Federal Reserve Bulletin, 1978-02

FEBRUARY 1978 FEDERAL RESERVE BULLETIN Domestic Financial Developments in the Fourth Quarter of 1977 Survey of Time and Savings Deposits, October 1977 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

NUMBER 2 • VOLUME 64 • FEBRUARY 1978 FEDERAL RESERVE BULLETIN Board of Governors of the Federal Reserve System Washington, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman o Stephen H. Axilrod • 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 fiirnished 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 67 DOMESTIC FINANCIAL DEVELOP- Debt Management of the Committee MENTS IN THE FOURTH QUARTER OF on Finance, U.S. Senate, February 6, 1977 1978. 86 Henry C. Wallich, member of the The quarterly report to the Joint Board of Governors, discusses U.S. Economic Committee of the U.S. exports and the influences on them of Congress, which highlights developrecent exchange-rate movements bements in domestic financial markets fore the Subcommittee on Internaduring the fall and early winter, tional Finance of the Committee on points out that credit flows to non- Banking, Housing and Urban Affairs, financial sectors of the U.S. econ- U.S. Senate, February 6, 1978. omy remained strong during the quarter, supporting a continuing advance 90 Philip E. Cold well, member of the in economic activity. Board of Governors, presents a review of the expenditures of the Federal 76 SURVEY OF TIME AND SAVINGS Reserve Banks and of the Board of DEPOSITS AT COMMERCIAL BANKS, Governors for 1977 and the budgets OCTOBER 1977 of the System for 1978 before the Inflows to total time and savings Committee on Banking, Housing and accounts at all insured commercial Urban Affairs, U.S. Senate, February banks slowed somewhat—from 8, 1978. nearly $14 billion in the previous quarter to a little more than $12 94 Governor Wallich gives his perbillion in the most recent quarterly sonal views in the area of incomes survey period. policies including a discussion of one version of a tax-oriented incomes 82 STAFF ECONOMIC STUDIES policy (TIP) before the Joint Eco- Summary of "External Capital Fi- nomic Committee, U.S. Congress, nancing Requirements of Commer- February 8, 1978. cial Banks: 1977-81" concludes that 98 RECORD OF POLICY ACTIONS OF THE banks, in the aggregate, should FEDERAL OPEN MARKET COMMITTEE have little difficulty in maintaining At the meeting held on December capital/asset ratios in future years through the issuance of new equity, 19-20, 1977, the Committee decided through long-term subordinated that operations in the period immedidebt, and through the retention of ately ahead should be directed toward earnings. maintenance of prevailing money market conditions, as represented by 84 STATEMENTS TO CONGRESS the current level of the Federal funds Stephen S. Gardner, Vice Chair- rate. However, the members agreed man of the Board of Governors, that if growth in the aggregates testifies on the financial implications should appear to approach or move of an expanding public debt before beyond the limits of their specified the Subcommittee on Taxation and ranges, the operational objective for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

the weekly-average Federal funds rate resumption of processing of applicashould be varied in an orderly fash- tions from bank holding companies to ion within a range of 6Va to 63A per underwrite and deal in Federal Govcent. With respect to the annual rates ernment and municipal securities. of growth in M-1 and M-2 over the Proposed amendment to Regulation December-January period, the Com- H (Membership of State Banking Inmittee specified ranges of 2Vi to 8V2 stitutions in the Federal Reserve Sysper cent and 6 to 10 per cent, tem) that would require State member respectively. It was also agreed that in banks to establish uniform records assessing the behavior of the agand procedures concerning security gregates, the Manager should give transactions for trust department and approximately equal weight to the other bank customers. behavior of M-1 and M-2. Federal Reserve Measures of Ca- 112 LAW DEPARTMENT pacity and Capacity Utilization, a Amendments to Regulation Z, varnew publication, is now available for ious rules and bank holding company distribution. and bank merger orders, and pending cases. Also available are aggregate data from a special survey of repurchase 145 ANNOUNCEMENTS agreements and other nonreservable Five new members have been ap- borrowings by banks in immediately pointed to the Consumer Advisory available funds. Council. Changes in Board staff. Plans for developing regulations to Four State banks were admitted to carry out the New Community Reinmembership in the Federal Reserve vestment Act have been announced System. by the four Federal bank and thrift institution regulators. 151 INDUSTRIAL PRODUCTION The Federal bank regulatory agen- Output decreased an estimated 0.7 cies have issued notice that politi- per cent in January. cal contributions and certain other A1 FINANCIAL AND BUSINESS STATISTICS questionable payments by banks A3 Domestic Financial Statistics and bank holding companies may be A46 Domestic Nonfinancial Statistics regarded as unsafe and unsound bank- A54 International Statistics ing practices subject to appropriate corrective action. A69 GUIDE TO TABULAR PRESENTATION AND STATISTICAL RELEASES Revisions in reports of condition and income will go into effect for A70 BOARD OF GOVERNORS AND STAFF State member banks for the Decem- A72 OPEN MARKET COMMITTEE AND ber 1978 reports. STAFF; ADVISORY COUNCILS Amendment to Regulation Z (Truth in Lending) relating to billing for A73 FEDERAL RESERVE BANKS, cash-advance check transactions. BRANCHES, AND OFFICES (See Law Department.) A74 FEDERAL RESERVE BOARD Interpretation of, and permissible PUBLICATIONS activity under, Regulation Y (Bank A76 INDEX TO STATISTICAL TABLES Holding Companies); actions concern transferred shares or other assets and A78 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Developments in the Fourth Quarter of 1977 This report, which was sent to the Joint Eco- by the U.S. Treasury, while borrowing by nomic Committee of the U.S. Congress on State and local governments fell off somewhat February 10, 1978, highlights the important despite a sizable volume of advance refunding developments in domestic financial markets activity. during the fall and early winter. Growth of the monetary aggregates slowed in the fourth quarter. The narrow money stock Credit flows to nonfinancial sectors of the (M-1) increased at a 6% per cent annual rate, U.S. economy remained strong in the fourth down from 9lA per cent in the previous quarquarter of 1977, supporting a continuing ad- ter. Expansion of the interest-bearing compovance in economic activity. Nonfinancial bus- nents of M-2 and M-3 also slackened appreciinesses increased their short- and ably during the quarter, as market interest intermediate-term borrowing substantially— rates by early fall had exceeded regulatory especially at banks—more than offsetting a ceiling rates for savings and all but the decline in funds raised in long-term credit longest-term, small-denomination time acmarkets. Borrowing by consumers continued counts at commercial banks and thrift instituat about the same rapid pace as in the third tions. As a result, growth in M-2 fell to an quarter, with mortgage lending rising to a new annual rate of IV2 per cent from IOV4 per cent record level and the expansion of consumer in the third quarter, and expansion in M-3 instalment credit remaining comparatively declined to a 10% per cent rate from 12Vi per strong. In the public sector an increase in the cent. Federal Government's deficit during the Despite the slowing of inflows into demand, fourth quarter led to a rise in credit demands savings, and small-denomination time ac- Interest rates NOTES: Per cent per annum Monthly averages except for F.R. discount rate and conventional mortgages (based on quotations for one day each month). Yields: U.S. Treasury bills, market yields on 3-month issues; prime commercial paper, dealer offering rates; conventional mortgages, rates on first mortgages in primary markets, unweighted and rounded to nearest 5 basis points, from Dept. of Housing and Urban Development; Aaa utility bonds, weighted averages of new publicly offered bonds rated Aaa, Aa, and A by Moody's Investors Service and adjusted to Aaa basis; U.S. Govt, bonds, market yields adjusted to 20-year constant maturity by U.S. Treasury; State and local govt, bonds (20 issues, mixed qual- 1975 1976 1977 1975 1976 1977 ity), Bond Buyer. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

68 Federal Reserve Bulletin • February 1978 counts, most depositary institutions continued money growth, which in early October had to expand loan portfolios at a rapid pace by accelerated once again. Following the upward turning increasingly to other liabilities for movement in market interest rates, the dissources of funds. During the fourth quarter, count rate at the Federal Reserve Banks was banks issued more large-denomination time raised from 53A to 6 per cent in late October. deposits, which are not subject to regulatory With monetary expansion subsequently modinterest rate ceilings, and they also relied more erating, the Federal funds and most other heavily on nondeposit sources of funds. Thrift short-term rates changed little between midinstitutions, with limited access to money October and the year-end. The rise in shortmarkets, borrowed substantial amounts from term interest rates in October was accomthe Federal home loan banks as well as from panied by an increase in most long-term rates. other sources. Bond yields tended to move higher again late Short-term interest rates increased early in in the quarter, perhaps reflecting in part an the fourth quarter. The rate on Federal funds upward revision in expectations about the (overnight loans of immediately available bank prospective strength of economic activity and funds) rose from 6 to 6V2 per cent, partly in associated growth in credit demands. response to Federal Reserve efforts to restrain In early January the Federal Reserve raised Changes in selected monetary aggregates Per cent, seasonally adjusted annual rates 1977 IItteemm 11997755 11997766 11997777 Ql Q2 Q3 04 | Member bank reserves: Total -2 1.0 5.2 2.7 3.0 9.0 5.7 Nonborrowed ... 3.2 1.2 2.8 2.6 1.9 3.4 3.0 Concepts of money:1 M-1 4.4 5.6 7.4 4.2 8.4 9.3 6.8 M-2 8.3 10.9 9.6 9.9 9.2 10.3 7.6 M-3 . 11.1 12.8 11.6 11.3 10.0 12.4 10.7 M-4 6.5 7.1 9.8 9.3 8.5 9.7 10.5 M-5 9.7 10.3 11.7 10.9 9.4 11.9 12.4 Time and savings deposits at commercial banks: Total (excluding large CD's) 11.7 15.2 11.1 14.0 9.8 10.9 8.1 Savings 17.5 25.0 10.5 21.1 8.5 6.6 4.6 Other time 7.8 7.7 11.7 8.0 10.8 15.0 11.0 Thrift institutions2 15.8 15.8 14.6 13.4 11.2 15.5 15.4 MEMO (change in billions of dollars, seasonally adjusted): Large negotiable CD's at large banks -5.3 -19.2 8.1 .3 -.3 .5 7.6 All other large time deposits3 -3.7 -.9 10.6 -.5 -1.1 5.9 6.3 U.S. Govt, demand deposits at all member banks .2 .2 -.4 .2 .2 Nondeposit sources of funds4 -3.9 17.7 10.4 O .8 4.2 4.1 JM-1 is currency plus private demand deposits adjusted. M-2 is funds purchased, securities sold under agreements to repurchase, M-1 plus bank time and savings deposits other than large CD's. M-3 and other liabilities for borrowed money, plus gross liabilities is M-2 plus deposits at mutual savings banks and savings and loan to own foreign branches (Euro-dollar borrowings), loans sold to associations and credit union shares. M-4 is M-2 plus large negoti- affiliates, loan repurchase agreements, borrowings from Federal able CD's. M-5 is M-3 plus large negotiable CD's. Reserve Banks, and other minor items. 2Savings and loan associations, mutual savings banks, and credit unions. included in M-2 and M-3. NOTE. Changes are calculated from the average amounts out- 4Nondeposit sources of funds include borrowings by commercial standing in each quarter. Annual rates of change in reserve meabanks from other than commercial banks in the form of Federal sures have been adjusted for changes in reserve requirements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Developments, Q4 1977 69 the discount rate to 6Vi per cent, primarily in Consumer-type time deposit growth an effort to counter the progressive fall in the at depositary intermediaries value of the dollar on foreign exchange mar- Basis points kets. In conjunction with this move, the Fed- YIELD DIFFERENTIALS Maximum allowable yields on commercial bank time deposits eral Reserve also became less accommodative in the provision of reserves to the banking system through open market operations, and 4-to 6-year account the Federal funds rate rose to about 6% per 1-to 2 M-year account minus 5-year minus 1-year Treasury yield Treasury yield cent. Prompt increases in both short- and Annual rate of growth, per cent long-term market yields followed these policy TIME DEPOSIT GROWTH changes, and the dollar exchange rate, on a trade-weighted average basis, declined only a little further over the balance of the month. MONETARY AGGREGATES AND BANK CREDIT As in the preceding two quarters, M-1 growth was quite rapid in the first month of the fourth Time deposit growth data are seasonally adjusted. Time deposit quarter and then slowed in the subsequent 2 yields correspond to current regulatory ceilings assuming continumonths. On average over the quarter, how- ous compounding of interest on the basis of a 360-day year. Time deposit growth at thrift institutions includes time accounts at ever, the rate of expansion of M-1 while still mutual savings banks and savings and loan associations. The strong, fell somewhat from the unusually rapid commercial bank data include only time accounts of less than $100,000. pace of the second and third quarters. The reduction in M-1 growth, and the concomitant rise in velocity, appeared to stem primarily from efforts to reduce non-interest-bearing assets induced by the increases in interest Savings account growth at depositary intermediaries rates that had occurred since the spring. In contrast to 1975 and 1976, the faster growth in Basis points ••1200 velocity did not seem to reflect to any great YIELD DIFFERENTIAL extent a downward shift in the demand for + 0 money relative to income and interest rates. In the fourth quarter, as in the two preceding quarters, the relationships among the growth Maximum allowable yield on commercial bank savings accounts minus 30-day Treasury bill rate of M-\ and movements in gross national prod- HHHHHHHHHHHiij^l 400 uct and interest rates appeared to conform Annual rate of growth, per cent 30 more closely to pre-1975 patterns than they SAVINGS ACCOUNT GROWTH had earlier in the current expansion. Commercial banks By early in the fourth quarter, market interest rates had risen above the maximum allowable yields at banks and thrift institutions on savings and small-denomination time deposits maturing in less than 4 years. As a result, inflows of funds to these accounts slowed during the quarter. The relative attractiveness Savings yields correspond to current regulatory ceilings assuming to small savers of financial investments offercontinuous compounding of interest on the basis of a 360-day year. Savings account growth data are seasonally adjusted. Thrift ing market rates of interest was evidenced by a institutions include savings and loan associations and mutual rise in noncompetitive tenders at weekly savings banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

70 Federal Reserve Bulletin • February 1978 Treasury bill auctions and by increased net Changes in income velocity of M-l and M-2 sales of shares in money market mutual funds. Inflows of savings deposits at banks slowed to a pace only two-thirds the rate of the preceding quarter. Growth in accounts owned by \ M-2 GNP individuals decelerated markedly over the quarter, while balances in government accounts continued to decline and the level of M-l business accounts showed essentially no change. In addition, there was only modest growth in small-denomination time deposits, with inflows apparently concentrated in longermaturity accounts on which ceiling rates were still above market yields. The effect on M-2 of the slowdown in inflows of deposits subject to interest rate ceilings was offset in part by a sharp rise in large-denomination time deposits that are included in this aggregate. Even with the increase in these deposits, which accounted for Data are at seasonally adjusted annual rates of growth. Money about two-fifths of the expansion in M-2 dur- stock data are quarterly averages. ing the fourth quarter, M-2 growth slowed in the quarter, resulting in a rise in the velocity of table. But, deposit expansion slowed notice- M-2 at nearly the same pace as the rise in the ably—from 18 per cent in the third quarter to velocity of M-l. 10 per cent in the fourth—when measured There also was a sizable increase during the on the more sensitive end-of-quarter basis. quarter in negotiable certificates of deposit Deposit inflows in the third quarter, however, issued by large banks, which are not included reportedly had been boosted by shifts of main M-2. Altogether, total large time deposits— turing "wild card" deposits from banks to thrift both negotiable and nonnegotiable—expanded institutions. $14 billion in the fourth quarter, or more than Despite moderation in growth of deposits twice their increase in the preceding 3 months. other than large time deposits, commercial In addition, banks continued to rely on other banks, through the increased use of managed managed liabilities, obtaining $4 billion from liabilities, were able to expand total loans and nondeposit sources of funds. Increased bor- investments by 8lA per cent at a seasonally rowing from nonbank investors in the Federal adjusted annual rate in the fourth quarter, funds market and through security repurchase about the same as the average for the precedagreements accounted for about half of this ing 3 months. Loan growth in the fourth total, and borrowing in the Euro-dollar market quarter exceeded that in the third quarter, and loan sales to affiliates accounted for most primarily reflecting stepped-up lending to busof the rest. inesses. Real estate and consumer lending The rise in market interest rates in the remained strong, though growth was below second and third quarters had a smaller impact the pace of the preceding quarter. Banks mainon deposit growth at thrift institutions than at tained the level of their liquid assets in the banks, in part because of the higher ceiling fourth quarter, as reductions in holdings of rates allowed on deposits at those institutions. U.S. Government securities were offset by Any lessening of deposit inflows that did occur increases in holdings of other securities— at thrift institutions is not reflected in the including municipal tax warrants—and in quarterly-average growth rates shown in the bankers acceptances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Developments, Q4 1977 71 The pick-up in loan growth and the modera- business borrowing from finance companies tion of deposit inflows combined to produce a accelerated from the third-quarter pace, aprise in the loan/deposit ratio at all commercial parently in conjunction with the rising level of banks. This ratio has increased at both large automobile inventories. and small banks, bringing the mean for all In contrast to the pick-up in the expansion banks, on average over the quarter, to its of short- and intermediate-term business highest level since early 1975. Among smaller credit, there was a moderation in the volume banks the increase in this ratio over the last 2 of long-term financing by businesses during years appears most pronounced at agricultural the fourth quarter. Gross issuance of bonds banks, where the protracted decline in farm and equities by both financial and nonfinancial income has resulted in a sharp expansion in U.S. corporations slowed to a seasonally adfarm loans and a rate of deposit growth that is justed annual rate of $48 billion, down from less than the national average. $57 billion in the third quarter, but about the same as in the first half of the year. For 1977, long-term corporate financing fell from the high levels of 1975-76, as firms generally in- BUSINESS CREDIT creased their reliance upon shorter-term bor- Short- and intermediate-term credit flows to rowing. The decline in the volume of new nonfinancial businesses—measured as the bond and equity issues was concentrated in sum of bank business loans, finance company the nonfinancial corporate sector, where business loans, and commercial paper growth in capital expenditures generally was issuance—rose substantially in the fourth moderate after the first quarter of 1977. The quarter, registering a 21 per cent rate of expansion in short-term business borrowing growth compared with an 8 per cent rate in the was accompanied by the accumulation of fithird quarter. Bank loans to businesses, which nancial assets, thereby enabling nonfinancial had been expanding rapidly throughout the year, accelerated further in the fourth quarter, due to a pick-up in loan growth at large banks. Business loans and shortand intermediate-term business credit A number of large banks recently appear to have been more aggressive in their lending Seasonally adjusted changes at annual percentage rates policies, making selected loans at rates below Business loans prime and seeking loans from other than tradi- Excluding tional customers, including firms of small- and PPeerriioodd Total1 bank holdings TToottaall sshhoorrtt-- aanndd of bankers iinntteerrmmeeddiiaattee--tteerrmm intermediate-size as well as those in different acceptances bbuussiinneessss ccrreeddiitt22 regional markets. Strong growth in commercial and industrial loans at large banks ap- 1975—Q1 ... -5.2 -6.8 -4.1 Q2 ... -8.7 -9.0 -7.9 peared to be broadly based among industrial Q3 ... -3.1 -3.5 -1.6 categories, with substantial borrowing by Q4 ... .7 -3.2 -5.1 manufacturing, trade, and mining firms and by 1976—Q1 ... -6.7 -4.8 -4.3 Q2 ... 1.4 2.2 7.4 public utilities. At small banks, loan growth Q3 ... 3.9 1.1 .3 Q4 ... 12.0 8.2 11.0 was quite rapid earlier in the year but has decelerated slowly in recent quarters. 1977—Q1 ... 11.4 16.4 17.1 Q2 ... 12.6 13.3 17.7 Commercial paper issued by nonfinancial Q3 ... 10.2 8.9 8.2 Q4 ... 16.0 14.9 20.9 firms declined during most of the quarter before rising sharply on a seasonally adjusted *At all commercial banks based on last-Wednesday-of-month basis at the end of December. Because of the data, adjusted for outstanding amounts of loans sold to affiliates. 2Short- and intermediate-term business credit is business loans at rise, business borrowing in the commercial commercial banks excluding bank holdings of bankers acceptpaper market increased in the fourth quarter, ances plus nonfinancial company commercial paper and finance company loans to businesses measured from end-of-month to following a decline in the third. Growth in end-of-month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 Federal Reserve Bulletin • February 1978 Components of Major categories of Interest rates on long-term corporate bonds bank credit bank loans increased during the fourth quarter, appar- Change, billions of dollars ently in response to rising short-term interest 12 rates and changing investor expectations BUSINESS about future credit demands. The Federal Re- ITnnn serve index of yields on recently issued, Aaarated utility bonds rose from 8.12 per cent at the end of the third quarter to close the fourth REAL ESTATE quarter at 8.48 per cent. In early January long-term rates rose further along with increases in short-term rates. Movements in stock prices were mixed during the fourth quarter. The New York Stock CONSUMER Exchange (NYSE) composite index fell 0.6 per cent and at year-end was 9.3 per cent below its level 12 months earlier. In contrast, NONBANK FINANCIAL the American Stock Exchange (AMEX) index rose during the fourth quarter and, after posting a 16.4 per cent increase during 1977, finished the year at a new all-time high. The Q4 Q1 Q2 Q3' Q4 Q4 Q1 Q2 Q3 Q4 '76 1977 76 1977 National Association of Securities Dealers Automated Quotation (NASDAQ) over-the- Seasonally adjusted. Total loans and business loans adjusted for transfer between banks and their holding companies, affiliates, counter index—which like the AMEX index subsidiaries, or foreign branches. reflects the stock price performance of gencorporations, in the aggregate, to maintain erally smaller corporations—also increased liquidity at close to the improved levels that during the October-December period to regishad been reached following widespread ter a 7.3 per cent appreciation during 1977. balance-sheet restructuring in 1975-76. Early in 1978 stock prices on most markets fell The fourth-quarter decline in long-term sharply, due at least in part to the decline of financing activity apparently was concen- the U.S. dollar on international currency martrated in the public bond market, in which kets and to the rise in interest rates. offerings by industrial concerns dropped off The generally lower level of prices on the following a third-quarter surge. Public New York Stock Exchange during 1977 limutilities, meanwhile, continued to issue a rela- ited the incentive for new corporate stock tively large volume of bonds during the quarter. Offerings by financial concerns increased Gross offerings of new security issues and accounted for more than 40 per cent of public bond issues over the period. Finance Billions of dollars, seasonally adjusted annual rates companies continued to borrow heavily, and 1976 1977 savings and loan associations offered publicly more than $500 million of mortgage-backed 04 Q»| Q, eQ4 m bonds. Private placements of corporate bonds Corporate securities—Total . 53 46 46 r57 48 are estimated to have remained substantial Bonds 43 36 36 '48 37 Publicly offered 26 23 20 '34 23 during the fourth quarter. The volume of pri- Privately placed 17 13 16 r14 14 Stocks 10 10 10 9 11 vate placements during the year was second only to the record level in 1976 with life Foreign securities 9 4 13 13 6 insurance companies continuing to use this State and local govt. ........ 36 r44 53 47 41 market as the major investment outlet for their strong cash flow. ? Estimated. " Revised. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Developments, Q4 1977 73 issues, and the volume of such offerings de- stituted about one-fourth of the new issues clined slightly from the already moderate during the fourth quarter and approximately 1975-76 levels. New corporate stock issues one-fifth of the new offerings for the year as a increased somewhat in the fourth quarter, whole. The marked rise in advance refunding however, in large part reflecting a record $718 activity was responsible for roughly one-half million issue by a large utility. Public utilities of the $11.4 billion increase in the volume of continued to account for the majority of new new issues of municipal bonds during 1977. stock issues during the October-December The continued large volume of advance reperiod; over the year they raised approxi- fundings can be attributed in part to the submately two-thirds of all the funds obtained in stantial reduction in the cost of municipal equity markets. The preponderance of utility bond financing since late 1975. In the fourth issues in part reflected relative movements in quarter of 1977, demand for tax-exempt instock prices last year when the NYSE utility vestment outlets by property-casualty insurstock price index fell only about 2 per cent ance companies and by commercial banks compared with a decline of almost 11 per cent helped the municipal bond market to absorb in the NYSE index of industrial stock prices. the sizable volume of new issues with relatively minor pressure on interest rates. The Bond Buyer index of long-term, tax-exempt yields declined from 5.51 per cent at the end of GOVERNMENT SECURITIES September to a 3Vi-year low of 5.45 per cent in In the municipal securities market, gross bond mid-November, before moving up along with issuance was at a $41 billion annual pace other long-term interest rates to close the year during the fourth quarter. Although down at 5.66 per cent. somewhat from the record levels of the previ- Treasury demands on credit markets inous three quarters, volume remained heavy by creased somewhat in the fourth quarter in historical standards and the 1977 annual total order to finance an expanded Federal budget reached a record $47 billion. Advance refund- deficit of $28.0 billion (not seasonally adings of outstanding higher-coupon issues con- justed) and a $1.4 billion deficit from off- Federal Government borrowing and cash balance Quarterly totals, billions of dollars, not seasonally adjusted IItteemm 1976 1977 Ql Q2 Q3 Q4 Ql Q2 Q3 fQ4 Treasury financing: Budget surplus, or deficit (-) -22.8 2.0 -13.0 -22.8 -18.7 8.6 -12.2 -28.0 Off-budget deficit1 -3.7 -.6 -1.8 .4 -4.3 .1 -4.9 -1.4 Net cash borrowings, or repayments (-) 24.1 9.4 18.0 17.4 17.6 -1.1 419.5 20.6 Other means of financing2 2.0 -4.0 -.7 -.8 2.7 -.4 .4 2.0 Change in cash balance -.4 6.8 2.6 -5.7 -2.6 7.2 42.8 -6.8 Federally sponsored credit agencies, net cash borrowings3 .3 .5 1.7 .4 J r3.0 1.8 2.0 ^ncludes outlays of the Pension Benefit Guaranty Corporation, intermediate credit banks, banks for cooperatives, and Federal Postal Service Fund, Rural Electrification and Telephone Revolv- National Mortgage Association (including discount notes and ing Fund, Rural Telephone Bank, Housing for the Elderly or securities guaranteed by the Government National Mortgage Handicapped Fund, and Federal Financing Bank. All data have Association). been adjusted to reflect the return of the Export-Import Bank to includes $2.5 billion of borrowing from the Federal Reserve the unified budget. on September 30, which was repaid October 4 after the new debt 2Checks issued less checks paid, accrued items, and other ceiling bill became law. transactions. Estimated. includes debt of the Federal Home Loan Mortgage Corpora- rRevised. tions, Federal home loan banks, Federal land banks, Federal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

74 Federal Reserve Bulletin • February 1978 budget programs. The Treasury borrowed Net change in mortgage debt outstanding $20.6 billion during the period, including $18.8 In billions of dollars, seasonally adjusted annual rates billion through the sale of marketable obligations. Although increases in outstanding notes 1976 ! 1977 CChhaannggee—— and bonds continued to account for the bulk of Q4 |rQi rQ2 rQ3 CQ4 new marketable borrowing, the $4.7 billion By type of property: (net) raised through the sale of Treasury bills Total 97 107 132 136 140 Residential 77 82 104 108 111 was the largest such amount since the first Other1 20 25 28 28 29 quarter of 1976. By type of holder: Foreign official institutions were a major Commercial banks 14 20 28 30 25 Savings and loans 52 48 59 62 65 source of demand for marketable Treasury Mutual savings banks 5 4 6 8 9 obligations; they increased their holdings by Life insurance companies . 3 2 5 5 7 FNMA and GNMA -5 (3) 7 -4 1 approximately $12.3 billion in the fourth quar- Other2 28 33 27 35 33 ter, primarily in the process of massive purincludes commercial and other nonresidential as well as farm chases of dollars in the foreign exchange marproperties. ket. In addition, the Federal Reserve System includes mortgage pools backing securities guaranteed by the Government National Mortgage Association, Federal Home Loan purchased $1.2 billion (net) of marketable Mortgage Corporation, or Farmers Home Administration, some Treasury obligations, and $0.7 billion of Fed- of which may have been purchased by the institutions shown separately. eral agency issues in the course of providing 3Less than $500 million. reserves to the banking system during the e Partially estimated. r Revised. fourth quarter. State and local governments, using the proceeds of advance refunding operrowed funds in order to sustain their high level ations, invested $2.4 billion in special nonof mortgage lending. Advances from Federal marketable Treasury obligations. home loan banks increased $2.6 billion on a seasonally adjusted basis, the largest quarterly expansion since 1973-74. Borrowings from MORTGAGE AND other sources, including mortgage-backed CONSUMER CREDIT bond issues and commercial bank loans, also rose considerably. Liquid asset holdings of Net mortgage lending during the fourth quar- savings and loan associations were not run ter rose to an estimated seasonally adjusted down significantly, however, and as a perannual rate of $140 billion, exceeding the third centage of total assets, such holdings requarter's record of $136 billion. Total annual mained well above the low levels reached in lending on both residential and nonresidential late 1974. properties reached record levels during 1977, Among other major lenders, commercial with strength in the residential sector concen- banks added to their mortgage holdings at a trated in the 1- to 4-family area. Multifamily residential mortgage lending, though some- Deposits Savings and loans what recovered from depressed 1975-76 vol- Annual rate of change, per umes, remained well below the levels of 1972-74. 16 Savings and loan associations continued to be the predominant suppliers of residential mortgage funds during the fourth quarter, ex- 8 panding their loan portfolios at a record seasonally adjusted annual rate of $65 billion. in i 0 Confronted with a slowing in deposit inflows Q4 Q1 Q2 Q3 Q4 during the October-December period, these 76 1977 associations increased their reliance on bor- Seasonally adjusted. Quarterly averages at annual rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Developments, Q4 1977 75 seasonally adjusted annual rate of $25 billion ing the fourth quarter compared with the rate during the fourth quarter, down somewhat increases on other long-term instruments. Avfrom the record pace of $30 billion in the third erage rates on new commitments for convenquarter. Mortgage lending by life insurance tional new-home mortgages increased from companies increased during the latest quarter, 9.00 per cent at the end of September to 9.10 reflecting for the most part stepped-up lending per cent at year-end. on commercial properties. Issues of Consumer instalment credit , the other major mortgage-backed, pass-through securities— source of household financing, is estimated to primarily obligations backed by Federally un- have expanded at a seasonally adjusted annual derwritten mortgages and guaranteed by the rate of $29 billion during the fourth quarter, Government National Mortgage Association— little changed from the third quarter's $30 expanded briskly as well. billion pace. A moderation in the growth of Despite a continued heavy demand for automobile credit, which in part reflected a mortgage credit coupled with a slowing in weakening in automobile sales, was largely deposit inflows to thrift institutions, home offset by stronger increases in other compomortgage interest rates rose only slightly dur- nents of consumer credit. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 Survey of Time and Savings Deposits at Commercial Banks, October 1977 Inflows to total time and savings accounts at creased only $500 million—the smallest inall insured commercial banks slowed some- crease in 3 years. For the first time since April what in the 3-month period ended October 26, 1970, small-denomination fless than $100,000) 1977. Total time and savings deposits, not time accounts registered a net outflow of seasonally adjusted, rose a little more than $12 nearly $1.8 billion, in contrast to the $3.8 billion in comparison with an increase of billion gain of the previous 3-month period. In nearly $14 billion during the previous 3-month light of these weak deposit inflows, the period. According to the results of the most strengthening demand for business loans, and recent survey of time and savings deposits,1 the the continued strong demand for real estate distribution of inflows among types of deposits and consumer loans, the volume of large-deand maturity categories contrasts markedly nomination (greater than $100,000) time acwith the previous quarter, reflecting in part the counts increased almost $13 billion in the shift in the term structure of yields in financial 3-month interval from July to October, nearly markets. Competing money market rates rose double the $6% billion increase of the previous above the shorter-term ceilings on rates pay- 3 months. able by commercial banks, while bank rates on long-term deposits remained competitive. After having increased $2.5 billion in the previous survey quarter, savings deposits in- SAVINGS DEPOSITS By the end of October, with the 30-day Treasury bill rate % of a percentage point higher NOTE.—Rebekah F. Wright of the Board's Division of than the legal maximum of 5 per cent that Research and Statistics prepared this article. 1 Surveys of time and savings deposits (STSD) at all banks may pay on savings accounts, savings member banks were conducted by the Board of Gover- deposits grew less than lA of a per cent, not nors in late 1965, in early 1966, and quarterly in 1967. In seasonally adjusted, over the survey quarter. January and July 1967 the surveys also included data for all insured nonmember banks collected by the Federal Domestic governmental units proved most Deposit Insurance Corporation (FDIC). Since the begin- sensitive to the opportunities for higher yields ning of 1968 the Board of Governors and the FDIC have elsewhere and decreased their savings balconducted joint quarterly surveys to provide estimates for all insured commercial banks based on a probability ances about $400 million, or nearly 8 per cent, sample of banks. The results of all earlier surveys have from July to October. Over this same period, appeared in previous BULLETINS from 1966 to 1977, the individual holdings of such deposits remained most recent being November 1977. The current sample—designed to provide estimates of about unchanged with an increase of only $180 the composition of deposits—includes about 560 insured million, or Vio of a per cent. In contrast, commercial banks. For details of the statistical methodolsavings deposits of businesses rose more than ogy, see "Survey of Time and Savings Deposits, July 1976" in the BULLETIN for December 1976. $750 million or IV2 per cent, a much larger Detailed data for this survey (formerly contained in increase than in the previous 3-month period. appendix tables) are available on request from Publica- Despite the restrained growth in savings tions Services, Division of Administrative Services, Board of Governors of the Federal Reserve System, deposits, the proportion of banks paying less Washington, D.C. 20551. than the ceiling rate on new issues of savings Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Survey of Time and Savings Deposits 77 deposits was essentially unchanged. The the July and October surveys, many banks, weighted-average rate paid on all new issues particularly large banks with total deposits of of savings deposits was 4.90 per cent in Octo- more than $100 million, raised their offering ber. rates on small-denomination time deposits to the maximum regulatory limits throughout the maturity structure. Most notably, the proportion of large banks paying the legal maximum SMALL-DENOMINATION of 5Vi per cent on time deposits maturing in 90 TIME DEPOSITS to 180 days rose from 88 to nearly 96 per cent. Market rates on most intermediate-term debt Likewise, 97 per cent of all large banks were instruments moved well above the regulatory paying the ceiling rate of 6V2 per cent on smallceiling rates on small-denomination time de- denomination time deposits maturing in 2V2 to posits of comparable maturity, following the 4 years, up from 92 per cent in the previous rising pattern of short-term rates that had survey quarter. In the longest maturity range begun in the second quarter of 1977. Between of 6 years or more, in which the ceiling rate 1. Types of time and savings deposits held by insured commercial banks on survey dates, April 27, July 27, and October 26, 1977 Deposits Number of issuing banks TTyyppee ooff ddeeppoossiitt In millions of dollars Percentage change Apr. 27 July 27 Oct. 26 Apr. 27 July 27 Oct. 26 Apr. 27- July 27- July 27 Oct. 26 Total time and savings deposits 14,397 14,405 14,383 504,299 518,117 530,210 2.7 2.3 Savings 1144,,339977 1144,,440055 14,383 221122,,886600 215,391 215,902 1.2 .2 Issued to: Individuals and nonprofit organizations... 14,397 14,405 14,383 196,394 199,629 199,809 1.6 . 1 Partnerships and corporations operated for profit (other than commercial banks). 9,003 8,986 9,199 9,880 10,310 11,075 4.4 7.4 Domestic governmental units 6,639 6,922 7,868 6,444 5,310 4,904 -17.6 -7.7 All other 731 704 712 143 142 114 -.3 -19.7 IRA and Keogh Plan time deposits with oorriiggiinnaall mmaattuurriittiieess ooff 33 yyeeaarrss oorr mmoorree...... 00)) 00)) 88,,999944 00)) 11,,556600 Other interest-bearing time deposits in denominations of less than $100,000 14,103 14,173 14,151 163,602 167,363 165,570 2.3 -1.1 Issued to: Domestic governmental units 10,531 10,789 11,017 4,789 4,688 4,378 -2.1 -6.6 Accounts with original maturity of: 30 up to 90 days 4,360 4,812 5,256 945 1,068 955 13.0 -10.6 90 up to 180 days 8,364 8,321 8.212 1,679 1,622 1,417 -3.4 -12.6 180 days up to 1 year 4,104 3,774 4,882 847 746 827 -11.9 10.8 1 year and over 8,152 8,345 8,595 1,317 1,253 1,178 -4.9 -5.9 Other than domestic governmental units.... 1144,,007744 14,173 14,151 158,814 116622,,667744 161,192 2.4 -.9 Accounts with original maturity of: 30 up to 90 days 5,916 5,836 6,676 7,220 7,635 7,358 5.7 -3.6 90 up to 180 days 11,784 11,495 11,699 31,747 31,599 30,822 -.5 -2.5 180 days up to 1 year 8,519 8,264 8,984 4,095 4,661 3,465 13.8 -25.6 1 up to 2l/i years 13,720 13,701 13,820 34,077 34,207 34,398 .4 .6 2Vi up to 4 years 12,452 12.628 12,578 18,119 18,768 18,716 3.6 -.3 4 up to 6 years 12,394 12,108 12,416 50,962 51,691 50,525 1.4 -2.3 6 years and over 9,082 9,372 8,957 12,594 14,113 15,908 12.1 12.7 Interest-bearing time deposits in denominations of $100,000 or more 11,242 11,376 1111,,777711 121,699 128,593 141,310 5.7 9.9 Non-interest-bearing time deposits 1,665 1,709 1,748 4,729 4,790 4,057 1.3 -15.3 In denominations of: Less than $100,000 1,287 1,378 1,436 1,358 1,396 846 2.8 -39.4 $100,000 or more 769 740 724 3,371 3,394 3,211 .7 -5.4 Club accounts (Christmas savings, vacation, or similar club accounts) 8,754 9,155 8,886 1,409 1,981 1,811 40.5 -8.5 1 Data not collected. issuing banks. However, small amounts of deposits held at banks that had discontinued issuing certain deposit types are included in the NOTE.—All banks that had either discontinued offering or never amounts outstanding. offered certain deposit types as of the survey date are not counted as Figures may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 Federal Reserve Bulletin • February 1978 2. Small-denomination time and savings deposits held by insured commercial banks on October 26 compared with July 27, 1977, by type of deposit, by most common rate paid on new deposits in each category, and by size of bank Size of bank Size of bank (total deposits in millions of dollars) (total deposits in millions of dollars) All banks All banks Deposit group, and distribution of deposits by Less than 100 100 and over Less than 100 100 and over most common rate Oct. 26 July 27 Oct. 26 July 27 Oct. 26 July 27 Oct. 26 July 27 Oct. 26 July 27 Oct. 26 July 27 Amount of deposits (in millions of dollars). Number of banks, or percentage distribution or percentage distribution Savings deposits Individuals and nonprofit organizations Issuing banks 14,383 14,405 13,382 13,406 1,001 999 199,809 199,629 76,072 75,312 123,737 124,317 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.00 or less 4.6 4.5 4.5 4.4 5.5 4.7 3.8 3.6 3.2 3.1 4.1 3.9 4.01-4.50 9.7 10.9 9.9 11.2 7.6 7.3 10.2 11.4 10.8 12.1 9.9 10.9 4.51-5.00 85.7 84.6 85.6 84.3 86.9 88.0 86.0 85.0 86.0 84.7 86.0 85.2 Paying ceiling rate1... 85.7 84.6 85.6 84.3 86.9 87.9 86.0 85.0 86.0 84.7 86.0 85.1 Partnerships and corporations Issuing banks 9,199 8,986 8.209 8,001 990 985 11,075 10,309 3,717 3,107 7,358 7,202 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.00 or less 1.4 1.1 1.4 1.1 1.6 1.2 1.2 .8 1.1 1.0 1.2 .8 4.01-4.50 7.8 8.4 8.0 8.6 6.3 7.0 8.2 8.9 10.2 9.6 7.2 8.6 4.51-5.00 90.8 90.5 90.6 90.3 92.0 91.8 90.6 90.3 88.7 89.4 91.6 90.7 Paying ceiling rate1... 90.6 90.1 90.4 89.9 92.0 91.4 90.6 89.5 88.7 89.3 91.6 89.5 Domestic governmental units Issuing banks 7,868 6,922 7,178 6.279 691 643 4,904 5,310 2,502 2,494 2,401 2,817 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.00 or less 5.2 2.8 5.5 2.9 2.1 1.3 2.4 2.1 3.7 3.1 1.1 1.1 4.01-4.50 10.7 10.8 10.9 10.9 9.3 9.5 11.4 8.9 19.1 9.9 3.4 8.0 4.51-5.00 84.0 86.5 83.6 86.2 88.7 89.2 86.1 89.0 77.1 87.0 95.6 90.9 Paying ceiling rateJ... 83.6 85.8 83.2 85.7 88.7 87.0 86.0 88.2 76.8 86.8 95.6 89.4 All other Issuing banks 712 704 546 617 165 87 114 142 32 46 82 96 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.00 or less 16.0 .4 20.4 (2) 1.7 3.2 1.2 .7 2.2 (2) .8 1.0 4.01-4.50 11.5 (2) 14.9 (2) (2) (2) (2) (2) (2) (2) (2) (2) 4.51-5.00 72.5 99.6 64.7 100.0 98.3 96.8 98.8 99.3 97.8 100.0 99.2 99.0 Paying ceiling rate1... 72.5 99.6 64.7 100.0 98.3 96.8 98.8 99.3 97.8 100.0 99.2 99.0 IRA and Keogh plan time deposits with original maturities of 3 years or more Issuing banks 8,994 8,101 893 1,558 662 895 Distribution, total 100 100 100 100 100 100 100 100 100 100 100 100 6 00 or less 10.2 10. 5 6.9 4.8 4.4 5.0 6 01-7 00 8.2 8. 3 7.3 4.0 4.5 3.7 7 01-7 50 56.9 58.5 42.6 49.3 59.0 42.1 7 5l_7 75 24.7 22.7 43.3 41.9 32.0 49.2 P/iVf ti if /*/if /Vti ft rnto 1 2244..55 2222..44 4433..33 4411..88 3311..88 4499..22 Time deposits in denominations of less than $100,000 Domestic governmental units: Maturing in— 30 up to 90 days Issuing banks 55,,225566 4,812 4,580 4,165 667755 647 955 1,068 567 714 388 354 Distribution, total... 100 100 100 100 100 100 100 100 100 100 100 100 4.50 or less 2.6 1.7 2.4 .9 4.1 6.7 .5 7.3 .2 9.2 1.0 3.7 4.51-5.00 58.6 71.6 56.6 71.3 72.5 72.9 54.1 58.4 56.4 62.9 50.6 49.2 5.01-5.50 22.5 17.6 24.5 17.4 9.5 19.2 22.0 25.8 24.8 16.5 17.9 44.4 5.51-7.75 16.3 9.1 16.6 10.3 13.9 1.2 23.4 8.5 18.6 11.4 30.5 2.7 Paying ceiling rate1... (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) 90 up to 180 days 8,212 8,321 7,451 7,579 776622 742 1,416 1,619 1,047 1,215 369 404 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.50 or less 1.2 .4 1.2 .3 1.6 2.1 .2 .5 .2 .4 .2 .8 4.51-5.00 13.2 13.2 13.5 13.3 9.9 11.4 12.0 12.7 13.8 14.5 6.8 7.2 5.01-5.50 74.4 81.7 74.2 81.5 76.7 84.0 76.4 84.1 76.7 81.8 75.3 90.9 5.51-7.75 11.2 4.7 11.1 4.9 11.8 2.5 11.4 2.8 9.2 3.3 17.6 1.2 Paying ceiling rate1... (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) 180 days up to 1 year Issuing banks 4,882 3,774 4,307 33,,225511 557766 523 826 744 587 449911 223399 225533 Di 4 st . r 5 i 0 b u or ti o le n s , s total. . . 100 .6 100 .6 100 .7 1 ( 0 2 0 ) 100 .2 10 4 0 . 2 1 ( 0 2 0 ) 100 .3 1 ( 0 2 0 ) 1 ( 0 2 0 ) 1 ( 0 2 0 ) 100 .9 4.51-5.00 7.9 10.3 7.4 10.3 11.2 10.1 20.3 24.6 12.3 17.0 39.9 39.2 5.01-5.50 65.5 72.9 65.1 73.3 68.6 70.6 47.1 48.0 49.8 46.3 40.6 51.4 5.51-7.75 26.0 16.2 26.8 16.4 20.1 15.2 32.6 27.1 37.9 36.7 19.5 8.6 Paying ceiling rate1... (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Survey of Time and Savings Deposits 79 Size of bank Size of bank (total deposits in millions of dollars) (total deposits in millions of dollars) All banks All banks Deposit group, and distribution of deposits by Less than 100 100 and over Less than 100 100 and over most common rate Oct. 26 July 27 Oct. 26 July 27 Oct. 26 | July 27 Oct. 26 July 27 Oct. 26 July 27 Oct. 26 July 27 Amount of deposits (in millions of dollars), Number of banks, or percentage distribution or percentage distribution Time deposits in denominations of less than $100,000 (cont.) Domestic governmental units (cont.) 1 year and over Issuing banks 8,595 8,345 7,807 7,576 787 769 1,172 1,247 945 937 227 331100 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 5.00 or less 2.4 4.2 2.1 3.9 5.8 7.4 .6 2.2 . 1 1.6 2.6 3.7 5.01-5.50 3.8 6.2 3.6 6.0 6.5 8.4 5.2 8.1 .8 3.4 23.6 22.1 5.51-6.00 65.6 70.4 65.7 70.8 64.7 66.6 64.4 73.0 67.1 75.7 53.1 64.6 6.01-7.75 28.1 19.1 28.6 19.3 23.0 17.6 29.8 16.8 32.0 19.2 20.8 9.5 Paying ceiling rate1... (2) (2) (2) (2) (2) .4 (2) .1 (2) (2) (2) .3 Other than domestic governmental units: Maturing in— 30 up to 90 days Issuing banks 6,676 5,836 5,787 4,952 889 885 7,336 7,611 11,,771100 11,,554411 55,,662266 66,,007700 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.50 or less 1.5 5.4 1.3 5.3 3.0 5.7 .7 1.7 (2) .3 1.0 2.1 4.51 5.00 98.5 94.6 98.7 94.7 97.0 94.3 99.3 98.3 100.0 99.7 99.0 • 97.9 Paying ceiling rate1... 98.5 94.2 98.7 94.7 96.7 91.9 99.3 97.5 100.0 99.7 99.0 97.0 90 up to 180 days Issuing banks 11,699 11,494 10,715 10,516 984 979 30,726 31,587 12,490 12,775 18,236 18,812 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.50 or less .6 .9 .6 .9 (2) .2 (2) (2) (2K (2) , (2) (2) 4.51-5.00 7. 1 9.6 7.5 10.1 2.5 4.2 5.8 7.6 6.2 9. 1 5.4 6.6 5.01-5.50 92.3 89.6 91.8 89.0 97.5 95.5 94.2 92.3 93.8 90.9 94.6 93.4 Paying ceiling rate1... 92.2 87.0 91.8 86.9 95.7 88.0 90.2 85.8 93.8 89.7 87.7 83.1 180 days up to 1 year Issuing banks 8,984 8,264 8,124 7,402 860 863 3,448 4,650 1,868 2,971 1,579 1,680 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 4.50 or less .5 .5 .4 .4 1.4 1.8 . 1 . 1 (2) (2) .2 .3 4.51-5.00 6.8 7.1 7.3 7.5 2.8 3.8 3.7 2.8 5.0 3.0 2.1 2.6 5.01 5.50 92.7 92.3 92.4 92.1 95.7 94.4 96.3 97.1 95.0 97.0 97.7 97.1 Paying ceiling rate1... 92.3 91.2 92.1 91.4 94.6 89.1 96.2 95.9 95.0 96.6 97.7 94.6 1 up to 2Vi years Issuing banks 13,820 13,701 12,829 12,714 991 987 34,397 34,207 21,445 21,239 12,952 12,967 Dis 5 t . r 0 i 0 b u o t r i o le n s , s total. . . 100 .7 100 .7 100 .7 100 .8 100 . 1 100 .2 100 . 1 100 . 1 100 .2 100 .2 100 . 1 1 ( 0 2 0 ) 5.01-5.50 3.6 2.9 3.8 3.0 .7 2.4 1.8 1.9 2.6 1.6 .6 2.3 5.51-6.00 95.8 96.4 95.5 96.3 99.2 97.4 98.1 98.0 97.3 98.2 99.3 97.6 Paying ceiling rate1... 95.4 95.6 95.3 95.8 97.6 93.5 97.8 95.7 97.3 97.5 98.8 92.8 2Vi up to 4 years Issuing banks 12,578 12,619 11,607 11,661 971 958 18,682 18,691 10,771 10,706 7,911 7,985 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 6.00 or less 2.5 2.8 2.5 2.6 2.2 5.2 1.2 2.1 1.0 .4 1.5 4.3 6.01 6.50 97.5 97.2 97.5 97.4 97.8 94.8 98.8 97.9 99.0 99.6 98.5 95.7 Paying ceiling rate1... 97.3 94.7 97.3 95.0 96.9 91.7 98.3 95.1 98.5 98.6 98.1 90.6 4 up to 6 years Issuing banks 12,416 12,108 11,445 11,152 970 956 50,215 50,925 26,795 25,992 23,420 24,932 Distribution, total. . . 100 100 100 100 100 100 100 100 100 100 100 100 6.50 or less 2.2 2.0 2.0 1.6 4.8 7.1 2.5 4.5 .7 .4 4.5 8.9 6 51-7 00 16.8 18.7 17.6 19.2 7.7 12.7 14.5 16.6 19.4 21.1 8.8 12.0 7 01-7.25 81.0 79.3 80.5 79.2 87.5 80.2 83.1 78.8 79.9 78.5 86.7 79.1 Paying ceiling rate1... 81.0 79.3 80.5 79.2 87.5 79.9 83.1 78.8 79.9 78.5 86.7 79.0 6 years and over Issuing banks 8,957 9,362 8,098 8,534 859 828 15,606 13,622 6,505 5,920 9,101 7,702 Dis 5 t . r 0 i 0 b u o t r i o le n s , s total. . . 100 .6 100 .8 100 .6 100 .8 100 .2 100 .7 1 ( 0 2 0 ) „ 1 ( 0 2 0 ) 1 ( 0 2 0 ) , 100 1 ( 0 2 0 ) 1 ( 0 2 0 ) 5 01 7 25 7.3 5.3 7.1 4.7 9.4 11.3 7.4 7.7 3.3 3.2 10.4 11.1 7 26 7.50 92.1 93.9 92.3 94.5 90.4 88.0 92.5 92.3 96.6 96.8 89.6 88.8 Paying ceiling rateK.. 92.1 93.9 92.3 94.5 90.2 88.0 90.0 92.3 96.6 96.8 85.2 88.8 Club accounts Issuing banks 8,886 9,155 8,170 8,417 715 738 1,768 1,849 772 773 996 1,076 Distribution, total... 100 100 100 100 100 100 100 100 100 100 100 100 0 00 .... 46.6 48.6 48.3 50.7 27.5 23.8 22.6 20.1 32.7 29.7 14.7 13.1 0 01-4 00 17.5 16.8 17.7 16.8 15.2 16.4 13.0 17.9 17.8 23.2 9.3 14.2 4 oi-4 50 7.5 7.3 7.3 7.1 9.6 9.6 8.9 13.6 9.7 13.2 8.3 13.8 4.51 5.50 28.4 27.4 26.7 25.4 47.7 50.3 55.5 48.4 39.8 33.8 67.6 58.9 1 See BULLETIN Table A8 for the ceiling rates that existed at the in the amounts outstanding. Therefore, the deposit amounts shown time of each survey. in Table 1 may exceed the deposit amounts shown in this table. 2 Less than .05 per cent. The most common interest rate for each instrument refers to the NOTE.—All banks that either had discontinued offering or had stated rate per annum (before compounding) that banks paid on the never offered particular deposit types as of the survey date are not largest dollar volume of deposit inflows during the 2-week period counted as issuing banks. Moreover, the small amounts of deposits immediately preceding the survey date. held at banks that had discontinued issuing deposits are not included Figures may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 Federal Reserve Bulletin • February 1978 3. Average of most common interest rates paid on various categories of time and savings deposits at insured commercial banks on October 26, 1977 Bank size (total deposits in millions of dollars) Type of deposit All size Less 20 up 50 up 100 up 500 up 1,000 groups than 20 to 50 to 100 to 500 to 1,000 and over Savings and small-denomination time deposits 5.55 5.75 5.70 5.61 5.49 5.48 5.41 Savings, total 4.90 4.95 4.88 4.92 4.86 4.88 4.92 Individuals and nonprofit organizations 4.90 4.95 4.89 4.92 4.86 4.87 4.92 Partnerships and corporations 4.94 5.00 4.88 4.98 4.92 4.93 4.95 Domestic governmental units 4.92 4.90 4.83 4.85 4.97 5.00 4.96 All other 4.97 3.04 5.00 5.00 4.96 5.00 5.00 IRA and Keogh Plan time deposits with maturity of 3 years or more 7.44 7.42 7.29 7.51 7.44 7.52 7.49 Other time deposits in denominations of less than $100,000, total 6.39 6.36 6.50 6.42 6.38 6.38 6.32 Domestic governmental units, total 5.71 5.76 5.78 5.48 5.50 6.19 5.60 Maturing in— 30 up to 90 days 5.38 5.38 5.40 5.02 5.30 6.08 5.30 90 up to 180 days 5.51 5.51 5.44 5.44 5.55 5.93 5.63 180 days up to 1 year 5.63 5.67 5.87 5.32 5.27 6.13 5.88 1 year and over 6.26 6.33 6.25 6.40 5.89 6.75 6.14 Other than domestic governmental units, total 6.41 6.39 6.52 6.43 6.39 6.38 6.33 Maturing in— 30 up to 90 days 4.99 5.00 5.00 5.00 4.99 4.96 5.00 90 up to 180 days 5.47 5.48 5.47 5.45 5.50 5.48 5.43 180 days up to 1 year 5.48 5.47 5.50 5.46 5.50 5.46 5.48 1 up to 2Vi years 5.99 5.98 6.00 5.98 6.00 6.00 5.99 2 Vi up to 4 years 6.49 6.50 6.49 6.49 6.48 6.49 6.50 4 up to 6 years 7.19 7.21 7.17 7.21 7.19 7.21 7.17 Over 6 years 7.47 7.49 7.48 7.48 7.46 7.48 7.43 MEMO : Club accounts1 3.60 3.20 2.18 3.68 3.84 3.54 4.50 1 Club accounts are excluded from all of the above categories. amount of that type of deposit outstanding. All banks that had either discontinued offering or never offered particular deposit types as of the NOTE.—The average rates were calculated by weighting the most survey date were excluded from the calculations for those specific common rate reported on each type of deposit at each bank by the deposit types. remained above comparable market rates, the previous 3-month period. Even in the 4- to 6proportion of large banks paying the maximum year category, where the ceiling rate remained of IV2 per cent increased from 88 per cent to 90 above market rates on instruments of compaper cent over the period from July to October. rable maturity, the level of deposits declined, Despite the increase in the number of banks as interest-sensitive depositors apparently offering ceiling rates on small-denomination shifted maturing 4 4wild card" deposits to thrift time deposits, yields on money market in- institutions.2 However, the decline shown in struments remained higher than those that the table for the category is probably overbanks could offer except in the longest matur- stated because an unknown portion of deposits ity ranges. Consequently, from July to Octo- formerly included has been reclassified into the ber the outstanding volume of small- new category of time deposits discussed in the denomination time deposits fell $1.8 billion, or next section. On the other hand, nondomestic 1 per cent, not seasonally adjusted, following governmental units chose to enlarge their the nearly $4 billion rise from April to July. holdings of such deposits maturing in 6 years Among ownership categories, domestic or more. These deposits rose almost $1.8 governmental entities reduced their holdings of such deposits, most of which mature in less than 1 year, by $310 million, or 6V2 per cent. 2 Between July and October 1973, interest rate ceilings Similarly, small-denomination time deposits were temporarily suspended on time deposits with maturities greater than 4 years and with denominations of with maturities of less than 4 years held by $1,000 to $100,000. During this period, banks issued an nondomestic governmental entities declined estimated $9 billion of such deposits. Effective November by just over $2 billion, or nearly 2lA per cent, 1, ceiling rates at commercial banks and thrifts of IVA per cent and IVi per cent, respectively, were established for in contrast to the $1.6 billion inflow of the 4-year deposits. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Survey of Time and Savings Deposits 81 billion, or by 13 per cent, compared with the billion. One-quarter of all banks offering such $1.5 billion rise over the 3 months from April accounts paid the maximum rate of 73A per to July. cent permitted under Regulation Q, while more As a result of the general rise in offering than four-fifths paid at least 7 per cent. rates among banks for small-denomination Banks increased their outstanding volume time deposits and the concentration of growth of interest-bearing, large-denomination time in the longest-maturity category with a higher deposits by nearly 10 per cent from July to ceiling rate, the weighted-average rate paid on October, from a level of almost $129 billion to new issues of such deposits rose from 6.35 more than $141 billion. This, the largest per cent to 6.39 per cent. gain in such deposits since the July 1974 survey, reflected the slower growth of deposits subject to Regulation Q ceilings. Non-interestbearing time deposits—principally escrow OTHER TIME DEPOSITS accounts and compensating balances held In July 1977, a new category of time deposits against loans—declined $700 million.3 Club was created under Regulation Q for individual accounts declined, seasonally $170 million to a retirement account (IRA) and Keogh Plan de- level of $1.8 billion. • posits with original maturities of 3 years or more. In order to monitor the level of these 3 Non-interest-bearing time deposits of less than deposits, an item corresponding to the new $100,000 accounted for 75 per cent of the total decline. category has been added to the survey. As of However, because the standard error of this category is October 26, 1977, the outstanding volume of extremely high, it is difficult to interpret the decline. For information on the standard error of each category see IRA and Keogh accounts with original the "Survey of Time and Savings Deposits, July 1976" the maturities of 3 years or more stood at $1.6 December 1976 Federal Reserve BULLETIN. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 Federal Reserve Bulletin • February 1978 Staff Economic Studies The research staffs of the Board of Governors In all cases the analyses and conclusions set of the Federal Reserve System and of the forth are those of the authors and do not Federal Reserve Banks undertake studies that necessarily indicate concurrence by the Board cover a wide range of economic and financial of Governors, by the Federal Reserve Banks, subjects, and other staff members prepare or by the members of their staffs. papers related to such subjects. In some in- Single copies of the full text of each of the stances the Federal Reserve System finances studies or papers summarized in the BULLEsimilar studies by members of the academic TIN are available in mimeographed form. The profession. list of Federal Reserve Board publications at From time to time the results of studies that the back of each BULLETIN includes a sepaare of general interest to the economics pro- rate section entitled ' 'Staff Economic Studies" fession and to others are summarized—or they that enumerates the papers prepared on these may be printed in full—in this section of the studies for which copies are currently available Federal Reserve BULLETIN. in mimeographed form. STUDY SUMMARY EXTERNAL CAPITAL FINANCING REQUIREMENTS OF COMMERCIAL BANKS: 1977-81 GERALD A. HANWECK AND JOHN J. MINGO—Staff, Board of Governors Prepared as a staff study in December 1977 Since 1974 the soundness and stability of the to average nearly $4.7 billion annually in excommercial banking system have markedly ternal capital financing over that period. This improved—capital, liquidity, and earnings amount, which substantially exceeds the ratios have made gains, and loan losses have yearly capital issuances of the last 5 years, begun to subside. However, there is concern could strain future equity and long-term debt about the ability of the banking system to markets. The report concludes that, unless finance an economic recovery while also there is a vast improvement in the market for maintaining the present capital standards, un- bank stock, bank capital ratios will decline less banks are willing or are able to issue large significantly and/or bank loan expansion will amounts of equity and approved debt capital. be severely constrained. This concern has been the subject of a recent This staff economic study critiques the report prepared by the staff of the Irving Trust Irving Trust Company projections by investi- Company. The report projects bank capital gating the implications of alternative assumpneeds for the 1977-81 period—assuming that tions and economic scenarios. In addition, it the current aggregate capital/asset ratio is held discusses the propriety of using aggregate constant—and concludes that banks will need capital/asset ratios as the sole, or even as the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Staff Economic Studies 83 most appropriate, indicator of banking system Even assuming relatively rapid growth rates soundness or as a practical constraint on bank for bank assets, the potential for a decline expansion. in capital ratios and the adverse effects of Using alternative "best guess" assumptions such a decline are mitigated by several facto those in the Irving Trust study, the authors tors. First, some improvement in the market estimate aggregate external bank capital needs for bank stock is to be expected. Second, at $3.5 billion per year over the 1977-81 there could be increased reliance on longperiod. This amount exceeds only slightly the term subordinated debt, under current reguapproximately $3.1 billion per year in new latory guidelines, to satisfy external capiexternal bank capital generated over the past 5 tal needs. Third, some minor declines in years—including new bank formations and aggregate bank capital ratios need not be issues of locally traded bank stock. The of great concern, especially if other indicators study's projections are based on the critical of bank soundness—purchased money ratios, assumption that bank assets will grow at liquid assets, and loan quality—continue to roughly, but no more than, 10 per cent over improve from their 1974 lows. the period. This projected rate compares with The study concludes that banks, in the an actual average yearly growth rate of aggregate, should have little difficulty in mainconsolidated assets of 8 per cent over the last taining capital/asset ratios in future years 4 years, although large banks grew at rates through the issuance of new equity, through much higher than the industry average. long-term subordinated debt, and through the Should aggregated banking assets grow at retention of earnings. The problem, in the regumuch higher rates in the future—for instance, latory sense, will continue to be evident in in excess of 12 per cent per year—there is a those banks that expand beyond their ability possibility of a decline in aggregate bank to absorb increased risk, thereby requiring capital ratios. special supervisory attention. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 Statements to Congress Statement by Stephen S. Gardner, Vice $871 billion is estimated to be needed to cover Chairman, Board of Governors of the Federal requirements through fiscal 1979, with about Reserve System, before the Subcommittee on $15 billion of the $90 billion increase allotted Taxation and Debt Management of the Com- to expected growth in agency holdings. mittee on Finance, U.S. Senate, February 6, The projected need for a higher debt ceiling 1978. also reflects the administration's estimate that the Treasury will have to borrow $66 billion Under the congressional budget procedures from the public during the current fiscal year adopted in 1974, increases in the Federal debt and then another $73 billion during fiscal 1979. ceiling have become essentially a reflection of These estimates include borrowing to finance the Federal budget totals the Congress sets so-called "off-budget" needs as well as reguwith the help of its new budget committees. lar budget requirements. Since "off-budget" Debt ceiling hearings, nevertheless, provide needs add to Federal demands on financial an opportunity for review and reassessment of markets, a borrowing figure that covers both the broader economic implications of a large types of operations provides a more comand rapidly growing Federal debt. My tes- prehensive measure of the financial pressures timony today will, therefore, focus as re- being exerted by Federal requirements. It quested on some of the financial implications should be noted that the $66 billion and $73 of an expanding public debt. billion figures relate only to net cash borrow- The Federal budget document recently sent ing from the public. Gross borrowing to refito the Congress provides projections of ex- nance public holdings of maturing Federal pected increases in the Federal debt subject to debt will be several times the volume of net ceiling, along with estimates of the likely di- borrowing. mensions of needed changes in the debt ceiling Successive fiscal-year cash borrowing totals itself. While the outstanding Federal debt is of $66 billion and $73 billion are obviously expected to remain below the present tempo- large. However, their likely impact on condirary ceiling of $752 billion during the next 2 tions in financial markets will depend on the months, this temporary leeway expires on aggregate volume of savings available in the March 31. Since the permanent debt ceiling is economy and the accumulated demand for still set at $400 billion, a new temporary ceiling funds from other types of borrowers. will obviously be needed by that date. Moreover, the significance of given absolute The budget document estimates that a new dollar totals of Federal deficit financing must temporary ceiling of $781 billion will be be kept in perspective by also considering the needed to accommodate prospective Federal growth in the over-all level of economic activborrowing requirement s through the end of the ity. current fiscal year. Of this $29 billion increase, In fiscal year 1976, net Federal borrowing about $10 billion is needed to cover expected from the public totaled more than $83 billion, growth in agency holdings of Government substantially more than the annual figures now debt, chiefly to fund future Civil Service re- being projected for the current fiscal year and tirement liabilities and unemployment com- for fiscal 1979. However, with the economy in pensation. A further increase in the ceiling to fiscal 1976 still in the early stages of recovery Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 85 from the serious 1974-75 recession, demands Treasury debt, which absorbed a sizable volfor funds from other nonfinancial sectors were ume of new offerings. Open market operations relatively moderate. Businesses were making undertaken by the Federal Reserve to counter sizable net repayments of short-term loans at the excessively rapid monetary growth that commercial banks, and demands for funds to developed in the April and July quarters of finance multifamily housing and commercial 1977 contributed to the rise in short-term properties remained slack. As a result, net rates, although reserves available to the bankborrowing by the Federal Government and ing system expanded significantly during fiscal other nonfinancial sectors, combined, 1977 after remaining essentially unchanged in amounted to about 15 per cent of GNP—a fiscal 1976. reasonable total under the circumstances of Since the end of fiscal 1977, the current and the recovery taking place that year. Moreover, prospective near-term volume of Federal defiwith credit demands moderate, commercial cit financing has expanded considerably. Presbanks and other institutions were still actively sures on Federal financing costs stemming rebuilding liquidity in the aftermath of the from this expanded borrowing might have 1973-74 financial strains. Consequently, there been greater had it not been for two special was a strong demand for U.S. Government types of demands for Treasury debt that besecurities, and the unusually large net Federal came particularly strong in this period. borrowing need was readily accommodated at Foreign investors—chiefly central banks and declining interest rates. other official institutions—invested a substan- In the fiscal year 1977—which ended last tial part of their sharply increased holdings of September—net funds raised by sectors other U.S. dollars in Treasury debt. Also, State and than the Federal Government were more than local governments continued to acquire a large $100 billion above the fiscal 1976 level. Even volume of special Treasury arbitrage bonds though Federal cash borrowing was about $30 and thus limited the volume of new debt the billion lower, total borrowing by all sectors Treasury had to sell to other investors. still showed a large increase and rose as a The Treasury has projected net Federal percentage of GNP. In bond and mortgage cash needs in the current quarter to be not too markets financing outside the Federal sector different from the large volume borrowed in rose by roughly 60 per cent; consumer credit the January quarter of fiscal 1976. During the expanded sharply; and bank lending to busi- May-June period, however, it expects the nesses showed a marked recovery from the weight of Federal borrowing on financial marearlier cyclical slackness. kets to slacken—with some seasonal debt re- As their customers' demands for loans ex- payment. During the July-September quarter, panded, commercial banks sharply curtailed although the Treasury is again likely to face a their acquisitions of Treasury securities; then sizable deficit, net borrowing will probably be during the final quarter of the fiscal year they less than in the current quarter and possibly became sizable net sellers of such issues. little different from the comparable period a Nonfinancial corporations were also sellers of year ago. Treasury debt on balance over the year as a In general, the net impact of the Treasury's whole. future borrowing requirements on financial Thus, changes on both the demand and markets will depend in large measure on the supply sides of financial markets contributed weight of other credit demands at the time. If to upward pressures on market interest rates rising Federal deficits occur in combination during the latter half of fiscal 1977 as the with a general strengthening of other deeconomy continued to expand. Short-term mands, this might very well lead to further interest rates rose the most, but some in- upward pressure on interest rates, particularly creases also developed in note and bond mar- if inflationary increases in the monetary kets, particularly those for intermediate-term aggregates are to be avoided. In order to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 Federal Reserve Bulletin • February 1978 encourage the capital spending by businesses of the debt ceiling is all to the good, since it that is needed to maintain our Nation's eco- should help to avoid the unfortunate disrupnomic growth and international competitive- tion of efficient debt management that invariness, it is, therefore, important to ensure that ably develops when the ceiling reverts back to the Federal Government does not unduly im- its permanent level—even for a few days. pinge on the financial and real resources that Second, the Federal Reserve hopes that your need to be channeled into business expansion. actions will continue to provide the Treasury Before concluding, Mr. Chairman, I would with the requisite statutory flexibility to place like to offer two comments of a strictly opera- new debt in whatever maturity sector of the tional character. First, I think the early timing market will best implement its policy of this hearing in relation to the expiration date goals. • Statement by, Henry C. Wallich, Member, against the mark and the yen, respectively. Board of Governors of the Federal Reserve During the period of September to January System before the Subcommittee on Interna- alone the dollar dropped by 9 per cent against tional Finance of the Committee on Banking, the mark and by 10 per cent against the yen. Housing, and Urban Affairs, U.S. Senate, These wide fluctuations must be viewed in February 6, 1978. the light of unprecedented economic disturbances, including the quadrupling of oil prices I am pleased to appear before this subcommit- in 1973-74, rapid and divergent rates of inflatee today to discuss U.S. exports and the tion around the world, and unprecedentedly influences on them of recent exchange-rate large swings in current accounts among indusmovements.1 trial countries. While with the benefit of At present the dollar's exchange value on a hindsight it would appear that the movement weighted-average basis is slightly above its of exchange rates has been excessive at times, level of March 1973, after considerable fluctu- this was not necessarily discernible at the ations in the nearly 5 years since the wide- moment. In general the system of managed spread adoption of floating exchange rates in floating exchange rates has served the United that month. It reached a peak value in June States, and the world, reasonably well. Indeed 1976, some 10 per cent above its March 1973 it is hard for me to imagine the world economy level. From June 1976 through September functioning as well as it has, in the face of such 1977 it declined slightly; then from September disturbances, under other exchange-rate systhrough January it recorded a sharp 7 per cent tems. drop. U.S. and world trade has continued to grow, Movements against some individual foreign and there is little evidence of major harm to currencies, indeed, have been even wider. For exports and imports from short-term fluctuainstance, the dollar rose by 13 per cent against tions in exchange rates. Our exports rose by the German mark and by 6 per cent against the 68 per cent in value terms and 19 per cent in Japanese yen from March through December volume terms from 1973 Q1 through 1977 Q4. 1975. Then, from June 1976 to January 1978 A serious threat to world trade, however, the dollar declined by 18 and 19 per cent could arise if wide fluctuations in exchange rates were to give rise to protectionist pres- Copies of a recent speech Governor Wallich gave sures in industrial countries, including the related to this subject are available on request from United States. So long as we do not encounter Publications Services, Division of Administrative Servprotectionism abroad, U.S. exports should ices, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. continue to grow. It should be remembered Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 87 that the industries and jobs most damaged by ket shares have not proved to be very reliable. protectionism, at home or abroad, are those So far as I have been able to read the evithat are most productive and dynamic, while dence, our present deficits do not stem from a those protected are usually much less so. general loss of price competitiveness of U.S. Floating exchange rates, so long as markets exports. The price performance of the United function in an orderly manner, in my view help States has generally been better than that to forestall or minimize the resort to protec- abroad over the past couple of years, with the tionist measures. notable exceptions of Switzerland and Ger- Since 1975 the U.S. trade and current ac- many. Indeed, adjusting exchange rates for count balances have swung into heavy deficit, relative price-level movements, we find that as U.S. export growth was dampened by eco- the dollar's so-called "real" exchange value nomic sluggishness abroad while imports has declined by some 9 per cent from the end surged as our economy expanded. The mag- of 1975 to January 1978. That is, taking into nitude, if not the direction, of this massive account both changes in relative price levels swing was largely unanticipated by exchange- and changes in exchange rates, the price commarket participants and has been a major petitiveness of U.S.-produced goods has infactor in the dollar's recent weakness in the creased over this period. exchange markets. A decline in the dollar's real exchange value Studies by the Federal Reserve staff and by produces incentives for U.S. and foreign resiothers attribute the major portion of the de- dents to purchase more goods produced in the cline in our trade and current-account bal- United States and fewer goods produced ances to cyclical developments in the U.S. and abroad. Federal Reserve studies based on past foreign economies. Just as our 1975 current- responses of the trade balance to exchangeaccount surplus reflected in part an economic rate movements indicate that, in the absence recession in 1974-75 that was deeper in the of major secondary disturbances from such an United States than in other industrial coun- exchange-rate movement, the depreciation in tries, so our current-account deficit in 1977 the dollar's weighted-average exchange value reflected the fact that recovery from the reces- since September will lower the current acsion had proceeded faster and further in the count deficit by %\V2 billion to $3 billion at an United States than abroad. As recovery annual rate by the end of 1978 and by $4 billion abroad begins to catch up with that in the to $5Vi billion at the end of 1979, compared United States, we may expect more rapid with the deficit that otherwise would have growth in our exports and a reduction of our prevailed. These estimates, of course, are deficit. subject to a fairly wide margin of error. Another part of our deficit stems from the Our investigations indicate that nearly all of special factors affecting oil. Domestic produc- the trade balance impact of the exchange-rate tion is dropping at a time when total consump- change comes from the export side. We estition is increasing under the stimulus of cyclical mate that the rise in dollar import prices expansion. The resulting scissors effect upon caused by the drop in the dollar will just about oil imports is magnified by the great rise of the offset the decline in import volume resulting price of oil. The oil problem weighs heavily on from that drop. The total value of imports, our balance of payments. Long-term im- therefore, may not be much affected. provement in the balance and a stronger out- The impact of the decline in the dollar's look for the dollar depend importantly on how exchange value upon exports may proceed we deal with our energy situation. through two mechanisms. For products that It does appear as though we have had a have something like a world market price, the decline in the share of our merchandise ex- dollar price will tend to rise quickly. This ports in world markets over the last year or so. increases dollar receipts of exporters and, if However, short-run indications based on mar- U.S. supply is elastic, also the volume of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 Federal Reserve Bulletin • February 1978 exports. Industrial materials tend to fall into Price-adjusted exchange value this category. Higher export prices also may of the weighted-average dollar stimulate efforts of producers to sell abroad. March 1973 = 100 For products that are less standardized, such as machinery or many consumer goods, a Period CPI-adjusted WPI-adjusted drop in the exchange rate may leave the dollar 1973—March 100.0 100.0 price unchanged initially. This enhances com- June 95.9 98.3 September 95.4 96.4 petitiveness and, given an elastic demand December 100.8 98.4 abroad, strongly favors an expansion of ex- 1974—March 100.1 95.5 June 98.0 93.6 ports. Over time, both price and volume of September 100.9 101.2 exports are likely to rise. December 96.4 98.5 On average, according to our studies, ex- 1975—March 90.9 92.5 June 90.6 95.0 port prices are likely to increase only moder- September 98.0 103.6 December 98.3 103.3 ately in response to a depreciation of the dollar, while export volume would tend to rise 1976—March 98.8 102.8 June 100.4 104.3 by somewhat more than half the percentage September 99.2 102.3 December 98.0 102.1 change in the exchange rate. The full impact of the rate change would normally be expected to 1977—March 97.5 101.8 June 96.3 101.2 occur over a period of 2 years following the September 95.7 100.8 December 91.3 96.8 exchange-rate change. With respect to particular products, the 1978—January* 88.9 94.6 increase in export volume depends upon how NOTE—This measure is calculated for each month by dividing demand and supply respond to price changes, the index of the weighted-average exchange value of the dollar including exchange-rate changes. These re- (against 10 leading currencies) by the ratio of foreign to U.S. price indexes. Calculations are shown using both consumer (CPI) sponses, in turn, are affected by the relative and wholesale (WPI) price indexes for comparison. A decline in importance of the United States in world mar- the resulting index implies an increase in U.S. "competitiveness." January figures are preliminary, based on projections of price kets and by the share of exports in total U.S. indexes for that month. output of particular industries. Increases will as the Organization of Petroleum Exporting be greater for those U.S. products whose Countries (OPEC) continues to run huge world market share is relatively small and also current-account surpluses, other countries as those whose export share, in relation to total a group must run deficits. The United States U.S. output, is small. These considerations may have to accept some share of these defisuggest that we should expect to see propor- cits, since many other countries may have tionally greater expansion of manufactured difficulty financing large deficits. While the exports, particularly of consumer goods, than OPEC countries will be placing their surpluses of food or raw material exports. outside their own territory, including presum- The pattern of recent bilateral exchange- ably in the United States, it would not seem rate changes suggests that there will be ad- inappropriate or unsustainable for the United justment in the volume of both exports and States to share in this aggregate non-OPEC imports in U.S. trade with Japan and Europe. deficit. There should also be gains in U.S. exports to I now turn to the subject of exchange rates other markets in which U.S. producers com- and the factors determining them. Exchange pete with Japanese and European producers. rates are determined ultimately by fundamen- Much larger effects on our exports are likely tal economic factors such as relative inflation to come from increasing economic activity in rates, relative interest rates, relative rates of the rest of the world. Since this expected real growth, and other structural factors. Cendevelopment may take some time to mate- tral bank intervention can play only a seconrialize, the anticipated effect in reducing our dary role. This is confirmed by the fact that deficit may also be delayed. Moreover, so long the dollar's decline in 1977 occurred despite Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 89 net intervention purchases of dollars by major disorder has increased, so has the scale of foreign central banks totaling nearly $35 bil- U.S. intervention. Intervention by foreign lion. While a large portion of this intervention central banks, notably those of Germany, Jawas not directly aimed at supporting the dollar pan, and Switzerland also increased in the in general but at moderating the rise of certain fourth quarter of last year and in the first few foreign currencies and rebuilding the reserves days of this year following extremely large and of the United Kingdom and Italy, it neverthe- rapid appreciations of their currencies against less reduced the supply of dollar-denominated the dollar. assets in the hands of the public, and to that This increased scale of intervention, parextent had the effect of generalized interven- ticularly by the United States, should serve to tion. restore some measure of calm to the exchange Despite the ultimate dominance of funda- markets. Indeed, most recently conditions in mental economic forces, the exchange market the markets have become more settled. Let may at times, as the pattern of rate changes me emphasize, however, that intervention can during the last 5 years described earlier indi- be successful in checking short-run excesses cates, produce exaggerated movements. This only if the intervention has fundamental ecomay happen when the market is faced with nomic forces on its side. great uncertainties or is acting under errone- One test, which has sometimes been proous perceptions. One such perception, which posed, of whether actual intervention operaseems to have held sway recently, is an appar- tions serve the purpose of countering disorent and often-voiced belief that the United derly markets by purchases of foreign ex- States would welcome a depreciation of the change when the price drops sharply and sales dollar in order to gain a trade advantage. when it rises sharply, is the degree to which Purportive evidence to support such a view intervention is profitable. With the exception could be the relatively moderate scale of U.S. of the unwinding of the pre-August 1971 supintervention to support the dollar. port operations under fixed exchange rates, Such an interpretation of U.S. policy, of the recent record of Federal Reserve intervencourse, would be entirely erroneous. Its unfor- tion in this regard is quite positive. In each of tunate result could be an excessive deprecia- the 5 years of intervention operations under tion of the dollar that would threaten the the regime of managed floating, the Federal stability of both the U.S. and foreign Reserve has realized modest profits on its economies. It could lead to significant in- current operations in foreign currencies, totalcreases in prices in the United States and ing almost $25 million over the period. While depress investment in export industries and profits are not a necessary criterion of sucimport-competing industries in relatively slug- cessful intervention and certainly not its obgish foreign economies. It could lead to meas- jective, they nevertheless suggest that Federal ures such as greater protection for import- Reserve intervention has tended to smooth competing industries abroad or increased sub- exchange-rate fluctuations. sidization of foreign export industries. In addition to increasing our scale of inter- The intervention policy of the Federal Re- vention to deal with increasing disorder, the serve and the Treasury relies on free markets Federal Reserve Board sought to deal with the in which underlying economic and financial situation in exchange markets by approving an factors determine exchange rates and in which increase in discount rates from 6 to 6V2 per exchange rates, prices, interest rates, and cent on January 6. This step was directed other competitive factors govern the flow of toward restoring calm in the exchange martrade and capital transactions. Exchange mar- kets. A majority of the Board felt that the kets, possibly laboring under misperceptions external situation posed dangers—through adof U.S. exchange rate policy, have been ex- verse effects on economic activity abroad, an tremely disorderly recently. As the scale of increase in the U.S. price level, and possibly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

