,448 35,736 42,134 36,748 35,591 41,094 30 Deferred availability cash items. 5,873 7,021 6,471 6,651 5,944 5,047 5,873 5,540 31 1,089 974 1,085 1,031 1,202 1,083 1,089 1,165 32 Total liabilities 130,059 123,858 129,245 131,003 136,858 129,552 130,059 135,160 CAPITAL ACCOUNTS 33 Capital paid in 1,011 1,013 1,013 1,012 1,013 1,006 1,011 1,016 34 983 983 983 983 983 983 983 983 35 Other capital accounts 540 138 251 369 498 534 540 495 36 Total liabilities and capital accounts 132,593 125,992 131,492 133,367 139,352 132,075 132,593 137,654 37 MEMO: Marketable U.S. Govt, securities held in custody for foreign and intl. account 60,717 62,176 62,287 62,911 62,807 60,359 60,717 63,781 Federal Reserve note statement 38 F.R. notes outstanding (issued to Bank) 93,289 93,571 93,753 93,828 93,780 9922,,664488 9933,,228899 9933,,776622 Collateral held against notes outstanding: 39 Gold certificate account 11,591 11,591 11,590 11,591 11,591 11,591 11,591 11,591 40 Special Drawing Rights certificate account 752 855 855 855 855 752 752 855 41 Acceptances 42 U.S. Govt, securities 82,135 82,185 82,536 82,785 82,885 81,585 82,135 82,885 43 Total collateral 94,478 94,631 94,981 95,231 95,331 93,928 94,478 95,331 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 A13 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month Type and maturity 1977 1977 Aug. 31 Sept. 7 Sept. 14 Sept. 21 Sept. 28 July 31 Aug. 31 Sept. 30 1 Loans 1,267 571 359 2,696 1,292 788 1,267 1,069 2 Within 15 days 1,224 501 294 2,669 1,265 768 1,224 1,032 3 16 days to 90 days. 43 70 65 27 27 20 43 37 4 91 days to 1 year.., 5 Acceptances 131 150 436 393 131 482 6 Within 15 days 127 146 432 384 127 478 7 16 days to 90 days. 4 4 8 4 4 8 91 days to 1 year.. 1 9 U.S. Govt, securities 98,436 91,486 96,114 96,878 104,275 98,711 98,436 104,715 10 Within 15 days 1 3,989 3,807 4,552 3,069 8,597 4,849 3,989 6,709 11 16 days to 90 days 18,881 12,416 17,211 18,046 19,027 17,589 18,881 20,858 12 91 days to 1 year 30,774 30,471 29,559 30,527 31,415 28.922 30,774 31,772 13 Over 1 year to 5 years. .. 27,750 27,750 27,750 28,097 28,097 29,652 27,750 28,110 14 Over 5 years to 10 years. 10,451 10,451 10,451 10,507 10,507 11,233 10,451 10,547 15 Over 10 years 6,591 6,591 6,591 6,632 6,632 6,466 6,591 6,719 16 Federal agency obligations.. 7,505 7,354 7,370 7,329 7,680 7,768 7,505 7,639 17 Within 15 days 1 305 125 41 25 376 375 305 335 18 16 days to 90 days 209 272 371 346 346 410 209 355 19 91 days to 1 year 915 881 893 893 893 1,000 915 884 20 Over 1 year to 5 years. . . 3,711 3,711 3,679 3,679 3,679 3,648 3,711 3,679 21 Over 5 years to 10 years. 1,542 1,542 1,563 1,563 1,563 1,512 1,542 1,563 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 BANK DEBITS AND DEPOSIT TURNOVER Debits are shown in billions of dollars. Monthly data are at annual rates 1977 BBaannkk ggrroouupp,, oorr ttyyppee 11997744 11997755 11997766 ooff ccuussttoommeerr Apr. May June July Aug. Debits to demand deposits 2 (seasonally adjusted) 1111 AAAAllllllll ccccoooommmmmmmmeeeerrrrcccciiiiaaaallll bbbbaaaannnnkkkkssss 22,937.8 25,028.5 29,180.4 33,343.9 34,687.0 34,805.2 34,098.5 35,644.8 2222 MMMMaaaajjjjoooorrrr NNNNeeeewwww YYYYoooorrrrkkkk CCCCiiiittttyyyy bbbbaaaannnnkkkkssss.... .... 8,434.8 9,670.7 11,467.2 13,276.9 13,979.7 14,049.7 13,501.0 14,351.0 3333 OOOOtttthhhheeeerrrr bbbbaaaannnnkkkkssss 14,503.0 15,357.8 17,713.2 20,067.0 20,707.3 20,755.5 20,597.5 21,293.8 Debits to savings deposits 3 (not seasonally adjusted) 4444 AAAAllllllll ccccuuuussssttttoooommmmeeeerrrrssss 333355559999....1111 333366666666....2222 5 Business i 44443333....6666 55555555....0000 6 Others 333311115555....6666 333311111111....2222 Demand deposit turnover 2 (seasonally adjusted) 77777 AAAAAllllllllll cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll bbbbbaaaaannnnnkkkkksssss 99.0 105.3 116.8 128.2 133.7 133.6 127.5 133.8 88888 MMMMMaaaaajjjjjooooorrrrr NNNNNeeeeewwwww YYYYYooooorrrrrkkkkk CCCCCiiiiitttttyyyyy bbbbbaaaaannnnnkkkkksssss.......... 321.6 356.9 411.6 479.3 504.7 524.2 479.7 519.3 99999 OOOOOttttthhhhheeeeerrrrr bbbbbaaaaannnnnkkkkksssss 70.6 72.9 79.8 86.4 89.4 88.8 86.1 89.2 Savings deposit turnover 3 (not seasonally adjusted) 1111100000 AAAAAllllllllll cccccuuuuussssstttttooooommmmmeeeeerrrrrsssss 1111....7777 1111....7777 11 Business ^ 4444....3333 5555....2222 12 Others 1111....5555 1111....5555 1 Represents corporations and other profit-seeking organizations (ex- NOTE.—Historical data—estimated for the period 1970 through June cluding commercial banks but including savings and loan associations, 1977, partly on the basis of the debits series for 233 SMSA's, which were mutual savings banks, credit unions, the Export-Import Bank, and available through June 1977 are available from Publications Services, Federally sponsored lending agencies). Division of Administrative Services, Board of Governors of the Federal 2 Represents accounts of individuals, partnerships, and corporations, Reserve System, Washington, D.C. 20551. Debits and turnover data for and of States and political subdivisions. savings deposits are not available prior to July 1977. 3 Excludes NOW accounts and special club accounts, such as Christmas and vacation clubs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • October 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 Mar. Apr. May June July Aug. Seasonally adjusted MEASURES! 1 M-1 270.5 283.1 294.8 312.4 315.4 320.5 320.7 321.9 326.8 328.3 2 M-2 571.4 612.4 664.3 740.3 756.1 764.6 767.6 772.8 783.5 787.7 3 M-3 919.6 981.5 1,092.6 1,237.1 1,268.1 1,281.2 1,289.0 1,299.5 '•1,316.8 1,329.2 4 M-4 634.4 701.4 746.5 803.5 818.2 826.2 829.9 836.8 846.3 850.9 5 M-5 982.5 1,070.5 1,174.7 1,300.3 1,330.3 1,342.8 1,351.3 1,363.4 '•1,379.6 1,392.4 COMPONENTS 6 Currency 61.5 67.8 73.7 80.5 82.2 83.1 83.6 84.0 85.1 85.5 Commercial bank deposits: 7 Demand 209.0 215.3 221.0 231.9 233.2 237.4 237.1 238.0 241.6 242.8 8 Time and savings 363.9 418.3 451.7 491.1 502.8 505.7 509.2 514.8 519.5 522.5 9 Negotiable CD's2 63.0 89.0 82.1 63.3 62.2 61.6 62.3 63.9 62.8 63.2 10 Other 300.9 329.3 369.6 427.9 440.6 444.1 446.9 450.9 456.7 459.4 11 Nonbank thrift institutions 3 348.1 369.1 428.3 496.8 512.1 516.6 521.4 526.6 ''533.3 541.5 Not seasonally adjusted MEASURES 1 12 M-1 278.3 291.3 303.2 321.3 312.4 322.3 315.5 321.4 327.2 325.1 13 M-2 576.5 617.5 669.3 745.3 756.2 770.0 766.2 774.5 784.0 784.3 14 M-3 921.8 983.8 1,094.3 1,237.9 1,269.8 1,290.2 1,290.3 1,305.6 1,322.0 1,326.4 15 M-4 640.5 708.0 752.8 809.5 817.0 830.1 827.4 837.5 846.8 848.8 16 M-5 ^985.8 1,074.3 1,177.7 1,302.1 1,330.7 1,350.3 1,351.4 1,368.6 ''1,384.7 1,390.8 COMPONENTS 17 Currency 62.7 69.0 75.1 82.0 81.6 82.8 83.4 84.2 85.7 85.8 Commercial bank deposits: 18 Demand 215.7 222.2 228.1 239.3 230.9 239.6 232.1 237.1 241.4 239.3 19 Member 156.5 159.7 162.1 168.5 162.1 167.6 161.8 165.1 167.7 166.2 20 Domestic nonmember 56.3 58.5 62.6 67.3 65.2 68.3 66.6 68.3 69.5 69.1 21 Time and savings 362.2 416.7 449.6 488.2 504.6 507.7 511.8 516.1 519.6 523.7 22 Negotiable CD's2 64.0 90.5 83.5 64.3 60.8 60.1 61.2 63.0 62.8 64.4 23 Other 298.2 326.3 366.2 423.9 443.8 4A1.1 450.7 453.2 456.9 459.2 24 Nonbank thrift institutions 3 345.3 366.3 424.9 492.6 513.6 520.2 524.1 531.1 538.0 542.1 25 U.S. Govt, deposits (all commercial banks) 6.3 4.9 4.1 4.7 4.5 5.6 3.8 5.2 3.9 3.7 1 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-1: Averages of daily figures for (1) demand deposits at 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. releeise. Back data are available from the Banking Section, Division of M-2: M-1 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 rewas 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 miUion in "Other" securities, and $600 million in "Total loans and investments." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Aggregates A15 1.22 AGGREGATE RESERVES AND DEPOSITS Member Banks Billions of dollars, averages of daily figures 1976 1977 IItteemm 11997733 11997744 11997755 DDeecc.. DDeecc.. DDeecc.. Dec. Feb. Mar. Apr. May June July Aug. Seasonally adjusted 1111 RRRReeeesssseeeerrrrvvvveeeessss iiii 34.94 36.60 34.73 34.95 34.40 34.31 34.68 34.72 34.86 35.35 35.64 2222 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd 33.64 35.87 34.60 34.90 34.33 34,20 34.61 34.52 34.60 35.03 34.58 3333 RRRReeeeqqqquuuuiiiirrrreeeedddd 34.64 36.34 34.47 34.68 34.20 34,09 34.49 34.51 34.71 35.08 35.44 4444 DDDDeeeeppppoooossssiiiittttssss ssssuuuubbbbjjjjeeeecccctttt ttttoooo rrrreeeesssseeeerrrrvvvveeee rrrreeeeqqqquuuuiiiirrrreeeemmmmeeeennnnttttssss 2222 442.3 486.2 505.4 529.6 532.0 535.2 538.4 537.6 544.5 547.7 551.4 5555 TTTTiiiimmmmeeee aaaannnndddd ssssaaaavvvviiiinnnnggggssss 279.2 322.1 337.9 355.0 360.1 361.3 361.4 363.1 367.0 369.2 370.8 DDDDeeeemmmmaaaannnndddd:::: 6666 PPPPrrrriiiivvvvaaaatttteeee 158.1 160.6 164.5 171.4 169.5 171.1 173.4 172.3 173.8 175.8 177.0 7777 UUUU....SSSS.... GGGGoooovvvvtttt 5.0 3.5 3.0 3.2 2.5 2.8 3.6 2.1 3.7 2.8 3.6 Not seasonally adjusted 8888 DDDDeeeeppppoooossssiiiittttssss ssssuuuubbbbjjjjeeeecccctttt ttttoooo rrrreeeesssseeeerrrrvvvveeee rrrreeeeqqqquuuuiiiirrrreeeemmmmeeeennnnttttssss 2222 447.5 491.8 510.9 534.8 528.7 534.0 541.3 535.8 544.5 547.6 548.3 9999 TTTTiiiimmmmeeee aaaannnndddd ssssaaaavvvviiiinnnnggggssss 278.5 321.7 337.2 353.6 358.4 361.7 362.3 364.7 367.8 369.5 371.7 DDDDeeeemmmmaaaannnndddd:::: 11110000 PPPPrrrriiiivvvvaaaatttteeee 164.0 166.6 170.7 177.9 167.2 169.1 175.0 168.5 173.0 175.6 174.1 11111111 UUUU....SSSS.... GGGGoooovvvvtttt 5.0 3.4 3.1 3.3 3.1 3.2 4.0 2.5 3.7 2.6 2.5 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 Apr. 27 May 25 June 30 July 27 Aug. 31 Sept. 28 V V V V V p Seasonally adjusted 1 Loans and investments ^ 633.4 690.4 721.1 784.4 812.4 819.4 825.5 831.8 840.4 843.1 2 Including loans sold outright 2 637.7 695.2 725.5 788.2 816.4 823.4 829.5 835.9 844.5 847.1 Loans: 3 Total 449.0 500.2 496.9 538.9 557.7 562.1 567.0 574.5 582.4 587.6 4 Including loans sold outright 2 453.3 505.0 501.3 542.7 561.7 566.1 571.0 578.6 586.5 591.6 5 Commercial and industrials 156.4 183.3 176.0 179.5 184.9 185.9 188.3 189.6 191.6 191.9 6 Including loans sold outright2,3 159.0 186.0 178.5 181.9 187.7 188.7 191.1 192.4 194.4 194.7 Investments: 7 U.S. Treasury 54.5 50.4 79.4 97.3 102.8 104.6 105.3 102.9 102.6 99.5 8 Other 129.9 139.8 144.8 148.2 151.9 152.7 153.2 154.4 155.4 156.0 Not seasonally adjusted 9 Loans and investments ^ 647.3 705.6 737.0 801.6 809.6 816.6 830.5 829.1 837.6 843.1 10 Including loans sold outright 651.6 710.4 741.4 805.4 813.6 820.6 834.5 833.2 841.7 847.2 Loans: 11 Total 1 458.5 510.7 507.4 550.2 553.5 561.3 574.4 575.4 583.6 589.3 12 Including loans sold outright 2 462.8 515.5 511.8 554.0 557.5 565.3 578.4 579.5 587.7 593.4 13 Commercial and industrial 3 159.4 186.8 179.3 182.9 185.1 186.1 190.7 189.6 190.6 192.3 14 Including loans sold outright2,3 162.0 189.5 181.8 185.3 187.9 188.9 193.5 192.4 193.4 195.1 Investments: 15 U.S. Treasury 58.3 54.5 84.1 102.5 103.0 101.9 101.7 99.5 98.9 98.0 16 Other 130.6 140.5 145.5 148.9 153.1 153.4 154.4 154.2 155.1 155.8 For notes see bottom of opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • October 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 Dec. Jan. Feb. Mar. Apr.P Mayf Junep JulyP Aug. 2' Sept.2' All commercial 1 Loans and investments 775.8 846.4 824.2 831.6 840.4 846.5 853.1 864.5 866.2 877.8 882.4 2 Loans, gross 546.2 594.9 575.3 580.4 587.0 590.4 597.8 609.5 612.5 623.8 628.6 Investments: 3 U.S. Treasury securities. .. 84.1 102.5 101.1 102.6 104.7 103.0 101.9 101.3 99.5 98.9 98.0 4 Other 145.5 148.9 147.9 148.5 148.7 153.1 153.4 153.7 154.2 155.1 155.8 5 133.6 136.1 120.1 127.1 122.8 122.7 119.4 124.5 124.7 134.0 127.5 6 Currency and coin 12.3 12.1 12.8 12.5 12.9 13.3 13.1 13.6 13.3 13.6 13.8 7 Reserves with F.R. Banks... 26.8 26.1 28.6 28.6 26.9 28.2 24.0 23.5 27.1 28.2 30.0 8 Balances with banks 47.3 49.6 39.2 41.5 41.9 40.1 41.3 42.9 40.4 44.0 41.7 9 Cash items in process of collection.. 47.3 48.4 39.6 44.4 41.1 41.0 41.0 44.4 43.9 48.3 42.1 10 Total assets/total liabilities and 964.9 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 1,065.5 11 786.3 838.2 801.0 809.3 817.1 819.4 818.9 833.7 836.4 850.5 844.8 Demand: 12 Interbank 41.8 45.4 35.3 36.6 37.6 33.9 35.2 37.3 37.7 39.0 36.6 13 U.S. Govt 3.1 3.0 4.0 3.8 3.1 7.4 3.6 3.0 3.8 2.5 8.0 14 Other 278.7 288.4 260.6 264.5 263.1 267.9 262.8 272.5 272.3 282.7 269.9 Time: 15 Interbank 12.0 9.2 8.8 8.6 8.9 8.6 8.5 8.9 8.3 8.0 8.3 16 Other 450.6 492.2 492.3 495.9 504.4 501.6 508.8 511.9 514.4 518.4 522.0 17 Borrowings 60.2 80.2 82.5 87.6 84.5 88.2 87.6 90.2 90.6 93.1 94.8 18 Total capital accounts 2 69.1 78.1 76.3 76.8 77.1 77.5 78.1 78.7 78.9 79.4 79.7 19 MEMO: Number of banks 14,633 14,671 14,667 14,688 14,685 14,690 14,695 14,702 14,709 14,713 14,713 Member 20 578.6 620.5 600.9 605.9 611.8 614.8 620.2 629.1 628.9 637.9 640.8 21 Loans, gross 416.4 442.9 426.3 429.9 434.6 435.9 441.5 450.1 451.3 459.9 463.0 Investments: 22 U.S. Treasury securities. .. 61.5 74.6 72.6 73.7 74.9 73.0 72.6 72.6 70.8 70.5 69.6 23 Other 100.7 103.1 102.0 102.3 102.3 105.8 106.1 106.4 106.7 107.5 108.3 24 Cash assets, total 108.5 108.9 97.7 102.8 100.0 99.4 95.7 100.5 101.1 108.5 103.1 25 Currency and coin 9.2 9.1 9.5 9.3 9.6 9.9 9.7 10.0 9.9 10.0 10.2 26 Reserves with F.R. Banks. . , 26.8 26.0 28.6 28.6 26.9 28.2 24.0 23.5 27.1 28.2 30.0 27 Balances with banks 26.9 27.4 21.5 22.2 24.0 21.9 22.6 24.2 21.9 23.9 22.5 28 Cash items in process of collection.. 45.5 46.5 38.1 42.7 39.5 39.4 39.3 42.7 42.2 46.4 40.4 29 Total assets/total liabilities and capital 1 733.6 772.9 744.6 755.1 759.7 762.7 763.9 778.9 780.1 796.2 793.2 30 590.8 618.7 587.0 592.0 598.1 597.8 597.4 609.4 610.6 622.1 617.0 Demand: 31 Interbank 38.6 42.4 33.1 34.1 35.3 31.6 32.9 34.9 35.3 36.6 34.3 32 U.S. Govt 3.2 2.1 3.0 2.7 2.1 5.9 2.7 2.2 2.8 1.7 6.4 33 Other 210.8 215.5 193.7 196.6 195.9 199.0 195.1 202.7 202.1 211.0 200.3 Time: 34 Interbank 10.0 7.2 6.8 6.6 6.9 6.6 6.5 6.9 6.3 6.0 6.3 35 Other 329.1 351.5 350.3 351.9 357.9 354.7 360.3 362.7 364.1 366.9 369.6 36 Borrowings 53.6 71.7 73.6 78.0 75.3 78.1 77.5 80.0 80.4 82.5 84.0 37 52.1 58.6 57.7 57.9 58.1 58.3 58.8 59.2 59.5 59.9 60.2 38 MEMO: Number of banks 5,788 5,759 5,739 5,740 5,739 5,726 5,708 5,721 5,701 5,676 5,676 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 naagainst "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

Commercial 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 Loans and investments, Gross 773366,,116644 776622,,440000 777733,,669966 827,692 442288,,116677 441,135 444433,,995555 447766,,660022 Loans: 2 Gross 526,272 535,170 539,017 578,712 312,229 315,738 315,624 340,679 3 Net ((22)) ((22)) 520,970 560,069 ((22)) (2) 330055,,227755 329,968 Investments: 4 67,833 83,629 90,947 101,459 37,606 46,799 49,688 55,729 5 Other 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 liabilities i 914,781 944,654 942,510 1,004,020 536,836 553,285 548,697 583,315 8 774466,,334488 777755,,220099 776,957 825,001 443311,,664466 444477,,559900 444444,,225511 469,378 Demand: 9 U.S. Govt 3,106 3,108 4,622 3,020 1,723 1,788 2,858 1,674 10 41,244 40,259 37,503 44,072 21,096 22,305 20,329 23,148 11 Other 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 65,986 68,474 68,989 72,070 37,483 38,969 39,502 41,323 16 14,320 14,372 14,373 14,397 4,730 4,741 4,747 4,735 State member (all insured) Insured nonmember 17 Loans and investments, Gross 113344,,775599 113377,,662200 113366,,991155 144,000 117733,,223388 183,645 119922,,882255 207,089 Loans: 18 Gross 100,968 100,823 98,889 102,278 113,074 118,609 124,503 135,754 19 Net ((22)) (2) 96,037 99,475 ((22)) ((22)) 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 Other 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 Total assets/total liabilities 179,787 180,495 179,645 189,573 198,157 210,874 214,167 231,130 24 Deposits 114411,,999955 114433,,440099 114422,,006611 149,481 117722,,770077 118844,,221100 119900,,664444 206,141 Demand: 25 U.S. Govt 443 467 869 429 940 853 894 917 26 18,751 16,265 15,834 19,296 1,397 1,689 1,339 1,627 27 Other 4488,,662211 5500,,998844 4499,,665588 52,194 6600,,770066 65,560 6633,,662299 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 12,773 13,105 12,791 13,199 15,730 16,400 16,696 17,547 32 1,064 1,046 1,029 1,023 8,526 8,585 8,597 8,639 Noninsured nonmember Total nonmember 33 11,725 1133,,667744 1155,,990055 18,819 118844,,996633 119977,,331199 220088,,773300 225,908 Loans: 34 9,559 11,283 13,209 16,336 122,633 129,892 137,712 152,091 35 Net ((22)) (2) 13,092 16,209 ((22)) ((22)) 132,751 146,836 Investments: 36 358 490 472 1,054 18,581 22,599 25,407 27,936 37 Other 1,808 1,902 2,223 1,428 43,750 44,829 45,610 45,880 38 Cash assets 3,534 5,359 4,362 6,496 21,563 25,137 22,524 27,141 39 Total assets/total liabilities 16,277 20,544 21,271 26,790 214,434 231,418 235,439 257,921 40 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 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 6622,,883300 6677,,886688 6666,,118844 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 3,110 3,449 3,372 4,842 6,086 6,577 6,711 8,412 47 570 651 663 818 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • October 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 banks i 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 All other securities 6,143 4,181 290 276 1,201 2,415 1,962 13 Unclassified total 92 57 22 35 35 14 Trading-account securities 5,339 5,233 2,075 687 2,251 220 106 15 U.S. Treasury 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 Unclassified 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 F.R. stock and corporate stock 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 30 Other loans, gross 536,794 405,594 70,710 21,530 149,631 163,122 131,200 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 1,191 316 1,826 1,706 1,267 33 Other loans, net 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 1- to 4-family residences 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 FHA-insured 370 305 116 25 85 78 66 43 Conventional 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 To banks in foreign countries 5,925 5,777 2,636 276 2,383 483 147 49 To other depositary institutions 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 Mobile homes 8,697 6,163 177 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 2,472 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

Commercial Banks A19 1.26 Continued Member banks i Insured Non- Liability or capital account commercial Large banks member banks banks 1 Total All other New York City of Other City Chicago large 75 Demand deposits 316,260 246,707 59,781 9,454 86,536 90,936 69,571 76 Mutual savings banks 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 States and political subdivisions 16,238 11,212 626 242 3,340 7,004 5,027 80 Foreign governments, central banks, etc 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 84 Time deposits 293,127 212,408 32,154 12,333 72,420 95,502 80,719 85 Accumulated for personal loan payments 137 112 10 102 25 86 Mutual savings banks 352 331 iis" 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 Commercial banks in United States 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 93 Savings deposits 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. Government 52 40 4 22 13 12 97 States and political subdivisions 6,242 4,500 535 82' 1,054 2,830 1,742 98 All other 126 115 82 1 25 8 11 99 Total deposits 823,090 612,081 104,006 25,063 215,676 267,336 211,027 100 Federal funds purchased and securities sold under agreements to repurchase 73,846 70,496 15,854 9,249 35,905 9,489 3,350 101 Commercial banks 40,778 39,292 6,646 6,303 21,715 4,628 1,486 102 Brokers and dealers 8,472 8,145 1,454 1,335 4,484 870 327 103 Others 24,597 23,060 7,754 1,610 9,705 3,991 1,537 104 Other liabilities for borrowed money 5,229 4,977 2,373 102 2,119 383 252 105 Mortgage indebtedness 797 570 58 4 307 202 228 106 Bank acceptances outstanding 12,278 11,920 6,340 632 4,634 314 358 107 Other liabilities 17,433 15,097 4,939 807 6,049 3,303 2,442 108 Total liabilities >. . 932,674 715,142 133,570 35,856 264,689 281,027 217,656 109 Subordinated notes and debentures 5,145 4,095 1,120 82 1,826 1,066 1,051 110 Equity capital 73,662 55,436 11,315 2,638 18,628 22,855 18,236 111 Preferred stock 67 25 2 23 42 112 Common stock 16,419 11,994 '2;453" 576" 3,847 5,124 4,430 113 Surplus 29,165 21,497 4,230 1,243 7,686 8,338 7,671 114 Undivided profits 26,266 20,706 4,594 772 6,670 8,671 5,562 115 Other capital reserves 1,745 1,215 38 53 424 700 531 116 Total liabilities and equity capital 1,011,482 774,673 146,005 38,576 285,143 304,948 236,942 MEMO ITEMS: 117 Demand deposits adjusted^ 231,519 165,830 24,269 5,588 57,408 78,564 65,690 Average for last 15 or 30 days: 118 Cash and due from bank 121,842 103,888 29,188 4,578 38,072 32,050 17,956 119 Federal funds sold and securities purchased under agreements to resell 42,908 33,274 3,121 1,384 16,897 11,873 9,675 120 Total loans 521,907 395,321 70,296 21,429 145,777 157,820 126,586 121 Time deposits of $ 100,000 or more 129,513 105,527 26,714 9,715 41,042 28,056 23,986 122 Total deposits 805,559 596,858 95,782 25,106 211,304 264,665 208,712 123 Federal funds purchased and securities sold under agreements to repurchase 76,919 73,461 19,126 9,305 35,188 9,842 3,458 124 Other liabilities for borrowed money 4,489 4,231 2,052 90 1,739 350 258 125 Standby letters of credit outstanding 12,593 11,931 6,925 996 3,242 768 662 126 Time deposits of $100,000 or more 131,851 107,632 26,650 9,501 42,859 28,621 24,219 127 Certificates of deposit 109,696 88,947 22,351 8,270 34,294 24,033 20,749 128 Other time deposits 22,155 18,685 4,299 1,231 8,565 4,589 3,470 129 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 domember 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