90 Federal Reserve Bulletin • February 1978 through foreign protectionist measures—that that affect the supply of dollars, the tax syscould ultimately reduce the economic welfare tem, the budget, and through these inflation of U.S. citizens. and economic growth, together with our deci- An action of this kind serves, in very mod- sions with respect to energy, that will deterest measure, to improve the fundamentals mine the balance of payments and the value of affecting the dollar. But ultimately it is policies the dollar. • Statement by Philip E. Coldwell, Member, Both the Reserve Banks and the Board of Board of Governors of the Federal Reserve Governors achieved significant savings in op- System, before the Committee on Banking, erations resulting primarily from accelerated Housing and Urban Affairs, U.S. Senate, programs to achieve cost reductions. Esti- February 8, 1978. mated budget savings at the Banks totaled $19.4 million, or 2.8 per cent below the ap- I am pleased to present a review of the expend- proved budget, and the Board's underrun was itures of the Federal Reserve Banks and the $92,000, or 0.2 per cent below its approved Board of Governors of the Federal Reserve budget. System for 1977 and the budgets of the System Reserve Bank employment dropped below for 1978. As you may recall from our tes- the 25,000 level for the first time since 1973. timony last April, I discussed the programs Estimated employment for 1977 is 24,493, a and progress of the System in improving pro- decrease of almost 800 employees from 1976 ductivity, cost effectiveness, and the quality and more than 2,000 employees since 1974. of Federal Reserve services. These programs Employment at the Board as measured by yielded even better results than expected dur- authorized positions has remained relatively ing 1977, and our projections suggest that steady for the past 2 years and for 1977 further improvements should be forthcoming amounted to 1,587. Continued increases in in 1978. requirements in the regulation areas of bank supervision and consumer affairs and sunshine legislation have been absorbed with little 1977 RESULTS change in employment through improvements in productivity and careful reallocation of re- Let me begin today by reviewing the financial sources. and operating results of the System during Major developments in 1977 affecting Sys- 1977. The approved operating budgets for 1977 tem expenses included a new program for totaled $704.8 million for the Federal Reserve consumer compliance examinations, educa- Banks, but estimated expenses are $685.4 mil- tional programs to familiarize bankers with lion, an increase of only 4.1 per cent over 1976 consumer laws and regulations, an expanded operating expenses. This modest growth in bank holding company inspection program expenses at the Reserve Banks was achieved and a new reporting format, volume increases despite an expansion in the volume of our in the operating areas of the Reserve Banks, operations of more than 7 per cent and in- and inflationary cost increases for the purcreases in resource costs also in the 7 per cent chase of resources. range. In April 1977 the System adopted a new The 1977 operating budget of $43.9 million program providing for special consumer affor the Board of Governors compared with fairs examinations of State member banks and estimated expenses of $43.8 million. This rep- a broad educational program for all member resented 6 per cent, of total System operating banks. The Board has provided specialized expenses. training to groups of examiners from all of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 91 Reserve Banks, placing emphasis on examina- representing an increase of 3.0 per cent over tion procedures, and has also provided train- 1977 expenses. ing programs to Reserve Bank staff covering The 1978 Reserve Bank budgets reflect the techniques for familiarizing commercial bank continuation of efforts to improve the effistaff with consumer regulations. ciency of operations. In 1978 the Reserve Regarding the impact of volume increases Banks expect to operate with 24,007 emon Reserve Bank operations, we estimate that ployees, a staff reduction of 486 or 2.0 per cent in 1977 the volume of measurable Federal below the estimated 1977 level. Reserve output increased by approximately 7 Output per hour is projected to increase per cent, while the aggregate unit cost of by more than 10 per cent, a rate similar to that operations decreased by more than 2 per cent. in each of the previous 2 years. This produc- These estimates are based upon operations in tivity gain, adjusted for the substitution of all Reserve Bank services with the exception capital for labor, yields a total factor producof functional groupings for monetary and eco- tivity increase of 8.3 per cent, which is connomic policy and supervision and regulations, siderably larger than estimates of productivity and account for approximately 88 per cent of growth for the private sector. total expenditures in the Reserve Banks. The principal portion of the cost increases is Based upon preliminary information, Re- expected in expenses for employees' and ofserve Bank output per hour in 1977 rose ficers' salaries, and retirement and other benesharply with some of the gain achieved fits. These increased expenses constitute 55 through substitution of capital for labor. Our per cent of the $36.8 million increase in total estimate of the increase in total factor produc- expenses. Even so, salary expenses are extivity, which measures changes in the use of pected to rise by only 4.1 per cent, as Reserve both capital and labor against changes in out- Banks reduce further their number of emput, is 10 per cent for 1977. ployees and continue to exercise firm control Capital expenditures totaled an estimated over salary increases. With a salary policy $71.8 million at the Reserve Banks and $4.1 based on performance, the Banks are able to million at the Board during 1977. Construction reward outstanding performers while keeping of new buildings at Richmond and Boston and salary expenses to a minimum. Benefits exthe purchase of automation equipment ac- penses are increasing 8.8 per cent, reflecting counted for most of the outlays of the Reserve the cost of a fully funded retirement program Banks. Renovation of the Board building and a for current employees, adjusted pension rates computer upgrade accounted for most of the for currently retired employees, and the upoutlays at the Board. ward movement in insurance costs and Social Security rates. The increased cost of Federal Reserve cur- 1978 BUDGET rency represents 15 per cent of the total increase in expenses and is an expense largely I would now like to review our budgets and beyond the control of the Reserve Banks since plans for this year. The 1978 Reserve Bank the Bureau of Engraving and Printing sets the operating expense budgets total $722.2 mil- price for printing and the public demand delion, an increase of $36.8 million or 5.4 per termines the volume to be issued. Such costs cent over estimated 1977 expenses. Capital are expected to advance 9.8 per cent over .outlays are estimated to be $64.8 million, 1977, reflecting a higher unit price from the declining $7.0 million from the 1977 estimate Bureau and a larger demand for currency. primarily due to the completion of the new Increased depreciation expenses on Boston and Richmond Federal Reserve Banks property and equipment account for another by early 1978. Total outlays of funds (capital 20 per cent of the advance in total expenses of plus operating expenses adjusted for deprecia- the Reserve Banks. Property depreciation will tion) are expected to reach $765.6 million, increase $4.1 million, primarily reflecting the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

92 Federal Reserve Bulletin • February 1978 completion of the new Boston and Richmond The Treasury check truncation effort entails Federal Reserve Bank buildings. Equipment the conversion of the data on the check to depreciation will rise $3.4 million. The pri- magnetic tape, with the tapes and a microfilm mary causes of the increase in equipment of the paid checks being sent to the Treasury depreciation expenses are computer upgrad- for processing and the checks being sent to a ing, the acquisition of high-speed currency Government Services Administration storage processing machines, and the installation of facility. The Treasury expects this truncation new equipment in the Boston and Richmond procedure to improve reconcilement of Social Federal Reserve Banks. Security and welfare payments and to acceler- The projected 6.1 per cent increase in vol- ate responses to beneficiaries when questions ume of operations affects primarily the ex- arise. penses for services to financial institutions and As you will recall, during this committee's the public (increasing $26.6 million or 5.1 per hearings on Federal Reserve payments mechcent) and for services to the U.S. Treasury anism activities last year, inquiries were made and Government agencies (increasing $3.6 mil- concerning access to System settlement lion or 4.6 per cent). These output costs reflect facilities by Bankwire. I am pleased to report full distribution and allocation of support and that the Board announced plans, late last year, overhead services. In these volume-related to provide such facilities to Bankwire in order areas, unit costs are projected to decline to encourage private alternatives in electronic nearly 1 per cent from 1977. fund transfers. In 1978 the Federal Reserve Banks will The anticipated capital outlays during 1978 continue to experience increased expenses primarily relate to building programs, comassociated with expanding regulatory respon- puter acquisitions and upgrades, and purchase sibilities and revisions to examination proce- of high-speed currency processing equipment. dures. The latest program instituted in this The $17.9 million in the buildings account area is the annual inspection of most bank reflects the completion of the Boston and holding companies with consolidated assets Richmond Bank buildings and the initial over $300 million and the implementation of a phases of new building construction at Miami standardized "Report of Bank Holding Com- and San Francisco. Outlays will also be made pany Examination." The supervision and reg- to consolidate New York Reserve Bank operaulation function shows an expense increase of tions now located in several outside facilities, $5.8 million, or 10.6 per cent, and 90 additional and preliminary costs will be incurred for site staff members, or a rise of 7.0 per cent. As and architectural plans for the new Baltimore these programs reach full-scale implementa- building. Outlays for data processing/data tion, additional costs may need to be funded. communications equipment are expected to Other System projects scheduled for 1978 account for about one-fifth of the capital include the automated clearing house pro- spending. gram, Treasury check truncation, and the Of special interest are the planned pur- Bankwire settlement. The automated clearing chases of high-speed currency machines. house program, in which both government and After a 5-year research and development procommercial payments are processed, is gram, our efforts are coming to fruition. We planned to include interregional clearings of expect these new machines to sort currency, commercial payments. We anticipate that this separate fit from unfit and counterfeit from expansion will facilitate long-run economies. genuine as well as destroy the unfit notes. Our That is, it will act as an incentive for the costs of handling currency are expected to conversion of check payments to electronic decline on a per-unit basis and output per hour payments, which will ultimately reduce unit will increase sharply. processing costs. As you may know, the Treas- The 1978 Board operating budget totals ury estimates this program now saves ap- $47.6 million, an increase of $4.0 million or 9.3 proximately $1 million per month. per cent over 1977 estimated operating ex- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 93 penses. The approved capital budget is pro- assumptions between the Conference and the jected at $10.5 million, bringing the total 1978 Board, a budget objective based upon these approved outlays to $58.1 million. assumptions is approved by the Board, usually The authorized staff positions at the Board in the second quarter of the year. are projected to decline slightly in 1978 to a The 1978 budget objective for the Federal level of 1,568. This decrease is a direct result Reserve Banks established a permissible range of the Board's program to reduce its over-all of expenditure increases between 5.5 and 7.5 position complement while reallocating re- per cent. Since salary expenses represent over sources to high priority areas such as surveil- 45 per cent of Bank budgets, the most restriclance of banks and bank holding companies. tive assumption was the 6.0 per cent increase The increase in the Board's operating in total salaries with a slight decline in embudget is reflective of its labor-intensive envi- ployment. Productivity gains were assumed to ronment and, measured in real resources, average 7.3 per cent System wide, and volume shows a slight decline. Expenses for personnel was projected to increase by 7 per cent. services including the full-year effect of the As in prior years, the Board's Committee on 1977 Government-wide general pay increase, Federal Reserve Bank Activities reviewed the the annualized cost of 1977 salary actions, preliminary budgets of the Banks for comexpected 1978 salary actions, and a cost-of- pliance with the budget guidelines. Following living increase in pensions to our retirees, ac- meetings between the Bank presidents and the count for 93 per cent of the total operating committee and the careful review by the budget increase over 1977. New initiatives are boards of directors at each Bank, the final planned in the regulatory area to strengthen 1978 budget proposals were reduced by $7.9 bank and bank holding company inspection million. and surveillance programs and the examina- The budget guidelines for 1978 consisted, in tion of trust activities. Volume increases are part, of offsetting new initiatives with reducalso expected in the areas of Freedom of tions elsewhere. Both the Banks and the Information requests and material distributed Board achieved this objective in their apfor consumer education and information. proved budgets primarily through im- The Board's capital budget includes $9.1 provements in productivity. Staff increases million to complete the renovation of the necessary to meet the new initiatives were Board building and $1.4 million to permit more offset by decreases in other staff areas at the intensive use of the annex building. Both of Board and by decreases in operating personnel these projects are expected to be completed in at the Reserve Banks. 1978 and are designed to provide for the This year's budget development process for accommodation of all our staff in the two the Board included the adoption of zero-base adjacent buildings. We expect to realize an- budgeting concepts to prepare and review the nual savings of nearly $1 million in lease costs. 1978 budget. The Board's divisions were required to review all existing and proposed new programs and to submit for management review a budget in the form of discrete program levels of effort with a division ranking. Each 1978 BUDGET PROCESS division's budget was reviewed by the Office The basic philosophy governing the formula- of the Controller, the Staff Director for Mantion of the Reserve Banks' budget is estab- agement, a committee of Board Members, and lished early in the year as the Conference of by the Vice Chairman of the Board. In the Presidents of the Federal Reserve Banks and course of these reviews, $1.5 million was the Board of Governors begin the annual deleted from the 1978 budget proposals after budget process with the development of making room for high priority items. A conscibudget objectives and guidelines. Following entious effort was made during the review discussions and modifications of underlying process to stress improvements in productiv- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 Federal Reserve Bulletin • February 1978 ity and eliminate all but the most essential the efficiency of operations. The projected 5.4 expenditures. per cent increase in operating expenses com- The Federal Reserve Banks have been ex- pares with an average annual growth rate of perimenting with the zero-base budgeting pro- 13.6 per cent from 1970 through 1974 and 7.7 cess since 1976. During 1977, the Federal per cent from 1974 through 1977. Total em- Reserve Bank of Minneapolis implemented ployment at the Reserve Banks has declined zero-base budgeting in three staff areas in by 2,156 employees or 8.1 per cent over the order to assess the effectiveness of this man- last 3 years, and an additional reduction of 2.0 agement tool for the budget decision-making per cent is projected for 1978. process at the Bank. In addition, the Federal Our weighted-unit cost of clearing checks, Reserve Bank of Chicago used zero-base processing currency and coin, issuing and budgeting to prepare the Bank's Research, redeeming Treasury and other Government Bank Relations and Public Information de- agency securities, and performing all other partments' 1978 budgets. The Board is pres- measurable output activities has increased by ently assessing the Board's and Banks' expe- about 1 per cent per year over the projections rience in the use of zero-base budgeting. for the 3-year period from 1974 through 1977. If unit costs are adjusted for higher prices paid for resources—that is for inflation—real unit costs have declined by approximately 7 per SUMMARY cent per year. In summary, the Board's 1978 budget repre- The performance record of the Federal Resents a 9.3 per cent growth over 1977 esti- serve System over the past few years clearly mated expenses. This number implies no addi- indicates the high degree of success the Systional use of real resources and requires the tem has achieved through its internal efforts to achievement of additional productivity gains improve operational efficiency. The Board bein 1978. The overriding constraint to fund new lieves that its review and budget processes initiatives and increases in volume through have created an atmosphere of cost con-* decreases in current activities and gains in sciousness that has resulted in better producproductivity has been met. tivity, cost efficiency, service to the public, Budgets of the Federal Reserve Banks also and ultimately in savings to the tax-paying reflect the continuation of efforts to improve public. • Statement by Henry C. Wallich, Member, we are not "learning to live" with inflation. Board of Governors of the Federal Reserve Increasingly, inflation is seen for what it is—a System, before the Joint Economic Commit- serious addiction that gradually undermines tee, U.S. Congress, February 8, 1978. the vitality and even the viability of the addict. While inflation is being forecast for the It is a pleasure to appear before the Joint indefinite future at a rate close to that of the Economic Committee to present my personal present, there is no reason at all to believe that views in the area of incomes policies. inflation will stabilize if left alone. Inflation Disruptive inflation has plagued our econ- has shown itself in recent years to be highly omy for something like 12 years. During that inflexible downward. It has shown no similar period its virulence has varied, as high as 12.0 inflexibility upward. Any one of a number of per cent in the fourth quarter of 1974 and as factors could send inflation spiraling again. low as 1.5 per cent in the second quarter of Pressure of demand on limited manufacturing 1967. But the experience has made clear that capacity, a major wage breakthrough resulting Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 95 from special circumstances that nevertheless set forth why a plan focusing on wages comcould set a pattern, food prices, oil prices, all bined with a tax paid by corporations seems could trigger higher inflation that would then adequate. work its way into wages and become resistant A considerable body of research indicates to any decline. Such a ratchet mechanism is a that prices in the long run are basically detertangible threat. mined by wages. Nonwage factors such as Further acceleration of inflation almost cer- those mentioned earlier—demand pressures, tainly would, after some not very long inter- nonwage costs—may play an initiating role in val, lead to renewed increases in unemploy- price movements. But with wages and other ment. Thus, there is no other choice but to try compensation of labor amounting to 75 per to bring down unemployment and inflation cent of gross national product, wages unsimultaneously. avoidably are the principal factor in prices. A It is largely because of concerns like these slowing in wage increases, therefore, will that a consensus has developed that the econ- necessarily bring about a slowing in price omy must be allowed to grow at only a increases. moderate rate. Idle resources, human and If prices follow wages, wage restraint will material, can be absorbed only gradually. not lead to any reduction in real wage in- Moreover, the noninflationary limits to that creases. Given productivity gains of, say, 3 absorption leave a distressingly high margin of per cent, labor will get the same increase in unused resources even in the longer run. real wages with a 5 per cent wage increase and Incomes policies have been suggested as a 2 per cent inflation as with a 9 per cent wage means of winding down inflation more rap- increase and 6 per cent inflation. The gains idly. In the general view, however, incomes from productivity are all that the economy can policies are associated with wage and price give to labor, unless it is to be taken away controls, or at least are seen as a step in that from something else. These gains will go to direction. This concern has helped to create an labor at any level of inflation, so long as the interest in a tax-oriented incomes policy (TIP) gap between wages and prices, as it normally that cannot be charged with that defect be- does, equals gains in productivity. Wage recause it is specifically designed to give full straint, therefore, imposes no sacrifice upon effect to market forces. While numerous ver- labor in real terms. On the contrary, by sions of TIP exist, their common characteris- reducing the threat of inflation, wage restraint tic is a reliance on the tax system as a means would permit the economy to move to lower of inducing more moderate behavior of wages levels of unemployment and to move there and prices. With the committee's permission, more rapidly, thereby benefiting both labor I would like to discuss a variant that was and all others who share in the national indeveloped by Professor Sidney Weintraub of come. the University of Pennsylvania and myself. TECHNICAL ASPECTS OUTLINE OF PLAN A tax to be imposed on firms granting exces- The essence of the plan consists of a tax sive wage increases could take one of several penalty on firms granting wage increases in forms. It could be imposed as an increase in excess of a guideline. The restraint is on wages the corporate income tax, as a payroll tax, rather than on prices. But the tax is paid by the through disallowance for income tax purposes firm. In this way, evenhandedness is main- of the deduction of any excess wage increases tained. The plan can be extended to include a paid, and perhaps others. The plan could also restraint on profits if that is regarded as neces- be structured in the form of a tax reduction for sary. To begin with, however, I would like to firms avoiding excess wage increases. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 Federal Reserve Bulletin • February 1978 Disallowance of excess wage increases as dure could also be envisaged—to cover not tax deductions has the advantage of having only all incorporated but also all unincorpoalready been on the statute books after World rated business. War II and after the Korean war. An increase in the corporate income tax has the advantage that it could be scaled easily in proportion to ADMINISTRATIVE PROBLEMS the magnitude of the excess. This would help to make the penalty or threat of a penalty The fact that laws disallowing excess wage effective while largely eliminating controver- increases under the post-World-War-II and sies over marginal excesses. A rise in the Korean-war wage and price control legislacorporate income tax, moreover, would be tion have been on the books suggests that the less easily shiftable than a payroll tax or denial technical problems of measuring excess wage of deductibility. On the other hand, it might increases have been considered by the legislamore adversely affect the ability of the firm to ture and not found to be intractable. There invest. is, of course, a wide range of technical problems to be resolved of which the following are indicative. GUIDELINE In an economy characterized by multicor- The setting of the wage guideline requires a porate enterprises, how is the tax-paying unit governmental decision. A maximum wage in- to be defined—a plant, a corporate entity, or crease equal to long-run productivity gains an entire conglomerate? How are the excesses plus half of the current rate of inflation might to be measured—by total payroll and total be appropriate. The guideline would in no way employment, or by individual categories of interfere with the functioning of the market workers, with allowance for overtime, for since firms and unions would be entirely free fringe benefits including deferred compensato make settlements above or below it. Thus, tion, cost-of-living adjustments, and health the concern that the guideline would become a insurance and all the rest? How are new firms, first step on the way to a system of controls firms with losses, with multiyear labor conwould be unwarranted. Likewise there seems tracts, with numerous subsidiaries to be dealt to be no good reason for expecting the with? Should the TIP penalty be applied for 1 "maximum to become a minimum" since the year only, for a fixed multiyear period, or for a guideline would not represent a maximum. lengthy or indefinite period? The guideline would be lowered periodically A large number of decisions will have to be as inflation was being reduced. made in writing the tax regulations. This is the same analysis, however, that firms and unions engage in during wage bargaining sessions and COVERAGE that at the present time the Council on Wage A good case can be made for subjecting only a and Price Stability must also undertake. Furlimited number of large corporations to the thermore, the initial evaluation of a wage guideline and tax. In an inflation such as the package, which would form the basis for a present, which is kept going because one high pay-as-you-go approach to the tax, can be wage settlement leads to another but in which revised upon eventual audit by the Internal there is no excess demand for labor, modera- Revenue Service. Since the tax penalty would tion in the settlements of large firms and some be proportionate to the degree of infringement consequent slowing of the price trend would of the guideline, minor differences between probably lead to moderation for most em- the taxpayer and the tax authorities would not ployers. Limiting the plan to large firms would involve large amounts of tax and could be greatly ease administrative complexities. compromised as many differences arising in However, an alternative and opposite proce- tax audits are. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 97 A TAX TO RESTRAIN utilized to reduce the income tax burden. THE SHARE OF PROFITS Given the uncertainty of these additional revenues, however, a precise link could probably It was noted earlier that the wage guideline not be established. proposal does not contain a corresponding restraint on prices because prices can be expected to follow wages. However, if the evi- EXPECTED DURATION dence supporting this view is not generally OF THE PLAN accepted, a supplementary device could be introduced that would serve to restrain, not Since inflation is expected to come to an end prices, but profits. A failure of prices to move under the plan, the arrangements, insofar as with wages would tend to show itself in a they do not involve carryovers from the operacorresponding change in profits. Labor would tive period of the plan, should be terminated have a legitimate right to expect that no spe- when success has been achieved. It might be cial benefits for profits should emerge from an better to reintroduce the scheme if inflation acceptance by labor of a wage guideline. To should revive thereafter rather than to perensure that this expectation is not disap- petuate it at a time when it is not needed. Even pointed, the corporate income tax could be after termination of the plan, a better underraised so as to prevent the rise in total after- standing of the role of wage increases in price tax profits from exceeding some historical determination should prevail and should make relationship to GNP. This would be a tax it easier to avoid renewed bursts of inflation. proportionate to the "excess profits" of the Alternatively, the arrangements could be corporate sector as a whole, but not related to kept alive even during a period of stable prices the profits of any particular corporation. as a means of permanently facilitating lower As a practical matter, such a tax increase rates of unemployment. It is the pressure of probably would never be triggered at all. But if strong demand for labor that, at low levels of it were, the increase in the corporate tax could unemployment, tends to give rise to excessive hardly amount to more than a few percentage wage increases. The threat of such increases, points. Such a tax would be an "incomes implying demand-pull inflation, in turn prepolicy" in the proper sense of the term since it vents the adoption of fiscal and monetary would specifically be designed to deal with policies that would lead to such lower levels of income shares. The setting of a profit share, unemployment. If the wage-increasing effect presumably in the light of historical experi- is restrained by a tax-oriented incomes policy, ence and the need for business capital expend- the achievement of permanently lower levels itures, would be one of the difficult decisions of unemployment should be within reach. to be made under this approach. It should be clear, however, that TIP cannot serve as a counterpoise to, or justification for, overly stimulative fiscal and monetary policies. The rate of growth of the money TAX REVENUES supply would have to be reduced in line with To the extent that the tax measures proposed diminishing inflation and eventually would here are cast in the form of tax increases for have to be stabilized at a level consonant with exceeding a guideline, rather than tax reduc- the rate of real growth and the trend in veloctions withheld, some incremental revenues ity. Fiscal policy would have to limit the would be collected. Their magnitude would government's demands on the credit markets depend on the nature of the guidelines set and to whatever could be financed with that rate of on the magnitude of penalties in relation to money growth at stable prices and interest violations. These additional revenues could be rates consistent with full employment. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON DECEMBER 19-20, 1977 1. Domestic Policy Directive The information reviewed at this meeting suggested that real output of goods and services was growing in the current quarter at about the third-quarter pace, which the Commerce Department had revised upward appreciably to an annual rate of 4.7 per cent. 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 stepping up somewhat from an annual rate of 5.1 per cent estimated for the third quarter. Staff projections for the year ahead, which were based on assumptions that did not include reductions in Federal income taxes, differed little from those prepared just before the November meeting of the Committee; they suggested that real GNP would continue to grow at a moderate, although gradually diminishing, pace throughout 1978. It was also expected that the rate of increase in prices would remain high and that the unemployment rate would decline gradually. The staff estimate of continued growth of real GNP in the current quarter at about the third-quarter pace was attributable to expectations of substantially greater expansion in final sales of goods and services in combination with a decline in the rate of business inventory accumulation. With respect to final sales, there were indications of considerable strength in consumer spending for both durable and nondurable goods and in residential construction. It was anticipated, moreover, that growth in business fixed investment would pick up from the reduced rate in the third quarter. The staff projections for the year ahead reflected expectations that, in real terms, the expansion in business capital outlays would be relatively strong; the growth in consumer spending would remain moderate; the increases in State and local government purchases of goods and services would continue to be sizable; the expansion in residential construction activity would taper off as the period Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 99 progressed; and the rise in Federal purchases of goods and services would be smaller than over the past year. In November industrial production expanded 0.5 per cent, compared with 0.3 per cent in October and 0.4 per cent in September. Increases in output were widespread in November, but automobile assemblies were reduced. Capacity utilization in manufacturing was estimated to have remained at about 83 per cent; in both the materials-producing and the advanced processing industries, utilization rates were close to their levels in the second and third quarters. For the materials-producing industries, the rate was about 10 percentage points below the high reached in the previous period of business expansion. Nonfarm payroll employment rose substantially in November. In particular, gains were large in services and finance, trade, and State and local government. Employment in manufacturing advanced moderately, and the average workweek edged up further to 40.5 hours, the same as in June. The increase in total employment, as measured by the survey of households, was particularly large. The rise in the civilian labor force also was substantial, however, and the unemployment rate, at 6.9 per cent, remained in the narrow range prevailing since April. The pace of expansion in personal income had increased sharply to an annual rate of more than 16 per cent in October and then slowed to a rate of about 11 per cent in November, according to statistics released since the Committee's meeting in mid-November. In October growth in wage and salary payments had been augmented by raises in pay for Federal civilian and military personnel. Farm income—bolstered by increased price supports for grains and sugar—advanced in both October and November, after having declined for a half year. The dollar value of retail sales had risen 1.5 per cent in November according to the advance report. Moreover, the estimate of sales for October had been revised upward substantially and was 2.7 per cent above the September level. As a consequence, the average for the first 2 months of the fourth quarter was up almost 4 per cent from the monthly average for the third quarter. Increases in total sales from one quarter to the next had not been that large since the fourth quarter of 1976. Although the total value of retail sales advanced in November, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

100 Federal Reserve Bulletin • February 1978 unit sales of new domestic and foreign autos declined about 5 per cent. Unit sales appeared to have been trending downward since spring. In October and November the average rate was nearly 10 per cent below that in the second quarter. Private housing starts rose substantially in October to an annual rate of more than 2.2 million units—the highest monthly rate since the current upswing began in early 1975—and then edged down in November to a rate of about 2.1 million units. The average for the 2 months was 5 per cent higher than that for the third quarter. The latest Department of Commerce survey of business spending plans, taken in late October and November, suggested that spending for plant and equipment would expand at an annual rate of 5.8 per cent in the fourth quarter of 1977 and at rates of 11.4 and 10.2 per cent in the first and second quarters of 1978, respectively. The survey also indicated that such spending would be 13.7 per cent greater in 1977 as a whole than in 1976; the preceding survey of the Department of Commerce had indicated a year-to-year gain of 13.3 per cent. Manufacturers' new orders for nondefense capital goods, which had advanced sharply in September, increased somewhat further in October to a level SV2 per cent above the monthly average for the third quarter. Contract awards for commercial and industrial buildings—measured in terms of floor space—in October were close to the average for the third quarter, which was up about 10 per cent from the average for the preceding quarter and 30 per cent from that for the third quarter of 1976. The index of average hourly earnings for private nonfarm production workers increased relatively little in November following a sharp rise in October. The rate of increase over the first 11 months of 1977 was about IV2 per cent, compared with a rise of about 7 per cent over the 12 months of 1976. The wholesale price index for all commodities rose sharply in November for the second successive month. Average prices of farm products and foods, which had advanced 1.3 per cent in October, increased 2.3 per cent further to a level 4.8 per cent higher than in November 1976. For industrial commodities, the rise slowed to 0.4 per cent from 0.6 per cent in October and 0.8 per cent in September. Over the 12 months ending in November, the increase in the industrial commodity average was 6.5 per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 101 The consumer price index rose 0.3 per cent in October, marking the fourth consecutive month of moderate increases. From June to October retail prices of foods advanced only about 0.5 per cent, in contrast with a rise of nearly 7 per cent over the first 6 months of the year. The rise in average prices of commodities other than foods continued in October at about the reduced pace of the third quarter, and the advance in prices of services slowed somewhat. The dollar had been under considerable selling pressure in foreign exchange markets throughout the inter-meeting period, and its trade-weighted value had declined more than 3 per cent further even though central banks purchased a substantial amount of dollars. All major currencies rose against the dollar over the period, and appreciations amounted to 9 per cent for the Swiss franc, 6 per cent for the German mark, and 2 per cent for the Japanese yen. The persistent pressure on the dollar reflected uncertainty about U.S. economic policies, especially with respect to energy, as well as continuing concern in the markets about the deficit in U.S. foreign trade and about the weakness in economic activity in other industrial countries relative to that in the United States. The U.S. foreign trade deficit increased sharply in October. However, the widening of the deficit was attributable to the 2-month dock strike that was terminated at the end of November. Because of statistical procedures, the strike depressed recorded exports more than recorded imports. At U.S. commercial banks, expansion of total credit in November was close to the fast pace in October. Bank loans continued to grow at a rapid rate, and the strength was broadly distributed among major loan categories. As in October, banks reduced their holdings of Treasury securities somewhat more than they added to their holdings of other securities. Commercial banks in the aggregate financed the November increase in loans entirely through managed liabilities. Negotiable CD's at weekly reporting member banks increased $4.5 billion over the month, and other large time deposits not subject to rate ceilings expanded $5.0 billion. The total increase of $9.5 billion for the month was a record for large-denomination time deposits. The narrowly defined money stock (M-l) contracted slightly in November, following a large increase in October. For October and November combined, growth in M-l was at an annual rate of 5 per Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

102 Federal Reserve Bulletin • February 1978 cent, and for the 11 months ending with November, it was at an annual rate of about llA per cent. Growth in M-2 slowed to an annual rate of 4Vi per cent in November. The increase in the interest-bearing component was concentrated in the large-denomination time deposits that are not subject to interest rate ceilings. The total of savings deposits and small-denomination time deposits, which are subject to rate ceilings, declined slightly. Throughout November rate ceilings on all but the longest maturities of bank time accounts were significantly below the yields available on competing market securities. Over the first 11 months of 1977, M-2 grew at an annual rate of about 9lA per cent. At nonbank thrift institutions, inflows of funds slowed further in November. Growth in M-3 was reduced to an annual rate of about 7!4 per cent, from 12Vi per cent in October. Over the first 11 months of the year M-3 grew at an annual rate of about 11 lA per cent. At its November meeting the Committee had decided that operations in the period immediatey ahead should be directed toward maintaining about the prevailing money market conditions, provided that monetary aggregates appeared to be growing at approximately the rates then expected. Specifically, the Committee sought to maintain the weekly-average Federal funds rate at about its current level—which was 6V2 per cent—so long as M-1 and M-2 appeared to be growing over the November-December period at annual rates within ranges of 1 to 7 per cent and 5 to 9 per cent, respectively. However, the members also had agreed that if growth in the aggregates appeared to approach or move beyond the limits of their specified ranges, the operational objective for the weekly-average Federal funds rate should be varied in an orderly fashion within a range of 6lA to 63A per cent. Throughout the period between the November and December meetings, incoming data suggested that growth in M-1 and M-2 would be well within the ranges that had been specified by the Committee. Accordingly, the Manager of the System Open Market Account sought to maintain reserve conditions consistent with a Federal funds rate of 6V2 per cent. In association with the stability in the Federal funds rate, shortterm market interest rates changed little during the inter-meeting period, although a minor realignment in relationships occurred. Rates on Treasury bills declined, reflecting in large part substantial Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 103 foreign purchases of such securities, while yields on private shortterm instruments edged up. Rates on longer-term securities rose somewhat during the period. The U.S. Treasury raised $10.2 billion of new money during the inter-meeting period, including $1.3 billion in its regular weekly bill auctions, $3.0 billion through 139-day, cash-management bills, and $5.9 billion through 1-year bills and 2- and 4-year notes. Moreover, the Treasury planned to auction $3 billion of 2-year notes on the Wednesday after this meeting and $1.5 billion of 15-year bonds in the following week. Gross public offerings of corporate bonds in November were close to the October volume, and private placements of bonds were estimated to have remained large. Total gross issues of corporate securities increased as stock offerings—primarily by public utility firms—reached the highest level in nearly 2 years. Gross offerings of new bonds by State and local governments declined somewhat more than seasonally in November. Advance refundings accounted for about one-fifth of the November total—the same proportion that had prevailed during the first 10 months of the year—although the volume was apparently reduced by a Treasury announcement on November 5 of an intention to issue new regulations restricting certain types of advance refunding issues. Demands for municipal securities continued to be strong from commercial banks, from property-casualty insurance companies, and from individuals through municipal bond investment companies. The volume of mortgage lending in November apparently remained near the record pace of other recent months. The increase in mortgage loans at commercial banks was larger than in October and near the high monthly-average gain in the third quarter. Outstanding mortgage commitments at savings and loan associations rose to a new record in October. In November these institutions apparently maintained a high level of mortgage lending activity, and they continued to float additional issues of mortgage-backed bonds and to increase their borrowings from the Federal home loan banks. By month-end, outstanding advances from those banks had reached their highest level since early 1975. The average interest rate on new commitments for conventional home mortgages at savings and loan associations changed little in late November and early December. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 Federal Reserve Bulletin • February 1978 In the Committee's discussion of the economic situation, the members were in agreement that the expansion in activity was likely to continue throughout the year ahead. A number of members expressed the view that growth in real GNP during 1978 would be as strong as or stronger than that suggested by the staff projections. Other members foresaw substantial strength for the period immediately ahead—in response to the recent pick-up in final sales and consequent adjustment of inventory positions—but less strength later in 1978. It was noted, however, that the administration was planning to propose a substantial reduction in taxes on individual and business incomes in the new year, and that such reductions— depending upon their nature and timing—could have a significant effect on the course of activity. Although the prospective reductions in taxes were seen as supportive of the rate of expansion in over-all activity, there was some concern about their implications for the mix of policies affecting aggregate demand and, consequently, for business fixed investment over the longer term. It was observed that long-term interest rates were relatively low, after allowing for the prevailing rate of increase in prices; but it was also observed that enlarged deficits in the Federal budget might be accompanied by increases in interest rates as the year progressed. It was suggested, moreover, that the rate of inflation could prove to be higher than expected and could, therefore, hamper the progress of the expansion. As at other recent meetings, members expressed different assessments of the outlook for business capital spending. A few felt that expansion in such spending would be at least as strong as suggested by the staff projections—which, in turn, were stronger than implied by the surveys of expenditures for the early part of 1978. One of these members suggested that, in a variety of ways, the recent decline in the value of the dollar against other major currencies had increased the attractiveness of investment in industrial facilities in the United States. On the other hand, some members felt that the staff projections of capital outlays were on the optimistic side. In the opinion of one of these, manufacturers had been able to achieve new efficiencies in their production facilities, which added significantly to capacity without requiring large expenditures for additional structures. With respect to the housing market, it was suggested that a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 105 number of forces were at work that might make activity in 1978 fall short of the rates projected by the staff. On the other hand, the thought was expressed that demands might continue to be buoyed by consumer perceptions of homeownership as an effective hedge against inflation. One member suggested that the expansion in residential construction activity had been sustained at a fast pace, despite the high and rising prices for housing, by such temporary influences as the rapid increase in homeowners' equity and a backlog of demands accumulated earlier during a period of reduced construction activity, whose force might now be spent; consequently, demands for housing in the period ahead might be more closely related to such fundamental factors as family formation and growth in disposable income. It was suggested also that construction activity in some areas might be impeded by elements of the Government's energy program and by moratoria on new hook-ups for utilities, although building activity in the inner cities might be stimulated. A few members expressed doubts that the demand for automobiles would measure up to the staff projections, which suggested that sales would be sustained in 1978 at about the fast pace of 1977. The observation was made that sizable cutbacks in assemblies, should they be made necessary by slippage in sales, might not be effected until the spring. It was also suggested, however, that some decline in the rate of sales was a reasonable expectation and, in view of the excessive expansion in consumer credit recently, a welcome development. In commenting on unemployment, one member questioned whether the over-all rate might not be about as low as could be expected, given the rapid growth in the labor force. He suggested that the high rate of unemployment was a structural problem that could not be solved with monetary policy instruments; in his view, growth in real GNP at any rate above the longer-run average would be satisfactory. Another member observed that a particularly troublesome aspect of the situation was that the large increase in employment during the current business expansion had not lowered the unemployment rate for blacks, especially for black teenagers. It was observed that the increase in the minimum wage that would become effective at the beginning of the new year would contribute to that problem, and it was suggested that in the coming year serious Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 Federal Reserve Bulletin • February 1978 attention might again be given to proposals for a youth differential in the minimum wage. In the Committee's discussion, serious concern was expressed about the recent weakness of the dollar in foreign exchange markets. While it was noted that depreciation of the dollar might in time contribute to improvement in the U.S. trade balance, it was pointed out that it contributed to the rate of inflation in this country and weakened business confidence both here and abroad. Excessive appreciation of foreign currencies, it was suggested, could have adverse effects on over-all economic activity abroad and, consequently, on the U.S. trade balance. The observation was made that the position of the dollar would be strengthened by adoption in this country of an effective energy program, of a tax policy conducive to business investment here, and of a more effective attack on inflation, as well as by pursuit abroad of faster rates of economic growth. At its October meeting the Committee had agreed that from the third quarter of 1977 to the third quarter of 1978 average rates of growth in the monetary aggregates within the following ranges appeared to be consistent with broad economic aims: M-l, 4 to 6V2 per cent; M-2, 6V2 to 9 per cent; and M-3, 8 to \0V2 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 the Committee's discussion of policy for the period immediately ahead, the members took note of the slowdown in the growth of the monetary aggregates in recent weeks and of the uncertainties in financial markets usually associated with the yearend. Against that background and in light of the performance of the economy, it was observed that increases in short-term interest rates were probably not warranted at this time. On the other hand, it was suggested, the weakness of the dollar in foreign exchange markets argued against declines in such rates. Accordingly, most members were in favor of the maintenance of prevailing conditions in the money market for the time being and of continuing to give greater weight than usual to money market conditions in conducting open market operations in the period until the next meeting of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 107 Committee. However, some members indicated a preference for basing operating decisions in the period ahead primarily on the behavior of the monetary aggregates. The members did not differ greatly in their preferences for ranges of growth for the monetary aggregates over the December-January period. Most of them favored ranges of 2Vi to SV2 per cent and 6 to 10 per cent for the annual rates of growth in M-1 and M-2, respectively. However, there was some sentiment for a slightly lower and some for a slightly higher range for M-1. And one member who preferred to base operations on the behavior of the monetary aggregates believed that System operations should be directed toward a firming in money market conditions if it appeared that over the 2-month period M-1 would grow at a rate in excess of 6V2 per cent. At the conclusion of the discussion the Committee decided that operations in the period immediately ahead should be directed toward maintenance of prevailing money market conditions, as represented by the current level of the Federal funds rate. However, the members agreed that if growth in the aggregates should appear to approach or move beyond the limits of their specified ranges, the operational objective for the weekly-average Federal funds rate should be varied in an orderly fashion within a range of 6V4 to 63A per cent. With respect to the annual rates of growth in M-l and M-2 over the December-January period, the Committee specified ranges of 2V2 to 8V2 per cent and 6 to 10 per cent, respectively. It was also agreed that in assessing the behavior of the aggregates, the Manager should give approximately equal weight to the behavior of M-l and M-2. The Committee decided to include in the next to last paragraph of its directive to the Federal Reserve Bank of New York the following sentence: "In the conduct of day-to-day operations, account shall be taken of emerging financial market conditions, including the unsettled conditions in foreign exchange markets." This instruction was added to provide the Manager with somewhat greater flexibility, in part because of the Committee's view that pressures on the dollar in foreign exchange markets might appropriately influence the nature and timing of domestic open market operations from day to day. As customary, it was understood that the Chairman might call upon the Committee to consider the need for supplementary instruc- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 Federal Reserve Bulletin • February 1978 tions 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 in the current quarter at about the pace in the third quarter. The dollar value of total retail sales, which had increased sharply in October, rose considerably further in November. Industrial production continued to expand, and employment increased substantially. However, the unemployment rate, at 6.9 per cent, remained in the narrow range prevailing since April. The wholesale price index for all commodities rose sharply in November for the second successive month, reflecting another large increase in average prices of farm products and foods. However, the rise in average prices of industrial commodities was less rapid than in the preceding 2 months. The index of average hourly earnings has advanced at a somewhat faster pace so far this year than it had on the average during 1976. The dollar has been under considerable pressure in foreign exchange markets in recent weeks, and its trade-weighted value against major foreign currencies has declined more than 3 per cent further since mid-November. In October the U.S. foreign trade deficit widened sharply, primarily as a result of the dock strike at many U.S. ports. M-l—which had expanded substantially in October—declined slightly in November, and M-2 increased relatively little. The total of savings deposits and small-denomination time deposits at commercial banks declined somewhat, but growth in large-denomination time deposits accelerated sharply further as credit demands remained strong. Inflows to nonbank thrift institutions slowed further in November. Market interest rates have changed relatively little since mid- November. 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 October 18, 1977, the Committee agreed that growth of M-l, M-2, and M-3 within ranges of 4 to 6V2 per cent, 6V2 to 9 per cent, and 8 to 10V2 per cent, respectively, from the third Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 109 quarter of 1977 to the third quarter of 1978 appears to be consistent with these objectives. These ranges are subject to reconsideration at any time as conditions warrant. At this time, the Committee seeks to maintain about the prevailing money market conditions during the period immediately ahead, provided that monetary aggregates appear to be growing at approximately the rates currently expected, which are believed to be on a path reasonably consistent with the longer-run ranges for monetary aggregates cited in the preceding paragraph. Specifically, the Committee seeks to maintain the weekly-average Federal funds rate at about the current level, so long as M-l and M-2 appear to be growing over the December-January period at annual rates within ranges of 2Vi to 8Vi per cent and 6 to 10 per cent, respectively. If, giving approximately equal weight to M-l and M-2, it appears that growth rates over the 2-month period are approaching or moving beyond the limits of the indicated ranges, the operational objective for the weekly-average Federal funds rate shall be modified in an orderly fashion within a range of 6!4 to 63A per cent. In the conduct of day-to-day operations, account shall be taken of emerging financial market conditions, including the unsettled conditions in foreign exchange markets. If it appears during the period before the next meeting that the operating constraints specified above are proving to be significantly inconsistent, the Manager is promptly to notify the Chairman who will then decide whether the situation calls for supplementary instructions from the Committee. Votes for this action: Messrs. Burns, Volcker, Coldwell, Gardner, Guffey, Jackson, Lilly, Mayo, Morris, Partee, and Wallich. Vote against this action: Mr. Roos. Mr. Roos dissented from this action because he believed that the upper limit of the December-January range for growth in M-l specified by the Committee allowed for the possibility of too rapid growth in that aggregate, particularly in view of the rate at which it had grown so far this year. In his opinion, growth in M-l over the December-January period at a rate in excess of 6V2 per cent would require an excessively restrictive policy later, if the Committee's long-range growth path were to be achieved. Subsequent to the meeting, on January 9, 1978, the Committee voted to raise the range for the Federal funds rate to 6V2 to 7 per Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 Federal Reserve Bulletin • February 1978 cent and to instruct the Manager to raise the rate to 63A per cent over the next few days. This action was taken upon recommendation of Chairman Burns. During the preceding 2 weeks the Federal funds rate had averaged a little over 65/s per cent, or above the midpoint of the range of 6lA to 63A per cent established at the December meeting. Year-end money market pressures had affected the rate, but most recently the Manager had not discouraged some rise above the midpoint of the range in view of unsettled conditions in foreign exchange markets. Available data had suggested that over the December-January period M-l and M-2 would grow at rates within the ranges specified at the December meeting. On January 6, just before the Chairman recommended this action, the Board of Governors had approved action by directors of two Federal Reserve Banks raising the discount rate from 6 to 6V2 per cent. In announcing the increase in the discount rate, the Board had issued the following press release: "The recent disorder in foreign exchange markets constitutes a threat to orderly expansion of the domestic and international economy. In view of this, the Board of Governors of the Federal Reserve System today approved an increase in the discount rate from 6 per cent to 6V2 per cent. "The Board expressed the hope that the need for the increase will prove temporary. The Board further indicated that the condition of the domestic economy is sound and that credit supplies to sustain economic expansion will remain ample. "In making the change, the Board acted on requests from directors of the Federal Reserve Banks of New York and Chicago, increasing the discount rates of those Banks to 6V2 per cent, effective Monday, January 9. The discount rate is the interest rate that is charged member banks when they borrow from their district Federal Reserve Banks." On January 9, 1978, the Committee modified the domestic policy directive adopted at its meeting of December 19-20, 1977, by raising the range for the Federal funds rate to 6V2 to 7 per cent and by instructing the Manager to raise the rate to 63A per cent over the next few days. Votes for this action: Messrs. Burns, Volcker, Coldwell, Gardner, Guffey, Mayo, Roos, and Wal- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 111 lich. Votes against this action: Messrs. Lilly, Morris, and Partee. Absent and not voting: Mr. Jackson. Messrs. Lilly, Morris, and Partee voted against this action because they did not believe that the performance of the domestic economy justified an increase in interest rates at this time. Mr. Morris believed, in addition, that the proper response to present conditions in the foreign exchange markets was more aggressive intervention, not a higher level of domestic interest rates. 2. Authorization for Foreign Currency Operations Paragraph ID of the Committee's authorization for foreign currency operations authorizes the System Open Market Account to maintain an over-all open position in all foreign currencies not exceeding $1.0 billion, unless a larger position is expressly authorized by the Committee. On January 6, 1978, the Committee authorized an increase in the limit to $1.5 billion. The Foreign Currency Subcommittee (consisting of Messrs. Burns, Gardner, Volcker, and Wallich) recommended the increase of $500 million in the limit in view of the recent scale of operations and the continuing unsettled condition of the foreign exchange markets. It was announced on January 4, 1978, that the Exchange Stabilization Fund of the U.S. Treasury would henceforth be utilized actively together with the $20 billion swap network operated by the Federal Reserve System to check speculation and to help re-establish order in the foreign exchange markets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

112 Law Department Statutes, regulations, interpretations, and decisions TRUTH IN LENDING RULES REGARDING DELEGATION OF AUTHORITY The Board of Governors has amended the provision of its Regulation Z concerning descriptive The Board of Governors has delegated to each billing of nonsale credit transactions on open end Federal Reserve Bank the authority to grant extencredit accounts. sions of the two-year time period within which a Effective March 28, 1978, section 226.7(k)(3)(ii) company or bank must dispose of bank shares is amended to read as follows: acquired in satisfaction of a debt previously contracted. Effective January 26, 1978, section 265.2(f) is amended by adding a new paragraph (37) to read as follows: SECTION 226.7—OPEN END CREDIT ACCOUNTS—SPECIFIC DISCLOSURES SECTION 265.2—SPECIFIC FUNCTIONS DELEGATED TO BOARD EMPLOYEES AND TO FEDERAL RESERVE BANKS (k) * * * (3) *** (ii) A description of the transaction, which characterizes it as a cash advance, loan, overdraft loan, or other designation as appropriate, and which includes the amount of the transaction and (f) Each Federal Reserve Bank is authorized, as the date of the transaction9® or the date which to member banks or other indicated organizations appears on the document or instrument evidencing headquartered in its district, or under subparagraph the transaction (if the customer signed the docu- (25) of this paragraph as to its officers: ment or instrument), or the date of debiting the amount to the account, provided that if only the debiting date is disclosed and the customer submits a proper written notification of a billing error related to the transaction, the creditor shall treat such inquiry as a billing error under §§ 226.2(j) and 226.14, and as an erroneous billing under § 226.14(b), and shall supply documentary evidence of the transaction whether or not the customer requests it, (37) Under the provisions of section 2(a)(5)(D) within the time period allowed under § 226.14 for and 3(a) of the Bank Holding Company Act (12 resolution of a billing error without charge to the U.S.C. §§ 1841(a)(5)(D), 1842(a)), to extend the customer. If the date of debiting is disclosed, it time within which a company or a bank must divest must be reasonably identified as such on the periodic itself of bank shares acquired in satisfaction of a statement. debt previously contracted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 113 BANK HOLDING COMPANY AND BANK MERGER ORDERS ISSUED BY THE BOARD OF GOVERNORS ORDERS UNDER SECTION 3 Applicant, the fifth largest banking organization in Iowa, controls four banks with aggregate deposits OF BANK HOLDING COMPANY ACT of $369 million, representing 2.8 per cent of the total deposits in commercial banks in the State.2 As- Central National Bancshares, Inc., sociated, the seventeenth largest banking organiza- Des Moines, Iowa tion in Iowa, controls five banks, other than Clear Lake which would be disposed of promptly upon Order Approving Acquisition of consummation of this proposal, with aggregate de- Shares of Bank Holding Company posits of $94.0 million, representing 0.7 per cent of total deposits in commercial banks in the State. Central National Bancshares, Inc., Des Moines, Upon consummation of the proposed transaction Iowa, a bank holding company within the meaning and divestiture of Clear Lake, the resulting banking of the Bank Holding Company Act, has applied for organization would rank as the State's fourth the Board's approval under § 3(a)(3) of the Act (12 largest banking organization and would control 3.5 U.S.C. § 1842(a)(3)) to acquire 80 per cent or more per cent of the total deposits in commercial banks in of the voting shares of Associated Bank Corpora- Iowa. While Associated would be eliminated as a tion, Mason City, Iowa ("Associated"), thereby potential Statewide competitor, because of the relaacquiring indirectly voting shares of the following tively small size of Associated and its lead bank, the banks: Iowa Trust & Savings Bank, Estherville, Board believes that consummation of the proposal Iowa; The Iowa County Savings Bank, Marengo, would not have a significantly adverse effect upon Iowa; First Trust & Union Savings Bank, Sigoureither the banking structure or the concentration of ney, Iowa; Kalona Savings Bank, Kalona, Iowa; banking resources in Iowa. Cresco National Bank, Cresco, Iowa; and Commu- None of Applicant's bank subsidiaries is located nity State Bank of Clear Lake ("Clear Lake"), Clear Lake, Iowa.1 Applicant would also acquire in banking markets where Associated's bank subsidiaries, other than Clear Lake, are situated.3 indirectly voting shares of Leasing, Inc., Mason Furthermore, the distance separating the closest of City, Iowa, a subsidiary of Associated. Accord- Applicant's and Associated's subsidiary banks, ingly, Applicant has applied for the Board's apother than Clear Lake, is approximately 53 miles, proval, under § 4(c)(8) of the Act (12 U.S.C. and the amount of deposits and loans derived by § 1843(c)(8)) and § 225.4(b)(2) of the Board's Regu- Applicant's and Associated's subsidiary banks lation Y (12 CFR § 225.4(b)(2)), to engage, through from each other's markets is small. Accordingly, Leasing, Inc., in the activities of leasing personal the Board concludes that no significant existing property and equipment, and acting as agent, competition will be eliminated upon consummation broker, or advisor in leasing of such property. Such of the proposal. With respect to potential competiactivities have been determined by regulation to be tion the Board is of the view that while both closely related to banking (12 CFR § 225.4(a)(6)), Applicant and Associated are capable of entering and would be conducted in accordance with that each other's markets, the loss of either firm as a regulation. potential entrant would not be serious. The banking Notice of these applications has been given in markets in which both banking organizations operaccordance with §§3 and 4 of the Act (42 Federal ate are primarily small and rural, and the two firms Register 58202) and the time for filing comments cannot be considered highly likely entrants into and views has expired. The Board has considered each other's markets. In addition, several other the applications and all comments received, includlarge Iowa bank holding companies would remain ing those of two of Applicant's minority shareas potential entrants into these markets. Accordholders ("Protestants"), in light of the factors set forth in § 3(c) of the Act (12 U.S.C. § 1842(c)) and the considerations specified in § 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)). 2 All banking data are as of December 31, 1976. 3 Applicant controls subsidiary banks located in the Algona, Des Moines, Greenfield and Mason City banking markets. Associated, on the other hand, controls subsidiary banks in the 1 Applicant has agreed to dispose of all interest in Clear Lake to Decorah-Cresco, Emmet County, Keokuk County, Marengo and an unaffiliated third party promptly after consummation of the Washington County banking markets. Clear Lake is located in the proposed acquisition of Associated. Mason City banking market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