A46 Domestic Nonfinancial Statistics • October 1977 1.27 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1977 Account Aug. 10 Aug. 17 Aug. 24 Aug. 31 Sept. 7 Sept. 14 Sept. 21 Sept. 28 1 Total loans and investments 428,233 428,718 425,802 429,180 434,446 431,197 432,499 430,854 Loans: 2 Federal funds sold'^ 25,638 24,096 22,960 24,465 25,774 24,350 23,554 23,228 3 To commercial banks 17,121 16,864 19,450 18,311 18,839 17,841 18,478 To brokers and dealers involving— 4 U.S. Treasury securities 4,964 3,779 3,289 2, All 4,872 2,980 3,140 2,249 5 Other securities 561 526 486 455 578 505 476 382 6 To others 2,895 2,670 2,321 2,133 2,013 2,026 2,097 2,119 7 Other, gross 301,365 302,163 300,999 302,650 304,994 303,542 305,991 305,673 8 Commercial and industrial 119,043 118,901 119,036 119,275 119,244 119,283 120,326 120,290 9 Agricultural 4,800 4,804 4,752 4,744 4,734 4,766 4,774 4,789 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities 1,875 1,635 1,612 1,127 2,700 1,568 2,021 1,408 11 Other securities 9,057 9,414 8,471 9,043 9,049 8,865 9,181 8,992 To others: 12 U.S. Treasury securities 70 83 74 74 73 72 70 69 13 Other securities 2,583 2,582 2,578 2,606 2,600 2,597 2,600 2,606 To nonbank financial institutions: 14 Personal and sales finance cos., etc 7,663 7,364 7,374 7,434 7,678 7,501 7,490 7,379 15 Other 15,302 15,250 14,941 15,071 15,117 15,146 14,978 15,146 16 Real estate 69,243 69,542 69,756 70,002 70,390 70,726 71,287 71,445 To commercial banks: 17 Domestic 1,721 1,941 1,837 1,839 2,119 1,699 2,031 2,003 18 Foreign 5,784 5,834 5,851 6,140 6,088 5,875 5,889 5,982 19 Consumer instalment 42,557 42,796 43,024 43,372 43,435 43,615 43,493 43,792 20 Foreign governments, official institutions, etc. 1,632 1,574 1,560 1,618 1,589 1,615 1,625 1,544 21 All other loans 20,035 20,443 20,133 20,305 20,178 20,214 20,226 20,228 22 LESS : Loan loss reserve and unearned income on loans 9,180 9,226 9,265 9,278 9,341 9,387 9,406 9,348 23 Other loans, net 292,185 292,937 291,734 293,372 295,653 294,155 296,585 296,325 Investments: 24 U.S. Treasury securities 45,930 47,209 46,718 46,479 47,945 46,870 46,717 45,713 25 Bills 7,813 8,094 8,285 8,021 8,454 8,056 8,336 7,640 Notes and bonds, by maturity: 26 Within 1 year 9,175 9,010 8,921 9,156 9,195 9,175 9,110 9,000 27 1 to 5 years 25,244 26,000 25,546 25,216 26,332 25,788 25,425 25,273 28 After 5 years 3,698 4,105 3,966 4,086 3,964 3,851 3,846 3,800 29 Other securities 64,480 64,476 64,390 64,864 65,074 65,822 65,643 65,588 Obligations of States and political subdivisions: 30 Tax warrants, short-term notes, and bills 9,272 9,050 8,885 9,041 9,005 9,655 9,230 9,156 31 All other 41,716 41,773 41,697 41,963 42,062 42,216 42,089 42,256 Other bonds, corporate stocks, and securities: 32 Certificates of participation2 2,048 2,017 1,985 2,061 2,115 2,051 2,141 2,210 33 All other, including corporate stocks 11,444 11,636 11,823 11,799 11,892 11,900 12,183 11,966 34 Cash items in process of collection 35,519 37,922 34,543 42,095 41,257 40,192 36,888 36,875 35 Reserves with F.R. Banks 17,878 18,889 18,371 21,458 15,330 22,146 18,567 22,999 36 Currency and coin 5,710 5,862 6,018 6,127 5,793 6,215 6,035 6,299 37 Balances with domestic banks 12,741 12,977 12,667 14,140 12,564 13,083 12,179 13,322 38 Investments in subsidiaries not consolidated 2,688 2,308 2,326 2,368 2,783 2,842 2,857 2,872 39 Other assets 54,635 53,337 52,931 54,790 54,861 55,594 54,751 54,181 40 Total assets/total liabilities 557,404 560,013 552,658 570,158 567,034 571,269 563,776 567,402 Deposits: 41 Demand deposits 171,688 175,002 168,704 183,179 179,609 181,255 174,307 176,535 42 Individuals, partnerships, and corporations.. 124,918 127,719 122,941 130,901 130,128 133,635 126,319 125,685 43 States and political subdivisions 5,361 5,740 5,495 6,401 5,572 5,474 6,012 5,748 44 U.S. Govt 1,653 1,465 1,075 1,009 1,701 1,520 3,256 5,352 Domestic interbank: 45 Commercial 24,341 25,137 24,394 26,704 26,782 25,106 23,741 25,178 46 Mutual savings 958 946 827 978 1,040 895 814 799 Foreign: , , 47 Governments, official institutionsr, etc 1,390 937 1,228 1,747 1,650 1,194 1,285 1,212 48 Commercial banks 6,018 6,091 6,190 6,521 6,103 6,321 6,110 6,078 49 Certified and officers' checks 7,049 6,967 6,554 8,918 6,633 7,110 6,770 6,483 50 Time and savings deposits'^ 238,751 238,899 239,228 239,523 238,704 238,901 239,243 241,749 51 Savings 4 94,301 94,131 93,914 93,594 93,708 93,418 93,290 93,406 52 Time: 144,450 144,768 145,314 145,929 144,996 145,483 145,953 148,343 5 3 Individuals, partnerships, and corporations 110,807 111,353 111,785 112,138 111,708 112,140 111,996 113,711 54 States and political subdivisions 20,642 20,810 21,040 21,271 21,157 21,268 21,459 21,693 55 Domestic interbank 4,223 4,126 4,065 4,141 4,089 4,076 A,261 4,490 56 Foreign govts., official institutions, etc 7,201 6,882 6,853 6,859 6,541 6,488 6,589 6,825 57 Federal funds purchased, etc. 5 72,453 71,211 69,015 72,088 74,015 75,886 72,032 72,295 Borrowings from: 58 F.R. Banks 736 738 1,938 858 335 136 2,446 877 59 Others 3,643 3,994 3,964 4,298 4,291 4,473 5,030 5,290 60 Other liabilities, etc.6 26,806 26,903 26,490 26,697 26,541 26,885 27,028 26,871 61 Total equity capital and subordinated notes/debentures 7 43,327 43,266 43,319 43,515 43,539 43,733 43,690 43,785 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

Weekly Reporting Banks All 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1977 Account Aug. 10 Aug. 17 Aug, 24 Aug. 31 Sept. 7 Sept. 14 Sept. 21 Sept. 28 1 Total loans and investments 92,150 93,331 91,490 92,806 94,205 92,107 93,994 92,287 Loans: 2 Federal funds sold i 4,657 4,909 4,109 4,803 3,683 3,961 4,490 4,327 3 To commercial banks 2,295 2,586 2,468 3,303 2,142 2,132 2,458 2,699 To brokers and dealers involving— 4 U.S. Treasury securities 1,056 1,146 714 674 918 1,051 1,154 733 5 Other securities o£ 6 To others 927" 826* 617 778' 878' 895' 7 Other, gross 68,566 68,644 67,724 68,121 70,348 68,090 69,522 68,502 8 Commercial and industrial 33,938 33,792 33,818 33,906 33,950 33,678 34,140 33,949 9 Agricultural 145 144 122 123 124 128 144 150 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities 1,709 1,436 1,322 964 2,515 1,410 1,768 1,234 11 Other securities 4,780 5,136 4,596 4,906 4,913 4,829 5,048 4,850 To others: 12 U.S. Treasury securities 24 29 28 25 25 24 24 23 13 Other securities 378 383 380 383 382 382 379 378 To nonbank financial institutions: 14 Personal and sales finance cos., etc 2,753 2,577 2,542 2,534 2,696 2,555 2,572 2,480 15 Other 4,757 4,739 4,655 4,667 4,760 4,731 4,693 4,793 16 Real estate 8,687 8,671 8,688 8,696 8,823 8,863 8,864 8,846 To commercial banks: 17 Domestic 543 631 614 603 958 502 786 670 18 Foreign 2,506 2,641 2,623 2,863 2,940 2,683 2,772 2,883 19 Consumer instalment 4,117 4,134 4,158 4,170 4,172 4,206 4,193 4,220 20 Foreign governments, official institutions, etc. 438 356 341 381 331 348 380 350 21 All other loans 3,791 3,975 3,837 3,900 3,759 3,751 3,759 3,676 22 LESS: Loan loss reserve and unearned income on loans 1,688 1,695 1,683 1,716 1,752 1,761 1,747 1,709 23 Other loans, net 66,878 66,949 66,041 66,405 68,596 66,329 67,775 66,793 Investments: 24 U.S. Treasury securities 10,278 11,198 11,137 11,285 11,715 11,166 10,946 10,558 25 Bills 2,529 3,024 3,166 3,184 3,065 2,895 2,847 2,620 Notes and bonds, by maturity: 26 Within 1 year 1,374 1,356 1,314 1,486 1,492 1,501 1,466 1,456 27 1 to 5 years 5,583 5,835 5,811 5,805 6,310 5,931 5,795 5,660 28 After 5 years 792 983 846 810 848 839 838 822 29 Other securities 10,337 10,275 10,203 10,313 10,211 10,651 10,783 10,609 Obligations of States and political subdivisions: 30 Tax warrants, short-term notes, and bills.. 2,565 2,431 2,320 2,319 2,223 2,561 2,463 2,420 31 All other 6,231 6,203 6,214 6,231 6,295 6,319 6,384 6,399 Other bonds, corporate stocks, and securities: 32 Certificates of participation2 194 193 193 193 193 193 193 194 33 All other, including corporate stocks 1,347 1,448 1,476 1,570 1,500 1,578 1,743 1,596 34 Cash items in process of collection 12,461 12,278 11,843 16,243 11,667 12,333 11,601 12,409 35 Reserves with F.R. Banks 5,810 5,318 6,228 5,687 3,564 5,946 3,514 6,337 36 Currency and coin 837 831 843 856 839 861 861 892 37 Balances with domestic banks 6,042 6,068 6,002 6,861 5,129 5,856 5,321 6,143 38 Investments in subsidiaries not consolidated 1,310 1,313 1,311 1,311 1,377 1,376 1,380 1,375 39 Other assets 19,069 17,910 17,809 18,774 18,984 19,819 19,285 19,169 40 Total assets/total liabilities 137,679 137,049 135,526 142,538 135,765 138,298 135,956 138,612 Deposits: 41 Demand deposits 48,574 48,767 47,304 54,891 47,710 48,895 47,367 49,183 42 Individuals, partnerships, and corporations.. 26,419 27,192 25,714 29,332 26,065 27,754 25,948 26,319 43 States and political subdivisions 485 531 497 840 480 436 495 427 44 U.S. Govt 280 173 102 101 137 173 616 711 Domestic interbank: 45 Commercial 11,735 11,784 12,095 13,004 11,412 11,378 11,268 12,788 46 Mutual savings 533 514 432 531 562 477 399 395 Foreign: 47 Governments, official institutions, etc 1,161 725 918 1,473 1,416 961 1,026 958 48 Commercial banks 4,584 4,666 4,596 4,993 4,713 4,666 4,698 4,645 49 Certified and officers' checks 3,377 3,182 2,950 4,617 2,925 3,050 2,917 2,940 50 Time and savings deposits'^ 42,026 42,027 41,857 41,746 41,163 41,106 40,805 41,748 51 Savings 4 10,598 10,581 10,510 10,449 10,438 10,400 10,357 10,369 52 Time: 31,428 31,446 31,347 31,297 30,725 30,706 30,448 31,379 5 3 Individuals, partnerships, and corporations 23,475 23,750 23,635 23,604 23,296 23,419 23,019 23,688 54 States and political subdivisions 1,410 1,452 1,451 1,403 1,396 1,397 1,423 1,452 55 Domestic interbank 1,549 1,512 1,516 1,547 1,510 1,465 1,481 1,563 56 Foreign govts., official institutions, etc 4,139 3,862 3,902 3,899 3,703 3,616 3,696 3,874 57 Federal funds purchased, etc. 5 20,785 20,035 19,376 19,815 20,966 22,203 20,088 20,751 Borrowings from: 58 F.R. Banks 1,018 204 1,522 59 Others '"i,'456' •"i;569' 1,453 ""i;652' 1,537 ""i,"634' 1,796 ""2,'i38' 60 Other liabilities, etc.6 12,574 12,451 12,253 12,035 11,811 11,899 11,798 12,208 61 Total equity capital and subordinated notes/debentures 7 12,264 12,260 12,265 12,399 12,374 12,561 12,580 12,584 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

A46 Domestic Nonfinancial Statistics • October 1977 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS OUTSIDE NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1977 Account Aug. 10 Aug. 17 Aug. 24 Aug. 31 Sept. 7 Sept. 14 Sept. 21 Sept. 28 1 Total loans and investments 336,083 335,387 334,312 336,374 340,241 339,090 338,505 338,567 Loans: 2 Federal funds sold^ 20,981 19,187 18,851 19,662 22,091 20,389 19,064 18,901 3 To commercial banks 14,923 14,535 14,396 16,147 16,169 16,707 15,383 15,779 To brokers and dealers involving— 4 U.S. Treasury securities 3,908 2,633 2,575 1,753 3,954 1,929 1,986 1,516 5 Other securities 561 526 486 455 572 505 476 382 6 To others 1,589 1,493 1,394 1,307 1,396 1,248 1,219 1,224 7 Other, gross 232,799 233,519 233,275 234,529 234,646 235,452 236,469 237,171 8 Commercial and industrial 85,105 85,109 85,218 85,369 85,294 85,605 86,186 86,341 9 Agricultural 4,655 4,660 4,630 4,621 4,610 4,638 4,630 4,639 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities. . 166 199 290 163 185 158 253 174 11 Other securities 4,277 4,278 3,875 4,137 4,136 4,036 4,133 4,142 To others: 12 U.S. Treasury securities 46 54 46 49 48 48 46 46 13 Other securities 2,205 2,199 2,198 2,223 2,218 2,215 2,221 2,228 To nonbank financial institutions: 14 Personal and sales finance cos., etc 4,910 4,787 4,832 4,900 4,982 4,946 4,918 4,899 15 Other 10,545 10,511 10,286 10,404 10,357 10,415 10,285 10,353 16 Real estate 60,556 60,871 61,068 61,306 61,567 61,863 62,423 62,599 To commercial banks: 17 Domestic 1,178 1,310 1,223 1.236 1,161 1,197 1,245 1,333 18 Foreign 3,278 3,193 3,228 3,277 3,148 3,192 3,117 3,099 19 Consumer instalment 38,440 38,662 38,866 39,202 39,263 39,409 39,300 39,572 20 Foreign governments, official institutions, etc. 1,194 1,218 1,219 1.237 1,258 1,267 1,245 1,194 21 All other loans 16,244 16,468 16,296 16,405 16,419 16,463 16,467 16,552 22 LESS : Loan reserve and unearned income on loans 7,492 7,531 7,582 7,562 7,589 7,626 7,659 7,639 23 Other loam, net 225,307 225,988 225,693 226,967 227,057 227,826 228,810 229,532 Investments: 24 U.S. Treasury securities 35,652 36,011 35,581 35,194 36,230 35,704 35,771 35,155 25 Bills 5,284 5,070 5,119 4,837 5,389 5,161 5,489 5,020 Notes and bonds, by maturity: 26 Within 1 year 7,801 7,654 7,607 1,61Q 7,703 7,674 7,644 7,544 27 1 to 5 years 19,661 20,165 19,735 19,411 20,022 19,857 19,630 19,613 28 After 5 years 2,906 3,122 3,120 3,276 3,116 3,012 3,008 2,978 29 Other securities 54,J 43 54,201 54,187 54,551 54,863 55,171 54,860 54,979 Obligations of States and political subdivisions: 30 Tax warrants, short-term notes, and bills. 6,707 6,619 6,565 6,722 6,782 7,094 6,767 6,736 31 All other 35,485 35,570 35,483 35,732 35,767 35,897 35,705 35,857 Other bonds, corporate stocks, and securities: 32 Certificates of participation2 1,854 1,824 1,792 1,868 1,922 1,858 1,948 2,016 33 All other, including corporate stocks 10,097 10,188 10,347 10,229 10,392 10,322 10,440 10,370 34 Cash items in process of collection 23,058 25,644 22,700 25,852 29,590 27,859 25,287 24,466 35 Reserves with F. R. Banks 12,068 13,571 12,143 15,771 11,766 16,200 15,053 16,662 36 Currency and coin 4,873 5,031 5,175 5,271 4,954 5,354 5,174 5,407 37 Balances with domestic banks 6,699 6,909 6,665 7,279 7,435 7,227 6,858 7,179 38 Investments in subsidiaries not consolidated.... 1,378 995 1,015 1,057 1,406 1,466 1,477 1,497 39 Other assets 35,566 35,427 35,122 36,016 35,877 35,775 35,466 35,012 40 Total assets/total liabilities 419,725 422,964 417,132 427,620 431,269 432,971 427,820 428,790 Deposits: 41 Demand deposits . 123,114 126,235 121,400 128,288 131,899 132,360 126.940 ' 127,352 42 Individuals, partnerships, and corporations . 98,499 100,527 97,227 101,569 104,063 105,881 100;371 99,366 43 States and political subdivisions 4,876 5,209 4,998 5,561 5,092 5,038 5,517 5,321 44 U.S. Govt 1,373 1,292 973 908 1,564 1,347 2,640 4,641 Domestic interbank: 45 Commercial 12,606 13,353 12,299 13,700 15,370 13,728 12,473 12,390 46 Mutual savings 425 432 395 447 478 418 415 404 Foreign: 47 Governments, official institutions, etc 229 212 310 274 234 233 259 254 48 Commercial banks 1,434 1,425 1,594 1,528 1,390 1,655 1,412 1,433 49 Certified and officers' checks 3,672 3,785 3,604 4,301 3,708 4,060 3,853 3,543 50 Time and savings deposits^ . 196,725 196,872 197,371 197,777 197,541 197, 795 198,438 200,001 51 Savings 4 83,703 83,550 83,404 83,145 83,270 83,018 82,933 83,037 52 Time: 113,022 113,322 113,967 114,632 114,271 114,777 115,505 116,964 5 3 Individuals, partnerships, and corporations 87,332 87,603 88,150 88,534 88,412 88,721 88,977 90,023 54 States and political subdivisions 19,232 19,358 19,589 19,868 19,761 19,871 20,036 20,241 55 Domestic interbank 2,674 2,614 2,549 2,594 2,579 2,611 2,786 2,927 56 Foreign govts., official institutions, etc, 3,062 3,020 2,951 2,960 2,838 2,872 2,893 2,951 57 Federal funds purchased, etc.5 . 51,668 51,176 49,639 52,273 53,049 53,683 51,944 51,544 Borrowings from: 58 F. R. Banks 736 738 920 858 131 136 924 877 59 Others 2,187 2,485 2,511 2,646 2,754 2,839 3,234 3,152 60 Other liabilities, etc.6 14,232 14,452 14,237 14,662 14,730 14,986 15,230 14,663 61 Total equity capital and subordinated notes/debentures7 31,063 31,006 31,054 31,116 31,165 31,172 31,110 31,201 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

Weekly Reporting Banks A23 1.30 LARGE WEEKLY REPORTING COMMERCIAL BANKS Balance Sheet Memoranda Millions of dollars, Wednesday figures 1977 Account and bank group Aug. 10 Aug. 17 Aug. 24 Aug. 31 Sept. 7 Sept. 14 Sept. 21 Sept. 28 Total loans (gross) and investments, adjusted i 1 Large banks 418,474 418,882 416,366 417,169 423,357 420,046 422,033 419,721 2 New York City banks 91,000 91,809 90,091 90,616 92,857 91,234 92,497 90,627 3 Banks outside New York City 327,474 327,073 326,275 326,553 330,500 328,812 329,536 329,094 Total loans (gross), adjusted 4 Large banks 308,064 307,197 305,258 305,826 310,338 307,354 309,673 308,420 5 New York City banks 70,385 70,336 68,751 69,018 70,931 69,417 70,768 69,460 6 Banks outside New York City 237,679 236,861 236,507 236,808 239,407 237,937 238,905 238,960 Demand deposits, adjusted^ 7 Large banks 110,175 110,478 108,692 113,371 109,869 114,437 110,422 109,130 8 New York City banks 24,098 24,532 23,264 25,543 24,494 25,011 23,882 23,275 9 Banks outside New York City 86,077 85,946 85,428 87,828 85,375 89,426 86,540 85,855 Large negotiable time CD's included in time and savings deposits ^ Total: 10 Large banks 64,272 64,510 64,943 65,028 64,697 64,927 65,245 67,447 11 New York City 20,455 20,466 20,428 20,251 19,880 19,760 19,533 20,497 12 Banks outside New York City 43,817 44,044 44,515 44,777 44,817 45,167 45,712 46,950 Issued to IPC's: 13 Large banks 43,229 43,683 44,087 44,061 43,934 44,096 43,868 45,397 14 New York City Banks 14,003 14,261 14,201 13,979 13,813 13,814 13,460 14,145 15 Banks outside New York City 29,226 29,422 29,886 30,082 30,121 30,282 30,408 31,252 Issued to others: 16 Large banks 21,043 20,827 20,856 20,967 20,763 20,831 21,377 22,050 17 New York City banks 6,452 6,205 6,221 6,212 6,067 5,946 6,073 6,352 18 Banks outside New York City 14,591 14,622 14,629 14,695 14,696 14,885 15,304 15,698 All other large time deposits4 Total: 19 Large banks 26,965 26,983 27,130 27,450 27,161 27,130 27,408 27,502 20 New York City banks 5,588 5,574 5,610 5,589 5,509 5,560 5,555 5,564 21 Banks outside New York City 21,377 21,409 21,520 21,861 21,652 21,570 21,853 21,938 Issued to IPC's: 22 Large banks 15,087 15,099 15,173 15,368 15,358 15,400 15,571 15,635 23 New York City banks 4,157 4,150 4,187 4,235 4,222 4,276 4,257 A,211 24 Banks outside New York City 10,930 10,949 10,986 11,133 11,136 11,124 11,314 11,358 Issued to others: 25 Large banks 11,878 11,884 11,957 12,082 11,803 11,730 11,837 11,867 26 New York City banks 1,431 1,424 1,423 1,354 1,287 1,284 1,298 1,287 27 Banks outside New York City 10,447 19,460 10,534 10,728 10,516 10,446 10,539 10,580 Savings deposits, by ownership category Individuals and nonprofit organizations: 28 Large banks 87,244 87,156 86,967 86,660 86,828 86,549 86,499 86,621 29 New York City banks 9,686 9,679 9,648 9,583 9,571 9,529 9,498 9,521 30 Banks outside New York City 77,558 11,All 77,319 77,077 77,257 77,020 77,001 77,100 Partnerships and corporations for profit:5 31 Large banks 5,167 5,158 5,191 5,183 5,167 5,172 5,134 5,168 32 New York City banks 575 572 573 563 571 562 560 561 33 Banks outside New York City 4,592 4,586 4,618 4,620 4,596 4,610 4,574 4,607 Domestic governmental units: 34 Large banks 1,828 1,760 1,712 1,706 1,664 1,644 1,609 1,588 35 New York City banks 293 291 262 275 265 273 267 270 36 Banks outside New York City 1,535 1,469 1,450 1,431 1,399 1,371 1,342 1,318 All other:6 37 Large banks 62 57 44 45 49 53 48 29 38 New York City banks 44 39 21 28 31 36 32 17 39 Banks outside New York City 18 18 17 17 18 17 16 12 Gross liabilities of banks to their foreign branches 40 Large banks 3,542 3,930 3,579 4,191 3,824 4,469 4,172 5,302 41 New York City banks 2,007 2,070 1,922 2,322 2,123 1,962 2,539 3,198 42 Banks outside New York City 1,535 1,860 1,657 1,869 1,701 2,507 1,633 2,104 Loans sold outright to selected institutions by all large banks 7 43 Commercial and industrial 2,832 2,807 2,851 2,845 2,800 2,822 2,813 2,775 44 Real estate 212 215 217 216 220 226 215 221 45 Another 1,013 1,014 1,025 1,022 1,028 1,010 1,029 1,050 1 Exclusive of loans and Federal funds transactions with domestic 5 Other than commercial banks. commercial banks. <> 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

A46 Domestic Nonfinancial Statistics • October 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. 31 Sept. 7 Sept. 14 Sept. 21 Sept. 28 Ql Q2 July Aug. Sept. Total loans classified 2 1 Total 97,020 97,000 96,978 97,777 97,682 -916 1,542 -602 286 662 Durable goods manufacturing: 2 Primary metals 2,390 2,380 2,429 2,501 2,494 377 -161 -93 67 104 3 Machinery 4,481 4,450 4,541 4,610 4,571 108 38 -60 -263 90 4 Transportation equipment 2,336 2,339 2,372 2,406 2,386 74 94 23 -85 50 5 Other fabricated metal products... 1,869 1,871 1,894 1,965 1,975 181 70 -25 -67 106 6 Other durable goods 3,661 3,695 3,730 3,749 3,732 90 323 -65 59 71 Nondurable goods manufacturing: 7 Food, liquor, and tobacco 3,296 3,368 3,361 3,443 3,456 -151 -21 -151 119 160 8 Textiles, apparel, and leather 4,065 4,111 4,112 4,060 4,020 381 475 193 20 -45 9 Petroleum refining 2,708 2,585 2,544 2,576 2,713 -305 285 10 77 5 10 Chemicals and rubber 2,813 2,830 2,851 2,897 2,881 131 68 11 45 68 11 Other nondurable goods 2,097 2,122 2,137 2,144 2,168 147 -22 -8 83 71 12 Mining, including crude petroleum and natural gas 8,159 8,163 88,,220044 8,285 8,232 94 757 -12 -1 73 Trade: 13 Commodity dealers 1,382 1,364 1,333 1,356 1,324 204 -434 -207 -114 -58 14 Other wholesale 6,732 6,813 6,759 6,813 6,860 465 36 -31 2 128 15 Retail 7,164 7,074 7,165 7,109 7,200 405 380 282 -5 36 16 Transportation 4,965 4,938 4,958 4,998 4,968 -140 -128 -123 51 3 17 Communication 1,255 1,304 1,289 1,363 1,268 -10 -152 36 23 13 18 Other public utilities 5,144 5,116 5,001 5,089 5,040 -61 12 -314 -94 -104 19 Construction 4,389 4,371 4,385 4,559 4,541 64 294 114 8 152 20 Services 11,147 11,025 11,057 11,140 11,053 398 331 -147 10 -94 21 All other domestic loans 7,942 7,924 7,927 7,912 7,922 -303 105 -32 253 -20 22 Bankers acceptances 33,,779999 44,,000033 33,,775522 33,,667799 33,,776666 --22,,993300 -263 11 108 -33 23 Foreign commercial and industrial loans 5,226 5,154 5,177 5,123 5,112 -135 -545 -14 -10 -114 MEMO: 24 Commercial paper included in total classified loans ^ 220033 223333 --221166 --3344 --7755 --4400 3300 25 Total commercial and industrial loans of all large weekly reporting banks 119,275 119,244 119,283 120,326 120,290 203 2,648 -576 412 1,015 1977 1977 1977 May 25 June 29 July 27 Aug. 31 Sept. 28 Ql Q2 July Aug. Sept. "Term" loans classifieds 26 Total 46,107 46,516 45,901 46,076 46,337 630 675 -615 175 261 Durable goods manufacturing: 27 Primary metals 1,342 1,388 1,323 1,394 1,426 204 -133 -65 71 32 28 Machinery 2,490 2,520 2,414 2,306 2,337 -33 -32 -106 -108 31 29 Transportation equipment 1,386 1,382 1,404 1,382 1,429 -13 43 22 -22 47 30 Other fabricated metal products... 826 832 813 785 775 44 12 -19 -28 -10 31 Other durable goods 1,647 1,722 1,719 1,734 1,774 97 -3 15 40 Nondurable goods manufacturing: 32 Food, liquor, and tobacco 1,438 1,435 1,363 1,368 1,400 14 23 -72 5 32 33 Textiles, apparel, and leather 1,163 1,150 1,204 1,149 1,154 -27 79 54 -55 5 34 Petroleum refining 1,824 1,938 1,975 1,988 1,997 -202 168 37 13 9 35 Chemicals and rubber 1,615 1,646 1,677 1,705 1,745 103 99 31 28 40 36 Other nondurable goods 1,172 1,128 1,118 1,088 1,094 78 96 -10 -30 6 37 Mining, including crude petroleum and natural gas 66,,004433 6,375 66,,225500 66,,229955 66,,228833 173 519 -125 45 -12 Trade: 3 8 Commodity dealers 202 171 180 209 194 _ 1 -28 9 29 -15 39 Other wholesale 1,519 1,483 1,478 1,485 1,540 16 4 -5 7 55 40 Retail 2,353 2,325 2,331 2,379 2,399 223 57 6 48 20 41 Transportation 3,604 3,649 3,607 3,624 3,625 -164 -124 -42 17 1 42 Communication 793 748 764 785 786 -68 -31 16 21 1 43 Other public utilities 3,796 3,771 3,416 3,358 3,302 243 -136 -355 -58 -56 44 Construction 1,722 1,833 1,873 1,904 2,042 32 172 40 31 138 45 Services 5,283 5,301 5,247 5,288 5,315 113 190 -54 41 27 46 All other domestic loans 22,,446655 22,,443322 22,,446644 22,,773333 22,,554422 -167 -1 32 269 -191 47 Foreign commercial and industrial loans 3,424 3,287 3,281 3,117 3,178 62 -399 -6 -164 61 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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 TTyyppee ooff hhoollddeerr 1976 1977 11997722 11997733 11997744 11997755 DDeecc.. DDeecc.. DDeecc.. DDeecc.. 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 25.9 109.9 116.2 118.8 125.1 116.9 121.2 122.6 130.2 125.1 129.2 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 6 Other 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 11997733 11997744 11997755 11997766 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Mar. Apr. May June July Aug.p 7 All holders, IPC 118.1 119.7 124.4 128.5 124.7 127.5 124.4 128.7 131.0 128.0 14.9 14.8 15.6 17.5 16.7 16.7 17.0 17.8 18.9 18.0 9 Nonfinancial business 66.2 66.9 69.9 69.7 67.8 68.5 67.2 69.5 70.7 68.8 28.0 29.0 29.9 31.7 31.5 33.5 31.5 32.3 32.6 32.4 11 Foreign 2.2 2.2 2.3 2.6 2.2 2.3 2.4 2.4 2.2 2.5 12 Other 6.8 6.8 6.6 7.1 6.5 6.6 6.4 6.7 6.7 6.4 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. Feb. Mar. Apr. May June July Aug. Commercial paper (seasonally adjusted) 1 All issuers 49,742 48,145 52,623 52,775 54,546 56,715 57,434 61,237 60,323 60,320 Financial companies: i Dealer-placed paper:2 2 Total 4,599 6,220 7,271 6,931 7,196 7,286 7,555 8,196 8,261 8,167 3 Bank-related 1,814 1,762 1,900 1,929 1,839 11,,777788 1,805 11,,889944 1,744 1,650 Directly-placed paper: 3 4 Total 31,801 31,230 32,365 32,073 33,873 34,753 34,949 37,593 36,773 30,699 5 Bank-related 6,518 6,892 5,959 5,502 6,126 5,703 5,999 6,636 6,344 6,394 6 Nonfinancial companies4 13,342 10,695 12,987 13,771 13,475 14,676 14,930 15,538 15,289 15,454 Dollar acceptances (not seasonally adjusted) 7 Total 18,484 18,727 22,523 22,187 22,694 22,899 23,201 23,440 23,499 23,091 Held by: 8 Accepting banks 4,226 7,333 10,442 7,991 7,787 7,761 7,326 7,630 7,601 7,647 9 Own bills 3,685 5,899 8,769 6,654 6,367 6,309 6,218 6,356 6,464 6,580 10 Bills bought 542 1,435 1,673 1,337 1,421 1,381 1,108 1,273 1,137 1,067 F.R. Banks: 11 Own account 999 1,126 991 322 280 881 108 '•621 '•393 131 12 Foreign correspondents 1,109 293 375 440 435 394 385 360 296 304 13 Others 12,150 9,975 13,447 13,434 14,191 13,863 15,382 '•14,829 '•I 5,209 15,009 Based on: 14 Imports into United States 4,023 3,726 4,992 5,138 4,983 5,114 5,124 5,635 5,570 5,446 15 Exports from United States 4,067 4,001 4,818 5,074 5,222 5,376 5,642 5,729 5,842 5,747 16 All other 10,394 11,000 12,713 11,974 12,489 12,410 12,436 12,076 12,088 11,899 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