114 Federal Reserve Bulletin • February 1978 ingly, based upon these and other facts of record, calendar day following the effective date of this the Board considers the competitive effects of this Order, or later than three months after the effective proposal to be only slightly adverse. date of this Order, unless such period is extended The financial and managerial resources and fu- for good cause by the Board, or by the Federal ture prospects of Applicant and Associated are Reserve Bank of Chicago pursuant to delegated considered satisfactory and consistent with ap- authority. The determination concerning Appliproval of the subject application. The Board has cant's leasing activities is subject to the conditions considered the contention of Protestants that Ap- set forth in § 225.4(c) of Regulation Y and to the plicant should concentrate its financial and manage- Board's authority to require reports by and make rial resources on its existing organization and examinations of bank holding companies and their should not expand at this time. On the basis of the subsidiaries, and to require such modification or record, however, the Board does not believe that termination of the activities of a holding company the proposed transaction is likely to affect ad- or any of its subsidiaries as the Board finds necesversely Applicant's financial or managerial re- sary to assure compliance with the provisions and sources or its future prospects. purposes of the Act and the Board's regulations and Considerations relating to the convenience and orders issued thereunder, or to prevent evasion needs of the communities to be served favor ap- thereof. proval of the application. Applicant plans to im- By order of the Board of Governors, effective prove services of Associated's bank subsidiaries in January 20, 1978. the areas of trust operations, data processing, in- Voting for this action: Vice Chairman Gardner and vestment advice, farm management, and loan ser- Governors Cold well, Partee, and Lilly. Absent and not vicing. Such improvements would be in the public voting: Chairman Burns and Governors Wallich and interest and, in the Board's judgment, outweigh the Jackson. slightly adverse competitive effects of the proposal. Therefore, it is the Board's judgment that the (Signed) GRIFFITH L. GARWOOD, proposal to acquire Associated's bank subsidiaries [SEAL] Deputy Secretary of the Board. would be consistent with the public interest, and that the application should be approved. Applicant has also applied for the Board's approval to acquire indirectly shares of Leasing, Inc., a subsidiary of Associated, and thereby engage indirectly in certain leasing activities permissible Charter Techny Bancorporation, Inc., under section 225.4(a)(6) of Regulation Y. Appli- Northfield, Illinois cant's nonbank subsidiaries are not involved in any of the product lines that Leasing Inc., provides and, Order Approving accordingly, it does not appear that this acquisition Formation of a Bank Holding Company would have any adverse effects upon competition. Moreover, there is no evidence in the record that Charter Techny Bancorporation, Inc., consummation of the proposal would result in any Northfield, Illinois, has applied for the Board's undue concentration of resources, unfair competi- approval under § 3(a)(1) of the Bank Holding tion, conflicts of interests, unsound banking prac- Company Act (12 U.S.C. § 1842(a)(1)) of formation tices or other adverse effects upon the public inter- of a bank holding company by acquiring 80 per cent est. or more of the voting shares of Charter Bank of Based upon the foregoing and other considera- Techny, Northbrook, Illinois ("Bank"), a proposed tions reflected in the record, the Board has deter- new bank. Related to this application, an mined that the considerations affecting the competi- application for membership in the Federal Reserve tive, banking, and convenience and needs factors System has been filed on behalf of Bank. under § 3(c) of the Act and the balance of the public Notice of the application, affording opportunity interest factors that the Board must consider under for interested persons to submit comments and § 4(c)(8) of the Act both favor approval of Appli- views, has been given in accordance with § 3(b) of cant's applications. the Act. The time for filing comments and views has On the basis of the record, the applications are expired, and the application and all comments approved for the reasons summarized above. The received have been considered in light of the factors transaction shall not be made before the thirtieth set forth in § 3(c) of the Act (12 U.S.C. § 1842(c)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 115 Applicant, a nonoperating company with no Considerations relating to the convenience and subsidiaries, was organized for the purpose of needs of the community to be served are consistent becoming a bank holding company by acquiring with approval of the application. It has been Bank, a proposed new bank in the Chicago banking determined that consummation of the proposed market.1 Inasmuch as Bank is a proposed new transaction would be in the public interest and that bank, consummation of the proposal will neither the application should be approved. eliminate existing competition nor increase the On the basis of the record, the application is concentration of banking resources in any relevant approved for the reasons summarized above. The area. Principals of Applicant are affiliated with four transaction shall not be made (a) before the thirtieth other one-bank holding companies that control calendar day following the effective date of this Bank of Clarendon Hills, Bank of Northfield, Bank Order or (b) later than three months after the of Wheaton, and Bank of Winfield, all of which are effective date of this Order, unless such period is located in the Chicago banking market. The extended for good cause by the Board, or by the aggregate deposits of these four banks are $116.8 Federal Reserve Bank of Chicago pursuant to delemillion, representing only 0.27 per cent of total gated authority. commercial bank deposits in the Chicago banking By order of the Secretary of the Board, acting market. The distances between these banks and the pursuant to delegated authority for the Board of absolute and relative size and number of banking Governors, effective January 23, 1978. alternatives available to the public are sufficient to preclude adverse competitive effects. Accordingly, (Signed) THEODORE E. ALLISON, it is concluded that competitive considerations are [SEAL] Secretary of the Board. consistent with approval of the application. The Board applies multi-bank holding company standards in assessing the financial and managerial resources and future prospects, both of an applicant seeking to become a one-bank holding company First Alabama Bancshares, Inc., and of its proposed subsidiary bank, where prin- Birmingham, Alabama cipals of the applicant are engaged in establishing a chain of one-bank holding companies.2 The finan- Order Approving Acquisition of Bank cial and managerial resources and future prospects of Applicant appear to be satisfactory. Although First Alabama Bancshares, Inc., Birmingham, Applicant would incur some debt in connection with Alabama, a bank holding company within the meanthis proposal, it appears that income from Bank will ing of the Bank Holding Company Act, has applied provide sufficient funds to service the debt without for the Board's approval under § 3(a)(3) of the Act unduly burdening the financial condition of either (12 U.S.C. § 1842(a)(3)) to acquire all of the voting Bank or Applicant. Bank, as a proposed new bank, shares (less directors' qualifying shares) of First has no financial or operating history; however, its Alabama Bank, N.A., Notasulga, Lee County, prospects as a subsidiary of Applicant appear to be Alabama ("Bank"), a proposed de novo bank favorable. The four one-bank holding companies formed for the purpose of acquiring certain assets and their respective subsidiary banks with which and assuming certain liabilities of First Bank of Applicant's principals are associated appear to be Macon County, Notasulga, Macon County, in a generally satisfactory condition, which sug- Alabama ("First Bank").1 gests that Applicant's principals would conduct the In view of the emergency situation involving operations of the proposed holding company and First Bank, the Comptroller of the Currency has Bank in a satisfactory manner. The considerations recommended immediate action by the Board in relating to banking factors are consistent with apaccordance with the provisions of § 3(b) of the Act proval of the application. (12 U.S.C. § 1842(b)) permitting immediate action by the Board in order to prevent the probable failure of a bank. Pursuant to the emergency provisions of the Bank Merger Act, the Comptroller of 1 The Chicago banking market is approximated by Cook County, DuPage County, and portions of Lake County, Illinois; this market is comprised of 338 banks holding aggregate deposits of $43.7 billion. All deposit data are as of December 31, 1976. 2 See e.g., Board's Order dated June 14, 1976, denying the application of Nebraska Banco, Inc., Ord, Nebraska, 62 Federal 1 Total deposits of First Bank as of January 26, 1978, amounted Reserve BULLETIN 638 (1976). to $3.8 million. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 Federal Reserve Bulletin • February 1978 the Currency has approved Bank's proposal to reasons summarized above. The transaction may be purchase certain of the assets and assume certain of consummated immediately but in no event later the liabilities of First Bank. Public notice of the than three months after the effective date of this application before the Board is not required by the Order, unless such period is extended for good Bank Holding Company Act, and in view of the cause by the Board, or by the Federal Reserve emergency situation the Board has not followed its Bank of Atlanta pursuant to delegated authority. normal practice of affording interested parties the By order of the Board of Governors, effective opportunity to submit comments and views. The January 30, 1978. Board has considered the application and the comments received from the Comptroller of the Cur- Voting for this action: Vice Chairman Gardner, and Governors Cold well, Jackson, Lilly, and Partee. Absent rency and the Alabama Superintendent of Banks in and not voting: Chairman Burns and Governor Wallich. light of the factors set forth in § 3(c) of the Act (12 U.S.C. § 1842(c)). (Signed) GRIFFITH L. GARWOOD, Applicant is the second largest banking organiza- [SEAL] Deputy Secretary of the Board. tion in the State of Alabama with thirteen subsidiary banks and total deposits of $1.2 billion, representing 11.2 per cent of the total deposits in First International Bancshares, Inc., commercial banks in the State.2 Applicant operates Dallas, Texas no subsidiaries in the Lee County banking market, where Bank will be located. Bank was formed to Order Approving Acquisition of Bank acquire certain assets and assume certain liabilities of First Bank, which was declared insolvent and First International Bancshares, Inc., Dallas, placed in receivership by the Alabama State Bank- Texas, a bank holding company within the meaning ing Board on January 26, 1978. In view of the of the Bank Holding Company Act, has applied for insolvency of First Bank, the Board finds that any the Board's approval under § 3(a)(3) of the Act (12 adverse effects on competition that would result U.S.C. § 1842(a)(3)) to acquire 100 per cent of the from consummation of the acquisition are out- voting shares, less directors' qualifying shares, of weighed by the public interest considerations relat- the successor by merger to City National Bank in ing to the proposal. Considerations relating to the Wichita Falls, Wichita Falls, Texas ("Bank"). The convenience and needs of the community to be bank into which Bank is to be merged has no served lend very strong weight toward approval of significance except as a means to facilitate the the application since the proposal will protect all acquisition of the voting shares of Bank. Accorddepositors of First Bank and will insure the con- ingly, the proposed acquisition of shares of the tinued availability of banking services and the pres- successor organization is treated herein as the ervation of a viable banking competitor in the proposed acquisition of the shares of Bank. community. Notice of this application, affording opportunity The financial and managerial resources and fu- for interested persons to submit comments and ture prospects of Applicant and Bank are regarded views has been given in accordance with section as satisfactory. In light of the insolvency of First 3(b) of the Act. The time for filing comments and Bank, financial and managerial factors lend support views has expired, and the Board has considered toward approval of the application. the application together with all comments re- On the basis of the information before the Board, ceived, including those of the United States Deit is apparent that an emergency situation exists so partment of Justice and the Commissioner of the as to require that the Board act immediately pur- Texas Department of Banking, in light of the factors suant to the emergency provisions of § 3(b) of the set forth in § 3(c) of the Act (12 U.S.C. § 1842(c)). Bank Holding Company Act. It is the Board's Applicant, the third largest banking organization judgment that any disposition of the application in Texas, controls 27 banks with total deposits of other than by approval would be inconsistent with $3.98 billion, representing approximately 7.5 per the public interest and that the proposed transac- cent of the total deposits in commercial banks in tion should be approved on a basis that would not Texas.1 While acquisition of Bank ($180.9 million in preclude immediate consummation of the proposal. deposits) will increase Applicant's share of deposits Accordingly, the application is approved for the 1 All banking data are as of December 31, 1976, and reflect bank 2 Unless otherwise indicated, all banking data are as of June 30, holding company formations and acquisitions approved as of 1977. October 31, 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 117 Statewide by 0.3 per cent and change Applicant's market de novo, demographic data indicate that the rank to second in the State, the Board does not Wichita Falls banking market is only slightly attracview this result as being particularly significant in tive for de novo entry. Accordingly, on the basis of the context of this proposal. the above and other facts of record, the Board Bank is the second largest of twelve banking concludes that consummation of the proposal organizations located in the Wichita Falls banking would have only slightly adverse effects upon commarket, which is the relevant banking market,2 and petition, and, as discussed below, it is the Board's controls approximately 31.1 per cent of the total view that such adverse effects are outweighed by deposits in commercial banks in the market. Appli- the convenience and needs factors. cant's banking subsidiary closest to Bank is located The financial and managerial resources and fuapproximately 115 miles southeast of Bank in a ture prospects of Applicant, its subsidiary banks, separate banking market. Thus, no significant exist- and Bank are regarded as satisfactory. Coning competition would be eliminated between Bank siderations relating to banking factors are consisand any of Applicant's subsidiary banks upon con- tent with approval of the application. Through summation of this proposal. With respect to poten- affiliation with Applicant, Bank will be in a position tial competition, the Department of Justice is of the to draw upon Applicant's financial and managerial view that approval would remove Applicant as a resources and to offer to its customers such addimeans for deconcentrating the Wichita Falls bank- tional services as factoring, equipment leasing, ining market either by de novo or foothold entry. dustrial development, data processing, and corpo- While it appears that consummation of the proposal rate cash management services. Bank will also be would have some adverse effects upon potential able to provide credit life and credit accident and competition, for the reasons discussed below, the health insurance to its customers at rates less than Board concludes that the anticompetitive effects currently offered by Bank. These convenience and associated with the proposal are only slightly ad- needs factors are sufficient to outweigh the slightly verse. adverse competitive effects that might result from The largest banking organization in the Wichita consummation of the proposal. Based upon the Falls banking market controls the first and fifth foregoing and other considerations reflected in the largest banks in the market and has director inter- record, it is the Board's judgment that the proposed locks with the third largest bank in the market, and acquisition is in the public interest and that the thus may be regarded as controlling or exerting application should be approved. some influence over 50.2 per cent of the total On the basis of the record, the application is commercial bank deposits in the market. Acquisi- approved for the reasons summarized above. The tion of Bank by Applicant, therefore, may have a transaction shall not be made (a) before the thirtieth positive effect upon competition in the market by calendar day following the effective date of this introducing a new and aggressive competitor into Order or (b) later than three months after the the Wichita Falls banking market. Furthermore effective date of this Order, unless such period is Applicant has committed that upon consummation extended for good cause by the Board, or by the it would sever director interlocks existing between Federal Reserve Bank of Dallas pursuant to dele- Bank and another bank in the Wichita Falls banking gated authority. market, and this should have procompetitive effects By order of the Board of Governors, effective within the market. Moreover, even after consum- January 6, 1978. mation of this proposal only two of the State's multibank holding companies will be present in the market and, accordingly, there will be numerous other potential entrants as sources of possible future deconcentration in the market. Even after consummation of this proposal, there will remain Voting for this action: Vice Chairman Gardner and other points of entry into the market for bank Governors Cold well, Jackson, Partee, and Lilly. Absent and not voting: Chairman Burns and Governor Wallich. holding companies outside the market. Although Applicant has the financial capability to enter the 2 The Wichita Falls banking market is approximated by the Wichita Falls SMSA (which consists of Wichita and Clay Counties (Signed) GRIFFITH L. GARWOOD, in Texas), plus the town of Grandfield, Oklahoma, and the Western portion of Cotton County, Oklahoma. [SEAL] Deputy Secretary of the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 Federal Reserve Bulletin • February 1978 First Missouri Banks, Inc., Bank are regarded as satisfactory.2 Considerations Creve Coeur, Missouri relating to banking factors, therefore, are consistent with approval. While there is no evidence in the Order Approving Acquisition of Bank record to indicate that the relevant market's banking needs are not being met, it appears that after First Missouri Banks, Inc., Creve Coeur, Mis- affiliation Bank will offer its customers additional souri ("Applicant"), a bank holding company and improved services, including paying the within the meaning of the Bank Holding Company maximum permissible rates on savings deposits and Act, has applied for the Board's approval under expanding Friday hours. Accordingly, con- § 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to ac- siderations relating to the convenience and needs of quire 50 per cent or more of the voting shares of Bank the community to be served lend some slight weight of Dutzow, Dutzow, Missouri ("Bank"). toward approval of the application. It is the Board's Notice of the application, affording opportunity judgment that consummation of the proposed acfor interested persons to submit comments and quisition would be in the public interest and that the views, has been given in accordance with § 3(b) of application should be approved. the .Act. The time for filing comments and views On the basis of the facts of record and for the has expired, and the application and all comments reasons summarized above, the application is apreceived have been considered in light of the factors proved. The transaction shall not be made (a) set forth in § 3(c) of the Act (12 U.S.C. § 1842(c)). before the thirtieth calendar day following the effec- Applicant, the seventeenth largest banking or- tive date of this Order or (b) later than three months ganization in Missouri, controls seven banks with after the effective date of this Order unless such aggregate deposits of $128.5 million,1 representing period is extended for good cause by the Board, or 0.7 per cent of total commercial bank deposits in by the Federal Reserve Bank of St. Louis pursuant the State. Applicant's acquisition of Bank, with to delegated authority. deposits of $5.5 million, would not result in any By order of the Board of Governors, effective significant increase in the concentration of banking January 26, 1978. resources in Missouri. Bank is the ninth largest of eleven banks operating in the relevant market (which is approximated by Dutzow plus all of Franklin County, Missouri, Voting for this action: Vice Chairman Gardner and Governors Cold well, Jackson, and Partee. Absent and not except for the community of Pacific) and holds 3 voting: Chairman Burns and Governors Wallich and Lilly. per cent of total market deposits. Applicant's nearest subsidiary bank is located approximately 20 miles north of Bank in a separate banking market, and consummation of the proposal would not result (Signed) THEODORE E. ALLISON, in the elimination of any significant existing compe- [SEAL] Secretary of the Board. tition between Bank and Applicant's banking subsidiaries. In view of the relative size of Bank, the low population growth in Bank's area, and other facts of record, it appears that consummation of the 2 The facts of record indicate that a principal of Applicant proposal would not have any significant adverse acquired Bank's shares with funds provided by Applicant's lead effect upon potential competition. Although Appli- bank. That action was taken before Applicant sought Board cant has several nonbanking subsidiaries, none of approval to acquire the identical stock interest in Bank. The Board has scrutinized the underlying facts surrounding the acquisition of these subsidiaries is engaged in activities that might Bank's shares by Applicant's principal and is of the view that such result in competition with Bank. Accordingly, an acquisition, in the context of the facts presented by the subject based upon the above and other facts of record, the proposal, did not result in Applicant having indirectly acquired control over Bank without the Board's prior approval. Neverthe- Board has determined that competitive conless, the Board's reservations concerning similar transactions siderations are consistent with approval of the involving acquisitions made by principals of holding companies application. have been indicated on numerous occasions in the past, and the Board believes it appropriate at this time to caution bank holding The financial and managerial resources and fu- companies of its intention to regard such actions as representing ture prospects of Applicant, its subsidiaries, and an indirect acquisition of control and to hold bank holding companies strictly accountable for such practices. Accordingly, the Board believes bank holding companies should refrain from financing the acquisition of the shares of any bank or company by a person closely associated with the holding company where the holding company proposes to purchase such shares from that 1 All banking data are as of June 30, 1977. person. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 119 First National Financial Corporation, banking organizations, headquartered in Detroit, Kalamazoo, Michigan are each at least double the size of First American based on total deposits, and together control ap- Order Approving proximately 54 per cent of total deposits in com- Merger of Bank Holding Companies mercial banks in Michigan. Given the structure of banking in the State, it does not appear that ap- First National Financial Corporation, proval of the subject application would have signifi- Kalamazoo, Michigan, a registered bank holding cantly adverse effects upon the concentration of company within the meaning of the Bank Holding banking resources in Michigan. Company Act, has applied for the Board's approval None of Applicant's banking subsidiaries is lounder § 3(a)(5) of the Act (12 U.S.C. § 1842(a)(5)) to cated in banking markets where Bankcorp's bankacquire all of the voting shares of American ing subsidiaries are situated.3 Furthermore, the Bankcorp., Inc., Lansing, Michigan ("Bankcorp"), distance separating the closest of Applicant's and with the resulting company to be known as First Bankcorp's subsidiary banks is approximately 24 American Bank Corporation ("First American"). miles, and the amount of deposits and loans held by Notice of the application, affording opportunity Applicant's and Bankcorp's subsidiary banks from for interested persons to submit comments and each other's market area is nominal. Accordingly, views, has been given in accordance with § 3(b) of the Board concludes that no significant existing the Act. The time for filing comments and views has competition would be eliminated upon consummaexpired, and the Board has considered the applica- tion of the proposal. tion and all comments received including those of With respect to potential competition, the Dethe United States Department of Justice, the Finan- partment of Justice has expressed the opinion that cial Institutions Bureau of the Michigan Depart- Applicant is a likely entrant into two markets where ment of Commerce, and American National Hold- Bankcorp has subsidiary banks, the Ann Arbor4 ing Company, Kalamazoo, Michigan, in light of the and Lansing5 banking markets, while Bankcorp is a factors set forth in § 3(c) of the Act (12 U.S.C. likely entrant into the Kalamazoo banking market6 § 1842(c)).1 where Applicant has its lead bank, and that ap- Applicant, the ninth largest banking organization proval of the application would result in the elimiin Michigan, controls twelve banks with aggregate nation of potential competition and decrease the deposits of $624.1 million, representing 2.0 per cent possibility that these markets would become less of the total deposits in commercial banks in the concentrated in the near future. State.2 Bankcorp, the eleventh largest banking or- In response to the Justice Department's comganization in Michigan, controls six banks with ments, Applicant contends that Bankcorp and Apaggregate deposits of $595.5 million, representing plicant are not potential entrants into each other's 1.9 per cent of total deposits in commercial banks in markets, that there exist other potential entrants the State. Upon consummation of the proposed into these markets, and that these markets are not transaction, the resulting banking organization, particularly concentrated when compared to other First American, would rank as the State's fifth Michigan markets. The Financial Institutions largest banking organization and control 3.9 per Bureau of the Michigan Department of Commerce, cent of the total deposits in commercial banks in in recommending to the Board approval of the Michigan. However, First American would be a proposal, concurs with Applicant in its claim that distant fifth behind the four larger commercial banking organizations in Michigan. These four 3 Applicant has subsidiary banks located in the Adrian, Calumet, Sheboygan, Grand Rapids, Holland, Ironwood, Kalamazoo, Ludington, Menominee, Sault Ste. Marie and Stambaugh markets. 1 American National Holding Company, Kalamazoo, Michigan, Bankcorp, on the other hand, has subsidiary banks located in the in objecting to this application alleges that unfair competition Ann Arbor, Lansing, Muskegon and Perry markets. would result from the public confusing the name of American 4 The Ann Arbor banking market is approximated by the Ann National Holding Company with that of First American Bank Arbor Standard Metropolitan Statistical Area ("SMSA") or Corporation. The Board has determined that resolution of such an Washtenaw County including the city of Ypsilanti. allegation rests with the courts and is not properly within the 5 The Lansing banking market is approximated by Eaton, jurisdiction of the Board under § 3(c) of the Act. See Board Order Ingham and Clinton Counties, and the southeastern corner of approving the application of First Security Corporation, Suther- Ionia County, which includes the town of Portland. land, Nebraska, to acquire First Security Bank, Sutherland, 6 The Kalamazoo banking market is approximated by all of Nebraska (61 Federal Reserve BULLETIN 589 (1975)). Kalamazoo County, the western portion of Calhoun County, the 2 All banking data, unless otherwise indicated, are as of De- northern portion of St. Joseph County, the eastern portion of cember 31, 1976, and reflect bank holding company formations Van Buren County, the southern portion of Allegan County, and and acquisitions approved as of November 30, 1977. the southwest portion of Barry County. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 Federal Reserve Bulletin • February 1978 the markets where Applicant and Bankcorp pres- extent consummation of the proposal will make it ently control banks are not especially attractive for possible for First American to compete more effecde novo entry and that the proposed merger would tively on a Statewide basis, the Board finds the in fact be procompetitive since it would create a competitive considerations favor approval. sizable holding company better able to compete The financial and managerial resources and fuwith the State's larger Detroit-based banking or- ture prospects of Applicant and Bankcorp, which ganizations. depend upon those of their subsidiary banks, are The Board has considered carefully the com- considered satisfactory and consistent with apments of the Justice Department and, for the reasons proval of the subject application. Therefore, condiscussed below, the Board is unable to conclude siderations relating to banking factors are consisthat consummation of the proposal would have tent with approval. significantly adverse competitive effects. It is true There is no evidence that the banking needs of that the banking markets of Ann Arbor, Lansing, the residents of the relevant markets are not presand Kalamazoo may be viewed as highly concen- ently being met by the existing institutions. Both trated;7 however, based upon the facts of record, it Applicant and Bankcorp are of sufficient size to appears that these markets are capable of support- improve the services of their present bank subing de novo entrants and, even after consummation sidiaries, and merger of the two holding companies of this proposal, there will remain other points of is unnecessary to ensure continued or increased entry into these markets as well as a number of public benefits in the future. Therefore, conother Michigan banking organizations as potential siderations relating to convenience and needs of the entrants capable of utilizing such entry vehicles. communities to be served are consistent with, but The Board also finds that to the extent approval lend little support toward, approval. Accordingly, it of this application might be viewed as having a is the Board's judgment that Applicant's proposal slightly adverse effect upon potential competition, to acquire Bankcorp is in the public interest and that effect would be more than offset by the antici- should be approved. pated ability of First American to become a com- On the basis of the record, the application is petitor with the larger Detroit-based holding com- approved for the reasons summarized above. The panies on a Statewide basis, thereby improving the transaction shall not be made (a) before the thirtieth overall competitive banking structure in Michigan.8 calendar day following the effective date of this Approval may also make it possible for First Order or (b) later than three months after the American itself to become a competitive force effective date of this Order, unless such period is within the most significant banking market in extended for good cause by the Board, or by the Michigan, the Detroit market, which possibility the Federal Reserve Bank of Chicago pursuant to dele- Board regards as procompetitive and clearly in the gated authority. public interest.9 Accordingly, based upon these By order of the Board of Governors, effective reasons and other facts of record, including the January 13, 1978. Board's analysis of the other markets in which Voting for this action: Chairman Burns and Governors Applicant and Bankcorp have banking subsidiaries, Gardner, Coldwell, Jackson, and Lilly. Voting against this the Board finds that consummation of the proposal action: Governors Wallich and Partee. would not have any significantly adverse effects upon either existing or potential competition nor (Signed) GRIFFITH L. GARWOOD, would it increase significantly the concentration of [SEAL] Deputy Secretary of the Board. banking resources in any relevant area. To the National Corporation, Bloomfield Hills, has 15 banking subsid- 7 In the Ann Arbor banking market, the largest two banking iaries with $3.3 billion in deposits; the third largest banking ororganizations control 51.7 per cent of market deposits, and the ganization, DETROITBANK, Detroit, has five banking subsidlargest four 71.1 per cent. Approximately similar concentration iaries with $3.0 billion in deposits; and the fourth largest banking levels are present in the Lansing banking market, where the organization, Manufacturers National Corp., Detroit, has five largest two banking organizations control 56.8 per cent of market banking subsidiaries with $2.6 billion in deposits. deposits, while the largest four hold 78.0 per cent. With respect 9 As of June 30, 1976, the banking organizations operating in the to the Kalamazoo banking market, the largest two banking or- Detroit banking market, which was then defined as being approxiganizations hold 53.2 per cent of market deposits and the largest mated by Macomb, Oakland, and Wayne Counties, controlled four have 83.6 per cent. The more limited market definitions em- approximately 54 per cent of total deposits in commercial banks ployed by the Justice Department give rise to even more dramatic in Michigan. (For a detailed description of the current definition concentration levels than the market definitions used by the Board. of the Detroit banking market, see the Board's Order denying the 8 The largest banking organization in Michigan, National Detroit application of National Detroit Corporation, Detroit, Michigan, to Corporation, Detroit, has six banking subsidiaries with $4.8 billion acquire The Brighton State Bank, Brighton, Michigan, 63 Federal in deposits; the second largest banking organization, Michigan Reserve BULLETIN 583 (1977)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 121 Dissenting Statement of competition in several major Michigan banking mar- Governors Wallich and Partee kets without providing significant public benefits. There is a danger that the majority decision in We would deny the application of First National this case could be misinterpreted as indicating that Financial Corporation, Kalamazoo, Michigan, to de novo or foothold entry into highly concentrated merge with American Bankcorp, Inc., Lansing, markets is no longer expected of those organiza- Michigan. We are concerned primarily with the tions most capable of entering new markets in that significant adverse effect that the proposed acquisi- manner. It is our understanding, however, that the tion would have upon potential competition.1 majority acted as it (lid in this case because it felt The facts of record indicate that both Applicant that the combination of two aggressive, medium and Bankcorp are aggressive, expansion-minded size bank holding companies would create an orfirms that appear to be likely entrants into each ganization better able to compete with the four other's market areas. Since its formation in 1972, larger Detroit-based banking organizations. We bewith three subsidiary banks, Applicant has acquired lieve the majority's decision should not be taken as nine additional banks and currently operates in encouragement to bank holding companies to eseleven separate banking markets throughout the chew de novo or foothold entry into highly concen- State of Michigan.2 Bankcorp, during the same trated markets on the presumption that the Board approximate time period, has also been aggres- will be likely to approve less precompetitive means sively expanding since its formation in 1973 with of entry. one subsidiary bank, as it has acquired or formed For the foregoing reasons, we would deny this five additional banks and currently operates in four application. separate markets in Michigan.3 Many of these 15 markets in which Applicant or Bankcorp could be considered potential competitors are characterized by a relatively high degree of concentration. Twelve have a three-firm concentration level greater than 60 per cent; ten have a level greater than 70 per cent; and five have a level greater than The Fulton National Corporation, 80 per cent. Approval of the merger, therefore, Atlanta, Georgia eliminates both the possibility of de novo or foothold entry by either banking organization into each Order Approving other's markets and the likelihood of possible future Acquisition of Bank Holding Companies deconcentration of these markets by the entry of these organizations. Thus, the Board has today ap- The Fulton National Corporation, Atlanta, Georproved the combination of two aggressive and growgia, a bank holding company within the meaning of ing organizations (one already possessing a network the Bank Holding Company Act, has applied for the of banks dispersed throughout the State and the Board's approval under § 3(a)(3) of the Act (12 other fully capable of independent development), U.S.C. § 1842(a)(3)) to acquire voting shares of four that will have an adverse effect upon potential bank holding companies as follows: 86 per cent of the voting shares of DUCO, Inc., Duluth, Georgia, which owns 61 per cent of the voting shares of The 1 The courts have distinguished between two different concepts Bank of Duluth, Duluth, Georgia; 85 per cent of the that are often labeled as "potential competition". The original voting shares of DORACO, Inc., Doraville, Georpotential competition doctrine asserts that the behavior of established firms in a given market may be constrained by the threat of gia, which owns 83 per cent of the voting shares of entry by firms not in the market. The second "potential competi- The Northeast Commercial Bank, Doraville, Geortion" doctrine, referred to generally as "probable future competigia; 91 per cent of the voting shares of COLPAK tion", asserts that if a potential entrant into a market is permitted to acquire one of the largest organizations in the market the Enterprises, Inc., College Park, Georgia, which possibility of introducing an additional strong competitor through owns 95 per cent of the voting shares of Bank of the de novo entry or foothold entry is eliminated, thus limiting the South, College Park, Georgia; and 92 per cent of the probability of future deconcentration of the market. We find that the primary anticompetitive effect of the subject application is the voting shares of FORPAK, Inc., Forest Park, elimination of probable future competition. Georgia, which owns 89 per cent of the voting 2 Applicant has subsidiary banks located in the Adrian, shares of Bank of Forest Park, Forest Park, Geor- Calumet, Sheboygan, Grand Rapids, Holland, Ironwood, Kalamazoo, Ludington, Menominee, Sault Ste. Marie, and Stam- gia. (The four bank holding companies are referred baugh markets. to collectively herein as "Companies" and their 3 Bankcorp has subsidiary banks located in the Ann Arbor, subsidiaries as "Banks"). Companies exist princi- Lansing, Muskegon, and Perry markets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 Federal Reserve Bulletin • February 1978 pally in order to hold the shares of Banks.1 The corp to receive its nonvoting shares and invoke this applications to acquire voting shares of Companies provision. At the time that Applicant's relationship are treated herein as applications to acquire voting with Companies commenced, Applicant was proshares of Banks. The proposed transactions would hibited by State law from acquiring the banks. The be accomplished by Applicant transferring nonvot- above arrangements were apparently intended to ing convertible shares of Companies to Applicant's preserve Applicant's opportunity to acquire Banks wholly-owned subsidiary, Fulcorp, Inc. Upon in the event of a change in the relevant statute. transfer, each nonvoting share would attain voting The Board has on several occasions indicated status. Fulcorp, Inc. has applied for the Board's that acquisitions of bank shares by persons afapproval pursuant to § 3(a)(1) of the Bank Holding filiated with a bank holding company may evidence Company Act, 12 U.S.C. § 1842(a)(1) of formation indirect control of such shares by the bank holding of a bank holding company. Inasmuch as it is a company where the persons who acquire the shares wholly-owned subsidiary of Applicant, formed do so with funds borrowed from the bank holding solely to receive and hold shares of Companies, company either at preferential rates or without risk Fulcorp's proposed acquisitions are treated herein of loss to the borrower.2 Such acquisitions, underas acquisitions by Applicant. taken without the prior approval of the Board, may Notice of the applications affording opportunity constitute violations of the Act. for interested persons to submit comments and It appears that Applicant achieved a similar result views, has been given in accordance with § 3(b) of by lending to corporations organized by "friendly" the Act. The time for filing comments and views has individuals with the understanding that the proexpired, and the Board has considered the applica- ceeds of the loans would be used to acquire voting tions and all comments received in light of the shares of Banks. In the facts and circumstances of factors set forth in § 3(c) of the Act (12 U.S.C. these cases, the Board does not believe that the use § 1842(c)). of a corporate vehicle negated the fact that Appli- The applications are consolidated because of the cant acquired indirect control of Banks. The Board set of facts common to them. Companies were has concluded that Applicant, by virtue of these organized during the period 1967 to 1970 by indi- arrangements, acquired indirect ownership or conviduals associated with Applicant's law firm. Dur- trol of more than 25 per cent of the voting shares of ing that period, Applicant's subsidiary bank, The Banks without the Board's prior approval and Fulton National Bank of Atlanta, Atlanta, Georgia therefore violated section 3 of the Act. ("Fulton Bank") loaned funds to Companies in The Board has noted particularly Applicant's order for them to acquire voting shares of Banks. assertion that the shares of Companies that it Fulton bank held such shares as collateral for its acquired in 1972 were "nonvoting." The proper loans. Since that time a close correspondent rela- characterization of shares is important for purposes tionship has existed between Applicant and Banks. of section 2(a)(2)(A) of the Act, which defines In 1972, in connection with a restructuring of Com- control as the direct or indirect ownership, control panies, Applicant acquired 100 per cent of the Class or power to vote of "25 per centum or more of any A common nonvoting shares of each Company. class of voting securities."3 In order to prevent Although such shares were nonvoting, they pro- evasions of the Act, the Board believes that its vided that, in the event of transfer to a party other inquiry into whether shares are voting or nonvoting than Applicant, they would become voting shares. should not end with an applicant's characteriza- As indicated above, Applicant has organized Ful- tion of the shares. In these cases, as noted previously, the shares were convertible into voting shares upon transfer to 1 FORPAK's inactive, wholly-owned subsidiary, Forpak In- another party. As the applications indicate, Applivestment Corporation, ("Forpak Investment") Forest Park, Georgia, is authorized pursuant to § 4(c)(8) of the Act, 12 U.S.C. cant is able to convert the shares simply by trans- § 1843(c)(8), to extend credit secured by second mortgages on real ferring them to its subsidiary. Upon conversion, the estate. Applicant and its wholly owned subsidiary, Fulcorp, Inc., have applied to acquire indirectly shares of Forpak Investment. In that Forpak Investment is inactive, the Board views these as applications to engage in the nonbanking activity de novo. The 2 See, The Jacobus Company and Inland Financial Corporation, Board's approval of Applicant's indirect acquisition of Forpak 60 Federal Reserve BULLETIN. 130 (1974); Mid America Bancor- Investment is subject to the conditions set forth in § 225.4(c) of poration, 60 Federal Reserve BULLETIN 131 (1974); First United Regulation Y and to the Board's authority to require such modifi- Bancorporation, Inc., 61 Federal Reserve BULLETIN 889 (1975); cation or termination of the activities of a holding company or any First National Holding Corp., 63 Federal Reserve BULLETIN 929 of its subsidiaries as the Board finds necessary to assure com- (1977). pliance with the provisions and purposes of the Act and the 3 Section 2(a)(2)(C) of the Act provides that a company has Board's regulations and orders issued thereunder, or to prevent control over a bank or over a company if the Board determines evasion thereof. [Footnote continued on next page.] Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 123 shares would represent over 80 per cent of the approximately $71.3 million.H Acquisition of Banks outstanding voting shares of each Company. In would increase Applicant's share of Statewide deaddition to their convertibility, the shares carried posits in commercial banks by less than one per voting rights for such major corporate actions as cent and would have no appreciable effect upon the merger and liquidation. It is the Board's judgment concentration of banking resources in the State. that the shares of Companies acquired by Appli- Banks together control 1.3 per cent of total cant, in view of their actual as well as potential deposits in commercial banks in the market. Applivoting authority, constitute "voting securities" for cant's subsidiary bank is the fourth largest bank in purposes of section 2(a)(2)(A) of the Act. Acquisi- the market contr611ing 9.5 per cent of total deposits tion of in excess of 25 per cent of that class of in commercial banks. Applicant's acquisition of securities without the Board's prior approval was a Banks would contribute to an increase in Appliviolation of section 3 of the Act. cant's deposit share in the market. However, after In the Board's judgment, were the events which consummation of the proposed transaction, the caused the above violations to occur today, that three largest banking organizations in the market fact standing alone would probably reflect so ad- would control 67.6 per cent of total market deversely on Applicant's management as to warrant posits. The slight increase in concentration in the denial of the applications. However, the record market that would result from these transactions is reflects that Applicant, at the time, had reason to mitigated by the fact that Applicant will be able to believe that its actions were lawful. In accordance compete more effectively with the larger organizawith the Board's policy with respect to past viola- tions in the market. Inasmuch as Fulton Bank and tions, Applicant has given definite undertakings, Banks are located in the same market, the propowhich have been approved by the Board, that will sals would be expected to result in the elimination protect against similar violations in the future. After of a certain amount of existing competition. Howscrutinizing the underlying facts of these violations, ever, as a result of the control relationship, as the Board has concluded that the violations do not discussed above, that has existed between Applireflect so adversely on management as to require cant and Banks, no significant competition has denial of the applications, and that acceptance of developed between Fulton Bank and Banks or Applicant's undertaking is a sufficient remedy for among Banks. the violations. Nevertheless, in analyzing the competitive ef- Applicant, the fourth largest banking organiza- fects of applications in which an applicant has tion in Georgia, controls one bank, Fulton Bank, in acquired control over a bank without the Board's addition to Banks. Fulton Bank holds total deposits prior approval, the Board examines the effects both of approximately $535.7 million, representing 4.2 at the time of the application and at the time control per cent of the total deposits in commercial banks in was established. In this regard, the Board notes that the State.4 Banks are all located in the Atlanta The Northeast Commercial Bank was organized by banking market5 and have aggregate deposits of individuals in Applicant's law firm and that Applicant's control over it has existed since that time. As a de novo bank, no competition existed between Applicant and the bank. With respect to The Bank after notice and opportunity for a hearing that the company directly or indirectly exercises a "controlling influence" over the of Duluth, Bank of the South and Bank of Forest management or policies of the bank or the company. For purposes Park it appears that some existing competition was of controlling influence proceedings pursuant to that section the Board has determined that eliminated at the time of acquisition; however, due "A company that owns directly or indirectly securities to the small size of the banks, the effect on competithat are immediately convertible at the option of the holder tion in the market was not significant. Moreover, or owner thereof into voting securities presumably owns Applicant's acquisition of control over Banks or controls the voting securities" § 225.2(b)(5) of Regulation Y, 12 C.F.R. 225.2(b)(5). placed it in a stronger competitive position vis a vis the market's larger banking organizations. The This regulatory presumption applies in cases where a company may have control over a bank or company other than through the Board, accordingly, concludes that competitive ownership of 25 per cent or more of any class of voting securities. In cases involving questions of control, the Board determines whether control exists pursuant to § 2(a)(2)(A) through the ownership of the requisite percentage of voting shares before 6 Duluth Bank (deposits of $16.5 million) is the 24th largest inquiring as to the possible existence of controlling influence. banking organization in the market; Northeast Commercial Bank 4 Banking data are as of December 31, 1976. (deposits of $5.8 million) is the 32nd largest; Bank of the South 5 The Atlanta banking market, which is the relevant banking (deposits of $20 million) is the 21st largest; and Bank of Forest market for purposes of the proposed transactions, is approximated Park (deposits of $29 million) is the 17th largest. Each bank has by Fulton, DeKalb, Cobb, Gwinnett, Clayton, Douglas, Henry less than one half of one per cent of total deposits in commercial and Rockdale Counties. banks in the market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 Federal Reserve Bulletin • February 1978 considerations, both now and at the time that Voting for this action: Vice Chairman Gardner and Applicant acquired control over Banks, are consis- Governors Cold well and Partee. Present and abstaining: tent with approval. Governor Jackson. Absent and not voting: Chairman Burns, and Governors Wallich and Lilly. Considerations relating to convenience and needs of the communities to be served are also consistent (Signed) GRIFFITH L. GARWOOD, with approval of the applications. As a result of [SEAL] Deputy Secretary of the Board. their involvement with Applicant, Banks have been offering a number of services that they would not have been able to offer absent affiliation with a larger organization. In connection with the pro- Concurring Statement of Governor Coldwell posed transactions, Banks will be able to offer a wider variety of savings plans, increase banking In my view this case is a close parallel to the First hours, and make available additional financial ser- National Holding Corp. case approved by the vices. Board on September 28, 1977, on which I registered The financial and managerial resources and fu- a dissent. Since the majority of the Board saw fit to ture prospects of Companies and Banks are viewed approve that application, I believe it would be as generally satisfactory. Applicant's and Fulton unjust to reach a different result with respect to Bank's managerial resources and future prospects Fulton National Corporation. viewed in the context of the record on these applications are also considered generally satisfactory. Heaton Bank Holding Company, Applicant's financial resources which suffered dur- Heaton, North Dakota ing the downturn in the real estate industry in the Southeast, are improving. Although Applicant is Order Denying progressing satisfactorily, the Board believes that Formation of Bank Holding Company Applicant should continue to strengthen its financial resources before attempting to expand through Heaton Bank Holding Company, Heaton, North proposals involving diversion of its resources. Dakota, has applied for the Board's approval under These applications, however, involve a restructur- § 3(a)(1) of the Bank Holding Company Act (12 ing of Applicant's present ownership of Companies U.S.C. § 1842(a)(1)) of formation of a bank holdand would not require any additional expenditures ing company through acquisition of 100 per cent of by Applicant. The Board, therefore, does not view the voting shares (less directors' qualifying shares) these proposals as being expansionary. In view of of Farmers State Bank, Heaton, North Dakota the foregoing and recent financial information sub- ("Bank"). mitted by Applicant, the Board concludes that Notice of the application, affording opportunity considerations relating to Applicant's financial refor interested persons to submit comments and sources are consistent with approval of these applications.7 views, has been given in accordance with § 3(b) of the Act. The time for filing comments and views has On the basis of the record, the applications are expired, and the Board has considered the applicaapproved for the reasons summarized above. The tion and all comments received in light of the transactions shall not be made (a) before the thirfactors set forth in § 3(c) of the Act (12 U.S.C. tieth calendar day following the effective date of § 1842(c)). this Order nor (b) later than three months after the Applicant is a nonoperating North Dakota corpoeffective date of this Order, unless such period is ration organized for the purpose of becoming a extended for good cause by the Board, or by the bank holding company by acquiring Bank ($5.1 Federal Reserve Bank of Atlanta pursuant to delemillion in deposits).1 Upon acquisition of Bank, gated authority. Applicant would control the 122nd largest banking By order of the Board of Governors, effective organization in North Dakota and approximately January 30, 1978. 0.2 per cent of total deposits in commercial banks in the State. Bank is the smallest of four banks located in the Wells County banking market,2 and holds 7 There is nothing in the record that indicates that Fulton Bank's financial resources, at the time it arranged to acquire control of Banks, were incompatible with those investments. Instead, it appears that the difficulties Applicant has experienced 1 All banking data are as of June 30, 1977. were chiefly those common to other banking organizations and 2 The relevant banking market is approximated by Wells arose several years later. County, North Dakota. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 125 approximately 11.4 per cent of the total deposits in With respect to Applicant's and Bank's financial commercial banks in the market. Since Applicant resources and future prospects, the Board notes has no other banking subsidiaries and Applicant's that Applicant would incur a sizable debt in connecprincipals do not control any other banks, con- tion with the proposed acquisition of Bank's shares. summation of the proposal would not have any Applicant proposes to service this debt over a adverse effects upon existing or potential competi- 12-year period primarily through dividends to be tion, nor would it increase the concentration of declared by Bank. In light of the policies and banking resources in the relevant market. There- practices in evidence in the principals' former bank, fore, the Board concludes that competitive con- as well as in Bank's existing operations, the Board siderations are consistent with approval of the believes that Applicant's financial projections may application. be suspect. Therefore, there is a significant degree The Board has indicated on previous occasions of uncertainty as to the Applicant's ability to serthat a holding company should serve as a source of vice its sizable acquisition debt without increasing financial and managerial strength to its subsidiary Bank's dividends or otherwise drawing on Bank's bank, and that the Board will closely examine the earnings so as to adversely affect Bank's capital condition of an applicant in each case with this position. Accordingly, the Board concludes that consideration in mind.3 Having examined such fac- considerations relating to financial resources and tors in light of the record in this application, the future prospects of Applicant and Bank weigh Board concludes that the record presents adverse against approval of this application. considerations as they relate to the applicant bank No significant changes in Bank's operations or in holding company that warrant denial of the propo- the services offered to customers are anticipated to sal to place the ownership of Bank into corporate follow from consummation of the proposed acquisiform. tion. Consequently, convenience and needs factors Applicant's four shareholders are also the princi- lend no weight towards approval of this proposal. pal shareholders of Bank, having acquired control On the basis of the circumstances concerning this of Bank in February 1977 in apparent anticipation application, the Board concludes that the banking of later placing the ownership of Bank into a considerations involved in this proposal present corporation. Prior to acquiring control of Bank, adverse factors bearing upon the financial and three of Applicant's principals were officers and managerial resources and future prospects of Apdirectors of another bank at varying times from plicant and Bank. Such adverse factors are not 1960 to early 1977, and during that period, that outweighed by an procompetitive effects or by bank's capital and earnings declined apparently due benefits that would result in better serving the in part to the policies and practices of the three convenience and needs of the community. Accordprincipals. The record indicates that since acquiring ingly, it is the Board's judgment that approval of the control of Bank Applicant's principals have intro- application would not be in the public interest and duced similar policies and practices at Bank. Since that the application should be denied. no management changes are contemplated by Ap- On the basis of the facts of record, the application plicant and consummation of this proposal would is denied for the reasons summarized above. perpetuate and enhance present management's con- By order of the Board of Governors, effective trol of Bank, the Board is of the view that at the January 16, 1978. present time managerial considerations should be viewed as weighing against approval of this application.4 Voting for this action: Vice Chairman Gardner and Governors Cold well, Partee, and Lilly. Absent and not voting: Chairman Burns and Governors Wallich and 3 The Bank Holding Company Act requires that the Board, in Jackson. acting on an application to acquire a bank, inquire into the financial and managerial resources of an applicant. While this proposal involves the transfer of the ownership of Bank from individuals to a corporation owned by the same individuals, the Act requires that before an organization is permitted to become a (Signed) GRIFFITH L. GARWOOD, bank holding company and thus obtain the benefits associated [SEAL] Deputy Secretary of the Board. 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 bank siderations is based upon the facts currently contained in the to be acquired. The Board's action in this case is based on a record. A demonstrated record of Bank's successful operations consideration of such factors. devoid of unfavorable policies and practices could be grounds for 4 The Board's conclusion with respect to managerial con- a different conclusion with respect to such considerations. 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126 Federal Reserve Bulletin • February 1978 The Jacobus Company ganization in the relevant banking market with Wauwatosa, Wisconsin aggregate deposits of $166.4 million, representing 3.0 per cent of market deposits. Consummation of the proposed transaction would not alter Applicant's rank in the market. While consummation of Order Approving Acquisition of Bank the proposal would eliminate some existing competition inasmuch as Applicant and Bank operate in the same market, the Board notes that numerous bank- The Jacobus Company, Wauwatosa, Wisconsin, ing organizations would remain in the relevant bankand its subsidiary Inland Heritage Corporation, ing market following acquisition and it does not Wauwatosa, Wisconsin (hereinafter jointly referred appear that the effects of consummation on existing to as "Applicant"), both of which are bank holding competition would be significant. Moreover, inascompanies within the meaning of the Bank Holding much as Applicant is not a dominant organization in Company Act,1 have applied for the Board's ap- the relevant banking market, the Board does not proval under § 3(a)(3) of the Act (12 U.S.C. regard the slight increase in concentration of bank- § 1842(a)(3)) to acquire 99.3 per cent of the voting ing resources in the market to be significant. Acshares of American Menomonee Falls Bank, cordingly, the Board concludes that the proposed Menomonee Falls, Wisconsin ("Bank"). acquisition of Bank by Applicant would not have Notice of the applications, affording opportunity significant adverse effects on competition. for interested persons to submit comments and The financial and managerial resources of Appliviews, has been given in accordance with § 3(b) of cant and its subsidiaries are regarded as generally the Act. The time for filing comments and views has satisfactory and their future prospects appear faexpired, and the Board has considered the applica- vorable. Viewed in light of the proposed transaction and all comments received in light of the tion, Bank's financial and managerial resources and factors set forth in § 3 of the Act (12 U.S.C. future prospects are likewise regarded as generally § 1842(c)). satisfactory. Accordingly, considerations relating Applicant, the 8th largest banking organization in to banking factors are consistent with approval of the State of Wisconsin, controls six banks with the application. aggregate deposits of $258.7 million, representing While no major changes in Bank's services are 1.6 per cent of total deposits in commercial banks in contemplated, Applicant would make available to the State.2 Acquisition of Bank, with deposits of Bank and its customers certain specialized services $17.6 million, would increase Applicant's ranking in offered by Applicant's other subsidiaries such as the State from 8th to 7th, but would increase its investment advisory services, trust services, lease share of commercial bank deposits in Wisconsin by financing and expanded data processing facilities. only one-tenth of one per cent and would not have Therefore, considerations relating to convenience an appreciable effect upon the concentration of and needs of the community to be served lend some banking resources in the State. weight toward approval of the application and, in Bank is the 35th largest of 58 banking organiza- the Board's view, outweigh any slightly adverse tions in the relevant banking market,3 and holds effects on competition that might result from conthree-tenths of one per cent of deposits in commer- summation of this proposal. Accordingly, it is the cial banks in the market. With three subsidiary Board's judgment that the proposed acquisition banks, Applicant is the sixth largest banking or- would be in the public interest and that the applications should be approved. On the basis of the record, the applications are 1 On November 16, 1977, The Jacobus Company ("TJC") approved for the reasons summarized above. The distributed to its shareholders on a pro rata basis 45.4 per cent of the outstanding voting shares of Inland Heritage Corporation transaction shall not be made (a) before the thirtieth ("Inland") then held by TJC. However, inasmuch as a majority of calendar day following the effective date of this the Inland shares held by TJC were distributed to individuals who Order or (b) later than three months after the are directors or officers of TJC, TJC is deemed to control these shares pursuant to the provisions of § 2(g)(3) of the Act, and effective date of this Order, unless such period is therefore, TJC will remain a bank company until it obtains a extended for good cause by the Board, or by the determination by the Board that it is not in fact capable of Federal Reserve Bank of Chicago pursuant to delecontrolling the Inland shares distributed. 2 Unless otherwise indicated, all banking data are as of Decem- gated authority. ber 31, 1976. By order of the Board of Governors, effective 3 The relevant banking market is approximated by the Milwaukee, Wisconsin Ranally Metro Area (RMA). January 23, 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 127 Voting for this action: Vice Chairman Gardner and the relevant market and operates eight subsidiary Governors Cold well, Jackson, and Partee. Absent and not banks holding approximately 8.8 per cent of the voting: Chairman Burns and Governors Wallich and Lilly. total commercial bank deposits in the market.3 In Sterling Heights, bank will compete with six bank- (Signed) GRIFFITH L. GARWOOD, ing organizations with 18 offices. In view of the [SEAL] Deputy Secretary of the Board. current and anticipated growth rate for the market and the Sterling Heights area, it appears that Applicant's entry would neither foreclose the development of future competition nor preempt a banking Michigan National Corporation, site. Since Bank is a proposed new bank, consum- Bloomfield Hills, Michigan, mation of the proposed acquisition would not eliminate any existing competition, nor would it immediately increase the concentration of banking Order Approving Acquisition of Bank resources in the relevant market. Accordingly, on the basis of the facts of record, the Board concludes Michigan National Corporation, Bloomfield that competitive considerations are consistent with Hills, Michigan ("MNC"), a bank holding company approval of the application. within the meaning of the Bank Holding Company The financial and managerial resources of Appli- Act, has applied for the Board's approval under cant and its subsidiary banks are generally satisfac- § 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to ac- tory, particularly in view of Applicant's plans to quire all of the voting shares (less directors' qualify- inject capital into, and retain earnings from, certain ing shares) of Michigan National Bank-Sterling, subsidiary banks.4 Given Applicant's satisfactory Sterling Heights, Michigan ("Bank"), a proposed management, favorable earnings and expected new bank. strengthening of financial resources, Applicant's Notice of the application, affording opportunity future prospects appear favorable. As a proposed for interested persons to submit comments and new bank, Bank has no financial or operating views, has been given in accordance with § 3(b) of history; however, based upon Bank's planned fithe Act. The time for filing comments and views has nancial resources, management, capitalization and expired, and the Board has considered the applica- expected earnings, Bank's future prospects as a tion and all comments received in light of the subsidiary of Applicant appear favorable. Thus, factors set forth in § 3(c) of the Act (12 U.S.C. considerations relating to banking factors are con- § 1842(c)). sistent with approval of the application. Applicant, the second largest banking organiza- Bank will serve as an additional full service tion in Michigan, controls 16 banks with aggregate banking alternative in the Sterling Heights area, deposits of approximately $3.4 billion, representing offering Saturday and selected week-day evening 10.3 per cent of the total commercial bank deposits banking hours. Accordingly, considerations relating in the State.1 Since Bank is a proposed new bank, to the convenience and needs of the community to its acquisition by Applicant would not immediately be served lend some weight toward approval of the increase Applicant's share of commercial bank de- application. posits in Michigan or the concentration of banking In its review of theis application, the Board has resources in that State. given careful consideration to the "accommodation Bank has received preliminary charter approval transaction services" ("ATS") program estabfrom the Comptroller of the Currency and is to be lished and operated among MNC's subsidiary located in the city of Sterling Heights, Michigan, in banks and planned to be instituted at Bank. Under the northeastern portion of the Detroit banking this program, a customer of an MNC subsidiary market, the relevant banking market.2 Applicant is bank (the "bank of record") may, at the location of the fourth largest of the 46 banking organizations in any of the other MNC subsidiary banks or their branches (the "accommodating bank"), effect a deposit to, or withdrawal from, any account (savings 1 All banking data, unless otherwise indicated, are as of June 30, 1977. 2 The Detroit banking market is approximated by Macomb, Oakland and Wayne Counties, Michigan, and 33 cities and townships from the Michigan counties of St. Clair, Lapeer, Livingston, Washtenaw and Monroe. (See the Board's Order of May 12, 1977, 3 All market data are as of June 30, 1976. denying the application of National Detroit Corporation, Detroit, 4 See the Board's Order and Statement of August 3, 1972, 58 Michigan, to acquire The Brighton State Bank, Brighton, Michi- Federal Reserve BULLETIN 804, 806-807 (1972), relating to Appligan (63 Federal Reserve BULLETIN 583 (1977)). cant's plan for raising capital. The plan, dated May 22, 1972, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 Federal Reserve Bulletin • February 1978 or checking) maintained at the customer's MNC illegal branch banking. In July 1977, MNC brought bank of record, or effect payments on any mortgage to the Board's attention the lawsuit filed by the or installment loan extended to the customer by the State of Michigan and the issues raised in that customer's bank of record. action. Because of MNC's pending application to Mechanically, ATS functions through the crea- acquire Bank and the prospect of Bank's participation by the accommodating bank of a separate and tion in the ATS program, Board staff requested temporary "accommodation account" for the cus- information and views from both MNC and the tomer desiring to use ATS to perform a banking State of Michigan on ATS.6 transaction at a location other than his bank of By Order of November 1, 1977,7 the Board record. At the end of the business day, all ATS directed that a public oral presentation be held transactions are cleared through two regional data before members of the Board with respect to processing centers maintained by MNC (at MNC whether MNC's ATS program, particularly its probanks in Lansing and Detroit). Settlement of ATS posed initiation at Bank, constitutes branch banktransactions is made through correspondent bal- ing in violation of the branch banking laws of ances maintained by each MNC bank at the other Michigan as made applicable to national banks by MNC banks. MNC's ATS procedures require that the National Bank Act, 12 U.S.C. § 36.8 The oral each customer be informed that the accommodating presentation was held on November 29, 1977. MNC bank performing an ATS transaction is not the presented facts and arguments to support its claim customer's bank of record and that the ATS trans- that the ATS program is not branch banking and, action is conditional—that is, the deposit is not therefore, not illegal under Federal and State effected at the customer's bank of record until the branching laws. Presentations by protestants accommodating bank settles its accounts with the against ATS were made by the State of Michigan, bank of record and the bank of record confirms the the Independent Bankers Association of America transfer of funds. All forms used in an ATS transac- ("IBAA"), the Michigan Association of Commution are required to be clearly labeled as ATS forms. nity Bankers ("MACB"), the Conference of State Each MNC bank has executed an agreement with Bank Supervisors (the "Conference"), and by each of the other MNC banks to perform ATS counsel for four banks located in Michigan.9 The transactions for customers of other MNC banks and to indemnify accommodating MNC banks against 6 In litigation involving MNC's ATS program, the Comptroller loss caused by the performance of certain ATS of the Currency has taken the position that the branch banking transactions. MNC banks maintain balances with issue raised by ATS and MNC's operations is reserved for the each other sufficient to compensate for the cost of Board. The Comptroller's position has been upheld by two United States district courts. Central State Bank v. Bloom, (D.D.C., No. ATS. 77-0484, July 27, 1977); First National Bank in Howell v. MNC's ATS program was initiated in 1972, and, Heimann, (E.D. Mich., No. 77-2264, October 26, 1977). Both of these cases have been appealed. See also Whitney National Bank according to MNC, was developed by MNC banks in Jefferson Parish v. Bank of New Orleans & Trust Co., 379 U.S. in response to spontaneous customer demand. 411, 419 (1965), where the court ruled "the statutory proceedings MNC does not advertise the availability of ATS to before the Board to be the sole means by which questions as to the organization or operation of a new bank by a bank holding its customers. However, MNC banks do have sub- company may be tested." The Court also stated that the Board stantially identical names and they participate in a may not approve a bank holding company proposal that would combined advertising program.5 MNC subsidiary violate Federal or State law. 379 U.S. at 418-419. If the ATS program does constitute unlawful branching, the approval of banks perform in the aggregate approximately MNC's application to acquire Bank would, in view of MNC's 20,000 ATS transactions per day, about three per express intent to offer the ATS service at Bank, constitute the approval by the Board of an unlawful branch. cent of their total daily banking transactions. 7 63 Federal Reserve BULLETIN 1092 (1977). In May 1977, the State of Michigan filed a lawsuit 8 Under the National Bank Act, a national bank may, With the against MNC and its subsidiary banks charging that approval of the Comptroller of the Currency, "establish and operate" branches at locations within a State, if State-chartered the establishment and operation of ATS causes banks are so authorized by the law of the State in question. 12 MNC and its subsidiary banks to be engaged in U.S.C. § 36(c). A branch is defined to "include . . . any branch place of business ... at which deposits are received, or checks paid, or money lent." 12 U.S.C. § 36(f). In Michigan, a State bank generally may establish and operate 5 Each MNC subsidiary bank is named "Michigan National branches within 25 miles of the bank's principal office, subject Bank" plus an additional word indicating its geographic location, to a "home office protection" provision. Mich. Stat. Ann. e.g. "Michigan National Bank—Detroit." The word indicating the § 23.710(171). A State bank may not establish and operate a branch location of the bank is often placed in smaller type on the bank's at other locations in Michigan. billoards and signs. The MNC subsidiary banks sponsor group 9 Central State Bank, Beulah; Peoples State Bank, Williamston; advertisements using the name "Michigan National Banks" and McPherson State Bank, Howell; and First National Bank in the MNC logogram. Howell, Howell. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 129 Michigan Bankers Association also appeared at the tralized operations, standing alone, constitute oral presentation. branch banking or are illegal.11 Rather, they claim MNC contends that the establishment and opera- that these practices, when combined with ATS, tion of the ATS program among its subsidiary banks give the MNC subsidiary banks both the appeardoes not constitute branch banking, but is merely ance and the substance of branch banks. The proan extension of traditional correspondent banking testants contend that this combination (of branchservices10 and is the functional equivalent of such like names and advertising with branch-like serbanking services as wire transfers of funds available vices) creates a public perception of a branch to large commercial customers, automated clearing banking system and gives the MNC subsidiary house operations and direct payroll services. MNC banks a competitive advantage over other Michigan argues that for a facility or place to be a branch of a banks, which are forbidden by the Michigan bankbank under Federal law, the facility must be estab- ing commissioner to offer ATS-type services.12 The lished and operated by the bank—that is, the bank Michigan banking commissioner has taken action to must have some possessory interest (e.g., as owner terminate and prevent the offering of ATS-type or lessee) in the alleged branch. Since no MNC services by State banks in Michigan (in bank holdsubsidiary bank was established or is operated by ing company systems). The protestants urge that a any other MNC bank, none can be a branch of the Board decision that ATS is not branch banking others. MNC contends that the term ''operate" in would create a significant competitive imbalance 12 U.S.C. § 36(c) means control of the activities of between State and national banks in Michigan, a the purported branch, and not the mere provision of result, they contend, that is precluded by Federal ATS services, which constitute only some 3 per branch banking laws. The State of Michigan further cent of the banking transactions performed by contends that MNC's argument that its banks are MNC banks. not branches of one another because of their sepa- MNC maintains that it is a "traditionally recog- rate charters has been rejected by a number of nized" bank holding company; that each of its courts.13 subsidiary banks has a valid and separate corporate The protestants claim that wire transfers of funds existence; and that each was so licensed by the and other correspondent banking practices are dis- Comptroller of the Currency and is so operated. tinguishable from the ATS program on several MNC claims that the separate corporate existence grounds. Their position is that, unlike wire transfers of an MNC subsidiary bank may not be disregarded and other correspondent banking practices, ATS is or its "corporate veil" pierced except upon a a marketing device designed to attract retail cusshowing of fraud of sham. MNC argues that the fact tomers.14 The protestants also argue that all banks that its subsidiary banks have substantially identi- have the capability of effecting wire transfers for cal names and engage in combined advertising is their customers and, therefore, the offering of wire not evidence of a sham but rather is characteristic transfers gives no bank an advantage over its comof and inherent in traditional bank holding company operations and authorized under the Bank Holding Company Act. 11 The opposition of the four Michigan banks that appeared at the oral presentation was directed not only to ATS but also to The protestants claim that ATS in and of itself MNC's alleged unified operations (combined advertising— constitutes branch banking since, under ATS, MNC allegedly designed to promote the image of one Statewide bank— subsidiary banks provide customers of other MNC uniform management and operating policies, centralized accounting, data processing, and clearing systems, common forms, logo, subsidiary banks on a systematic basic the tradistationery, and procedures, the pervasive operational and mantional banking services designated in the Federal agement control exerted by MNC and the lack of independence definition of a branch. The State of Michigan, and autonomy among MNC banks), which the four banks contend establish that MNC (even without ATS) is operating a "de facto IBAA, and MACB do not claim that the substan- Statewide branch banking system" in violation of State and tially identical names of the MNC banks, their Federal law. combined advertising program and other cen- 12 As a separate ground for determining that MNC's subsidiary banks are engaged in branch banking, the State of Michigan, IBAA and MACB assert that the combination of ATS with MNC's unified operations compels the conclusion that MNC operates its 10 MNC places considerable reliance on the Supreme Court's subsidiary banks in a "unitary fashion." decision in United States v. Citizens & Southern National Bank, 13 Commercial National Bank v. Board of Governors, 451 F.2d 422 U.S. 86 (1975), arguing that in that case the Court noted, 86, 89 (8th Cir. 1971); Whitney National Bank v. Bank of New without disapproval, the use by a bank holding company of Orleans and Trust Co., 323 F.2d 290 (D.C. Cir. 1963) rev'd on extensive interbank correspondent relationships to establish a de other grounds, 379 U.S. 411 (\955),First National Bank of Billings facto branch banking system. The Board believes that MNC's v. First Bank Stock Corp., 306 F.2d 937 (9th Cir. 1962). reliance on C&S is misplaced since the Supreme Court was there 14 In the Detroit area, for example, banks charge a fee of $3.00 concerned with the antitrust implications of such practices and not for a wire transfer. MNC banks make no charge to customers for with the legality of such practices under branch banking laws. an ATS transaction. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 Federal Reserve Bulletin • February 1978 petitors. ATS, on the other hand, is utilized only sidiaries of bank holding companies such as MNC's among MNC banks and provides MNC banks a banks under their ATS program. Although the competitive advantage. The critical distinction, Board sees significant public benefit in the ATS claim the protestants, is that a bank accepting a program, the question whether ATS is branch bankrequest for a wire transfer from a customer in no ing is one of law. Accordingly, the Board is conway represents any other bank.15 strained to examine ATS on the basis of the Federal As a supplement to its oral presentation, the definition of branch in 12 U.S.C. § 36, as that State of Michigan has forwarded letters from the definition has been interpreted by the courts. banking commissioners of 13 States with restrictive After careful consideration of the facts and argubranching laws.16 Ten State commissioners indi- ments of all participants in this matter, the Board cated that they believe ATS is branch banking; one concludes that its decision on the branch banking said he thought ATS "very likely" is branch bank- issue raised by ATS is controlled by the decision of ing; and two were uncertain. Each State banking the United States Supreme Court in First National commissioner was also asked whether a Board Bank in Plant City v. Dickinson, 396 U.S. 122 finding that ATS is illegal branch banking would (1969), rehearing denied 396 U.S. 1047 (1970) prevent banks in his State from offering traditional ('Plant City"). In that case, the Court found that wire transfers of funds or correspondent banking an armored car service and an off-premises deservices. Ten responded that such services would pository utilized by a national bank to receive not be affected by a Board decision condemning deposits from the bank's customers constituted ATS; three States did not respond. branching on the basis that: The Michigan Bankers Association stated that a the term "branch bank" at the very least Board decision could "have a very great effect includes any place for receiving deposits or upon the future operating methods of bank holding paying checks or lending money apart from companies, upon the competitive status of financial the chartered premises. 396 U.S. at 135. institutions, and upon the long range availability of (Emphasis in original) competitive banking services to the public." The Association urged the Board to consider that allow- The Court stated that the Federal branching proviing ATS would cause independent banks in unit sions were intended by Congress to promote combank and limited branch States to affiliate or to petitive equality between State and national banks become less competitive. in the area of branch banking and, accordingly, in Based upon its review of the evidence of record, construing the Federal definition of branch "all the Board is impressed with the ATS program as an those aspects of the transaction that might give the innovative means of providing services to retail bank an advantage in its competition for custombanking customers that produces substantial public ers" must be considered. 396 U.S. at 136-7. benefits, both in terms of increased convenience to On the basis of the form and agreed-upon procethe individual consumer and enhanced competition dures of MNC's ATS program, it can be argued in the banking industry. The Michigan banking persuasively that ATS transactions do not meet the commissioner is in substantial agreement with the Federal definition of branch. When an accom- Board in this respect and has indicated that ATS is modating MNC bank receives funds for transfer to an "innovative, efficient, and convenient means of a customer's bank of record, the customer does not transfer funds." The commissioner favors the de- technically make a deposit at the bank of record. velopment of Statewide electronic funds transfer The accommodating bank, which is principally ensystems and indicated that several studies commis- gaged in its own banking business, does not purport sioned by the State have advocated amendment of to accept deposits as agent for the bank of record, Michigan law to allow Statewide branch banking. but acts as an independent bank to open an accom- The State of Michigan, however, contends that the modation account for the customer and to transfer ability to branch should be available to all banks the customer's funds to a bank of record. In this rather than being limited to national bank sub- respect, ATS resembles wire transfers of funds.17 15 MNC banks compensate each other for the cost of ATS and, 17 The IBAA argues that the accommodation account is a by agreement, may not refuse to perform an ATS transaction for a "fiction" designed to mask the branch banking characteristics of customer of another MNC bank. ATS and exists only to "liken" ATS transactions to wire trans- 16 Michigan asked for views from banking commissioners in 17 fers. The protestants also offered evidence tending to show that States with branch banking restrictions. Four of the commission- MNC banks do not uniformly adhere to ATS procedures and, on ers responded by telephone. The Board has not been advised of occasion, treat ATS transactions as if they were routine banking the views of the commissioners so responding. transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 131 In terms of the substance and competitive impact Board finds ATS to be distinguishable in purpose of ATS, however, the receipt of funds by an ac- and substance from wire transfers (and the other commodating bank for transfer to a bank of record banking activities referred to by MNC). All banks effects a deposit at the bank of record and is generally have the capability of effecting wire transindistinguishable from a deposit at a branch, par- fers for customers, and therefore the offering of ticularly as perceived by the customer. The sepa- wire transfers gives no bank an advantage over its rate corporate status of each MNC bank and the competitors. ATS, on the other hand, is utilized technically conditional nature of ATS transactions only among MNC banks20 and provides MNC have little or no effect on the convenience afforded banks a clear advantage over its competitors. ATS to the banking customer or the competitive advan- is a routine, systematic program, which, like the tage thereby accruing to MNC banks. Such armored car in Plant City, may be characterized as technicalities do not, in the Board's view, insulate "a large-scale continuing mode of conducting the ATS transactions from the Supreme Court's ruling banking business designed to bring basic bank in Plant City that any place or facility that in services to the customers." 396 U.S. at 137. substance accepts deposits for a bank apart from The Board next considers whether the performthe bank's premises is a branch of that bank. Plant ance of ATS transactions by an MNC bank for a City compels the Board to look to the "underlying customer of another MNC bank satisfies the "essubstance." of the ATS program for purposes of tablish and operate" provision of Federal branching the Federal branching law,18 because to ignore the law, 12 U.S.C. § 36(c). It is principally on the basis substance of ATS would give MNC banks a clear of the "establish and operate" clause that MNC competitive advantage over other banks in Michi- distinguishes the armored car and CBCT21 cases gan. On this basis, the Board concludes that ATS relied on by the protestants against ATS. In those transactions are, in substance, banking activities of cases the off-premises facilities (none of which was the type specified in the Federal definition of a lawfully chartered bank) were indisputably estabbranch in section 36(f) of the National Bank Act. lished, owned and operated by the bank.22 In The State of Michigan, acting through its banking MNC's case, no MNC bank has a possessory commissioner, has treated ATS-type programs as interest, in the traditional sense, in any other MNC constituting branch banking in violation of Michi- bank. No one MNC bank owns or operates any gan's branch banking laws, and has, on that ground, other MNC bank. Control of all MNC banks is prohibited State banks in Michigan from offering clearly vested in and exercised by the parent bank such programs. Under Michigan branch banking holding company, MNC, which control is aulaws as made applicable to national banks by sec- thorized, contemplated and lawful under the Bank tion 36(c) of the National Bank Act, Bank may not Holding Company Act.23 engage in ATS.19 While ATS has a technical and operational re- 20 MNC has stated that its subsidiary banks are prepared to offer semblance to traditional wire transfer services, the participation in the ATS system to any bank in Michigan upon payment of reasonable compensation. No bank unaffiliated with MNC has joined the ATS network. Nor does the Board believe such a prospect likely in view of the cost and the logistical, 18 In Plant City, the bank and its customers had, by contract, identification and competitive difficulties, particularly when balagreed that, when the armored car received funds away from the anced against the benefits that might be expected to flow to an bank's premises, the armored car acted as the customer's agent unaffiliated bank as a result of participation in MNC's ATS for the purposes of transmitting the funds to the bank and that a system. deposit would not be deemed to have occurred until the funds 21 In Independent Bankers Association of America v. Smith, 534 were delivered to the bank's premises. The Court rejected the F.2d 921 (D.C. Cir. 1976), cert, denied, 429 U.S. 862 (1976), the contention of the national bank that the funds were not a "de- Court held that a customer-bank communication terminal posit" until received in its office. The Court regarded the transac- ("CBCT") owned or rented by a national bank at a location away tion at the armored car (or off-premises depository) as a deposit at from the bank's premises is a branch under Federal law if the the bank and as causing the bank to be operating a branch. CBCT performs the banking functions of receiving or disbursing 19 There is, in the Board's view, a two-part test to be applied to funds. branch banking questions under the National Bank Act. First, it 22 ATS, unlike the armored car and CBCT situations, does not must be determined whether the challenged activity is a traditional involve the extension or furnishing of banking services by a banking transaction of the type covered by the Federal definition nonbank at a nonbank location, i.e., at a location that no bank of "branch" in section 36(f); second, if the activity meets the first supervisor has authorized as a banking location. Rather, ATS test, the performance of the activity by a national bank must then transactions are performed at banks that have been chartered to be considered in the context of "competitive equality" in the engage in the banking business at their respective locations. State. If the challenged activity does not meet the threshold test of However, in its decision in Plant City, the Supreme Court did not "branchness" under section 36(f), the State's treatment of that rely on the nonbank character of the off-premises facilities, but activity will be irrelevant. If the activity does reach that threshold, took the position that the Federal branch definition should be however, and the State has subjected the activity, as engaged in by interpreted to promote competitive equality and "includes any State chartered banks, to State branching limitations, Federal law place" where traditional banking functions are conducted. must be applied in such a way as to maintain competitive equality 23 Grandview Bank & Trust Co. v. Board of Governors, 550 F.2d between national and State banks. 415 (8th Cir. 1977), cert, denied, 98 S. Ct. 64 (October 3, 1977). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 Federal Reserve Bulletin • February 1978 The various MNC subsidiary banks were all cation, MNC's ATS program, the branching law of acquired or established by MNC. MNC secured the Michigan, and the fact that State banks in Michigan requisite regulatory approval for the creation of all may not offer ATS-type programs. The decision MNC banking subsidiaries chartered after the for- herein is not necessarily applicable in other jurisdicmation of MNC, and MNC now owns all of the tions or on other facts. shares of each subsidiary bank. Each of the banks As discussed above, competitive, financial and has its own officers, directors and employees and managerial factors are consistent with approval of operates independently of any other MNC bank and this application and convenience and needs confor its own (and its parent's) benefit. There is no siderations weigh in favor of approval. However, evidence that Bank's separate corporate identity since the Board has concluded that an ATS transacwill be ignored by MNC or that Bank was organized tion causes the accommodating bank to operate as a as part of a sham or subterfuge to evade branch branch of the customer's bank of record, and since banking laws. These facts demonstrate that none of branching at Bank's location is prohibited to MNC MNC's subsidiary banks, including Bank, is estab- banks, Bank may not engage in MNC's ATS prolished or operated by any other MNC subsidiary gram.26 bank. Neither the fact that MNC's subsidiary banks In their original submissions to the Board, the have similar names and engage in joint advertising, State of Michigan, the IBAA, and MACB and the nor the fact that the public may perceive the MNC four protesting Michigan banks requested a formal banks to be part of a "branch" system is sufficient hearing on the ATS issue. In its Order of November to establish unlawful branch banking.24 1, 1977, the Board declined to grant a formal On the other hand, the record indicates that the hearing and ordered an oral presentation. The ATS program was established and is operated Board was of the view that the voluminous mateamong the MNC subsidiary banks acting in concert rials on ATS already in the record and the opportuand by agreement. MNC has so stated. By virtue of nity provided by the oral presentation to supplethe agreement among MNC banks to offer ATS, ment the record would provide an adequate basis each bank has in substance a place away from its for Board decision. In view of the Board's disposimain office for the performance, on a systematic tion of the ATS branch banking issue, it appears basis, of banking services for its customers and a that these hearing requests are now moot. In any resulting advantage over other banks in competition event, the Act does not require a hearing on an for customers.25 In the Board's opinion, the application filed under Section 3 of the Act, unless, agreements among the MNC banks to furnish ATS within a specified time period, the Comptroller of adequately satisfy the "establish" and "operate" the Currency (if the transaction involves a national provisions of the Federal branching laws. bank, as here) recommends to the Board disap- In conclusion, on the basis of the language and proval of the application. 12 U.S.C. § 1842(b). No policies embodied in the Federal branch banking such recommendation for disapproval was filed in laws as construed by the courts, the Board is of the this case and, therefore, no hearing is required. view that MNC's ATS program appears to meet Farmers and Merchants Bank of Las Cruces, New both the "establish" and "operate" provisions, as Mexico v. Board of Governors, (D.C. Cir. No. well as the banking activities test (accepting de- 76-1367, November 7, 1977). In the Board's judgposits and disbursing funds), specified in the Fed- ment, no formal hearing is warranted on the facts of eral branch banking law. The Board wishes to this case and the requests for a formal hearing are emphasize that its decision in this case is based on denied. the particular facts and circumstances of this appli- On the basis of the extensive record in this case and for the reasons summarized above, the application is approved on the condition that ATS services 24 The factors (other than ATS) relied upon by the four Michigan not be offered at Bank or to any of Bank's custombanks in support of their contention that MNC is operating a "de ers by any other MNC bank. The transaction shall facto Statewide branch banking system" (see footnote 11, supra) have been considered by the Board on numerous occasions. The Board has not found such activities to constitute branch banking and, in a recent Order, has found them to be permissible for bank holding companies and intrinsic to their operation. See United 26 In a hearing before the United States District Court for the Banks of Colorado, Inc./United Bank of Arvada, N.A. (December Eastern District of Michigan in the State's lawsuit against MNC, 27, 1977). To the same effect, see Grandview Bank & Trust Co. v. MNC has stipulated that, subject to appeal rights, MNC would Board of Governors, supra. abide by the Board's decision on the ATS branching issue raised in 25 On this point, the Supreme Court in Plant City stated that the context of MNC's application to acquire Bank and would "[unquestionably, a competitive advantage accrues to a bank that consider that decision applicable to all MNC banks. MNC's provides the service of receiving money for deposit at a place stipulation makes it unnecessary for the Board to consider away from its main office." 396 U.S. at 137. Whether to direct MNC to terminate ATS at all MNC banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 133 not be made (a) before the thirtieth calendar day Notice of the application, affording opportunity following the effective date of this Order nor (b) for interested persons to submit comments and later than three months after that date, and (c) Bank views, has been given in accordance with § 3(b) of shall be opened for business not later than six the Act. The time for filing comments and views has months after the effective date of this Order. Each expired, and the Board has considered the applicaof the periods described in (b) and (c) may be tion and all comments received, in light of the extended for good cause by the Board, or by the factors set forth in § 3 (c) of the Act (12 U.S.C. Federal Reserve Bank of Chicago pursuant to dele- § 1842(c)). gated authority. Applicant is the fourth largest banking organiza- By order of the Board of Governors, effective tion in Texas and controls 12 banking subsidiaries, January 31, 1978. with aggregate deposits of approximately $3.3 billion, representing 6.2 per cent of total commercial Voting for this action: Vice Chairman Gardner and bank deposits in the State.1 Acquisition of Bank Governors Cold well, Jackson, and Partee. Absent and not voting: Chairman Burns and Governors Wallich and Lilly. ($34.8 million in deposits) would increase Applicant's share of commercial bank deposits in Texas (Signed) GRIFFITH L. GARWOOD, by 0.07 per cent but would not alter Applicant's [SEAL] Deputy Secretary of the Board. ranking in the State. By Order dated October 25, 1973, the Board Statement of Governor Lilly approved the application of Applicant to become a bank holding company through the direct acquisi- Although I was not present during the Board's tion of Republic National Bank of Dallas ("Repubconsideration of this matter and did not vote lic Bank") and the indirect acquisition of 29.9 per cent of the voting shares of Oak Cliff Bank & Trust thereon, I did attend the oral presentation held Company, Dallas, Texas. In addition to its interest before the Board on November 29, 1977, and I wish in Bank, Republic Bank at the time also owned to indicate my agreement with the decision reached indirectly between 5 and 24.99 per cent of the by the Board and the rationale for that decision as shares of twenty other banks, seventeen of which expressed in the Board's Order. were in the Dallas banking market.2 Applicant represented to the Board that it would file separate January 31, 1978 applications for prior approval by the Board for acquisition of additional shares in each of certain of those banks, and would divest completely its interests in others. In its Order the Board stated that each such application filed by Applicant would be considered on its own merits in light of the statutory Republic of Texas Corporation, standards set forth in § 3 of the Act. Since that time Dallas, Texas Applicant has divested its interests in eight of the Dallas-area banks, and has with the Board's ap- Order Approving Acquisition of Bank proval acquired all the shares of four of the Dallasarea banks.3 Republic of Texas Corporation, Dallas, Texas, a bank holding company within the meaning of the Bank is the 30th largest banking organization in Bank Holding Company Act, has applied for the the Dallas banking market and controls 0.35 per cent of the total deposits held by commercial banks Board's approval under § 3(a)(3) of the Act (12 in the market. Applicant is already a significant U.S.C. § 1842(a)(3)) to acquire all of the voting competitor in the Dallas banking market. With the shares (less directors' qualifying shares) of the addition in 1977 of the four Dallas-area banks as successor by merger to First National Bank of Duncanville, Duncanville, Texas ("Bank"). The bank into which Bank is to be merged has no significance except as a means to facilitate the 1 All banking data are as of December 31, 1976, and reflect bank acquisition of the voting shares of Bank. Accord- holding company formations and acquisitions approved as of ingly, the proposed acquisition of shares of the November 30, 1977. 2 The Dallas banking market is approximated by the Dallas successor organization is treated herein as the RMA. proposed acquisition of the shares of Bank. Appli- 3 By Order dated June 20, 1977 (42 F.R. 32587) the Board denied cant presently controls indirectly 20 per cent of the Applicant's proposal to acquire Preston State Bank, Dallas, Texas. Accordingly, Applicant must divest itself of its interest in outstanding voting shares of Bank. this bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 Federal Reserve Bulletin • February 1978 subsidiaries, Applicant's shares of market deposits On the basis of the record, the application is apincreased to 25.9 per cent, and Applicant presently proved for the reasons summarized above. The controls the first and eighth largest banks in the transaction shall not be made (a) before the thirtieth market plus four smaller banks. In addition, the six calendar day following the effective date of this banks in the Dallas market (including Bank) in Order or (b) later than three months after the effecwhich Applicant holds minority interests have tive date of this Order, unless such period is exaggregate deposits of $379 million, representing 3.8 tended for good cause by the Board, or by the Fedper cent of market deposits. eral Reserve Bank of Dallas pursuant to delegated Inasmuch as Applicant and Bank operate in the authority. same market, consummation of the proposed trans- By Order of the Board of Governors, effective action would appear to eliminate some existing January 20, 1978. competition. However, the Board notes that Appli- Voting for this action: Vice Chairman Gardner and cant, or its predecessor in interest, Republic Bank, Governors Partee and Lilly. Absent and not voting: has held 20 per cent or more of the shares of Bank Chairman Burns and Governors Wallich and Jackson. since its formation in 1961, and that the nature of Abstaining: Governor Coldwell. this relationship is such that little, if any, meaningful competition presently exists between Bank and (Signed) GRIFFITH L. GARWOOD, Applicant's subsidiary banks in the Dallas market. [SEAL] Assistant Secretary of the Board. But for the history of the established relationship between Applicant and Bank, the effects on exist- 2nd Charter Financial Corporation ing competition would be viewed as more serious, but viewed in light of that relationship the effects Order Approving are only slight. Moreover, while Applicant is the Formation of a Bank Holding Company largest organization in the banking market, in view of the facts presented in the record of this applica- 2nd Charter Financial Corportion, Albion, Intion, the Board does not regard the slight increase diana, has applied for the Board's approval under in concentration of market deposits as significant. section 3(a)(1) of the Bank Holding Company Act Accordingly, the Board concludes that the pro- (12 U.S.C. § 1842(a)(1)) of formation of a bank posed acquisition of Bank by Applicant would not holding company by retaining 87.6 per cent of the have significant adverse effects on competition. voting shares of The Albion National Bank The financial and managerial resources of Appli- ("Bank"), Albion, Indiana. cant, its subsidiaries, and Bank are regarded as Notice of the application, affording opportunity generally satisfactory and consistent with approval for interested persons to submit comments and of the application, particularly in light of Appli- views, has been given in accordance with section cant's commitment to inject additional capital into 3(b) of the Act. The time for filing comments and Bank upon consummation of the proposal. Con- views has expired, and the Board has considered siderations relating to banking factors are consis- the application and all comments received in light of tent with approval of the application. Following the factors set forth in section 3(c) of the Act (12 consummation of the transaction, Applicant intends U.S.C. § 1842(c)). to assist Bank in providing commercial and indus- Applicant was organized for the purpose of betrial banking services to its customers while assist- coming a bank holding company by acquiring ing Bank to continue its residential real estate and shares of Bank, which it did in December 1973 consumer lending. In addition, Applicant intends to without the Board's approval.1 Applicant now assist Bank in improving and expanding its seeks the Board's approval to retain these shares. facilities. These considerations relating to conveni- Bank is the fifth largest of seven banking organience and needs of the community to be served, zations in the relevant banking market, and holds while not substantial, lend some weight toward deposits of $14.5 million, representing 10.6 percent2 approval of the application, and in the Board's view, outweigh any slightly adverse competitive 1 In accordance with the Board's policy regarding violations of effects that might result from consummation of this the Act, the Board has scrutinized the underlying facts surrounding Applicant's acquisition of Bank. Upon an examination of the proposal. Accordingly, it is the Board's judgment facts of record, the Board is of the view that the circumstances that the proposed acquisition would be in the public surrounding the violation are not such as would call for denial of interest and that the application should be ap- the application. 2 All banking data are as of December 31, 1976. The relevant proved. banking market is approximated by Noble County. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 135 of the deposits in commercial banks in the market. The Tayco Corporation, It does not appear that approval of the application Chicago, Illinois will result in any adverse competitive effects. Order Approving Viewed as a present acquisition, the proposal will Formation of a Bank Holding Company not eliminate competition or increase the concentration of banking resources in any relevant area. The Tayco Corporation, Chicago, Illinois, has Viewing the competitive circumstances as they applied for the Board's approval under § 3(a)(1) of existed in 1973 when Applicant acquired shares of the Bank Holding Company Act (12 U.S.C. § 1842 Bank, it appears that the original acquisition (a)(1)) to become a bank holding company likewise did not eliminate any significant competithrough the acquisition of shares of Drovers Bank tion. Principals of Applicant were at that time of Chicago, Chicago, Illinois ("Bank"), a de novo principals of a second one-bank holding company, State bank formed for the purpose of acquiring the bank subsidiary of which served a separate certain assets and assuming substantially all of the banking market. Competitive considerations are liabilities of The Drovers National Bank of therefore consistent with approval of the applica- Chicago, Chicago, Illinois ("Drovers National tion. Bank").1 The financial and managerial resources and fu- In view of the emergency situation involving ture prospects of Applicant and Bank are considered Drovers National Bank, the Illinois Commissioner generally satisfactory, viewed in the light of recent of Banks and the Comptroller of the Currency have improvements in Bank's operations, recent maneach recommended immediate action by the Board agement changes, and commitments in the record in accordance with the provisions of § 3(b) of the respecting future management practices, and these Act (12 U.S.C. § 1842(b)) permitting immediate considerations are consistent with approval of this action by the Board in order to prevent the probable application. Considerations relating to the convenifailure of a bank. Pursuant to the emergency provience and needs of the communities to be served are sions of the Bank Merger Act, the Federal Deposit likewise consistent with approval, although there Insurance Corporation has approved Bank's prowill be no immediate increase in the services ofposal to purchase the assets and assume the liabilfered by Bank. ities of Drovers National Bank. Public notice of the Therefore, it is the Board's judgment that the application before the Board is not required by the retention of the shares of Bank would be in the Bank Holding Company Act, and in view of the public interest and that the application should be emergency situation the Board has not followed its approved. normal practice of affording interested parties the On the basis of the record, the application is opportunity to submit comments and views. The approved for the reasons summarized above. Board has considered the application and the com- By order of the Board of Governors, effective ments received from the Commissioner of Banks January 5, 1978. and the Comptroller of the Currency in light of the factors set forth in § 3(c) of the Act (12 U.S.C. § 1842(c)). Applicant is a recently organized corporation formed for the purpose of becoming a bank holding company. Bank was formed in order to acquire certain assets and assume certain liabilities of the Drovers National Bank, Chicago, Illinois, which Voting for this action: Vice Chairman Gardner and Governors Wallich, Coldwell, and Partee. Absent and not was declared insolvent and placed in receivership voting: Chairman Burns and Governors Jackson and by the Comptroller of the Currency on January 19, Lilly. 1978. At the time of the Comptroller's action, Drovers National Bank had total assets of approximately $210 million, and it ranked as the 14th largest bank in Chicago. In view of the insolvency of Drovers National Bank, the Board finds that any adverse effects on competition that would result (Signed) GRIFFITH L. GARWOOD, 1 Total deposits of Drovers Bank as of June 30, 1977, amounted [SEAL] Deputy Secretary of the Board. to about $265 million. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 Federal Reserve Bulletin • February 1978 from consummation of the acquisition are out- ORDER UNDER SECTION 4 weighed by the public interest considerations relating to the proposal. Considerations relating to convenience and needs of the community to be served lend very strong weight toward approval of the Chemical New York Corporation, application since the proposal will protect all de- New York, New York positors of Drovers National Bank and will insure the continued availability of banking services and Order Approving the preservation of a viable banking competitor in Recommencement of Reinsurance Activities the community. Chemical New York Corporation, New York, The financial and managerial resources and fu- New York, a bank holding company within the ture prospects of Applicant and Bank are regarded meaning of the Bank Holding Company Act, has as generally satisfactory. In light of the insolvency applied for the Board's approval, under § 4(c)(8) of of Drovers National Bank and the financial assistthe Act (12 U.S.C. § 1843(c)(8)) and § 225.4(b)(1) of ance being provided by the Federal Deposit Insurthe Board's Regulation Y (12 CFR § 225.4(b)(1)), to ance Corporation for Bank, financial and managerecommence the activity of reinsuring credit life rial factors lend support toward approval of the insurance and credit accident and health insurance application. that is directly related to extensions of credit in On the basis of the information before the Board, North Carolina by The Sun Finance & Loan Co., it is apparent that an emergency situation exists so Boulder, Colorado ("Sun Finance"). Applicant will as to require that the Board act immediately purengage in the reinsurance of credit life insurance suant to the emergency provisions of § 3(b) of the through Sun State Life Insurance Company, Cleve- Bank Holding Company Act. It is the Board's land, Ohio ("Sun States"), and the reinsurance of judgment that any disposition of the application credit accident and health insurance through Great other than by approval would be inconsistent with Lakes Insurance Company, Cleveland, Ohio the public interest and that the proposed transac- ("Great Lakes"), both of which are subsidiaries of tion should be approved on a basis that would not Sunamerica Corporation, Cleveland, Ohio preclude immediate consummation of the proposal. ("Sunamerica"), a subsidiary of Chemical New Accordingly, the application is approved for the York Corporation. Such activity has been deterreasons summarized above. The transaction may be mined by the Board to be closely related to banking consummated immediately but in no event later (12 CFR § 225.4(a)(10)). than three months after the effective date of this Notice of the application, affording opportunity Order, unless such period is extended for good for interested persons to submit comments and cause by the Board, or by the Federal Reserve views on the public interest factors, has been duly Bank of Chicago pursuant to delegated authority. published (42 Fed. Reg. 55925 (1977)). The time for By order of the Board of Governors, effective filing comments and views has expired, and the January 20, 1978. Board has considered the application and all comments received in the light of the public interest factors set forth in § 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)). Applicant is the fourth largest banking organization in New York State, with consolidated assets of $26.6 billion,1 and controls Chemical Bank, New Voting for this action: Chairman Burns and Governors York, New York. Sunamerica, a holding company Gardner, Cold well, Partee, and Lilly. Absent and not indirectly engaged in consumer finance, industrial voting: Governors Wallich and Jackson. loan, and credit insurance agent and reinsurance activities, was acquired by Applicant on June 30, 1975, pursuant to Board approval granted by Order of June 27, 1975 (61 Federal Reserve BULLETIN 447 (1975)). The Board's Order approving Applicant's acqui- (Signed) GRIFFITH L. GARWOOD, [SEAL] Deputy Secretary of the Board. 1 Banking and financial data are as of December 31, 1976. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 137 sition of Sunamerica specifically authorized Appli- evidence in the record indicating that consummacant, through Sun States and Great Lakes, to act as tion of the proposal would result in any undue conreinsurer for credit-related life insurance and centration of resources, adverse effects on comcredit-related accident and health insurance sold by petition, conflicts of interests, unsound banking Sun Finance. In its application to acquire Sun- practices, or other effects that would be adverse to america, Applicant indicated that Sun States and the public interest. Great Lakes were not engaged in reinsurance ac- As indicated above, the subject application is a tivities in North Carolina, and, accordingly, the request for the Board's approval to recommence Board's Order of June 27, 1975, did not authorize operations that were initiated in violation of the Applicant to engage in reinsurance activities in Board's Regulation Y. In acting on the application, North Carolina. Applicant, however, commenced the Board took into consideration the fact that reinsurance activities in the State of North Carolina Applicant, upon becoming aware of the existence of on September 1, 1976. Applicant's performance of the violation, promptly took steps to terminate the this activity without the prior approval of the Board violation and to conform its operations to the Act was in violation of the Board's Regulation Y.2 by filing the subject application. In addition, Appli- Applicant, at the request of the Board's staff, has cant's senior management has taken steps to preterminated its reinsurance activities in North vent future violations from occurring by centraliz- Carolina pending the Board's action on the instant ing internal review of all of Applicant's activities to application. evaluate compliance with the substantive and pro- Credit life insurance and credit accident and cedural requirements of the Act and the Board's health insurance are generally made available by Regulation Y. The Board anticipates that these banks and other lenders and are designed to assure actions, along with continuation of Applicant's past repayment of a loan in the event of death or diligence in consulting with the Federal Reserve disability of the borrower. In connection with its Bank of New York as to regulatory requirements, addition of the underwriting of such insurance to will aid Applicant in preventing future violations of the list of permissible activities for bank holding this type. In light of the above and other informacompanies, the Board stated: tion of record in this application, the Board has determined that the circumstances of the above To assure that engaging in the underwriting violation do not warrant denial of the application. of credit life insurance and credit accident Based upon the foregoing and other conand health insurance can reasonably be exsiderations reflected in the record, including Applipected to be in the public interest, the Board cant's commitment to maintain on a continuing will only approve applications in which an basis the public benefits that the Board has found to applicant demonstrates that approval will be reasonably expected to result from this proposal benefit the consumer or result in other public and upon which the approval of this proposal is benefits. Normally, such a showing would be based, the Board has determined that the balance of made by a projected reduction in rates or the public interest factors the Board is required to increase in policy benefits due to bank holdconsider under § 4(c)(8) is favorable. Accordingly, ing company performance of this service. (12 the application is hereby approved. This determina- CFR § 225.4(a)(10) n. 7) tion is subject to the conditions set forth in § 225.4(c) Applicant had, immediately after its acquisi- of Regulation Y and to the Board's authority tion of Sunamerica, offered rates on credit accident to require such modification or termination of the and health insurance sold in North Carolina below activities of a holding company or any of its the maximum authorized by North Carolina law, subsidiaries as the Board finds necessary to assure and, when it commenced reinsurance activities in compliance with the provisions and purposes of the that State, Applicant generally continued such rate Act and the Board's regulations and orders issued reductions. Applicant has committed itself to con- thereunder, or to prevent evasion thereof. tinue to make those reduced rates available upon The transaction shall be made not later than three receiving Board approval to recommence its rein- months after the effective date of this Order, unless surance activities in North Carolina. The Board is of such period is extended for good cause by the the view that the availability of this service at re- Board or by the Federal Reserve Bank of New duced premiums is in the public interest. There is no York, pursuant to delegated authority. By order of the Board of Governors, effective 2 12 C.F.R. § 225.4(c)(2). January 5, 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 Federal Reserve Bulletin • February 1978 Voting for this action: Vice Chairman Gardner and in a transaction2 in which nine shares of Bank Governors Cold well, Jackson, Partee, and Lilly. Absent common stock were issued to shareholders of Bank and not voting: Chairman Burns and Governor Wallich. for every one share of Bank common stock held by such shareholders.3 (Signed) GRIFFITH L. GARWOOD, 3. KR became a bank holding company on De- [SEAL] Deputy Secretary of the Board. cember 31, 1970, as a result of the 1970 Amendments to the BHC Act, by virtue of its ownership and control at that time of more than 25 per cent of the outstanding voting shares of Bank, and it regis- PRIOR CERTIFICATIONS PURSUANT TO THE tered as such with the Board on January 3, 1972. BANK HOLDING COMPANY TAX ACT OF 1976 KR would have been a bank holding company on July 7, 1970 if the BHC Act Amendments of 1970 King Ranch, Inc., had been in effect on such date, by virtue of its Kingsville, Texas ownership and control on that date of more than 25 per cent of the outstanding voting shares of Bank. [Docket No. TCR 76-144] KR presently owns and controls 35.67 per cent of the outstanding voting shares of Bank.4 King Ranch, Inc., Kingsville, Texas ("KR"), has 4. More than 85 per centum of the voting stock of requested a prior certification pursuant to § 1101(b) KR was collectively owned on June 30, 1968, and of the Internal Revenue Code (the "Code"), as has been so owned continuously thereafter, directly amended by § 2(a) of the Bank Holding Company or indirectly, by members of the same family, or Tax Act of 1976 (the "Tax Act"), that its proposed their spouses, who are lineal descendants of comdivestiture of 43,360 shares of common stock of mon ancestors. Accordingly, KR has been exempt Kleberg First National Bank, Kingsville, Texas from the prohibitions of § 4 of the BHC Act by ("Bank"), presently held by KR, through the pro virtue of clause (ii) of § 4(c) of the BHC Act. rata distribution of such shares to the holders of 5. KR holds property acquired by it on or before common stock of KR, is necessary or appropriate July 7, 1970, the disposition of which would, but for to effectuate the policies of the Bank Holding the proviso of § 4 (a)(2) and clause (ii) or § 4(c) of Company Act (12 U.S.C. § 1841 et seq.) ("BHC the BHC Act, be necessary or appropriate to effec- Act"). tuate § 4 of the BHC Act if KR were to remain a In connection with this request, the following bank holding company beyond December 31, 1980, information is deemed relevant, for purposes of and which property would, but for such proviso and issuing the requested certification:1 such clause, be "prohibited property" within the 1. KR is a corporation organized on December meaning of § 1103(c) of the Code. Sections 1103(g) 15, 1934 under the laws of the State of Texas. and 1103(h) of the Code provide that any bank 2. On December 18, 1946, KR acquired holding company may elect, for purposes of Part ownership and control of 4,345 shares, representing VIII of subchapter 0 of chapter 1 of the Code, to 28.97 per cent of the outstanding voting shares of have the determination whether property is "prohib- Bank. On February 27, 1971, KR received an ited property" or is property eligible to be distribadditional 39,105 shares of common stock of Bank uted without recognition of gain under § 1101(b)(1) of the Code, made under the BHC Act as if such Act did not contain, respectively, the proviso of 1 This information derives from KR's correspondence with the Board concerning its request for this certification, KR's Registra- § 4(a)(2) thereof and clause (ii) of § 4(c) thereof. KR tion Statement filed with the Board pursuant to the BHC Act, and other records of the Board. 2 Under subsection (c) of § 1101 of the Code, property acquired after July 7, 1970 generally does not qualify for the tax benefits of 3 On October 27, 1976, KR purchased an additional 10,000 § 1101(b) when distributed by an otherwise qualified bank holding shares of common stock of Bank. However, since these shares company. However, where such property was acquired by a were acquired by KR after July 7, 1970, the provisions of qualified bank holding company in a transaction in which gain was § 1101(b) are made inapplicable by § 1101(c)(1), and KR has not not recognized under § 305(a) of the Code, then § 1101(b) is requested a prior certification with respect to the distribution of applicable. KR has stated that the shares received on February 27, these shares. 1971, were received in a transaction in which gain was not 4 KR also presently owns approximately 16 per cent of the recognized under section 305(a) of the Code. Accordingly, even outstanding shares of the State Bank of Kingsville, Kingsville, though the 39,105 shares of Bank common stock were acquired by Texas, which it also intends to distribute to its shareholders at the KR after July 7, 1970, those shares would nevertheless qualify as same time that it distributes the shares of Bank. However, since property eligible for the tax benefits provided in § 1101(b) of the KR does not control the Kingsville bank, within the meaning of § Code, by virtue of § 1101(c), if the Bank shares were, in fact, 2(a)(2) of the BHC Act, its shares of that bank are not eligible to be received in a transaction in which no gain was recognized under distributed without recognition of gain pursuant to § 1101(b)(1) of § 305(a) of the Code. the Code. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 139 has represented that it will make such an election.5 Republic of Texas Corporation 6. KR and Bank have committed to the Board Dallas, Texas that no person holding an office or position (includ- [Docket No. TCR 76-108] ing an advisory or honorary position) with KR or any of its subsidiaries as a director, policy-making Republic of Texas Corporation, Dallas, Texas employee or consultant, or who performs (directly, ("Republic") has requested a prior certification or through an agent, representative or nominee) pursuant to section 6158(a) of the Internal Revenue functions comparable to those normally associated Code (the "Code"), as amended by section 3(a) of with such office or position, will hold any such the Bank Holding Company Tax Act of 1976 (the office or position or perform any such function with "Tax Act"), that each sale by The Howard Corpo- Bank or any of its subsidiaries. KR and Bank have ration ("Howard") of certain of its nonbanking further committed that all such interlocking relaassets, which assets are described in Schedule A tionships presently existing between KR and Bank hereto ("Howard Assets"), was necessary or apand their respective subsidiaries will be terminated. propriate to effectuate section 4 of the Bank Hold- On the basis of the foregoing information, it is ing Company Act (12 U.S.C. § 1843) ("BHC Act"). hereby certified that: In connection with this request, the following (A) KR is a qualified bank holding corporation, information is deemed relevant for purposes of within the meaning of subsection (b) of section 1103 issuing the requested certification:1 of the Code, and satisfies the requirements of that 1. On July 7, 1970, Republic National Bank of subsection; Dallas ("Old Republic Bank"), a national banking (B) the 43,360 shares of Bank covered by the association, indirectly controlled 29.9 per cent of instant request that KR proposes to distribute to its the voting shares of Oak Cliff Bank and Trust shareholders are part of the property by reason of Company, Dallas, Texas ("Oak Cliff Bank"). which KR controls (within the maning of § 2(a) of 2. On July 7, 1970, Old Republic Bank indirectly the BHC Act) a bank or a bank holding company; controlled, through Howard, a trusteed affiliate, and property, including the Howard Assets, the disposi- (C) the distribution of such shares is necessary tion of which would have been necessary or approor appropriate to effectuate the policies of the BHC priate to effectuate section 4 of the BHC Act if Old Act. Republic Bank were to have continued to be a bank This certification is based upon the representaholding company beyond December 31, 1980, tions and commitments made to the Board by KR which property was "prohibited property" within and upon the facts set forth above. In the event the the meaning of sections 6158(f)(2) and 1103(c) of the Board should determine that facts material to this Code. certification are otherwise than as represented by 3. Old Republic Bank became a bank holding KR, or that KR has failed to disclose to the Board company on December 31, 1970, as a result of the other material facts or to fulfill any commitments 1970 Amendments to the BHC Act, by virtue of its made to the Board in connection herewith, it may indirect control at that time of more than 25 per cent revoke this certification. of the outstanding voting shares of Oak Cliff Bank, By order of the Board of Governors, acting and it registered as such with the Board on Septemthrough its General Counsel, pursuant to delegated ber 24, 1971. Old Republic Bank would have been a authority (12 CFR 265.2(b)(3)), effective bank holding company on July 7, 1970, if the BHC November 22, 1977. Act Amendments of 1970 had been in effect on such date, by virtue of its indirect control on that date of more than 25 per cent of the outstanding voting shares of Oak Cliff Bank. 4. Republic is a corporation that was organized under the laws of the State of Delaware on July 12, 1972, for the purpose of effecting the reorganization (Signed) THEODORE E. ALLISON, of Old Republic Bank into a subsidiary of Republic. [SEAL] Secretary of the Board. 1 This information derives from Republic's correspondence with 5 Sections 1103(g) and (h) require that an election thereunder be the Board concerning its request for this certification, Republic's made "at such time and in such manner as the Secretary [of the Registration Statement filed with the Board pursuant to the BHC Treasury] or his delegate may by regulations prescribe." As of this Act as well as the Registration Statement of Republic National date no such regulations have been promulgated. Bank and other records of the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 Federal Reserve Bulletin • February 1978 5. On September 10, 1973, the Board ruled that 10. The transaction in which each of the Howard in the event Republic were to become a bank Assets was sold and the date on which each such holding company through the acquisition of the sale occurred are described in Schedule A attached successor by merger to Old Republic Bank, Repub- hereto. lic would not be regarded as a "successor" to Old On the basis of the foregoing information, it is Republic Bank as defined in section 2(e) of the BHC hereby certified that: Act for the purposes of section 2(a)(6) of the BHC (A) Prior to May 9, 1974, Old Republic Bank was Act, or as a "company covered in 1970," as that a "qualified bank holding corporation," within the term is defined in the BHC Act, and that Republic meaning of subsection (b) of section 1103 of the was not entitled to the benefit of any grandfather Code, and satisfied the requirements of that subsecprivileges that Old Republic Bank may have pos- tion; sessed pursuant to the proviso in section 4(a)(2) of (B) New Republic Bank is a corporation that the BHC Act. acquired substantially all of the properties of a 6. By Order dated October 25, 1973, the Board qualified bank holding corporation, and as such is approved Republic's application under section treated as a qualified bank holding corporation for 3(a)(1) of the BHC Act to become a bank holding the purposes of section 1103(b) and section 6158 of company through the acquisition of 100 per cent of the Code, pursuant to section 3(d) of the Tax Act; the voting shares (less directors' qualifying shares) (C) Republic is a corporation in control (within of the successor by merger to Old Republic Bank the meaning of section 2(a)(2) of the BHC Act) of and the indirect acquisition of control of 29.9 per New Republic Bank, and as such is treated as a cent of the voting shares of Oak Cliff Bank. Pur- qualified bank holding corporation for the purposes suant to the provisions of section 4(a)(2) of the BHC of section 1103 (b) and section 6158 of the Code, Act, Republic was required by that order to divest pursuant to section 3(d) of the Tax Act; itself, within two years from the date as of which it (D) Howard is a subsidiary (within the meaning of would become a bank holding company, of the § 2(d) of the BHC Act) of Republic, and as such is impermissible nonbanking interests that would be treated as a qualified bank holding corporation for directly or indirectly controlled by the successor by the purposes of section 1103(b) and section 6158 of merger to Old Republic Bank, including such im- the Code, pursuant to section 3(d) of the Tax Act; permissible interests held by Howard. (E) Each of the Howard Assets described in 7. On May 9, 1974, in a transaction described in Schedule A hereto was "prohibited property" for section 368(a)(1)(A) and section 368(a)(2)(D) of the the purposes of section 6158 of the Code; and Code, Old Republic Bank was merged into the (F) the sale of each of the Howard Assets was present Republic National Bank of Dallas ("New necessary or appropriate to effectuate section 4 of Republic Bank"), a national banking association the BHC Act. that was a wholly-owned subsidiary (except for This certification is based upon the representadirectors' qualifying shares) of Republic. New Re- tions made to the Board by Republic and upon the public Bank thereby acquired substantially all of facts set forth above. In the event the Board should the properties of Old Republic Bank and Republic hereafter determine that facts material to this certhereupon became a bank holding company. By tification are otherwise than as represented by virtue of two one-year extensions granted by the Republic, or that Republic has failed to disclose to Board, Republic presently has until May 9, 1978, to the Board other material facts, it may revoke this complete the divestitures required by the Board's certification. Order of October 25, 1973. By order of the Board of Governors acting 8. As part of the same transaction by which through its General Counsel, pursuant to delegated Republic became a bank holding company, in a authority (12 CFR § 265.2(B)(3)), effective January transaction to which section 351 of the Code 12, 1978. applied, Republic acquired beneficial interests in the shares of Howard held by trustees for the benefit of shareholders of New Republic Bank, which shares are shares described in section 2(g)(2) of the BHC Act. 9. The Howard Assets are a part of the property of Howard in which Republic acquired a beneficial (Signed) THEODORE E. ALLISON, interest pursuant to section 2(g)(2) of the BHC Act. [SEAL] Secretary of the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 141 Schedule A for $175,000 cash. Howard acquired the ten oil leases in July 1965. 4. Sale of Oaklawn Village Shopping Center, Texarkana, Texas ("Oaklawn"). On May 28, 1976 Republic of Texas Corporation Howard sold Oaklawn to J.J.R. & B. Co., a Texas corporation, for $392,600 cash and assumption of [Docket No. TCR 76-108] the unpaid principal balance owed by Howard on a note dated March 24, 1966 to the Annuity Board of The following is a description of each of the the Southern Baptist Convention. Howard acquired Howard Assets to which this certification relates. Oaklawn on March 24, 1966. 1. Sale of 41,689 square feet (including Maxon 5. Sale of Orange Plaza Shopping Center, Gar- Building) of Uptown North Real Estate ("Up- den Grove, California ("Orange Plaza"). On July town"). On December 10, 1974, Howard sold Up- 30, 1976, Howard sold Orange Plaza to Orange town to Sedco, Inc., a Texas Corporation, for County Plaza Associates a partnership ("As- $1,042,225 cash. Howard acquired Uptown on sociates"), for a fifteen year note from Associates March 31, 1969. to Howard in the principal amount of $729,139 with 2. Sale of Anderson "B", McCrary and S noddy interest. In addition, Associates assumed the unoil leases (including six working oil wells) located in paid principal balance owed by Howard on a note the East Texas Field, Gregg County, Texas. On dated March 28, 1966 held by the National Life and March 14, 1975 Howard sold these leases to Gen- Accident Insurance Company of Nashville, Teneral American Oil Company of Texas, a Texas nessee. Howard acquired Orange Plaza in April corporation, for $4,166,666 cash. Howard acquired 1966. the leases on September 28, 1950. 6. Sale of Highland Park Shopping Center, Dal- 3. Sale of ten oil leases in the Panhandle Field, las, Texas ("Highland"). On December 14, 1976 Hutchinson County, Texas. On May 3, 1976 How- Howard sold Highland to Henry S. Miller, Jr. for ard sold its 50 per cent interest in these oil leases to $6,425,000 cash. Howard acquired Highland in Oil Patch Leasing Corporation, a Texas corporation February 1966. ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT BY THE BOARD OF GOVERNORS During January 1978, the Board of Governors approved the applications listed below. Copies are available upon request to Publications Services, Division of Administrative Services, Board of Governors of the Federal Reserve System, Washington, D. C. 20551. Section 3 Board action (effective Applicant Bank(s) date) First Colonial Corporation, Chicago, Colonial Bank and Trust Company of 1/5/78 Illinois Chicago, Chicago, Illinois First National Schaumburg Corporation, Schaumburg State Bank, Schaumburg, 1/10/78 Schaumburg, Illinois Illinois Old Capitol Bancorporation, Inc., The Farmers and Merchants Bank of 1/24/78 Vandalia, Illinois Vandalia, Vandalia, Illinois San Bancorp., Sanborn, Iowa Sanborn Savings Bank, Sanborn, Iowa 1/20/78 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 Federal Reserve Bulletin • February 1978 Sections 3 and 4 Nonbanking company Reserve Effective Applicant Bank(s) (or activity) Bank date Kremmling Holding Bank of Kremmling, Sale of credit life and Kansas City 1/13/78 Company, Kremm- Kremmling, Colorado credit accident and ling, Colorado health insurance Memphis Bancshares, Farmers and Merchants Insurance agency St. Louis 1/12/78 Inc., Memphis, Bank of Memphis, Missouri Missouri, Memphis, Missouri BY FEDERAL RESERVE BANKS During December 1977 or January 1978, applications were approved by Federal Reserve Banks as listed below. The orders have been published in the Federal Register, and copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant Bank(s) Bank date Suburban Bancorporation, The Peoples National Bank, Richmond 1/16/78 Hyattsville, Maryland Hancock, Maryland Community Banks, Inc., Middleton, The Bank of Middleton, Middleton, Chicago 12/30/77 Wisconsin Wisconsin WINGO, LTD., Brooklyn, Iowa Poweshiek County Savings Bank, Chicago 12/29/77 Brooklyn, Iowa Citizens Bancorporation, Sheboggan, North Shore Bank, Shore wood, Chicago 1/10/78 Wisconsin Wisconsin Delta Bancshares Company, St. Louis, Security Bank of Manchester, Man- St. Louis 1/20/78 Missouri chester, Missouri (Pending Cases Involving the Board of Governors on following page.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 143 PENDING CASES INVOLVING THE BOARD OF GOVERNORS! Gelfand v. Board of Governors, filed December Association of Bank Travel Bureau, Inc. v. Board 1977, U.S.C.A. for the Fifth Circuit. of Governors, filed February 1976, U.S.C.A. for Vickars-Henry Corp. v. Board of Governors, filed the Seventh Circuit. December 1977, U.S.C.A. for the Ninth Circuit. Memphis Trust Company v. Board of Governors, Emch v. The United States of America, et. al., filed filed February 1976, U.S.D.C. for the Western November 1977, U.S.D.C. for the Eastern Dis- District of Tennessee. trict of Wisconsin. First Lincolnwood Corporation v. Board of Gover- Consumers Union of the United States, Inc. v. nors , filed February 1976, U.S.C.A. for the Board of Governors, filed October 1977, Seventh Circuit. U.S.D.C. for the District of Columbia. Roberts Farms, Inc. v. Comptroller of the Cur- Corbin v. Federal Reserve Bank of New York, rency, et. al., filed November 1975, U.S.D.C. for Board of Governors, et. al., filed October 1977, the Southern District of California. U.S.D.C. for the Southern District of New York. Florida Association of Insurance Agents, Inc. v. Central Bank v. Board of Governors, filed October Board of Governors, and National Association of 1977, U.S.C.A. for the District of Columbia. Insurance Agents, Inc. v. Board of Governors, Investment Company Institute v. Board of Gover- filed August 1975, actions consolidated in nors, filed September 1977, U.S.C.A. for the U.S.C.A. for the Fifth Circuit. District of Columbia. David R. Merrill, et. al. v. Federal Open Market Plaza Bank of West Port v. Board of Governors, Committee of the Federal Reserve System, filed filed September 1977, U.S.C.A. for the Eighth May 1975, U.S.D.C. for the District of Columbia. Circuit. Louis J. Roussel v. Board of Governors, filed April First State Bank of Abilene, Texas v. Board of 1975, U.S.D.C. for the Eastern District of Governors, filed August 1977, U.S.C.A. for the Louisiana. District of Columbia. Georgia Association of Insurance Agents, et. al. v. BankAmerica Corporation v. Board of Governors, Board of Governors, filed October 1974, filed May 1977, U.S.C.A. for the Northern Dis- U.S.C.A. for the Fifth Circuit. trict of California. Alabama Association of Insurance Agents, et. al. BankAmerica Corporation v. Board of Governors, v. Board of Governors, filed July 1974, U.S.C.A. filed May 1977, U.S.C.A. for the Ninth Circuit. for the Fifth Circuit. National Automobile Dealers Association, Inc. v. Bankers Trust New York Corporation v. Board of Board of Governors, filed November 1976, Governors, filed May 1973, U.S.C.A. for the U.S.C.A. for the District of Columbia. Second Circuit. Central Wisconsin Bankshares, Inc. v. Board of Governors, filed June 1976, U.S.C.A. for the Seventh Circuit. National Urban League, et. al. v. Office of the Comptroller of the Currency, et. al., filed April tThis list of pending cases does not include suits against the 1976, U.S.C.A. for the District of Columbia Federal Reserve Banks in which the Board of Governors is not Circuit. named a party. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