A46 Domestic Nonfinancial Statistics • October 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 61/2 1976—June 7.20 1977_jan.. 6.25 21 634 July. 7.25 Feb. 6.25 Dec. 13, 61/4 Aug. 7.01 Mar, 6.25 June 1, Sept. 7.00 6.25 7, 7 1977—May 13 61/2 Oct.. 6.78 May' 6.41 71/4 31, 63/4 Nov. 6.50 June, 6.75 Aug. 2, Dec. 6.35 July. 6.75 Aug. 22. 7 Aug. 6.83 Oct. 4 7 Sept. 7.13 63/4 Sept. 16. 71/4 1.35 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 2-7, 1977 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 per annum) 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 per annum) 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 per annum).. 8.72 9.28 8.95 8.79 8.46 7.97 19 Interquartile range 1 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-to 4-family 55.9 75.9 74.6 61.4 23.6 39.9 24 Muhifamily. 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 per annum).. '•8.72 9.06 8.98 »-8.92 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 '•S.U 8.89 8.91 '•8.85 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 1 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets All 1.36 INTEREST RATES Money and Capital Markets Averages, per cent per annum 1977 1977, week ending— IInnssttrruummeenntt 1974 1975 1976 June July Aug. Sept. Sept. 3 Sept. 10 Sept. 17 Sept. 24 Oct. 1 Money market rates Prime commercial paper ,1 1 90-to 119-dav 10.05 6.26 5.24 5.42 5.38 5.75 6.09 5.88 5.89 6.13 6.15 6.25 2 4- to 6-month 9.87 6.33 5.35 5.49 5.41 5.84 6.17 6.00 5.99 6.19 6.22 6.30 3 Finance company paper, directly placed, 3- to 6-month 2 8.62 6.16 5.22 5.38 5.38 5.71 6.04 5.88 5.88 6.05 6.13 6.13 4 Prime bankers acceptances, 90-day 3 9.92 6.30 5.19 5.39 5.43 5.88 6.16 5.93 5.98 6.19 6.22 6.30 5 Federal funds 4 10.51 5.82 5.05 5.39 5.42 5.90 6.14 6.02 5.97 6.05 6.10 6.35 Large negotiable certificates of deposit 6 3-month secondarv market ^ 1100..2277 66..4433 5.26 5.42 5.46 5.91 6.18 '•5.98 5.97 6.10 6.22 6.37 7 3-month primary market ^ 5.15 5.35 5.32 5.82 6.04 '•5.88 5.84 6.02 6.00 6.29 8 Euro-dollar deposits, 3-month ^ 10.96 6.97 5.57 5.78 5.80 6.30 6.57 ''6.30 6.26 6.49 6.59 6.78 U.S. Govt, securities Bills: 8 Market yields: 9 3-month 7.84 5.80 4.98 5.02 5.19 5.49 5.81 5.56 5.65 5.86 5.90 5.89 10 6-month 7.95 6.11 5.26 5.21 5.40 5.83 6.04 5.86 5.93 6.05 6.06 6.16 11 1 -year 7.71 6.30 5.52 5.41 5.57 5.97 6.13 5.98 6.04 6.14 6.15 6.21 Rates on new issue: 12 3-month 7.886 5.838 4.989 5.004 5.146 5.500 5.770 5.574 5.554 5.887 5.851 5.982 13 6-month 7.926 6.122 5.266 5.198 5.351 5.810 5.991 5.849 5.845 6.098 5.976 6.185 Notes and bonds maturing in 14 9 to 12 months^ 8.25 6.70 5.84 5.76 5.89 6.35 6.53 6.35 6.41 6.59 6.52 6.64 Constant maturities: 10 15 1-year 88..1188 66..7766 5.88 55..8800 55..9944 66..3377 66..5533 66..3355 66..4411 66..5577 66..5555 66..6633 Capital market rates Government notes and bonds U.S. Treasury: Constant maturities: i o 2-yea r 6.31 6.13 6.27 6.61 6.71 6.56 6.59 6.73 6.76 6.82 3-yea r 7.82 7.49 6.77 6.39 6.51 6.79 6.84 6.72 6.75 6.84 6.86 6.94 5-year 7.80 7.77 7.18 6.76 6.84 . 7.03 7.04 6.93 6.98 7.05 7.06 7.10 7-year 7.71 7.90 7.42 7.05 7.12 7.24 7.21 7.11 7.15 7.22 7.22 7.26 10-year 7.56 7.99 7.61 7.28 7.33 7.40 7.34 7.27 7.29 7.35 7.36 7.40 20-year 8.05 8.19 7.86 7.64 7.60 7.64 7.57 7.52 7.52 7.57 7.59 7.61 30-year 7.64 7.64 7.68 7.64 7.59 7.^0 7.64 7.66 7.68 Notes and bonds maturing in9— 23 3 to 5 years 7.81 7.55 6.94 6.58 6.67 6.90 6.92 6.84 6.86 6.93 6.93 6.98 24 Over 10 years (long-term) 6.99 6.98 6.78 6.99 6.97 7.00 6.94 6.90 6.90 6.94 6.95 6.97 State and local: Moody's series: 11 25 Aaa 5.89 6.42 5.66 5.21 5.21 5.28 5.27 5.27 5.24 5.28 5.27 5.27 26 Baa 6.53 7.62 7.49 6.05 6.00 5.95 5.83 5.85 5.82 5.83 5.82 5.83 27 Bond Buyer SQxics 12. 6.17 7.05 6.64 5.62 5.63 5.62 5.51 5.54 5.48 5.51 5.50 5.51 Corporate bonds Seasoned issues 13 All industries 9.03 9.57 9.01 8.38 8.33 8.34 8.31 8.31 8.30 8.29 8.'30 8.34 By rating groups: Aaa 8.57 8.83 8.43 7.95 7.94 7.98 7.92 7.92 7.90 7.89 7.92 7.96 Aa 8.84 9.17 8.75 8.19 8.12 8.17 8.15 8.14 8.14 8.14 8.15 8.18 A 9.20 9.65 9.09 8.46 8.40 8.40 8.37 8.39 8.38 8.35 8.36 8.39 Baa 9.50 10.61 9.75 8.91 8.87 8.82 8.80 8.80 8.78 8.79 8.79 8.82 Aaa utility bonds: 14 33 New issue 9.33 9.40 8.48 '^8.08 8.14 8.04 8.07 7.97 8.02 8.08 8.08 8.14 34 Recently offered issues. 9.34 9.41 8.49 8.12 8.12 8.05 8.07 8.02 8.03 8.07 8.09 8.12 Dividend/price ratio 35 Preferred stocks., 8.23 8.38 7.97 7.62 7.51 7.55 7.58 7.60 7.68 7.51 7.57 7.56 36 Common stocks. 4.47 4.31 3.77 4.60 4.59 4.72 4.82 '•4.78 4.72 4.80 4.88 4.57 1 Averages of the most representative daily offering rates 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 10 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 11 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 Digitized dfaoyr dFaRteAs. SER restrictions), on Friday close-of-business quotations. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • October 1977 1.37 STOCK MARKET Selected Statistics 1977 Indicator 1974 1975 1976 Mar. Apr. May June July Aug. Sept. 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 54.67 53.92 53,96 54.31 54.94 53.51 52.66 2 Industrial 48.08 51.88 60.44 59.56 58.47 58.13 58.44 58.90 57.30 56.41 3 Transportation 31.89 30.73 39.57 40.52 41.51 43.25 43.29 43.52 41.04 39.99 4 Utility 29.82 31.45 36.97 40.18 40.24 41.14 41.59 42.44 41.50 40.93 5 Finance 49.67 46.62 52.94 54.84 54.30 54.80 55.15 57.29 56.52 55.33 6 Standard & Poor's Corporation (1941-43 = 10) i.. 82.85 85.17 102.01 100.57 99.05 98.76 99.29 100.19 97.75 96.23 7 American Stock Exchange (Aug. 31,1973 = 100). 79.97 83.15 101.63 111.77 111.70 113.72 116.28 122.03 119.33 118.08 Volume of trading (thousands of shares)2 8 New York Stock Exchange 111333,,,888888333 111888,,,555666888 222111,,,111888999 18,900 21,214 222000,,,222777777 222222,,,000000777 222333,,,666555666 111888,,,888333111 111888,,,222777000 9 American Stock Exchange 111,,,999000888 222,,,111555000 222,,,555666555 22,,558800 22,,550000 222,,,444444000 222,,,777222000 222,,,888888000 222,,,111444000 222,,,000888000 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 9,701 9,885 10,068 10,255 10,490 10,592 11 Brokers, total 3,980 5,540 8,166 8,891 9,078 9,267 9,432 9,667 9,763 12 Margin stock^ 3,840 5,390 7,960 8,690 8,880 9,070 9,230 9,460 9,560 13 Convertible bonds 137 147 204 199 196 196 198 204 196 14 Subscription issues 3 3 2 2 2 1 4 3 7 15 Banks, total 856 960 845 810 807 801 823 823 829 16 Margin stocks 815 909 800 767 764 761 779 780 787 17 Convertible bonds 30 36 30 25 25 25 25 24 23 18 Subscription issues 11 15 15 18 18 15 19 19 19 19 Unregulated nonmargin stock credit at banks5 2,064 2,281 2,817 2,312 2,350 2,345 2,403 2,419 2,438 MEMO: Free credit balances at brokers^ 20 Margin-account 410 475 585 605 615 625 595 600 605 21 Cash-account 1,425 1,525 1,855 1,720 1,715 1,710 1,805 1,860 1,745 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)-.7 23 Under 40 45.4 24.0 12.0 16.5 16.5 17.8 12.9 16.2 17.4 24 40-49 23.0 28.8 23.0 36.8 34.1 35.6 27.0 32.9 32.0 25 50-59 13.9 22.3 35.0 23.2 25.4 23.0 33.0 26.4 27.0 26 60-69 8.8 11.6 15.0 11.6 11.8 11.0 13.3 12.0 12.0 27 70-79 4.6 6.9 8.7 6.7 6.8 7.0 8.0 7.0 7.0 28 80 or more 4.3 5.3 6.0 5.3 5.4 5.0 5.8 5.5 5.0 Special miscellaneous-account balances at brokers (end of period) 29 Total balances (millions of dollars) «.,.. 7,010 7,290 8,776 9,350 9,300 9,360 9,470 9,730 9,660 Distribution by equity status (per cent) 30 Net credit status 41.1 43.8 41.3 42.3 41.4 41.0 41.0 40.9 41.1 Debit status, equity of— 31 60 per cent or more 32.4 40.8 47.8 46.0 46.3 46.3 47.8 47.1 46.2 32 Less than 60 per cent 26.5 15.4 10.9 11.7 12.4 12.6 11.2 12.0 12.4 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 5Vi-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 redata 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 11997744 11997755 11997766 AAccccoouunntt Dec. Jan. Feb. Mar. Apr. May June July Aug. Savings and loan associations 1 Assets 295,545 338,233 391,999 391,999 398,299 403,591 409,357 414,436 421,865 427,041 433,828 440,172 22 MMoorrttggaaggeess 249,301 278,590 323,130 323,130 326,056 329,086 333,703 338,984 344,631 350,765 '-355,991 361,710 33 CCaasshh aanndd iinnvveessttmmeenntt 23,251 30,853 35,660 35,660 38,252 39,505 39,656 39,061 40,461 39,626 MO, 990 40,982 4 Other 22,993 28,790 33,209 33,209 33,991 35,000 35,998 36,391 36,773 36,650 '•36,847 37,480 5 Liabilities and net worth 295,545 338,233 391,999 391,999 398,299 403,591 409,357 414,436 421,865 427,041 433,828 440,172 242,974 285,743 336,030 336,030 341,211 344,616 352,194 354,318 357,965 364,349 '•368,513 371,380 7 Borrowed money 24,780 20,634 19,087 19,087 18,455 18,256 18,283 18,880 19,804 20,558 ^20,964 22,018 8 FHLBB 21,508 17,524 15,708 15,708 15,029 14,661 14,325 14,809 15,000 15,595 '•15,724 16,250 9 Other 3,272 3,110 3,379 3,379 3,426 3,595 3,958 4,071 4,804 4,963 '•5,240 5,768 3,244 5,128 6,836 6,836 6,718 6,783 7,351 7,899 8,505 9,123 '•9,332 9,648 11 Other 6,105 6,949 8,015 8,015 9,667 11,418 8,833 10,360 12,287 9,515 ''11,220 12,975 12 Net worth 2 18,442 19,779 22,031 22,031 22,248 22,518 22,696 22,979 23,304 23,496 23,799 24,151 13 MEMO : Mortgage loan commitments outstandings.. 7,454 10,673 14,828 1144,,882288 15,079 16,796 19,304 21,242 22,274 22,037 '•21,911 21,892 1 Mutual savings banks 14 Assets 109,550 121,056 134,812 134,812 135,906 137,307 138,901 139,496 140,593 141,657 142,915 Loans: 15 Mortgage 74,891 77,221 81,630 81,630 81,826 81,982 82,273 82,687 83,075 83,937 84,584 16 Other 3,812 4,023 5,183 5,183 5,956 6,254 6,389 6,050 6,650 6,818 7,103 Securities: 17 U.S. Govt 2,555 4,740 5,840 5,840 5,917 6,096 6,360 6,323 6,248 6,135 6,131 18 State and local government. 930 1,545 2.417 2,417 2,295 2,366 2,431 2,504 2,539 2,546 2,596 19 Corporate and other4 22,550 27,992 33,793 33,793 34,475 35,088 35,928 36,322 36,455 36,420 36,742 20 Cash 2,167 2,330 2,355 2,355 1,800 1,835 1,823 1,900 1,922 2,083 2,013 21 Other assets 2,645 3,205 3,593 3,593 3,637 3,686 3,668 3,709 3,703 3,719 3,745 22 Liabilities 109,550 121,056 134,812 134,812 135,906 137,307 138,901 139,496 140,593 141,657 142,915 23 Deposits 98,701 109,873 122,877 122,877 123,864 124,728 126,687 126,938 127,791 129,200 130,000 24 Regular: 5 98,221 109,291 121,961 121,961 122,874 123,721 125,624 125,731 126,587 127,955 128,632 25 Ordinary savings 64,286 69,653 74,535 74,535 74,621 75,038 76,260 76,336 76,384 76,976 77,012 26 Time and other 33,935 39,639 47,426 47,426 48,253 48,683 49,364 49,395 50,203 50,979 51,620 27 Other 480 582 916 916 989 1,007 1,063 1,207 1,204 1,245 1,368 28 Other liabilities 2,888 2,755 2,884 2,884 2,940 3,368 2,939 3,230 3,381 2,955 3,373 29 General reserve accounts 7,961 8,428 9,052 9,052 9,102 9,211 9,275 9,329 9,422 9,502 9,541 30 MEMO : Mortgage loan com mitments outstanding®.. 2,040 1,803 2,439 2,439 2,584 2,840 3,161 3,287 3,521 A,019 4,049 \1 Life insurance companies 31 Assets. 263,349 289,304 321,552 321,552 323,407 325,094 326,753 328,786 331,028 334,386 336,651 Securities: Government 10,900 13,758 17,942 17,942 18,198 18,443 18,470 18,500 18,475 18,579 18,916 United States 7. 3,372 4,736 5,368 5,368 5,537 5,592 5,546 5,544 5,396 5,400 5,628 State and local. 3,667 4,508 5,594 5,594 5,657 5,709 5,732 5,758 5,797 5,813 5,847 Foreign 8 3,861 4,514 6,980 6,980 7,004 7,142 7,192 7,198 7,282 7,366 7,441 Business 119,637 135,317 157,246 157,246 159,213 160,463 161,214 162,816 164,126 166,859 168,498 Bonds 97,717 107,256 122,984 122,984 125,910 127,603 128,596 130,057 131,568 133,497 135,262 Stocks 21,920 28,061 34,262 34,262 33,303 32,860 32,618 32,759 32,558 33,362 33,236 39 Mortgages. . 86,234 89,167 91,552 91,552 91,566 91,585 91,786 92,200 92,358 92,854 93,106 40 Real estate.. 8,331 9,621 10,476 10,476 10,556 10,629 10,738 10,802 10,822 10,897 10,901 41 Policy loans. 22,862 24,467 25,834 25,834 25,911 26,034 26,207 26,364 26,500 26,657 26,780 42 Other assets. 15,385 16,971 18,502 18,502 17,963 17,940 18,338 18,104 18,747 18,540 18,450 Credit unions 43 Total assets/liabilities and capital 31,948 38,037 44,897 44,835 44,906 45,798 47,111 47,348 48,322 49,479 49,501 50,123 44 Federal 16,715 20,209 24,164 24,164 24,188 24,756 25,596 25,697 26,259 27,017 26,951 27,304 45 State 15,233 17,828 20,733 20,671 20,718 21,042 21,515 21,651 22,063 22,462 22,550 22,819 46 Loans outstanding 24,432 28,169 34,033 34,293 34,188 34,549 35,411 36,019 36,936 38,134 38,597 39,613 47 Federal 12,730 14,869 18,022 18,202 18,081 18,275 18,776 19,050 19,583 20,303 20,456 21,036 48 State 11,702 13,300 16,011 16,091 16,107 16,274 16,635 16,969 17,353 17,831 18,141 18,577 49 Savings , 27,518 33,013 39,264 38,968 39,344 39,981 41,161 41,394 42,125 43,196 43,294 43,575 50 Federal (shares) , 14,370 17,530 21,149 20,980 21,165 21,559 22,346 22,524 22,955 23,608 23,661 23,882 51 State (shares and deposit , 13,148 15,483 18,115 17,988 18,179 18,442 18,815 18,870 19,170 19,588 19,633 19,693 For notes see bottom of page A30. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • October 1977 1.39 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTrrraaannnsssiiitttiiiooonnn qqquuuaaarrrttteeerrr TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn (((JJJuuulllyyy--- 1976 1977 1977 11997755 11997766 SSSeeepppttt... 111999777666))) HI H2 HI June July Aug. U.S. Budget 1 Receipts i 280,997 299,197 81,686 159,742 157,868 189,410 43,075 24,952 29,676 2 Outlays 1,2,3 326,105 365,658 94,659 180,559 193,626 199,482 32,881 33,630 34,720 3 Surplus, or deficit (-) -45,108 -66,461 -12,973 -20,816 -35,758 -10,072 10,194 -8,678 -5,044 4 Trust funds 7,419 2,409 -1,952 5,503 -4,621 7,332 1,829 -3,348 2,384 5 Federal funds 4 -52,526 -68,870 -11,021 -26,320 -31,137 -17,405 8,365 -5,330 -7,429 Off-budget entities surplus, or deficit (-) 6 Federal Financing Bank outlays. .. -6,389 -5,915 -2,575 -3,222 -5,176 -2,075 -45 -1,606 -1,241 7 Other 2,5 -1,652 -1,355 793 -1,119 3,809 -2,086 -262 -122 -290 U.S. Budget plus oflf-budget, including Federal Financing Bank 8 Surplus, or deficit (—) -53,149 -73,731 -14,755 -25,158 -37,125 -14,233 9,888 -10,406 -6,575 Financed by: 9 Borrowing from the public 3. . .. 50,867 82,922 18,027 33,561 35,457 16,480 518 11,,880033 77,,778800 10 Cash and monetary assets (decrease, or increase (-)) -320 -7,796 -2,899 -7,909 2,153 -4,666 -9,345 6,730 2,740 11 Other 6 2,602 -1,396 -373 -495 -485 2,420 -1,061 1,874 -3,944 MEMO ITEMS : 12 Treasury operating balance (level, end of period) 7,591 14,836 17,418 14,836 11,670 77,311 16,255 10,154 7,063 13 F.R. Banks 5,773 11,975 13,299 11,975 10,393 65,372 15,183 8,789 6,115 14 Tax and loan accounts 1,475 2,854 4,119 2,854 1,277 11,940 1,072 1,365 948 1155 Other demand accounts ^ 334433 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 Holdings of stock of the Federal home loan banks are included in Even when revised, data for current and preceding year are subject to "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 SSoouurrccee oorr ttyyppee (July- 1976 1977 1977 1975 1976 Sept. 1976) HI H2 HI June July Aug. Receipts 1 All sources i 280,997 300,005 81,773 160,552 157,961 190,238 43,075 24,952 29,676 2 Individual income taxes, net 122,386 131,603 38,801 65,767 75,094 78,775 17,949 12,438 12,725 3 Withheld 112222,,007711 112233,,440088 3322,,994499 6633,,885599 6688,,002233 7733,,330033 12,175 12,240 1122,,442299 4 Presidential Election Campaign Fund 32 34 1 33 J 28 4 5 Nonwithheld 34,296 35,528 6,809 27,879 8,426 32,967 6,272 923 660 6 Refunds i 34,013 27,367 958 26,004 1,356 27,521 501 726 364 7 Corporation income taxes: 8 Gross receipts 45,747 46,783 9,808 27,973 20,706 37,133 14,758 1,968 1,288 9 Refunds 5,125 5,374 1,348 2,639 2,886 22,,332244 379 430 479 10 Social insurance taxes and contributions, net 8866,,444411 92,714 25,760 51,828 4477,,559966 5588,,009988 77,,669966 77,,996611 1122,,995588 11 Payroll employment taxes and contributions 2 71,789 76,391 21,534 4400,,994477 4400,,442277 45,241 66,,770099 66,,772255 10,347 12 Self-employment taxes and contributions 3 3,417 3,518 269 3,250 286 3,688 335 13 Unemployment insurance 6,771 8,054 2,698 5,193 4,379 6,'576 228 800 2,161 14 Other net receipts 4 4,466 4,752 1,259 2,438 2,504 2,594 424 437 450 15 Excise taxes 16,551 16,963 4,473 8,204 8,910 8,431 1,530 1,567 1,523 16 Customs 3,676 4,014 1,212 2,147 2,361 2,518 504 446 543 17 Estate and gift 4,611 5,216 1,455 2,643 2,943 4,333 437 505 547 18 Miscellaneous receipts 5 6,711 8,026 1,612 4,630 3,236 3,269 581 498 572 Outlays 19 All types 1,6 326,105 366,466 94,746 181,369 193,719 200,310 32,881 33,630 34,720 20 National defense 86,585 89,996 22,518 44,052 45,002 48,721 8,404 8,004 8,412 21 International affairs 6 5,862 5,067 1,997 22,,666688 33,,002288 22,,552222 439 463 497 22 General science, space, and technology 3,989 4,370 1,161 1,708 2,377 2,108 362 357 420 23 Natural resources, environment. and energy 9,537 11,282 3,324 6,900 7,206 6,855 1,421 1,266 1,404 24 Agriculture 1,660 2,502 584 417 2,019 2,628 256 334 740 25 Commerce and transportation 1166,,001100 17,248 4,700 5,766 99,,664433 5,945 1,419 978 988 26 Community and regional development 4,431 5,300 1,530 2,411 3,192 3,149 670 627 875 27 Education, training, employment, and social services 15,248 18,167 5,013 9,116 9,083 9,775 1,772 1,656 1,970 28 Health 27,647 33,448 8,720 17,008 19,329 18,654 3,398 3,115 3,469 29 Income security i 108,605 127,406 32,796 65,336 65,456 70,745 11,129 11,590 11,598 30 Veterans benefits and services 16,597 18,432 3,962 9,450 8,542 9,382 1,225 1,338 1,430 31 Law enforcement and justice 2,942 3,320 859 1,784 1,839 1,783 316 291 269 32 General government 3,089 2,927 878 870 1,734 1,587 324 198 347 33 Revenue sharing and general purpose fiscal assistance 7,005 7,119 2,024 3,664 4,729 4,333 47 2,257 44 34 Interest 7 30,974 34,589 7,246 18,560 18,409 18,927 5,908 2,494 2,844 35 Undistributed offsetting receipts 7,8 -14,075 -14,704 -2,567 -8,340 -7,869 -6,803 -4,211 -1,338 -587 1 Effective June 1977, earned income credit payments in excess of an from off-budget status to unified budget status. Export-Import Bank individual's tax liability, formerly treated as outlays, are classified as in- certificates of beneficial interest (effective July 1, 1975) and loans to the come tax refunds retroactive to January 1976. Private Export Funding Corp. (PEFCO), a wholly owned subsidiary of 2 Old-age, disability and hospital insurance, and Railroad Retirement the Export-Import Bank, are treated as debt rather than asset sales, accounts. 7 Effective September 1976, "Interest" and "Undistributed Offsetting 3 Old-age, disability, and hospital insurance. Receipts" reflect the accounting conversion for the interest on special 4 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. 8 Consists of interest received by trust funds, rents and royalties on 5 Deposits of earnings by F.R. Banks and other miscellaneous receipts. the Outer Continental Shelf, and U.S. Govt, contributions for em- 6 Outlay totals reflect the reclassification of the Export-Import Bank ployee retirement. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • October 1977 1.41 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1974 1975 1976 1977 IItteemm 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 4 Held by agencies 138.2 141.2 145.3 139.3 149.6 146.1 147.1 144.9 151.2 12.0 11.3 10.9 10.9 11.5 11.6 12.0 10.9 10.8 66 HHeelldd bbyy ppuubblliicc 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 1 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 May June July Aug. Sept. 1 Total gross public debti 469.9 492.7 576.6 653.5 672.1 674.4 673.9 685.2 698.8 By type: 2 Interest-bearing debt 467.8 491.6 575.7 652.5 671.0 673.4 671.4 684.1 697.6 3 Marketable 270.2 282.9 363.2 421.3 431.5 431.1 430.2 438.1 443.5 4 Bills 107.8 119.7 157.5 164.0 157.9 155.1 154.2 154.3 156.1 5 Notes 124.6 129.8 167.1 216.7 230.2 232.9 231.4 238.1 241.7 6 Bonds... 37.8 33.4 38.6 40.6 43.3 43.2 44.7 45.8 45.7 7 Nonmarketable^ 197.6 208.7 212.5 231.2 239.5 242.2 241.1 245.9 254.1 8 Convertible bonds 3 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 21.8 21.7 21.5 21.4 21.8 10 Savings bonds and notes 60.8 63.8 67.9 72.3 74.3 74.7 75.2 75.5 75.8 11 Govt, account series 5 108.0 119.1 119.4 129.7 133.0 134.8 132.4 136.3 140.1 By holder:6 12 U.S. Govt, agencies and trust funds 129.6 141.2 139.3 147.1 149.4 151.2 148.7 13 F.R.Banks.. 78.5 80.5 87.9 97.0 97.4 102.2 98.6 14 Private investors 261.7 271.0 349.4 409.5 425.3 421.0 426.5 15 Commercial banks 60.3 55.6 85.1 103.8 102.2 '•102.4 100.1 16 Mutual savings banks 2.9 2.5 4.5 5.7 6.1 6.0 6.0 17 Insurance companies 6.4 6.1 9.3 12.5 12.9 14.2 14.1 18 Other corporations 10.9 11.0 20.2 26.5 25.8 23.8 23.5 19 State and local governments 29.2 29.2 33.8 41.6 49.1 '•47.8 47.8 Individuals: 20 Savings bonds 60.3 63.4 67.3 72.0 '•74.1 '•74.4 74.9 21 Other securities 16.9 21.5 24.0 28.8 '•28.6 '•28.6 28.4 22 Foreign and international 7 55.5 58.4 66.5 78.1 86.0 '•87.9 90.2 23 Other miscellaneous investors »,.. 1199..33 2233..22 3388..66 ''••4400..55 ''••4400..77 3366..00 4411..55 1 Includes $1.2 billion of non-interest-bearing debt (of which $700 6 Data for F.R. Banks and U.S. Govt, agencies and trust funds are million on Sept. 30, 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 July 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 l^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 foreign government dollar-denominated and foreign beginning in July 1974, includes Federal Financing Bank security issues. currency denominated 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 TTyyppee ooff hhoollddeerr 1975 1976 1975 1976 July Aug. July Aug. All maturities 1 to 5 years 1 All holders 363,191 421,276 430,248 438,146 112,270 141,132 141,650 144,790 2 U.S. Govt, agencies and trust funds 19,397 16,485 15,425 14,709 7,058 6,141 5,951 5,948 3 F. R. Banks 87,934 96,971 98,646 98,436 30,518 31,249 30,443 28,161 4 Private investors 255,860 307,820 316,357 355,001 74,694 103,742 105,256 110,681 5 Commercial banks 64,398 78,262 75,749 74,227 29,629 40,005 39,389 38,945 6 Mutual savings banks 3,300 4,072 4,382 4,402 1,524 2,010 2,109 2,136 7,565 10,284 11,196 11,177 2,359 3,885 4,358 4,253 8 Nonfinancial corporations 9,365 14,193 11,835 12,349 1,967 2,618 3,142 2,811 9 Savings and loan associations IJ^-i 4,576 5,069 5,294 1,558 2,360 2,648 2,764 10 State and local governments 9,285 12,252 14,064 17,219 1,761 2,543 3,794 4,271 11 All others 159,154 184,182 193,882 200,333 35,894 50,321 49,816 55,501 Total, within 1 year 5 to 10 years 12 All holders 199,692 211,035 212,457 216,141 26,436 43,045 141,650 45,879 13 U.S. Govt, agencies and trust funds 2,769 2,012 1,811 1,024 3,283 2,879 2,139 2,139 14 F. R. Banks 46,845 51,569 50,314 53,185 6,463 9,148 11,285 10,479 15 Private investors 150,078 157,454 160,332 161,932 16,690 31,018 32,521 33,261 16 Commercial banks 29,875 31,213 28,932 27,789 4,071 6,278 6,514 6,607 17 Mutual savings banks 983 1,214 1,297 1,310 448 567 662 641 2,024 2,191 1,750 1,975 1,592 2,546 2,999 2,952 19 Nonfinancial corporations 7,105 11,009 8,186 9,050 175 370 310 287 20 Savings and loan associations 914 1,984 2,199 2,298 216 155 145 147 21 State and local governments 5,288 6,622 7,190 9,381 782 1,465 1,291 1,256 22 All others 103,889 103,220 110,777 110,129 9,405 19,637 20,600 21,370 Bills, within 1 year 10 to 20 years 23 All holders 157,483 163,992 154,227 154,283 14,264 11,865 13,076 13,037 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 39,700 40,440 1,507 1,363 1,534 1,423 26 Private investors 119,258 122,264 114,257 113,573 8,524 7,400 8,440 8,512 17,481 17,303 10,883 9,546 552 339 585 545 28 Mutual savings banks 554 454 428 397 232 139 150 151 1,513 1,463 113, 964 1,154 1,114 1,255 1,305 30 Nonfinancial corporations 5,829 9,939 6,449 6,962 61 142- 149 131 518 1,266 1,090 1,148 82 64 63 70 32 State and local governments 4,566 5,556 5,645 7,751 896 718 620 842 33 All others 88,797 86,282 88,989 86,806 5,546 4,884 5,618 5,468 Other, within 1 year Over 20 years 34 All holders 42,209 47,043 58,230 61,858 10,530 14,200 17,119 18,299 35 U.S. Govt, agencies and trust funds 2,562 1,563 1,541 754 2,053 2,350 2,421 2,495 36 F. R. Banks 8,827 10,290 10,614 12,745 2,601 3,642 5,070 5,188 37 Private investors 30,820 35,190 46,075 48,359 5,876 8,208 9,628 10,'616 38 Commercial banks 12,394 13,910 18,049 18,243 271 All 329 340 39 Mutual savings banks 429 760 869 913 112 143 163 164 40 Insurance companies 511 728 977 1,011 436 548 835 692 41 Nonfinancial corporations 1,276 1,070 1,737 2,088 57 55 48 70 42 Savings and loan associations 396 718 1,109 1,150 22 13 13 16 43 State and local governments 722 1,066 1,545 1,630 558 904 1,169 1,468 44 All others 15,092 16,938 21,788 23,323 4,420 6,120 7,071 7,865 NOTE.—Direct public issues only. Based on Treasury Survey of Owner- banks, 467 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 Aug. 31, 1977; (1) 5,490 commercial in the Treasury Survey, including investor groups not listed separately. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 DomesticN onfinancial Statistics • October 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 June July Aug.*" Aug. 17 Aug. 24 Aug. 31 Sept. 7 Sept. 14 Sept. 21 1 U.S. Govt, securities 3,579 6,027 10,449 8,683 9,078 10,288 10,217 9,961 10,225 9,118 10,417 9,665 By maturity: 2 Bills 2,550 3,889 6,676 5,021 5,905 6,208 6,725 6,310 5,559 5,231 6,724 6,928 3 Other within 1 year 250 223 210 215 194 339 343 331 348 180 169 210 4 1-5 years 465 1,414 2,317 2,059 1,790 2,216 1,900 1,993 2,567 2,535 2,266 1,491 5 5-10 years 256 363 1,019 952 752 1,079 931 913 1,170 823 895 686 6 Over 10 years 58 138 229 436 438 446 318 413 581 350 363 350 By type of customer: 7 U.S. Govt, securities dealers 652 885 1,360 1,030 962 1,106 914 1,165 1,335 924 959 1,312 8 U.S. Govt, securities brokers 965 1,750 3,407 2,529 3,007 3,439 3,829 3,015 3,186 2,601 4,486 '•3,171 9 Commercial banks 998 1,451 2,426 1,965 2,124 2,274 2,395 2,237 2,171 2,089 2,052 1,792 10 All others 1 964 1,941 3,257 3,159 2,986 3,469 3,080 3,544 3,533 3,504 2,920 '•3,390 11 Federal agency securities.. .. 965 1,043 1,548 2,138 a, 543 1,863 1,499 2,627 2,307 1,570 1,691 1,633 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— IItteemm 11997744 11997755 11997766 June July Aug. July 27 '• Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 Positions 2 11 UU..SS.. GGoovvtt,, sseeccuurriittiieess 2,580 5,884 7,592 5,757 4,724 '^2,951 4,232 2,197 2,692 2,036 3,514 3,979 22 BBiillllss 1,932 4,297 6,290 5,538 5,034 3,883 4,866 3,462 3,186 3,481 4,745 4,358 33 OOtthheerr wwiitthhiinn 11 yyeeaarr -6 265 188 15 -7 -191 -66 -47 -175 -177 -255 -230 44 11--55 yyeeaarrss 265 886 515 82 -291 -661 -361 -753 -616 -1,000 -848 -185 55 55--1100 yyeeaarrss 302 1 300 402 23 -192 r79 -254 -372 262 -233 -141 -17 66 OOvveerr 1100 yyeeaarrss 88 1 136 198 99 181 -1 47 -94 35 -35 13 53 77 FFeeddeerraall aaggeennccyy sseeccuurriittiieess 1,212 943 729 1,027 '•776 ^522 692 329 311 336 712 877 Sources of financings 8 All sources 3,977 6,666 8,715 10,791 9,532 8,738 8,826 7,675 8,454 8,757 9,215 9,122 Commercial banks: 9 New York City 1,032 1,621 1,896 1,583 1,289 808 960 52 1,274 705 869 599 10 Outside New York City... 1,064 1,466 1,660 2,179 1,574 1,824 1,456 1,374 1,635 1,705 2,289 1,889 11 Corporations! 459 842 1,479 2,769 2,307 2,347 2,403 2,276 2,060 2,259 2,557 2,626 12 All others 1,423 2,738 3,681 4,261 4,361 3,759 4,007 3,972 3,486 4,088 3,500 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 to 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 Feb. Mar. Apr. May July 1 Federal and Federally sponsored agencies 71,594 89,381 97,680 102,961 103,673 105,579 105,823 107,152 108,243 2 Federal agencies 11,554 12,719 19,046 22,307 22,413 22,462 22,316 22,220 22,232 3 Defense Department 1 1,439 1,312 1,220 1,086 1,077 1,068 1,059 1,044 1,035 4 Export-Import Bank2,3 2,625 2,893 7,188 8,580 8,615 8,610 8,596 8,742 8.742 5 Federal Housing Administration4 415 440 564 581 592 598 594 588 583 6 Government National Mortgage Association participation certificates 5 4,390 4,280 4,200 3 3,845 3,845 3,803 3,803 3,803 3,768 7 Postal Service6 250 721 1,750 2,998 2,998 2,998 2,856 2,431 2,431 8 Tennessee Valley Authority 2,435 3,070 3,915 5,005 5,070 5,155 5,175 5,370 5,410 9 United States Railway Association6 3 209 212 216 230 233 242 263 10 Federally sponsored agencies 60,040 76,662 78,634 80,654 81,260 83,117 84,248 84,932 86,011 11 Federal home loan banks 15,362 21,890 18,900 16,587 16,626 16,678 16,851 16,921 17,328 Federal Home Loan Mortgage Corporation. 1,784 1,551 1,550 9^7 957 957 '-1,698 1,698 1,698 Federal National Mortgage Association 23,002 28,167 29,963 30,143 30,392 30,684 30,843 31,378 31,566 Federal land banks 10,062 12,653 15,000 17,304 17,304 18,137 18,137 18,137 18,719 Federal intermediate credit banks 6,932 8,589 9,254 10,556 10,670 10,990 11,174 11,418 11,654 Banks for cooperatives 2,695 3,589 3,655 4,695 4,899 5,254 5,113 4,948 4,604 Student Loan Marketing Association7 200 220 310 410 410 415 430 430 440 Other 3 3 2 2 2 2 2 2 2 MEMO ITEMS : 19 Federal Financing Bank debt6,8 4,474 17,154 30,328 31,312 30,823 31,007 30,820 32,443 Lending to Federal and Federally sponsored agencies: 20 Export-Import Bank 3 4,595 5,237 5,273 5,273 5,273 5,420 5,420 21 Postal Services 500 1,500 2,748 2,748 2,748 2,606 2,181 2,181 22 Student Loan Marketing Association7 220 310 410 410 415 430 430 440 23 Tennessee Valley Authority 895 1,840 3,180 3,245 3,330 3,350 3,545 3,585 24 United States Railway Association^ 3 209 212 216 230 233 242 263 Other lending:9 25 Farmers Home Administration 2,500 7,000 11,450 11,750 11,750 12,250 12,900 13,650 26 Rural Electrification Administration 566 1,584 1,677 1,806 1,864 2,042 2,105 27 Other 356 1,134 5,507 5,993 5,271 5,001 4,060 4,799 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 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 Oflf-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

A46 Domestic Nonfinancial Statistics • October 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 All issues, new and refunding i 24,315 30,607 35,313 3,429 3,150 4,140 3,566 4,308 5,347 By type of issue: 2 General obligation 13,563 16,020 18,040 1,867 1,624 1,812 1,701 2,032 2,265 3 Revenue 10,212 1144,,551111 17,140 1,552 1,518 2,323 11,,886622 22,,227722 33,,007799 4 Housine Assistance Administration 2 461 5 U.S. Govt, loans 79 76 133 10 8 5 3 4 3 By type of issuer: 6 State 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 9 Issues for new capital, total 23,508 29,495 32,108 3,084 3,019 3,209 2,939 3,781 4,456 By use of proceeds: 10 Education 4,730 4,689 4,900 489 502 472 249 497 807 11 Transportation 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 Industrial aid 494 445 483 15 12 38 42 130 23 15 Other purposes 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 3,735 5,321 17 Bonds 32,066 42,756 42,262 3,387 1,888 4,300 3,048 2,487 4,286 By type of offering: 18 Public 25,903 32,583 26,453 2,786 1,102 2,610 1,961 1,600 2,045 19 Private placement 6,160 10,172 15,808 601 786 1,690 1,087 887 2,241 By industry group: 20 Manufacturing 9,867 16,980 13,243 817 568 1,049 1,128 644 1,006 21 Commercial and miscellaneous 1,845 2,750 4,361 743 346 454 180 112 363 22 Transportation 1,550 3,439 4,357 165 47 243 129 169 25 23 Public utility 8,873 9,658 8,297 634 210 756 602 581 1,237 24 Communication 3,710 3,464 2,787 50 290 808 324 294 371 25 Real estate and financial 6,218 6,469 9,222 979 426 991 684 688 1,284 26 Stocks 6,247 10,863 11,094 602 820 1,195 591 1,248 1,035 By type: 27 Preferred 2,253 3,458 2,789 103 128 520 163 212 332 28 Common 3,994 7,405 8,305 499 692 675 428 1,036 703 By industry group: 29 Manufacturing 544 1,670 2,237 89 175 76 220 8 176 30 Commercial and miscellaneous 940 1,470 1,183 136 94 114 114 126 437 31 Transportation . ... 22 1 24 125 103 32 Public utility 3,964 6,235 6,101 352 225 842 172 11,,003311 229 33 Communication 217 1,002 776 267 10 45 34 Real estate and financial 562 488 771 25 60 38 75 84 45 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 issues 1 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 5 Retirements 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 Manufacturing 7,404 13,219 8,978 4,574 1,442 2,069 2,966 1,529 1,551 2,932 8 Commercial and other 2 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 11 Communication 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 14 Retirements 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: 16 Manufacturing 17 1,607 2,634 500 412 433 838 1,120 744 -68 17 Commercial and other 2 -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 19 Public utility 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 IItteemm 11997755 11997766 Feb. Mar. Apr. May June July Aug. INVESTMENT COMPANIES excluding money market funds 1 Sales of own shares i 3,302 4,226 423 463 558 421 639 573 501 2 Redemptions of own shares 2 3,686 6,802 463 553 468 531 510 515 493 3 Net sales -384 2,496 -40 -90 63 -110 129 58 8 4 Assets 3 42,179 47,537 45,040 44,516 44,862 44,403 46,255 45,651 45,038 5 Cash position^ 3,748 2,747 3,260 3,474 2,776 2,859 2,901 3,068 3,135 6 Other 38,431 44,790 41,780 41,042 42,086 41,544 43,354 42,583 41,903 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 memto 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 ofifering of securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Financial Statistics • October 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 Q1 Q2 Q3 Q4 Ql Q2r 1 Profits before tax 126.9 123.5 156.9 141.0 153.5 159.2 159.9 154.8 161.7 174.0 2 Profits tax liability 52.4 50.2 64.7 57.9 63.1 66.1 65.9 63.9 64.4 69.7 3 Profits after tax 74.5 73.3 92.2 83.1 90.4 93.1 94.0 90.9 97.3 104.3 4 Dividends 31.0 32.4 35.8 32.5 33.6 35.0 36.0 38.4 '•38.5 40.3 5 Undistributed profits 43.5 40.9 56.4 50.6 56.8 58.1 58.0 52.5 '•58.8 64.0 6 Capital consumption allowances 81.6 89.5 97.2 92.2 94.1 95.9 98.2 100.4 102.0 103.5 7 Net cash flow. 125.1 130.4 153.6 142.8 150.9 154.0 156.2 152.9 '•160.8 167.5 SOURCE.—Survey of Current Business (U.S. Dept. of Commerce). 1.51 NONFINANCIAL CORPORATIONS Current Assets and Liabilities Billions of dollars, end of period 1975 1976 1977 AAccccoouunntt 11997711 11997722 11997733 11997744 Q4 Ql Q2 Q3 Q4 Ql 1 Current assets 529.4 574.4 643.2 712.2 731.6 753.5 775.4 791.8 816.8 845.3 2 Cash 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.i 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 Inventories 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 Notes and accounts payable 220.5 234.4 265.9 292.7 288.0 286.9 293.8 291.7 302.9 309.0 11 U.S. Govt.i 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 15 Net working capital 203.6 222.2 242.3 261.5 274.1 287.6 299.5 307.7 316.9 328.7 1 Receivables from, and payables to, the U.S. Govt, exclude amounts SOURCE.—Estimates published in Statistical Bulletin (Securities and offset against each other on corporations' books. Exchange Commission). 1.52 BUSINESS EXPENDITURES on New Plant and Equipment Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1975 1976 1977 IInndduussttrryy 11997766 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 2 Q4 2 1 All industries 120.82 111.80 114.72 118.12 122.55 125.22 130.16 134.24 138.43 142.02 Manufacturing 2 Durable goods industries 23.50 21.07 21.63 22.54 24.59 25.50 26.30 27.26 27.96 29.74 3 Nondurable goods industries 29.22 25.75 27.58 28.09 30.20 28.93 30.13 32.19 33.40 34.58 Nonmanufacturing 4 Mining 3.98 3.82 3.83 3.83 4.21 4.13 4.24 4.49 4.52 4.54 Transportation : 5 Railroad 2.35 2.39 2.08 2.64 2.69 2.63 2.71 2.57 2.74 3.19 6 Air 1.31 1.65 1.18 1.44 1.12 1.41 1.62 1.43 1.84 2.05 7 Other 3.56 3.56 3.29 4.16 3.44 3.49 2.96 2.96 2.18 1.72 Public utilities: 8 Electric 18.90 17.92 18.56 18.82 18.22 19.49 21.19 21.14 22.24 22.72 9 Gas and other 3.47 3.00 3.36 3.03 3.45 3.96 4.16 4.16 4.47 4.78 10 Communication 12.93 12.22 12.54 12.62 13.64 14.30 14.19 15.32 Commercial and other i 20.87 20.44 20.68 20.94 20.99 21.36 22.67 22.73 1 39.08 38.70 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.—Survey of Current Business (U.S. Dept. of Commerce). 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 AAccccoouunntt 11997722 11997733 11997744 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 11.1 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 AAAccccccooouuunnntttsss receivable during— rrreeeccceeeiiivvvaaabbbllleee TTTyyypppeee ooouuutttssstttaaannnddd--iiinnnggg AAAuuuggg... 333111,,, 1977 1977 1977 111999777777 June July Aug. June July Aug. June July Aug. 1 Total 50,006 982 1,103 1,968 11,961 12,152 13,218 10,979 11,049 11,250 2 Retail automotive (commercial vehicles) 11,183 340 296 269 1,042 1,030 1,022 702 734 753 3 Wholesale automotive 9,317 137 686 1,187 55,,004499 55,,449933 66,,332211 44,,991122 44,,880077 5,134 4 Retail paper on business, industrial, and farm equipment 13,140 238 197 296 694 788 805 456 591 509 5 Loans on commercial accounts receivable. . . 3,914 115 28 -2 2,483 2,301 2,270 2,368 2,273 2,272 6 Factored commercial accounts receivable... . 2,294 -50 -120 17 1,347 1,261 1,429 1,397 1,381 1,412 7 All other business credit 10,158 202 16 201 1,346 1,279 1,371 1,144 1,263 1,170 1 Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • October 1977 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1977 Item 1974 1975 1976 Mar. Apr. May June July Aug. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms; ^ 1 Purchase price (thous. dollars) 40.1 44.6 48.4 53.8 53.4 52.8 53.1 53.7 54.6 2 Amount of loan (thous. dollars) 29.8 33.3 35.9 40.9 39.6 39.9 39.5 40.0 40.7 3 Loan/price ratio (per cent) 74.3 74.7 74.2 77.5 75.5 77.4 76.0 76.2 76.5 4 Maturity (years) 26.3 26.8 27.2 28.0 27.3 27.9 27.2 27.9 28.2 5 Fees and charges (per cent of loan amount) 2. 1.30 1.54 1.44 1.34 1.30 1.34 1.25 1.31 1.29 6 Contract rate (per cent per annum) 8.71 8.75 8.76 8.74 8.73 8.74 8.78 8.79 8.81 Yield (per cent per annum): 7 FHLBB series 3 8.92 9.01 8.99 8.95 8.94 8.96 8.98 9.00 9.02 8 HUD series4 9.22 9.10 8.99 8.85 8.90 8.95 9.00 9.00 9.00 SECONDARY MARKETS Yields (per cent per annum) on— 9 FHA mortgages (HUD series) 5. 9.55 9.19 8.82 8.58 8.57 8.74 8.74 8.74 10 GNMA securities 6 8.72 8.52 8.17 8.06 7.96 8.04 7.95 7.95 8.03 FNMA auctions-.7 11 Government-underwritten loans 9.31 9.26 8.99 8.68 8.67 8.74 8.75 8.72 8.76 12 Conventional loans 9.43 9.37 9.11 8.91 8.97 9.08 9.12 9.07 9.06 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 13 Total 29,578 31,824 32,904 32,830 32,938 33,580 33,918 33,954 34,029 14 FHA-insured 19,189 19,732 18,916 18,739 18,745 18,939 18,974 18,887 18,785 15 VA-guaranteed 8,310 9,573 9,212 9.099 9,125 9,399 9,509 9,449 9,388 16 Conventional 2,080 2,519 4,776 4.992 5,069 5,241 5,435 5,618 5,866 Mortgage transactions (during period) 17 Purchases 6,953 4,263 3,606 283 391 947 656 322 405 1188 Sales 4 2 8866 7 Mortgage commitments:» 19 Contracted (during period) 10,765 6,106 6,247 1,119 716 1,452 999 357 531 20 Outstanding (end of period) 7,960 4,126 3,398 5,184 5,411 5,773 5,854 5,062 4,717 Auction of 4-month commitments to buy— Government-underwritten loans: 21 Offered 9 5,462.6 7,042.6 4,929.8 1,138.2 456.1 1,842.8 278.9 206.4 314.9 22 Accepted 22,,337711..44 33,,884488..33 2,787.2 612.0 269.8 11,,002277..44 127.8 131.4 221.4 Conventional loans : 23 Offered 9 1,195.4 1,401.3 2,595.7 373.9 348.1 1,164.6 371.1 286.8 370.2 24 Accepted 656.5 765.0 1,879.2 268.1 280.7 751.7 263.0 184.4 236.7 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period) lo 2255 Total 4,586 4,987 44,,226699 3,557 3,355 3,;i85 3,389 3,483 3,424 26 FHA/VA 1,904 1,824 1,618 1,564 1,542 1,523 1,502 1,481 1,463 27 Conventional 2,682 3,163 2,651 1,993 1,813 1,763 1,887 2,001 1,961 Mortgage transactions (during period) 28 Purchases 2,191 1,716 1,175 200 235 310 379 236 348 29 Sales 52 1,020 1,396 285 388 329 336 79 414 Mortgage commitments: 11 30 Contracted (during period) 4,553 982 1,477 459 606 525 511 511 567 31 Outstanding (end of period) 2,390 111 333 760 1,112 1,314 1,293 1,350 1,352 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. I 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 II 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

Real Estate Debt A41 1.54 MORTGAGE DEBT OUTSTANDING Millions of dollars, end of period 1976 1977 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11997722 11997733 1974 1975 Q3 04 Ql Q2P 1 All holders 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 q12,665 131,725 146,877 159,298 167,539 171,259 174,763 181,216 5 Farm 35,758 41,253 46,288 50,877 55,465 57,054 59,319 61,419 6 Major financial institutions 450,000 505,400 542,560 581,193 630,103 641,621 662,272 687,968 7 Commercial banks ^ 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 43,679 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 Farm 62 64 62 59 56 57 58 59 17 Savings and loan associations 206,182 231, 733 249,301 278,590 311,847 323,130 333,703 350,777 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 46J21 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 279 743 759 208 754 454 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 47 Mortgage pools or trusts 2 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-famiIy 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 131 138 116 295 535 532 530 111 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 nonmsured 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

A46 DomesticN onfinancial Statistics • October 1977 1.55 CONSUMER INSTALMENT CREDIT Total Outstanding, and Net Change Millions of dollars 1977 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 1974 1975 1976 Feb. Mar. Apr. May June July Aug. Amounts outstanding (end of period) 1 157,454 164,955 185,489 184,504 186,379 189,187 192,143 196,157 198,973 203,192 By holder: 2 Commercial banks 75,846 78,667 89,511 89,223 90,187 91,837 93,190 95,307 96,797 98,894 3 Finance companies 36,087 35,994 38,639 38,868 39,188 39,561 40,127 40,712 41,398 41,987 4 Credit unions 21,895 25,666 30,546 30,701 31,448 31,912 32,704 33,750 34,122 35,077 5 Retailers i 17,933 18,002 19,052 17,860 17,585 17,734 17,911 18,032 18,137 18,475 6 Others 2 5,693 6,626 7,741 7,852 7,971 8,142 8,211 8,355 8,520 8,760 By tvpe of credit: 7 Automobile 52,871 55,879 66,116 66,361 67,678 69,064 70,557 72,459 73,863 75,512 8 Commercial banks 30,994 31,553 37,984 38,170 38,962 39,940 40,760 41,937 42,770 43,746 9 Indirect 18,687 18,353 21,176 21,170 21,563 22,059 22,442 23,054 23,493 23,994 10 Direct 12,306 13,200 16,808 17,000 17,399 17,881 18,319 18,883 19,277 19,752 11 Finance companies 10,623 11,155 12,489 12,450 12,593 12,757 13,023 13,219 13,597 13,783 12 Credit unions 10,869 12,741 15,163 15,240 15,611 15,841 16,234 16,754 16,938 17,412 13 Others 386 430 480 501 513 525 540 549 558 570 14 Mobile homes 14,618 14,423 14,572 14,396 14,409 14,471 14,477 14,551 14,623 14,710 15 Commercial banks 8,972 8,649 8,734 8,590 8,571 8,597 8,617 8,646 8,671 8,691 16 Finance companies 3,525 3,451 3,273 3,202 3,190 3,170 3,149 3,136 3,126 3,114 17 Home improvement 8,522 9,405 10,990 10,962 11,097 11,287 11,465 11,742 11,964 12,257 18 Commercial banks 4,694 4,965 5,554 5,474 5,510 5,594 5,702 5,838 5,960 6,087 Revolving credit: 19 Bank credit cards 8,281 9,501 11,351 11,090 10,971 11,149 11,205 11,462 11,634 12,085 20 Bank check credit 2,797 2,810 3,041 3,071 3,061 3,076 3,125 3,202 3,261 3,369 21 All other 70,364 72,937 79,418 78,624 79,162 80,139 81,313 82,742 83,628 85,260 22 Commercial banks, total 20,108 21,188 22,847 22,828 23,112 23,481 23,780 24,224 24,499 24,916 23 Personal loans 13,771 14,629 15,669 15,753 15,932 16,168 16,344 16,602 16,749 17,037 24 Finance companies, total 21,590 21,238 22,749 23,088 23,277 23,506 23,827 24,223 24,538 24,951 25 Personal loans 16,985 17,263 18,554 18,567 18,751 18,938 19,214 19,540 19,808 20,118 26 Credit unions 9,174 10,754 12,799 12,864 13,177 13,371 13,703 14,141 14,297 14,697 27 Retailers 17,933 18,002 19,052 17,860 17,585 17,734 17,911 18,032 18,137 18,475 28 Others 1,559 1,755 1,971 1,984 2,011 2,047 2,092 2,121 2,157 2,221 Net change (during period) 3 29 Total 9,280 7,504 20,533 1,824 2,848 2,770 2,519 2,282 2,319 2,508 By holder: 30 Commercial banks 3,975 2,821 10,845 858 1,434 1,328 1,100 1,283 1,005 1,305 31 Finance companies 731 -90 2,644 349 585 392 460 182 524 321 32 Credit unions 2,262 3,771 4,880 517 611 634 665 519 368 472 33 Retailers i 1,538 69 1,050 14 113 223 210 144 286 170 34 Others 2 774 933 1,115 86 106 192 84 154 136 240 By type of credit: 35 Automobile 500 3,007 10,238 955 1,326 1,155 1,188 898 1,005 990 36 Commercial banks -508 559 6,431 491 790 693 561 681 521 661 37 Indirect -310 -334 2,823 217 396 355 241 328 255 322 38 Direct -198 894 3,608 274 394 338 320 353 266 338 39 Finance companies -116 532 1,334 174 244 135 258 -28 275 65 40 Credit unions 1,123 1,872 2,422 266 294 298 352 244 208 237 41 Other 2 44 50 24 -2 29 17 2 2 27 42 Mobile homes 1,068 -195 150 -48 48 56 -18 23 45 44 43 Commercial banks 632 -323 85 -38 5 11 —7 1 -8 44 Finance companies 166 -73 -177 -40 -1 -14 -24 -21 -12 -18 45 Home improvement 1,094 881 1,585 87 160 181 126 174 156 175 46 Commercial banks 611 271 588 20 71 64 58 67 68 54 Revolving credit: 47 Bank credit cards 1,443 1,220 1,850 186 245 259 173 219 164 295 48 Bank check credit 543 14 231 39 50 54 98 85 34 55 49 Another 4,631 2,577 6,479 605 1,019 1,065 952 883 914 949 50 Commercial banks, total 1,255 1,080 1,659 160 212 248 209 237 211 248 51 Personal loans 898 858 1,040 126 200 182 146 156 117 137 52 Finance companies, total 746 -348 1,509 212 341 270 227 226 260 273 53 Personal loans 486 279 1,290 178 280 219 184 185 228 186 54 Credit unions 948 1,580 2,045 204 264 281 258 239 129 200 55 Retailers 1,538 69 1,050 14 113 223 210 144 286 170 56 Others 145 196 217 15 29 43 48 36 28 59 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 Debt A43 1.56 CONSUMER INSTALMENT CREDIT Extensions and Liquidations Millions of dollars 1977 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 1974 1975 1976 Feb. Mar. Apr. May June July Aug, Extensions 3 1 Total 157,200 164,169 193,328 17,418 18,351 18,609 18,322 18,613 18,416 18,979 By holder: 2 72,605 77,312 94,220 8,399 8,927 9,008 8,888 9,036 8,928 9,201 3 Finance companies 34,061 31,173 36,028 3,301 3,528 3,445 3,359 3,443 3,335 3,459 4 19,596 24,096 28,587 1,61 A 2,787 2,859 2,860 2,769 2,663 2,806 5 Retailers i 27,034 27,049 29,188 2,580 2,615 2,721 2,728 2,806 2,951 2,840 6 Others 2 3,904 4,539 5,305 464 494 576 485 559 540 673 By type of credit: 7 45,429 51,413 62,988 5,747 6,135 6,037 5,973 5,978 5,877 6,064 8 Commercial banks 26,406 28,573 36,585 3,278 3,563 3,462 3,341 3,442 3,464 3,523 9 Indirect 15,576 15,766 19,882 1,730 1,923 1,850 1,751 1,817 1,856 1,874 10 Direct 10,830 12,807 16,704 1,547 1,640 1,612 1,590 1,625 1,608 1,649 11 Finance companies 8,604 9,674 11,209 1,014 1,112 1,074 1,114 1,099 963 1,036 12 Credit unions 10,015 12,683 14,675 1,392 1,418 1,431 1,457 1,390 1,402 1,434 13 Others 404 483 518 64 42 70 60 47 48 72 14 Mobile homes 5,782 4,323 4,841 367 434 463 402 408 440 465 15 Commercial banks 3,486 2,622 3,071 210 257 269 262 232 253 253 16 Finance companies 1,376 764 690 53 56 58 50 48 55 55 17 5,211 5,556 6,736 564 638 660 627' 677 661 723 18 Commercial banks 2,789 2,722 3,245 262 310 308 308 319 320 321 Revolving credit: 19 Bank credit cards 17,098 20,428 25,862 2,384 2,381 2,547 2,589 2,604 2,525 2,667 20 Bank check credit 4,227 4,024 4,783 459 470 467 498 512 489 500 21 Another 79,453 78,425 88,117 7,897 8,292 8,436 8,233 8,434 8,424 8,559 22 Commercial banks, total 18,599 18,944 20,673 1,806 1,945 1,956 1,891 1,927 1,876 1,937 23 Personal loans 13,176 13,386 14,480 1,302 1,392 1,406 1,365 1,380 1,314 1,367 24 Finance companies, total 23,796 20,657 24,087 2,228 2,354 2,307 2,188 2,289 2,309 2,361 25 Personal loans 17,162 16,944 19,579 1,755 1,863 1,833 1,744 1,850 1,836 1,870 26 Credit unions 8,560 10,134 12,340 1,127 1,207 1,264 1,233 1,225 1,113 1,207 27 Retailers 27,034 27,049 29,188 2,580 2,615 2,721 2,728 2,806 2,951 2,840 28 Others 1,463 1,642 1,830 156 171 188 193 187 175 214 Liquidations^ 29 Total 147,920 156,665 172,795 15,594 15,503 15,840 15,803 16,331 16,098 16,471 By holder: 30 Commercial banks 68,630 74,491 83,376 7,540 7,493 7,680 7,789 7,753 7,923 7,897 31 33,330 31,263 33,384 2,952 2,943 3,053 2,899 3,261 2,811 3,138 32 Credit unions 17,334 20,325 23,707 2,157 2,176 2,225 2,195 2,250 2,295 2,333 33 Retailers i 25,496 26,980 28,138 2,566 ?,502 2,497 2,518 2,662 2,665 2,670 34 Others 2 3,130 3,606 4,191 378 389 384 401 405 404 433 By type of credit: 35 44,929 48,406 52,750 4,792 4,809 ' 4,882 4,785 5,080 4,871 5,074 36 Commercial banks 26,915 28,014 30,154 2,787 2,773 2,769 2,780 2,761 2,943 2,862 37 Indirect 15,886 16,101 17,059 1,513 1,527 1,495 1,509 1,489 1,601 1,552 38 Direct 11,029 11,913 13,095 1,274 1,246 1,274 1,271 1,272 1,342 1,310 39 Finance companies 8,720 9,142 9,875 840 868 939 856 1,127 688 970 40 Credit unions. 8,892 10,811 12,253 1,126 1,124 1,133 1,106 1,146 1,194 1,197 41 Others 402 439 468 40 44 41 43 45 46 45 42 Mobile homes 4,715 4,517 4,691 415 386 407 420 385 395 421 43 Commercial banks 2,854 2,944 2,986 248 252 258 262 239 245 261 44 Finance companies 1,210 837 867 93 57 72 74 68 68 73 45 4,117 4,675 5,151 477 478 479 501 503 504 548 46 Commercial banks 2,178 2,451 2,657 241 238 244 250 252 252 267 Revolving credit: 47 Bank credit cards 15,655 19,208 24,012 2,198 2,136 2,288 2,416 2,385 2,361 2,372 48 Bank check credit 3,684 4,010 4,552 420 420 413 400 All 455 445 49 All other 74,821 75,849 81,638 7,292 7,273 7,371 7,282 7,551 7,510 7,611 50 Commercial banks, total 17,345 17,864 19,014 1,646 1,673 1,708 1,682 1,689 1,666 1,689 51 Personal loans 12,278 12,528 13,439 1,176 1,192 1,224 1,219 1,224 1,197 1,230 52 Finance companies, total 23,050 21,005 22,578 2,016 2,013 • 2,037 1,961 2,063 2,049 2,089 53 Personal loans 16,676 16,665 18,289 1,577 1,583 1,614 .1,560 1,666 1,609 1,684 54 Credit unions 7,613 8,554 10,295 922 943 983 975 986 984 1,008 55 Retailers 25,496 26,980 28,138 2,566 2,502 2,497 2,518 2,662 2,665 2,670 56 Others 1,318 1,446 1,613 141 143 145 146 151 146 155 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