145 Announcements CONSUMER ADVISORY COUNCIL: The Comptroller of the Currency (supervisor of New Members national banks), the Federal Deposit Insurance Corporation (Federal supervisor of State-chartered The Board of Governors of the Federal Reserve banks and savings banks that are not members of System has announced the appointment of five new the Federal Reserve System), the Federal Home members to its Consumer Advisory Council. Loan Bank Board (supervisor of Federally char- Named to fill existing vacancies were: Richard F. tered savings and loan associations, and savings Kerr, Operating Vice President of Federated De- and loan holding companies), and the Board of partment Stores, Inc., Cincinnati, Ohio; Jean A. Governors of the Federal Reserve System (super- Fox, Regional Director of the Bureau of Consumer visor of State member banks and bank holding Services, Public Utility Commission of Pennsyl- companies)— vania, Pittsburgh; and Blair C. Shick, Senior Con- 1. Announced the following schedule of regional sultant, Arthur D. Little, Inc., Cambridge, Mas- hearings to receive suggestions from the public on sachusetts. how to implement the new law: In addition, the Board expanded Council mem- Federal Deposit Insurance Corporation bership to 28 by naming two other members: March 20, 10 a.m. Richard H. Holton, Professor of the School of Auditorium Business Administration, University of California Federal Reserve Bank of Boston at Berkeley, and Thomas R. Swan, Vice President Boston, Massachusetts of the Maine Savings Bank, Portland. Federal Reserve Board The Council advises the Board on the Board's March 23, 10 a.m. responsibilities in the field of consumer credit pro- American Room tection law. Beginning with the Truth in Lending Peachtree Plaza Hotel Atlanta, Georgia Act of 1968, the Congress has directed the Board to write regulations to give effect to many of the Federal Deposit Insurance Corporation consumer credit laws passed since. The Consumer March 27, 10 a.m. Advisory Council was established by the Congress, Conference Room C Fifth Floor at the suggestion of the Board, in 1976. Its members Federal Reserve Bank of Dallas come from all parts of the Nation and include a Dallas, Texas broad representation of consumer and creditor interests. It has met four times with the Board in the Comptroller of the Currency April 5 and 6, 10 a.m. past year. Conference Room, Fifth Floor The Council is chaired by Mrs. Leonor K. Sulli- Federal Reserve Bank of Chicago van, a former member of Congress from Missouri, Chicago, Illinois who was a principal author of the Truth in Lending Federal Home Loan Bank Board Act. The vice chairman is Dr. William D. Warren, April 12 and 13, 10 a.m. Dean of the School of Law, University of California Ceremonial Courtroom at Los Angeles. Federal Building 450 Golden Gate Avenue San Francisco, California COMMUNITY REINVESTMENT ACT 2. Invited the public to submit written comment The Federal bank and thrift institution regulators through March 8 on any aspect of interest to have announced plans for developing regulations to individuals or organizations, but particularly to give carry out the new Community Reinvestment Act the agencies responses to a list of questions (avail- (CRA). able on request to any of the four Federal reg- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

146 Federal Reserve Bulletin • February 1978 ulators) on subjects to be addressed in implement- Statement of Policy Concerning Improper and ing regulations the four agencies will write. Illegal Payments by Banks and The CRA is part (Title VIII) of the Housing and Bank Holding Companies Community Development Act (Public Law 95-128) In recent years a number of U.S. corporasigned into law October 12, 1977. Among other tions have disclosed that they have engaged things, it requires the four Federal regulators to in certain questionable practices with respect have implementing regulations in force not later to foreign and domestic payments. These practices have included improper and illegal than November 6, 1978. political contributions, bribes, kickbacks, etc., The CRA requires that the Federal agencies— and have taken place, in some instances, 1. Encourage bank and thrift institutions that with the knowledge, consent, and even they supervise to meet the credit needs of their the participation of senior corporate management. Many of the foreign payments, legal entire community, including low- and moderateunder U.S. law at the time they were made, income neighborhoods, consistent with safe and would, as a result of the recently enacted sound operation of the lending institutions. Foreign Corrupt Practices Act of 1977, 2. Take into account the lenders' records in Public Law 95-213, 91 Stat. 1494 (1977), be illegal if made today. In addition, under meeting this standard in assessing applications by Federal and State laws, certain political the lenders to open new offices under a Federal contributions and other types of payments charter, obtain Federal deposit insurance, establish are illegal. branches, carry out mergers, and the like. Recently, a few banks and bank holding companies have disclosed that, over a period of time, they also have engaged in questionable payment practices either directly or IMPROPER P A Y M E N TS BY B A N KS through subsidiary banks. Of the questionable payment practices disclosed to date, A ND B A NK H O L D I NG C O M P A N I ES most have consisted of domestic political The Federal bank regulating agencies issued notice contributions. While information presently available does not indicate any significant on January 17, 1978, that political contributions and involvement by banks or bank holding comcertain other questionable payments by banks and panies in any of the other types of questionbank holding companies may be regarded as unsafe able payment practices disclosed by other and unsound banking practices subject to appro- U.S. corporations, the agencies recognize that the circumstances in which questionable priate corrective action. domestic and foreign payments were made In a joint policy statement the agencies said they by corporations may influence banks and will use their full legal authority to halt such prac- bank holding companies. Thus, although the tices, including cease-and-desist orders and re- available information indicates that the number of banking firms that have engaged ferrals to law enforcement agencies for possible in improper payment practices is small, Fedprosecution. Such payments may also become a eral bank supervisory agencies are conrelevant factor in consideration of applications cerned that such practices, if permitted to submitted by the organizations that made them. continue, would come to reflect adversely on The policy statement was issued by the Comp- the banking system as a whole. It is the judgment of the agencies that the practice of troller of the Currency (supervisor of national making political contributions and certain banks), the Federal Deposit Insurance Corporation other payments, in addition to their possible (Federal supervisor of insured State-chartered illegality, may constitute an unsafe or unbanks that are not members of the Federal Reserve sound banking practice. System), and the Board of Governors of the Federal The devices used by banking organizations Reserve System (supervisor of State-chartered to make political payments have included member banks and of bank holding companies). compensatory bonuses to employees, im- Referring to recent disclosures by a small number properly designated expense accounts, excessive fees or salaries paid to officers, and of banks and bank holding companies of certain low or zero interest rate loans. In addition, questionable payments, the statement expressed political contributions have been made by the belief of the Federal regulators that continua- providing equipment and services without tion of such practices would reflect unfavorably on charge to candidates for office. Many of the banking system as a whole and thus undermine these devices involved clear departures from acceptable accounting practices. Consequent public confidence. lack of corporate accountability raises seri- The text of the joint statement by the three agen- ous questions regarding the effectiveness of cies is as follows: an institution's own internal audit proce- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 147 dures. For banking organizations to engage On December 20, 1977, the agencies deferred the in illegal or unethical activities and to at- effective date of March 31, 1978, that had been part tempt to conceal those activities by the use of the original proposals issued for comment last of irregular accounting practices could only serve to undermine public confidence in the October, but at that time they did not indicate a new banking system. date. The Board also announced that a full description All banks and bank holding companies of the report revisions and revised detailed reportsubject to the Federal supervisory authority of the Board, the Comptroller of the Cur- ing instructions would be sent to banks by the end rency, and the FDIC are expected not only of April. to conduct their operations in accordance The revisions to be effective for the December with applicable laws but also to refrain from 1978 reports will affect mainly banks with foreign making payments that may constitute unsafe and unsound banking practices. When viola- offices, but there will also be a number of changes tions of law or unsafe and unsound banking for other banks with more than $300 million in practices result from improper payments, the assets and some relatively minor changes for appropriate agency will exercise its full legal smaller banks. authority, including cease-and-desist proceedings and referral to the appropriate law The Board also stated that the banking agencies enforcement agency for further action, to are developing a simplified call report for smaller ensure that such practices are terminated. In banks in order to reduce their reporting burden. appropriate circumstances, the fact that such This simplified version should be available for the payments have been made may reflect so adversely on an organization's management March 1979 reports, with announcement of the as to be a relevant factor in connection with detailed specifications by September 1978. the consideration of applications submitted by the organization. In the near future, the agencies expect to REGULATION Z: Amendment institute additional procedures in conjunction with their general and specialized The Board of Governors has announced that it has examinations of banks and bank holding modified provisions of its Regulation Z (Truth in companies designed to evaluate individual Lending) relating to billing for cash-advance check institutions' controls for ensuring adherence to provisions of law prohibiting unsafe or transactions, effective March 28, 1978. unsound practices, including the making of The modification will permit creditors to use—in contributions to or corporate expenditures on addition to methods already employed for identifybehalf of candidates for elective office, offiing transactions involving cash-advance checks— cials of foreign or domestic governments, and others. Banks and bank holding com- the date on which a creditor charges a cash-advance panies are urged to review their own corpo- check to the customer's account (the debiting date) rate policies and accounting practices to en- in billing the customer. sure that the funds of the institution are However, the revised rule also provides that: applied for proper purposes only. 1. If the date of debiting is used to identify a cash-advance check charge and if the customer REVISED REPORTS OF makes any inquiry about that item, the inquiry must CONDITION AND INCOME be treated as a notification of a billing error, triggering the provisions of the Fair Credit Billing Act for The Board of Governors has announced that revi- settling billing errors. sions in reports of condition and income, reflecting 2. No finance charge on the transaction will be comments received on proposals issued last Octo- allowed during the time a credit-card issuer takes to ber, will go into effect for State member banks for provide required supporting documentary evidence the December 1978 reports. to a customer who questions a billing by using the The revised report of condition and supporting debiting date for identification. statements will be required for December 31, 1978, Creditors may continue to use the date when a data, and the revised income report and supporting cash-advance check is utilized by the customer (the statements for the year ending December 31, 1978. transaction date), or the date written on the check The Comptroller of the Currency and the Federal by the customer as presently allowed. Deposit Insurance Corporation will require similar The Board proposed to modify the rules for revised reporting as of the same date for national identifying transactions involving cash-advance banks and insured nonmember banks. checks on September 29, 1977. The proposal, now Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