A46 Domestic Nonfinancial Statistics • October 1977 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-year data are at seasonally adjusted annual rates. 1975 1976 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 1971 1972 1973 1974 1975 1976 HI H2 HI H2 Nonfinancial sectors I Total 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 .7 274.4 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. 168 .4 82 111.4 152.. 9 754.0 11 12 Debt capital instruments 86.8 102.. 3 105.. 0 98 .7 95. • S 122 .7 93 .8 97.8 Ill .7 733.7 12 13 State and local obligations 17.4 14 .7 14 .1 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 i. .3 45 .7 -77 .0 13.6 41 .2 50.3 19 20 Consumer credit 13.1 18,. 9 22. .0 10 .2 9,A 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 7(97,. 0 179.. 0 95 .7 120.9 166 .2 191.7 24 25 State and local governments 11.1 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. 20 .i 7 .9 18.2 75 .7 25.5 32 33 Bonds .9 1 .0 1 .0 2 .1 6,. 2 8 .4 _5 .7 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 .4 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 .7 13.. 5 18.. 6 14 .5 12.6 18 .5 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 ""p'.y ""lb .7 16 .3 10 .0 .6 .2 9 .7 10.8 42 43 Corporate equities 3.5 2 .8 1,. 5 .3 * .7 . 1 —. 1 —. .7 2.2 43 44 Debt instruments 6.0 17 .1 30 .2 16 .0 .4 9 .2 .6 .3 9 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 .1 -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 Mortgage pools 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 70 .6 .2 9 .7 10.8 52 53 Commercial banks 2.4 4 .8 8 . 1 — 1. 1 1!. 7 7 .4 5 .1 -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 -1. .0 -2 .8 -2 .0 -1.9 -2 .5 -3.0 59 60 Open-end investment companies 1.3 —, .5 — 1.,2 — .7 —. -1 .0 .7 -.9 -2, .5 .5 60 61 Money market funds 2 .4 1 !!33 .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 Debt instruments 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 Mortgages 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 Bank loans n.e.c 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 Other loans 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 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 financial institutions 110.3 149.7 164.9 126.3 119.9 187.3 99.8 140.0 167.6 207.1 19 20 Commercial banking 50.6 70.5 86.5 64.6 27.6 58.0 14.4 40.7 44.5 71.5 20 21 Savings institutions 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 25 Private domestic deposits 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 28 Foreign funds -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 31 Other, net 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 2.9 12.5 4.8 3.1 4.0 1.5 4.7 6.7 1.3 36 37 Other ~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 19.\ 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 and currency 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 50 Total net issues 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 52 Other equities 13.7 13.8 10.4 4.8 10.2 12.2 9.8 10.5 15.1 9.3 52 5 5 3 4 O Ac th q e u r i s n it e io t n p s u r b c y h a f s in e a s n cial institutions - 1 4 9 .3 .2 - 1 2 5 .1 .3 - 1 4 3 .1 .3 -1 5 . . 6 8 9. . 4 6 - 1 1 2 .1 .3 1 - 0 .2 .7 8 1 . . 1 4 12.6* - 1 2 2 .2 .0 5 5 4 3 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 II. 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 • October 1977 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1977 Measure 1974 1975 1976 Feb. Mar. Apr. May June July Aug. Sept. 1 Industrial production 129.3 117.8 129.8 133.2 135.3 136.1 137.0 137.8 138.8 138.2 138.8 Market groupings: 2 Products, total 129.3 119.3 129.3 133.6 135,1 135.8 136.5 137.3 138.6 138.1 138.5 3 Final, total 125.1 118.2 127.2 131.6 133.3 134.1 134.7 135.4 136.5 136. 1 136.4 4 Consumer goods 128.9 124.0 136.2 140.5 142.9 142.9 143.1 143.8 145.0 144.2 144.6 5 Equipment 120.0 110.2 114.6 119.2 120.0 122.1 123.2 124.1 124.8 125.0 125.2 6 Intermediate 135.3 123.1 137.2 141.6 141.8 142.3 143.5 144.7 146.2 145.9 146.3 7 Materials 132.4 115.5 130.6 132.7 135.5 136.5 137.8 138.7 139.0 138.5 139.3 Industry groupings: 8 Manufacturing 129.4 116.3 129.5 132.6 135.1 135.8 137.1 137.8 138.5 138.6 138.9 Capacity utilization (per cent) i in— 9 Manufacturing 84.2 73.6 80.2 80.9 82.1 82.2 82.8 83.0 83. 1 82.9 82.9 10 Industrial materials industries 87.7 73.6 80.4 80.2 81.6 82.1 82.7 83.0 83.0 82.6 82.8 11 Construction contracts 2 173.9 162.3 190.2 212.0 207.0 250.0 317.0 284.0 218.0 268.0 12 Nonagricultural employment, total3 119.1 116.9 120.6 122.7 123.6 124.0 124.4 124.7 125.1 125.2 125.7 13 Goods-producing, total 106.2 96.9 100.3 101.9 103.2 104.1 104.5 104.7 104.9 '•104.4 104.7 14 Manufacturing, total 103.1 94.3 97.5 98.9 99.8 100.4 100.8 100.9 101.0 MOO.7 100.9 15 Manufacturing, production-worker 102.1 91.3 95.2 96.5 97.6 98.3 98.9 98.9 '-98.8 98.3 98.5 16 Service-producing 126.1 127.8 131.7 134.1 134.8 134.9 135.3 135.6 136. 1 '•136.6 137.1 17 Personal income, totaH 184.3 200.0 220.7 235.7 239.2 241.0 242.1 243.3 245.6 246.9 248.8 18 Wages and salary disbursements 178.9 188.5 208.6 222.6 225.7 227.9 229.7 230.8 232.3 '•232.9 234.6 19 Manufacturing 157.6 157.3 177.7 190.4 194.4 196.0 198.5 200.4 201.2 -•200.1 201.5 20 Disposable personal income 180.8 199.2 217.8 235.4 239.4 21 Retail sales 5 171.2 186.0 206.6 222.3 227.4 227.2 226.1 223.1 224.9 228.3 225.5 Prices: 6 22 Consumer 147.7 161.2 170.5 177.1 178.2 179.6 180.6 181.8 182.6 183.3 23 Wholesale 160.1 174.1 182.9 190.0 191.9 194.3 195.2 194.4 194.9 194.6 195.3 1 Ratios of indexes of production to indexes of capacity. Based on data 6 Data without seasonal adjustment, as published in Monthly Labor from Federal Reserve, McGraw-Hill Economics Department, and De- Review (U.S. Dept. of Labor). Seasonally adjusted data for changes in partment of Commerce. the price indexes may be obtained from the Bureau of Labor Statistics, 2 Index of dollar value of total construction contracts, including U.S. Dept. of Labor. residential, nonresidential, and heavy engineering, from McGraw-Hill Informations Systems Company, F. W. Dodge Division. NOTE.—Basic data (not index numbers) for series mentioned in notes 3 Based on data in Employment and Earnings (U.S. Dept. of Labor). 3, 4. and 5, and indexes for series mentioned in notes 2 and 6 may also be Series covers employees only, excluding personnel in the Armed Forces. found in the Survey of Current Business (U.S. Dept. of Commerce). 4 Based on data in Survey of Current Business (U.S. Dept. of Com- Figures for industrial production for the last 2 months are preliminary merce). Series for disposable income is quarterly. and estimated, respectively. 5 Based on Bureau of Census data published in Survey of Current Business (U.S. Dept. of Commerce). 2.11 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1976 1977 1976 1976 1977 r Series Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Output (1967 = 100) Capacity (per cent of 1967 output) Utilization rate (per cent) 1 Manufacturing 131.2 133.1 136.9 138.7 162.8 164.0 165.6 167.1 80.6 81.2 82.7 83.0 2 Primary processing 138.9 140.1 146.3 148.1 168.8 170.2 171.8 173.5 82.3 82.3 85.1 85.4 127.2 129.4 132.0 133.7 159.6 '•160.6 160.7 163.8 79.7 80.5 81.4 81.7 3 Advanced processing 131.9 133.1 137.7 138.9 164.3 165.5 166.6 167.8 80.3 80.4 82.6 82.8 4 Materials 128.4 129.2 135.1 136.6 167.8 169.0 170.3 171.6 76.5 76.5 79.4 79.6 5 Durable goods 107.4 108.6 116.4 144.4 144.8 145.1 74.4 75.0 80.2 6 Basic metal 146.9 149.5 154.6 154.9 174. 1 175.6 177.2 178.8 84.4 85.1 87.2 86.7 7 Nondurable goods 151.4 153.9 159.9 159.8 182.0 183.6 185.4 187. 1 83.2 83.8 86.3 85.4 8 Textile, paper, and chemical 112.1 111.3 110.9 140.6 141.4 141.9 79.7 78.7 78.1 9 Textile 130.2 131.7 134.3 147.9 148.9 150.1 88.1 88.4 89.5 10 Paper 177.3 181.6 191.8 213.7 216.2 218.7 83.0 84.0 87.7 11 Chemical 122.0 122.0 122.6 124.7 143.9 144.3 144.7 145.2 84.8 84.5 84.8 85.9 12 Energy Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Labor Market A47 2.12 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1977 Category 1974 1975 1976 Mar. Apr. May June July Aug. Sept. Household survey data 1 Noninstitutional population ^ 150,827 153,449 156,048 157,782 157,986 158,228 158,456 158,682 158,899 159,114 2 Labor force (including Armed Forces) i 93,240 94,793 96,917 98,677 98,892 99,286 99,770 99,440 99,834 99,999 3 Civilian labor force 91,011 92,613 94,773 96,539 96,760 97,158 97,641 97,305 97,697 97,868 Employment: 4 Nonagricultural industries 2... . 82,443 81,403 84,188 86,359 86,763 87,022 87,341 87,348 87,519 87,880 5 Agriculture 3,492 3,380 3,297 3,116 3,260 3,386 3,338 3,213 3,252 3,215 Unemployment: 6 Number 5,076 7,830 7,288 7,064 6,737 6,750 6,962 6,744 6,926 6,773 7 Rate {per cent of civilian labor force) 5.6 8.5 7.7 7.3 7.0 6.9 7.1 6.9 7.1 6.9 8 Not in labor force 57,587 58,655 59,130 59,104 59,094 58,943 58,686 59,242 59,064 59,114 Establishment survey data 9 Nonagricultural payroll employment 3 78,413 77,050 79,443 81,395 81,686 81,921 82,121 ^^82,366 '^82,459 82,750 10 Manufacturing 20,046 18,347 18,958 19,404 19,528 19,600 19,622 '•19,648 '•19,580 19,618 11 Mining 694 745 783 842 847 845 855 '•834 '•825 846 12 Contract construction 3,957 3,515 3,593 3,759 3,842 3,861 3,876 '•3,917 >•3,884 3,888 13 Transportation and public utilities. 4,696 4,499 4,508 4,568 4,575 4,586 4,579 '•4,572 '•4,583 4,590 14 Trade 17,017 16,997 17,694 18,189 18,203 18,235 18,247 '•18,294 '•18,356 18,427 15 Finance 4,208 4,222 4,315 4,453 4,463 4,480 4,489 '•4,506 '•4,520 4,543 16 Service 13,617 14,008 14,645 15,149 15,182 15,197 15,245 '•15,372 '•15,461 15,534 17 Government 14,177 14,773 14,947 15,031 15,046 15,117 15,208 '•15,223 '•15,250 15,304 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 figu^jes. 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 • October 1977 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value Monthly data are seasonally adjusted. 11996677 1976 1977 GGrroouuppiinngg pprroo-- 11997766 ppoorr-- aavveerr-ttiioonn aaggee July Aug. ^ Sept. Feb. Mar. Apr. May June July Aug.2' Sept." Index (1967 = 100) MAJOR MARKET 1 Total index 100.00 129.8 130.7 131.3 130.6 133.2 135.3 136.1 137.0 137.8 138.8 138.2 138.8 2 Products 60.71 129.3 129.7 130.1 129.4 133.6 135.1 135.8 136.5 137.3 138.6 138.1 138.5 3 Final products 47.82 127.2 127.4 128.0 126.9 131.6 133.3 134.1 134.7 135.4 136.5 136.1 136.4 4 Consumer goods 27.68 136.2 136.1 137.0 135.7 140.5 142.9 142.9 143.1 143.8 145.0 144.2 144.6 5 Equipment 20.14 114.6 115.3 115.6 114.8 119.2 120.0 122.1 123.2 124.1 124.8 125.0 125.2 6 Intermediate products 12.89 137.2 138.4 138.4 138.7 141.6 141.8 142.3 143.5 144.7 146.2 145.9 146.3 7 Materials 39.29 130.6 132.1 133.0 132.4 132.7 135.5 136.5 1378. 138.7 139.0 138.5 139.3 Consumer goods 8 Durable consumer goods 7.89 141.4 141.5 144.2 138.7 146.1 152.4 151.5 152.2 155.8 157.7 154.7 155.1 9 Automotive products 2.83 154.8 156.1 157.8 147.6 161.7 178.3 173.9 172.8 179.8 184.3 177.7 178.2 10 Autos and utility vehicles 2.03 149.8 155.3 157.5 139.2 152.7 176.1 171.2 167.4 177.4 183.9 173.7 174.7 11 Autos 1.90 132.0 134.4 137.3 121.0 132.8 155.8 150.6 148.5 156.8 161.4 150.9 151.7 12 Auto parts and allied goods .80 167.6 158.3 158.4 168.6 184.3 184.1 181.3 186.6 185.8 185.5 187.0 187.5 13 Home goods 5.06 133.9 133.4 136.5 133.8 137.3 137.9 138.8 140.6 142.3 142.8 141.7 142.1 14 Appliances, A/C, and TV 1.40 114.6 106.9 120.5 113.1 118.5 124.1 126.4 131.0 133.1 130.1 129.2 129.2 15 Appliances and TV 1.33 117.2 110.4 123.2 116.6 121.1 126.5 129.9 134.8 136.8 134.4 132.7 16 Carpeting and furniture 1.07 144.1 142.7 145.0 146.3 146.0 144.6 145.0 147.3 151.2 154.1 153.8 17 Misc. home goods 2.59 140.1 143.9 141.7 139.8 144.0 142.7 143.0 143.1 143.6 145.0 143.4 'i44!6 18 Nondurable consumer goods. • 19.79 134.1 134.0 134.2 134.5 138.3 139.1 139.4 139.5 139.1 140.1 139.9 140.2 19 Clothing 4.29 124.0 123.4 120.7 121.5 123.6 123.9 124.4 125.5 125.7 124.1 20 Consumer staples 15.50 136.9 136.9 137.9 138.0 142.2 143.3 143.6 143.4 142.9 144.6 "lAA.'e •i45!6 21 Consumer foods and tobacco 8.33 130.7 131.6 131.9 132.6 133.3 136.0 136.1 135.0 135.4 137.0 137.6 22 Nonfood staples 7.17 144.1 143.2 144.9 144.2 152.6 151.8 152.5 153.2 151.7 153.3 152.8 153.2 23 Consumer chemical products 2.63 166.4 164.5 168.9 169.2 175.7 175.9 178.1 180.8 179.3 179.4 181.3 24 Consumer paper products 1.92 113.3 112.8 113.9 111.9 113.3 117.4 116.6 118.4 116.3 117.4 117.3 25 Consumer energy products 2.62 144.4 144.0 143.3 142.9 158.3 152.8 153.0 150.8 149.8 153.6 150.3 26 Residential utilities 1.45 151.1 150.7 149.3 148.4 167.1 Equipment 27 Business equipment 12.63 136.3 137.9 137.6 137.0 143.5 144.8 147.1 148.9 150.1 151.1 150.9 151.3 28 Industrial equipment 6.77 128.0 128.7 128.1 129.5 133.2 134.4 136.3 138.4 140.0 140.7 140.6 141.0 29 Building and mining equipment. . . 1.44 177.7 179.1 180.3 180.3 192.9 197.9 200.5 205.3 208.1 210.6 207.1 208.0 30 Manufacturing equipment.... 3.85 106.5 107.5 107.2 108.2 108.5 109.0 112.0 112.8 115.0 114.3 115.1 115.7 31 Power equipment 1.47 135.3 134.9 132.2 135.8 139.3 138.3 136.7 139.9 139.0 141.2 142.4 141.8 32 Commercial transit, farm equipment. 5.86 145.8 148.7 148.6 145.8 155.3 156.9 159.5 161.2 161.9 163.0 162.9 163.2 33 Commerical equipment 3.26 173.5 174.9 176.2 176.8 185.6 186.1 189.7 191.1 191.4 191.7 191.9 192.7 34 Transit equipment 1.93 104.1 108.4 106.4 98.2 108.7 113.0 115.2 116.5 118.5 120.6 121.2 121.0 35 Farm equipment .67 131.4 137.5 136.7 131.4 142.5 141.8 141.0 144.4 143.2 144.6 141.8 36 Defense and space equipment 7.51 78.4 77.5 78.5 77.6 78.5 78.5 79.9 80.0 80.3 80.5 81.1 81.4 Intermediate products 37 Construction supplies 6.42 132.6 134.1 134.9 134.1 135.6 136.4 137.2 138.7 139.9 141.1 140.9 141.6 38 Business supplies 6.47 141.8 142.7 141.8 143.2 147.6 147.3 147.5 148.4 149.6 151.3 150.9 39 Commercial energy products 1.14 157.1 159.2 157.7 157.5 164.9 163.6 164.6 165.8 164.2 168.2 165.3 Materials 40 Durable goods materials 20. SS 126.8 131.0 131.4 129.9 128.4 131.9 133.8 135.2 136.4 136.9 136.1 136.8 41 Durable consumer parts 4.58 121.6 126.1 125.9 123.6 124.1 126.8 129.4 132.0 134.5 137.1 136.9 137.4 42 Equipment parts 5.44 133.9 136.3 138.1 138.3 137.3 137.8 140.7 141.7 143.0 145.1 145.4 146.2 43 Durable materials n.e.c 10.34 125.5 130.4 130.6 128.3 125.5 131.1 132.2 133.2 133.8 132.4 130.9 131.7 44 Basic metal materials 5.57 110.9 118.6 120.0 113.7 105.5 113.6 115.0 117.8 116.3 112.6 110.3 45 Nondurable goods materials 10.47 146.3 145.1 146.3 147.6 150.4 153.3 153.7 155.4 154.7 154.3 155.0 155.5 46 Textile, paper, and chem. mat 7.62 151.1 149.3 150.6 152.4 153.9 158.4 159.0 160.7 160.1 159.2 160.0 160.2 47 Textile materials , 1.85 115.1 115.9 114.9 114.6 109.8 113.2 111.8 111.8 109.0 110.2 112.1 48 Paper materials 1.62 130.8 129.1 132.2 131.2 133.5 133.9 132.2 136.2 134.4 134.3 135.8 49 Chemical materials 4.15 175.1 172.2 173.5 177.6 181.6 188.0 190.6 192.2 192.7 190.9 191.0 50 Containers, nondurable 1.70 142.7 142.8 143.9 143.5 150.2 148.9 148.5 152.3 152.4 152.4 154.9 51 Nondurable materials n.e.c 1.14 119.9 120.4 121.7 122.1 126.8 126.1 125.6 123.1 122.9 124.4 122.1 52 Energy materials 8.48 120.2 118.8 120.1 119.9 120.8 121.8 121.3 122.3 124.3 125.2 123.8 53 Primary energy 4.65 107.1 106.7 107.9 108.4 103.1 107.0 106.0 106.6 109.7 109.1 108.9 54 Converted fuel materials . 3.82 136.2 133.5 134.9 134.2 142.4 139.9 140.1 141.4 142.0 144.6 142.0 Supplementary groups 55 Home goods and clothing 9.35 129.4 128.8 129.2 128.1 131.0 131.5 132.2 133.6 134.7 134.2 133.2 133.4 56 Energy, total . 12.23 128.8 128.0 128.5 128.3 132.9 132.3 132.1 132.5 133.5 135.3 133.4 134.6 57 Products . 3.76 148.2 148.5 147.7 147.3 160.3 156.0 156.5 155.3 154.1 158.0 154.9 58 Materials . 8.48 120.2 118.8 120.1 119.9 120.8 121.8 121.3 122.3 124.3 125.2 123.8 For NOTE see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Output A49 2.13 Continued 11996677 1976 1977 GGrroouuppiinngg SSIICC pprroo-- 11997766 ccooddee ppoorr-- aavveerr-ttiioonn aaggee July Aug.'" Sept. »• Feb. Mar. Apr. May June*" July Aug.P Sept.® Index (1967 = 100) MAJOR INDUSTRY 1 Mining and utilities. 12.05 131.6 130.3 131.3 131.6 137.1 136.6 135.7 137.1 138.8 139.2 135.9 137.8 2 Mining 6.36 114.2 112.7 114.0 115.5 116.3 120.6 119.2 119.5 122.8 120.0 117.0 120.4 3 Utilities 5.69 151.0 150.0 150.5 149.6 160.3 154.8 154.0 156.7 156.8 160.7 156.9 157.2 4 Electric 3.88 167.6 166.8 167.6 166.0 179.1 5 Manufacturing. 87.95 129.5 130.7 131.2 130.5 132.6 135.1 135.8 137.1 137.8 138.5 138.6 138.9 6 Nondurable., 35.97 140.9 140.3 140.4 142.3 145.3 147.0 147.0 148.5 148.4 148.6 149.1 149.2 7 Durable 51.98 121.7 124.0 125.0 122.4 124.0 126.8 128.0 129.3 130.5 131.5 131.2 131.9 Mining 8 Metal mining 10 .51 122.8 124.2 124.5 123.2 128.5 133.8 126.1 120.5 121.3 101.9 70.3 9 Coal 11,12 .69 117.2 104.8 112.6 121.3 100.8 124.1 118.4 122.4 133.4 120.7 113.6 133.0 10 Oil and gas extraction 13 4.40 112.0 111.9 112.2 113.1 115.8 117.5 117.5 118.3 121.3 120.8 121.5 121.7 11 Stone and earth minerals. 14 .75 118.3 116.5 118.8 119.2 124.9 126.1 124.0 123.0 122.5 126.7 125.7 Nondurable manufactures 12 Foods 8.75 132.3 134.5 134.8 134.6 136.4 138.7 138.0 138.3 136.9 138.2 139.0 13 Tobacco products .67 117.9 114.5 114.8 115.4 116.8 104.3 112.1 105.2 119.2 114.5 14 Textile mill products 2.68 136.4 137.7 135. 136.4 132.3 134.4 134.6 136.0 135.4 137.3 135.2 15 Apparel products 3.31 122.2 120.2 117.5 119.5 124.4 122.2 121.4 123.5 122. 121.1 16 Paper and products 3.21 133.0 131.0 134.6 132.1 136.5 135.5 136.3 139.5 139.3 139.1 140.'5 140.9 17 Printing and publishing 4.72 120.6 121.2 120.6 120.6 122.4 124.8 123.4 124.4 124.1 124.9 124.7 125.3 18 Chemicals and products. ... 7.74 169.3 167.6 169.7 171.3 174.9 180.0 180.6 182.8 183.5 182.5 183.0 19 Petroleum products 1.79 133.1 134. 133.8 133.9 145.2 143.3 143.4 142.4 140.0 140.3 139.1 i46.'6 20 Rubber & plastic products. 2.24 200.2 191.2 189.3 212.4 220.3 225.6 226.0 232.4 235.2 235.2 239.5 21 Leather and products .86 80.9 81.1 78.3 77.9 75.0 73.8 74.7 76.2 74. 74.1 75.1 Durable manufactures 22 Ordnance, pvt. & govt.... 19,91 3.64 72.7 72.9 73.6 73.0 72.6 72.8 74.6 74.4 74.1 75.0 76.2 75.2 23 Lumber and products 24 1.64 125. 124.6 127.9 128.7 132.2 132.1 130.6 133.0 132.4 134.0 134.6 24 Furniture and fixtures 25 1.37 132.7 131.6 133.8 133.6 137. 135.1 135.4 137.5 139.9 143.0 140.5 25 Clay, glass, stone products. 32 2.74 137.1 137.5 137.6 137.9 139.0 143.7 145.0 145.0 147.7 147.9 147.3 26 Primary metals 33 6.57 108.9 117.7 118.3 113.0 100.2 108.3 112.2 117. 114.7 114.4 114.1 114.5 27 Iron and steel 331,2 4.21 104.9 115.0 116.0 108.6 91.3 97.9 103.9 111.0 109.2 110.9 111.0 28 Fabricated metal products. 34 5.93 123.3 124.6 125.8 126.5 125.8 127.5 127.6 128.2 130.8 131.7 134.0 134.8 29 Nonelectrical machinery... 35 9.15 135.0 137.9 136.4 136.8 139.8 139.8 142.9 142.6 144.0 145.7 144.8 145.5 30 Electrical machinery 36 8.05 131.6 131.4 135.4 133.9 137.6 137.6 139.6 141.8 142.6 143.6 143.3 143.8 31 Transportation equipment 37 9.27 110.6 112.8 114.6 104.7 113.4 120.5 119.8 120.3 123.7 125.4 123.5 125.0 32 Motor vehicles & parts 371 4.50 140.7 147.5 149.7 130.6 145.4 161.2 158.1 157.7 163.2 165.8 164.1 166.6 33 Aerospace & misc. tr. eq 372-9 4.77 82.2 80.2 81.6 80.3 83.3 82.3 83.8 85.2 86.5 87.2 85.2 86.0 34 Instruments 38 2.11 148.2 151.3 149.5 148.7 157.0 156.9 157.8 157.4 158.2 159.2 158.5 159.0 35 Miscellaneous mfrs 39 1.51 143.5 148.4 142.3 143.7 147.9 147.4 145.6 148.0 148.4 150.4 147.6 148.2 Gross value (billions of 1972 dollars, annual rates) MA.10R MARKET 36 Products, total 1507.4 5S0.4 552.7 555.5 548.2 569.4 578.2 578.3 582.2 585.9 589.0 587.6 589.2 37 Finai products iSPO.P 425.7 427.1 429.8 421.5 441.1 449.0 448.5 451.0 453.7 456.5 454.7 455.6 38 Consumer goods. 1277.5 301.6 301.4 303.5 299.4 312.2 316.8 316.1 316.3 318.9 320.8 318.9 319.2 39 Equipment 1113.4 124.0 125.7 126.4 121.9 128.9 132.1 132.6 134.6 134.9 135.7 135.7 136.4 40 Intermediate products. 1116.6 124.8 125.5 126.0 126.6 128.4 129.1 130.1 131.4 131.8 132.7 133.1 133.5 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

A46 Domestic Nonfinancial Statistics • October 1977 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates. Exceptions noted. 1977 Item 1974 1975 1976 Feb.'' Mar. ApT.r May June*- July Aug.P Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,074 927 1,296 1,526 1,687 1,605 1,615 1,678 1,639 .1,768 2 1-family 644 669 894 1,060 1,188 1,051 1,077 1,105 1,089 1,138 3 2-or-more-family 431 278 402 466 499 554 538 573 550 630 4 Started 11,,333388 1,160 1,540 1,802 2,089 1,880 1,937 1,897 2,076 2,022 5 1-family 888888 892 1,163 1,424 1,503 1,413 1,455 1,389 1,446 1,440 6 2-or-more-family 450 268 377 378 586 467 482 508 630 582 7 Under construction, end of period 1,189 1,003 '1,147 1,215 1,237 1,268 1,302 1,324 1,347 8 1-famiIy 516 531 '•655 710 732 748 111 788 796 9 2-or-more-family 673 All r492 505 505 520 532 536 551 10 Completed 1,692 1,297 1,362 1,637 1,707 1,540 1,536 1,638 1,648 11 1-family 931 866 1,026 1,242 1,236 1,226 1,177 1,198 1,251 12 2-or-more-family 760 430 336 395 471 314 359 440 397 13 Mobile homes shipped 329 213 250 275 275 252 251 264 251 253 Merchant builder activity in 1-family units: 14 Number sold 501 544 639 893 867 775 111 799 672 15 Number for sale, end of period i. 407 383 433 434 435 441 441 444 454 Price (thous. of dollars) 2 Median: 16 Units sold 35.9 39.3 44.2 47.4 46.2 48.7 49.4 48.9 49.1 17 Units for sale 36.2 38.9 41.6 42.1 42.9 43.3 43.9 44.4 44.8 Average: 18 Units sold 38.9 42.5 48.1 52.6 51.6 54.6 54.4 54.1 53.9 55.0 EXISTING UNITS (1-family) 19 Number sold 2,272 2,452 3,002 3,080 3,410 3,300 3,450 3,420 3,510 3,720 Price of units sold (thous. of dollars): 2 20 Median 32.0 35.3 38.1 40.7 41.0 42.0 42.2 43.4 43.7 43.9 21 Average 35.8 39.0 42.2 45.1 45.5 46.5 46.8 47.7 48.0 48.1 Value of new construction 3 (millions of dollars) CONSTRUCTION 22 Total put in place. 138,499 134,293 147,481 156,879 163,790 167,605 172,239 174,378 172,512 170,893 23 Private 100,165 93,624 109,499 122,395 128,387 131,421 133,816 135,026 133,358 133,321 24 Residential 50,377 46,472 60,519 72,124 76,677 79,616 82,542 82,181 79,977 79,670 25 Nonresidential, total 49,788 47,152 48,980 50,271 51,710 51,805 51,274 52,845 53,381 53,651 Buildings: 26 Industrial 7,902 8,017 7,182 6,262 7,162 7,279 7,184 7,066 7,210 7,881 27 Commercial 15,945 12,804 12,757 12,542 13,677 13,851 13,760 15,235 15,533 15,232 28 Other 5,797 5,585 6,155 6,061 5,850 6,271 6,077 6,206 6,474 6,423 29 Public utilities and other. 20,144 20,746 22,886 25,406 25,021 24,404 24,253 24,338 24,164 24,115 30 Public 38,333 40,669 37,982 34,483 35,403 36,184 38,423 39,352 39,154 37,572 31 Military 1,188 1,392 1,508 1,552 1,452 1,494 1,642 1,566 1,537 1,448 32 Highway 12,066 10,861 9,756 8,416 9,153 9,052 9,835 10,792 9,067 33 Conservation and development... 2,740 3,256 3,722 3,871 3,675 4,012 3,562 3,196 4,235 34 Other4 22,339 25,160 22,996 20,644 21,123 21,626 23,384 23,798 24,315 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 availsee 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 Item 1976 1977 1977 Aug. 1976 1977 1977 Aug. Aug. (1967 Sept. Dec. Mar. June Apr. May June July Aug. = 100) Consumer prices 1 All items 5.6 6.6 5.3 4.2 10.0 8.1 .8 .6 .6 .4 .3 183.3 2 Commodities 3.9 5.8 3.9 3.4 10.4 7.4 .8 .5 .5 .1 .i 176.3 3 Food 2.4 7.0 1.6 14.6 12.7 1.5 .7 .8 .1 .3 195.2 4 Commodities less food 4.8 5.1 5.5 '"s.Y 7.4 4.2 .4 .4 .2 .1 .3 166.0 5 Durable 6.0 5.1 5.0 6.0 10.5 2.5 .5 .2 -.1 0.0 .1 164.3 6 Nondurable 4.0 5.2 6.0 5.4 5.5 5.2 .3 .5 .4 •3 .4 167.3 7 Services 8.6 8.0 7.5 5.1 9.8 9.4 .8 .7 .8 .8 .5 196.3 8 Rent 5.5 6.0 5.4 5.3 6.3 6.3 .7 .4 .5 .6 .5 154.4 9 Services less rent 9.1 8.2 7.7 5.4 10.4 9.7 .8 .7 .8 .8 .5 203.9 Other groupings: 10 All items less food i 6.7 6.5 7.4 5.3 6.9 7.8 .7 .6 .6 .4 .4 179.9 11 All items less shelter i 5.5 6.5 5.6 4.3 9.4 8.4 .8 .5 .7 .3 .3 180.8 12 Homeownership i 5.8 7.2 8.0 1.2 9.1 9.6 .9 .6 .8 1.1 .6 207.4 Wholesale prices 13 All commodities 4.0 5.9 3.5 7.1 10.2 3.6 1.1 .4 -.7 -.1 .1 194.6 14 Farm products, and processed foods and feeds -3.9 1.4 -12.0 6.6 19.1 -2.5 2.9 .3 -3.6 -2.1 -2.1 184.2 15 Farm products -1.8 -4.5 -11.9 5.8 26.0 -21.6 3.4 -2.3 -6.8 -1.8 -4.3 181.2 16 Processed foods and feeds -5.2 4.8 -11.8 6.5 15.6 10.8 2.5 1.8 -1.7 -2.4 -.8 185.1 17 Industrial commodities 6.7 7.1 8.0 7.6 7.9 5.3 .6 .4 .3 .5 .5 196.9 Materials, supplies, and components of which: 18 Crude materials 2 12.9 11.2 10.6 21.6 21.9 -2.0 .3 .8 -1.6 0.0 1.9 283.4 19 Intermediate materials 3 6.7 7.1 8.3 7.1 8.0 4.7 .6 .3 .2 .6 .5 204.9 Finished goods, excluding foods: 20 Consumer 5.5 6.4 7.7 5.2 8.5 6.5 .7 .5 .4 .2 .3 172.9 21 Durable 4.5 5.9 5.1 3.3 7.0 6.0 .7 .4 .3 .3 1.0 152.1 22 Nondurable 6.1 6.7 9.1 6.5 9.5 7.0 .7 .5 .5 .2 0.0 186.8 23 Producer 6.2 6.7 4.7 9.5 5.3 6.3 .6 .6 .4 .4 .4 184.7 MEMO: 24 Consumer foods -3.3 6.9 -13.1 8.4 12.7 13.8 2.5 2.1 -1.3 -.7 -.9 190.0 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

A46 Domestic Nonfinancial Statistics • October 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 Q1 Q2 Q3 Q4 QL Q2 Gross national product 1 Total 1,412.9 1,528.8 1,706.5 1,651.2 1,691.9 1,727.3 1,755.4 1,810.8 N,869.9 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 Nonfarm 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 ^-9.7 16 Exports 137.9 147.3 162.9 153.9 160.6 168.4 168.5 170.4 '•178.1 17 Imports 131.9 126.9 155.1 143.7 150.4 160.6 165.6 178.6 '•187.7 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 State and local 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 11,,440044..00 11,,554400..33 1,693.1 1,636.7 1,673.7 1,705.8 1,756.3 1,797.0 '•1,848.2 22 Goods 638.6 686.2 764.2 744.6 761.7 746.0 774.7 805.9 827.1 23 Durable goods 247.8 258.2 303.4 285.6 301.9 313.4 312.6 334.4 341.0 24 Nondurable 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 '•855.3 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 A,330.7 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 '•1,505.7 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 11.\ 38 Other labor income 55.6 64.9 75.9 71.7 74.5 77.3 80.0 83.2 86.7 39 Proprietors^ income^ 86.4 86.0 88.0 86.9 90.4 86.2 88.7 95.1 97.0 40 Business and professional i 60.9 62.8 69.4 66.9 68.8 70.0 72.0 74.3 77.3 41 Farmi 25.4 23.2 18.6 20.0 21.6 16.2 16.6 20.7 19.7 42 Rental income of persons 2 21.4 22.3 23.3 23.0 22.9 23.3 24.1 24.5 24.9 43 Corporate profits 1 83.6 99.3 128.1 126.5 129.2 133.5 123.1 125.4 '•140.2 44 Profits before tax 3 126.9 123.5 156.9 153.5 159.2 159.9 154.8 161.7 '•174.0 -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 88.4 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.—^wrvej' 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 Account 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^ income^ 86.2 86.0 88.0 86.9 90.4 86.2 88.7 95.1 97.0 10 Business and professional i 60.9 62.8 69.4 66.9 68.8 70.0 72.0 74.3 77.3 11 Farmi 25.4 23.2 18.6 20.0 21.6 16.2 16.6 20.7 19.7 12 Rental income of persons 2 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 27 Gross private saving 209.5 259.4 272.5 276.0 275.4 277.2 261.6 262.9 '^292.1 28 Personal saving 71.7 80.2 65.9 72.4 70.3 64.8 56.3 51.4 68.5 29 Undistributed corporate profits i .2 16.7 27.6 29.8 28.0 31.6 20.8 22.5 '•30.3 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 ^-14.9 35 Federal -10.7 -70.2 -54.0 -60.3 -46.2 -53.5 -55.9 -38.8 '•-40.3 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 ^276.1 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 '•-18.8 41 Statistical discrepancy ; 5.8 5.9 5.5 4.2 4.5 8.0 5.3 3.3 '•-1.2 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 • October 1977 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.^ 1976'' 191ir Item credits or debits 1974 1975 1976'- Q1 Q2 Q3 Q4 Ql Q2 1 Merchandise exports 98,306 107,088 114,694 27,000 28,380 29,603 29,711 29,458 30,488 2 Merchandise imports 103,673 98,043 124,014 28,343 29,955 32,411 33,305 36,561 38,347 3 Merchandise trade balance 2 -5,367 9,045 -9,320 -1,343 -1,575 -2,808 -3,594 -7,103 -7,859 4 Military transactions, net -2,083 -876 366 -65 -39 235 235 516 464 5 Investment income, net 8,744 5,954 9,808 2,437 2,280 2,667 2,424 3,252 3,401 6 Other service transactions, net 865 2,042 2,743 523 839 781 598 340 629 7 Balance on goods and services 3 2,160 16,164 3,596 1,552 1,505 875 -337 -2,995 -3,365 8 Remittances, pensions, and other transfers -1,714 -1,719 -1,878 -485 -459 -461 -473 -526 -505 9 U.S. Govt, grants (excluding military) -5,475 -2,893 -3,146 -544 -556 -1,475 -572 -637 -735 10 Balance on current account -5,028 11,552 -1,427 523 490 -1,061 -1,382 -4,158 -4,605 11 Not seasonally adjusted 1,458 621 -3,809 303 -3,409 -4,812 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 -909 -827 13 Change in U.S. official reserve assets {increase, —) -1,434 -607 2,530 -773 -1,578 -407 -228 -388 6 14 Gold -58 15 SDK's ••••-i72 ""-66 "" -78 ""-45 U ""-'is • • • • -29 ••••-83 16 Reserve position in IMF -1,265 -466 -2,212 -237 -798 -716 -461 '"-389 -80 17 Foreign currencies 3 -75 -240 -491 -794 327 718 59 169 18 Change in U.S. private assets abroad (increase, —) -25,960 -36,216 -9,254 -7,257 -6,597 -13,108 1,627 -10,952 19 Bank-reported claims -19,516 -13,532 -20,904 -3,630 -4,754 -3,372 -9,148 3,446 -5,426 20 Long-term -1,183 -2,357 -2,124 -289 -377 -978 -480 -306 -28 21 Short-term -18,333 -11,175 -18,780 -3,341 -4,377 -2,394 -8,668 3,752 -5,398 22 Nonbank-reported claims -3,221 -1,447 -1,986 -738 -1,004 723 -967 -722 -1,179 23 Long-term -474 -432 10 -191 145 66 -10 45 85 24 Short-term -2,747 -1,015 -1,996 -547 -1,149 657 -957 -767 -1,264 25 U.S. purchase of foreign securities, net -1,854 -6,236 -8,730 -2,460 -1,357 -2,743 -2,171 -692 -1,746 26 U.S. direct investments abroad, net -1,368 -6,264 -4,596 -2,427 -142 -1,205 -822 -404 -2,602 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 5,719 6,935 28 U.S. Treasury securities 3,282 4,408 9,333 1,998 2,166 1,260 3,909 5,149 4,757 29 Other U.S. Govt, obligations 902 905 566 68 316 66 116 100 588 30 Other U.S. Govt, liabilities 4 724 1,701 4,938 1,524 743 1,819 852 712 307 31 Other U.S. liabilities reported by U.S. banks 5,818 -2,158 893 -412 135 -599 1,769 -420 410 32 Other foreign official assets 5 254 2,104 2,215 669 691 524 331 178 873 33 Change in foreign private assets in the United States (increase, +) 22,631 7,376 16,575 3,009 3,333 5,132 5,102 -3,209 6,056 34 U.S. bank-reported liabilities. 16,017 628 10,982 672 3,528 1,774 5,008 -5,298 6,321 35 Long-term 9 -280 175 -105 -16 15 221 47 98 36 Short-term 16,008 908 10,807 111 3,544 1,699 4,787 -5,345 6,223 37 U.S. nonbank-reported liabilities 1,844 240 -616 161 -238 -297 -242 -374 -298 38 Long-term -90 334 -947 -233 -162 -241 -311 -229 -102 39 Short-term 1,934 -94 331 394 -16 -56 69 -145 -196 40 Foreign private purchases of U.S. Treasury securities, net 697 2,590 2,783 437 -592 3,026 -88 1,047 -1,273 41 Foreign purchases of other U.S. securities, net 378 2,503 1,250 1,030 131 68 21 879 820 42 Foreign direct investments in the LFnited States, net 3,695 1,414 2,176 709 504 561 403 537 486 43 Allocation of SDR's 44 Discrepancy "-l',5'55 "5',66b "9,866 "'3,372 "l',905 "i',268 "l',yi7 'y,388 45 Owing to seasonal adjustments 111 129 -2,622 1,780 -205 46 Statistical discrepancy in recorded data before seasonal . 524 adjustment -1,555 5,660 9,866 2,655 1,776 3,890 1,545 3,593 793 MEMO ITEMS : Changes in official assets: 47 U.S. official reserve assets (increase, —) -1,434 -607 -2,530 -773 -1,578 -407 228 -388 6 48 Foreign official assets in the U.S. (increase, +) 10,257 5,259 13,007 2,323 3,308 1,251 6,125 5,007 49 Changes in OPEC official assets in the U.S. (part of line 6,628 27 above 10,841 7,092 9,324 3,482 3,263 1,774 805 3,249 50 Transfers under military grant programs (excluded from 824 lines 1, 4, and 9 above) 1,817 2,217 386 50 86 156 94 46 28 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 (lA) basis. Differs from the Govt, interest payments from imports. Census basis primarily because the lA 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 Current 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 IItteemm 11997744 11997755 11997766 Feb. Mar. Apr. May June July Aug. 1 EXPOKTS of domestic and foreign merchandise excluding grant-aid shipments 97,908 107,130 114,802 9,808 10,072 9,970 10,395 10,112 10,150 9,563 2 GENEKAL IMPOKTS including merchandise for immediate consumption plus entries into bonded warehouses 100,252 96,115 120,678 11,674 12,459 12,593 11,616 12,932 12,476 12,232 3 Trade balance -2,344 +11,014 -5,876 -1,866 -2,387 -2,623 -1,221 -2,820 -2,326 -2,669 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.—FT 900 "Summary of U.S. Export and Import Merchandise Canada not covered in Census statistics, and (b) the exclusion of military Trade" (U.S. Dept. of Commerce, Bureau of the Census). 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1977 TTyyppee 11997744 11997755 11997766 Mar. Apr. May June July Aug. Sept.J' 1 Total 15,883 16,226 18,747 19,120 18,868 19,195 19,156 18,927 19,055 318,988 2 Gold stock, including Exchange Stabilization Fund i 11,652 11,599 11,598 11,658 11,658 11,658 11,658 11,658 11,658 11,658 3 Special Drawing Kights2 2,374 2,335 2,395 2,389 2,384 2,470 2,486 2,498 2,483 3 2,489 4 Keserve position in International Monetary Fund 1,852 2,212 4,434 4,812 4,720 4,972 4,920 4,716 4,859 3 4,776 5 Convertible foreign currencies 5 80 320 261 106 95 92 55 55 65 1 Gold held under earmark at F.R. Banks for foreign and international SDK 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. SDK 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 SDK's used prior to July 1974 (SDKl = $1.20635) total U.S. reserve assets as follows: $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; at end of Sept. amounted to $19,134; SDK holdings, $2,581, and reserve and $710 million on Jan. 1, 1972; plus net transactions in SDK's. position in IMF, $4,830. 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 • October 1977 3.13 SELECTED U.S. LIABILITIES TO FOREIGNERS Millions of dollars, end of period 1977 HHoollddeerr,, aanndd ttyyppee ooff lliiaabbiilliittyy 11997744 11997755 11997766 Feb. Mar. Apr. May June Julyf Aug.p 1 Total 119,164 126,552 151,356 149,241 151,871 157,020 161,224 163,096 168,545 166,087 2 Foreign countries 115,842 120,929 141,256 143,770 149,306 152,532 154,913 162,124 158,930 3 Official institutions^ 76,823 80,712 91,975 93,972 96,788 99,748 101,546 110033,,009999 107,150 107,560 4 Short-term, reported by banks in the United States. 2 53,079 49,530 53,619 54,910 56,046 57,486 58,260 57,413 60,059 56,773 U.S. Treasury bonds and notes: 5 Marketable 3 5,059 6,671 11,788 12,725 13,772 14,694 15,846 17,808 18,856 22,522 6 Nonmarketable4 1166,,333399 19,976 2200,,664488 20,495 21,106 2200,,997766 2200,,995500 20,917 2200,,883377 2200,,665555 7 Other readily marketable liabilities 5 2,346 4,535 5,920 5,842 5,864 6,592 6,490 6,961 7,398 7,610 Commercial banks abroad: 8 Short-term, reported by banks in the United States2,6 30,106 29,516 37,329 33,116 32,816 35,356 36,239 36,677 40,016 36,028 9 Other foreigners 8,913 10,701 1133,,556699 14,141 14,166 1144,,220022 1144,,774477 15,137 1144,,995588 1155,,226600 10 Short-term, reported by banks in the United States 2 8,415 10,000 12,592 13,120 13,008 12,873 13,393 13,615 1133,,337766 1133,,666666 11 Marketable U.S. Treasury bonds and notes3,7 498 701 977 1,021 1,158 1,329 1,354 1,522 1,582 1,676 12 Nonmonetary international and regional organization 8 33,,332222 5,623 8,483 7,985 8,101 7,714 8,692 8,183 66,,442211 7,157 13 Short-term, reported by banks in the United States 2 3,171 5,292 5,450 3,918 4,282 5,287 6,557 5,727 33,,883355 44,,221177 14 Marketable U.S. Treasury bonds and notes 3 151 331 3,033 4,067 3,819 2 All 2,135 2,456 2,586 2,940 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 Interporations. 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 AArreeaa 11997744 11997755 11997766 Feb. Mar. Apr. May June Julyf Aug.?' 1 Total 76,823 80,712 91,975 93,972 96,788 99,748 101,546 103,099 107,150 107,560 2 Western Europe i 44,328 45,701 45,882 46,136 47,929 48,733 50,048 52,789 55,219 57,277 3 Canada 3,662 3,132 3,406 2,844 2,684 2,752 2,798 2,699 2,653 2,557 4 Latin American republics 4,419 4,450 4,906 4,595 4,834 4,396 4.672 4,240 4,338 4,248 5 Asia 18,627 22,551 34,108 36,474 37,730 39,946 40,331 39,835 41,163 40,329 6 Africa 3,160 2,983 1,893 1,770 1,628 1,883 1.821 1,938 2,460 2,265 7 Other countries 2 2,627 1,895 1,780 2,153 1,983 2,038 1,876 1,600 1,317 884 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 HHoollddeerr,, aanndd ttyyppee ooff lliiaabbiilliittyy 1974 1975 1976 Feb. Mar. Apr. May June JulyP Aug.J* 1 All foreigners, excluding the International Monetary Fund 94.771 94,338 108,990 105,064 106,152 111,002 114,449 113,432 117,286 110,684 2 Payable in dollars 94,004 93,780 108,266 104,249 105,291 110,194 113,796 112,758 116,326 109,792 Deposits: 3 Demand 14,051 13,564 16,803 16,098 15,101 15,382 16,732 16,272 17,496 15,946 4 Timei 9,932 10,250 11,316 11,319 11,244 11,282 11,612 12,082 11,843 11,178 5 U.S. Treasury bills and certificates 2 35,662 37,414 40,744 42,669 43,498 44,661 45,463 44,110 44,413 42,243 6 Other short-term liabilities 3 34,359 32,552 39,403 34,164 35,448 38,869 39,990 40,294 42,574 39,825 7 Payable in foreign currencies 766 558 724 815 861 809 653 675 960 892 8 Nonmonetary international and regional organizations'^ 3,171 5,293 5,450 3,918 4,283 5,287 6,557 5,728 3,834 4,211 9 Payable in dollars 3,171 55,,228844 55,,444455 33,,991122 44,,227799 5,284 66,,555511 5,715 3,819 4,179 Deposits : 10 Demand 139 139 290 216 203 119 172 228 122 142 11 TimeV 111 148 205 237 241 207 167 156 154 147 12 U.S. Treasury bills and certificates 497 2,554 2,701 2,779 2,743 2,849 2,977 2,521 2,191 1,990 13 Other short-term liabilities 5 2,424 2,443 2,250 680 1,093 2,109 3,234 2,811 1,352 1,901 14 Pnvnhlfi in fnreien rurrenries 8 5 6 3 3 6 13 15 38 15 Official institutions, banks, and other foreigners.. 91,600 89,046 103,540 101,146 101,870 105,715 107,892 107,705 113,451 106,467 16 Payable in dollars 90,834 88,497 102,821 100,337 101,012 104,910 107,246 107,043 112,507 105,613 Deposits: 17 Demand 13,912 13,426 16,513 15,882 14,898 15,262 16,559 16,044 11,31A 15,804 18 Timei 9,796 10,102 11,112 11,081 11,003 11,076 11,445 11,926 11,689 11,631 19 U.S. Treasury bills and certificates2 35,165 34,860 38,042 39,889 40,755 41,812 42,485 41,589 42,221 40,253 20 Other short-term liabilities 3 31,961 30,109 37,153 33,484 34,355 36,760 36,756 37,483 41,222 37,925 21 Payable in foreign currencies 766 549 719 809 858 805 647 662 945 854 22 Official institutions <» 53,079 49,530 53,619 54,910 56,046 57,486 58,260 57,413 60,059 56,773 23 Payable in dollars 52,952 49,530 53,619 54,910 56,046 57,486 58,260 57,413 60,059 56,773 Deposits: 24 Demand 2,951 2,644 3,394 2,406 2,638 2,747 2,676 2,705 3,642 3,122 25 Timei 4,167 3,423 2,321 2,408 2,266 2,335 2,441 2,506 2,401 2,241 26 U.S. Treasury bills and certificates2 34,656 34,199 37,725 39,559 40,399 41,508 42,197 41,322 41,926 39,810 27 Other short-term liabilities 5 11,178 9,264 10,179 10,537 10,744 10,896 10,947 10,880 12,090 11,600 Pnvnhip in fareian rurrp.nri4>x 127 29 Banks and other foreigners 38,520 39,515 49,921 46,236 45,824 48,230 49,362 50,292 53,392 49,693 30 Payable in dollars 37,881 38,966 49,202 45,427 44,966 47,424 48,985 49,630 52,448 48,839 31 Banks 7 29,467 28,966 36,610 32,301 31,958 34,551 35,592 36,015 39,071 35,174 Deposits: 32 Demand 8,231 7,534 9,104 9,385 8,392 8,712 9,772 9,551 10,137 8,931 33 Timei 1,885 1,856 2,267 1,797 1,742 1,675 1,808 2,128 1,836 1,898 34 U.S. Treasury bills and certificates 232 335 119 102 108 104 108 100 144 136 35 Other short-term liabilities 3 19,119 19,241 25,120 21,023 21,716 24,060 23,904 24,236 26,955 24,209 36 Other foreigners 8,414 1100,,000000 12,592 13,120 13,008 1122,,887733 13,393 1133,,661144 1133,,337777 1133,,666666 Deposits: 37 Demand 2,729 3,248 4,015 4,091 3,868 3,803 4,111 3,788 3,595 3,751 38 Timei 3,744 4,823 6,524 6,877 6,996 7,065 7,196 7,292 7,453 7,492 39 U.S. Treasury bills and certificates 277 325 198 229 248 201 180 167 151 307 40 Other short-term liabilities 5 1,664 1,604 1,854 1,924 1,896 1,804 1,906 2,367 2,Ml 2,116 41 Payable in foreign currencies 639 549 719 809 858 805 647 662 945 854 1 Excludes negotiable time certificates of deposit, which are included 5 Principally.bankers acceptances, commercial paper, and negotiable in "Other short-term liabilities." time certificates of deposit. 2 Includes nonmarketable certificates of indebtedness and Treasury 6 Foreign central banks 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 Development, and the Inter-American and Asian Development Banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • October 1977 3.16 SHORT-TERM LIABILITIES TO FOREIGNERS Reported by Banks in the United States By Country Millions of dollars, end of period 1977 AArreeaa aanndd ccoouunnttrryy 11997744 11997755 11997766 Feb. Mar. Apr. May June Julyf Aug.p 1 Total 94,771 94,338 108,990 105,064 106,152 111,002 114,449 113,432 117,286 110,684 2 Foreign countries 91,600 89,046 103,540 101,146 101,870 105,715 107,892 107,705 113,451 106,467 3 Europe 48,813 43,988 46,938 43,630 44,363 45,049 48,232 49,627 50,604 48,933 4 Austria 607 754 348 401 499 506 409 465 455 498 5 Belgium-Luxembourg 2,506 2,898 2,275 2,419 2,566 2,609 2,641 2,704 2,822 2,691 6 Denmark 369 332 363 419 569 809 974 1,178 1,154 1,032 7 Finland 266 391 422 370 312 306 242 258 209 210 8 France 4,287 7,733 4,875 4,610 4,817 4,748 4,920 5,089 4,745 4,894 9 Germany 9,429 4,357 5,965 5,495 4,677 4,490 4,825 4,271 4,937 4,415 10 Greece 248 284 403 346 302 350 409 556 573 709 11 Italy 2,577 1,072 3,206 2,703 2,361 2,625 3,509 4,636 5,422 5,538 12 Netherlands 3,234 3,411 3,007 2,817 3,181 2,924 3,111 3,545 3,397 3,328 13 Norway 1,040 996 785 793 746 906 999 1,195 1,203 1,139 14 Portugal 310 195 239 228 209 184 238 163 222 169 15 Spain 382 426 561 542 555 501 586 667 642 543 16 Sweden 1,138 2,286 1,693 1,593 1,717 2,047 2,431 2,390 1,963 1,782 17 Switzerland 10,139 8,514 9,458 9,634 8,927 8,798 8,436 9,323 9,162 9,382 18 Turkey 152 118 166 82 88 81 68 127 101 203 19 United Kingdom 7,584 6,886 10,004 8,715 10,368 10,704 11,959 10,701 11,250 10,192 20 Yugoslavia 183 126 188 121 96 111 102 115 125 142 21 Other Western Europe i 4.073 2,970 2,672 2,136 2,144 2,132 2,136 2,009 1,973 1,845 22 U.S.S.R ' 82 40 51 45 50 41 66 73 88 70 23 Other Eastern Europe 206 200 255 162 178 176 172 162 160 151 24 Canada 3,520 3,076 4,784 4,815 4,324 4,823 4,869 4,253 4,456 4,631 25 Latin America 11,754 14,942 19,026 18,656 19,052 20,437 19,944 20,771 23,038 21,551 26 Argentina 886 1,147 1,538 1,820 1,890 1,845 1,971 1,699 1,754 2,022 27 Bahamas 1,054 1,827 2,750 2,434 2,184 4,001 2,744 3,777 5,518 4,5C8 28 Brazil 1,034 1,227 1,432 1,272 1,108 1,225 1,175 1,357 1,398 1,233 29 Chile 276 317 335 302 403 329 432 393 373 353 30 Colombia 305 417 1,017 1,152 1,201 1,253 1,172 1,196 1,220 1,164 31 Cuba 7 6 6 6 6 6 8 7 6 6 32 Mexico 1,770 2,066 2,848 2,782 2,747 2,699 2,764 2,832 2,869 2,788 33 Panama 510 1,099 1,140 1,002 1,001 1,008 984 941 1,015 959 34 Peru 111 244 257 228 246 255 219 224 241 273 35 Uruguay 165 172 245 239 241 263 251 234 242 230 36 Venezuela 3,413 3,289 3,095 3,038 2,927 2,440 2,992 2,463 2,532 2,887 37 Other Latin American republics 1,316 1,494 2,081 2,258 2,429 2,284 2,HQ 2,376 2,238 2,154 38 Netherlands Antilles 2 158 129 140 157 162 173 215 207 158 180 39 Other Latin America 589 1,507 2,142 1,966 2,508 2,656 2,745 3,066 3,476 2,893 40 Asia 21,130 21,539 28,472 29,285 29,614 30,459 29,933 28,456 30,366 26,997 41 China, People's Republic of (Mainland) 50 123 47 47 52 52 53 44 49 87 42 China, Republic of (Taiwan) 818 1,025 989 1,163 1,067 1,138 1,210 1,196 1,259 885 43 Hong Kong 530 623 892 1,039 1,018 993 950 931 1,028 1,045 44 India 261 126 648 558 537 648 721 814 746 743 45 Indonesia 1,221 369 340 546 480 887 531 282 782 589 46 Israel 389 386 391 559 509 436 503 547 484 467 47 Japan 10,931 10,218 14,380 13,358 13,271 13,071 12,481 12,387 12,837 11,780 48 Korea 384 390 437 483 382 430 472 534 633 527 49 Philippines 747 698 627 554 652 624 634 614 673 561 50 Thailand 333 252 275 313 312 308 275 257 281 293 51 Middle East oil-exporting countries3 4,623 6,461 8,073 9,287 9,988 10,399 10,447 9,283 10,026 8,828 52 Other4 845 867 1,372 1,377 1,346 1,473 1,655 1,568 1,568 1,193 53 Africa 3,551 3,373 2,300 2,413 2,285 2,587 2,753 2,671 3,284 3,177 54 Egypt 103 343 333 251 251 245 360 314 401 603 55 Morocco 38 68 88 105 94 91 93 81 73 61 56 South Africa 130 169 143 155 136 176 184 237 264 185 57 Zaire 84 63 35 41 39 28 30 30 40 38 58 Oil-exporting countries 5 2,814 2,239 1,116 1,132 964 1,151 1,205 1,145 1,541 1,430 59 Other4 383 491 585 728 802 896 881 866 966 860 60 Other countries 2,831 2,128 2,019 2,348 2,231 2,361 2,162 1,926 1,704 1,179 61 Australia 2,742 2,014 1,911 2,231 2,101 2,223 2,026 1,800 1,553 1,007 62 All other 89 114 108 118 130 138 135 126 151 112 63 Nonmonetary international and regional organizations 3,171 5,293 5,450 3,918 44,,228833 5,287 6,557 5,728 3,834 A,in 64 International 2,900 5,064 5,091 3,599 3,960 4,995 6,230 5,365 3,484 3,816 65 Latin American regional 202 187 136 132 136 110 118 144 165 187 66 Other regional 6 69 42 223 187 187 182 209 218 186 213 For notes see bottom of p. A59. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-reported Data A59 3.17 SHORT-TERM LIABILITIES TO FOREIGNERS Reported by Banks in the United States Supplemental "Other" Countries ^ Millions of dollars, end of period 1975 1976 1977 1975 1976 1977 Area and country Area and country Apr. Dec. Apr. Dec. Apr. Apr. Dec. Apr. Dec. Apr. Other Western Europe Other Asia 1 Cyprus 17 38 68 58 25 Afghanistan 19 41 57 55 90 2 Iceland 20 43 40 32 26 Bangladesh 50 54 44 54 3 Ireland, Republic of. 29 43 236 131 27 Burma 49 31 34 13 28 Cambodia 4 4 3 4 Other Eastern Europe 29 Jordan 30 39 23 37 23 Bulgaria 19 14 30 Laos 5 2 2 1 Czechoslovakia 32 11 31 Lebanon 180 117 132 140 133 German Democratic Republic. 17 3 32 Malaysia 92 77 130 394 511 Hungary 13 11 33 Nepal 22 28 34 32 35 Poland 66 74 34 Pakistan 118 74 92 188 135 Rumania 44 29 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 10 Bolivia 93 110 117 121 135 11 Costa Rica 120 124 134 134 170 Other Africa 12 Dominican Republic 214 169 170 274 280 38 Ethiopia (incl. Eritrea) 76 60 72 41 48 13 Ecuador 157 120 150 319 311 39 Ghana 13 23 45 27 37 14 El Salvador 144 171 212 176 214 40 Ivory Coast 11 18 17 10 26 15 Guatemala 255 260 368 340 392 41 Kenya 32 19 39 46 185 16 Haiti 34 38 48 46 68 42 Liberia 33 53 63 76 95 17 Honduras 92 99 137 134 210 43 Southern Rhodesia 3 1 1 1 1 18 Jamaica 62 41 59 34 43 44 Sudan 14 12 17 22 30 19 Nicaragua 126 133 158 113 133 45 Tanzania 21 30 20 48 57 20 Paraguay 38 43 50 47 60 46 Tunisia 23 29 34 19 15 21 Surinam 2 13 29 17 47 Uganda 38 22 50 43 22 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 42 48 43 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 HHoollddeerr,, aanndd aarreeaa oorr ccoouunnttrryy 11997744 11997755 11997766 Feb. Mar. Apr. May June Julyf Aug.P 1 Total 1,285 1,812 2,427 2,307 2,300 2,505 2,214 2,376 2,322 2,321 2 Nonmonetary international and regional 822 415 264 258 267 250 261 279 269 313 3 Foreign countries 464 1,397 2,163 2,049 2,033 2.256 1,953 2,097 2,053 2,008 4 Official institutions, including central banks. .. 124 931 1,337 1,192 1,163 1,358 1,069 1,135 1,186 1,097 5 Banks, excluding central banks 261 366 621 627 648 631 615 650 538 573 6 Other foreigners 79 100 204 230 222 267 270 312 329 337 Area or country: 7 Europe 226 330 570 580 571 583 579 628 634 664 8 Germany 146 214 346 296 354 304 297 312 307 308 9 United Kingdom 59 66 124 122 103 131 133 147 162 169 10 Canada 19 23 29 29 37 35 34 35 33 27 11 Latin America 115 140 230 267 263 264 254 280 287 304 12 Middle East oil-exporting countries i 94 894 1,236 1,104 1,091 1,304 1,015 1,130 1,075 972 13 Other Asia 2 7 8 96 67 67 68 69 18 18 34 • • * • » * * * * * 15 Other Africa4 1 1 * 1 2 2 2 6 6 6 16 All other countries * * 1 1 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 • October 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 1976 Feb. Mar. Apr. May June JulyP Aug.p 1 Total 39,056 50,231 68,908 63,191 65,156 65,874 68,160 70,563 69,463 68,514 2 Foreign countries 39,055 50,229 68,903 63,186 65,150 65,869 68,156 70,550 69,454 68,503 3 Europe 6,255 8,987 12,122 10,695 10,896 12,033 12,913 13,769 12,707 12,326 4 Austria 21 15 44 42 58 63 43 53 63 53 5 Belgium-Luxembourg 384 352 662 611 570 470 589 759 505 465 6 Denmark 46 49 85 64 67 84 84 85 86 100 7 Finland 122 128 139 131 141 126 130 113 101 103 8 France 673 1,471 1,445 1,372 1,337 1,511 1,546 1,455 1,462 1,469 9 Germany 589 416 517 623 535 550 503 575 647 671 10 Greece 64 49 79 85 54 70 65 51 66 68 11 Italy 345 370 929 802 870 946 979 875 972 1,007 12 Netherlands 348 300 304 510 252 385 362 480 471 371 13 Norway 119 71 98 139 133 142 148 124 121 135 14 Portugal 20 16 65 90 98 90 100 97 110 138 15 Spain 196 249 373 315 291 363 302 284 323 344 16 Sweden 180 167 180 85 77 116 79 101 153 152 17 Switzerland 335 237 485 530 496 496 473 484 488 533 18 Turkey 15 86 176 207 274 291 322 333 333 329 19 United Kingdom 2,580 4,718 6,179 4,658 5,230 5,939 6,803 7,485 6,458 6,055 20 Yugoslavia 22 38 41 60 37 31 55 58 49 35 21 Other Western Europe 22 27 52 60 56 51 40 51 42 47 22 U.S.S.R 46 103 99 95 104 108 82 90 88 81 23 Other Eastern Europe 131 108 171 215 218 203 209 216 169 169 24 Canada 2,776 2,817 3,049 3,461 3,737 3,701 3,554 3,607 3,728 3,977 25 Latin America 12,377 20,532 34,039 31,391 32,017 31,789 32,560 33,413 33,326 32,731 26 Argentina 720 1,203 964 867 914 873 886 904 839 856 27 Bahamas 3,405 7,570 15,336 14,099 15,431 14,157 15,127 16,058 15,061 13,532 28 Brazil 1,418 2,221 3,322 3,089 2,948 3,186 3,061 3,030 2,984 3,052 29 Chile 290 360 387 371 357 420 362 349 373 382 30 Colombia 713 689 586 598 544 565 505 495 514 539 31 Cuba 14 13 13 13 13 13 13 13 13 13 32 Mexico 1,972 2,802 3,432 3,333 3,295 3,302 3,249 3,204 3,469 3,458 33 Panama 505 1,052 1,026 869 849 753 840 905 1,278 1,463 34 Peru 518 583 704 748 733 756 741 797 796 784 35 Uruguay 63 51 38 39 39 35 36 32 38 39 36 Venezuela 704 1,086 1,564 1,265 1,241 1,197 1,359 1,348 1,421 1,430 37 Other Latin American republics 852 967 1,125 1,108 1,132 1,079 1,176 1,144 1,181 1,233 38 Netherlands Antilles 1 62 49 40 41 41 54 36 69 64 57 39 Other Latin America 1,142 1,885 5,503 4,953 4,482 5,401 5,170 5,066 5,295 5,893 40 Asia 16,226 16,057 17,672 15,442 16,118 15,760 16,606 16,979 17,025 16,807 41 China, People's Republic of (Mainland) 4 22 3 30 5 3 15 30 13 9 42 China, Republic of (Taiwan) 500 736 991 1,086 1,124 1,099 1,221 1,259 1,275 1,236 43 Hong Kong 223 258 271 265 317 337 298 337 359 271 44 India 14 21 41 23 32 24 34 39 25 65 45 Indonesia 157 102 76 55 53 41 39 72 65 56 46 Israel 255 491 551 334 328 287 280 334 311 323 47 Japan 12,518 10,776 10,997 9,471 9,486 9,397 9,591 9,935 9,698 9,601 48 Korea 955 1,561 1,714 1,562 1,736 1,807 1,912 1,861 1,981 2,067 49 Philippmes 372 384 559 479 463 490 498 418 372 478 50 Thailand 458 499 422 446 491 468 519 558 584 580 51 Middle East oil-exporting countries^ 330 524 1,312 1,040 1,389 1,170 1,469 1,275 1,476 1,368 52 Other3 441 684 735 651 693 638 730 860 867 753 53 Africa 855 1,228 1,481 1,480 1,603 1,572 1,559 1,773 1,658 1,720 54 Egypt 111 101 127 126 149 146 152 141 158 149 55 Morocco 18 9 13 13 26 35 34 36 46 43 56 South Africa 329 545 763 797 792 783 778 810 882211 799 57 Zaire 98 34 29 11 10 8 7 9 88 6 5 8 Oil-exporting countries ^ 115 231 253 246 343 291 243 422 290 357 59 Other 3 185 308 296 286 283 309 344 355 333 365 60 Other countries 565 609 540 717 779 1,013 963 1,009 1,010 941 61 Australia 466 535 441 592 663 894 846 878 861 793 62 All other 99 73 99 125 116 119 117 132 150 148 63 Nonmonetary international and regional organizations * 1 5 5 6 5 4 13 10 11 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