148 Federal Reserve Bulletin • February 1978 adopted, was designed to facilitate compliance with without affording the applicant company an opporthe Fair Credit Billing provisions of Truth in Lend- tunity for a hearing. The Board will continue to ing and at the same time to maintain requirements publish final decisions under this section in the adequate to allow customers to identify transac- Federal Register. tions billed to them. While considering the change, The Board withdrew a rulemaking proposal unthe Board postponed the date for full implementa- der Section 2(g)(3) published in February 1977. tion of the section of Regulation Z relating to In addition, the Board announced on January 26, cash-advance check transactions from October 28, 1978, it will resume the processing of applications 1977, to March 28, 1978. from bank holding companies to underwrite and deal in Federal Government and municipal securities. REGULATION Y: Interpretation Applications will be processed, however, on a case-by-case basis, and no regulatory action will be and Permissible Activity taken by the Board to add this activity to its The Board of Governors on January 26, 1978, Regulation Y (Bank Holding Companies) as being issued an interpretation of a section of the Bank closely related to banking and permissible for bank Holding Company Act concerning transferred holding companies. shares or other assets. On October 19, 1976, the Board announced that it The Bank Holding Company Act provides that if had deferred action on a rulemaking proposal to a bank holding company transfers shares that it make underwriting and dealing in Government secuowns to a company or other transferee that is either rities a permissible activity for bank holding comindebted to the bank holding company or has an panies. It suspended further consideration of appliofficer or director interlock with the bank holding cations to engage in this activity in order to allow company, control of the shares is presumed not to time for the newly created Municipal Securities have changed unless the Board determines other- Rulemaking Board to take possible action in this wise. field. The Board has in effect interpreted this Section A proposal to add this activity to its Regulation Y 2(g)(3) of the act in decisions on specific cases. The as permissible for bank holding companies was interpretation— issued by the Board on April 2, 1974, and has now 1. Codifies these past rulings by the Board to the been withdrawn. effect that (a) the presumption of continued control arises when the shares or other assets are transferred to a person who is an officer or director of PROPOSED AMENDMENT the company making the transfer and (b) the terms "transferor" and "transferee" include parent or The Board of Governors on January 31, 1978, subsidiary companies of each (including a trans- proposed a change in Regulation H (Membership of ferred company itself). State Banking Institutions in the Federal Reserve 2. Interprets Section 2 (g)(3) as being applicable System) that would require State member banks to where (a) all or substantially all of the assets of a establish uniform records and procedures concerncompany or subsidiary are being transferred or (b) ing securities transactions for trust department and the asset being transferred is of such significant size other bank customers. The Board requested comor value as to constitute the transfer of an "activ- ment by March 31, 1978. ity" of a bank holding company; also, that transfers of partnership interests are covered. 3. Interprets the terms "officer" and "director" NEW PUBLICATION to include not only persons with such titles but also those with comparable functions and those holding The Board of Governors has announced publication such offices in honorary or advisory capacities. of a new booklet—Federal Reserve Measures of 4. Provides that, in the interests of expediting Capacity and Capacity Utilization. proceedings under this provision of the Bank Hold- This 40-page pamphlet provides a summary deing Company Act, no future Federal Register scription of the capacity utilization measures pubnotice will be published upon receipt of an applica- lished by the Federal Reserve, as well as detailed tion under this section, but that no application descriptions of the methodologies currently used in under Section 2(g)(3) will be denied by the Board compiling the capacity and capacity utilization Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 149 series for both manufacturing and industrial mate- from Utah State University and an M.B.A. and rials. It also includes an analysis of capacity Ph.D. from Stanford University. utilization developments indicated by these mea- Cathy E. Minehan as Assistant Secretary of the sures, historical data for the output, capacity, and Board for a 6-month period beginning February 1, capacity utilization series, and an outline of plans 1978. Ms. Minehan, who is Manager, Management for future efforts to improve and broaden these Information Department at the Federal Reserve measures. Bank of New York, will replace Robert E. Mat- Copies of the booklet may be obtained from thews, who has returned to the Federal Reserve Publications Services, Division of Administrative Bank of Philadelphia. She holds a B.A. from the Services, Board of Governors of the Federal Re- University of Rochester and an M.B.A. from New serve System, Washington, D.C. 20551. The price York University. is $1.75 per copy; in quantities of 10 or more sent to Joseph W. Daniels, Sr., as Director of Equal one address, $1.50 each. Remittances should be Employment Opportunity in the Office of Staff made payable to the Board of Governors of the Director for Management, effective February 21. Federal Reserve System. Prior to joining the Board's staff, Mr. Daniels was Director of Equal Employment Opportunity for the General Services Administration. He holds a B.A. SPECIAL SURVEY: from Lincoln University and has done graduate Repurchase Agreements and work at George Washington University. Other Borrowing by Banks The Board has also announced the resignations of in Immediately Available Funds John D. Hawke, Jr., General Counsel, Milton W. Hudson, Assistant to the Chairman, and Baldwin Aggregate data from a special survey of repurchase B. Tuttle, Deputy General Counsel. agreements and other nonreservable borrowings by banks in immediately available funds, often called Federal funds, are now available. The survey, in ERRATUM which 46 member banks participated, was conducted during the statement week ended December In Line 2 of Table 3.24 (page A64 of the BULLETINS 7, 1977. Data from the survey may be obtained on for both January and February 1978) the figure for request from the Financial Reports Section, Divi- December 1977 is incorrect. It should be 91,962 insion of Research and Statistics, Board of Gover- .tead of 83,832. nors of the Federal Reserve System, Washington, D.C. 20551. The special survey obtained detailed information on the types of institutions supplying funds to the SYSTEM MEMBERSHIP: sample banks and the maturity distribution of these Admission of State Banks funds. Aggregate data from a similar but less detailed survey, conducted in April 1974, are also The following banks were admitted to membership included for purposes of comparing changes in the in the Federal Reserve System during the period various sources of funds over time. January 16, 1978, through February 15, 1978: Colorado CHANGES IN BOARD STAFF Windsor Bank of Windsor The Board of Governors has announced the follow- Nebraska ing appointments. Omaha ... First Northwestern Trust Co. of Sidney L. Jones as an Assistant to the Board, Nebraska effective February 1, 1978. Mr. Jones, a Fellow of the Woodrow Wilson International Center for North Dakota Scholars, Smithsonian Institution, served as Assist- Fargo .... First Northwestern Trust Co. of ant Secretary for Economic Policy in the Treasury North Dakota Department from 1974 to 1977. He holds a B.S. First Trust Company of North Dakota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

151 Industrial Production Released for publication February 15 0.7 per cent in January, reflecting some weather disruption and some reduction in output of con- Industrial production declined by an estimated 0.7 sumer durable goods parts associated with reduced per cent in January to 138.6 per cent of the 1967 motor vehicle production. Output of textile, paper, average level. Severe storm activity over much of and chemical materials also declined. Energy matethe United States—which caused widespread abrials production was about unchanged as further senteeism, shorter workweeks, and some supply reductions in coal output almost offset increases in disruption—contributed significantly to the decline other energy materials. in output. However, a further reduction in motor vehicle output was responsible for a greater part of the over-all decline. Coal output was also reduced further as a result of the coal strike. Over all, the January index was 4.8 per cent above a year earlier. Output of consumer goods dropped 1.5 per cent in January, largely because of sharp cutbacks in auto and utility vehicle production. A reduction in auto assemblies—to an annual rate of 7.9 million units from an 8.9-million rate in December— reflected efforts to control dealer stocks, as well as the impact of shortages of some parts and weather disruptions. Smaller declines in output of many home goods and nondurable consumer goods apparently reflected effects of the weather. Business equipment production declined an estimated 0.5 per cent, as small increases in both building and mining and commercial equipment were insufficient to offset the declines in other types of equipment and the sharply reduced production of large trucks. Output of construction supplies also declined following very large gains in recent months. F.R. indexes, seasonally adjusted. Latest figures: January. Production of durable goods materials declined *Auto sales and stocks include imports. Seasonally adjusted, 1967 = 100 PPeerr cceenntt cchhaannggeess ffrroomm—— IIInnnddduuussstttrrriiiaaalll ppprrroooddduuuccctttiiiooonnn 1977 1978 Oct. Nov. Dec.p Jan.e Month ago Year ago Q3 to Q4 Total 138.9 139.3 139.6 138.6 -.7 4.8 .7 Products, total 138.9 139.6 140.3 139.3 -.7 4.7 .7 Final products 136.5 137.2 137.8 136.4 -1.0 4.3 .4 Consumer goods 144.9 145.4 145.7 143.6 -1.5 2.6 .2 Durable goods 156.8 155.4 156.0 149.3 -4.3 2.7 .0 Nondurable goods ... 140.1 141.4 141.6 141.3 -.2 2.6 .4 Business equipment ... 152.6 153.5 154.8 154.0 -.5 8.2 1.4 Intermediate products ... 147.8 148.5 150.1 149.7 -.3 5.3 1.7 Construction supplies .. 144.9 146.6 148.0 146.9 -.8 7.9 3.2 Materials 138.9 139.0 138.4 137.5 -.7 4.9 .5 p Preliminary. e Estimated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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 A10 Maximum interest rates payable on A25 Commercial paper and bankers time and savings deposits at Federally acceptances outstanding insured institutions A26 Prime rate charged by banks on A10 Margin requirements short-term business loans A11 Federal Reserve open market A26 Terms of lending at commercial banks transactions A27 Interest rates in money and capital markets FEDERAL RESERVE BANKS 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 FEDERAL FINANCE MONETARY AND CREDIT AGGREGATES A30 Federal fiscal and financing operations A13 Bank debits and deposit turnover A31 U.S. Budget receipts and outlays A14 Money stock measures and components A15 Aggregate reserves and deposits of A32 Federal debt subject to statutory member banks limitation A15 Loans and investments of all A32 Gross public debt of U.S. Treasury— commercial banks Types and ownership A33 U.S. Government marketable 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, June 30, 1977 agencies—Debt outstanding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • February 1978 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 A55 U.S. reserve assets A37 Corporate securities—Net change in 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 assets held at F.R. A43 Extensions and liquidations banks A65 Foreign transactions in securities FLOW OF FUNDS REPORTED BY NONBANKING CONCERNS IN A44 Funds raised in U.S. credit markets THE UNITED STATES: A45 Direct and indirect sources of funds to credit markets A66 Short-term liabilities to and claims on foreigners DOMESTIC NONFINANCIAL STATISTICS A67 Long-term liabilities to and claims on foreigners A46 Nonfinancial business activity— Selected measures INTEREST AND EXCHANGE RATES A46 Output, capacity, and capacity utilization A68 Discount rates of foreign central banks A47 Labor force, employment, and A68 Foreign short-term interest rates unemployment A68 Foreign exchange rates A48 Industrial production—Indexes and gross value A69 GUIDE TO TABULAR PRESENTATION A50 Housing and construction AND STATISTICAL RELEASES 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 1977 1977 Item Q1 Q2 Q3 Q4 Aug. Sept. Oct. Nov. Dec. Monetary and credit aggregates (annual rates of change, seasonally adjusted in per cent)12 Member bank reserves 1 Total 2.7 3.0 9.0 5.6 9.8 -.5 9.1 3.7 6.6 2 Required 3.0 3.5 8.6 5.8 12.5 -.8 9.1 2.4 8.7 3 Nonborrowed 2.6 1.9 3.4 2.9 -15.4 14.6 -14.1 19.3 16.7 Concepts of money 1 4 M-l 4.2 8.4 9.3 6.8 5.9 7.3 12.0 r — 1.4 7.6 5 M-2 9.9 9.2 10.3 7.6 6.4 7.9 10.1 '4.7 5.7 6 M-3 11.3 10.0 12.4 10.8 11.5 12.3 12.5 r7. 5 7.5 Time and savings deposits Commercial banks: 7 Total 12.5 8.3 10.0 12.9 6.9 7.6 14.6 18.3 12.2 8 Other than large CD's 14.0 9.8 10.9 8.1 6.8 8.6 8.6 9.0 4.3 9 Thrift institutions 2 13.4 11.2 15.5 15.4 18.4 18.8 15.9 11.8 9.8 10 Total loans and investments at commercial banks 3 9.5 13.3 9.8 9.3 12.3 3.8 13.5 11.8 -.7 1977 1977 1978 Ql Q2 Q3 Q4 Sept. Oct. Nov. Dec. Jan. Interest rates (levels, per cent per annum) Short-term rates 11 Federal funds 4 4.66 5.16 5.82 6.51 6.14 6.47 6.51 6.56 6.70 12 Treasury bills (3-month market yield) 5 4.63 4.84 5.50 6.11 5.81 6.16 6.10 6.07 6.44 13 Commercial paper (90- to 119-day) <> 4.74 5.15 5.74 6.56 6.09 6.51 6.54 6.61 6.75 14 Federal Reserve discount 7 55..2255 55..2255 55..4422 55..7755 55..8800 66..0000 66..0000 66..3377 Long-term rates Bonds: 15 U.S. Govt. 8 7.62 7.68 7.60 7.78 7.57 7.71 7.76 7.87 8.14 16 State and local government 9 5.88 5.70 5.59 5.57 5.51 5.64 5.49 5.57 5.71 17 Aaa utility (new issue) 8.17 8.21 8.09 8.27 8.07 8.23 8.27 8.34 8.68 18 Conventional mortgages 1 * 88..8822 88..9955 99..0000 99..0055 99..0000 99..0000 99..0055 99..1100 1 M-l equals currency plus private demand deposits adjusted. 7 Rate for the Federal Reserve Bank of New York. M-2 equals M-l plus bank time and savings deposits other than large » Market yields adjusted to a 20-year maturity by the U.S. Treasury. negotiable certificates of deposit (CD's). 9 Bond Buyer series for 20 issues of mixed quality. M-3 equals M-2 plus deposits at mutual savings banks, savings and I o Weighted averages of new publicly offered bonds rated Aaa, Aa, loan associations, and credit union shares. and A by Moody's Investors Service and adjusted to an Aaa basis. 2 Savings and loan associations, mutual savings banks, and credit Federal Reserve compilations. unions. II Average rates on new commitments for conventional first mortgages 3 Quarterly changes calculated from figures shown in Table 1.23. on new homes in primary markets, unweighted and rounded to nearest 4 Seven-day averages of daily effective rates (average of the rates on 5 basis points, from Dept. of Housing and Urban Development. a given date weighted by the volume of transactions at those rates). 12 Unless otherwise noted, rates of change are calculated from average 5 Quoted on a bank-discount rate basis. amounts outstanding in preceding month or quarter. 6 Beginning Nov. 1977, unweighted average of offering rates quoted by five dealers. Previously, most representative rate quoted by these dealers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • February 1978 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 1978 1977 1978 Nov. Dec. Jan.f Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan. 18p Jan. 25p SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding... 110,650 116,382 118,747 112,574 116,571 121,748 120,184 117,750 117,339 118,415 2 U.S. Govt, securities1 95,421 100,185 100,076 97,416 100,532 103,365 103,544 99,635 100,482 99,710 3 Bought outright. 95,170 98,957 99,544 97,416 99,504 100,990 100,904 99,313 100,105 99,646 4 Held under repurchase agreement 251 11,,222288 532 11,,002288 22,,337755 22,,664400 322 377 64 5 Federal agency securities 7,355 77,,776633 8,119 7,319 77,,445511 88,,557788 88,,550055 8,090 8,119 8,010 6 Bought outright 7,329 77,,554411 8,004 7,319 77,,330055 88,,001133 88,,000044 8,004 8,004 8,004 7 Held under repurchase agreement 26 222 115 146 565 501 86 115 6 8 Acceptances 42 326 178 270 589 901 124 112 31 9 Loans 840 558 481 509 527 686 506 442 418 591 10 Float 4,660 5,308 7,214 5,193 5,546 6,129 4,285 7,062 5,651 7,248 11 Other Federal Reserve assets 2,332 2,242 2,679 2,137 2,246 2,400 2,441 2,396 2,557 2,827 12 Gold stock 11,595 11,696 11,719 11,718 11,718 11,718 11,718 11,719 11,719 11,719 13 Special Drawing Rights certificate account 1,200 1,208 1,250 1,200 1,200 1,214 1,250 1,250 1,250 1,250 14 Treasury currency outstanding 11,313 11,354 11,393 11,348 11,359 11,364 11,351 11,385 11,392 11,396 ABSORBING RESERVE FUNDS 15 Currency in circulation 100,741 102,862 102,091 102,556 102,990 103,713 103,877 103,157 102,136 101,173 16 Treasury cash holdings 415 408 395 403 400 394 392 393 397 397 Deposits, other than member bank reserves with F.R. Banks: 17 Treasury 2,399 5,640 7,519 3,210 5,303 9,346 6,887 6,422 5,257 8,210 18 Foreign 301 298 335 270 280 297 366 436 305 283 19 Other2 597 658 839 620 620 581 1,152 647 759 966 20 Other F.R. liabilities and capital... 3,522 3,718 3,652 3,408 3,672 4,331 3,406 3,419 3,610 3,753 21 Member bank reserves with F.R. Banks 26,783 27,057 28,278 26,374 27,584 27,384 28,422 27,629 29,234 27,997 End-of-month figures Wednesday figures 1977 1978 1977 1978 Nov. Dec. Jan.f Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan. 18p Jan. 25? SUPPLYING RESERVE FUNDS 22 Reserve Bank credit outstanding. .. 11,862 118,745 112,976 111,761 120,588 125,241 119,081 111,852 118,553 118,279 23 U.S. Govt, securities1 96,477 102,819 97,004 94,557 101,977 105,682 101,852 94,462 99,958 98,337 24 Bought outright 94,438 100,918 97,004 94,557 99,588 101,063 100,842 94,462 99,615 97,888 25 Held under repurchase agreement 22,,003399 1,901 22,,338899 44,,661199 11,,001100 343 449 26 Federal agency securities 77,,446600 8,455 8,004 7,305 77,,555511 88,,882255 88,,223300 8,004 8,222 8,044 27 Bought outright 77,,332299 8,004 8,004 7,305 77,,330055 88,,001133 88,,000044 8,004 8,004 8,004 28 Held under repurchase agreement 131 451 246 812 226 218 40 29 Acceptances 248 954 469 734 624 214 214 30 Loans 926 265 757 1,238 1,038 1,909 1,096 792 554 2,332 31 Float 4,632 3,810 A,212 6,477 7,229 5,688 4,891 6,197 7,127 6,656 32 Other Federal Reserve assets. . . 2,119 2,442 2,939 2,184 2,324 2,403 2,388 2,397 2,478 2,696 33 Gold stock 11,595 11,718 11,718 11,718 11,718 11,718 11,719 11,719 11,719 11,719 34 Special Drawing Rights certificate account 1,200 1,250 1,250 1,200 1,200 1,250 1,250 1,250 1,250 1,250 35 Treasury currency outstanding.... 11,308 11,331 11,412 11,351 11,360 11,364 11,384 11,386 11,395 11,398 ABSORBING RESERVE FUNDS 36 Currency in circulation 101,856 103,811 100,846 103,039 103,639 104,412 103,948 102,918 101,907 101,076 37 Treasury cash holdings 397 392 391 400 399 390 393 395 396 396 Deposits, other than member bank reserves with F.R. Banks: 38 Treasury 2,562 7,114 11,228 2,744 8,201 7,664 6,790 5,360 6,155 9,841 39 Foreign 416 379 422 291 285 327 376 289 253 262 40 Other 2 719 1,187 871 704 531 630 737 660 641 640 41 Other F.R. liabilities and capital.. 3,675 3,292 4,109 3,508 3,660 3,902 3,306 3,466 3,666 3,874 42 Member bank reserves with F.R. Banks 26,345 26,870 19,489 25,344 28,152 32,249 27,884 23,118 29,898 26,557 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 1978 Dec. May June July Aug. Sept. Oct. Nov. Dec. Jan.f All member banks Reserves: 1 At F.R. Banks 26,430 25,970 25,646 26,663 26,373 26,152 26,933 26,783 27,057 28,278 2 Currency and coin 8,548 8,610 8,609 8,622 8,712 8,887 8,820 8,932 9,351 9,983 3 Total held i 35,136 34,732 34,406 35,391 35,186 35,156 35,860 35,782 36,471 38,330 4 Required 34,964 34,460 34,293 35,043 34,987 34,965 35,521 35,647 36,297 37,880 5 Excess1 172 272 113 348 199 191 339 135 174 31 Borrowings at F.R. Banks:2 6 Total 62 200 262 336 1,071 634 1,319 840 558 481 7 Seasonal 12 31 55 60 101 112 114 83 54 43 Large banks in New York City 8 Reserves held 6,520 6,310 6,241 6,359 6,272 6,025 6,175 6,181 6,244 6,791 9 Required 6,602 6,279 6,188 6,342 6,247 6,022 6,120 6,175 6,279 6,775 10 Excess -82 31 53 17 25 3 55 6 -35 16 11 Borrowings2 15 18 36 74 157 75 133 132 48 77 Large banks in Chicago 12 Reserves held 1,632 1,637 1,662 1,573 1,653 1,655 1,666 1,607 1,593 1,705 13 Required 1,641 1,634 1,627 1,606 1,622 1,634 1,656 1,609 1,613 1,683 14 Excess -9 3 35 -33 31 21 10 -2 -20 22 15 Borrowings2 4 4 15 6 5 12 24 23 26 14 Other large banks 16 Reserves held 13,117 13,067 12,869 13,438 13,290 13,362 13,711 13,607 13,993 14,272 17 Required 13,053 12,996 12,943 13,286 13,270 13,355 13,598 13,602 13,931 14,498 18 Excess 64 71 -74 152 20 7 113 5 62 -226 19 Borrowings2 14 62 80 79 530 183 681 355 243 164 All other banks 20 Reserves held 13,867 13,718 13,634 14,021 13,971 14,114 14,308 14,387 14,641 15,081 21 Required 13,668 13,551 13,535 13,809 13,848 13,954 14,147 14,261 14,924 22 Excess 199 167 99 212 123 160 161 126 167 157 23 Borrowings2 29 116 131 177 379 364 481 330 241 226 Weekly averages of daily figures for weeks ending- 1977 1978 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan. 18 p Jan. 25 * All member banks Reserves: 24 At F.R. Banks 27,541 26,779 26,368 26,374 27,584 27,394 28,422 27,629 29,234 27,997 25 Currency and coin 8,249 9,094 9,254 9,837 8,923 9,360 9,421 9,536 10,677 10,131 26 Total held1 35,856 35,938 35,687 36,275 36,570 36,807 37,902 37,240 39,981 38,198 27 Required 35,867 35,500 35,672 35,962 36,425 36,562 37,615 36,935 39,556 37,787 28 Excess1 -11 438 15 313 145 245 287 305 425 411 Borrowings at F.R. Banks:2 29 Total 879 1,079 583 509 527 686 506 442 418 591 30 Seasonal 85 75 65 56 53 53 31 26 25 34 Large banks in New York City 31 Reserves held 6,280 5,956 55,,996699 66,,221199 6,419 6,273 6,640 6,641 7,330 7,051 32 Required 6,322 5,848 66,,008877 66,,118822 6,401 6,268 6,699 6,517 7,475 6,563 33 Excess -42 108 --111188 3377 18 5 -59 124 -145 488 34 Borrowings2 252 252 3377 9933 50 32 101 27 211 Large banks in Chicago 35 Reserves held 1,575 1,587 11,,661188 11,,664466 1,562 1,600 1,774 1,549 1,877 1,596 36 Required 1,594 1,570 11,,662200 11,,663311 1,574 1,593 1,693 1,596 1,834 1,660 37 Excess -19 17 --22 1155 -12 7 81 -47 43 -64 38 Borrowings2 33 31 99 88 27 73 14 29 19 Other large banks 39 Reserves held 13,578 13,788 13,578 13,957 13,990 14,161 14,443 14,150 15,072 14,292 40 Required 13,602 13,638 13,609 13,840 13,992 14,083 14,399 14,118 15,172 14,488 41 Excess -24 150 -31 117 -2 78 44 32 -100 -196 42 Borrowings2 298 386 287 211 229 292 129 204 210 138 All other banks 43 Reserves held 14,423 14,607 14,522 14,453 14,599 14,773 15,045 14,900 15,217 15,322 44 Required 14,349 14,444 14,356 14,309 14,458 14,618 14,824 14,704 15,075 15,076 45 Excess 74 163 166 144 141 155 221 196 142 246 46 Borrowings2 296 410 250 197 221 289 276 197 179 223 i Adjusted to include waivers of penalties for reserve deficiencies in nonmember bank joins the Federal Reserve System. For weeks for which accordance with Board policy, effective Nov. 19, 1975, of permitting figures are preliminary, figures by class of bank do not add to total transitional relief on a graduated basis over a 24-month period when a because adjusted data by class are not available. nonmember bank merges into an existing member bank, or when a 2 Based on closing figures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • February 1978 1.13 FEDERAL FUNDS TRANSACTIONS Money Market Banks Millions of dollars, except as noted 1977, week ending Wednesday— 1978, week ending Wednesday- Type Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25 Total, 46 banks Basic reserve position 1 Excess reserves1 209 8 100 87 128 84 86 37 57 LESS: 2 Borrowings at F.R. Banks... 422 106 123 175 251 156 129 128 277 3 Net interbank Federal funds transactions 16,212 19,618 20,864 19,431 16,287 15,135 20,710 20,198 18,005 EQUALS: Net surplus, or deficit (-): 4 Amount -16,425 -19,716 -20,887 -19,519 -16,411 -15,207 -20,754 -20,290 -18,225 5 Per cent of average required reserves 110.9 130.8 136.2 125.6 106.3 94.4 132.5 115.9 114.0 Interbank Federal funds transactions Gross transactions: Purchases 24,445 28,000 28,734 27,426 25,218 25,020 28,330 27,896 24,683 Sales 8,233 8,382 7,870 7,995 8,930 9,885 7,620 7,698 6,678 Two-way transactions2 5,836 5,921 5,329 5,977 5,528 6,092 5,221 5,511 5,575 Net transactions: Purchases of net buying banks.. 18,609 22,079 23,405 21,449 19,689 18,928 23,110 22,385 19,108 Sales of net selling banks 2,397 2,462 2,540 2,019 3,402 3,794 2,400 2,188 1,102 Related transactions with U.S. Govt, securities dealers 11 Loans to dealers 3 4,019 3,563 4,684 4,133 3,437 4,004 5,050 2,912 4,006 12 Borrowing from dealers4... 1,758 1,568 1,822 1,575 2,185 1,693 1,462 1,776 2,340 13 Net loans 2,261 1,994 2,863 2,559 1,252 2,312 3,588 1,136 1,666 8 banks in New York City Basic reserve position 14 Excess reserves1 91 -35 6 13 16 -46 94 21 30 15 LES B S o : rrowings at F.R. Banks 225522 37 81 50 32 101 27 211 16 Net interbank Federal funds transactions 66,,000044 7,352 9,076 7,147 6,150 6,528 7,766 6,373 5,314 EQUALS : Net surplus, or deficit (-): 17 Amount . -6,165 -7,424 -9,151 -7,185 -6,165 -6,675 -7,699 -6,352 -5,496 18 Per cent of average required reserves 115.5 134.5 163.4 123.4 108.5 109.4 129.8 93.1 92.6 Interbank Federal funds transactions Gross transactions: Purchases 6,806 8,147 9,412 8,052 7,242 7,291 8,342 7,297 6,246 Sales 803 795 335 905 1,092 763 576 924 932 Two-way transactions2 803 796 335 905 1,092 764 576 924 932 Net transactions: Purchases of net buying banks.. 6,004 7,352 9,076 7,147 6,150 6,527 7,766 6,373 5,314 Sales of net selling banks Related transactions with U.S. Govt, securities dealers 24 Loans to dealers 3 1,978 2,122 2,799 2,530 2,085 2,718 2,902 1,747 2,200 25 Borrowing from dealers4... 1,076 1,128 1,225 1,095 1,226 1,031 1,147 1,168 1,509 26 Net loans 902 994 1,573 1,435 859 1,687 1,755 579 691 38 banks outside New York City Basic reserve position 27 Excess reserves1 119 43 93 74 111 130 -9 16 27 28 LE B SS o : rrowings at F.R. Banks 169 70 41 125 219 55 102 128 66 29 Net interbank Federal funds transactions 10,209 12,266 11,788 12,284 10,138 8,607 12,944 13,825 12,691 EQUALS: Net surplus, or deficit (-): 30 Amount . -10,259 -12,292 -11,736 -12,335 -10,246 -8,533 -13,055 -13,938 -12,729 31 Per cent of average required reserves 108.2 128.6 120.5 126.9 105.0 85.2 134.1 130.4 126.6 Interbank Federal funds transactions Gross transactions: 32 Purchases 17,639 19,853 19,322 19,374 17,976 17,729 19,988 20,599 18,437 33 Sales 7,431 7,587 7,534 7,091 7,838 9,122 7,045 6,774 5,746 34 Two-way transactions2 5,033 5,125 4,994 5,072 4,436 5,328 4,645 4,587 4,643 Net transactions: 35 Purchases of net buying banks.. 12,606 14,727 14,329 14,302 13,540 12,401 15,343 16,012 13,794 36 Sales of net selling banks 2,397 2,462 2,540 2,019 3,402 3,794 2,400 2,188 1,102 Related transactions with U.S. Govt, securities dealers 3 3 3 7 8 9 N B L o o et r a r n l o o s w a t n i o n s g d e f a r l o e m rs 3 d ealers4.... 2 1 , , 0 3 6 4 5 8 1 9 2 1 1 , ,4 0 4 4 0 4 1 0 1 1 1, , 2 8 5 8 8 9 9 6 6 1 1 , , 1 6 4 0 2 7 3 4 9 1,3 9 3 5 5 9 2 9 3 1,2 6 6 8 2 6 7 5 2 2 1 , , 1 8 3 4 3 1 8 3 5 1,1 6 5 6 5 0 5 8 8 1,8 9 8 0 7 3 5 5 0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Funds A 7 1.13 Continued 1977, week ending Wednesday— 1978, week ending Wednesday— Type Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan.18 Jan. 25 5 banks in City of Chicago Basic reserve position 40 Excess reserves1 16 16 21 2 8 91 -20 19 8 LESS: 41 Borrowings at F.R. Banks 20 23 73 14 29 19 42 Net interbank Federal funds transactions 5,968 6,988 6,725 6,193 5,719 5,447 6,502 6,654 6,168 EQUALS: Net surplus, or deficit (-): 43 Amount -5,972 -6,972 -6,704 -6,214 -5,784 -5,356 -6,536 -6,663 -6,179 44 Per cent of average required reserves 408.7 461.9 441.6 424.8 390.5 339.2 441.5 387.7 399.2 Interbank Federal funds transactions Gross transactions: 45 Purchases 7,381 8,165 7,843 7,358 6,747 6,539 7,492 7,928 7,256 46 Sales 1,413 1,178 1,117 1,165 1,028 1,092 991 1,274 1,088 47 Two-way transactions2 1,409 1,175 1,093 1,115 992 1,018 911 1,217 1,049 Net transactions: 48 Purchases of net buying banks.. 5,972 6,990 6,749 6,243 5,755 5,522 6,582 6,710 6,206 49 Sales of net selling banks 3 3 24 50 36 74 80 57 39 Related transactions with U.S. Govt, securities dealers 50 Loans to dealers3 357 299 455 436 278 180 387 201 206 51 Borrowing from dealers4 114 121 367 338 476 246 34 228 290 52 Net loans 243 178 88 98 -198 -66 353 -28 -84 33 other banks Basic reserve position 5 3 Excess reserves1 103 27 72 72 103 39 u -3 20 LESS: 54 Borrowings at F.R. Banks 149 70 41 102 146 55 88 100 47 55 Net interbank Federal funds transactions 4,241 5,278 5,063 6,090 4,419 3,160 6,442 7,172 6,523 EQUALS: Net surplus, or deficit (-): 56 Amount -4,287 -5,320 -5,032 -6,121 -4,462 -3,177 -6,519 -7,275 -6,550 57 Per cent of average required reserves 53.5 66.1 61.2 74.1 53.9 37.7 79.0 81.1 77.0 Interbank Federal funds transactions Gross transactions: 58 Purchases 10,258 11,688 11,480 12,016 11,229 11,189 12,496 12,672 11,181 59 Sales 6,018 6,410 6,417 5,926 6,810 8,030 6,054 5,500 4,658 60 Two-way transactions2 3,624 3,950 3,901 3,957 3,444 4,310 3,734 3,370 3,594 Net transactions: 61 Purchases of net buying banks.. 6,634 7,737 7,579 8,059 7,785 6,879 8,762 9,302 7,588 62 Sales of net selling banks 2,393 2,459 2,516 1,969 3,366 3,719 2,320 2,131 1,064 Related transactions with U.S. Govt, securities dealers 63 Loans to dealers3 1,684 1,142 1,431 1,168 1,074 1,107 1,761 965 1,600 64 Borrowing from dealers4 568 320 229 141 483 416 281 379 540 65 Net loans 1,116 822 1,201 1,026 591 691 1,480 585 1,059 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 policy clearing banks, reverse repurchase agreements (sales of securities to of the Board of Governors 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 August 1964 BULLETIN, pp. 944-53. Back data for 46 banks appear banks, repurchase agreements (purchases from dealers subject to resale), in the Board's Annual Statistical Digest, 1971-1975, Table 3. or other lending arrangements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • February 1978 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* Bank Regular rate Special rate 3 Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous 1/31/78 date rate 1/31/78 date rate 1/31/78 date rate 1/31/78 date rate B P A C N R D C S K S M t a h o t h a i e l a . i n l c e w i s l i n n a l L l h c t v a n a s n o a F m o e a d Y s t n e g r u l a s e a o o a o a i l p s n n r n C p o k d c h d i l i . . t i . i s a y . s c . . . . . . . o . . . . . 6 6 6 6 6 6 6 6 6 6 6 6 1 1 1 1 1 1 1 1 1 1 I i / / / / / / / / / / / / 2 2 2 2 2 22 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 / / / / / / / / / / / 1 1 1 9 1 2 2 1 1 1 1 1 6 3 / 0 0 0 3 0 3 3 0 9 7 / / / / / / / / / / / 8 7 7 7 7 7 7 7 7 7 7 1 8 8 8 8 8 8 8 8 8 8 8 1 1 1 1 1 1 1 1 1 1 1 1 / / / / / / / / / / / / 1 9 9 1 1 1 1 1 1 1 2 2 3 / 0 6 / 3 0 3 0 3 0 0 7 7 / / / / / / / / / / 8 8 7 7 7 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 6 6 6 6 6 6 6 6 6 6 6 6 1 1 1 1 1 1 1 1 1 1 I I / / / / / / / / / / / / 2 2 2 2 2 2 2 2 2 2 2 2 7 7 7 7 7 7 7 7 7 7 7 7 1 1 1 1 1 1 1 1 1 1 1 1 / / / / / / / / / / / / 2 2 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 / / / / / / / / / / / / 9 1 1 1 9 1 1 1 1 1 2 2 / 6 0 3 / 0 3 3 0 3 0 0 7 7 / / / / / / / / / / 8 8 7 7 7 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 9 9 1 1 1 1 1 1 1 1 1 1 V i/ / / / / / / / / / / 2 2 2 2 2 2 2 2 2 2 2 i 1 1 1 1 1 1 1 1 1 1 1 1 / / / / / / / / / / / / 9 1 1 1 1 1 1 1 9 2 1 2 / 6 3 0 0 0 3 3 / 0 3 0 7 7 / / / / / / / / / / 8 8 7 7 7 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 Range of rates in recent years5 Range F.R. Range F.R. Range Effective date (or level)- Bank Effective date (or level)— Bank Effective date (or level)— All F.R. of All F.R. of All F.R. Banks N.Y. Banks N.Y. Banks In effect Dec. 31, 1970 51/2 51/2 1973—Jan. 15. 5 5 1975—Jan. 6 71/4-734 734 1971—Jan. 2 1 1 2 8 9 5 5 5 5 i/ 5 4 1 - - - 5 5 5 4 1 1 i / / 4 4 2 5 5 5 5 1 V 1 / a 4 4 A F M M e p a a b r r y . . . 2 2 1 4 6 3 2 1 . . . . . 5 5 1 3 / 5 5 5 2 ^ 1 3 - - - 5 5 / 6 4 3 2 i/ / 2 4 5 5 5 5 6 1 3 1 1 / / / / 2 4 2 2 M Fe a b r . . 2 1 1 4 5 7 0 0 7 6 61 1 3 / 4 / 7 6 4 4 1 3 - / - / - 7 6 4 4 7 3 3 1 4 4 4 7 7 6 6 6 1 1 3 1 3 / / / 4 4 4 4 4 J F u e l b y . 2 1 1 1 9 3 6 9 4 4 ^ ^ 4 5- - 5 5 5 /4 4 5 5 5 3 >/a J J u u n ly e 1 1 1 2 5 8 1 , . . . 6 7 6 1 -6 /2 i/2 7 66 6 1 % /2 May 2 1 1 3 6 4 6 6 6 1 - 4 6 14 6 6 6 14 N D o ec v . . 2 1 2 1 1 1 1 3 3 4 9 7 4 4 41 1 3 / /4 4 54 2 2 1 y - - - 4 / 44 5 3 2 % / 4 54 4 4 4 5 3 1 1 3 / / % 4 2 2 1974— A A D p u ec r g . . . 2 2 1 3 1 9 5 3 4 0 6, , , , , , 7 7 1 3 7 m 7 8 / 4 2 3 - - - 7 8 4 8 % 7 7 7 7 8 8 V 3 3 % 4 4 4 1 1 9 9 7 7 6 7 — — J N A a o u n v g . . . 2 2 3 2 3 1 2 6 0 3 1 9 5 5 5 5i 1 1 1 / / 4 4 5 5 £ 4 1 - - 1 - / - 4 5 5 6 2 5 3 3 % 4 4 5 5 5 5 5 5 1 1 3 1 1 1 / / 4 4 4 4 2 2 Sept. 2 534 534 Oct. 26 6 6 1978—Jan. 9 6-61/2 61/2 20 61/2 61/2 In effect Jan. 31, 1978 61/2 61/2 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, Annual Statistical Digest, 1971-75, and Annual Statistical Digest, 1972-76. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.15 MEMBER BANK RESERVE REQUIREMENTS1 Per cent of deposits Requirements in effect Previous requirements Jan. 31, 1978 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 71/2 2/13/75 21-01-01 00 91/2 12/30/76 10 2/13/75 1134 12/30/76 12 2/13/75 100-400 12% 12/30/76 13 2/13/75 Over 400 I6I/4 12/30/76 16% 2/13/75 Time:2,3 S O a t v h i e n r g s t ime: 3 3/16/67 3»/2 3/2/67 0-5, maturing in— 30-179 days 3 3/16/67 3% 3/2/67 180 days to 4 years 4 21/2 1/8/76 3 3/16/67 4 years or more 4 1 10/30/75 3 3/16/67 Over 5, maturing in— 30-179 days 6 12/12/74 5 10/1/70 180 days to 4 years 4 21/2 1/8/76 3 12/12/74 4 years or more 4 1 10/30/75 3 12/12/74 Legal limits, Jan. 31, 1978 Minimum Maximum Net demand: Reserve city banks 10 22 Other banks 7 14 3 10 1 For changes in reserve requirements beginning 1963, see Board's (c) The Board's Regulation M requires a 4 per cent reserve against net Annual Statistical Digest, 1971-1975 and for prior changes, see Board's balances due from domestic banks to their foreign branches and to foreign Annual Report for 1976, Table 13. banks abroad. Effective Dec. 1, 1977, a 1 per cent reserve is required 2 (a) Requirement schedules are graduated, and each deposit interval against deposits that foreign branches of U.S. banks use for lending to applies to that part of the deposits of each bank. Demand deposits U.S. residents. Loans aggregating $100,000 or less to any U.S. resident are subject to reserve requirements are gross demand deposits minus cash excluded from computations, as are total loans of a bank to U.S. residents items in process of collection and demand balances due from domestic if not exceeding $1 million. Regulation D imposes a similar reserve rebanks. quirement on borrowings from foreign banks by domestic offices of a (b) The Federal Reserve Act specifies different ranges of requirements member bank. 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

A10 DomesticN onfinancial Statistics • February 1978 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 TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy ooofff dddeeepppooosssiiittt 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 55555 77777/////11111/////7777733333 41/2 1/21/70 5555511111/////44444 ((66)) 5 (7) 2 Negotiable order of withdrawal (NOW) accounts i 55555 11111/////11111/////7777744444 55555 11//11//7744 Time (multiple- and single-maturity unless otherwise indicated):2 30-89 days: 4 3 S M in u g lt l i e p - l m e- a m tu a r t i u ty r ity }}}}} ''''' 77777/////11111/////7777733333 JJJJ IIII 4444 5555 %%%% 99 11 // // 22 22 66 11 // // 66 77 66 00 }}}}} (((((88888))))) ((((8888)))) 90 days to 1 year: }}}}} 333335555533333/////44444 6 Single-maturity }}}}} 5555511111/////22222 77777/////11111/////7777733333 '''' {{{{ 99 77 // // 22 22 66 00 // // 66 66 66 66 (((666))) {{{{ 55551111////4444 ssss **** 1/21/70 7 8 2 1 t t o o 2 21 y /2 e a y r e s a 3 r s 3 }}}}} 66666 77777/////11111/////7777733333 JJJJ IIII 5555 5555 1111 3333 //// 4444 2222 11 11 // // 22 22 11 11 // // 77 77 00 00 }}}}} 6666611111/////22222 (((666))) 1 1 / / 2 2 1 1 / / 7 7 0 0 9 21/2 to 4 years3 66666%%%%% 77777/////11111/////7777733333 555533334444 11//2211//7700 6666633333/////44444 (((666))) 1/21/70 6666 10 4 to 6 years4 7777711111/////44444 1111111111/////11111/////7777733333 ((((9999)))) 7777711111/////22222 111111///111///777333 ((((®®®®)))) 11 6 years or more4 7777711111/////22222 1111122222/////2222233333/////7777744444 77771111////4444 11/1/73 7777733333/////44444 111222///222333///777444 11/1/73 77771111////2222 12 Governmental units (all maturities).... mmmmm 1111122222/////2222233333/////7777744444 77771111////2222 11/27/74 777773333344444 111222///222333///777444 11/27/74 13 Individual retirement accounts and 77777%%%%% 77771111////2222 Keogh (H R 10) plans 5 . 77777/////66666/////7777777777 ((((8888)))) 777773333344444 777///666///777777 ((((8888)))) 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 All 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1977 TTyyppee ooff ttrraannssaaccttiioonn 11997755 11997766 11997777 June July Aug. Sept. Oct. Nov. Dec. U.S. GOVT. SECURITIES Outright transactions (excl. matched salepurchase transactions) Treasury bills: 11111111,,,,555566662222 11114444,,,,333344443333 11113333,,,,777733338888 2222,,,,666699996666 111111888 881122 2222,,,,000000005555 33,,110099 2 Gross sales 5555,,,,555599999999 8888,,,,444466662222 7777,,,,222244441111 1111,,,,111155554444 777555333 117766 333300003333 1,877 443366 331111 2222 6666,,,,444433331111 2222 5555,,,,000011117777 2222,,,,111133336666 666600000000 555000000 333311117777 330000 Others within 1 year:1 3333,,,,888888886666 444477772222 3333,,,,000011117777 88889999 2222,,,,666611116666 9999 6 Exchange, or maturity shift ---444 792 444...444999999 478 238 2,321 320 --4455 1,352 623 333,,,555444999 222...555000000 22,,550000 1 to 5 years: 222333,,,222888444 2222 3333,,,,222200002222 222,,,888333333 220000 668811 662288 111177777777 10 Exchange, or maturity shift 33,,885544 ----2222,,,,555588888888 --66,,664499 --447788 -238 -1,664 --332200 45 r —1,267 --662233 5 to 10 years: 11 Gross purchases 11,,551100 1111,,,,000044448888 775588 6688 9966 116666 13 Exchange or maturity shift ---444,,,666999777 111,,,555777222 555888444 --778822 --332255 Over 10 years: 14 Gross purchases 111,,,000777000 666444222 555555333 111144 112288 110088 16 Exchange or maturity shift 888884444488888 222222222255555 11111,,,,,555556666655555 111222555 224400 All maturities:1 17 Gross purchases 222222222211111,,,,,333331111133333 222221111199999,,,,,777770000077777 2222200000,,,,,888889999988888 3333,,,,111166667777 111111888 888111222 555,,,555222666 44,,111100 18 Gross sales 55555,,,,,555559999999999 88888,,,,,666663333399999 77777,,,,,222224444411111 1111,,,,111155554444 777555333 111777666 333000333 11,,887777 443366 331111 19 Redemptions 2222299999,,,,,999998888800000 2222255555,,,,,000001111177777 44444,,,,,666663333366666 666600000000 555000000 333111777 22,,550000 330000 Matched sale-purchase transactions 20 Gross sales 111115555511111,,,,,222220000055555 111119999966666,,,,,000007777788888 444442222255555,,,,,222221111144444 33336666,,,,222255558888 222777,,,999444777 45,831 333999,,,555555222 4488,,220044 5566,,889999 3322,,332200 21 Gross purchases 111115555522222,,,,,111113333322222 111119999966666,,,,,555557777799999 444442222233333,,,,,888884444411111 33336666,,,,444444449999 222777,,,333000111 46,170 333999,,,666999444 4444,,777722 5577,,447777 3355,,000011 Repurchase agreements 22 Gross purchases 111114444400000,,,,,333331111111111 222223333322222,,,,,888889999911111 111117777788888,,,,,666668888833333 11114444,,,,777744448888 111333,,,999777333 4,397 111666,,,777000000 99,,557788 66,,447722 1188,,007711 23 Gross sales 111113333399999,,,,,555553333388888 222223333300000,,,,,333335555555555 111118888800000,,,,,555553333355555 11111111,,,,555500006666 111555,,,777111999 5,648 111555,,,444666999 1111,,888899 44,,443333 1188,,220088 24 Net change in U.S. Govt, securities ---333,,,555222888 -276 666,,,222777999 --1100,,111188 11,,888800 FEDERAL AGENCY OBLIGATIONS 77777,,,,,444443333344444 99999,,,,,000008888877777 55555,,,,,777779999988888 4444,,,,888844445555 66,,334422 Outright transactions: 25 Gross purchases 26 Gross sales 27 Redemptions 11111,,,,,666662221111144466666666 888881119999966611111999 11111,,,,,444442223333322233333333 333333388883330000 ---666999 222555 44!! 7700337722 Repurchase agreements: 111555,,,111777999 111000,,,555222000 111333,,,888111111 111,,,666555666 11,,667722 222666555 111,,,111333666 774411 661155 22,,771122 111555,,,555666666 111000,,,333666000 111333,,,666333888 111,,,000555666 11,,993388 444555999 999777888 11,,005511 448844 22,,339922 BANKERS ACCEPTANCES *** 30 Outright transactions net 111666333 ---555444555 ---111999666 ---111555 --2244 ---111555 --44 ---333555 444111000 111555999 555222888 --220044 ---222444777 333555111 --447788 248 705 32 Net change in total System Account 888,,,555333999 999,,,888333333 777,,,111444333 666,,,333000555 --44,,002200 ---888000111 666,,,777666444 --1100,,991100 2,260 8,042 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): 1975, 3,549; 1976, none; Sept. 1977, 2,500. NOTE.—Sales, redemptions, and negative figures reduce holdmgs 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 lor maturing bills. In 1976 there was a similar transaction Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Nonfinancial Statistics • February 1978 1.18 FEDERAL RESERVE BANKS Condition and F.R. Note Statements Millions of dollars Wednesday End of month Account 1977 1978 1977 1978 Dec. 28 Jan. 4 Jan. 11 Jan. 18» Jan. 25p Nov. Dec. Jan.f Consolidated condition statement ASSETS Gold certificate account 11,718 11,719 11,719 11,719 11,719 11,595 11,718 11,718 Special Drawing Rights certificate account. 1,250 1,250 1,250 1,250 1,250 1,200 1,250 1,250 Coin1 281 276 282 303 322 289 334 282 Loans: Member bank borrowings 1,909 792 554 2,332 757 Other 265 Acceptances: Bought outright Held under repurchase agreements... 734 214 248 954 Federal agency obligations: Bought outright 8,013 ,004 8,004 ,004 ,004 7,329 1,004 8,004 Held under repurchase agreements... 812 226 218 40 131 457 U.S. Govt, securities Bought outright: Bills 41,706 41,485 35,105 40,258 37,974 36,081 41,561 37,090 Certificates—Special Other Notes 50,509 50,509 50,509 50,965 49,616 50,509 50,965 Bonds 8,848 8,848 8,848 8,949 8,741 8,848 8,949 Total2 101,063 100,842 94,462 99,615 97,888 94,438 100,918 97,004 Held under repurchase agreements. 4,619 1,010 343 449 2,039 1,901 17 Total U.S. Govt, securities. 105,682 101,852 94,462 99,958 98,337 96,477 102,819 97,004 18 Total loans and securities.. 117,150 111,802 103,258 108,948 108,927 105,111 112,493 105,765 19 Cash items in process of collection 13,555 13,106 12,519 14,118 12,817 11,109 9,617 11,188 20 Bank premises 377 377 377 378 379 383 378 379 Other assets: 21 Denominated in foreign currencies. 16 14 19 14 262 16 18 422 22 All other 2,010 1,997 2,001 2,086 2,055 1,720 2,046 2,138 23 Total assets. 146,357 140,541 131,425 138,816 137,731 131,423 137,802 133,194 LIABILITIES 24 F.R. notes 93,718 93,233 92,210 91,212 90,396 91,229 93,153 90,159 Deposits: 25 Member bank reserves 32,249 27.884 23,118 29,898 26,557 26,345 26,870 19,489 26 U.S. Treasury—General account. 7,664 6,790 5,360 6,155 9,841 2,562 7,114 11,228 27 Foreign 327 376 289 253 262 416 379 422 28 Other 3 630 737 660 641 640 719 1,187 871 29 Total deposits. 40,870 35,787 29,427 36,947 37,300 30,042 35,550 32,010 30 Deferred availability cash items 7,867 8,215 6,322 6,991 6,161 6,477 5,807 6,916 31 Other liabilities and accrued dividends. 1,341 1,168 1,200 1,272 1,348 1,130 1,234 1,474 32 Total liabilities 143,796 138,403 129,159 136,422 135,205 128,878 135,744 130,559 CAPITAL ACCOUNTS 33 Capital paid in 1,027 1,030 1,032 1,032 1,035 1,025 1,029 1,039 34 Surplus 983 1,029 1,029 1,029 1,029 983 1,029 1,029 35 Other capital accounts 551 79 205 333 462 537 567 36 Total liabilities and capital accounts 146,357 140,541 131,425 138,816 137,731 131,423 137,802 133,194 37 MEMO: Marketable U.S. Govt, securities held in custody for foreign and intl. account 76,347 77,090 77,910 79,705 79,725 76,055 80,009 74,208 Federal Reserve note statement 38 F.R. notes outstanding (issued to Bank) 99,479 101,006 101,621 101,862 102,112 96,398 100,534 102,355 Collateral held against notes outstanding: 39 Gold certificate account 11,713 11,719 11,719 11,719 11,719 ,591 11,713 11,718 40 Special Drawing Rights certificate account.... 873 1,250 1,250 1,250 1,250 855 880 1,250 41 Eligible paper 995 763 547 2,317 733 42 U.S. Govt, securities 88,685 87,042 87,889 88,346 86,826 84,795 89,675 88,654 43 Total collateral. 101,271 101,006 101,621 101,862 102,112 97,241 102,268 102,355 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 1978 1977 1978 Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25 Nov. 30 Dec. 31 1 Loans 1,909 1,096 790 554 2,332 925 266 2 Within 15 days 1,904 1,083 775 551 2,324 895 256 3 16 days to 90 days. 5 13 15 3 30 10 4 91 days to 1 year... 5 Acceptances 734 624 214 214 248 954 6 Within 15 days 734 624 214 214 248 954 7 16 days to 90 days. 8 91 days to 1 year... U.S. Govt, securities 105,682 101,852 94,462 99,958 98,337 96,477 102,819 Within 15 days1 9,496 5,117 2,628 2,612 4,073 3,950 4,947 16 days to 90 days 18,885 20,143 14,456 19,243 15,752 18.203 20,362 91 days to 1 year 32,330 31,916 32,702 33.427 33,336 30,255 32,539 Over 1 year to 5 years. . . 27,516 27.221 27,221 27,221 27,532 26,888 27,516 Over 5 years to 10 years. 10,388 10,388 10,388 10,388 10,477 10.222 10,388 Over 10 years 7,067 7,067 7,067 7,067 7,167 6,959 7,067 16 Federal agency obligations.. 8,825 8,230 8,004 8,222 8,044 7,460 8,455 17 Within 15 days i 910 227 52 335 105 292 540 18 16 days to 90 days 423 465 413 348 354 291 423 19 91 days to 1 year 740 827 827 827 886 836 740 20 Over 1 year to 5 years. . . 4,149 4,109 4,110 4,110 4,175 3.726 4,149 21 Over 5 years to 10 years. 1,646 1,648 1,648 1,648 1,623 1,492 1,648 22 Over 10 years 957 954 954 954 901 823 955 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 Aug.r Sept.r Oct.r Nov.r Dec. Debits to demand deposits 2 (seasonally adjusted) 1111 AAAAllllllll ccccoooommmmmmmmeeeerrrrcccciiiiaaaallll bbbbaaaannnnkkkkssss 22,937.8 25,028.5 29,180.4 35,932.7 36,321.9 37,068.4 36,831.9 37,331.1 2222 MMMMaaaajjjjoooorrrr NNNNeeeewwww YYYYoooorrrrkkkk CCCCiiiittttyyyy bbbbaaaannnnkkkkssss........ 8,434.8 9,670.7 11,467.2 14,358.5 14,388.9 14,976.2 14,216.3 14,633.3 3333 OOOOtttthhhheeeerrrr bbbbaaaannnnkkkkssss 14,503.0 15,357.8 17,713.2 21,574.1 21,933.0 22,092.2 22,615.7 22,697.8 Debits to savings deposits 3 (not seasonally adjusted) 4444 AAAAllllllll ccccuuuussssttttoooommmmeeeerrrrssss 333333335555....2222 333344445555....5555 333366660000....0000 333333334444....6666 333355559999....2222 5 Business i 44444444....5555 44446666....9999 44447777....7777 44445555....3333 55554444....7777 6 Others 33331111....77777777 222299998888....6666 333311112222....3333 222288889999....4444 333300004444....5555 Demand deposit turnover 2 (seasonally adjusted) 77777 AAAAAllllllllll cccccooooommmmmmmmmmeeeeerrrrrccccciiiiiaaaaalllll bbbbbaaaaannnnnkkkkksssss 99.0 105.3 116.8 133.2 133.7 134.2 133.5 134.3 88888 MMMMMaaaaajjjjjooooorrrrr NNNNNeeeeewwwww YYYYYooooorrrrrkkkkk CCCCCiiiiitttttyyyyy bbbbbaaaaannnnnkkkkksssss..... ..... 321.6 356.9 411.6 519.3 533.8 533.9 524.4 539.2 99999 OOOOOttttthhhhheeeeerrrrr bbbbbaaaaannnnnkkkkksssss 70.6 72.9 79.8 89.1 89.6 89.0 90.9 90.5 Savings deposit turnover 3 (not seasonally adjusted) 1111100000 AAAAAllllllllll cccccuuuuussssstttttooooommmmmeeeeerrrrrsssss 1111....7777 1111....6666 1111....7777 1111....6666 1111....7777 11 Business 1 4444....2222 4444....4444 4444....4444 4444....1111 5555....0000 12 Others 1111....5555 1111....5555 1111....5555 1111....4444 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 negotiable orders of withdrawal (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

A14 Domestic Nonfinancial Statistics • February 1978 1.21 MONEY STOCK MEASURES AND COMPONENTS Billions of dollars, averages of daily figures 1977 11997744 11997755 1976 1977 DDeecc.. DDeecc.. Dec. Dec. Item July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted MEASURES i 5 4 2 3 1 M M M M M - - - - - 5 4 3 2 l 1,0 9 2 6 7 7 8 8 0 1 0 1 3 1 2 . . . . . 5 5 1 4 4 1 1. . 1 0 7 2 6 7 9 4 9 6 4 2 6 4 4 . . . . . 7 6 5 8 3 1 1 , , 2 3 8 7 3 3 0 0 4 1 7 0 3 0 2 . . . . . 1 5 3 3 4 1 1 , ,3 4 8 3 8 7 4 8 0 3 4 8 1 6 5 . . . . . 1 8 2 5 4 1 1 , , 3 3 7 8 3 1 7 8 4 2 6 9 3 6 6 . . . . . 9 8 5 3 8 1 1 , , 3 3 7 8 3 2 9 8 5 2 9 2 7 0 8 . . . . . 5 7 7 9 4 1 1 , , 3 4 8 7 3 4 0 5 9 3 3 6 6 2 0 . . . . . 1 3 2 9 4 1 1 , , 3 4 7 8 3 5 2 9 6 3 7 3 3 9 5 . . . . . 1 5 7 6 9 r r l l , , 3 r 4 r 3 8 8 6 3 3 0 7 5 6 3 2 3 . . . . . 5 3 7 6 5 1 1 , , 3 4 8 8 3 7 4 0 8 3 4 8 6 1 5 . . . . . 1 5 8 2 4 COMPONENTS 6 C C o u m rr m en e c r y c ial bank deposits: 67.8 73.7 80.5 88.4 85.1 85.5 86.4 87.1 87.8 88.4 1 7 9 8 0 D Ti e m O N m e e t a h g a n e o n r d t d ia s b a l v e i n C gs D 's2 2 4 3 1 1 8 2 8 5 9 9 .3 . . . 3 3 0 2 4 3 5 8 2 6 1 2 1 9 . . 7 . . 1 6 0 4 4 2 9 6 2 3 1 7 3 1 .1 . . . 9 3 9 2 5 4 4 7 7 4 5 4 1 7 . . . 8 . 7 1 0 2 5 4 1 6 4 5 9 1 6 2 .5 . . . 7 7 8 2 5 4 2 6 5 4 2 9 2 3 .5 . . . 3 9 2 5 4 2 2 6 6 4 5 3 2 4 . . 8 . 2 . 6 0 4 2 53 6 4 6 2 5 6 6 . . . 2 . 6 9 4 4 2 54 7 6 4 0 0 5 9 .3 . . . 9 5 4 4 2 54 7 7 4 5 4 1 7 .8 . . . 1 7 0 11 Nonbank thrift institutions 3 369.1 428.3 496.8 567.6 533.5 541.7 550.2 557.5 r563.0 567.6 Not seasonally adjusted MEASURES i 1 1 1 1 1 2 4 3 6 5 M M M M M - - - - l 3 - 2 5 4 1,0 2 6 9 7 7 9 1 8 0 4 7 3 1 8 . . . . . 5 8 3 3 0 1 1, , 1 0 6 7 3 7 9 5 6 0 7 4 2 9 3 . . . . . 7 3 8 3 2 1 1, , 3 2 7 8 3 0 3 4 0 2 2 7 5 9 1 . . . . . 1 9 5 3 3 1 1 , , 4 3 8 3 8 5 7 8 1 4 0 4 7 1 4 . . . . . 3 2 7 6 9 1 1 , , 3 3 7 8 3 2 8 4 8 2 2 4 6 4 7 . . . . . 1 9 8 2 0 1 1, , 3 3 7 8 3 9 2 4 8 2 1 6 8 4 5 . . . . . 1 8 6 2 4 1 1 , , 3 4 7 8 3 3 0 8 5 2 7 2 8 4 8 . . . . . 1 6 9 3 2 1 1 , , 3 4 7 3 8 9 5 1 6 3 6 0 9 4 2 . . 4 . . . 6 7 5 0 r r l l , , 3 ' r ' 4 8 8 3 5 2 7 0 3 7 9 1 5 0 . . . . . 4 0 6 4 0 1 1 , , 3 4 8 8 3 7 5 8 1 4 4 0 7 1 4 . . . . . 3 6 7 2 9 COMPONENTS 17 C C o u m rr m en e c r y ci .* a l bank deposits: 69.0 75.1 82.0 90.0 85.7 85.8 86.1 86.9 88.4 90.0 2 2 2 2 1 1 0 1 2 3 9 8 D Ti e m N D O M m e e o t a e h g m n m a e o d n r e t b d s i e a t r i b s c a l e v n in o C g n D s m ' e s2 m ber 2 4 3 1 2 1 9 5 2 5 2 6 0 8 6 9 . . . . 2 7 . . 5 5 3 7 2 4 3 1 2 4 6 8 6 6 8 9 2 3 2 6 . . 1 6 . . . . 5 6 1 2 2 4 4 1 3 8 6 6 6 2 9 8 8 7 4 3 . . . 3 2 . . . 5 3 9 3 2 5 4 1 5 4 7 7 6 7 4 2 4 5 6 6 . . 9 7 . . . . 3 9 8 3 5 2 4 1 1 4 6 6 5 6 9 1 9 2 6 7 . . 6 4 . . . . 5 8 9 7 4 5 2 1 2 3 6 6 5 6 3 9 4 9 9 6 . . . 7 . 3 . . 5 1 2 3 2 5 4 1 4 2 6 7 6 6 2 6 5 0 0 7 . . 1 1 . . . . 7 4 4 5 5 2 4 1 3 4 7 6 6 7 2 5 8 1 3 0 . . 2 . 6 . . . 3 3 8 0 ' r2 5 4 1 4 3 7 7 6 7 7 6 1 2 4 0 . . 0 2 . . . . 6 6 3 4 2 4 5 1 5 4 7 7 6 7 4 2 5 4 6 6 . . 9 7 . . . . 9 3 8 3 2 2 5 4 N U o .S n . b G an o k v t, t h d r e if p t o i s n i s ts t it ( u a t ll i o c n o s m 3 mercial 366.3 424.9 492.6 562.6 538.1 542.3 548.2 554.3 557.4 562.6 banks) 4.9 4.1 4.7 5.5 3.9 3.7 5.4 4.1 3.8 5.5 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-l: Averages of daily figures for (1) demand deposits at commercial For a description of the latest revisions in the money stock measures p b B r a a o n n c k k e s s s ; s o t a o h f n e d c r o ( t l 3 l h e ) a c n t c i u o d r n o r m e a n n e c d s y t i F c o . u R in t . s t i e f d r lo e b a a t t n ; h k e ( 2 a T ) n r f d e o a r s U e u i . g r S n y . , d G F e o m .R v a t . . n , d B l e a b s n a s k l c a s, a n s c a h e n s d it a e t v m a F s u .R l i t n s . S 3 E 0 E 5 a M nd o n 3 e 0 y 6 . Stock Measures: Revision" in the March 1977 BULLETIN, pp. of commercial banks. Latest monthly and weekly figures are available from the Board's H.6 release. Back data are available from the Banking Section, Division of M-2: M-l plus savings deposits, time deposits open account, and time Research and Statistics. c m er o t r i e f ic o a f t l e a s r g o e f w de e p ek os ly it r ( e C po D r ' t s i ) n g o t b h a e n r k t s h . a n negotiable CD's of $100,000 or 2 Negotiable time CD's issued in denominations of $100,000 or more ot M m - u 3 t : u a M l - s 2 a v p i l n u g s s t b he a n a k v s e , r s a a g v e i n o g f s t h a e n d b e l g o i a n n n i s n h g a - r a es n , d a e n n d d c -o re f- d m it o u n n th io n d e s p h o a s r i e ts s by 3 l a A r v ge e r w ag e e e k o ly f r th ep e o b rt e i g n i g n n c i o n m g- m a e n r d c ia e l n d b - a o n f k -m s. onth figures for deposits of (nonbank thrift). mutual savings banks, for savings capital at savings and loan associations, and for credit union shares. NOTES TO TABLE 1.23: 2 J L A o d a ju n s s t e s d o ld to a e r x e c l t u h d o e s e d o s m ol e d s t o ic u t c r o ig m h m t e t r o c i b a a l n i k n s te ' r o b w an n k fo lo r a ei n g s n . branches, th O er th e er w er s e e c i u n r c i r ti e e a s s es a n o d f $ a 6 b 0 o 0 u t m i $ l 5 li 0 o 0 n m in i l " li T on o ta i l n lo lo a a n n s s, a n $ d 1 0 i 0 n v m es i t l m lio e n n ts i . n " nonconsoli dated nonbank affiliates of the bank, the banks' holding As ot Oct. 31, 1974, "Total loans and investments" of all commercial company (if not a bank), and nonconsolidated nonbank subsidiaries of banks were reduced by $1.5 billion in connection with the liquidation the holding company. Prior to Aug. 28, 1974, the institutions included ot one large bank. Reductions in other items were: "Total loans," $1 0 had been defined somewhat differently, and the reporting panel of banks (of which $0.6 billion was in "Commercial and industrial loans"), was also different. On the new basis, both "Total loans" and "Com- and Other securities," $0.5 billion. In late November "Commercial and mercial and industrial loans" were reduced by about $100 million. industrial loans" were increased by $0.1 billion as a result of loan reas of R M ec a l r a . s s 3 i 1 fi , c a 1 t 9 i 7 o 6 n . of loans reduced these loans by about $1.2 billion classifications at another large bank. , 4 As of Dec. 31, 1977, commercial and industrial loans were reduced NOTE.—Data are for last Wednesday of month except for June 30 by $300 million as the result of loan reclassifications at one large bank. and Dec. 31; data are partly or wholly estimated except when June 30 5 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 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. June July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted 11 RReesseerrvveess 11 34.94 36.60 34.73 34.95 34.86 35.35 35.64 35.63 35.90 36.01 36.21 22 NNoonnbboorrrroowweedd 33.64 35.87 34.60 34.90 34.60 35.03 34.58 35.00 34.59 35.15 35.64 33 RReeqquuiirreedd 34.64 36.34 34.47 34.68 34.71 35.08 35.44 35.42 35.69 35.76 36.02 44 DDeeppoossiittss ssuubbjjeecctt ttoo rreesseerrvvee rreeqquuiirreemmeennttss 22 442.3 486.2 505.4 529.6 544.5 547.7 551.4 552.9 559.4 564.6 569.9 55 TTiimmee aanndd ssaavviinnggss 279.2 322.1 337.9 355.0 367.0 369.2 370.8 372.4 377.1 383.5 387.7 DDeemmaanndd:: 66 PPrriivvaattee 158.1 160.6 164.5 171.4 173.8 175.8 177.0 176.9 179.0 177.6 178.5 77 UU..SS.. GGoovvtt 5.0 3.5 3.0 3.2 3.7 2.8 3.6 3.7 3.3 3.5 3.7 Not seasonally adjusted 8 Deposits subject to reserve requirements 2 447.5 491.8 510.9 534.8 544.5 547.6 548.3 552.1 558.2 562.1 575.3 9 Time and savings 278.5 321.7 337.2 353.6 367.8 369.5 371.7 373.0 377.5 380.7 386.4 Demand: 10 Private 164.0 166.6 170.7 177.9 173.0 175.6 174.1 175.2 178.0 178.7 185.1 11 U.S. Govt 5.0 3.4 3.1 3.3 3.7 2.6 2.5 3.8 2.7 2.6 3.8 i 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 1978 1973 1974 1975 1976 Dec. 31 Dec5. 31 Dec. 31 Dec. 31 Category Aug. 31 Sept. 28 Oct. 26 Nov. 30 Dec. 31 Jan. 25 v V V P V p Seasonally adjusted ! Loans and investments1 633.4 690.4 721.1 784.4 845.6 848.4 857.9 866.1 865.4 874.3 2 Including loans sold outright2 637.7 695.2 725.5 788.2 849.7 852.4 862.0 870.5 870.0 878.8 Loans: 3 Total 449.0 500.2 496.9 538.9 587.0 592.2 602.5 611.2 612.9 622.4 4 Including loans sold outright2 453.3 505.0 501.3 542.7 591.1 596.2 606.6 615.6 617.5 626.9 65 Co I m nc m lu e d rc in ia g l l a o n a d n s i n s d o u ld s t o r u ia t l r i 3 g ,4 h t 2,3,4 1 1 5 5 6 9 . . 4 0 1 1 8 8 3 6 . . 3 0 1 17 7 8 6 . . 5 0 1 18 7 1 9 . . 9 5 1 1 9 9 4 7 . . 6 4 1 1 9 9 7 5. . 1 9 2 1 0 9 2 9 . . 2 3 2 20 0 4 1 . . 7 6 2 20 0 5 2 . . 5 2 2 20 0 7 4 . . 7 6 Investments: 7 U.S. Treasury 54.5 50.4 79.4 97.3 103.1 100.1 97.8 95.0 93.5 92.5 8 Other 129.9 139.8 144.8 148.2 155.5 156.1 157.6 159.9 159.0 159.4 Not seasonally adjusted 9 Loans and investments1 647.3 705.6 737.0 801.6 842.8 848.4 856.1 866.4 884.5 872.7 10 Including loans sold outright 651.6 710.4 741.4 805.4 846.9 852.4 860.2 870.8 889.1 877.2 Loans: 11 Total i 458.5 510.7 507.4 550.2 588.2 594.0 601.3 610.1 625.7 617.0 12 Including loans sold outright2 462.8 515.5 511.8 554.0 592.3 598.0 605.4 614.6 630.4 621.5 13 Commercial and industrial 3,4 159.4 186.8 179.3 182.9 193.6 195.5 198.6 200.8 206.0 202.5 14 Including loans sold outright 2,3,4 162.0 189.5 181.8 185.3 196.4 198.3 201.5 203.9 209.3 205.6 Investments: 15 U.S. Treasury 58.3 54.5 84.1 102.5 99.4 98.5 97.7 97.9 98.9 97.2 16 Other 130.6 140.5 145.5 148.9 155.2 155.9 157.1 158.4 159.8 158.5 For notes see bottom of opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • February 1978 1.24 COMMERCIAL BANK ASSETS AND LIABILITIES Last-Wednesday-of-Month Series Billions of dollars except for number of banks 1976 19773 1978 Account Dec. 3 Apr. May June July? Aug.f Sept.f Oct.? NOV.p Dec.f Jan.f All commercial 1 Loans and investments 846.4 852.2 860.4 877.5 875.0 886.8 891.4 897.7 915.0 931.6 919.9 2 Loans, gross 594.9 595.8 604.6 621.9 620.7 632.2 637.1 642.9 658.7 667733..44 664.2 Investments: 3 U.S. Treasury securities.. 102.5 103.4 102.4 101.6 100.0 99.4 98.5 97.7 97.8 98.9 97.2 4 Other 148.9 153.0 153.4 154.1 154.3 155.2 155.9 157.1 158.4 159.3 158.5 5 Cash assets 136.1 123.6 120.6 139.1 126.9 135.5 128.7 129.4 138.8C 150.1 128.0 6 Currency and coin 12.1 13.4 13.1 12.7 13.5 13.7 13.9 13.9 14.7 15.8 14.1 7 Reserves with F.R. Banks... 26.1 28.2 24.0 25.5 27.2 28.2 30.0 28.3 26.3 32.1 26.6 8 Balances with banks 49.6 41.0 42.4 47.4 42.4 45.3 42.7 44.4 46.8 48.8 43.3 9 Cash items in process of collection.. 48.4 41.0 41.0 53.4 43.9 48.3 42.1 42.8 51.0 53.5 44.0 10 Total assets/total liabilities and capital1 1,030.7 1,032.3 1,036.2 1,074.2 1,059.3 1,079.7 1,076.7 1,083.9 1,117.5 1,145.4 1,112.8 11 Deposits 838.2 823.7 824.4 861.9 843.2 857.6 852.1 858.8 883.5 908.5 888800..33 Demand: 12 Interbank 45.4 34.2 35.7 46.5 38.2 39.6 37.1 37.5 41.8 43.7 37.3 13 U.S. Govt 3.0 7.4 3.6 2.8 3.8 2.5 8.0 3.6 4.7 7.2 4.5 14 Other 288.4 269.1 264.3 288.1 273.9 285.1 272.5 279.4 293.2 307.0 283.8 Time: 15 Interbank 9.2 8.6 8.5 8.9 8.3 8.0 8.3 8.5 9.0 9.6 9.2 16 Other 492.2 504.4 512.3 515.6 519.0 522.6 526.1 529.9 534.8 541.1 545.5 17 Borrowings 80.2 89.4 89.0 88.2 92.2 94.8 96.5 96.8 101.0 107.1 101.7 18 Total capital accounts2 78.1 77.7 78.2 81.8 79.0 79.6 80.1 80.5 81.4 81.6 82.2 19 MEMO: Number of banks 14,671 14,690 14,695 14,718 14,709 14,713 14,724 14,718 14,718 14,709 14,709 Member 20 Loans and investments 620.5 614.7 620.1 632.8 628.9 637.9 640.8 645.2 658.6 670.8 659.5 21 Loans, gross 442.9 435.9 441.5 453.4 451.3 459.9 463.0 467.1 479.0 448899..99 481.8 Investments: 22 U.S. Treasury securities. .. 74.6 73.0 72.6 72.6 70.8 70.5 69.6 68.9 69.2 69.9 67.7 23 Other 103.1 105.8 106.0 106.7 106.8 107.5 108.3 109.3 110.3 111.1 110.0 24 Cash assets, total 108.9 99.4 95.7 110.6 101.2 108.6 103.1 102.3 110.6 121.7 102.2 25 Currency and coin 9.1 9.9 9.7 9.3 9.9 10.0 10.2 10.2 10.8 11.7 10.4 26 Reserves with F.R. Banks. , . 26.0 28.2 24.0 25.6 27.2 28.2 30.0 28.3 26.3 32.1 26.6 27 Balances with banks 27.4 21.9 22.6 24.4 22.0 24.0 22.5 22.8 24.7 26.6 23.0 28 Cash items in process of collection.. 46.5 39.4 39.3 51.3 42.1 46.4 40.4 41.0 48.9 51.3 42.2 29 Total assets/total liabilities and capital1 772.9 762.7 763.9 795.2 780.1 796.3 793.2 796.5 823.9 847.0 818.0 30 Deposits 618.7 597.7 597.4 628.7 611.0 622.2 617.0 620.9 641.8 660.8 636.8 Demand: 31 Interbank 42.4 31.6 32.9 43.4 35.3 36.6 34.3 34.6 38.7 40.4 34.4 32 U.S. Govt 2.1 5.9 2.7 2.0 2.8 1.7 6.4 2.6 3.6 5.3 3.4 33 Other 215.5 198.9 195.1 213.9 202.2 211.0 200.3 205.3 216.4 226.3 208.4 Time: 34 Interbank 7.2 6.6 6.5 6.9 6.3 6.0 6.3 6.5 6.8 7.4 7.1 35 Other 351.5 354.7 360.3 362.5 364.4 366.9 369.6 372.0 376.2 381.4 383.5 36 Borrowings 71.7 78.1 77.5 77.0 80.4 82.5 84.0 83.8 87.8 93.4 88.0 37 Total capital accounts2 58.6 58.3 58.7 60.8 59.4 59.9 60.2 60.6 61.2 61.4 61.7 38 MEMO: Number of banks 5,759 5,726 5,708 5,721 5,701 5,676 5,692 5,686 5,686 5,669 5,669 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 1977 1975 1976 1977 Account Dec. 31 June 30 Dec. 31 June 30 Dec. 31 June 30 Dec. 31 June 30 Total insured National (all insured) 1 Loans and investments, gross 776622,,440000 777733,,770011 882277,,669922 885544,,773366 441,135 444433,,995599 447766,,660022 488,240 Loans: 2 Gross 535,170 539,021 578,710 601,141 315.738 315,628 340,679 351,311 3 Net ((22)) 520,976 560,062 581,163 ((22)) 330055,,228800 332299,,996688 339,955 Investments: 4 U.S. Treasury securities 83,629 90,947 101,463 100,566 46,799 49,688 55,729 53.346 5 Other 143,602 143,731 147,517 153,029 78,598 78,642 80,193 83,582 6 Cash assets 128,256 124,072 129,581 130,724 78,026 75,488 76,074 74,641 7 Total assets/total liabilities1 944,654 942,519 1,004,001 1,040,952 553,285 548,702 583,315 599,743 8 Deposits 777755,,220099 777766,,995577 882255,,001100 847,373 444477,,559900 444444,,225511 446699,,337788 447766,,338811 Demand: 9 U.S. Govt 3,108 4,622 3,020 2,817 1,788 2,858 1,674 1,632 10 Interbank 40,259 37,502 44,068 44.965 22,305 20.329 23,148 22,876 11 Other 227766,,338844 265,671 228855,,220011 284,544 115599,,884400 115522,,338833 116633,,334477 116611,,335588 Time: 12 Interbank 10,733 9,406 8,249 7,721 7,302 5,532 4,909 4,599 13 Other 444,725 459,753 484,470 507,323 256,355 263,147 276,298 285,915 14 Borrowings 56,775 63,828 75,302 81,157 40,875 45,187 54,420 57,283 15 Total capital accounts 68,474 68,988 72,065 75,503 38,969 39,501 41,323 43,142 16 MEMO: Number of banks 14,372 14,373 14,397 14,425 4,741 4,747 4,735 4,701 State member (all insured) Insured nonmember 17 Loans and investments, gross 113377,,662200 113366,,991155 114444,,000000 114444,,559977 118833,,664455 119922,,882255 220077,,008899 221,898 Loans: 18 Gross 100,823 98,889 102.277 102,144 118,609 124,503 135,753 147,685 19 Net ((22)) 96,037 9999,,447744 99,200 ((22)) 111199,,665588 113300,,661188 142,008 Investments: 20 U.S. Treasury securities 14,720 16,323 18,849 19,296 22,109 24,934 26,884 27,923 21 Other 22,077 21,702 22,873 23,157 42,927 43,387 44,450 46,288 22 Cash assets 30,451 30,422 32,859 35,918 19,778 18,161 20,647 20,164 23 Total assets/total liabilities 180,495 179,649 189,578 195,455 210,874 214,167 231,106 245,753 24 Deposits 114433,,440099 114422,,006611 114499,,449911 115522,,447711 118844,,221100 119900,,664444 206,140 218,519 Demand: 25 U.S. Govt 467 869 429 371 853 894 917 813 26 Interbank 16,265 15,833 19,295 20,568 1,689 1,339 1,624 1,520 27 Other 5500,,998844 4499,,665599 5522,,220044 5522,,557711 6655,,556600 63,629 6699,,664499 7700,,661155 Time: 28 Interbank 2,712 3.074 2,384 2,134 719 799 956 988 29 Other 72,981 72,624 75,178 76,826 115,389 123,980 132,993 144,581 30 Borrowings 12,771 15,300 17,310 19,718 3,128 3,339 3,571 4,155 31 Total capital accounts 13,105 12,791 13,199 13,441 16,400 16,696 17,543 18,919 32 MEMO: Number of banks 1,046 1,029 1,023 1,019 8,585 8,597 8,639 8,705 Noninsured nonmember Total nonmember 33 Loans and investments, gross 1133,,667744 1155,,990055 1188,,881199 2222,,994400 119977,,331199 220088,,773300 222255,,990099 224444,,883399 Loans: 34 Gross 11,283 13,209 16,336 20,865 129,892 137,712 152,090 168,551 35 Net ((22)) 1133,,009922 16,209 2200,,667799 ((22)) 113322,,775511 146,828 116622,,668877 Investments: 36 U.S. Treasury securities 490 472 1,054 993 22,599 25,407 27,939 28,917 37 Other 1,902 2,223 1,428 1,081 44,829 45,610 45,879 47,370 38 Cash assets 5,359 4,362 6,496 8,330 25,137 22,524 27,144 28,494 39 Total assets/total liabilities 20,544 21,271 26,790 33,390 231,418 235,439 257,897 279,143 40 Deposits 11,323 11,735 1133,,332255 1144,,665588 119955,,553333 220022,,338800 221199,,446666 233,177 Demand: 41 U.S. Govt 6 4 4 8 859 899 921 822 42 Interbank 1,552 1,006 1,277 1,504 3,241 2,346 2,901 3,025 43 Other 2,308 22,,555555 3,236 33,,558888 6677,,886688 6666,,118844 7722,,888855 7744,,220033 Time: 44 Interbank 1,291 1,292 1,041 1,164 2,010 2,092 1,997 2,152 45 Other 6,167 6,876 7,766 8,392 121,556 130,857 140,760 152,974 46 Borrowings 3,449 3,372 4,842 7,056 6,577 6,711 8,413 11,212 47 Total capital accounts 651 663 818 893 17,051 17,359 18,361 19,813 48 MEMO: Number of banks 261 270 275 293 8,846 8,867 8,914 8,998 1 Includes items not shown separately. For Note see Table 1.24. 2 Not available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic NonfinancialS tatistics • February 1978 1.26 COMMERCIAL BANK ASSETS AND LIABILITIES Detailed Balance Sheet, June 30, 1977 Asset and liability items are shown in millions of dollars. Member banks1 All Insured Asset account commercial commercial Large banks banks banks Total All other2 New York City of Other City Chicago large 1 Cash bank balances, i tems in process 139,055 130,725 110,560 32,752 4,674 39,078 34,056 2 Currency and coin 12,729 12,718 9,347 895 171 3,073 5,209 3 Reserves with F.R. Banks 25,536 25,536 25,536 4,452 1,997 9,261 9,826 4 Demand balances with banks in United States 36,269 30,589 18,153 6,669 179 3,341 7,964 5 Other balances with banks in United States... 6,128 4,840 2,813 27 17 1,028 1,740 6 Balances with banks in foreign countries 5,018 3,800 3,393 335 157 1,875 1,026 7 Cash items in process of collection 53,375 53,242 51,318 20,374 2,153 20,500 8,291 8 Total securities held—Book value 254,052 252,016 178,050 22,989 8,520 56,518 90,023 9 U.S. Treasury 101,560 100,566 72,642 12,098 3,898 23,810 32,837 10 Other U.S. Govt, agencies 35,827 35,250 21,846 1,406 477 5,676 14,287 11 States and political subdivisions 110,106 109,875 79,216 9,032 3,943 25,822 40,419 12 All other securities 6,452 6,224 4,273 454 202 1,186 2,432 13 Unclassified total 108 101 73 25 48 14 Trading-account securities 7,055 7,049 6,916 3,572 617 2,465 262 15 U.S. Treasury 3,797 3,797 3,725 2,347 412 877 90 16 Other U.S. Govt, agencies 953 953 952 479 38 410 25 17 States and political subdivisions 1,764 1,764 1,733 561 123 951 98 18 All other trading acct. securities 433 433 432 185 44 202 2 19 Unclassified 108 101 73 25 48 20 Bank investment portfolios 246,998 244,967 171,135 19,417 7,903 54,053 89,761 21 U.S. Treasury 97,762 96,769 68,917 9,751 3,486 22,933 32,747 22 Other U.S. Govt, agencies 34,874 34,297 20,894 927 439 5,266 14,263 23 States and political subdivisions 108,342 108,110 77,483 8,471 3,821 24,870 40,321 24 All other portfolio securities 6,020 5,791 3,841 269 158 984 2,430 25 F.R. stock and corporate stock 1,618 1,580 1,332 287 100 499 446 26 Federal funds sold and securities resale agreement. 44,318 40,759 32,986 2,962 1,431 18,636 ,958 27 Commercial banks 37,469 34,098 26,504 1,509 1,255 14,502 ',239 28 Brokers and dealers 4,342 4,304 4,219 735 137 2,728 618 29 Others 2,507 2,358 2,264 718 40 1,406 101 30 Other loans, gross 577,689 560,382 420,469 71,053 21,812 156,134 171,469 31 LESS: Unearned income on loans 13,610 13,558 9,182 579 85 2,980 5,538 32 Reserves for loan loss 6,553 6,420 5,119 1,213 324 1,866 1,716 33 Other loans, net 557,525 540,405 406,169 69,261 21,403 151,289 164,216 Other loans, gross, by category 34 Real estate loans 161,276 161,047 111,520 9,218 2,017 40,619 59,666 35 Construction and land development 18,405 18,392 14,135 2,412 437 6,761 4.525 36 Secured by farmland 7,358 7,341 3,129 18 9 302 2,800 37 Secured by residential 91,349 91,214 64,398 4,466 1,016 23,733 35,182 38 /- to 4-family residences 86,839 86,709 61,150 4,045 920 22,541 33,644 39 FHA-insured or VA-guaranteed 7,786 7,738 6,710 582 46 3,557 2.526 40 Conventional 79,053 78,971 54,440 3,463 874 18,984 31,118 41 Multifamily residences 4,511 4,505 3,248 422 96 1,192 1,539 42 FHA-insured 353 352 281 108 16 81 76 43 Conventional 4,158 4,153 2,967 314 80 1,110 1,463 44 Secured by other properties 44,164 44,100 29,858 2,322 555 9,823 17,158 45 Loans to financial institutions 40,151 33,371 31,419 10,625 4,179 13,592 3,024 46 To REIT's and mortgage companies 9,247 9,234 8,879 2,870 1,128 4,196 684 47 To domestic commercial banks 4,573 2,470 1,911 497 116 1,008 290 48 To banks in foreign countries 10,383 6,165 6,014 2,624 284 2,501 605 49 To other depository institutions 1,257 1,241 1,126 73 27 822 204 50 To other financial institutions 14,691 14,261 13,490 4,561 2,624 5,065 1,240 51 Loans to security brokers and dealers 10,436 10,180 9,943 5,664 1,303 2,734 241 52 Other loans to purch./carry securities 4,142 4,135 3,425 374 353 1,760 939 53 Loans to farmers—except real estate 25,642 25,620 14,157 153 126 3,385 10,493 54 Commercial and industrial loans 192,715 183,767 149,361 36,383 10,819 57,632 44,527 55 Loans to individuals 127,701 127,590 88,149 6,083 1,860 30,887 49,319 56 Instalment loans 101,424 101,355 69,803 4,481 1,110 24,797 39,415 57 Passenger automobiles 44,707 44,694 28,632 845 142 8,342 19,303 58 Residential-repair/modernize 6,640 6,639 4,447 291 55 1,586 2,516 59 Credit cards and related plans 14,936 14,929 13,098 1,769 731 7,156 3,441 60 Charge-account credit cards 11,576 11,576 10,330 1,186 695 5,810 2,639 61 Check and revolving credit plans 3,360 3,353 2,768 584 36 1,346 803 62 Other retail consumer goods 16,601 16,598 11,307 354 64 4,040 6,849 63 Mobile homes 8,836 8,836 6,224 184 26 2,233 3,781 64 Other 7,765 7,762 5,082 170 38 1,807 3,068 65 Other instalment loans 18,539 18,496 12,319 1,221 118 3,674 7,306 66 Single-payment loans to individuals 26,277 26,235 18,346 1,603 750 6,090 9,904 67 All other loans 15,624 14,672 12,495 2,553 1,156 5,526 3,260 68 Total loans and securities, net 857,514 834,759 618,538 95,499 31,455 226,941 264,642 69 Direct lease financing 5,169 5,168 4,845 879 131 3,003 832 70 Fixed assets—Buildings, furniture, real estate.... 20,360 20,258 15,100 2,071 689 5,867 6,473 71 Investment in unconsolidated subsidiaries.... 2,634 2,591 2,555 1,193 212 1,062 88 72 Customer acceptances outstanding 12,749 11,882 11,457 5,692 749 4,710 306 73 Other assets 36,862 35,568 32,144 13,709 1,362 12,718 4,355 74 Total assets 1,074,343 1,040,952 795,199 151,796 39,272 293,378 310,752 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 banks1 AAAllllll IIInnnsssuuurrreeeddd NNNooonnn--- LLLiiiaaabbbiiillliiitttyyy ooorrr cccaaapppiiitttaaalll aaaccccccooouuunnnttt cccooommmmmmeeerrrccciiiaaalll cccooommmmmmeeerrrccciiiaaalll Large banks mmmeeemmmbbbeeerrr bbbaaannnkkksss bbbaaannnkkksss bbbaaannnkkksss111 TToottaall AAllll ootthheerr 22 New York City of Other City Chicago large 337,428 332,327 259,378 64,350 10,338 90,634 94,056 78,051 76 Mutual savings banks 1,621 1,443 1,257 684 2 270 301 364 77 Other individuals, partnerships, and corporations 252,889 251,580 189,126 32,633 7,349 71,011 7788,,113344 63,763 78 U.S. Govt 2,826 2,817 2,004 136 31 710 1,126 822 79 States and political subdivisions 17,825 17,752 12,328 636 173 3,794 7,725 5,497 80 Foreign governments, central banks, etc 1,908 1,454 1,382 1,115 17 225 25 527 8! Commercial banks in United States 37,537 36,909 35,716 19,236 2,289 10,522 3,670 1,821 82 Banks in foreign countries 7,311 6,613 6,471 5,157 159 1,021 134 840 83 Certified and officers' checks, etc 15,511 13,759 11,094 4,754 318 3,081 2,941 4,417 84 Time deposits 308,831 299,840 217,098 32,405 12,921 74,985 96,787 91,733 134 134 108 10 98 26 86 Mutual savings banks 363 346 332 136 67 100 30 30 87 Other individuals, partnerships, and corpora- 242,952 237,078 170,322 24,043 9,454 57,628 79,197 7722,,663300 88 U.S. Govt 752 752 602 68 46 272 216 150 89 States and political subdivisions 46,541 46,212 31,715 1,372 981 13,134 16,230 14,826 90 Foreign governments, central banks, etc 9,590 7,967 7,635 4,254 1,520 1,797 65 1,955 91 Commercial banks in United States 6,358 5,770 4,934 1,694 736 1,774 730 1,423 92 Banks in foreign countries 2,142 1,582 1,449 838 118 270 223 693 215,772 215,206 152,378 11,746 3,145 56,133 81,353 63,394 94 Individuals and nonprofit organizations 200,240 199,697 141.252 10,714 2,880 52.234 75,425 58,988 95 Corporations and other profit organizations.. 10,072 10,056 7,289 603 219 3,076 3,391 2,783 96 U.S. Government 61 61 52 4 25 24 9 97 States and political subdivisions 5,331 5,325 3,725 394 46 782 2,504 1,606 98 Allother 67 67 60 32 1 17 9 7 99 Total deposits 862,031 847,373 628,853 108,501 26,405 221,751 272,196 233,178 100 Federal funds purchased and securities sold under agreements to repurchase 79,167 75,397 7711,,554477 17,045 8,277 36,363 9,862 77,,662200 42,487 39,624 37,861 7,203 5,437 20,513 4,707 4,626 102 Brokers and dealers 9,397 9,374 8,979 1,639 1,454 4,973 914 418 103 - Others 27,283 26,399 24,707 8,203 1,386 10,877 4,241 2,576 104 Other liabilities for borrowed money 9,047 5,761 5,455 1,914 45 3,030 467 3,592 105 Mortgage indebtedness 807 804 572 57 16 297 201 235 106 Bank acceptances outstanding 13,407 12,536 12,111 6,337 750 4,717 307 1,296 107 Other liabilities 28,093 18,248 15,854 5,256 1,000 6,256 3,342 12,239 108 Total liabilities 992,552 960,118 734,392 139,110 36,493 272,415 286,374 258,160 109 Subordinated notes and debentures 5,393 5,330 4,223 1,118 82 1,881 1,142 1,170 110 Equity capital 76,397 75,503 56,584 11,568 2,698 19,082 23,236 19,813 j j j Preferred stock 77 71 28 2 26 48 112 Common stock 16,719 16,623 12,084 2.496 570 3,850 5,167 4,635 113 Surplus 30,211 29,728 21,794 4,290 1,298 7,839 8,367 8,418 27,608 27,365 21,492 4,744 776 6,994 8,978 6,116 115 Other capital reserves 1,782 1,717 1,187 38 53 396 699 595 116 Total liabilities and equity capital 1,074,343 1,040,952 795,199 151,796 39,272 293,378 310,752 279,144 MEMO ITEMS: 117 Demand deposits adjusted 3 243,690 239,359 170,340 24,604 5,866 58,901 80,969 73,350 Average for last 15 or 30 days: 118 Cash and due from bank 132,469 126,370 107,671 2299,,888877 44,,776644 40,094 3322,,992277 2244,,779988 119 Federal funds sold and securities purchased under agreements to resell 47,876 42,907 33,605 33,,666677 11,,444499 16,759 1111,,773300 1144,,227711 120 Total loans 559,178 542,036 407,556 69,936 21,456 151,616 164,548 151,621 121 Time deposits of $ 100,000 or more 139,145 132.096 107.972 26,712 10,328 43,044 27,888 31,174 845,218 830,008 612,859 98,375 25,769 217,875 270,841 232,359 123 Federal funds purchased and securities sold 84,385 80,374 76,761 20,960 9,219 36,604 99,,997777 7,624 124 Other liabilities for borrowed money 9,553 5,961 5,666 2,172 79 2,980 436 3,887 125 Standby letters of credit outstanding 14,499 13,705 12,902 7,705 1,037 3,302 858 1,598 126 Time deposits of $100,000 or more 140,410 133,981 109,615 26,547 10,360 44,386 28,322 30,795 115,589 111,351 90,425 22,011 8,703 35,781 23,930 25,164 24,820 22,630 19,190 4,536 1,657 8,605 4,392 5,630 14,718 14,425 5,720 12 9 154 5,545 8,998 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- Sta 2 t e F s i . gures for one large national bank have been estiBm ated due to a a ti s o n so s o o n f a v s a l t u h a e t y i o b n e c r o e m se e r v a es v . a i H la o b l l d e i . n gs by type of security will be reported merger. Back data in lesser detail were shown in previous BULLETINS. Details 3 Demand deposits adjusted are demand deposits other than domestic may not add to totals because of rounding. commercial interbank and U.S. Govt., less cash items reported as in process of collection. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • February 1978 1.27 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1977 1978 Account Dec. 14 Dec. 21 Dec. 28 Jan.4 Jan.1 Jan.18 Jan. 25* 1 Total loans and investments 448,160 451,359 452,697 453,160 452,083 444,094 442,258 Loans: 2 Federal funds sold1 27,699 27,004 27,902 27,991 29,645 25,977 24,988 3 To commercial banks 19,305 20,857 22,039 22,882 20,841 20,637 18,059 To brokers and dealers involving— 4 U.S. Treasury securities 5,352 3,163 2,845 3,101 5,383 2,969 4,359 5 Other securities 705 782 839 654 864 612 581 6 To others 2,337 2,202 2,179 1,354 2,557 1,759 1,989 7 Other, gross 315,986 319,644 320,649 322,462 320,146 316,981 316,622 8 Commercial and industrial 123,942 125,567 125,661 125,782 124,750 124,135 123,955 9 Agricultural 4,649 4,668 4,705 4,723 4,673 4,657 4,639 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities 2,122 1,598 949 1,767 3,031 1,285 1,802 11 Other securities 9,288 9,731 9,956 9,127 8,441 9,029 8,551 To others : 12 U.S. Treasury securities 105 103 102 107 106 107 102 13 Other securities 2,606 2,615 2,623 2,618 2,634 2,639 2,643 To nonbank financial institutions: 14 Personal and sales finance cos., etc 7,742 8,167 8,116 7,750 7,804 7,371 7,242 15 Other 15,673 15,561 15,742 16,155 15,605 15,169 15,138 16 Real estate 73,628 73,936 74,137 74,459 74,805 74,937 75,076 To commercial banks: 17 Domestic 2,213 2,576 2,603 2,992 2,846 2,375 2,250 18 Foreign 6,068 6,215 6,328 6,637 6,270 5,933 6,041 19 Consumer instalment 45,721 45,995 46,434 46,651 46,655 46,732 46,750 20 Foreign governments, official institutions, etc., 1,444 1,544 1,516 1,608 1,569 1,566 1,631 21 All other loans 20,785 21,368 21,777 22,086 20,957 21,046 20,802 22 LESS : Loan loss reserve and unearned income on loans 9,544 9,533 9,427 9,361 9,395 9,412 9,429 23 Other loans, net 306,442 310,111 311,222 313,101 310,751 307,569 307,193 Investments: 24 U.S. Treasury securities 46,535 46,381 45,969 45,964 45,032 44,259 43,584 25 Bills 8,954 9,067 8,853 8,422 7,689 7,111 6,780 Notes and bonds, by maturity: 26 Within 1 year 8,339 8,406 8,553 9,024 9,030 9,031 8,810 27 1 to 5 years 25,290 24,976 24,675 24,624 24,273 24,055 23,888 28 After 5 years 3,952 3,932 3,888 3,894 4,040 4,062 4,106 29 Other securities 67,484 67,863 67,604 66,104 66,655 66,289 66,493 Obligations of States and political subdivisions: 30 Tax warrants, short-term notes, and bills 8,900 8,799 8,725 7,834 8,026 7,757 7,667 31 Allother 43,067 43,088 43,143 42,913 43,315 43,135 43,370 Other bonds, corporate stocks, and securities: 32 Certificates of participation2 2,342 2,452 2,491 2,678 2,719 2,693 2,712 33 All other, including corporate stocks 13,175 13,524 13,245 12,679 12,595 12,704 12,744 34 Cash items in process of collection 43,962 43,610 46,738 51,631 40,780 41,591 38,653 35 Reserves with F.R. Banks 19,029 21,074 25,284 20,443 15,808 23,590 19,995 36 Currency and coin 6,558 6,586 7,282 6,841 6,829 6,538 6,449 37 Balances with domestic banks 15,062 17,168 16,229 16,461 14,122 14,498 13,730 38 Investments in subsidiaries not consolidated 2,867 2,871 2,896 2,952 2,971 3,002 3,037 39 Other assets 58,177 57,690 58,445 60,190 60,450 60,628 60,967 40 Total assets/total liabilities 593,815 600,358 609,571 611,678 593,043 593,941 585,089 Deposits: 41 Demand deposits 190,687 194,681 199,851 205,515 186,285 187,569 179,950 42 Individuals, partnerships, and corporations., 138,502 138,604 143,166 146,604 136,019 135,681 130,281 43 States and political subdivisions 6,136 6,279 6,333 6,888 6,010 6,362 6,114 44 U.S. Govt 1,327 3,304 3,738 1,679 1,712 2,975 2,264 Domestic interbank: 45 Commercial 27,794 29,433 29,273 33,238 26,403 26,204 25,153 46 Mutual savings 783 805 860 1,155 993 905 883 Foreign: 47 Governments, official institutions, etc 1,280 1,506 1,913 1,363 1,191 1,185 1,925 48 Commercial banks 6,927 6,952 7,630 7,115 6,500 6,241 6,187 49 Certified and officers' checks 7,938 7,798 6,938 7,473 7,457 8,016 7,143 50 Time and savings deposits3 249,649 251,152 251,776 252,158 251,956 251,893 252,355 51 Savings4 92,004 91,765 92,090 92,940 93,150 92,911 92,749 52 Time: 157,645 159,387 159,686 159,218 158,806 158,982 159,606 5 3 Individuals, partnerships, and corporations 119,772 120,735 121,159 120,814 120,254 120,464 120,899 54 States and political subdivisions 23,067 23,478 23,360 23,312 23,601 23,714 23,866 55 Domestic interbank 5,541 5,689 5,792 5,606 5,329 5,247 5,203 56 Foreign govts., official institutions, etc 7,714 7,993 7,889 7,947 8,091 8,061 8,079 57 Federal funds purchased, etc.5 76,798 77,887 80,358 77,365 78,807 78,324 74,743 Borrowings from : 58 F.R. Banks 1,051 830 1,540 862 650 392 2,098 59 Others 5,533 5,378 5,422 5,100 4,989 4,905 5,010 60 Other liabilities, etc.* 25,679 26,052 26,057 25,914 25,591 26,142 25,958 61 Total equity capital and subordinated notes/debentures7 44,418 44,428 44,567 44,764 44,765 44,716 44,975 1 Includes securities purchased under agreements to resell. 6 Includes minority interest in consolidated subsidiaries and deferred 2 Federal agencies only. tax portion of reserves for loans. 3 Includes time deposits of U.S. Govt, and of foreign banks, which are 7 Includes reserves for securities and contingency portion of reserves not shown separately. for loans. 4 For amounts of these deposits by ownership categories, see Table 1.30. • See p. A-23. 5 Includes securities sold under agreements to repurchase. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A21 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1977 1978 Account Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25* Total loans and investments. 95,639 97,884 98,160 97,936 96,265 93,212 92,371 Loans: Federal funds sold 1 3,323 4,424 5,198 5,060 4,885 4,111 4,274 To commercial banks 1,676 2,197 2,981 3,835 3,119 2,896 2,312 To brokers and dealers involving— U.S. Treasury securities 1,117 ,241 ,227 1,049 ,106 911 1,401 Other securities To others 530 986 990 176 660 304 561 71,925 73,465 73,139 73,088 71,278 69,489 69,017 Other, gross Commercial and industrial 35,750 36,534 36,389 35,816 35,152 34,780 34,068 Agricultural 169 171 168 166 168 172 167 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities 1,885 1.389 799 1,585 2,327 1,142 1,661 11 Other securities 5,142 5,311 5,730 4,952 4,586 4,914 4,433 To others: 12 U.S. Treasury securities 21 21 21 21 21 21 21 13 Other securities 396 390 380 390 390 378 377 To nonbank financial institutions: 14 Personal and sales finance cos., etc 2,794 3,030 2,929 2,434 2,621 2,364 2,283 15 Other 4,955 5,011 5,077 5,174 5,054 4,995 5,068 16 Real estate 8,800 8,835 8,812 9,042 8,995 8,994 9,011 To commercial banks : 17 Domestic 585 885 812 1,214 723 642 627 18 Foreign ,822 3,017 2,965 3,221 2,643 2,501 2,660 19 Consumer instalment ,384 4.390 4,433 4,415 4,409 4,427 4,435 20 Foreign governments, official institutions, etc. 283 356 290 352 277 242 266 21 All other loans ,939 4,125 4,334 4,306 3,912 3,917 3,940 22 LESS : Loan loss reserve and unearned income on loans 1,746 1,733 1,672 1,648 1,656 1,657 1,647 23 Other loans, net 70,179 71,732 71,467 71,440 69,622 67,832 67,370 Investments: U.S. Treasury securities 11,207 10,761 10,661 11,102 11,015 10,740 10,208 Bills 2,490 2,218 2,178 2,324 2,565 2,362 2,128 Notes and bonds, by maturity: Within 1 year 1,433 1,511 1,536 1,895 1,917 1,863 1,700 1 to 5 years 6,503 6,232 6,203 6,131 5,671 5,679 5,478 After 5 years 781 800 744 752 862 836 902 Other securities 10,930 10,967 10,834 10,334 10,743 10,529 10,519 Obligations of States and political subdivisions: Tax warrants, short-term notes, and bills. 2,142 2,147 2,132 1,781 1,915 1,841 1,790 All other 6,638 6,607 6,589 6,561 6,865 6,757 6,802 Other bonds, corporate stocks, and securities: Certificates of participation2 190 190 190 424 425 424 425 All other, including corporate stocks 1,960 2,023 1,923 1,568 1,538 1,507 1,502 34 Cash items in process of collection 15,034 13,811 15,216 15,350 13,971 14,283 13,938 35 Reserves with F.R. Banks 4,438 5,236 6,017 4,200 3,293 6,543 5,262 36 Currency and coin 974 983 1,045 1,034 1,006 968 952 37 Balances with domestic banks 7,446 8,638 7,825 7,084 6,322 6,698 6,806 38 Investments in subsidiaries not consolidated. 1,424 1,424 1,427 1,463 1,489 1,492 1,508 39 Other assets 21,792 20,458 21,295 22,517 22,877 22,581 22,869 40 Total assets/total liabilities. 146,747 148,434 150,985 149,584 145,223 145,777 143,706 Deposits: Demand deposits 54,103 55,686 57,799 56,880 51,521 52,644 51,230 Individuals, partnerships, and corporations.. 28,627 29,008 31,242 31,730 28,341 28,829 27,531 S U t . a S t . e s G a o n v d t political subdivisions 4 1 2 0 7 3 5 5 8 6 6 2 5 59 8 5 4 511866 2 5 8 0 0 9 5 5 4 9 7 7 4 6 3 1 1 1 Domestic interbank: Commercial 14,000 14,858 14,229 14,462 12,612 12,794 12,489 Mutual savings 408 418 459 648 569 494 486 Foreign : Governments, official institutions, etc 984 1,185 1,625 1,091 931 935 1,681 Commercial banks 5,484 5,293 6,010 5,437 4,869 4,580 4,753 Certified and officers' checks 4,070 3,776 3,055 2,810 3,410 3,868 3,248 Time and savings deposits3 44,505 44,623 44,505 44,452 44,695 44,785 45,168 Savings4 9,924 9,904 9,929 10,018 10,057 10,015 10,004 Time: 34,581 34,719 34,576 34,434 34,638 34,770 35,164 Individuals, partnerships, and corporations 25,933 26,029 25,920 25,813 25,853 25,888 26,230 States and political subdivisions 1,691 1,660 1,650 1,565 1,564 1,606 1,575 Domestic interbank 1,652 1.653 1,679 1,642 1,703 1,711 1,700 Foreign govts., official institutions, etc 4,572 4.654 4,611 4,651 4,766 4,808 4,836 57 Federal funds purchased, etc. 5 21,789 21,920 22,320 21,301 22,470 21,743 18,972 Borrowings from: 58 F.R. Banks 654 350 225 505 190 1,478 59 Others 2,507 2,386 2,344 2,206 2,321 2,457 2,467 60 Other liabilities, etc.® 10,459 10,709 11,014 11,414 11,157 11,298 11,534 61 Total equity capital and subordinated notes/debentures7 12,730 12,760 12,778 12,826 12,869 12,850 12,857 * Includes securities purchased under agreements to resell. 6 Includes minority interest in consolidated subsidiaries and deferred 2 Federal agencies only. tax portion of reserves for ioans. 3 Includes time deposits of U.S. Govt, and of foreign banks, which 7 Includes reserves for securities and contingency portion of reserves are not shown separately.' for loans. 4 For amounts of these deposits by ownership categories, see Table 1.30. A See p. A-23. 5 Includes securities sold under agreements to repurchase. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic NonfinancialS tatistics • February 1978 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS OUTSIDE NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1977 1978 Account Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25p 1 Total loans and investments 352,521 353,475 354,537 355,224 355,818 350,882 349,887 Loans: 2 Federal funds sold1 24,376 22,580 22,704 22,931 24,760 21,866 20,714 3 To commercial banks 17,629 18,660 19,058 19,047 17,722 17,741 15,747 To brokers and dealers involving— 4 U.S. Treasury securities 4,235 1,922 1,618 2,052 A,211 2,058 2,958 5 Other securities 705 782 839 654 864 612 581 6 To others 1,807 1,216 1,189 1,178 1,897 1,455 1,428 7 Other, gross 244,061 246,179 247,510 249,374 248,868 247,492 247,605 8 Commercial and industrial 88,192 89,033 89,272 89,966 89,598 89,355 89,887 9 Agricultural 4,480 4,497 4,537 4,557 4,505 4,485 4,472 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities 237 209 150 182 704 143 141 11 Other securities 4,146 4,420 4,226 4,175 3,855 4,115 4,118 To others: 12 U.S. Treasury securities 84 82 81 86 85 86 81 13 Other securities 2,210 2,225 2,243 2,228 2,244 2,261 2,266 To nonbank financial institutions: 14 Personal and sales finance cos., etc 4,948 5,137 5,187 5,316 5,183 5,007 4,959 15 Other 10,718 10,550 10,665 10,981 10,551 10,174 10,070 16 Real estate 64,828 65,101 65,325 65,417 65,810 65,943 66,065 To commercial banks: 17 Domestic 1,628 1,691 1,791 1,778 2,123 1,733 1,623 18 Foreign 3,246 3,198 3,363 3,416 3,627 3,432 3,381 19 Consumer instalment 41,337 41,605 42,001 42,236 42,246 42,305 42,315 20 Foreign governments, official institutions, etc 1,161 1,188 1,226 1,256 1,292 1,324 1,365 21 All other loans 16,846 17,243 17,443 17,780 17,045 17,129 16,862 22 LESS : Loan reserve and unearned income on loans. 7,798 7,800 7,755 7,713 7,739 7,755 7,782 23 Other loans, net 236,263 238,379 239,755 241,661 241,129 239,737 239,823 Investments: 24 U.S. Treasury securities 35,328 35,620 35,308 34,862 34,017 33,519 33,376 25 Bills 6,464 6,849 6,675 6,098 5,124 4,749 4,652 Notes and bonds, by maturity: 26 Within 1 year 6,906 6,895 7,017 7,129 7,113 7,168 7,110 27 1 to 5 years 18,787 18,744 18,472 18,493 18,602 18,376 18,410 28 After 5 years 3,171 3,132 3,144 3,142 3,178 3,226 3,204 29 Other securities 56,554 56,896 56,770 55,770 55,912 55,760 55,974 Obligations of States and political subdivisions: 30 Tax warrants, short-term notes, and bills 6,758 6,652 6,593 6,053 6,111 5,916 5,877 31 All other 36,429 36,481 36,554 36,352 36,450 36,378 36,568 Other bonds, corporate stocks, and securities: 32 Certificates of participation2 2,152 2,262 2,301 2,254 2,294 2,269 2,287 33 All other, including corporate stocks 11,215 11,501 11,322 11,111 11,057 11,197 11,242 34 Cash items in process of collection 28,9?8 29.799 31,522 36,281 26,809 27,308 24,715 35 Reserves with F.R. Banks 14,591 15,838 19,267 16,243 12,515 17,047 14,733 36 Currency and coin 5,584 5,603 6,237 5,807 5,823 5,570 5,497 37 Balances with domestic banks 7,616 8,530 8,404 9,377 7,800 7,800 6,924 38 Investments in subsidiaries not consolidated 1,443 1,447 1,469 1,489 1,482 1,510 1,529 39 Other assets 36,385 37,232 37,150 37,673 37,573 38,047 38,098 40 Total assets/total liabilities 447,068 451,924 458,586 462,094 447,820 448,164 441,383 Deposits: 41 Demand deposits 136,584 138,995 142,052 148,635 134,764 134,925 128,720 42 Individuals, partnerships, and corporations 109,875 109,596 111,924 114,874 107,678 106,852 102,750 43 States and political subdivisions 5,709 5,693 5,749 6,372 5,501 5,765 5,503 44 U.S. Govt 1,224 2,742 3,143 1,493 1,432 2,428 1,833 Domestic interbank: 45 Commercial 13,794 14,575 15,044 18,776 13,791 13,410 12,664 46 Mutual savings 375 387 401 507 424 411 397 Foreign: 47 Governments, official institutions, etc 296 321 288 272 260 250 244 48 Commercial banks 1,443 1,659 1,620 1,678 1,631 1,661 1,434 49 Certified and officers' checks 3,868 4,022 3,883 4,663 4,047 4,148 3,895 50 Time and savings deposits* 205,144 206,529 207,271 207,706 207,261 207,108 207,187 51 Savings4 82,080 81,861 82,161 82,922 83,093 82,896 82,745 52 Time: 123,064 124,668 125,110 124,784 124,168 124,212 124,442 53 Individuals, partnerships, and corporations 93,839 94,706 95,239 95,001 94,401 94,576 94,669 54 States and political subdivisions 21,376 21,818 21,710 21,747 22,037 22,108 22,291 55 Domestic interbank 3,889 4,036 4,113 3,964 3,626 3,536 3,503 56 Foreign govts., official institutions, etc 3,142 3,339 3,278 3,296 3,325 3,253 3,243 57 Federal funds purchased, etc.5 55,009 55,967 58,038 56,064 56,337 56,581 55,771 Borrowings from: 58 F. R. Banks 397 480 1,315 357 460 392 620 59 Others 3,026 2,942 3,078 2,894 2,668 2,444 2,543 60 Other liabilities, etc.6 15,220 15,343 15,043 14,500 14,434 14,844 14,424 61 Total equity capital and subordinated notes/debentures 7 - 31,688 31,668 31,789 31,938 31,896 31,866 32,118 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 1978 Account and bank group Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan.18 Jan. 25f Total loans (gross) and investments, adjusted1 1 Large banks 436,186 437,459 437,482 436,647 437,791 430,494 431,378 2 New York City banks 95,124 96,535 96,039 94,535 94,079 91,331 91,079 3 Banks outside New York City 341,062 340,924 341,443 342,112 343,712 339,163 340,299 Total loans (gross), adjusted 4 Large banks 322,167 323,215 323,909 324,579 326,104 319,946 321,301 5 New York City banks 72,987 74,807 74,544 73,099 72,321 70,062 70,352 6 Banks outside New York City 249,180 248,408 249,365 251,480 253,783 249,884 250,949 Demand deposits, adjusted2 7 Large banks 117,604 118,334 120,102 118,967 117,390 116,799 113,8c 8 New York City banks 24,966 26,455 27,759 26,882 24,658 25,020 24,372 9 Banks outside New York City 92,638 91,879 92,343 92,085 92,732 91,779 89,508 Large negotiable time CD's included in time and savings deposits3 Total: 10 Large banks 75,879 77,157 77,589 77,085 76,079 75,852 76,170 11 New York City 23,673 23,914 23,802 23,632 23,721 23,824 24,133 12 Banks outside New York City 52,206 53,243 53,787 53,453 52,358 52,028 52,037 Issued to IPC's: 13 Large banks 51,525 52,448 52,871 52,514 51,504 51,350 51,610 14 New York City Banks 16,498 16,653 16,568 16,508 16,430 16,440 16,751 15 Banks outside New York City 35,027 35,795 36,303 36,006 35,074 34,910 34,859 Issued to others: 16 Large banks 24,354 24,709 24,718 24,571 24,575 24,502 24,560 17 New York City banks 7,175 7,261 7,234 7,124 7,291 7,384 ' 7,382 18 Banks outside New York City 17,179 17,448 17,484 17,447 17,284 17,118 17,178 AH other large time deposits4 Total: 19 Large banks 29,668 30,172 30,028 29,903 30,455 30,753 31,006 20 New York City banks 5,984 5,905 5,866 5,944 6,071 6,132 6,193 21 Banks outside New York City 23,684 24,267 24,162 23,959 24,384 24,621 24,813 Issued to IPC's: 22 Large banks 16,876 16,892 16,867 16,733 17,156 17,436 17,602 23 New York City banks 4,646 4,598 4,563 4,571 4,691 4,755 4,761 24 Banks outside New York City 12,230 12,294 12,304 12,162 12,465 12,681 12,841 Issued to others: 25 Large banks 12,792 13,280 13,161 13,170 13,299 13,317 13,404 26 New York City banks 1,338 1,307 1,303 1,373 1,380 1,377 1,432 27 Banks outside New York City 11,454 11,973 11,858 11,797 11,919 11,940 11,972 Savings deposits, by ownership category Individuals and nonprofit organizations: 28 Large banks 85,406 85,296 85,635 86,482 86,620 86,451 86,276 29 New York City banks 9,194 9,111 9,223 9,297 9,321 9,283 9,244 30 Banks outside New York City 76,212 76,119 76,412 77,185 77,299 77,168 77,032 Partnerships and corporations for profit:5 31 Large banks 5,193 5,104 5,097 4,997 4,988 4,950 4,966 32 New York City banks 515 510 510 502 500 491 489 33 Banks outside New York City 4,678 4,594 4,587 4,495 4,488 4,459 4,477 Domestic governmental units: 3 3 4 5 Lar N g e e w b Y an o k r s k City banks 1,3 2 8 0 0 5 1,3 1 3 9 7 9 1,3 1 3 8 9 6 1,4 2 3 0 8 7 1,5 2 2 2 0 2 1,4 2 8 2 4 1 1,4 2 7 5 7 4 36 Banks outside New York City 1,175 1,138 1,153 1,231 1,298 1,257 1,223 All other:6 37 Large banks 25 28 19 23 22 26 30 38 New York City banks 10 18 10 12 14 14 11 39 Banks outside New York City 15 10 9 11 12 13 Gross liabilities of banks to their foreign branches 40 Large banks 4,929 5,058 6,014 6,375 5,491 5,414 5.292 41 New York City banks 3,324 3,489 4,013 4,176 3,595 3,502 3,999 42 Banks outside New York City 1,605 1,569 2,001 2,199 1,896 1,912 1.293 Loans sold outright to selected institutions by all large banks7 43 Commercial and industrial 3,172 ,146 3,260 3,172 3,159 3,063 3,074 44 Real estate 243 223 224 219 224 236 236 45 All other 1,155 ,180 1,164 1,184 1,167 1,168 1,161 1 Exclusive of loans and Federal funds transactions with domestic 7 To bank's own foreign branches, nonconsolidated nonbank afcommercial banks. filiates of the bank, the bank's holding company (if not a bank), and 2 All demand deposits except U.S. Govt, and domestic commercial nonconsolidated nonbank subsidiaries of the holding company. banks, less cash items in process of collection. • These amounts represent accumulated adjustments originally made 3 Certificates of deposit (CD's) issued in denominations of $100,000 or to offset the cumulative effects of mergers. A "positive" adjustment bank more. should be added to, and a "negative" adjustment bank subtracted from, 4 All other time deposits issued in denominations of $100,000 or more outstanding data fop-any date in the year to establish comparability with not included in large negotiable CD's). any date in the subsequent year. 5 Other than commercial banks, 6 Domestic and foreign commercial banks, and official international organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Financial Statistics • February 1978 1.31 LARGE WEEKLY REPORTING COMMERCIAL BANKS Commercial and Industrial Loans Millions of dollars Outstanding Net change during— Adjust- IInndduussttrryy ccllaassssiiffiiccaattiioonn 1977 1978 1977 1977 1978 ment bbaannkkAA Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25 Q3 Q4 Nov. Dec. Jan.f Total loans classified2 1 Total 102,000 102,814 101,879 101,301 100,992 268 4,395 707 1,527 -1,706 745 Durable goods manufacturing: 2 Primary metals 2,750 2,600 2,587 2,539 2,564 74 256 -78 392 -186 90 3 Machinery 4,567 4,504 4,546 4,641 4.662 -233 -4 -119 29 95 176 4 Transportation equipment 2,297 2,285 2,269 2,374 2; 388 -15 -89 88 -151 91 -21 5 Other fabricated metal products... 1,949 1,977 2,001 1,961 2,004 11 -26 -37 -7 55 -28 6 Other durable goods 3,501 3,399 3,385 3,391 3,357 66 -231 -137 -64 -144 -20 Nondurable goods manufacturing: 7 Food, liquor, and tobacco 3,780 3,796 3,803 3,787 3,772 128 324 146 37 -8 21 8 Textiles, apparel, and leather 3,357 3,231 3,212 3,145 3,174 166 -663 -259 -270 -183 -65 9 Petroleum refining 2,948 2,856 2,765 2,722 2,713 91 235 98 23 -235 -249 10 Chemicals and rubber 2,844 2,831 2,851 2,827 2,914 124 -37 12 -81 70 39 2,242 2,236 2,255 2,239 2,244 149 74 -30 95 2 26 12 Mining, including crude petroleum and natural gas 8,769 88,,990055 88,,881177 99,,000000 9,017 88 537 86 305 248 306 Trade: 13 Commodity dealers 1,826 2,046 2,115 2,225 2,202 -379 502 208 6 376 125 14 Other wholesale 7,299 7,825 7,796 7,608 7,773 103 439 31 187 474 390 15 Retail 6,965 6,909 7,033 6,901 7,047 311 -235 62 -510 82 96 16 Transportation 4,985 5,210 5,225 5,192 5,210 -68 17 102 -25 225 239 17 Communication 1,383 1,578 1,490 1.461 1,444 72 115 74 -15 61 22 18 Other public utilities 5,330 5,644 5,648 5,665 5,535 -512 290 -44 260 205 210 19 Construction 4,473 4,524 4,530 4,406 4,474 243 -31 74 -67 1 -39 20 Services 11,299 11,830 11,642 11,826 11,852 -270 286 124 184 553 330 21 All other domestic loans 8,341 7,652 7,703 7,492 7,448 197 419 146 225 -893 -857 22 Bankers acceptances 66,,222211 66,,007722 5,362 5,008 4,317 86 2,455 551 980 -1,904 2 23 Foreign commercial and industrial loans 4,874 4,904 4,844 4,891 4,881 -164 -238 -391 -6 7 48 MEMO ITEMS: 24 Commercial paper included in total classified loans1 115588 113333 --8855 --7755 --7733 2200 --2255 25 Total commercial and industrial loans of all large weekly reporting banks 125,661 125,782 124,750 124,135 123,955 684 5,440 1,187 2,054 -1,706 -13 1977 1978 1977 1977 1978 Adjustment Sept. 28 Oct. 26 Nov. 30 Dec. 28 Jan. 25 Q3 Q4 Nov. Dec. Jan.*3 bankA "Term" loans classified3 26 Total 46,274 46,631 46,660 46,626 48,216 -242 352 29 -34 1,590 840 Durable goods manufacturing: 27 Primary metals 1,426 1,420 1,405 1,546 1,559 38 120 -15 141 1133 46 28 Machinery 2,337 2,384 2,319 2,286 2,403 -183 -51 -65 -33 117 40 29 Transportation equipment 1,429 1,373 1,339 1,317 1,432 47 -112 -34 -22 115 20 30 Other fabricated metal products... 775 831 838 834 882 -57 59 7 -4 48 18 31 Other durable goods 1,774 1,774 1,742 1,698 1,630 52 -76 -32 -44 -68 -21 Nondurable goods manufacturing: 32 Food, liquor, and tobacco 1,400 1,441 1,442 1,498 11,,443366 -35 98 1 56 -62 -45 33 Textiles, apparel, and leather 1,154 1,173 1,142 1,058 973 4 -96 -31 -84 -85 -60 34 Petroleum refining 1,997 2,129 2,167 2,268 2,136 59 271 38 101 -132 -221 35 Chemicals and rubber 1,745 1,746 1,770 1,727 1,926 99 -18 24 -43 199 174 36 Other nondurable goods 1,094 1,094 1,119 1,147 1,198 -34 53 25 28 51 20 37 Mining, including crude petroleum and natural gas 66,,228844 6,328 6,412 6,501 66,,557700 --9911 221177 84 89 69 53 Trade: 38 Commodity dealers 194 209 234 236 229944 23 42 25 2 58 34 39 Other wholesale 1,540 1,588 1,592 1,665 1,874 57 125 4 73 209 126 40 Retail 2.400 2,495 2,583 2,448 2,481 75 48 88 -135 33 52 41 Transportation 3; 625 3,622 3.651 3.484 3,731 -24 -141 29 -167 247 168 42 Communication 786 812 835 840 901 38 54 23 5 61 37 43 Other public utilities 3,302 3,413 3,294 3,266 3,802 -469 -36 -119 -28 536 590 44 Construction 2,011 1,956 2,007 1.990 2,002 178 -21 51 -17 12 -89 5,281 5,185 5,250 5,366 5,746 -20 85 65 116 380 207 46 All other domestic loans 22,,554422 2,502 2,641 2,726 2,617 110 184 139 85 -109 -97 47 Foreign commercial and industrial loans 3,178 3,156 2,878 2,725 2,623 -109 -453 -278 -153 -102 -212 1 Reported for the last Wednesday of each month. A These amounts represent accumulated adjustments originally made 2 Includes "term" loans, shown below. to offset the cumulative effects of mergers. A "positive" adjustment bank 3 Outstanding loans with an original maturity of more than 1 year and should be added to, and a "negative" adjustment bank subtracted from, all outstanding loans granted under a formal agreement—revolving credit outstanding data for any date in the year to establish comparability with or standby—on which the original maturity of the commitment was in any date in the subsequent year. 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.. Sept. Dec. Mar. June Sept. Dec.f 11111 AAAAAllllllllll hhhhhooooollllldddddeeeeerrrrrsssss,,,,, IIIIIPPPPPCCCCC 208.0 220.1 225.0 236.9 236.1 250.1 242.3 253.8 252.7 272.9 22222 FFFFFiiiiinnnnnaaaaannnnnccccciiiiiaaaaalllll bbbbbuuuuusssssiiiiinnnnneeeeessssssssss 18.9 19.1 19.0 20.1 19.7 22.3 21.6 25.9 23.7 24.6 109.9 116.2 118.8 125.1 122.6 130.2 125.1 129.2 128.5 142.8 65.4 70.1 73.3 78.0 80.0 82.6 81.6 84.1 86.2 90.2 55555 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 1.5 2.4 2.3 2.4 2.3 2.7 2.4 2.5 2.5 2.5 66666 OOOOOttttthhhhheeeeerrrrr 12.3 12.4 11.7 11.3 11.5 12.4 11.6 12.2 11.8 12.8 At weekly reporting banks 1977 11997733 11997744 11997755 11997766 DDeecc.. DDeecc.. DDeecc.. DDeecc.. July Aug. Sept. Oct. Nov. Dec.P 77777 AAAAAllllllllll hhhhhooooollllldddddeeeeerrrrrsssss,,,,, IIIIIPPPPPCCCCC 118.1 119.7 124.4 128.5 131.0 128.0 129.2 131.4 133.0 139.2 88888 FFFFFiiiiinnnnnaaaaannnnnccccciiiiiaaaaalllll bbbbbuuuuusssssiiiiinnnnneeeeessssssssss 14.9 14.8 15.6 17.5 18.9 18.0 17.4 18.0 17.9 18.4 66.2 66.9 69.9 69.7 70.7 68.8 70.0 72.1 72.2 76.4 28.0 29.0 29.9 31.7 32.6 32.4 32.8 32.4 33.4 34.4 2.2 2.2 2.3 2.6 2.2 2.5 2.4 2.3 2.5 2.4 1111122222 OOOOOttttthhhhheeeeerrrrr 6.8 6.8 6.6 7.1 6.7 6.4 6.6 6.7 7.0 7.6 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 11997755 11997766 11997777 IInnssttrruummeenntt DDeecc.. DDeecc.. DDeecc.. June July Aug. Sept. Oct. Nov. Dec. Commercial paper (seasonally adjusted) 1111 AAAAllllllll iiiissssssssuuuueeeerrrrssss 48,145 52,623 64,571 61,327 60,323 60,320 61,391 62,591 61,995 64,571 FFFFiiiinnnnaaaannnncccciiiiaaaallll ccccoooommmmppppaaaannnniiiieeeessss::::1111 DDDDeeeeaaaalllleeeerrrr----ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr::::2222 2222 TTTToooottttaaaallll 6,220 7,271 8,899 8,196 8,261 8,167 8,493 8,547 8,493 8,899 3333 BBBBaaaannnnkkkk----rrrreeeellllaaaatttteeeedddd 1,762 1,900 2,132 1,894 1,744 1,650 1,846 1,961 1,980 2,132 DDDDiiiirrrreeeeccccttttllllyyyy----ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr:::: 3333 4444 TTTToooottttaaaallll 31,230 32,365 40,231 37,593 36,773 36,699 37,670 38,979 38,845 40,231 5555 BBBBaaaannnnkkkk----rrrreeeellllaaaatttteeeedddd 6,892 5,959 7,003 6,636 6,344 6,394 7,069 7,008 6,567 7,003 10,695 12,987 13,443 15,538 15,289 15,454 15,228 15,065 14,657 15,443 Dollar acceptances (not seasonally adjusted) 7777 TTTToooottttaaaallll 1188,,772277 2222,,552233 2255,,665544 2233,,444400 2233,,449999 2233,,009911 2233,,331177 23,908 2244,,008888 2255,,665544 HHHHeeeelllldddd bbbbyyyy:::: 8888 AAAAcccccccceeeeppppttttiiiinnnngggg bbbbaaaannnnkkkkssss 77,,333333 1100,,444422 1100,,443344 77,,663300 77,,660011 77,,664477 77,,447733 8,673 88,,995522 1100,,443344 9999 OOOOwwwwnnnn bbbbiiiillllllllssss 55,,889999 88,,776699 88,,991155 66,,335566 66,,446644 66,,558800 66,,556666 7,248 77,,770022 88,,991155 11110000 BBBBiiiillllllllssss bbbboooouuuugggghhhhtttt 11,,443355 11,,667733 11,,551199 11,,227733 11,,113377 11,,006677 990077 1,424 11,,225511 11,,551199 FFFF....RRRR.... BBBBaaaannnnkkkkssss:::: 11111111 OOOOwwwwnnnn aaaaccccccccoooouuuunnnntttt 11,,112266 999911 995544 662211 339933 113311 448822 224488 995544 12 Foreign correspondents 229933 337755 336622 336600 229966 330044 228877 422 339922 336622 13 Others 99,,997755 1133,,444477 1133,,990044 1144,,882299 1155,,220099 1155,,000099 1155,,007755 14,813 1144,,449955 1133,,990044 Based on: 33,,772266 44,,999922 66,,553322 55,,663355 55,,557700 55,,444466 55,,665544 5,886 55,,997733 66,,553322 15 Exports from United States 44,,000011 44,,881188 55,,889955 55,,772299 55,,884422 55,,774477 55,,554444 5,584 55,,880033 55,,889955 16 All other 1111,,000000 1122,,771133 1133,,222277 1122,,007766 1122,,008888 1111,,889999 1122,,111199 12,438 1122,,331122 1133,,222277 1 Institutions engaged primarily in activities such as, but not limited to, 3 As reported by financial companies that place their paper directly commercial, savings, and mortgage banking; sales, personal, and mortgage with investors. financing; factoring, finance leasing, and other business lending; insurance 4 Includes public utilities and firms engaged primarily in activities such underwriting; and other investment activities. as communications, construction, manufacturing, mining, wholesale and 2 Includes all financial company paper sold by dealers in the open retail trade, transportation, and services, market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 DomesticN onfinancial Statistics • February 1978 1.34 PRIME RATE CHARGED BY BANKS on Short-term Business Loans Per cent per annum Month Average Month Effective date Rate Effective date Rate rate 1976—June 1 7 1977—May 13... 6i/z 1976—June 7.20 1977—Apr. 7, 7 VA 31... 63/4 July 7.25 May Aug 7.01 June Aug. 2 1 Aug. 22... 7 Sept 7.00 July. Oct 6.78 Aug. Oct. 4 6V4 Sept. 16. .. m Nov 6.50 Sept. Dec 6.35 Oct.. Nov. 1 61/2 Oct. 7.... m Nov. Oct. 24.... mm 1977—Jan 6.25 Dec. Dec. 13 6 tt Feb 6.25 1978—Jan. 10... 8 Mar 6.25 1978—Jan.. 1.35 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, Nov. 7-12, 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) 6,072,726 851,269 419,038 665,606 1,424,620 452,092 2,260,100 2 Number of loans 160,330 128,007 12,690 10,986 7,097 719 830 3 Weighted-average maturity (months) 3.1 2.8 2.8 3.6 2.7 3.3 3.3 4 Weighted-average interest rate (per cent per annum).. 8.66 9.53 9.12 9.02 8.74 8.47 8.14 5 Interquartile range 1 7.98-9.20 8.68-10.50 8.51-9.58 8.30-9.46 8.00-9.25 7.98-8.86 7.75-8.48 Percentage of amount of loans: 6 With floating rate 59.2 36.5 45.9 43.9 66.2 60.2 70.1 7 Made under commitment 40.4 15.9 19.7 22.8 34.8 60.6 58.1 Long-term commercial and industrial loans 8 Amount of loans (thousands of dollars) 1,035,642 318,418 154,405 65,136 497,682 9 Number of loans 22,711 21,516 981 99 115 10 Weighted-average maturity (months) 44.7 36.9 35.6 41.5 52.9 11 Weighted-average interest rate (per cent per annum).. 8.71 9.16 9.03 8.87 8.30 12 Interquartile range 1 8.14-9.46 8.42-10.00 .75-9.38 7.98-9.75 7.95-8.11 Percentage of amount of loans: 13 With floating rate 53.4 30.3 41.2 71.9 69.5 14 Made under commitment 48.3 36.8 37.8 61.7 57.1 Construction and land development loans 15 Amount of loans (thousands of dollars) 597,800 183,346 85,429 81,873 134,728 112,423 16 Number of loans 26,608 22,199 2,381 1,261 684 82 17 Weighted-average maturity (months) 8.8 8.3 5.9 8.2 9.1 11.3 18 Weighted-average interest rate (per cent per annum).. 9. 19 9.36 8.99 9.68 9.34 8.54 19 Interquartile range 1 75-9.92 9.00-9.88 8.03-9.50 9.32-10.00 8.84-9.84 8.00-9.95 Percentage of amount of loans: 20 With floating rate 37.7 8.8 17.0 24.8 57.1 86.7 21 Secured by real estate 77.6 68.4 65.3 93.6 90.9 74.3 22 Made under commitment 50.1 30.8 44.9 41.9 73.7 63.1 23 Type of construction: 1-to 4-family 44.1 61.9 57.8 70.9 29.3 (2) 24 Multifamily 8.7 1.0 2.2 6.4 16.7 18.3 25 Nonresidential 47.2 37.1 39.9 22.8 54.0 79.0 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) 708,606 146,349 136,895 93,587 103,885 81,366 146,525 27 Number of loans 53,756 39,137 9,624 2,704 1,498 576 217 28 Weighted-average maturity (months) 9.4 8.0 8.3 21.0 6.5 6.6 7.9 29 Weighted-average interest rate (per cent per annum).. 9.12 9.14 9.03 9.07 8.91 9.10 9.35 30 Interquartile range 1 68-9.40 8.68-9.38 8.71-9.31 8.68-9.50 8.68-9.24 8.68-9.40 8.75-9.69 By purpose of loan: 31 Feeder livestock 8.93 8.94 8.87 8.79 9.03 9.22 8.88 32 Other livestock 9.06 9.36 8.98 9.82 8.44 9.09 9.05 3 3 4 3 F O a t r h m er m cu a r c r h e i n n t e r o y p e a r n a d t in eq g u e i x p p m e e n n s t e s 9 9 . .1 2 8 0 9 9 . .4 0 1 9 9 9 . . 0 2 9 7 9 9. . 1 1 7 4 8 8 . .8 8 8 3 9 8 . . 2 6 3 2 9 ( . 2 6 ) 0 35 Other 9.19 9.03 9.10 9.19 9.31 8.89 9.37 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. 2 Fewer than three sample loans. 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 1978 1978, week ending- IInnssttrruummeenntt 11997755 1976 1977 Oct. Nov. Dec. Jan. Jan. 7 Jan. 14 Jan.21 Jan. 28 Money market rates Prime commercial paper 1 1 90-to 119-day 6.26 5.24 5.54 6.51 6.54 6.61 6.75 6.66 6.73 66..8822 6.77 6.33 5.35 5.60 6.55 6.59 6.64 6.79 6.69 6.77 6.85 6.83 3 Finance company paper, directly placed, 3- to 6- 6.16 55..2222 5.49 6.41 6.49 6.52 66..6699 66..5588 66..6655 66..7755 66..7755 4 Prime bankers acceptances, 90-day 3 6.30 5.19 5.59 6.57 6.58 6.60 6.86 6.71 6.98 6.89 6.85 5.82 5.05 5.54 6.47 6.51 6.56 6.70 6.69 6.58 6.78 6.72 Large negotiable certificates of deposit 6 3-month, secondary market 5 6.43 5.26 5.58 6.24 6.68 6.72 6.71 6.77 6.88 7.06 66..9977 5 15 5.52 6.53 6.56 6.64 6.83 6.70 6.85 6.89 6.88 6.97 5.57 6.05 7.14 7.09 7.15 7.32 7.25 7.26 7.43 7.30 U.S. Govt, securities Bills: 8 Market yields: 5.80 4.98 5.27 6.16 6.10 6.07 6.44 6.20 6.60 6.48 66..4444 6.11 5.26 5.53 6.43 6.41 6.40 6.70 6.45 6.84 6.74 6.72 6.30 5.52 5.71 6.52 6.52 6.52 6.80 6.57 6.94 6.84 6.82 Rates on new issue: 5.838 4.989 5.265 6.188 6.160 6.063 6.448 6.144 6.682 6.535 6.429 6.122 5.266 5.510 6.410 6.433 6.377 6.685 6.423 6.848 6.759 6.709 Constant maturities: 9 6.76 5.88 6.09 6.97 6.95 6.96 7.28 7.03 7.43 7.34 7.30 Capital market rates Goverment notes and bonds U.S Treasury: Constant maturities:9 6.45 7.11 7.14 7.18 7.49 7.26 7.59 7.55 7.52 7.49 6.77 6.69 7.19 7.22 7.30 7.61 7.40 7.71 7.66 7.65 7.77 7.18 6.99 7.32 7.34 7.48 7.77 7.59 7.85 7.81 7.79 7.90 7.42 7.23 7.44 7.46 7.59 7.86 7.72 7.93 7.89 7.89 7.99 7.61 7.42 7.52 7.58 7.69 7.96 7.83 8.01 7.98 7.98 8.19 7.86 7.67 7.71 7.76 7.87 8. 14 8.01 8.18 8.16 8.17 77..7777 77..8855 77..9944 88.. 1188 88..0088 88..2211 88..1199 88..2211 Notes and bonds maturing ini°— 7.55 6.94 6.85 7.23 7.28 7.40 7.71 7.52 7.78 7.75 7.74 6.98 6.78 7.06 7.08 7.14 7.23 7.50 7.36 7.54 7.54 7.55 State and local: Moody's series:11 24 Aaa 6.42 5.66 5.20 5.31 5.15 5.07 5.20 55..1155 55..2255 55..2200 55..2200 25 Baa 7.62 7.49 6.12 5.94 5.94 5.79 5.91 5.85 6.00 5.90 5.90 26 Bond Buyer series 12 7.05 6.64 5.68 5.64 5.49 5.57 5.71 5.64 5.75 5.74 5.70 Corporate bonds Seasoned issues 13 27 All industries 9.57 9.01 8.43 8.42 8.48 8.54 8.74 8.64 88..7722 8.76 88..7799 By rating groups: 28 Aaa 8.83 8.43 8.02 8.04 8.08 8.19 8.41 8.30 8.40 88..4444 88..4477 29 Aa 9.17 8.75 8.24 8.26 8.34 8.40 8.59 8.51 8.56 8.61 8.65 30 A 9.65 9.09 8.49 8.48 8.56 8.57 8.76 8.66 8.74 8.77 8.81 31 Baa 10.61 9.75 8.97 8.89 8.95 8.99 9.17 9.10 9.16 9.20 9.21 Aaa utility bonds:14 32 New issue 9.40 8.48 8.19 8.23 8.27 8.34 8.68 8.70 8.68 33 Recently offered issues 9.41 8.49 8.19 8.22 8.24 8.38 8.60 8.48 8.65 8i65 8.62 Dividend/price ratio 34 Preferred stocks 8.38 7.97 7.60 7.60 7.67 7.85 7.93 7.83 77..8899 7.96 88..0011 35 Common stocks 4.31 3.77 4.56 4.97 5.02 5.11 5.32 5.15 5.37 5.33 5.42 1 Beginning Nov. 1977, unweighted average of offering rates quoted 7 Averages of daily quotations for the week ending Wednesday. by five dealers. Previously, most representative rate quoted by those 8 Except for new bill issues, yields are computed from daily closing dealers. bid prices. Yields for all bills are quoted on a bank-discount basis. 2 Averages of the most representative daily offering rates published by 9 Yields on the more actively traded issues adjusted to constant finance companies for varying maturities in this range. maturities by the U.S. Treasury, based on daily closing bid prices. 3 Beginning Aug. 15, 1974, the rate is the average of the midpoint of Unweighted averages for all outstanding notes and bonds in maturity the range of daily dealer closing rates offered for domestic issues; prior ranges shown, based on daily closing bid prices. "Long-term" includes data are averages of the most representative daily offering rate quoted by all bonds neither due nor callable in less than 10 years. dealers. 11 General obligations only, based on figures for Thursday, from 4 Weekly figures are 7-day averages of daily effective rates for the week Moody's Investors Service. ending Wednesday; the daily effective rate is an average of the rates on 12 Twenty issues of mixed quality. a given day weighted by the volume of transactions at these rates. 13 Averages of daily figures from Moody's Investors Service. 5 Weekly figures are 7-day averages of the daily midpoints as determined 14 Compilation of the Board of Governors of the Federal Reserve from the range of offering rates; monthly figures are averages of total days System. in the month. Issues included are long-term (20 years or more). New-issue yields are 6 Posted rates, which are the annual interest rates most often quoted based on quotations on date of offering; those on recently offered issues on new offerings of negotiable CD's in denominations of $100,000 or (included only for first 4 weeks after termination of underwriter price more. Rates prior to 1976 not available. Weekly figures are for Wednes- restrictions), on Friday close-of-business quotations. day dates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • February 1978 1.37 STOCK MARKET Selected Statistics 1977 1978 Indicator 1975 1976 1977 July Aug. Sept. Oct. Nov. Dec. Jan. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31,1965 = 50) 45.73 54.45 53.67 54.94 53.51 52.66 51.37 51.87 51.83 49.89 2 Industrial 51.88 60.44 57.84 58.90 57.30 56.41 54.99 55.62 55.55 53.45 3 Transportation 30.73 39.57 41.07 43.52 41.04 39.99 38.33 39.30 39.75 39.15 4 Utility 31.45 36.97 40.91 42.44 41.50 40.93 40.38 40.33 40.36 39.09 5 Finance 46.62 52.94 55.23 57.29 56.52 55.33 53.24 54.04 53.85 50.91 6 Standard & Poor's Corporation (1941-43 = 10) *. 85.17 102.01 98.18 100.19 97.75 96.23 93.78 94.28 93.82 90.28 7 American Stock Exchange (Aug. 31,1973 = 100) 83.15 101.63 116.18 122.03 119.33 118.08 115.41 117.80 124.88 121.73 Volume of trading (thousands of shares)2 8 New York Stock Exchange 18,568 21,189 20,936 23,656 18,831 18,270 19,689 23,557 21,475 20,530 9 American Stock Exchange 2,150 2,565 2,514 2,880 2,140 2,080 2,080 2,061 3,008 2,250 Customer financing (end-of-period balances, in millions of dollars) 10 Regulated margin credit at brokers/dealers and banks3 6,500 9,011 10,866 10,490 10,592 10,617 10,583 10,680 10,866 11 Brokers, total 5,540 8,166 9,993 9,667 9,763 9,793 9,756 r9,859 9,993 12 Margin stock4 5,390 7,960 9,740 9,460 9,560 9,590 9,560 9,610 9,740 13 Convertible bonds 147 204 250 204 196 196 192 '246 250 14 Subscription issues 3 2 3 3 7 7 4 3 3 15 Banks, total 960 845 873 823 829 824 827 822 873 16 Margin stocks 909 800 827 780 787 783 783 778 827 17 Convertible bonds 36 30 30 24 23 24 27 28 30 18 Subscription issues 15 15 16 19 19 17 17 16 16 19 Unregulated nonmargin stock credit at banks5 2,281 2,817 2,568 '2,568 '2,587 '2,581 '2,579 '2,604 2,568 MEMO: Free credit balances at brokers6 20 Margin-account 475 585 640 600 605 600 615 630 640 21 Cash-account 1,525 1,855 2,060 1,860 1,745 1,745 1,850 1,845 2,060 Margin-account debt at brokers (percentage distribution, end of period) 22 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 By equity class (in per cent) 23 Under 40 24.0 12.0 19.0 16.2 17.4 18.0 27.0 17.0 19.0 24 40-49 28.8 23.0 34.0 32.9 32.0 36.0 35.0 33.0 34.0 25 50-59 22.3 35.0 24.0 26.4 27.0 23.0 18.0 26.0 24.0 26 60-69 11.6 15.0 11.0 12.0 12.0 11.0 9.8 12.0 11.0 27 70-79 6.9 8.7 7.0 7.0 7.0 6.0 6.0 7.0 7.0 28 80 or more 5.3 6.0 5.0 5.5 5.0 5.0 5.0 5.0 5.0 Special miscellaneous-account balances at brokers (end of period) 29 Total balances (millions of dollars) 8... 7,290 8,776 9,910 9,730 9,660 9,640 9,640 9,710 9,910 Distribution by equity status (per cent) 30 Net credit status 43.8 41.3 43.4 40.9 41.1 41.7 42.8 41.8 43.4 Debit status, equity of— 31 60 per cent or more 40.8 47.8 44.9 47.1 46.2 45.9 43.8 45.5 44.9 32 Less than 60 per cent 15.4 10.9 11.7 12.0 12.4 12.4 13.4 12.7 11.7 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 1977 1974 1975 1976 Apr. May June July | Aug. Sept. Oct. Nov. Dec. Savings and loan associations r 1 295,545 338,233 391,907 414,340 All,16% 426,943 433,728 440,101 444,383 450,563 455,644 459,249 2 Mortgages 249,301 278,590 323,005 338,855 344,500 350,632 355,856 361,582 366,838 371,714 376,468 381,106 3 Cash and investment securities1 23,251 30,853 35,724 39,128 39,707 39,693 41,057 41,069 39,709 40,642 40,522 39,202 4 Other 22,993 28,790 33,178 36,357 37,561 36,618 36,815 37,450 37,836 38,207 38,654 38,941 5 Liabilities and net worth 295,545 338,233 391,907 414,340 421,768 426,943 433,728 440,101 444,383 450,563 455,644 459,249 6 Savings capital 242,974 285,743 335,912 354,194 357,840 364,222 368,385 371,247 377,208 379,604 381,333 386,856 7 Borrowed money 24,780 20,634 19,083 18,877 19,800 20,756 20,960 22,026 22,920 24,206 25,547 27,835 8 FHLBB 21,508 17,524 15,708 14,809 15,000 15,595 15,724 16,255 16,908 17,546 18,282 19,988 9 Other 3,272 3,110 3.375 4,068 4,800 5,161 5,236 5,771 6,012 6,660 7,265 7,847 10 Loans in process 3,244 5,128 6,840 7,905 8,511 9,129 9,338 9,662 9.741 9,856 9,924 9,951 11 Other 6,105 6,949 8,074 10,419 12,348 9,374 11,280 13,053 10,176 12,226 13,839 9,430 12 Net worth2 18,442 19,779 21,998 22,945 23,269 23,462 23,765 24,113 24,338 24,671 25,001 25,177 13 MEMO: Mortgage loan commitments outstanding3.. 7,454 10,673 14,826 21,238 22,270 22,032 21,907 21,901 21,631 21,555 21,270 19,961 Mutual savings banks 14 Assets 109,550 121,056 134,812 139,496 140,593 141,778 143,036 143,815 144,666 145,651 146,346 Loans: 15 Mortgage 74,891 77,221 81,630 82,687 83,075 84,051 84,700 85,419 86,079 86,769 87,333 16 Other 3,812 4,023 5,183 6,050 6,650 6,887 7,176 7,119 6,878 7,115 7,241 17 Sec U u . r S i . t i G es o : v t 2,555 4,740 5,840 6,323 6,248 c6,104 6,101 6,019 6,192 6,101 6,071 18 State and local government 930 1,545 2.417 2,504 2,539 2,544 2,594 2,762 2,777 2,808 2,809 2 1 0 9 Ca C sh o rporate and other4 2 2 2 , , 1 5 6 5 7 0 2 2 7 , , 3 99 3 2 0 3 2 3 , , 3 7 5 9 5 3 36 1 , , 3 90 2 0 2 36 1 , , 4 9 5 2 5 2 3 2 6 , , 0 3 7 4 1 9 3 2 6 , , 0 6 0 7 1 4 3 C 6 1 , , 8 8 7 5 8 7 36 1 , , 9 9 2 9 7 2 3 2 7 , , 0 0 1 7 1 3 37 1 , , 2 8 2 8 1 7 21 Other assets 2,645 3,205 3,593 3,709 3,703 3,771 3,789 3,760 3,821 3,773 3,783 22 Liabilities 109,550 121,056 134,812 139,496 140,593 141,778 143,036 143,815 144,666 145,651 146,346 23 Deposits 98,701 109,873 122,877 126,938 127,791 129,332 130,111 130,381 131,688 132,250 132,537 24 Regular:5 98,221 109,291 121,961 125,731 126,587 128,071 128,748 129,030 130,230 130,913 131,319 25 Ordinary savings 64,286 69,653 74,535 76,336 76,384 77,033 77,069 77,163 77,640 77,503 77,460 26 Time and other 33,935 39,639 47,426 49,395 50,203 51,038 51,679 51,867 52,590 53,410 53,859 27 Other 480 582 916 1,207 1,204 1,261 1,363 1,351 1,458 1,337 1,208 28 Other liabilities 2,888 2,755 2,884 3,230 3,381 2,939 3,379 3,779 3,254 3,632 3.938 29 General reserve accounts 7,961 8,428 9,052 9,329 9,422 9,506 9,546 9,654 9,723 9,769 9.882 30 MEMO : Mortgage loan commitments outstanding6., 2,040 1,803 2,439 3,287 3,521 4,079 4,049 4,198 4,254 4,423 4,458 Life insurance companies 31 Assets 263,349 289,304 321,552 328,786 331,028 334,386 336,651 338,964 341,382 343,738 347,182 Securities: 32 Government 10,900 13,758 17,942 18,500 18,475 18,579 18,916 19,174 19,515 19,519 19,681 33 United States7 3,372 4,736 5,368 5,544 5,396 5,400 5,628 5,831 5,883 5,810 5,993 34 State and local 3,667 4,508 5,594 5,758 5,797 5,813 5,847 5,881 5,994 5,979 5,967 35 Foreign 8 3,861 4,514 6,980 7,198 7,282 7,366 7,441 7,462 7,638 7,730 7,721 36 Business 119,637 135,317 157,246 162,816 164,126 166,859 168,498 169,747 170,606 172,005 174,109 37 Bonds 97,717 107,256 122,984 130,057 131,568 133,497 135,262 136,752 138,046 139,909 141,354 38 Stocks 21,920 28,061 34,262 32,759 32,558 33,362 33,236 32,995 32,560 32,096 32,755 39 Mortgages 86,234 89,167 91,552 92,200 92,358 92,854 93,106 93,326 94,070 94,684 95,110 40 Real estate 8,331 9,621 10,476 10,802 10,822 10,897 10,901 10,926 10,930 11,024 11,113 41 Policy loans 22,862 24,467 25,834 26,364 26,500 26,657 26,780 26,946 27,087 27,220 27,355 42 Other assets 15,385 16,971 18,502 18,104 18,747 18,540 18,450 18,845 19,174 19,286 19,814 Credit unions 43 Total assets/liabilities and capital 31,948 38,037 45,225 47,974 48,999 50,186 50,218 50,904 52,136 52,412 53,141 54,084 44 Federal 16,715 20,209 24,396 25,980 26,594 27,364 27,290 27,632 28,384 28,463 28,954 29,574 45 State 15,233 17,828 20,829 21,994 22,405 22,822 22,928 23,272 23,752 23,949 24,187 24,510 46 Loans outstanding. 24,43: 28,169 34,384 36,102 36,987 38,201 38,657 39,711 40,573 40,865 41,427 42,055 47 Federal 12,730 14,869 18,311 19,151 19,680 20,420 20,591 21,194 21,692 21,814 22,224 22,717 48 State 11,702 13,300 16,073 16,951 17,307 17,781 18,066 18,517 18,881 19,051 19,203 19,338 49 Savings 27,518 33,013 39,173 41,760 42,504 43,552 43,658 43,982 45,103 45,441 45,977 46,832 50 Federal (shares) 14,370 17,530 21,130 22,730 23,169 23,825 23,873 24,080 24,775 24,945 25,303 25,849 51 State (shares and deposits). 13,148 15,483 18,043 19,030 19,335 19,727 19,785 19,902 20,328 20,496 20,674 20,983 For notes see bottom of page A30. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • February 1978 1.39 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year TTTrrraaannnsssiiitttiiiooonnn FFFiiissscccaaalll qqquuuaaarrrttteeerrr FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr (((JJJuuulllyyy--- yyyeeeaaarrr 1976 1977 1977 111999777666 SSSeeepppttt... 111999777777 111999777666))) H2 HI H2 Oct. Nov. Dec. U.S. Budget 1 Receipts 1 299,197 81,686 356,861 157.868 189,410 175,787 24,127 27,596 32,794 2 Outlays i,2,3 365,658 94,659 401,896 -193,629 199,482 216.747 38,790 36,864 37.646 3 Surplus, or deficit (—) -66,461 -12,973 -45,035 -35,761 -10,072 -40,961 -14,663 -9,269 -4,852 4 Trust funds 2,409 -1,952 7,833 -4,621 7,332 4,293 198 457 700 5 Federal funds 4 -68,870 -11,021 -52,868 -31,140 -17,405 -45,254 -14,861 -9,726 -5,552 Off-bud set entities surplus, or deficit (-) 6 Federal Financing Bank outlays... -5,915 -2,575 -8,415 -5,176 -2,075 -6,663 -1,211 -250 -1,462 7 Other 2,5 -1,355 793 -269 3,809 -2,086 428 1,750 -183 59 U.S. Budget plus off-budget, including Federal Financing Bank 8 Surplus, or deficit (—) -73,731 --1144,,775555 -53,718 -37,125 -14,233 -47,196 --1144,,112244 -9,702 --66,,225555 Financed by: 9 Borrowing from the public 3. . .. 8822,,992222 1188,,002277 53,516 35,457 16,480 40,284 11,,885511 8,854 99,,997711 10 Cash and monetary assets (decrease, or increase (— )) -7,796 -2,899 -2,238 2,153 -4,666 4,317 9,952 2,278 -5,290 11 Other 6 -1,396 -373 2,440 -485 2,420 2,597 2,321 -1,429 1,573 MEMO ITEMS : 12 Treasury operating balance (level, end of period) 14,836 17,418 19,104 11,670 -16,255 12,274 7,687 5,471 12,274 13 F.R. Banks 11,975 13,299 15,740 10,393 '15,183 7,114 6,398 2,562 7,114 14 Tax and loan accounts 2,854 44,,111199 3,364 11,,227777 r1.072 5,160 ..11,,228899 22,,990099 5,160 1155 Other demand accounts 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 until October 1978. 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 and the Housing for the Elderly and Handicapped Fund effective October accounts; seignorage; increment on gold; net gain/loss for U.S. currency 1978, from off-budget status to unified budget status. valuation adjustment; net gain/loss for IMF valuation adjustment. 3 Export-Import Bank certificates of beneficial interest (effective July 7 Excludes the gold balance but includes deposits in certain commercial 1, 1975) and loans to the Private Export Funding Corp. (PEFCO), a wholly depositories that have been converted from a time deposit to a demand owned subsidiary of the Export-Import Bank are treated as debt rather deposit basis to permit greater flexibility in Treasury cash management. than asset sales. 4 Half years calculated as a residual of total surplus/deficit and trust SOURCE.—"Monthly Treasury Statement of Receipts and Outlays of fund surplus/deficit. the U.S. Government," Treasury Bulletin, and U.S. Budget, Fiscal Year 5 Includes Pension Benefit Guaranty Corp.; Postal Service Fund, Rural 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 Calendar year Transition FFiissccaall quarter Fiscal Source or type yyeeaarr (July- year 1976 1977 1977 11997766 Sept. 1977 1976) H2 HI H2 Oct. Nov. Dec. Receipts 1 All sources 1 299,197 81,686 356,861 157,868 189,410 175,786 24,127 27,596 32,794 2 Individual income taxes, net 130,794 39,611 156,725 75,899 77,948 82,877 13,275 13,171 13,941 3 Withheld 123,408 32,949 144,820 68,023 73,303 75,480 12,770 12,916 13,351 4 Presidential Election Campaign Fund 3344 1 37 1 37 1 5 Nonwithheld 3355,,552288 6,809 42,062 8,426 32,959 9,397 711 430 770 6 Refunds i 2288,,117755 1,139 30,194 1,541 28,350 2,001 206 174 179 7 Corporation income taxes: 8 Gross receipts 46,783 9,808 60,057 20,706 37,133 25,121 2,159 1,386 9,549 9 Refunds 5,374 1,348 5,164 2,886 2,324 2,819 714 466 337 10 Social insurance taxes and contributions, net 92,714 25,760 108,683 47,596 58,099 52,347 6,550 10,404 6,647 11 Payroll employment taxes and contributions 2 76,391 21,534 88,196 40,427 45,242 44,384 5,542 8,750 6,030 12 Self-employment taxes and contributions 3 33,,551188 269 44,,001144 286 33,,668877 316 7 13 Unemployment insurance 88,,005544 2,698 1111,,331122 4,379 66,,557755 4,936 54i 1,216 123 14 Other net receipts 4 44,,775522 1,259 55,,116622 2,504 22,,559955 2,711 466 438 486 15 Excise taxes 16,963 4,473 17,548 8,910 8,432 9,284 1,529 1,615 1,463 16 Customs 4,074 1,212 5,150 2,361 2,519 2,848 406 459 501 17 Estate and gift 5,216 1,455 7,327 2,943 4,332 2,837 410 439 482 18 Miscellaneous receipts 5 8,026 1,612 6,536 3,236 3,269 3,292 512 587 549 Outlays 19 All types 1,6 365,658 94,659 401,896 193,629 199,482 216,747 38,790 36,864 37,646 20 National defense 89,996 22,518 96,721 45,002 48,721 50,873 8,087 8,974 8,417 21 International affairs 6 5,067 1,997 5,593 3,028 2,522 2,896 446 251 371 22 General science, space, and technology 4,370 1,161 4,677 2,377 2,108 2,318 378 389 382 23 Natural resources, environment, and energy 11,282 3,324 14,335 7,206 6,855 8,527 1,259 1,527 1,561 24 Agriculture 2,502 584 5,330 2,019 2,628 5,477 1,103 1,553 1,697 25 Commerce and transportation 17,248 4,700 14,731 9,643 5,945 10,743 3,586 1,777 1,551 26 Community and regional development 5,300 1,530 7,394 3,192 3,149 4,924 628 1,058 795 27 Education, training, employment, and social services 18,167 5,013 19,718 9,083 9,775 10,800 1,761 1,834 1,778 28 Health 33,448 8,720 38,838 19,329 18,654 19,422 3,355 2,613 3,554 29 Income security 1 126,598 32,710 137,151 65,367 69,917 71,047 11,476 12,635 12,105 30 Veterans benefits and services 18,432 3,962 18,040 8,542 9,382 9,864 1,587 1,571 2,613 31 Law enforcement and justice 3,320 859 3,589 1,839 1,783 1,723 282 321 293 32 General government 2,927 878 3,338 1,734 1,587 1,749 182 376 320 33 Revenue sharing and general purpose fiscal assistance 7,119 2,024 9,404 4,729 4,333 4,926 2,274 249 37 34 Interest 7 34,589 7,246 38,092 18,409 18,927 19,962 2,908 2,758 6,236 35 Undistributed offsetting receipts 7,8 -14,704 -2,567 -15,053 -7,869 -6,803 -8,506 -524 -1,021 -4,063 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 Exoort-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 bas;s. 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