Nonbank-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 TTyyppee 11997744 11997755 11997766 Feb. Mar. Apr. May June JulyP Aug.P 1 Total 39,056 50,231 68,908 63,191 65,156 65,874 68,160 70,563 69,463 68,514 2 Payable in dollars 37,859 48,888 67,263 61,232 63,259 64A88 66,396 68,784 67,797 66,579 3 Loans, total 11,287 13,200 18,141 15,989 15,766 16,396 16,647 16,074 17,602 16,718 4 Official institutions, including central banks. 381 613 1,448 943 784 741 967 983 852 1,018 5 Banks, excluding central banks 7,332 7,665 11,142 9,755 9,740 10,550 10,638 9,985 11,523 10,562 6 All other, including nonmonetary international and regional organizations 3,574 4,921 5,552 5,291 5,241 5,105 5,041 5,105 5,228 5,138 7 Collections outstanding 5,637 5,467 5,756 5,868 6,190 6,316 6,317 6,417 6,352 6,187 8 Acceptances made for accounts of foreigners... 11,237 11,147 12,358 12,009 12,790 12,976 13,045 13,166 13,390 13,517 9 Other claims 1 9,694 19,075 31,007 21,367 28,513 28,499 30,387 33,127 30,453 30,156 1,196 1,342 1,645 1,959 1,897 1,686 1,764 1,779 1,667 1,935 11 Deposits with foreigners 669 656 1,063 1,091 1,100 918 864 845 817 1,036 12 Foreign government securities, commercial 289 314 89 272 323 332 377 302 211 233 13 Other claims 238 372 493 596 474 436 522 631 572 667 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 accoimt 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 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11997744 11997755 11997766 Feb. Mar. Apr. May June Julyp Aug.f 1 Total 7,179 9,536 11,898 12,065 12,204 12,458 12,294 12,191 12,212 12,418 By type: 2 Payable in dollars 7,099 9,419 11,750 11,855 12,015 12,257 12,091 11,991 12,010 12,199 3 Loans, total 6,490 8,316 10,097 10,329 10,411 10,534 10,399 10,296 10,325 10,474 4 Official institutions, including central banks 1,324 1,351 1,407 1,531 1,625 1,647 1,642 1,653 1,676 1,684 5 Banks, excluding central banks 929 1,567 22,,223322 22,,223311 2,194 22,,119933 22,,227733 22,,226600 22,,224455 22,,227777 6 All other, including nonmonetary international and regional organizations 4,237 5,399 6,458 6,567 6,591 6,693 6,484 6,383 6,404 6,514 7 Other long-term claims 609 1,103 1,653 1,526 1,604 1,723 1,693 1,695 1,685 1,725 8 Payable in foreign currencies 80 116 148 211 190 201 202 200 202 218 By area or country: 9 Europe 1,908 2,1 OA 3,314 3,444 3,616 3,698 3,650 3,687 3,606 3,659 10 Canada 501 555 637 587 566 558 501 483 485 455 11 Latin America 2,614 3,468 4,870 4,966 4,911 4,990 5,042 5,016 5,045 5,207 12 Asia 1,619 1,795 1,904 1,874 1,896 1,933 1,884 1,832 1,865 1,855 13 Japan 258 296 382 367 417 416 420 410 420 375 14 Middle East oil-exporting countries i 384 220 146 133 152 149 149 151 156 182 15 Other Asia 2 977 1,279 1,376 1,374 1,327 1,368 1,316 1,271 1,288 1,298 16 Africa 366 747 890 875 890 953 898 860 857 898 17 Oil-exporting countries 3 62 151 271 210 211 228 213 213 191 219 18 Other 4 305 596 619 665 678 725 685 647 666 679 19 All other countries 5 171 267 282 319 327 327 319 313 353 344 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