A32 Domestic Nonfinancial Statistics • February 1978 1.41 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1974 1975 1976 1977 IItteemm Dec. 31 June 30 Dec. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 1 Federal debt outstanding 504.0 544.1 587.6 631.9 2 646.4 665.5 680.1 685.2 709.1 2 Public debt securities 492.7 533.7 576.6 620.4 634.7 653.5 669.2 674.4 698.8 3 Held by public 351.5 387.9 437.3 470.8 488.6 506.4 524.3 523.2 543.4 4 Held by agencies 141.2 145.3 139.3 149.6 146.1 147.1 144.9 151.2 155.5 5 Agency securities 11.3 10.9 10.9 11.5 11.6 12.0 10.9 10.8 10.3 6 Held by public 9.3 9.0 8.9 9.5 29.7 10.0 9.1 9.0 8.5 7 Held by agencies 2.0 1.9 2.0 2.0 1.9 1.9 1.8 1.8 1.8 8 Debt subject to statutory limit 493.0 534.2 577.8 621.6 635.8 654.7 670.3 675.6 698.5 9 Public debt securities 490.5 532.6 576.0 619.8 634.1 652.9 668.6 673.8 696.8 10 Other debt i 2.4 1.6 1.7 1.7 1.7 1.7 1.7 1.7 1.7 11 MEMO: Statutory debt limit 495.0 577.0 595.0 636.0 636.0 682.0 682.0 700.0 752.0 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 1978 Type and holder 1973 1974 1975 1976 Sept. Oct. Nov. Dec. Jan. 469.9 492.7 576.6 653.5 698.8 697.4 708.0 718.9 721.6 By type: 2 Interest-bearing debt 446677..88 491.6 575.7 652.5 697.6 696.3 707.0 715.2 720.6 3 Marketable 270.2 282.9 363.2 421.3 443.5 447.4 454.9 459.9 466.8 4 Bills 107.8 119.7 157.5 164.0 156.1 156.2 156.7 161.1 161.2 5 124.6 129.8 167.1 216.7 241.7 245.6 251.1 251.8 257.1 6 Bonds 37.8 33.4 38.6 40.6 45.7 45.7 47.1 47.0 48.5 7 Nonmarketable2 197.6 208.7 212.5 231.2 254.1 248.9 252.1 255.3 253.8 8 Convertible bonds3 2.3 2.3 2.3 2.3 2.2 2.2 2.2 2.2 2.2 9 Foreign issues4 26.0 22.8 21.6 22.3 21.8 21.1 21.7 22.2 22.8 10 Savings bonds and notes 60.8 63.8 67.9 72.3 75.8 76.2 76.6 77.0 11A 11 Govt, account series5 108.0 119.1 119.4 129.7 140.1 136.9 138.6 139.8 136.4 By holder:6 12 U.S. Govt, agencies and trust funds -123.4 -138.2 145.3 -149.6 155.5 152.2 153.9 13 F.R. Banks -75.0 80.5 84.7 -94.4 9104.7 94.6 96.5 14 Private investors -260.9 271.0 349.4 409.5 438.6 450.6 457.6 15 Commercial banks 60.3 55.6 85.1 103.8 101.0 100.5 101.4 16 2.9 2.5 4.5 5.7 6.1 6.0 6.0 1 1 7 8 Insurance companies 1 6 0 . . 4 9 1 -6 1 . . 2 0 2 - 0 9 . . 2 5 2 1 6 2 . . 5 5 2 1 3 4 . . 9 5 2 1 3 4 . . 8 7 2 1 3 5 . . 4 3 19 State and local governments 29.2 29.2 -34.2 41.6 53.5 54.5 55.6 Individuals: 20 Savings bonds 60.3 63.4 67.3 72.0 75.6 76.0 76.4 21 Other securities 16.9 21.5 24.0 28.8 28.3 -28.4 28.5 22 Foreign and international7 -54.7 -58.8 66.5 78.1 -95.5 -101.3 106.7 23 Other miscellaneous investors8 19.3 -22.8 -38.0 40.5 40.7 -45.3 44.2 1 Includes $1.0 billion of non-interest-bearing debt (of which $611 7 Consists of the investments of foreign balances and international million on Jan. 31, 1978, was not subject to statutory debt limitations). accounts in the United States. Beginning with July 1974, the figures exclude 2 Includes (not shown separately): Securities issued to the Rural non-interest-bearing notes issued to the International Monetary Fund. Electrification Administration and to State and local governments, de- 8 Includes savings and loan associations, nonprofit institutions, corpositary bonds, retirement plan bonds, and individual retirement bonds. porate pension trust funds, dealers and brokers, certain Govt, deposit 3 These nonmarketable bonds, also known as Investment Series B accounts, and Govt.-sponsored agencies. Bonds, may be exchanged (or converted) at the owner's option for IVi 9 Includes a nonmarketable Federal Reserve special certificate for $2.5 per cent, 5-year marketable Treasury notes. Convertible bonds that have billion. 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 6 Data for F.R. Banks and U.S. Govt, agencies and trust funds are Bulletin. actual holdings; data for other groups are Treasury estimates. 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 11997755 11997766 11997755 1976 Oct. Nov. Oct. Nov. All maturities 1 to 5 years 1 AH holders 363,191 421,276 447,435 454,862 112,270 141,132 149,820 153,696 2 U.S. Govt, agencies and trust funds 19,397 16,485 14,548 14,514 7,058 6,141 5,921 4,793 3 F. R. Banks 87,934 96,971 94,597 96,477 30,518 31,249 28,155 27,558 4 Private investors 255,860 307,820 338,290 343,870 74,694 103,742 115,744 121,346 64,398 78,262 73,127 73,839 29,629 40,005 38,493 39,706 3,300 4,072 4,393 4,353 1,524 2,010 2,109 2,146 7 Insurance companies 7,565 10,284 11,576 12,091 2,359 3,885 4,285 4,679 9,365 14,193 10,305 10,091 1,967 2,618 2,821 3,330 2,793 4,576 5,138 5,002 1,558 2,360 2,725 2,599 9,285 12,252 16,524 16,582 1,761 2,543 3,930 4,022 11 All others .* 159,154 184,182 217,227 221,912 35,894 50,321 61,381 64,862 Total, within 1 year 5 to 10 years 12 All holders 199,692 211,035 217,765 223,139 26,436 43,045 48,599 45,337 2,769 2,012 890 1,995 3,283 2,879 2,139 2,129 14 F. R. Banks 46,845 51,569 49,176 51,592 6,463 9,148 10,547 10,349 150,078 157,454 167,699 169,552 16,690 31,018 35,913 32,858 29,875 31,213 26,572 26,973 4,071 6,278 7,164 6,148 983 1,214 1,335 1,342 448 567 655 615 2,024 2,191 2,103 2,218 1,592 2,546 3,135 3,162 19 Nonfinancial corporations 7,105 11,009 6,867 6,011 175 370 367 427 914 1,984 2,177 2,182 216 155 161 148 5,288 6,622 8,493 8,680 782 1,465 1,325 1,367 22 All others 103,889 103,220 120,153 122,147 9,405 19,637 23,104 21,022 Bills, within 1 year 10 to 20 years 23 All holders 157,483 163,992 156,174 156,656 14,264 11,865 12,975 12,939 207 449 112 112 4,233 3,102 3,102 3,102 38,018 41,279 36,240 37,192 1,507 1,363 1,467 1,473 119,258 122,264 119,822 119,353 8,524 7,400 8,406 8,364 17,481 17,303 9,549 10,176 552 339 490 471 554 454 444 465 232 139 152 138 1,513 1,463 1,171 1,115 1,154 1,114 1,253 1,254 30 Nonfinancial corporations 5,829 9,939 5,239 4,640 61 142 136 134 518 1,266 976 860 82 64 57 56 4,566 5,556 6,876 6,851 896 718 918 867 33 All others 88,797 86,282 95,566 95,245 5,546 4,884 5,400 5,444 Other, within 1 year Over 20 years 42,209 47,043 61,592 66,483 10,530 14,200 18,276 19,751 35 U.S. Govt, agencies and trust funds 2,562 1,563 779 1,883 2,053 2,350 2,495 2,495 8,827 10,290 12,936 14,400 2,601 3,642 5,252 5,505 30,820 35,190 47,877 50,199 5,876 8,208 10,529 11,751 12,394 13,910 17,023 16,797 271 427 409 541 429 760 890 877 112 143 142 142 511 728 931 1,103 436 548 800 778 1,276 1,070 1,628 1,371 57 55 114 189 396 718 1,201 1,322 22 13 18 18 43 State and local governments 722 1,066 1,617 1,829 558 904 1,858 1,645 44 All others 15,092 16,938 24,587 26,902 4,420 6,120 7,189 8,437 NOTE.—Direct public issues only. Based on Treasury Survey of Owner- banks, 466 mutual savings banks, and 728 insurance companies, each ship from Treasury Bulletin (U.S. Treasury Dept.). about 90 per cent; (2) 440 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 pceportion reporting as of Nov. 30, 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