A62 International Statistics • October 1977 3.22 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1976 1977 AAsssseett aaccccoouunntt 1974 1975 Dec. Jan. Feb. Mar. Apr. May June Julyf All foreign countries 1 Total, all currencies 151,905 176,493 219,476 212,427 215,934 223,239 223,014 229,542 236,352 235,641 2 Claims on United States 6,900 6,743 7,999 6,529 7,031 7,267 8,830 7,359 7,396 10,681 3 Parent bank 4,464 3,665 4,435 2,966 3,725 3,622 5,432 3,928 3,612 7,134 4 Other 2,435 3,078 3,564 3,563 3,306 3,645 3,398 3,430 3,784 3,547 5 Claims on foreigners 138,712 163,391 204,433 198,285 201,466 208,552 207,211 214,786 221,542 217,462 6 Other branches of parent bank.. 27,559 34,508 45,894 46,086 47,767 48,645 47,826 49,489 52,375 48,035 7 Other banks 60,283 69,206 83,765 77,415 77,923 81,668 79,756 83,912 86,831 84,719 8 Official institutions 4,077 5,792 10,609 10,837 11,190 11,768 12,400 12,728 13,194 13,572 9 Nonbank foreigners 46,793 53,886 64,164 63,947 64,587 66,471 67,230 68,657 69,143 71,136 10 Other assets 6,294 6,359 7,045 7,613 7,437 7,421 6,973 7,397 7,414 7,497 11 Total payable in U.S. dollars 105,969 132,901 167,751 163,028 165,472 172,360 171,926 176,603 182,434 179,651 12 Claims on United States 6,603 6,408 7,705 6,250 6,743 6,868 8,456 6,949 6,979 10,263 13 Parent bank 4,428 3,628 4,375 2,921 3,680 3,574 5,388 3,903 3,590 7,095 14 Other 2,175 2,ISO 3,330 3,323 3,063 3,293 3,068 3,047 3,389 3,168 15 Claims on foreigners 96,209 123,496 156,842 152,866 155,106 161,966 160,167 166,162 172,053 166,063 16 Other branches of parent bank.. 19,688 28,478 37,848 38,362 39,822 40,922 39,960 41,373 43,919 39,293 17 Other banks 45,067 55,319 66,331 60,816 60,909 64,591 63,037 66,297 68,763 66,233 18 Official institutions 3,289 4,864 9,018 9,469 9,854 10,470 11,056 11,364 11,886 12,110 19 Nonbank foreigners 28,164 34,835 43,645 44,219 44,521 45,983 46,113 47,128 47,486 48,427 20 Other assets 3,157 2,997 3,204 3,912 3,623 3,527 3,303 3,492 3,401 3,325 United Kingdom 21 Total, all currencies 69,804 74,883 81,466 78,708 81,268 80,150 83,178 84,734 83,484 22 Claims on United States 3,248 2,392 3,354 2,262 1,772 2,311 2,541 2,714 2,450 3,129 23 Parent bank 2, All 1,449 2,376 1,377 1,011 1,302 1,698 1,850 1,553 2,249 24 Other lie 943 978 885 761 1,009 843 863 897 881 25 Claims of foreigners 64,111 70,331 75,859 71,995 74,713 76,865 75,559 78,333 80,087 78,083 26 Other branches of parent bank.. 12,724 17,557 19,753 19,483 21,450 21,115 21,733 21,122 22,104 20,560 27 Other banks 32,701 35,904 38,089 34,827 35,517 37,074 35,559 38,635 39,174 38,121 28 Official institutions 788 881 1,274 1,377 1,615 1,606 1,611 1,631 1,764 1,863 29 Nonbank foreigners 17,898 15,990 16,743 16,309 16,130 17,070 16,656 16,945 17,045 17,538 30 Other assets 2,445 2,159 2,253 2,225 2,224 2,092 2,050 2,131 2,197 2,272 31 Total payable in U.S. dollars 49,211 57,361 61,587 57,758 60,038 62,353 61,179 63,481 64,841 62,815 32 Claims on United States 3,146 2,273 3,275 2,185 1,684 2,173 2,430 2,590 2,338 3,011 33 Parent bank 2,468 1,445 2,374 1,372 1,008 1,297 1,690 1,842 1,547 2,237 34 Other 678 828 902 813 676 876 740 748 791 774 35 Claims on foreigners 44,694 54,121 57,488 54,735 57,492 59,342 57,894 60,030 61,582 58,875 36 Other branches of parent bank.., 10,265 15,645 17,249 17,183 19,114 18,712 19,256 18,642 19,519 17,784 37 Other banks 23,716 28,224 28,983 26,184 26,767 28,352 26,917 29,498 29,949 28,849 38 Official institutions 610 648 846 1,110 1,340 1,310 1,297 1,306 1,437 1,473 39 Nonbank foreigners 10,102 9,604 10,410 10,258 10,271 10,968 10,424 10,584 10,676 10,769 40 Other assets 1,372 967 824 838 862 839 855 861 922 930 Bahamas and Caymans 41 Total, all currencies 31,733 45,203 66,774 66,445 66,100 69,526 70,950 71,540 74,853 74,727 42 Claims on United States 2,464 3,229 3,506 3,158 3,687 3,409 4,996 3,540 3,970 6,445 43 Parent bank 1,081 1,477 1,141 lis 1,384 1,037 2,703 1,251 1,394 4,062 44 Other 1,383 1,752 2,365 2,381 2,303 2,372 2,293 2,290 2,576 2,383 45 Claims on foreigners 28,453 41,040 62,050 61,539 60,999 64,783 64,654 66,581 69,528 66,973 46 Other branches of parent bank.. 3,478 5,411 8,144 8,463 7,815 9,060 8,095 8,703 9,638 7,586 47 Other banks 11,354 16,298 25,354 23,836 23,435 25,339 25,234 25,588 21,3,12 25,967 48 Official institutions 2,022 3,576 7,101 7,004 7,225 7,495 7,784 8,062 8,344 8,628 49 Nonbank foreigners 11,599 15,756 21,451 22,236 22,523 22,890 23,540 24,228 24,174 24,791 50 Other assets 815 933 1,217 1,748 1,413 1,333 1,300 1,419 1,356 1,309 51 Total payable in U.S. dollars 28,726 41,887 62,705 62,232 61,571 64,946 66,366 66,550 69,930 69,548 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overseas Branches A63 3.22 Continued 1976 1977 LLiiaabbiilliittyy aaccccoouunntt 1974 1975 Dec. Jan. Feb.'- Mar. Apr.'- May June JuIyJ' All foreign countries 52 Total, all currencies 151,905 176,493 219,476 212,427 215,934 223,239 223,014 229,542 236,352 235,641 53 To United States 11,982 20,221 32,837 30,379 30,482 34,420 33,082 34,768 37,177 37,703 54 Parent bank 5,809 12,165 19,895 18,696 19,229 21,017 18,312 20,497 22,821 19,689 55 Other 6,173 8,057 12,942 11,683 11,253 13,403 14,770 14,270 14,356 18,014 56 To foreigners 132,990 149,815 179,893 175,155 178,570 181,926 182,966 187,537 191, 761 189,361 57 Other branches of parent bank. 26,941 34,111 44,310 44,289 46,328 47,444 46,175 48,032 50,292 47,016 58 Other banks 65,675 72,259 83,878 79,487 78,295 80,026 82,132 84,113 84,197 86,903 59 Official institutions 20,185 22,773 25,829 25,796 26,656 26,438 26,150 27,328 28,197 27,112 60 Nonbank foreigners 20,189 20,672 25,877 25,583 27,291 28,018 28,509 28,065 29,075 28,329 61 Other liabilities 6,933 6,456 6,747 6,894 6,882 6,893 6,965 7,237 7,414 8,577 62 Total payable in U.S. dollars 107,890 135,907 173,127 167,591 170,544 177,255 177,062 181,798 187,552 184,726 63 To United States 11,437 19,503 32,050 29,443 29,568 33,477 32,118 33,882 36,120 36,770 64 Parent bank 5,641 11,939 19,681 18,447 18,983 20,764 18,067 20,241 22,378 19,415 65 Other 5,795 7,564 12,369 10,996 10,585 12,713 14,051 13,640 13,742 17,355 66 92,503 112,879 137,550 134,375 137,313 140,179 141,220 144,098 147,266 142,942 67 Other branches of parent bank. 19,330 28,217 37,038 37,707 39,373 40,474 39,096 40,572 42,740 38,940 68 Other banks 43,656 51,583 60,617 56,766 56,091 57,750 59,977 60,930 60,232 61,755 69 Official institutions 17,444 19,982 22,878 23,063 23,624 23,650 23,241 24,369 25,249 24,159 70 12,072 13,097 17,017 16,838 18,225 18,305 18,906 18,242 19,045 18,088 71 Other liabilities 3,951 3,526 3,527 3,773 3,664 3,600 3,724 3,819 4,167 5,013 United Kingdom 72 Total, all currencies 69,804 74,883 81,466 78,708 81,268 80,150 83,178 84,734 83,484 73 To United States 3,978 5,646 5,997 5,101 4,871 6,365 6,272 5,845 6,894 8,537 74 Parent bank 510 2,122 1,198 1,211 1,191 1,537 1,515 1,460 2,150 2,217 75 Other 3,468 3,523 4,798 3,889 3,681 4,828 4,756 4,386 4,743 6,320 76 To foreigners 63,409 67,240 73,228 69,202 71,523 72,665 71,787 75,145 75,683 72,585 77 Other branches of parent bank. A,162 6,494 7,092 7,663 7,981 8,252 7,764 8,570 8,937 7,987 78 Other banks 32,040 32,964 36,259 32,336 32,097 33,830 33,747 35,932 34,959 34,623 79 Official institutions 15,258 16,553 17,273 16,975 18,204 17,711 17,260 17,538 18,086 17,148 80 Nonbank foreigners 11,349 11,229 12,605 12,228 13,242 12,872 13,016 13,106 13,701 12,827 81 Other liabilities 2,418 1,997 2,241 2,179 2,313 2,238 2,091 2,187 2,157 2,362 82 Total payable in U.S. dollars 49,666 57,820 63,174 59,009 61,331 63,346 62,373 64,343 65,735 63,848 83 To United States 3,744 5,415 5,849 4,876 4,704 6,189 6,108 5,688 6,679 8,348 84 Parent bank 484 2,083 1,182 1,195 1,166 1,506 1,498 1,438 2,083 2,184 85 Other 3,261 3,332 4,666 3,681 3,538 4,683 4,610 4,250 4,596 6,164 86 To foreigners 44,594 51,447 56,372 53,230 55,675 56,283 55,390 57,720 58,136 54,550 87 Other branches of parent bank. 3,256 5,442 5,874 6,573 6,906 7,188 6,563 7,333 7,661 6,583 88 Other banks 20,526 23,330 25,527 22,m 22,211 23,841 23,815 25,171 24,134 23,681 89 Official institutions 13,225 14,498 15,423 15,184 16,345 15,817 15,394 15,674 16,301 15,295 90 Nonbank foreigners 7,587 8,176 9,547 9,336 10,213 9,437 9,617 9,541 10,040 8,990 91 Other liabilities 1,328 959 953 903 953 874 875 936 920 951 Bahamas and Caymans 92 Total, all currencies 31,733 45,203 66,774 66,445 66,100 69,526 70,950 71,540 74,853 74,727 93 To United States 4,815 11,147 22,723 21,656 21,638 24,277 23,060 25,137 26,571 25,051 94 Parent bank 2,636 7,628 16,163 15,157 15,207 17,110 14,514 16,426 18,366 14,835 95 Other 2,180 3,520 6,560 6,499 6,431 7,167 8,545 8,710 8,205 10,217 96 To foreigners 26,140 32,949 42,897 43,376 43,166 43,863 46,641 45,054 46,531 47,189 97 Other branches of parent bank. 7,702 10,569 13,801 13,551 14,406 14,714 14,123 13,894 14,662 13,736 98 Other banks 14,050 16,825 21,758 22,231 20,981 20,455 23,244 22,296 22,693 24,166 99 Official institutions 2,377 3,308 3,573 3,632 3,339 3,540 3,917 4,130 4,216 4,351 100 Nonbank foreigners 2,011 2,248 3,765 3,963 4,439 5,155 5,356 4,734 4,960 4,936 101 Other liabilities 778 1,106 1,154 1,413 1,295 1,385 1,249 1,350 1,751 2,487 102 Total payable in U.S. doUars 28,840 42,197 63,417 62,818 62,382 65,755 67,168 67,518 70,816 70,399 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • October 1977 3.23 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions Millions of dollars 11997777 1977 Country or area 11997755 11997766 JJaann..—— AAuugg..pp Feb. Mar. Apr. May June JulyP Aug.P Holdings (end of period) 4 1 Estimated total... 7,703 15,798 17,813 18,748 18,450 19,335 21,787 23,024 27,138 2 Foreign countries. 7,372 12,765 13,746 14,929 16,024 17,200 19,331 20,439 24,198 3 Europe 1,085 2,330 2,504 2,870 3,505 3,624 4,862 5,815 8,070 4 Belgium-Luxembourg.. 13 14 14 14 14 16 18 19 19 5 Germany 215 764 789 894 1,112 1,112 1,262 1,266 1,847 6 Netherlands 16 288 367 388 388 418 492 503 634 7 Sweden 276 191 188 188 188 148 149 149 155 8 Switzerland 55 261 324 317 397 429 439 485 478 9 United Kingdom 363 485 512 713 1,069 1,181 2,190 3,068 4,607 10 Other Western Europe. 143 323 306 354 332 316 312 322 327 11 Eastern Europe 4 4 4 4 4 4 4 4 4 12 Canada. 395 256 261 270 268 271 279 283 288 13 Latin America 200 312 295 405 448 All 481 481 514 14 Venezuela 4 149 149 258 193 193 193 193 193 15 Other Latin America republics. 29 35 21 26 21 21 18 18 18 16 Netherlands Antilles i 161 118 121 120 119 113 114 114 145 17 Asia 5,370 9,323 10,330 11,068 11,476 12,528 13,407 13,567 15,034 18 Japan. 3,271 2,687 2,806 3,123 3,174 3,773 4,290 4,314 5,025 19 Africa 321 543 356 305 305 279 279 279 279 20 All other. * * * 11 23 27 23 13 13 21 Nonmonetary international and regional organizations 331 3,033 4,068 3,819 2,426 2,135 2,456 2,586 2,940 22 international 322 2,905 3,948 3,700 2,318 2,032 2,353 2,440 2,830 23 Latin American regional. 9 128 119 118 108 103 103 146 110 Transactions (net purchases, or sales (—), during period) 24 Total 1,994 8,095 11,340 1,505 936 -298 885 2,451 1,238 4,114 25 Foreign countries 1,814 5,393 11,433 732 1,184 1,094 1,176 2,131 1,108 3,759 26 Official institutions 1,612 5,116 10,699 709 1,047 922 1,152 1,927 1,048 3,665 27 Other foreign 202 276 734 23 137 172 24 203 60 94 28 Nonmonetary international and regional organizations 180 2,702 -93 773 -248 -1,392 -291 321 130 354 MEMO: Oil-exporting countries 29 Middle East 2 1,797 3,887 2,783 505 408 338 392 397 -14 503 30 Africa 3 117700 222211 --2244 --115500 --5511 --2266 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 AAsssseettss 11997744 11997755 11997766 Mar. Apr. May June July Aug. Sept. 1 Deposits 418 353 352 349 305 436 379 468 534 382 Assets held in custody: 2 U.S. Treasury securities i 55,600 60,019 66,532 71,435 73,261 73,964 74,098 75,443 75,976 79,285 3 Earmarked gold 2 16,838 16,745 16,414 16,271 16,282 16,221 16,184 16,179 16,117 16,073 1 Marketable U.S. Treasury bills, certificates of indebtedness, notes, NOTE.—Excludes deposits and U.S. Treasury securities held for interand 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 TTrraannssaaccttiioonnss,, aanndd aarreeaa oorr ccoouunnttrryy 1975 1976 Jan.- Feb. Mar. Apr. May June Julyf Aug.p Aug.P U.S. corporate securities Stocks 1 Foreign purchases 15,347 18,227 9,622 1,162 1,101 1,135 1,207 1,196 1,373 1,023 2 Foreign sales 10,678 15,474 8,054 1,036 980 913 978 948 1,162 900 3 Net purchases, or sales (—) 4,669 2,752 1,568 126 121 222 229 248 211 123 4 Foreign countries 4,651 2,740 1,548 124 116 222 209 254 209 124 5 Europe 2,491 336 604 47 72 105 128 42 43 37 6 France 262 256 -4 -10 4 -6 -3 21 -24 -13 7 Germany 251 68 96 -7 -4 38 37 12 20 -1 8 Netherlands 359 -199 17 -5 -10 -7 27 * -10 -2 9 Switzerland... 899 -100 112 23 30 38 4 -20 5 -7 10 United Kingdom 594 340 427 36 55 47 67 43 71 69 11 Canada 361 325 13 30 9 -5 -33 -3 12 -5 12 Latin America -7 155 92 14 14 21 17 17 4 1 13 Middle East 1 1,640 1,803 794 50 17 97 92 186 157 95 14 Other Asia 2 142 117 42 -17 3 5 4 10 -6 -3 15 Africa 10 7 1 • * * » • * 1 16 Other countries 15 -4 4 1 1 -1 1 2 * -2 17 Nonmonetary international and regional organizations 18 12 19 1 5 1 20 -7 2 -1 Bonds3 18 Foreign purchases 5,408 5,529 5,145 534 348 856 609 976 752 670 19 Foreign sales 4,642 4,322 2,248 214 208 245 332 394 285 248 20 Net purchases, or sales (—) 766 1,207 2,896 320 140 611 277 582 467 421 21 Foreign countries 1,795 1,248 2,852 329 112 566 308 569 499 396 22 Europe 113 92 1,239 281 75 100 99 314 232 130 23 France 82 40 -23 -3 -2 -5 -7 -3 1 1 24 Germany -6 -50 37 4 * -4 13 12 12 1 25 Netherlands -8 -29 30 -2 -3 -7 -28 57 11 0 26 Switzerland 117 158 166 32 31 -4 19 17 35 21 27 United Kingdom -52 23 1,000 225 43 106 102 223 197 96 28 Canada 128 96 120 55 -3 6 1 7 30 13 29 Latin America 31 94 39 8 1 3 « 2 12 18 30 Middle East 1 1,553 1,179 1,284 -7 48 454 192 235 153 150 31 Other Asia2 -35 -165 174 -8 -6 4 17 10 72 84 32 Africa 5 -25 -2 * -2 * * « * * 33 Other countries 1 -21 * * * * * * * • 34 Nonmonetary international and regional organizations -1,030 -41 42 -9 27 45 -31 13 -32 25 Foreign securities 35 Stocks, net purchases, or sales (—) -189 -322 -618 -109 -62 -40 -7 -56 -263 -63 36 Foreign purchases 1,541 1,937 1,360 130 187 157 204 173 159 169 37 Foreign sales 1,730 2,259 1,976 238 249 197 211 229 421 232 38 Bonds, net purchases, or sales (-) -6,325 -8,729 -3,342 -374 -56 -11 -866 -765 -205 -992 39 Foreign purchases 2,383 4,932 5,514 581 628 606 607 636 786 852 40 Foreign sales 8,708 13,661 8,855 955 684 617 1,473 1,401 991 1,843 41 Net purchases, or sales (—) of stocks and bonds.. -6,515 -9,050 3,960 -483 -118 -51 -873 -821 -467 -1,055 42 Foreign countries -4,323 -7,155 -2,512 -488 -149 4 -201 -692 -391 -213 43 Europe -53 -844 -842 -207 54 2 -124 -271 -267 -8 44 Canada -3,202 -5,246 -1,700 -265 -83 -94 -128 -292 -241 -255 45 Latin America -306 1 164 42 35 69 -13 -39 52 -7 46 Asia -622 -700 -162 -61 -155 25 62 -94 59 55 47 Africa 15 48 5 2 * * * 3 1 * 48 Other countries -155 -416 22 1 * 2 2 2 5 1 49 Nonmonetary international and regional organizations -2,192 -1,898 1,448 5 31 -55 -673 -129 -76 -841 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 • October 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. Liabilities to foreigners Claims on foreigners 1 Total. 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 name 480 558 592 442 387 5 Other 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 Austria 6 13 15 10 9 17 17 21 21 23 Belgium-Luxembourg 296 233 183 166 169 116 193 195 164 170 Denmark 12 12 13 7 15 35 30 26 56 49 Finland 5 1 17 2 2 31 131 135 77 40 France 205 159 185 200 163 355 363 413 426 422 Germany 152 228 256 174 173 305 358 492 378 366 Greece 25 29 28 48 80 41 47 56 51 90 Italy 125 116 148 131 135 406 335 358 384 473 Netherlands 162 170 141 141 168 176 146 142 166 172 Norway 23 22 24 29 37 58 52 43 51 42 Portugal 3 3 5 13 23 45 22 28 40 35 Spain 68 51 36 40 52 516 432 336 369 325 Sweden 25 24 35 34 35 80 84 62 90 92 Switzerland 162 213 243 190 214 207 270 253 241 154 Turkey 14 20 16 13 12 26 31 23 25 32 United Kingdom 924 837 888 879 689 2,282 2,602 2,365 2,445 2,476 Yugoslavia 91 108 113 123 113 30 28 30 26 30 Other Western Europe 6 7 8 7 6 18 14 17 20 18 U.S.S.R 23 10 19 9 15 106 96 81 156 104 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 47 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 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 i 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 22,,442211 2,325 2,371 45 China, People's Republic of (Mainland) 5 8 7 20 27 35 23 1111 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 2ro 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 27 29 22 28 36 28 71 58 Morocco 7 32 42 43 27 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 97 100 112 107 114 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 1977 Type and country 1973 1974 1975 1976 Feb. Mar. Apr. May June Julyf 1 Total 3,185 3,357 3,799 5,440 5,590 6,314 6,226 7,370 7,558 7,357 By type: 2 Payable in dollars 2,641 2,660 3,042 4,772 4,935 5,696 5,555 6,736 6,817 6,618 3 Deposits 2,604 2,591 2,710 4,399 4,558 5,241 4,973 6,213 6,352 6,195 4 Short-term investments i. 37 69 332 373 377 455 582 523 465 424 5 Payable in foreign currencies 544 697 757 669 654 619 672 634 741 139 6 Deposits 431 429 511 383 339 317 362 300 340 352 7 Short-term investments 1. 113 268 246 286 315 302 310 334 401 387 By country: 8 United Kingdom 1,128 1,350 1,306 1,837 1,846 1,879 1,713 1,889 2,252 2,123 9 Canada 775 967 1,156 1,539 1,338 1,468 1,503 1,642 1,650 1,725 10 Bahamas. 597 391 546 1,247 1,412 1,709 1,649 2,350 2,064 2,113 11 Japan 336 398 343 113 165 147 155 158 178 149 12 All other 349 252 446 704 829 1,111 1,206 1,331 1,414 1,247 1 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 AArreeaa aanndd ccoouunnttrryy Mar. June Sept. Dec. Mar. 2' 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 15 Africa 2 2 2 2 2 214 163 165 187 198 16 All other i 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 • October 1977 3.29 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Per cent per annum Rate on Sept. 30, 1977 Rate on Sept. 30, 1977 Rate on Sept. 30, 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 4.25 Sept. 1977 United Kingdom 6.0 Sept. 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 Apr. May June July Aug. Sept. 1 Euro-dollars 11.01 7.02 5.58 5.16 5.80 5.78 5.80 6.30 6.56 2 United Kingdom. 13.34 10.63 11.35 8.59 7.63 7.81 7.77 6.91 6.03 3 Canada 10.47 8.00 9.39 7.58 7.44 7.16 7.27 7.44 7.31 4 Germany... 9.80 4.87 4.19 4.57 4.43 4.24 4.20 4.04 4.07 5 Switzerland.. 3.01 1.45 2.61 3.98 3.80 3.01 2.41 2.37 6 Netherlands. 5.17 7.02 4.89 3.03 2.84 3.05 3.48 4.39 7 France 7.91 8.65 9.33 9.13 9.01 8.67 8.51 8.38 8 Italy. ... 10.37 16.32 16.26 15.49 14.65 14.09 13.94 12.42 9 Belgium. 6.63 10.25 7.01 6.94 6.88 6.85 6.20 6.20 10 Japan... 11.64 7.70 6.46 5.75 6.05 6.25 6.24 5.32 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 CCoouunnttrryy//ccuurrrreennccyy 11997744 11997755 11997766 Apr. May June July Aug. Sept. 1 Australia/dollar 143.89 130.77 122.15 110.53 110.31 110.80 112.20 110.47 110.37 2 Austria/shilling 5.3564 5.7467 5.5744 5.9252 5.9533 5.9647 6.1691 6.0792 6.0377 3 Belgium/franc 2.5713 2.7253 2.5921 2.7509 2.7700 2.7713 2.8208 2.8107 2.7910 4 Canada/dollar 102.26 98.30 101.41 95.103 95.364 94.549 94.230 93.028 93.168 5 Denmark/krone 16.442 17.437 16.546 16.710 16.638 16.544 16.769 16.590 16.188 6 Finland/markka 26.565 27.285 25.938 24.899 24.530 24.524 24.902 24,801 23.977 7 France/franc 20.805 23.354 20.942 20.133 20.190 20.240 20.607 20.415 20.314 8 Germany/deutsche mark... 38.723 40.729 39.737 42.119 42.394 42.453 43.827 43.168 43.034 9 India/rupee 12.460 11.926 11.148 11.310 11.320 11.286 11.342 11.465 11.450 10 Ireland/pound 234.03 222.16 180.48 171.90 171.85 171.91 172.26 173.97 174.31 11 Italy/lira .15372 .15328 .12044 .11264 .11279 .11295 .11330 .11332 .11318 12 Japan/yen .34302 .33705 .33741 .36339 .36046 .36652 .37756 .37499 .37486 13 Malaysia/ringgit 41.682 41.753 39.340 40.305 40.255 40.270 40.443 40.606 40.600 14 Mexico/peso 8.0000 8.0000 6.9161 4.4076 4.3890 4.3582 4.3528 4.3629 4.3776 15 Netherlands/guilder 37.267 39.632 37.846 40.464 40.7009 40.326 40.983 40.831 40.604 16 New Zealand/dollar 140.02 121.16 99.115 96.129 96.002 96.264 97.160 96.826 96.812 1177 NNoorrwwaayy//kkrroonnee 18.119 19.180 18.327 18.909 18.956 18.915 19.023 18.863 18.226 1188 PPoorrttuuggaall//eessccuuddoo 3.9506 3.9286 3.3159 2.5752 2.5818 2.5802 2.5953 2.5678 2.4606 19 South Africa/rand 146.98 136.47 114.85 114.93 115.00 114.88 114.98 115.00 115.00 20 Spain/peseta 1.7337 1.7424 1.4958 1.4536 1.4491 1.4404 1.2382 1.1804 1.1824 21 Sri Lanka/rupee 14.978 14.385 11.908 13.676 13.700 13.664 13.700 13.721 12.301 22 Sweden/krona 22.563 24.141 22.957 23.004 22.962 22.625 22.991 22.472 20.602 23 Switzerland/franc 33.688 38.743 40.013 39.582 39.694 40.170 41.487 41.523 42.115 24 United Kingdom/pound... 234.03 222.16 180.48 171.90 171.85 171.91 172.26 173.97 174.31 MEMO: 25 United States/dollar i 84.11 82.20 89.68 90.13 89.99 89.91 88.67 89.10 89.52 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

69 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 partice Estimated ular unit (e.g., less than 5(X),0(X) when c Corrected the unit is millions) n.e.c. Not elsewhere classified (1) Zero, (2) no figure to be expected, or Rp•'s's Repurchase agreements (3) figure delayed or, (4) no change (when IPC!''ss 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

> o 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 STAFF DIRECTOR FOR MANAGEMENT DIRECTOR FOR MONETARY POLICY THOMAS J. O'CONNELL, Counsel to the JOHN M. DENKLER, Staff Director Chairman STEPHEN H. AXILROD, Staff Director ROBERT J. LAWRENCE, Deputy Staff MILTON W. HUDSON, Assistant to the ARTHUR L. BROIDA, Deputy Staff Director Director Chairman MURRAY ALTMANN, Assistant to the Board DONALD E. ANDERSON, Assistant Director for JOSEPH R. COYNE, Assistant to the Board PETER M. KEIR, Assistant to the Board Construction Management KENNETH A. GUENTHER, Assistant to the Board STANLEY J. SIGEL, Assistant to the Board 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 A ND STATISTICS Board JAMES L. KICHLINE, Director JOSEPH S. ZEISEL, Deputy Director DIVISION OF D A TA 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 DIVISION OF PERSONNEL Counsel ROBERT A. EISENBEIS, Associate Research 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

OFFICE OF THE CONTROLLER DIVISION OF CONSUMER AFFAIRS T HELMUT F. WENDEL, Associate Research Division Officer JOHN KAKALEC, Controller JANET O. HART, Director JAMES M. BRUNDY, Assistant Research TYLER E. WILLIAMS, JR., Assistant Controller NATHANIEL E. BUTLER, Associate Director Division Officer JERAULD C. KLUCKMAN, Associate Director JARED J. ENZLER, Assistant Research Division Officer DIVISION OF ADMINISTRATIVE SERVICES ROBERT M. FISHER, Assistant Research Division Officer WALTER W. KREIMANN, Director OFFICE OF THE SECRETARY J J O O H H N N L D . . S G M R I I T Z H Z , A A R s D s , is A ta ss n i t s ta D n ir t e c D to ir r e ctor THEODORE E. ALLISON, Secretary RIC D H iv A i R s D io n H . O P f U fi C ce K r E TT, Assistant Research GRIFFITH L. GARWOOD, Deputy Secretary STEPHEN P. TAYLOR, Assistant Research ^ROBERT E. MATTHEWS, Assistant Secretary Division Officer OFFICE OF STAFF DIRECTOR FOR LEVON H. GARABEDIAN, Assistant Director FEDERAL RESERVE B A NK ACTIVITIES WILLIAM H. WALLACE, Staff Director DIVISION OF BANKING SUPERVISION AND REGULATION DIVISION OF FEDERAL RESERVE B A NK EXAMINATIONS AND BUDGETS JOHN E. RYAN, Director tFREDERiCK C. SCHADRACK, Deputy Director DIVISION OF INTERNATIONAL FINANCE D F A C J P. O E L I L V B H Y D D N E I . D E S E R R F R T I . H O I A . N N R L H . G F O , A R H O O R A F E A V N s S M E S s R E I i W , s L R t T O a A V O R n E s N t T s , H i B s , D t A A a J i s r n R N e s t K . o , c t c A o D ia r s O i r t s e P e is c E t t a D o R n r i A r t e T c D I t O o ir r e N c S tor T F J R W T D A R H H O O I C E O N O L B K D L E M M E E I R M A A A T R . S . S M K I C S E L E A . K W G . . I N . P E M S R E L R . W I E , O T D I A A T S D M L D K O s E A A , s I N S H N N i A , , s , , L A t s A , a A A s s s A n s s i s s s t s s s i o t s s i i a s s c D t o n a t t i a a a c i t n r i n n t e a t e D t t c t e t D i o D r D D e i r r i D i i c r r r e e e e t i c o r c c c e t r o t t t c o o o r t r r r o r J R G E C S O O E H D A H O B A M W N E R R U IN R G L E E T E E . L S M F R B . P . . E J I T . Z G Y H R E S N E E R U I O M N , E M L M R G S A D Y I M e N S L , n A , , L A i , N o C D s r A , o s ir s I u A o n e s n c s t c o e i s s t a c o e r o t n i r e l a c o a i t r a e t D i t o e i n D r e a D i c r l e t ir o c e D r t c o i t v r o is r ion Officer SAMUEL H. TALLEY, Assistant Director JAMES R. KUDLINSKI, Director WILLIAM TAYLOR, Assistant Director WALTER ALTHAUSEN, Assistant Director BRIAN M. CAREY, Assistant Director * On loan from the Federal Reserve Bank of Philadelphia, HARRY A. GUINTER, Assistant Director t On loan from the Federal Reserve Bank of New York. t On leave of absence. ->J Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 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 ANATOL BALBACH, Associate Economist MURRAY ALTMANN, Deputy Secretary RICHARD G. DAVIS, Associate Economist NORMAND R. V. BERNARD, Assistant THOMAS DAVIS, Associate Economist Secretary ROBERT EISENMENGER, Associate Economist THOMAS J. O'CONNELL, General Counsel EDWARD C. ETTIN, Associate Economist EDWARD G. GUY, Deputy General Counsel JAMES L. KICHLINE, Associate Economist BALDWIN B. TUTTLE, Assistant General JOHN E. REYNOLDS, Associate Economist Counsel KARL SCHELD, Associate Economist STEPHEN H. AXILROD, Economist EDWIN M. TRUMAN, Associate Economist JOSEPH S. ZEISEL, Associate Economist ALAN 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. HILL, FIRST FEDERAL RESERVE DISTRICT. President GILBERT F. BRADLEY, TWELFTH 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 WILLIAM J. KORSVIK, Associate Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

73 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 STUDeral Reserve Bw/Zerm. 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 PROCEof 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 BANK DEBITS, DEPOSITS, AND DEPOSIT TURNOVER— REVISED SERIES. 7/72. (Short pamphlets suitable for classroom use. Multiple YIELDS ON NEWLY ISSUED CORPORATE BONDS. 9/72. copies available without charge.) RECENT ACTIVITIES OF FOREIGN BRANCHES OF U.S. BANKS. 10/72. THE EQUAL CREDIT OPPORTUNITY ACT AND . . . AGE REVISION OF CONSUMER CREDIT STATISTICS. 10/72. THE EQUAL CREDIT OPPORTUNITY ACT AND . . . ONE-BANK HOLDING COMPANIES BEFORE THE 1970 DOCTORS, LAWYERS, SMALL RETAILERS, AND AMENDMENTS. 12/72. OTHERS WHO MAY PROVIDE INCIDENTAL CREDIT YIELDS ON RECENTLY OFFERED CORPORATE BONDS. THE EQUAL CREDIT OPPORTUNITY ACT AND . 5/73. WOMEN CREDIT-CARD AND CHECK-CREDIT PLANS AT COMMER- FAIR CREDIT BILLING CIAL BANKS. 9/73. IF YOU BORROW TO BUY STOCK RATES ON CONSUMER INSTALMENT LOANS. 9/73. U.S. CURRENCY NEW SERIES FOR LARGE MANUFACTURING CORPORA- WHAT TRUTH IN LENDING MEANS TO YOU TIONS. 10/73. U.S. ENERGY SUPPLIES AND USES, Staff Economic STAFF ECONOMIC STUDIES Study by Clayton Gehman. 12/73. INFLATION AND STAGNATION IN MAJOR FOREIGN IN- Studies and papers on economic and financial subjects DUSTRIAL COUNTRIES. 10/74. that are of general interest in the field of economic THE STRUCTURE OF MARGIN CREDIT. 4/75. research. NEW STATISTICAL SERIES ON LOAN COMMITMENTS AT SELECTED LARGE COMMERCIAL BANKS. 4/75. SUMMARIES ONLY PRINTED IN THE BULLETIN RECENT TRENDS IN FEDERAL BUDGET POLICY. 7/75. (Limited supply of mimeographed copies of full text RECENT DEVELOPMENTS IN INTERNATIONAL FINANCIAL available upon request for single copies.) MARKETS. 10/75. M I N N I E: A SMALL VERSION OF THE THE GROWTH OF MULTIBANK HOLDING COMPANIES: MIT-PENN-SSRC ECONOMETRIC MODEL, Staff 1956-73, by Gregory E. Boczar. Apr. 1976. 27 Economic Study by Douglas Battenberg, Jared J. pp. Enzler, and Arthur M. Havenner. 11/75. EXTENDING MERGER ANALYSIS BEYOND THE SINGLE- AN ASSESSMENT OF BANK HOLDING COMPANIES, Staff MARKET FRAMEWORK, by Stephen A. Rhoades. Economic Study by Robert J. Lawrence and May 1976. 25 pp. Samuel H. Talley. 1/76. SEASONAL ADJUSTMENT OF M^—CURRENTLY PUB- INDUSTRIAL ELECTRIC POWER USE. 1/76. LISHED AND ALTERNATIVE METHODS, by Edward REVISION OF MONEY STOCK MEASURES. 2/76. R. Fry. May 1976. 22 pp. SURVEY OF FINANCE COMPANIES, 1975. 3/76. EFFECTS OF NOW ACCOUNTS ON COSTS AND EARNINGS REVISED SERIES FOR MEMBER BANK DEPOSITS AND OF COMMERCIAL BANKS IN 1974-75, by John D. AGGREGATE RESERVES. 4/76. Paulus. Sept. 1976. 49 pp. INDUSTRIAL PRODUCTION—1976 Revision. 6/76. RECENT TRENDS IN LOCAL BANKING MARKET STRUC- FEDERAL RESERVE OPERATIONS IN PAYMENT MECHA- TURE, by Samuel H. Talley. May 1977. 26 pp. NISMS: A SUMMARY. 6/76. RECENT GROWTH IN ACTIVITIES OF U.S. OFFICES OF BANKS. 10/76. PRINTED IN FULL IN THE BULLETIN NEW ESTIMATES OF CAPACITY UTILIZATION: MANU- Staff Economic Studies shown in list below. FACTURING AND MATERIALS. 11/76. U.S. INTERNATIONAL TRANSACTIONS IN A RECOVERING REPRINTS ECONOMY. 4/77. BANK HOLDING COMPANY FINANCIAL DEVELOPMENTS (Except for Staff Papers, Staff Economic Studies, and IN 1976. 4/77. some leading articles, most of the articles reprinted do CHANGES IN BANK LENDING PRACTICES, 1976. 4/77. not exceed 12 pages.) 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. ASSETS AND LIABILITIES OF FOREIGN BRANCHES OF CONSUMPTION AND FIXED INVESTMENT IN THE ECO- U.S. BANKS. 2/72. NOMIC RECOVERY ABROAD. 10/77. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 Index to Statistical Tables References are to pages A-3 through A-68 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 Discount rates at F.R. Banks (See Interest rates) BANKERS balances, 16, 18, 20, 21, 22 Discounts and advances by F.R. Banks (See Loans) (See also Foreigners) Dividends, corporate, 38 Banks for cooperatives, 35 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 Receipts and outlays, 30, 31 loans) Treasury operating balance, 30 Federal Financing Bank, 35 Federal funds, 3, 6, 18, 20, 21, 22, 27, 30 CAPACITY utilization, 46, 47 Federal home loan banks, 35 Capital accounts: Federal Home Loan Mortgage Corp., 35, 40, 41 Banks, by classes, 16, 17, 19, 20 Federal Housing Administration, 35, 40, 41 Federal Reserve Banks, 12 Federal intermediate credit banks, 35 Central banks, 68 Federal land banks, 35, 41 Certificates of deposit, 23, 27 Federal National Mortgage Assn., 35, 40, 41 Commercial and industrial loans: Federal Reserve Banks: Commercial banks, 15, 18, 23, 26 Condition statement, 12 Weekly reporting banks, 20, 21, 22, 23, 24 Discount rates (See Interest rates) Commercial banks: U.S. Govt, securities held, 4, 12, 13, 32, 33 Assets and liabilities, 3, 15-18, 20-23 Federal Reserve credit, 4,5, 12, 13 Business loans, 26 Federal Reserve notes, 12 Commercial and industrial loans, 24 Federally sponsored credit agencies, 35 Consumer loans held, by type, 42, 43 Finance companies: Loans sold outright, 23 Assets and liabilities, 39 Number, by classes, 16, 17, 19 Busines credit, 39 Real estate mortgages held, by type of holder and Loans, 20, 21, 22, 42, 43 property, 41 Paper, 25, 27 Commercial paper, 3, 24, 25, 27, 39 Financial institutions, loans to, 18, 20-23 Condition statements (See Assets and liabilities) Float, 4 Construction, 46, 50 Flow of funds, 44, 45 Consumer instalment credit, 42, 43 Foreign: Consumer prices, 46, 51 Currency operations, 12 Consumption expenditures, 52, 53 Deposits in U.S. banks, 4, 12, 19, 20, 21, 22 Corporations: Exchange rates, 68 Ptofits, taxes, and dividends, 38 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 Customer credit, stock market, 28 GOLD: 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

A712 Federal Reserve Bulletin • October 1976 HOUSING, new and existing units, 50 REAL estate loans: Banks, by classes, 18, 20-23, 29, 41 Life insurance compares, 29 INCOME, personal and national, 46, 52, 53 Mortgage terms, yields, and activity, 3, 40 Industrial production, 46, 48 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 Prime rate, commercial banks, 26 SAVING: Time and savings deposits, maximum rates, 10 Flow of funds, 44, 45 International capital transactions of the United National income accounts, 53 States, 56-67 Savings and loan assns., 3, 10, 29, 33, 41, 44 International organizations, 56-61, 65-67 Savings deposits (See Time deposits) Inventories, 52 Savings institutions, selected assets, 29 Investment companies, issues and assets, 37 Securities (See also U.S. Govt, securities): Investments {See also specific types of investments): Federal and Federally sponsored agencies, 35 Banks, by classes, 16, 17, 18, 20, 21, 22, 29 Foreign transactions, 65 Commercial banks, 3, 15, 16, 17, 18 New issues, 36, 37 Federal Reserve Banks, 12, 13 Prices, 28 Life insurance companies, 29 Special Drawing Rights, 4, 12, 54, 55 Savings and loan assns., 29 State and local govts.: Deposits, 19, 20, 21, 22 LABOR force, 47 Holdings of U.S. Govt, securities, 32, 33 Life insurance companies (See Insurance companies) New security issues, 36 Loans (See also specific types of loans): Ownership of securities of, 18, 20, 21, 22, 29 Banks, by classes, 16, 17, 18, 20-23, 29 Yields of securities, 3 Commercial banks, 3, 15-18, 20-23, 24, 26 State member banks, 17 Federal Reserve Banks, 3, 4, 5, 8, 12, 13 Stock market, 28 Insurance companies, 29, 41 Stocks (See also Securities): Insured or guaranteed by U.S., 40, 41 New issues, 36, 37 Savings and loan assns., 29 Prices, 28 MANUFACTURERS: TAX receipts. Federal, 31 Capacity utilization, 46, 47 Time deposits, 3, 10, 13, 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 Yields, 3 OPEN market transactions, 11 Utilities, production, 49 PERSONAL income, 53 VETERANS Administration, 40, 41 Prices: Consumer and wholesale, 46, 51 WEEKLY reporting banks, 20-24 Stock market, 28 Wholesale prices, 46 Prime rate, commercial banks, 26 Production, 46, 48 Profits, corporate, 38 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 The Federal Reserve l^stem Boundaries of Federal Reserve Districts and Their Branch Territories HAWAII . 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