A34 Domestic NonfinancialS tatistics • February 1978 1.44 U.S. GOVERNMENT SECURITIES DEALERS Transactions Par value; averages of daily figures, in millions of dollars 1977 11997788,, wweeeekk 11997777,, wweeeekk eennddiinngg WWeeddnneessddaayy—— eennddiinngg IIIttteeemmm 111999777444 111999777555 111999777666 WWeeddnneessddaayy—— OOcctt.. NNoovv.. DDeecc.. Dec. 7 Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan.11 1 U.S. Govt, securities 3,579 6,027 10,449 11,231 11,086 9,301 9,618 8,840 8,766 8,715 12,497 13,711 By maturity: 2 Bills 2,550 3,889 6,676 6,916 6,689 5,834 5,773 5,699 5,964 4,840 8,111 8,920 3 Other within 1 year 250 223 210 291 257 264 259 223 292 253 425 308 4 1-5 years 465 1,414 2,317 2,355 2,136 1,865 2,304 1,689 1,371 2,195 1,871 2,374 5 5-10 years 256 363 1,019 1,320 1,372 729 818 814 708 464 851 984 6 Over 10 years 58 138 229 348 631 609 465 415 431 964 1,239 1,125 By type of customer: 7 U.S. Govt, securities dealers 652 885 1,360 1,195 11,,115577 11,,331177 11,,116677 11,,118866 1,458 11,,112255 11,,885555 11,,660033 8 U.S. Govt, securities brokers 965 1,750 3,407 4,204 3,912 2,819 3,282 2,823 2,480 2,444 3,484 5,393 9 Commercial banks 998 1,451 2,426 2,126 2,048 1,756 1,619 1,604 1,660 1,684 2,905 2,734 10 All others1 964 1,941 3,257 3,705 3,968 3,408 3,550 3,226 3,168 3,462 4,253 3,982 11 Federal agency securities 965 1,043 1,548 1,733 1,697 1,444 1,515 1,302 2,033 871 1,281 1,523 1 Includes—among others—all other dealers and brokers in commodi- Transactions are market purchases and sales of U.S. Govt, securities ties and securities, foreign banking agencies, and the F.R. System. dealers reporting to the F.R. Bank of New York. The figures exclude allotments of, and exchanges for, new U.S. Govt, securities, redemptions NOTE.—Averages for transactions are based on number of trading days of called or matured securities, or purchases or sales of securities under in the period. repurchase, reverse repurchase (resale), or similar contracts. 1.45 U.S. GOVERNMENT SECURITIES DEALERS Positions and Sources of Financing Par value; averages of daily figures, in millions of dollars 1977 1977, week ending Wednesday— Item 1974 1975 1976 Oct. Nov. Dec. Nov. 16 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Positions2 1 U.S. Govt, securities 2,580 5,884 7,592 3,913 4,351 5,114 5,003 r3,929 4,197 4,546 5,534 5,178 2 Bills 1,932 4,297 6,290 4,283 3,784 4,312 4,577 '3,515 2,994 3,523 5,090 4,923 3 Other within 1 year -6 265 188 11 120 210 105 103 108 183 179 169 4 1-5 years 265 886 515 -233 -135 377 -437 r —215 615 595 93 -27 5 5-10 years 302 300 402 -84 383 66 r545 321 281 142 35 13 6 Over 10 years 88 136 198 -64 199 147 r215 r205 198 104 137 100 7 Federal agency securities.... 1,212 943 729 637 914 788 1,040 1,087 1,143 979 1,003 759 Sources of financing3 8 All sources 3,977 6,666 8,715 8,362 9,209 11,429 9,101 10,207 9,680 10,699 12,066 12,684 Commercial banks: 9 New York City 1,032 1,621 1,896 876 914 1,255 917 1,540 811 994 1,500 1,599 10 Outside New York City... 1,064 1,466 1,660 1,954 1,802 2,246 1,752 1,642 1,814 2,070 2,457 2,479 11 Corporations1 459 842 1,479 2,469 2,893 2,839 2,686 3,112 2,888 2,797 3,019 3,022 12 All others 1,423 2,738 3,681 3,063 3,599 5,090 3,747 3,914 4,166 4,839 5,090 5,585 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 1974 1975 1976 June July Aug. Sept. Oct. Nov. 1 Federal and Federally sponsored agencies. 89,381 97,680 103,325 107,152 108,243 107,868 108,379 109,046 109,427 2 Federal agencies 12,719 19,046 21,896 22,220 22,232 22,322 23,055 23,143 23,257 3 Defense Department1 1,312 1,220 1,113 1,044 1,035 1,024 1,016 1,006 991 4 Export-Import Bank2,3 2,893 7,188 7,801 8,742 8,742 8,742 9,246 9,246 9,246 5 Federal Housing Administration4 440 564 575 588 583 579 579 583 585 6 Government National Mortgage Association participation certificates5 4,280 4,200 4,120 3,803 3,768 3,768 3,768 3,768 3,768 7 Postal Service 6 721 1,750 2,998 2,431 2,431 2,431 2,431 2,431 2,431 8 Tennessee Valley Authority 3,070 3,915 5,185 5,370 5,410 5,490 5,705 5,785 5,905 9 United States Railway Association6 3 209 104 242 263 288 310 324 331 10 Federally sponsored agencies 76,662 78,634 81,429 84,932 86,011 85,546 85,324 85,903 86,170 11 Federal home loan banks 21,890 18,900 16,811 16,921 17,328 17,196 17,162 17,325 17,867 12 Federal Home Loan Mortgage Corporation. 1,551 1,550 1,690 1,698 1,698 1,686 1,686 1,686 1,686 13 Federal National Mortgage Association 28,167 29,963 30,565 31,378 31,566 31,301 31,491 31,572 31,333 14 Federal land banks 12,653 15,000 17.127 18,137 18,719 18,719 18,719 19,118 19,118 15 Federal intermediate credit banks 8,589 9,254 10,494 11,418 11,654 11,786 11,693 11,623 11,421 16 Banks for cooperatives 3,589 3,655 4,330 4,948 4,604 4,356 4,061 4,052 4,208 17 Student Loan Marketing Association7 220 310 410 430 440 500 510 525 535 18 Other 3 2 2 2 2 2 2 2 2 MEMO ITEMS : 19 Federal Financing Bank debt6,8 4,474 17,154 28,711 30,820 32,443 33,800 35,418 36,722 37,095 Lending to Federal and Federally sponsored agencies: 20 Export-Import Bank3 4,595 5,208 5,420 5,420 5,420 5,924 5,924 5,924 21 Postal Service6 500 1,500 2,748 2,181 2,181 2,181 2,181 2,181 2,181 22 Student Loan Marketing Association7 220 310 410 430 440 500 510 525 535 23 Tennessee Valley Authority 895 1,840 3,110 3,545 3,585 3,665 3,880 3,960 4,080 24 United States Railway Association6 3 209 104 242 263 288 310 324 331 Other lending:9 25 Farmers Home Administration 2,500 7,000 10,750 12,900 13,650 14,465 14,615 15,295 15,295 26 Rural Electrification Administration. 566 1,415 2,042 2,105 2,184 2,382 2,467 2,535 27 Other 356 1,134 4,966 4,060 4,799 5,097 5,616 6,046 6,214 1 Consists of mortgages assumed by the Defense Department between 7 Unlike other Federally sponsored agencies, the Student Loan 1957 and 1963 under family housing and homeowners assistance programs. Marketing Association may borrow from the Federal Financing Bank 2 Includes participation certificates reclassified as debt beginning (FFB) since its obligations are guaranteed by the Department of Health, Oct. 1, 1976. Education, and Welfare. 3 Off-budget Aug. 17,1974, through Sept. 30,1976; on-budget thereafter. 8 The FFB, which began operations in 1974, is authorized to purchase 4 Consists of debentures issued in payment of Federal Housing Ad- or sell obligations issued, sold, or guaranteed by other Federal agencies. ministration insurance claims. Once issued, these securities may be sold Since FFB incurs debt solely for the purpose of lending to other agencies, privately on the securities market. its debt is not included in the main portion of the table in order to avoid 5 Certificates of participation issued prior to fiscal 1969 by the Govern- double counting. ment National Mortgage Association acting as trustee for the Farmers 9 Includes FFB purchases of agency assets and guaranteed loans; Home Administration; Department of Health, Education, and Welfare; the latter contain loans guaranteed by numerous agencies with the Department of Housing and Urban Development; Small Business Ad- guarantees of any particular agency being generally small. The Farmers ministration; and the Veterans Administration. Home Administration item consists exclusively of agency assets, while the 6 Off-budget. Rural Electrification Administration entry contains both agency assets and guaranteed loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic NonfinancialS tatistics • February 1978 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 May June July Aug. Sept. Oct. State and local government 1 AH issues, new and refunding 1 22222222222222224444444444444444,,,,,,,,,,,,,,,,333333333333333311111111111111115555555555555555 33330000,,,,666600007777 33335555,,,,333311113333 4444,,,,333300008888 5555,,,,333344447777 By type of issue: 2 General obligation 11111111111111113333333333333333,,,,,,,,,,,,,,,,555555555555555566666666666666663333333333333333 11116666,,,,000022220000 11118888,,,,000044440000 2222,,,,000033332222 2222,,,,222266665555 3 Revenue 11111111111111110000000000000000,,,,,,,,,,,,,,,,222222222222222211111111111111112222222222222222 11114444,,,,555511111111 11117777,,,,111144440000 2222,,,,222277772222 3333,,,,000077779999 4 Housing Assistance Administration 2 444444444444444466666666666666661111111111111111 5 U.S. Govt, loans 77777777777777779999999999999999 777777777777666666666666 111111111111333333333333333333333333 444444444444 333333333333 By type of issuer: 6 State 4444444444444444,,,,,,,,,,,,,,,,777777777777777788888888888888884444444444444444 777777777777,,,,,,,,,,,,444444444444333333333333888888888888 777777777777,,,,,,,,,,,,000000000000555555555555444444444444 888888888888777777777777555555555555 111111111111............444444444444777777777777666666666666 7 Special district and statutory authority 8888888888888888,,,,,,,,,,,,,,,,666666666666666633333333333333338888888888888888 111111111111222222222222,,,,,,,,,,,,444444444444444444444444111111111111 111111111111555555555555,,,,,,,,,,,,333333333333000000000000444444444444 111111111111,,,,,,,,,,,,888888888888333333333333666666666666 111111111111,,,,,,,,,,,,888888888888777777777777333333333333 8 Municipalities, counties, townships, school districts.... 11111111111111110000000000000000,,,,,,,,,,,,,,,,888888888888888811111111111111117777777777777777 111111111111000000000000,,,,,,,,,,,,666666666666666666666666000000000000 111111111111222222222222,,,,,,,,,,,,888888888888444444444444555555555555 111111111111,,,,,,,,,,,,555555555555999999999999333333333333 111111111111............999999999999999999999999444444444444 9 Issues for new capital, total 22222222222222223333333333333333,,,,,,,,,,,,,,,,555555555555555500000000000000008888888888888888 222222222222999999999999,,,,,,,,,,,,444444444444999999999999555555555555 333333333333222222222222,,,,,,,,,,,,111111111111000000000000888888888888 333333333333,,,,,,,,,,,,777777777777888888888888111111111111 444444444444,,,,,,,,,,,,444444444444555555555555666666666666 By use of proceeds: 10 Education 4444444444444444,,,,,,,,,,,,,,,,777777777777777733333333333333330000000000000000 444444444444,,,,,,,,,,,,666666666666888888888888999999999999 444444444444,,,,,,,,,,,,999999999999000000000000000000000000 444444444444999999999999777777777777 888888888888000000000000777777777777 11 Transportation 1111111111111111,,,,,,,,,,,,,,,,777777777777777711111111111111112222222222222222 222222222222,,,,,,,,,,,,222222222222000000000000888888888888 222222222222,,,,,,,,,,,,555555555555888888888888666666666666 555555555555000000000000888888888888 222222222222111111111111888888888888 12 Utilities and conservation 5555555555555555,,,,,,,,,,,,,,,,666666666666666633333333333333334444444444444444 777777777777,,,,,,,,,,,,222222222222000000000000999999999999 999999999999,,,,,,,,,,,,555555555555999999999999444444444444 111111111111,,,,,,,,,,,,222222222222333333333333555555555555 111111111111,,,,,,,,,,,,222222222222000000000000222222222222 13 Social welfare 3333333333333333,,,,,,,,,,,,,,,,888888888888888822222222222222220000000000000000 444444444444,,,,,,,,,,,,333333333333999999999999222222222222 666666666666,,,,,,,,,,,,555555555555666666666666666666666666 444444444444333333333333888888888888 888888888888111111111111666666666666 14 Industrial aid 444444444444444499999999999999994444444444444444 444444444444444444444444555555555555 444444444444888888888888333333333333 111111111111333333333333000000000000 222222222222333333333333 15 Other purposes 7777777777777777,,,,,,,,,,,,,,,,111111111111111111111111111111118888888888888888 111111111111000000000000,,,,,,,,,,,,555555555555555555555555222222222222 777777777777,,,,,,,,,,,,999999999999777777777777999999999999 999999999999777777777777333333333333 111111111111,,,,,,,,,,,,333333333333999999999999000000000000 Corporate 16 A11 issues 3. 38,313 53,619 53,356 3,735 5,321 4,074 3,322 3,905 4,032 17 Bonds 32,066 42,756 42,262 2,487 4,286 3,379 2,765 3,279 3,098 By type of offering: 18 Public 25,903 32,583 26,453 1,600 2,045 2,360 1,947 2,059 2,189 19 Private placement 6,160 10,172 15,808 887 2,241 1,019 818 1,220 909 By industry group: 20 M anufactur ing 9,867 16,980 13,243 644 1,006 1,165 932 513 623 21 Commercial and miscellaneous. 1,845 2,750 4,361 112 363 526 380 623 521 22 Transportation 1,550 3,439 4,357 169 25 143 241 131 113 23 Public utility 8,873 9,658 8,297 581 1,237 480 347 1,014 854 24 Communication 3,710 3,464 2,787 294 371 258 45 319 8 25 Real estate and financial 6,218 6,469 9,222 688 1,284 807 819 679 979 26 Stocks. 6,247 10,863 11,094 1,248 1,035 695 557 626 934 By type: 27 Preferred. 2,253 3,458 2,789 212 332 327 178 347 299 28 Common. 3,994 7,405 8,305 1,036 703 368 379 279 635 By industry group: 29 Manufacturing 544 1,670 2,237 8 176 144 34 38 83 30 Commercial and miscellaneous. 940 1,470 1,183 126 437 66 94 86 325 31 Transportation 22 1 24 103 100 40 32 Public utility 3,964 6,235 6,101 1,031 229 363 150 403 395 33 Communication 217 1,002 776 45 19 45 3 34 Real estate and financial 562 488 771 84 45 3 279 55 " i 3i" 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 SSoouurrccee ooff cchhaannggee,, oorr iinndduussttrryy 11997744 11997755 11997766 Q2 Q3 Q4 Q1 Q2 Q3 Q4 AH issues1 1 New issues 39,344 53,255 53,123 15,602 9,079 13,363 13,671 14,229 11,385 13,838 2 Retirements 9,935 10,991 12,184 3,211 2,576 3,116 2,315 3.668 2,478 3,723 3 Net change 29,399 42,263 40,939 12,390 6,503 10,247 11,356 10,561 8,907 10,115 Bonds and notes 4 New issues 31,354 40,468 38,994 11,460 6,654 9,595 9,404 10,244 8,701 10,645 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 other2 1,116 1,605 2,259 483 221 528 203 726 610 720 9 Transportation, including railroad 341 2,165 3,078 429 147 1,588 985 488 1,092 513 10 Public utility 7,308 7,236 6,829 1,977 1,395 1,211 1,820 1,260 2,109 1,640 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 11,,660077 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 11997766 11997777 June July Aug. Sept. Oct. Nov. Dec. INVESTMENT COMPANIES excluding money market funds 1 Sales of own shares * 4,226 6,421 639 573 501 558 542 511 577 2 Redemptions of own shares2 6,802 5,976 510 515 493 469 519 430 511 3 Net sales -2,496 398 129 58 8 89 23 81 46 4 Assets3 47,537 45,049 46,255 45,651 45,038 45,046 43,435 45,050 45,049 5 Cash position4 2,747 3,274 2,901 3,068 3,135 3,403 3,481 3,487 3,274 6 Other 44,790 41,775 43,354 42,583 41,903 41,643 39,954 41,563 41,775 * 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 offering of securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic NonfinancialS tatistics • February 1978 1.50 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1976 1977 AAccccoouunntt 1974 1975 1976 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1 Profits before tax 126.9 123.5 156.9 153.5 159.2 159.9 154.8 161.7 174.0 172.8 2 Profits tax liability 52.4 50.2 64.7 63.1 66.1 65.9 63.9 64.4 69.7 69.3 3 Profits after tax 74.5 73.3 92.2 90.4 93.1 94.0 90.9 97.3 104.3 103.5 31.0 32.4 35.8 33.6 35.0 36.0 38.4 38.5 40.3 42.3 43.5 40.9 56.4 56.8 58.1 58.0 52.5 58.8 64.0 61.2 6 Capital consumption allowances 81.6 89.5 97.2 94.1 95.9 98.2 100.4 102.0 103.5 105.8 7 Net cash flow 125.1 130.4 153.6 150.9 154.0 156.2 152.9 160.8 167.5 167.0 SOURCE.—Survey of Current Business (U.S. Dept. of Commerce). 1.51 NONFINANCIAL CORPORATIONS Current Assets and Liabilities Billions of dollars, end of period 1976 1977 AAccccoouunntt 11997722 11997733 11997744 11997755 Q2 Q3 Q4 Ql Q2 Q3 1 574.4 643.2 712.2 731.6 775.4 791.8 816.8 845.3 874.7 909.8 2 3 C U a .S sh . Govt, securities 5 1 7 0 . . 5 2 6 1 1 1 . . 6 0 6 1 2 1 . . 7 7 6 1 8 9 . . 1 4 2 7 3 0. . 8 3 7 2 1 3 . . 1 9 2 7 6 7 . . 4 0 7 2 5 7 . . 0 3 7 24 7 . . 1 9 7 2 9 4 . . 1 1 4 Notes and accounts receivable 243.4 269.6 293.2 298.2 321.8 328.5 328.2 346.6 361.4 379.1 5 U.S. Govt.1 3.4 3.5 3.5 3.6 3.7 4.3 4.3 4.7 4.8 5.3 6 Other 240.0 266.1 289.7 294.6 318.1 324.2 323.9 342.0 356.6 373.8 7 Inventories 215.2 246.7 288.0 285.8 295.6 302.1 315.4 322.1 332.5 343.1 8 Other 48.1 54.4 56.6 60.0 63.9 66.3 69.8 74.3 78.8 84.5 9 352.2 401.0 450.6 457.5 475.9 484.1 499.9 516.6 532.0 556.3 10 234.4 265.9 292.7 288.0 293.8 291.7 302.9 309.0 318.9 329.7 U.S. Govt.1 4.0 4.3 5.2 6.4 6.8 7.0 7.0 6.8 5.7 6.2 12 Other 230.4 261.6 287.5 281.6 287.0 284.7 295.9 302.2 313.2 323.5 13 Accrued Federal income taxes 15.1 18.1 23.2 20.7 22.0 24.9 26.8 28.6 24.5 26.9 14 Other 102.6 117.0 134.8 148.8 160.1 167.5 170.2 179.0 188.6 199.7 222.2 242.3 261.5 274.1 299.5 307.7 316.9 328.7 342.8 353.5 I Receivables from, and payables to, the U.S. Govt, exclude amounts SOURCE.—Securities and Exchange Commission, offset against each other on corporations' books. 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 Q4 1 120.82 111.80 114.72 118.12 122.55 125.22 130.16 134.24 138.43 142.02 Manufacturing 2 Durable goods industries 23.50 21.07 21.63 22.54 2244..5599 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 33..8833 33..8833 44..2211 44..1133 4.24 4.49 4.52 4.54 Transportation: 5 Railroad 2.35 2.39 2.08 2.64 22..6699 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 1 1 0 1 C Co o m m m m e u r n c i i c a a l ti a o n n d other1 2 1 0 2 . . 8 9 7 3 2 1 0 2 . . 4 2 4 2 2 1 0 2 . . 6 5 8 4 2 1 0 2 . . 9 6 4 2 2 1 0 3 . . 9 6 9 4 2 1 1 4 . . 3 3 6 0 2 1 2 4 . . 6 1 7 9 2 1 2 5 . . 7 3 3 2 I> •jJyQ.U nos 3o. 70 1 Includes trade, service, construction, finance, and insurance. agriculture; real estate operators; medical, legal, educational, and cultural 2 Anticipated by business. 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 1976 1977 AAccccoouunntt 11997722 11997733 11997744 11997755 Q2 Q3 Q4 Ql Q2 Q3 ASSETS Accounts receivable, gross 1 Consumer 31.9 35.4 36.1 36.0 36.7 37.6 38.6 39.2 40.7 42.3 2 Business 27.4 32.3 37.2 39.3 42.4 42.4 44.7 47.5 50.4 50.6 3 Total 59.3 67.7 73.3 75.3 79.2 80.0 83.4 86.7 91.2 92.9 4 LESS: Reserves for unearned income and losses 7.4 8.4 9.0 9.4 9.8 10.2 10.5 10.6 11.1 11.7 5 Accounts receivable, net 51.9 59.3 64.2 65.9 69.4 69.9 72.9 76.1 80.1 81.2 6 Cash and bank deposits 2.8 2.6 3.0 2.9 2.7 2.6 2.6 2.7 2.5 2.5 7 Securities .9 .8 .4 1.0 .8 1.2 1.1 1.0 1.2 1.8 8 All other 10.0 10.6 12.0 11.8 12.4 12.7 12.6 13.0 13.7 14.2 9 Total assets 65.6 73.2 79.6 81.6 85.3 86.4 89.2 92.8 97.5 99.6 LIABILITIES 10 Bank loans 5.6 7.2 9.7 8.0 6.9 5.5 6.3 6.1 5.7 5.4 11 Commercial paper 17.3 19.7 20.7 22.2 22.2 21.7 23.7 24.8 27.5 25.7 Debt: 12 Short-term, n.e.c 4.3 4.6 4.9 4.5 5.0 5.2 5.4 4.5 5.5 5.4 13 Long-term, n.e.c 22.7 24.6 26.5 27.6 30.1 31.0 32.3 34.0 35.0 34.8 14 Other 4.8 5.6 5.5 6.8 7.8 9.5 8.1 9.5 9.4 13.7 15 Capital, surplus, and undivided profits 10.9 11.5 12.4 12.5 13.2 13.4 13.4 13.9 14.4 14.6 16 Total liabilities and capital 65.6 73.2 79.6 81.6 85.3 86.4 89.2 92.8 97.5 99.6 NOTE.—Components may not add to totals due to rounding. 1.522 DOMESTIC FINANCE COMPANIES Business Credit Millions of dollars, seasonally adjusted except as noted Changes in accounts Extensions Repayments Accounts receivable during— receivable Type outstanding Nov. 30, 1977 1977 1977 19771 Sept. Oct. Nov. Sept. Oct. Nov. Sept. Oct. Nov. 1 Total 53,943 -240 1,522 499 11,702 12,461 12,655 11,942 10,939 12,156 2 Retail automotive (commercial vehicles) 11,630 239 152 146 1,004 942 961 765 790 815 3 Wholesale automotive 11,280 -960 741 -96 4,233 5,488 5,104 5,193 4,747 5,200 4 Retail paper on business, industrial, and farm equipment 14,406 369 415 357 1,097 1,096 1,176 728 681 819 5 Loans on commercial accounts receivable... 3,913 19 -128 16 2,499 2,032 <2,428 2,480 2,160 2,412 6 Factored commercial accounts receivable.... 2,294 -58 248 15 1,477 1,506 1,466 1,535 1,258 1,451 7 All other business credit 10,420 151 94 61 1,392 1,397 1,520 1,241 1,303 1,459 1 Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • February 1978 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1977 Item 1974 1975 1976 July Aug. Sept. Oct. Nov. Dec. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms:1 1 Purchase price (thous. dollars) 40.1 44.6 48.4 53.7 54.9 56.0 54.0 r56.4 57.7 2 Amount of loan (thous. dollars) 29.8 33.3 35.9 40.0 40.8 41.7 40.2 r42.0 42.6 3 Loan/price ratio (per cent) 74.3 74.7 74.2 76.2 76.5 76.3 76.1 r76. 5 75.4 4 Maturity (years) 26.3 26.8 27.2 27.9 28.2 28.2 27.6 r28.2 28.0 5 Fees and charges (per cent of loan amount)2. 1.30 1.54 1.44 1.31 1.30 1.34 1.35 r 1.38 1.30 6 Contract rate (per cent per annum) 8.71 8.75 8.76 8.79 8.81 8.82 8.84 8.85 8.87 Yield (per cent per annum): 7 FHLBB series 3 8.92 9.01 8.99 9.00 9.02 9.04 9.07 9.07 9.08 8 HUD series4 9.22 9.10 8.99 9.00 9.00 9.00 9.00 9.05 9.10 SECONDARY MARKETS Yields (per cent per annum) on— 9 FHA mortgages (HUD series)5 9.55 9.19 8.82 8.74 8.74 8.72 8.78 8.78 8.91 10 GNMA securities6 8.72 8.52 8.17 7.95 8.03 8.03 8.16 8.19 8.29 FNMA auctions:7 11 Government-underwritten loans 9.31 9.26 8.99 8.72 8.76 8.74 8.74 8.85 8.94 12 Conventional loans 9.43 9.37 9.11 9.07 9.06 9.05 9.05 9.16 9.19 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 13 Total 29,578 31,824 32,904 33,954 34,029 34,149 34,123 34,192 14 FHA-insured 19,189 19,732 18,916 18,887 18,785 18,704 18,602 18,535 15 VA-guaranteed 8,310 9,573 9,212 9,449 9,388 9,344 9,287 9,267 16 Conventional 2,080 2,519 4,776 5,618 5,866 6,100 6,234 6,389 Mortgage transactions (during period) 17 Purchases 6,953 4,263 3,606 322 405 385 251 352 18 Sales 4 2 86 Mortgage commitments:8 19 Contracted (during period) 10,765 6,106 6,247 357 531 364 897 975 20 Outstanding (end of period) 7,960 4,126 3,398 5,062 4,717 3,522 3,702 4,192 Auction of 4-month commitments to buy— Government-underwritten loans: 21 Offered 9 5,462.6 7,042.6 4,929.8 206.4 314.9 112.9 613.2 105.2 22 Accepted 2,371.4 3,848.3 2,787.2 131.4 221.4 75.4 400.5 76.4 Conventional loans: 23 Offered 9 1,195.4 1,401.3 2,595.7 286.8 370.2 246.4 758.1 268.8 24 Accepted 656.5 765.0 1,879.2 184.4 236.7 184.4 529.0 193.2 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)10 25 Total 4,586 4,987 4,269 3,483 3,424 3,376 3,402 3,266 26 FHA/VA 1,904 1,824 1,618 1,481 1,463 1,443 1,424 1,406 27 Conventional 2,682 3,163 2,651 2,001 1,961 1,933 1,978 1,860 Mortgage transactions (during period) 28 Purchases 2,191 1,716 1,175 236 455 479 428 576 29 Sales 52 1,020 1,396 79 479 386 354 677 Mortgage commitments:11 30 Contracted (during period) 4,553 982 1,477 511 567 547 465 574 31 Outstanding (end of period) 2,390 111 333 ,350 1,352 ,353 1,329 1,233 1 "Weighted averages based on sample surveys of mortgages originated securities, assuming prepayment in 12 years on pools of 30-year FHA/VA by major institutional lender groups. Compiled by the Federal Home Loan mortgages carrying the prevailing ceiling rate. Monthly figures are Bank Board in cooperation with the Federal Deposit Insurance Cor- unweighted averages of Monday quotations for the month. poration. 7 Average gross yields (before deduction of 38 basis points for mortgage 2 Includes all fees, commissions, discounts, and "points" paid (by servicing) on accepted bids in Federal National Mortgage Association's the borrower or the seller) in order to obtain a loan. auctions of 4-month commitments to purchase home mortgages, assuming 3 Average effective interest rates on loans closed, assuming prepayment prepayment in 12 years for 30-year mortgages. No adjustments are made at the end of 10 years. for FN MA 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. I o 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 1977 Type of holder, and type of property 1973 1974 1975 1976 Ql Q2 Q3- 1 All holders 682,321 742,512 801,537 889,327 912,582 -948,959 985,695 2 1- to 4-family 416,211 449,371 490,761 556,557 -573,861 -600,370 626,628 3 Multifamily. 93,132 99,976 100,601 104,516 -105,309 -107,106 109,052 4 Commercial 131,725 146,877 159,298 171,223 -174,257 -179,591 185,935 5 Farm 41,253 46,288 50,877 57,031 -59,155 -61,892 64,080 7 6 Ma C j o o m r m fi e n r a c n ia c l i al b i a n n s k t s it 1 utions 5 11 0 9 5 , , 0 4 6 0 8 0 5 13 4 2 2 , , 1 5 0 6 5 0 5 13 8 6 1 , , 1 1 8 9 6 3 6 15 4 1 7 , , 3 6 2 5 6 0 - - 6 7 6 5 3 5, , 4 2 4 1 8 0 - r1 69 6 0 2 , , 4 7 7 7 3 8 7 17 1 0 7 , , 3 5 7 0 8 2 8 1- to 4-family 67,998 74,758 77,018 86,234 -88,886 -93,393 97,746 9 Multifamily 6,932 7,619 5,915 8,082 -7,974 -8,003 8,383 10 Commercial 38,696 43,679 46,882 50,289 -51,624 -54,038 56,565 11 Farm 5,442 6,049 6,371 6,721 -6,964 7,344 7,684 12 Mutual savings banks 73,230 74,920 77,249 81,639 82,273 84,076 86,079 13 1- to 4-family 48,811 49,213 50,025 53,089 53,502 55,000 56,313 14 Multifamily 12,343 12,923 13,792 14.177 14,291 14,602 14,952 15 Commercial 12,012 12,722 13,373 14,313 14,422 14,422 14,762 16 Farm 64 62 59 60 58 52 52 17 Savings and loan associations 231,733 249,301 278,590 323,130 333,703 350,765 366,975 18 1- to 4-family 187,078 200,987 223,903 260,895 269,932 284,541 -296,846 19 Multifamily 22,779 23,808 25,547 28,436 29,199 30,517 32,110 20 Commercial 21,876 24,506 29,140 33,799 34,572 35,707 38,019 21 Life insurance companies 81.369 86,234 89,168 91,555 91,786 92,854 94,070 22 1- to 4-family 20,426 19,026 17,590 16,088 15,699 15,418 15,022 23 Multifamily 18,451 19,625 19,629 19.178 18,921 18,891 18,831 24 Commercial 36,496 41,256 45,196 48,864 49,526 50,405 51,742 25 Farm 5,996 6,327 6,753 7,425 7,640 8,140 8,475 26 Federal and related agencies 46,721 58,320 66,891 66,753 -66,065 -68,338 69,068 27 Government National Mortgage Assn. 4,029 4,846 7,438 4,241 4,013 3,912 3,599 28 1- to 4-family 1,455 2,248 4,728 1,970 1,670 1,654 1,522 29 Multifamily 2,574 2,598 2,710 2,271 2,343 2,258 2,077 30 Farmers Home Admin 1,366 1,432 1,109 1,064 500 1,043 1,292 31 1- to 4-family 743 759 208 454 98 410 548 32 Multifamily 29 167 215 218 28 97 192 33 Commercial 218 156 190 72 64 126 142 34 Farm 376 350 496 320 310 410 410 35 Federal Housing and Veterans Admin. 3,476 4,015 4,970 5,150 5,223 -5,259 5,130 36 1- to 4-family 2,013 2,009 1,990 1,676 1,730 -1,711 1,566 37 Multifamily 1,463 2,006 2,980 3,474 3,493 -3,548 3,564 38 Federal National Mortgage Assn... . 24,175 29,578 31,824 32,904 -32,830 33,918 34,148 39 1- to 4-family 20.370 23,778 25,813 26,934 26,836 27,933 28,178 40 Multifamily 3,805 5,800 6,011 5,970 -5,994 5,985 5,970 41 Federal land banks 11,071 13,863 16,563 19,125 19,942 20,818 21,523 42 1- to 4-family 123 406 549 601 611 628 649 43 Farm 10,948 13,457 16,014 18,524 19,331 20,190 20,874 44 Federal Home Loan Mortgage Corp.. 2,604 4,586 4,987 4,269 3,557 3,388 3,376 45 1- to 4-family 2,446 4,217 4,588 3,889 3,200 2,901 2,818 46 Multifamily 158 369 399 380 357 487 558 47 Mortgage pools or trusts2 18,040 23,799 34,138 49,801 55,462 58,748 64,667 48 Government National Mortgage Assn. 7,890 11,769 18,257 30,572 34,260 36,573 41,089 49 1- to 4-family 7,561 11,249 17,538 29,583 33,190 35,467 39,865 50 Multifamily 329 520 719 989 1,070 1,106 1,224 51 Federal Home Loan Mortgage Corp. 766 757 1,598 2,671 3,570 4,460 5,332 52 1- to 4-family 617 608 1,349 2,282 3,112 3,938 4,642 53 Multifamily 149 149 249 389 458 522 690 54 Farmers Home Admin 9,384 11,273 14,283 16,558 17,632 17,715 18,426 55 1- to 4-family 5,458 6,782 9,194 10,219 10,821 10,814 11,127 56 Multifamily .. 138 116 295 532 786 111 768 57 Commercial 1,124 1 ,473 1,948 2,440 2,570 2,680 2,824 58 Farm 2,664 2,902 2,846 3,367 3,455 3,444 3,527 59 Individuals and others3 112,160 117,833 119,315 125,123 -127,845 -131,400 134,458 60 1- to 4-family 51 ,112 53,331 56,268 62,643 -64,574 -66,592 69,786 61 Multifamily 23,982 24,276 22,140 20,420 -20,395 -20,313 19,733 62 Commercial 21,303 23,085 22,569 21,446 -21,479 -22,213 21,881 63 Farm 15,763 17,141 18,338 20,614 -21,397 -22,312 23,058 1 Includes loans held by nondeposit trust companies but not bank trust NOTE.—Based on data from various institutional and Govt, sources, departments. with some quarters estimated in part by Federal Reserve in conjunction 2 Outstanding principal balances of mortgages backing securities in- with the Federal Home Loan Bank Board and the Dept. of Commerce. sured or guaranteed by the agency indicated. Separation of nonfarm mortgage debt by type of property, if not re- 3 Other holders include mortgage companies, real estate investment ported directly, and interpolations and extrapolations where required, are trusts, State and local credit agencies, State and local retirement funds, estimated mainly by Federal Reserve. Multifamily debt refers to loans on noninsured pension funds, credit unions, and U.S. agencies for which structures of 5 or more units. amounts are small or separate data are not readily available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Financial Statistics • February 1978 1.55 CONSUMER INSTALMENT CREDIT Total Outstanding, and Net Change Millions of dollars 1977 Holder, and type of credit 1974 1975 1976 June July Aug. Sept. Oct. Nov. Dec. Amounts outstanding (end of period) 1 Total 157,454 164,955 185,489 196,998 199,971 204,358 207,294 209,141 212,074 216,557 By holder: 2 Commercial banks 75,846 78,667 89,511 96,149 97,794 100,059 101,564 102,504 103,469 1051291 3 Finance companies 36,087 35,994 38,639 40,712 41,398 41,987 42,333 42,704 43,322 44,000 4 Credit unions 21,895 25,666 30,546 33,750 34,122 35,077 35,779 35,993 36,488 37,036 5 Retailers 1 17,933 18,002 19,052 18,032 18,137 18,475 18,725 18,961 19,629 21,082 6 Others2 5,693 6,626 7,741 8,355 8,520 8,760 8,894 8,978 9,166 9,149 By type of credit: 7 Automobile 52,871 55,879 66,116 72,829 74,304 76,027 77,207 77,845 78,757 79,414 8 Commercial banks 30,994 31,553 37,984 42,307 43,211 44,262 44,933 45,399 45,845 46,119 9 Indirect 18,687 18,353 21,176 23,258 23,735 24,277 24,717 24,972 25,228 25,370 10 Direct 12,306 13,200 16,808 19,050 19,476 19,985 20,216 20,427 20,616 20,749 11 Finance companies 10,623 11,155 12,489 13,219 13,597 13,783 13,930 13,998 14,205 14,325 12 Credit unions 10,869 12,741 15,163 16,754 16,938 17,412 17,761 17,867 18,113 18,385 13 Others 386 430 480 549 558 570 584 581 594 585 14 Mobile homes 14,618 14,423 14,572 14,627 14,713 14,812 14,880 14,929 14,999 15,014 15 Commercial banks 8,972 8,649 8,734 8,722 8,761 8,794 8,828 8,839 8,856 8,862 16 Finance companies 3,525 3,451 3,273 3,136 3,126 3,114 3,119 3,116 3,123 3,109 17 Home improvement 8,522 9,405 10,990 11,794 12,025 12,329 12,532 12,703 12,879 12,951 18 Commercial banks 4,694 4,965 5,554 5,889 6,022 6,158 6,265 6,377 6,447 6,473 Revolving credit: 19 Bank credit cards 8,281 9,501 11,351 11,563 11,754 12,227 12,651 12,829 13,096 14,262 20 Bank check credit 2,797 2,810 3,041 3,230 3,295 3,409 3,504 3,551 3,601 3,724 21 Allother 70,364 72,937 79,418 82,955 83,880 85,554 86,519 87,283 88,743 91,193 22 Commercial banks, total, 20,108 21,188 22,847 24,437 24,752 25,209 25,383 25,510 25,626 25,850 23 Personal loans 13,771 14,629 15,669 16,749 16,922 17,238 17,373 17,452 17,555 17,740 24 Finance companies, total 21,590 21,238 22,749 24,223 24,538 24,951 25,143 25,448 25,850 26,422 25 Personal loans 16,985 17,263 18,554 19,540 19,808 20,118 20,256 20,498 20,852 21,281 26 Credit unions 9,174 10,754 12,799 14,141 14,297 14,697 14,991 15,081 15,289 15,518 27 Retailers 17,933 18,002 19,052 18,032 18,137 18,475 18,725 18,961 19,629 21,082 28 Others 1,559 1,755 1,971 2,121 2,157 2,221 2,277 2,283 2,350 2,321 Net change (during period)3 29 Total 9,280 7,504 20,533 2,422 2,464 2,651 2,351 2,626 2,853 2,696 By holder: 30 Commercial banks 3,975 2,821 10,845 1,422 1,150 1,448 1,228 1,315 1,384 1,611 31 Finance companies 731 -90 2,644 182 524 321 378 487 543 459 32 Credit unions 2,262 3,771 4,880 519 368 472 458 469 566 641 33 Retailers 1 1,538 69 1,050 144 286 170 144 280 184 -12 34 Others 2 774 933 1,115 154 136 240 143 75 177 -3 By type of credit: 35 Automobile 500 3,007 10,238 963 1,069 1,054 1,105 850 1,241 1,328 36 Commercial banks -508 559 6,431 745 584 125 714 587 125 835 37 Indirect -310 -334 2,823 365 290 351 466 295 444 486 38 Direct -198 894 3,608 380 294 368 248 292 281 349 39 Finance companies -116 532 1,334 -28 275 65 128 52 742 159 40 Credit unions 1,123 1,872 2,422 244 208 237 228 222 263 328 41 Other 2 44 50 2 2 27 34 -11 10 7 42 Mobile homes 1,068 -195 150 34 57 55 32 44 74 75 43 Commercial banks 632 -323 85 3 19 3 10 15 23 60 44 Finance companies 166 -73 -111 -21 -12 -18 -3 -11 4 -9 45 Home improvement 1,094 881 1,585 181 165 183 143 201 211 171 46 Commercial banks 611 271 588 15 16 62 11 115 99 110 Revolving credit: 47 Bank credit cards 1,443 1,220 1,850 238 184 315 219 287 243 250 48 Bank check credit 543 14 231 90 39 60 49 57 21 46 49 All other 4,631 2,577 6,479 916 951 984 743 1,188 1,057 824 50 Commercial banks, total 1,255 1,080 1,659 211 248 283 99 254 261 310 51 Personal loans 898 858 1,040 180 143 161 56 142 183 235 52 Finance companies, total....... 746 -348 1,509 226 260 273 251 448 293 308 53 Personal loans 486 279 1,290 185 228 186 223 353 235 236 54 Credit unions 948 1,580 2,045 239 129 200 197 204 252 252 55 Retailers 1,538 69 1,050 144 286 170 144 280 184 -12 56 Others 145 196 217 36 28 59 52 2 61 -33 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 February 1978 BULLETIN. 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 Holder, and type of credit 1974 1975 1976 June July Aug. Sept. Oct. Nov. Dec. Extensions3 1 Total 157,200 164,169 193,328 18,810 18,631 19,204 19,164 19,787 19,680 20,108 By holder: 2 Commercial banks 72,605 77,312 94,220 9,232 9,143 9,426 9,442 9,802 9,688 10,226 3 Finance companies 34,061 31,173 36,028 3,444 3,335 3,459 3,514 3,653 3,602 3,714 4 Credit unions 19,596 24,096 28,587 2,769 2,663 2,806 2,773 2,858 2,920 3,093 5 Retailers1 27,034 27,049 29,188 2,806 2,951 2,840 2,860 2,961 2,857 2,647 6 Others 2 3,904 4,539 5,305 559 540 673 575 512 612 428 By type of credit: 7 Automobile 45,429 51,413 62,988 6,063 5,966 6,158 6,109 6,083 6,330 6,743 8 Commercial banks 26,406 28,573 36,585 3,527 3,553 3,616 3,640 3,642 3,717 3,941 9 Indirect 15,576 15,766 19,882 1,865 1,905 1,925 2,028 1,976 2,076 2,153 10 Direct 10,830 12,807 16,704 1,661 1,649 1,692 1,612 1,666 1,641 1,788 11 Finance companies 8,604 9,674 11,209 1,099 963 1,036 1,013 989 1,097 1,165 12 Credit unions 10,015 12,683 14,675 1,390 1,402 1,434 1,376 1,414 1,458 1,581 13 Others 404 483 518 47 48 72 80 38 58 55 14 Mobile homes 5,782 4,323 4,841 420 455 479 424 457 464 450 15 Commercial banks 3,486 2,622 3,071 244 267 267 261 270 280 300 16 Finance companies 1,376 764 690 48 55 55 51 61 54 50 17 Home improvement 5,211 5,556 6,736 686 671 733 679 718 761 721 18 Commercial banks 2,789 2,722 3,245 328 330 332 340 373 370 384 Revolving credit: 19 Bank credit cards 17,098 20,428 25,862 2,640 2,566 2,711 2,847 2,973 2,828 2,973 20 Bank check credit A,221 4,024 4,783 521 499 510 485 487 492 531 21 All other 79,453 78,425 88,117 8,480 8,476 8,612 8,620 9,067 8,804 8,690 22 Commercial banks, total. 18,599 18,944 20,673 1,973 1,928 1,990 1,870 2,056 2,001 2,096 23 Personal loans 13,176 13,386 14,480 1,413 1,350 1,404 1,346 1,463 1,434 1,518 24 Finance companies, total. 23,796 20,657 24,087 2,289 2,309 2,361 2,440 2,596 2,441 2,490 25 Personal loans 17,162 16,944 19,579 1,850 1,836 1,870 1,938 2,044 1,914 1,955 26 Credit unions 8,560 10,134 12,340 1,225 1,113 1,207 1,240 1,282 1,285 1,326 27 Retailers 27,034 27,049 29,188 2,806 2,951 2,840 2,860 2,961 2,857 2,641 28 Others 1,463 1,642 1,830 187 175 214 211 172 221 131 Liquidations3 29 Total 147,920 156,665 172,795 16,388 16,167 16,553 16,814 17,160 16,826 17,413 By holder: 30 Commercial banks 68,630 74,491 83,376 7,810 7,992 7,978 8,214 8,487 8,305 8,615 31 Finance companies 33,330 31,263 33,384 3,261 2,811 3,138 3,135 3,166 3,059 3,255 32 Credit unions 17,334 20,325 23,707 2,250 2,295 2,333 2,316 2,389 2,354 2,452 33 Retailers i 25,496 26,980 28,138 2,662 2,665 2,670 2,716 2,681 2,673 2,659 34 Others 2 3,130 3,606 4,191 405 404 433 432 437 435 432 By type of credit: 35 Automobile 44,929 48,406 52,750 5,100 4,897 5,104 5,005 5,234 5,089 5,414 36 Commercial banks 26,915 28,014 30,154 2,781 2,969 2,891 2,926 3,055 2,991 3,106 37 Indirect 15,886 16,101 17,059 1,500 1,615 1,568 1,562 1,681 1,632 1,667 38 Direct 11,029 11,913 13,095 1,281 1,354 1,324 1,364 1,374 1,360 1,439 39 Finance companies 8,720 9,142 9,875 1,127 688 970 885 937 855 1,007 40 Credit unions 8,892 10,811 12,253 1,146 1,194 1,197 1,148 1,193 1,195 1,253 41 Others 402 439 468 45 46 45 46 49 48 48 42 Mobile homes 4,715 4,517 4,691 386 397 424 392 413 390 375 43 Commercial banks 2,854 2,944 2,986 241 248 264 251 255 257 240 44 Finance companies 1,210 837 867 68 68 73 54 72 50 59 45 Home improvement 4,117 4,675 5,151 505 506 551 536 517 550 549 46 Commercial banks 2,178 2,451 2,657 253 254 270 263 257 272 274 Revolving credit: A1 Bank credit cards 15,655 19,208 24,012 2,403 2,382 2,396 2,567 2,687 2,585 2,723 48 Bank check credit 3,684 4,010 4,552 431 459 450 436 430 466 485 49 All other 74,821 75,849 81,638 7,564 7,525 7,628 7,877 7,880 7,747 7,866 50 Commercial banks, total, 17,345 17,864 19,014 1,702 1,680 1,707 1,771 1,802 1,734 1,786 51 Fersonal loans 12,278 12,528 13,439 1,233 1,207 1,243 1,291 1,321 1,250 1,284 52 Finance companies, total 23,050 21,005 22,578 2,063 2,049 2,089 2,189 2,148 2,148 2,182 53 Personal loans 16,676 16,665 18,289 1,666 1,609 1,684 1,714 1,692 1,678 1,718 54 Credit unions 7,613 8,554 10,295 986 984 1,008 1,043 1,078 1,033 1,075 55 Retailers 25,496 26,980 28,138 2,662 2,665 2,670 2,716 2,681 2,673 2,659 56 Others 1,318 1,446 1,613 151 146 155 158 170 159 165 1 Excludes 30-day charge credit held by retailers, oil and gas companies, 2 Mutual savings banks, savings and loan associations, and auto dealers. and travel and entertainment companies. 3 Monthly figures are seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Financial Statistics • February 1978 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-year data are at seasonally adjusted annual rates. 1975 1976 1977 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 1972 1973 1974 1975 1976 HI H2 HI H2 HI Nonfinancial sectors 1 Total funds raised 177.8 202.0 189.6 205.6 268.3 180.8 230.4 254.5 282.1 309.6 1 2 Excluding equities 167.2 194.3 185.8 195.5 257.8 170.3 220.8 241.1 274.4 300.8 2 By sector and instrument: 3 U.S. Govt 15.1 8.3 11.8 85.4 69.0 79.6 91.2 73.1 64.9 40.3 3 4 Public debt securities 14.3 7.9 12.0 85.8 69.1 80.4 91.3 73.0 65.3 40.9 4 5 Agency issues and mortgages .8 .4 -.2 -.4 -.1 -.8 -.1 .1 -.3 -.6 5 6 All other nonfinancial sectors 162.7 193.8 177.8 120.2 199.2 101.1 139.2 181.4 217.1 269.3 6 7 Corporate equities 10.5 7.7 3.8 10.0 10.5 10.5 9.6 13.3 7.6 8.8 7 8 Debt instruments 152.2 186.1 174.0 110.1 188.8 90.7 129.6 168.0 209.5 260.5 8 9 Private domestic nonfinancial sectors 158.7 187.5 162.4 107.0 179.0 93.1 120.9 166.2 191.7 264.9 9 10 Corporate equities 10.9 7.9 4.1 9.9 10.5 10.3 9.5 13.3 7.7 8.2 10 11 Debt instruments 147.8 179.7 158.3 97.1 168.4 82.8 111.4 152.9 184.0 256.6 11 12 Debt capital instruments 102.3 105.0 98.7 95.8 122.7 93.8 97.8 111.7 133.7 163.5 12 13 State and local obligations 14.7 14.7 17.1 13.6 15.1 12.3 14.9 14.7 15.5 27.2 13 14 Corporate bonds 12.2 9.2 19.7 27.2 22.8 33.4 21.1 20.4 25.3 19.6 14 Mortgages: 15 Home 42.6 46.4 34.8 39.5 63.6 33.4 45.6 57.1 70.2 85.6 15 16 Multifamily residential 12.7 10.4 6.9 * 1.6 .4 -.4 .6 2.6 4.6 16 17 Commercial 16.5 18.9 15.1 11.0 13.4 9.4 12.6 13.9 12.9 17.3 17 18 Farm 3.6 5.5 5.0 4.6 6.1 5.1 4.0 5.0 7.3 9.2 18 19 Other debt instruments 45.5 74.6 59.6 1.3 45.7 -11.0 13.6 41.2 50.3 93.2 19 20 Consumer credit 18.9 22.0 10.2 9.4 23.6 2.2 16.6 22.9 24.2 35.2 20 21 Bank loans n.e.c 18.9 39.8 29.1 -14.5 3.7 -20.9 -8.2 -.3 7.8 37.2 21 22 Open market paper .8 2.5 6.6 -2.6 4.0 -1.4 -3.8 6.4 1.6 5.0 22 23 Other 6.9 10.3 13.7 9.0 14.4 9.0 9.0 12.2 16.7 15.9 23 24 By borrowing sector 158.7 187.5 162.4 107.0 179.0 93.1 120.9 166.2 191.7 264.9 24 25 State and local governments 14.5 13.2 16.2 11.2 14.6 10.0 12.3 13.0 16.3 20.6 25 26 Households 66.6 79.1 49.2 48.6 89.8 37.3 59.9 83.9 95.6 129.6 26 27 Farm 5.8 9.7 7.9 8.7 11.0 8.7 8.8 10.6 11.6 16.9 27 28 Nonfarm noncorporate 14.1 12.8 7.4 2.0 5.2 -1.1 5.1 2.7 7.6 10.6 28 29 Corporate 57.7 72.7 81.8 36.6 58.3 38.3 34.8 56.1 60.5 87.2 29 30 Foreign 4.0 6.2 15.4 13.2 20.3 8.0 18.3 15.2 25.4 4.4 30 31 Corporate equities -.4 -.2 -.2 . 1 * . 1 . 1 * -.1 .6 31 32 Debt instruments 4.4 6.4 15.7 13.0 20.3 7.9 18.2 15.1 25.5 3.9 32 33 Bonds 1.0 1.0 2.1 6.2 8.4 5.7 6.8 7.3 9.5 4.3 33 34 Bank loans n.e.c 2.9 2.8 4.7 3.1 6.7 -.4 7.8 3.4 10.0 -5.8 34 35 Open market paper -1.0 .9 7.3 .3 1.9 -.8 1.4 1.5 2.4 2.2 35 36 U.S. Govt, loans 1.5 1.7 1.6 2.8 3.3 3.4 2.2 2.9 3.6 3.1 36 Financial sectors 37 Total funds raised 28.3 51.6 39.4 14.0 28.6 15.1 12.8 27.8 29.4 64.0 37 By instrument: 38 U.S. Govt, related 8.4 19.9 23.1 13.5 18.6 14.5 12.6 18.6 18.6 25.7 38 39 Sponsored credit agency securities 3.5 16.3 16.6 2.3 3.3 1.9 2.8 4.5 2.1 10.1 39 40 Mortgage pool securities 4.9 3.6 5.8 10.3 15.7 11.5 9.2 14.2 17.2 17.9 40 41 Loans from U.S. Govt .7 .9 -.4 1.1 .6 * - .7 — 2.3 41 42 Private financial sectors 19.9 31.7 16.3 .4 10.0 .6 .2 9.1 10.8 38,3 42 43 Corporate equities 2.8 1.5 .3 * .7 .1 —. 1 -.7 2.2 .9 43 44 Debt instruments 17.1 30.2 16.0 .4 9.2 .6 .5 9.8 8.6 37.4 44 45 Corporate bonds 5.1 3.5 2.1 2.9 5.8 2.3 3.5 7.0 4.5 8.2 45 46 Mortgages 1.7 -1.2 -1.3 2.3 2.1 1.4 3.2 1.4 2.8 3.0 46 47 Bank loans n.e.c 5.9 8.9 4.6 -3.6 -3.7 -4.7 -2.5 -3.0 -4.4 -2.7 47 48 Open market paper and Rp's 4.4 11.8 3.9 2.8 7.1 8.2 -2.6 6.1 8.1 25.4 48 49 Loans from FHLB's * 7.2 6.7 -4.0 -2.0 -6.6 — 1.3 -1.6 -2.4 3.5 49 By sector: 50 Sponsored credit agencies 3.5 16.3 17.3 3.2 2.9 3.0 3.4 4.5 1.4 7.8 50 51 Mortgage pools 4.9 3.6 5.8 10.3 15.7 11.5 9.2 14.2 17.2 17.9 51 52 Private financial sectors 19.9 31.7 16.3 .4 10.0 .6 .2 9.1 10.8 38.3 52 53 Commercial banks 4.8 8.1 -1.1 1.7 1A 5.7 -2.3 9.0 5.9 15.1 53 54 Bank affiliates .7 2.2 3.5 .3 -.8 .9 -.3 -1.3 -.3 1.3 54 55 Savings and loan associations 2.0 6.0 6.3 -2.2 * -6.8 2.3 .5 -.5 10.6 55 56 Other insurance companies .5 .5 .9 1.0 1.0 .9 1.0 1.0 1.0 1.0 56 57 Finance companies 6.2 9.4 4.5 .5 6.4 -1.4 2.4 5.7 7.1 14.9 57 58 REIT's 6.3 6.5 .6 -2.0 -2.8 -2.0 -1.9 -2.5 -3.0 -2.9 58 59 Open-end investment companies -.5 -1.2 -.7 —. 1 -1.0 .7 -.9 -2.5 .5 -1.1 59 6600 22..44 1.3 -.3 22..66 * --..77 .2 --..55 6600 All sectors 61 Total funds raised, by instrument 206.1 253.7 229.0 219.5 296.8 195.9 243.2 282.2 311.4 373.6 61 62 -.5 -1.2 -.7 —. 1 -1.0 .7 -.9 -2.5 .5 -1.1 62 63 Other corporate equities 13.8 10.4 4.8 10.2 12.2 9.8 10.5 15.1 9.3 10.8 63 64 Debt instruments 192.8 244.5 224.9 209.5 285.6 185.4 233.6 269.6 301.6 363.9 64 65 U.S. Govt, securities 23.6 28.3 34.3 98.2 88.1 93.1 103.2 91.9 84.3 68.4 65 66 State and local obligations 14.7 14.7 17.1 13.6 " 15.1 12.3 14.9 14.7 15.5. 27.2 66 67 Corporate and foreign bonds 18.4 13.6 23.9 36.3 37.0 41.3 31.3 34.7 39.3 32.2 67 68 Mortgages 77.0 79.9 60.5 57.2 86.8 49.5 65.0 77.9 95.7 119.6 68 69 Consumer credit 18.9 22.0 10.2 9.4 23.6 2.2 16.6 22.9 24.2 35.2 69 70 Bank loans n.e.c 27.8 51.6 38.4 -14.4 6.7 -25.9 -2.9 .1 13.4 28.7 70 71 Open market paper and Rp's 4.1 15.2 17.8 .5 13.0 6.1 -5.0 14.0 12.0 32.5 71 72 Other loans 8.4 19.1 22.7 8.7 15.3 6.9 10.5 13.4 17.2 20.1 72 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 1977 Transaction category, or sector 1972 1973 1974 1975 1976 HI H2 HI H2 HI 1 Total funds advanced in credit markets to 167.2 194.3 185.8 195.5 257.8 170.3 220.8 241.1 274.4 300.8 1 By public agencies and foreign: 19.8 34.1 52.7 44.3 54.6 55.0 33.6 53.2 56.0 74.0 2 3 US. Govt, securities 7.6 9.5 11.9 22.5 26.8 33.4 11.6 27.1 26.5 31.7 3 7.0 8.2 14.7 16.2 12.8 16.9 15.5 12.1 13.5 20.0 4 5 FHLB advances to S&L's * 7.2 6.7 -4.0 -2.0 -6.6 -1.3 -1.6 -2.4 3.5 5 5.1 9.2 19.5 9.5 16.9 11.3 7.8 15.6 18.3 18.8 6 Totals advanced, by sector 7 U.S. Govt 1.8 2.8 9.8 15.1 8.9 15.9 14.3 6.4 11.4 5.9 7 9.2 21.4 25.6 14.5 20.6 16.5 12.6 20.7 20.6 27.5 8 .3 9.2 6.2 8.5 9.8 7.6 9.5 14.5 5.2 11.6 9 8.4 .6 11.2 6.1 15.2 15.0 -2.7 11.6 18.8 28.9 10 11 Agency borrowing not included in line 1 8.4 19.9 23.1 13.5 18.6 14.5 12.6 18.6 18.6 25.7 11 Private domestic funds advanced 155.9 180.2 156.1 164.8 221.8 129.8 199.7 206.6 237.0 252.5 12 13 US Govt, securities 16.0 18.8 22.4 75.7 61.3 59.7 91.6 64.8 57.8 36.7 13 14.7 14.7 17.1 13.6 15.1 12.3 14.9 14.7 15.5 27.2 14 13.1 10.0 20.9 32.8 30.3 38.8 26.8 26.8 33.9 20.9 15 48.2 48.4 26.9 23.2 52.4 16.7 29.6 45.5 59.2 70.1 16 63.9 95.4 75.4 15.6 60.8 -4.3 35.5 53.2 68.3 101.1 17 * 7.2 6.7 -4.0 -2.0 -6.6 -1.3 -1.6 -2.4 3.5 18 Private financial intermediation 19 Credit market funds advanced by private 149.7 164.9 126.3 119.9 187.2 99.8 140.0 167.6 206.8 233.9 19 20 Commercial banking 70.5 86.5 64.6 27.6 58.0 14.4 40.7 44.5 71.5 80.1 20 21 Savings institutions 48.2 36.9 26.9 52.0 71.7 48.5 55.4 71.8 71.7 84.6 21 22 Insurance and pension funds 17.2 23.9 30.0 41.5 47.6 38.3 44.7 47.8 47.3 55.3 22 23 Other finance 13.9 17.5 4.7 -1.1 9.9 — 1.4 -.7 3.4 16.3 13.9 23 24 Sources of funds 149.7 164.9 126.3 119.9 187.2 99.8 140.0 167.6 206.8 233.9 24 25 Private domestic deposits 100.8 86.5 69.4 90.9 122.8 90.3 91.5 106.1 139.5 122.8 25 26 Credit market borrowing 17.1 30.2 16.0 .4 9.2 .6 .3 9.8 8.6 37.4 26 27 Other sources 31.8 48.2 40.9 28.6 55.1 9.0 48.2 51.7 58.7 73.7 27 28 Foreign funds 5.3 6.9 14.5 -.4 3.1 -5.6 4.8 -2.6 8.8 -4.1 28 29 Treasury balances .7 -1.0 -5.1 -1.7 _ J -3.5 2.9 -3.1 -1.1 29 30 Insurance and pension reserves 11.6 18.4 26.0 29.0 35 !8 26.4 31.'5 35.1 36.5 46.2 30 31 Other net 14.1 23.9 5.4 1.7 16.4 -8.3 11.7 16.2 16.6 32.7 31 Private domestic nonfinancial investors 32 Direct lending in credit markets 23.3 45.5 45.9 45.3 43.8 30.6 60.0 48.8 38.8 56.0 32 33 US Govt securities 3.9 19.5 18.2 22.2 19.4 6.0 38.4 22.6 16.1 11.0 33 34 State and local obligations 3.0 5.4 10.0 6.3 4.7 7.2 5.5 3.9 5.5 9.5 34 35 Corporate and foreign bonds 4.4 1.3 4.7 8.2 4.0 10.8 5.6 4.9 3.1 .4 35 36 Commercial paper 2.9 12.5 4.8 3.1 4.0 1.5 4.7 6.7 1.3 18.7 36 37 Other 9.1 6.8 8.2 5.5 11.8 5.1 6.0 10.8 12.8 16.4 37 38 Deposits and currency 105.2 90.4 75.7 97.1 130.3 96.0 98.2 111.0 149.5 127.1 38 39 Time and savings accounts 83.8 76.1 66.7 84.8 113.0 73.0 96.5 98.3 127.6 106.6 39 40 Large negotiable CD's 7.7 18.1 18.8 -14.0 -14.2 -27.8 -.2 -18.0 -10.4 -2.6 40 41 Other at commercial banks 30.6 29.6 26.1 39.4 58.1 39.3 39.4 50.2 66.0 41.9 41 42 At savings institutions 45.4 28.5 21.8 59.4 69.1 61.5 57.4 66.1 72.1 67.4 42 21.4 14.3 8.9 12.3 17.2 23.0 1.7 12.7 21.6 20.5 43 44 Demand deposits 17.0 10.3 2.6 6.1 9.9 17.3 -5.0 7.8 11.9 16.2 44 45 Currency 4.4 3.9 6.3 6.2 7.3 5.7 6.7 4.9 9.8 4.3 45 46 Total of credit market instruments, deposits and currency 128.5 136.0 121.5 142.4 174.0 126.6 158.2 159.8 188.1 183.1 46 47 Public support rate (in per cent) 11.8 17.5 28.4 22.7 21.2 32.3 15.2 22.1 20.4 24.6 47 48 Private financial intermediation (in per cent) 96.1 91.5 80.9 72.8 84.4 76.9 70.1 81.1 87.3 92.6 48 49 Total foreign funds 13.7 7.5 25.7 5.8 18.3 9.4 2.1 9.0 27.6 24.9 49 MEMO : Corporate equities not included above 13.3 9.2 4.1 10.0 11.2 10.5 9.5 12.6 9.8 9.7 50 51 Mutual fund shares -.5 -1.2 -.7 _ I -1.0 .7 -.9 -2.5 .5 -1.1 51 52 Other equities 13.8 10.4 4.8 10.2 12.2 9.8 10.5 15.1 9.3 10.8 52 53 Acquisitions by financial institutions 15.3 13.3 5.8 9.4 12.3 10.7 8.1 12.6 12.0 6.5 53 54 Other net purchases -2.1 -4.1 -1.6 .6 — 1.1 -.2 1.4 * -2.2 3.3 54 NOTES BY LINE NO. 29. Demand deposits at commercial banks. 1. Line 2 of p. A-44. 30. Excludes net investment of these reserves in corporate equities. 2. Sum of lines 3-6 or 7-10. 31. Mainly retained earnings and net miscellaneous liabilities. 6. Includes farm and commercial mortgages. 32. Line 12 less line 19 plus line 26. 11. Credit market funds raised by Federally sponsored credit agencies, 33-37. Lines 13-17 less amounts acquired by private finance. Line 37 and net issues of Federally related mortgage pool securities. Included includes mortgages. below in lines 3, 13, and 33. 45. Mainly an offset to line 9. 12. Line 1 less line 2 plus line 11. Also line 19 less line 26 plus line 32. 46. Lines 32 plus 38 or line 12 less line 27 plus line 45. Also sum of lines 27, 32, 39, and 44. 47. Line 2/line 1. 17. Includes farm and commercial mortgages. 48. Line 19/line 12. 25. Lines 39 plus 44. 49. Lines 10 plus 28. 26. Excludes equity issues and investment company shares. Includes 50. 52. Includes issues by financial institutions. line 18. NOTE.—Full statements for sectors and transaction types quarterly, 28. Foreign deposits at commercial banks, bank borrowings from foreign and annually for flows and for amounts outstanding, may be obtained branches, and liabilities of foreign banking agencies to foreign af- from Flow of Funds Section, Division of Research and Statistics, Board filiates. of Governors of the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • February 1978 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1977 1978 1977 Measure 1975 1976 p June July Aug. Sept. Oct. Nov. 1 Industrial production 117.8 129.8 137.0 137.8 138.7 138.1 138.5 138.9 139.3 Market groupings: 2 Products, total 119.3 129.3 137.1 137.3 138.7 138.4 138.8 138.9 139.6 3 Final, total 118.2 127.2 135.0 135.4 136.8 136.3 136.8 136.5 137.2 4 Consumer goods 124.0 136.2 143.5 143.8 145.4 144.7 144.9 '144.9 145.4 5 Equipment 110.2 114.6 123.3 124.1 124.8 124.9 125.6 125.0 125.8 6 Intermediate 123.1 137.2 145.1 144.7 146.3 146.1 146.5 147.8 148.5 7 Materials 115.5 130.6 136.9 138.7 138.9 137.6 137.9 138.9 139.0 Industry groupings: 8 Manufacturing 116.3 129.5 137.1 137.8 138.5 138.6 139.0 139.4 139.9 Capacity utilization (per cent)1 in— 9 Manufacturing 73.6 80.2 82.4 83.0 83.1 82.9 82.9 '82.9 82.9 10 Industrial materials industries 73.6 80.4 81.9 83.0 82.9 82.0 82.0 '82.4 82.3 11 Construction contracts2 162.3 190.2 P252 284.0 218.0 267.0 279.0 244.0 258.0 1 1 2 3 No G na o g o r d ic s u -p lt r u o r d a u l c e i m ng p , l o t y o m ta e l nt, total3 '1 r9 1 7 7 . .0 1 1 1 2 0 0 0 . . 6 3 1 1 2 0 4 4 . . 7 1 1 1 2 0 4 4 . . 7 7 1 1 2 0 5 4 . . 1 9 1 1 2 0 5 4 . . 2 5 1 1 2 0 5 4 . . 7 7 1 1 2 0 5 5 . . 9 0 1 1 2 0 6 5 . . 4 4 14 Manufacturing, total 94.3 97.5 100.6 100.9 101.1 100.8 100.8 101.1 101.4 15 Manufacturing, production-worker 91.3 95.2 98.3 98.9 '98.9 98.4 98.5 98.8 '99.1 16 Service-producing 127.8 131.7 136.0 135.6 136.2 136.6 137.1 137.3 '137.9 17 Personal income, total4 200.0 220.7 245.1 243.3 245.6 247.2 '249.2 '252.8 '255.3 18 Wages and salary disbursements 188.5 208.6 231.5 230.8 232.3 233.4 '235.2 '239.1 '240.4 19 Manufacturing 157.3 177.7 199.3 200.4 201.2 200.7 202.2 '205.3 '206.9 20 Disposable personal income 199.2 217.8 240.3 241.3 21 Retail sales 5 184.6 203.5 224.4 221.0 223.7 225.5 225.4 '232.2 '234.9 Prices:6 2 2 2 3 C W o h n o s l u e m sa e le r p 1 1 6 7 1 4 . . 2 9 '1 17 8 0 3 . . 5 0 1 1 8 9 1 4 . . 6 2 - 1 1 9 8 4 1 . . 5 8 ' ' 1 1 8 9 2 4 . . 6 8 r r 1 1 8 9 3 4 . . 3 6 ' ' 1 1 8 9 4 5. . 8 0 " '1 1 9 8 6 4 . . 3 5 1 1 8 9 5 7 . . 4 0 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 1977 1977 1977 Series Ql Q2 Q3' Q4' Ql Q2 Q3 Q4 ' Ql Q2 Q3' Q4 ' Output (1967 = 100) Capacity (per cent of 1967 output) Utilization rate (per cent) 1 Manufacturing 133.1 136.9 138.7 139.9 164.0 165.6 167.1 168.7 81.2 82.7 83.0 82.9 2 Primary processing 140.1 146.3 147.3 148.1 170.2 171.8 173.5 175.1 82.3 85.1 84.9 84.6 3 129.3 132.0 129.3 135.6 160.7 162.2 163.8 165.3 80.5 81.4 81.9 82.0 133.1 137.7 138.1 138.8 165.5 166.6 167.8 168.9 80.4 82.6 82.3 82.2 5 Durable goods 129.2 135.1 136.0 137.5 169.0 170.3 171.6 172.8 76.5 79.4 79.2 79.6 6 Basic metal 108.6 116.4 109.4 109.1 144.8 145.1 145.3 145.5 75.0 80.2 75.3 75.0 7 Nondurable goods 149.5 154.6 154.4 154.9 175.6 177.2 178.8 180.4 85.1 87.2 86.3 85.8 8 Textile, paper, and chemical 153.9 159.9 159.2 159.6 183.6 185.4 187.1 188.9 83.8 86.3 85.1 84.5 9 Textile 111.3 110.9 112.3 118.7 141.4 141.9 142.5 143.0 78.7 78.1 78.8 83.0 10 Paper 131.7 134.3 135.1 134.2 148.9 150.1 151.3 152.5 88.4 89.5 89.3 88.0 11 181.6 191.8 189.5 187.8 216.2 218.7 221.2 223.6 84.0 87.7 85.7 84.0 12 Energy 122.0 122.6 123.4 122.2 144.3 144.7 145.2 145.7 84.5 84.8 85.0 83.9 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 1978 CCaatteeggoorryy 11997744 11997755 11997766 July ' Aug.' Sept.' Oct.' Nov.r Dec.' Jan.f Household survey data 1111 NNNNoooonnnniiiinnnnssssttttiiiittttuuuuttttiiiioooonnnnaaaallll ppppooooppppuuuullllaaaattttiiiioooonnnn1111 150,827 153,449 156,048 158,682 158,899 159,114 159,334 159,522 159,736 159,937 2222 LLLLaaaabbbboooorrrr ffffoooorrrrcccceeee ((((iiiinnnncccclllluuuuddddiiiinnnngggg AAAArrrrmmmmeeeedddd FFFFoooorrrrcccceeeessss))))1111 93,240 94,793 96,917 '99,442 '99,751 '99,887 '100,205 101,009 101,048 101,228 3333 CCCCiiiivvvviiiilllliiiiaaaannnn llllaaaabbbboooorrrr ffffoooorrrrcccceeee 91,011 92,613 94,773 '97,307 '97,614 '97,756 '98,071 98,877 98,919 99,107 EEEEmmmmppppllllooooyyyymmmmeeeennnntttt:::: 4444 NNNNoooonnnnaaaaggggrrrriiiiccccuuuullllttttuuuurrrraaaallll iiiinnnndddduuuussssttttrrrriiiieeeessss2222 82,443 81,403 84,188 '87,382 '87,569 '87 889 '88,140 88,857 89,286 89,527 5555 AAAAggggrrrriiiiccccuuuullllttttuuuurrrreeee 3,492 3,380 3,297 '3,206 '3,224 '3,199 '3,243 3,357 3,323 3,354 UUUUnnnneeeemmmmppppllllooooyyyymmmmeeeennnntttt:::: 6666 NNNNuuuummmmbbbbeeeerrrr 5,076 7,830 7,288 '6,719 '6,821 '6,668 '6,688 6,663 6,310 6,226 7777 RRRRaaaatttteeee ((((ppppeeeerrrr cccceeeennnntttt ooooffff cccciiiivvvviiiilllliiiiaaaannnn llllaaaabbbboooorrrr ffffoooorrrrcccceeee)))) 5.6 8.5 7.7 6.9 n.o r6.8 r6.8 6.7 6.4 6.3 8888 NNNNooootttt iiiinnnn llllaaaabbbboooorrrr ffffoooorrrrcccceeee 57,587 58,655 59,130 '59,240 '59,148 '59,226 '59,130 58,512 58,689 58,709 Establishment survey data 9999 NNNNoooonnnnaaaaggggrrrriiiiccccuuuullllttttuuuurrrraaaallll ppppaaaayyyyrrrroooollllllll eeeemmmmppppllllooooyyyymmmmeeeennnntttt3333 78,419 77,052 79,436 82,407 82,474 82,763 82,902 83,245 83,432 83.685 11110000 MMMMaaaannnnuuuuffffaaaaccccttttuuuurrrriiiinnnngggg 20,048 18,347 18,955 19,666 19,594 19,612 19,666 19,715 19,879 19,983 11111111 MMMMiiiinnnniiiinnnngggg 694 745 783 833 818 856 859 863 713 720 11112222 CCCCoooonnnnttttrrrraaaacccctttt ccccoooonnnnssssttttrrrruuuuccccttttiiiioooonnnn 3,963 3,515 3,594 3,913 3,893 3,892 3,911 3,950 3,956 3,949 11113333 TTTTrrrraaaannnnssssppppoooorrrrttttaaaattttiiiioooonnnn aaaannnndddd ppppuuuubbbblllliiiicccc uuuuttttiiiilllliiiittttiiiieeeessss.... 4,696 4,499 4,510 4,572 4,581 4,616 4,610 4,634 4,650 4,628 11114444 TTTTrrrraaaaddddeeee 17,016 16,999 17,690 18,322 18,377 18,431 18,414 18,512 18,592 18.686 11115555 FFFFiiiinnnnaaaannnncccceeee 4,209 4,223 4,315 4,506 4,524 4,545 4,572 4,597 4,609 4,619 11116666 SSSSeeeerrrrvvvviiiicccceeee 13,617 14,007 14,642 15,372 15,448 15,482 15,533 15,608 15,659 15,713 11117777 GGGGoooovvvveeeerrrrnnnnmmmmeeeennnntttt 14,176 14,719 14,948 15,223 15,239 15,329 15,337 15,366 15,374 15,387 1 Persons 16 years of age and over. Monthly figures, which are based 3 Data include all full- and part-time employees who worked during, on sample data, relate to the calendar week that contains the 12th day; or received pay for the pay period that includes the 12th day of the annual data are averages of monthly figures. By definition, seasonality month, and exclude proprietors, self-employed persons, domestic servants, does not exist in population figures. Based on data from Employment unpaid family workers, and members of the Armed Forces. Data are and Earnings (U.S. Dept. of Labor). adjusted to the February 1977 benchmark. Based on data from Employ- 2 Includes self-employed, unpaid family, and domestic service workers. ment and Earnings (U.S. Dept. of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • February 1978 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value Monthly data are seasonally adjusted. 1967 1976 1977 1978 GGrroouuppiinngg pro- 1977^ por- avertion age Nov. Dec. Jan. June July Aug. Sept. Oct.r Nov. Dec.f Jan.® Index (1967 = : 100) MAJOR MARKET 1 Total index 100.00 137.0 131.5 133.0 132.3 137.8 138.7 138.1 138.5 138.9 139.3 139.6 138.6 2 Products 60.71 137.1 131.3 133.4 133.1 137.3 138.7 138.4 138.8 138.9 139.6 140.3 139.3 3 Final products 47.82 135.0 129.3 131.5 130.8 135.4 136.8 136.3 136.8 136.5 137.2 137.8 136.4 4 Consumer goods 27.68 143.5 138.4 141.3 139.9 143.8 145.4 144.7 144.9 144.9 145.4 145.7 143.6 5 Equipment 20.14 123.3 116.8 118.0 118.4 124.1 124.8 124.9 125.6 125.0 125.8 127.0 126.5 6 Intermediate products 12.89 145.1 139.0 140.5 142.2 144.7 146.3 146.1 146.5 147.8 148.5 150.1 149.7 7 Materials 39.29 136.9 131.9 132.0 131.1 138.7 138.9 137.6 137.9 138.9 139.0 138.4 137.5 Consumer goods 8 Durable consumer goods 7.89 153.1 143.7 150.5 145.4 155.8 115588..00 154.7 155.6 156.8 155.4 156.0 149.3 9 Automotive products 2.83 174.1 161.6 178.8 164.2 179.8 184.8 177.2 177.0 179.4 173.3 172.9 156.4 10 Autos and utility vehicles 2.03 169.3 154.0 176.9 155.8 177.4 184.1 173.1 172.6 176.1 167.7 166.9 144.4 11 Autos 1.90 148.4 138.4 156.3 136.9 156.8 161.4 150.9 151.6 154.3 147.5 143.6 127.4 12 Auto parts and allied goods .80 186.2 180.5 183.4 185.6 185.8 186.6 187.3 188.1 187.6 187.6 188.2 186.7 13 Home goods 5.06 141.3 133.7 134.5 134.8 142.3 142.9 142.1 143.6 144.2 145.4 146.5 145.2 14 Appliances, A/C, and TV 1.40 127.4 114.9 110.3 113.4 133.1 130.1 129.6 129.4 128.6 132.5 132.5 131.2 15 1.33 no.5 117.3 112.3 116.0 136.8 134.4 133.0 134.1 131.6 133.0 134.8 16 1.07 157.2 143.6 144.7 143.7 151.2 154.1 154.8 159.0 160.5 160.2 161.1 17 Misc. home goods 2.59 144.4 139.9 143.6 142.7 143.6 145.1 143.6 144.9 145.8 146.3 148.1 147.0 18 Nondurable consumer goods 19.79 139.6 136.2 137.6 137.7 139.1 140.3 140.6 140.7 140.1 141.4 141.6 141.3 19 Clothing 4.29 123.1 124.1 123.7 125.7 124.1 126.4 128.3 128.0 127.3 20 Consumer staples 15.50 143.6 139.8 141.3 141.7 142.9 144.8 144.6 144.1 143.5 145.3 145.6 145.5 ?1 Consumer foods and tobacco 8.33 135.5 132.4 131.8 131.5 135.4 137.1 137.9 137.1 135.2 136.6 136.9 22 Nonfood staples 7.17 153.1 148.2 152.3 153.4 151.7 153.8 152.4 152.4 153.4 155.3 155.9 155.8 23 Consumer chemical products 2.63 180.6 173.7 177.5 178.5 179.3 179.4 181.8 182.5 183.7 186.9 187.3 24 Consumer paper products 1.92 117.1 114.2 116.6 116.0 116.3 117.4 117.0 116.4 117.6 118.5 119.7 25 Consumer energy products 2.62 115511..88 147.6 153.1 155.8 114499..88 115544..99 114488..99 148.6 149.1 115500..66 115500..88 2266 Residential utilities 11..4455 115533..99 116622..11 116666..77 Equipment 27 Business equipment 12.63 149.2 140.1 142.3 142.3 150.1 115511..22 151.1 152.1 152.6 153.5 154.8 154.0 28 Industrial equipment 6.77 138.6 131.1 132.3 131 .3 140.0 140.7 140.4 141.4 141.8 143.2 143.8 144.1 29 Building and mining equipment 1.44 202.6 181.5 183.7 187.4 208.1 210.6 203.9 204.5 205.7 208.7 209.3 212.0 30 Manufacturing equipment 3.85 114.0 109.9 110.8 107.8 115.0 114.3 115.3 117.6 118.5 119.1 119.6 119.2 31 Power equipment 1.47 140.1 137.0 137.9 137.5 139.0 141.2 143.7 141.4 139.8 142.1 143.0 142.5 32 Commercial transit, farm equipment 5.86 161.6 150.6 154.1 155.0 161.9 163.3 163.4 164.4 165.1 165.3 167.6 165.5 33 Commerical equipment 3.26 191.6 179.6 184.3 185.2 191.4 191.7 193.0 193.7 195.4 196.7 199.7 200.6 34 Transit equipment 1.93 117.6 107.8 108.0 108.4 118.5 121.5 121.9 125.1 122.3 118.8 120.8 113.4 35 Farm equipment .67 142.1 132.4 140.3 142.5 143.2 144.6 113399..22 134.9 142.1 146.8 145.5 36 Defense and space equipment 7.51 79.6 77.6 77.2 78.0 80.3 80.4 8800..88 80.9 78.9 79.3 80.3 80.1 Intermediate products 37 Construction supplies 6.42 140.7 135.8 135.5 136.2 139.9 114411..22 141.7 143.2 144.9 146.6 148.0 146.9 38 Business supplies 6.47 149.4 141.9 145.3 148.0 149.6 151.3 150.6 149.7 150.5 150.4 152.0 3399 Commercial energy products 11..1144 116644..44 115566..22 116622..77 116644..99 116644..22 168.2 116655..00 116622..77 163.0 116622..88 163.6 Materials 40 Durable goods materials 20.35 134.4 128.2 128.7 127.4 136.4 113366..88 135.4 135.7 137.1 137.2 138.1 137.1 41 Durable consumer parts 4.58 122.0 126.2 126.3 121 .8 134.5 137.2 135.2 135.8 135.4 136.3 135.7 131.5 42 Equipment parts 5.44 143.1 137.2 138.8 135.1 143.0 145.0 145.6 146.8 147.6 147.5 148.8 149.0 43 Durable materials n.e.c 10.34 131.0 124.4 124.3 125.9 133.8 132.4 130.1 129.8 132.4 132.1 133.4 133.2 44 Basic metal materials 5.57 110.9 105.5 104.8 106.6 116.3 112.6 108.7 106.8 110.0 107.9 109.5 45 Nondurable goods materials 10.47 153.4 147.3 145.8 144.8 154.7 154.1 155.1 153.9 154.4 155.3 154.9 153.4 46 Textile, paper, and chem. mat 7.62 158.3 151.4 150.3 149.3 160.1 158.9 159.6 159.0 160.0 159.3 159.4 158.3 47 Textile materials 1.85 113.2 110.0 113.7 111.0 109.0 110.1 112.2 114.5 118.5 118.0 119.6 48 Paper materials 1.62 133.9 131.0 127.6 127.6 134.4 134.3 135.7 135.2 134.4 132.4 135.8 49 Chemical materials 4.15 188.0 178.1 175.5 175.1 192.7 190.3 190.1 188.2 188.5 188.4 186.6 50 Containers nondurable 1.70 151.0 145.9 143.8 139.5 152.4 152.4 156.2 151.2 148.9 156.1 156.0 51 Nondurable materials n.e.c 1.14 124.7 121.3 119.8 122.6 122.9 124.9 122.4 124.1 125.4 127.6 123.9 52 Energy materials 8.48 122.4 121.9 123.4 123.3 124.3 125.2 121.4 123.5 124.0 123.6 119.1 119.2 53 Primary energy 4.65 107.3 106.7 107.0 102.9 109.7 108.9 106.8 110.0 112.2 111.9 102.6 5544 Converted fuel materials 33..8822 114400..88 114400..33 114433..44 114488..11 114422..00 145.1 113399..11 140.0 113388..44 113377..88 139.1 Supplementary groups 55 Home goods and clothing 9.35 134.0 128.8 129.7 129.7 134.7 113344..33 134.9 113366..55 136.8 137.1 137.8 136.4 56 Energy, total 12.23 132.6 130.6 133.3 134.1 133.5 135.6 131.4 132.5 133.0 133.1 130.0 130.2 57 Products 3.76 155.6 150.2 156.0 158.5 154.1 158.9 153.7 153.0 153.3 154.4 154.6 58 Materials 8.48 122.4 121.9 123.4 123.3 124.3 125.2 121.4 123.5 124.0 123.6 119.1 119.2 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 1978 GGrroouuppiinngg SSIICC pprroo-- 11997777PP ccooddee ppoorr-- aavveerr-ttiioonn aaggee Nov. Dec. Jan. June July Aug. Sept. Oct.r Nov. Dec.f Jan.e Index (1967 = 100) MAJOR INDUSTRY 1 Mining and utilities. 12.05 136.2 133 135.4 137.0 138. 139.4 134.4 135.1 135.8 136.0 134.0 135.0 2 Mining 6.36 117.9 115.3 115.4 112.8 122. 119.8 115.4 118.0 119.6 119.0 113.4 112.0 3 Utilities 5.69 156.6 154.6 157.9 163.8 156. 161.4 155.7 154 154.0 154.9 157.0 160.7 4 Electric 3.88 171.8 176.1 183.6 5 Manufacturing. 87.95 137.1 131.4 132.5 131.6 137. 138.5 138.6 139.0 139.4 139.9 140.5 139.0 6 Nondurable. 35.97 148.1 143.0 143.3 143.4 148.4 148.6 149.4 149.5 149.6 150.6 150.6 150.3 7 Durable 51.98 129.5 123.4 125.0 123.4 130.5 131.6 131.3 131.7 132.4 132.6 133.6 131.0 Mining 8 Metal mining 10 .51 105.5 124.5 126.8 130.6 121.3 101.9 70.0 71.4 80.0 84.8 104.5 9 Coal 11,12 .69 118.0 122.1 120.6 95.3 133.4 120.7 113.6 133.0 141.4 140.6 74.6 51.0 10 Oil and gas extraction 13 4.40 118.1 112.3 112.8 112.0 121.3 120.6 119.3 119.6 119.4 118.1 118.4 118.7 11 Stone and earth minerals. 14 .75 125.0 120.8 118.0 121.6 122.5 126.7 125.0 126.7 128.1 127.2 126. Nondurable manufactures 12 Foods 8.75 137.8 134.3 132.9 134.2 136.9 138.3 139.3 138.3 137.3 139.2 138.7 13 Tobacco products .67 119.6 119.2 114.8 119.2 114.5 117.0 113.5 113.8 117.5 14 Textile mill products... 2.68 137.1 133.3 133.7 132.2 135.4 137.2 136.6 140.7 142.4 142.5 144.0 15 Apparel products 3.31 122.7 124.9 123.0 122.1 121.1 124. 127.7 129.0 128.1 16 Paper and products 3.21 i 37 ] 5 132.5 131.4 130.6 139.3 139.2 140.3 139.1 137.9 138.8 i40!7 140.0 17 Printing and publishing 4.72 124.6 119.7 123.0 124.7 124.1 124.9 125.0 124.2 125.7 126.2 126.8 127.9 18 Chemicals and products 7.74 180.7 173.7 173.1 172.2 183.5 182.6 182.6 181.3 182.3 183.4 182.6 19 Petroleum products 1.79 141.2 135.8 138.9 139.7 140.0 140.4 139.9 141.9 141.4 141.4 138.5 i 39.2 20 Rubber & plastic products. 2.24 232.2 215.5 216.9 218.9 235.2 235.2 237.4 239.5 236.3 238.2 240.3 21 Leather and products .86 75.0 75.8 74.2 74.8 74.1 74. 74.5 74.0 77.0 77.1 74.4 Durable manufactures 22 Ordnance, pvt. & govt.... 19,91 3.64 74.0 71.6 71.3 72.6 74.1 75.0 75.5 75.1 74.4 74.1 74.6 73.6 23 Lumber and products 24 1.64 133.0 129.5 128.1 132.7 132.4 132.9 131.8 137.1 135.7 133.5 136.8 24 Furniture and fixtures 25 1.37 141.0 133.7 135.7 135.1 139.9 143.0 142.9 145.6 146.6 146.6 147.1 25 Clay, glass, stone products. 32 2.74 146.0 143.2 142.8 137.1 147.7 148.0 148.8 145.5 148.0 151.3 152.3 2 2 6 7 Pr I im ro a n r y a n m d e t s a te ls e l 331 3 ,2 3 4 6 . . 2 5 1 7 1 1 1 0 0 3 . .3 1 1 1 0 0 4 0 . . 6 3 1 9 0 3 1. . 5 4 1 8 0 9 0 . . 7 8 1 1 1 0 4 9 . . 7 2 1 11 1 0 4 . . 9 4 1 11 1 0 2 . .5 6 1 1 0 0 9 4 . . 0 6 1 1 0 1 7 3 . . 7 5 1 1 1 0 1 4 . .3 2 1 1 0 0 9 2 . . 9 5 105.6 28 Fabricated metal products. 34 5.93 130.9 126.7 128.1 125.7 130.8 132.0 134.0 133.6 133.8 135.8 136.9 135.2 29 Nonelectrical machinery... 35 9.15 144.8 137.5 141.5 139.9 144.0 145.7 145.2 147.4 148.9 149.7 151.6 150.5 30 Electrical machinery 36 8.05 141.9 135.7 135.1 134.0 142.6 143.6 143.9 144.6 144.2 145.8 147.7 147.3 31 Transportation equipment. . 37 9.27 121.1 112.7 117.4 113.5 123.7 125.6 124.3 125.5 124.3 121.9 122.7 115.5 32 Motor vehicles & parts... 371 4.50 159.6 145.5 155.0 145.5 163.2 166.2 164.4 165.6 168.4 162.9 161.9 146.3 33 Aerospace & misc. tr. eq. 372-9 4.77 84.8 81.7 81.9 83.4 86.5 87.3 86.5 87.7 82.8 83.4 85.7 86.6 34 Instruments 38 2.11 159.1 150.3 155.8 153.7 158.2 159.0 158.3 160.3 162.2 163.0 165.1 163.2 35 Miscellaneous mfrs 39 1.51 149.2 143.7 146.8 147.8 148.4 150.4 147.5 150.7 151.0 151.8 153.4 153.4 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products, total 1507.4 584.1 558.7 571.2 564.8 585.9 590.5 590.2 590.1 591.3 592.2 595.4 585.1 37 Final products I390.9 452.3 432.6 443.8 436.7 453.7 457.8 456.9 456.8 457.8 457.9 460.6 449.8 38 Consumer goods. 1277.5 317.5 306.4 315.1 308.8 318.9 321.5 320.0 319.1 319.5 320.4 320.5 314.4 39 Equipment 1113.4 134.8 126.4 128.4 127.9 134.9 136.2 137.0 137.6 138.1 137.3 140.0 135.7 40 Intermediate products. 1116.6 131.8 126.4 127.1 128.2 131.8 132.8 133.1 133.5 133.8 134.3 135.3 135.2 i 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 June 1976 which may be obtained from the Publications Services, Board of Governors BULLETIN, pp. 470-79. Availability of detailed descriptive and historical of the Federal Reserve System, Washington, D.C. 20551. data will be announced in a forthcoming BULLETIN. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • February 1978 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates. Exceptions noted. 1977 Item 1974 1975 1976 June July Aug. Sept. Oct.r Nov. Dec.? Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,074 927 1,296 1,678 1,639 1,772 1,695 1,850 1,893 1,858 2 1-family 644 669 894 1,105 1,089 1,156 1,135 1,216 1,257 1,223 3 2-or-more-family 431 278 402 573 550 616 560 634 636 635 4 Started 1,338 1,160 1,540 1,897 2,083 2,029 2,065 2,203 2,121 2,295 5 1-family 888 892 1,163 1,389 1,437 1,453 1,523 1,562 1,543 1,605 6 2-or-more-family 450 268 377 508 646 576 542 641 578 690 7 Under construction, end of period 1,189 1,003 1,147 1,323 1,344 1,359 1,368 1,418 1,449 8 1-family 516 531 655 787 793 799 798 824 848 9 2-or-more-family 673 472 492 536 551 559 570 594 602 10 Completed 11,,669922 1,297 1,362 1,647 1,671 111,,,666999999 11,,990077 1,624 1,789 11 1-family 993311 866 1,026 11,,220099 1,267 111,,,222888222 11,,449933 1,212 1,266 12 2-or-more-family 760 430 336 443388 404 444111777 414 412 523 13 Mobile homes shipped 329 213 250 264 251 270 300 319 318 324 Merchant builder activity in 1-family units: 14 Number sold 501 544 639 806 694 825 r828 861 875 901 15 Number for sale, end of period i. 407 383 433 444 453 467 '482 476 467 482 Price (thous. of dollars)2 Median: 16 Units sold 35.9 39.3 44.2 '48.7 48.6 49.0 r48.5 51.2 51.6 52.2 17 Units for sale 36.2 38.9 41.6 44.3 44.8 r45.1 45.9 46.7 47.7 48.2 Average: 13 Units sold 38.9 42.5 48.1 53.9 53.6 54.3 53.9 57.2 58.0 57.5 EXISTING UNITS (1-family) 19 Number sold 2,272 2,452 3,002 3,420 3,510 3,720 3,880 3,930 4,160 4,140 Price of units sold (thous. of dollars):2 20 Median 32.0 35.3 38.1 43. 43.7 43.9 43.8 44.0 44.5 44.2 21 Average 35.8 39.0 42.2 47.7 48.0 48.1 47.9 48.2 48.5 48.3 Value of new construction 3 (millions of dollars) CONSTRUCTION 22 Total put in place 138,499 134,293 147,481 174,584 173,035 172,001 175,929 177,802 177,837 180,300 23 Private 100,165 93,624 109,499 135,232 133,795 133,774 136,676 140,103 142,196 144,052 24 Residential 50,377 46,472 60,519 82,487 80,825 80,718 82,365 85,697 87,714 89,935 25 Nonresidential, total 49,788 47,152 48,980 52,745 52,970 53,056 54,311 54,406 54,482 54,117 Buildings: 26 Industrial 7,902 8,017 7,182 7,066 7,210 7,646 7,484 7,579 7,716 7,064 27 Commercial 15,945 12,804 12,757 15,235 15,533 15,257 16,054 15,846 15,404 14,854 28 Other 5,797 5,585 6,155 6,206 6,474 6,294 6,370 6,337 6,437 6,285 29 Public utilities and other 20,144 20,746 22,886 24,238 23,753 23,859 24,404 24,644 24,925 25,914 30 Public 33338888,,,,333333333333 4400,,666699 37,982 33339999,,,,333355552222 33339999,,,,222244440000 38,228 33339999,,,,222255553333 33337777,,,,666699999999 35,641 36,248 31 Military 1111,,,,111188888888 11,,339922 1,508 1111,,,,555566666666 1111....555533338888 1,460 1111,,,,444499993333 1111,,,,333388881111 1,286 1,387 32 Highway 11112222,,,,000066666666 1100,,886611 9,756 11110000,,,,777799992222 9999....555533339999 9,449 9999,,,,000055551111 9999,,,,555500007777 8,409 33 Conservation and development.. 2222,,,,777744440000 33,,225566 333,,,777222222 3333,,,,111199996666 4444,,,,222255552222 4,120 4444,,,,888877778888 3333,,,,111144441111 3,454 34 Other4 22222222,,,,333333339999 2255,,116600 222222,,,999999666 22223333,,,,777799998888 22223333,,,,999911111111 2233,,119999 22223333,,,,888833331111 22223333,,,,666677770000 2222,,449922 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 includeu 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 1977 1977 Dec. 1976 1977 1977 Dec. Dec. (1967 Mar. June Sept. Dec. Aug. Sept. Oct. Nov. Dec. = 100)1 Consumer prices 1 All items 4.8 6.8 10.0 8.1 4.2 4.6 .3 .3 .3 .5 .4 186.1 2 Commodities 3.3 6.1 10.4 7.4 2.3 4.6 .3 .2 .2 .5 .4 178.3 3 Food .6 8.0 14.6 12.7 1.7 3.7 .3 .1 .1 .6 .2 196.3 4 Commodities less food 5.1 4.9 7.4 4.2 2.7 5.2 .3 .2 .3 .5 .5 168.4 5 Durable 6.1 4.7 10.5 2.5 1.0 5.2 . i .2 .0 .6 .7 165.9 6 Nondurable 4.4 4.9 5.5 5.2 4.2 5.1 .4 .3 .5 .4 .4 170.3 7 Services 7.3 7.9 9.8 9.4 7.4 4.9 .5 .5 .4 .4 .5 200.5 8 Rent 5.5 6.5 6.3 6.3 7.0 6.3 .5 .6 .4 .7 .4 157.9 9 Services less rent 7.6 8.1 9.9 10.1 7.5 4.8 .4 .5 .4 .3 .4 208.2 Other groupings: 10 All items less food i 6.2 6.3 6.9 7.8 5.7 5.0 .4 .6 .4 .5 .3 183.1 11 All items less shelter1 4.9 6.3 9.4 8.2 3.6 4.0 .3 .2 .3 .4 .3 183.0 12 Homeo wnership i 3.8 9.2 9.1 9.6 10.6 7.7 .6 .8 .4 .7 .7 213.0 Wholesale prices 13 All commodities 4.7 5.9 10.6 '3.6 '1.5 8.3 .1 .5 .8 .7 .5 198.2 14 Farm products, and processed foods and feeds -1.1 3.0 19.1 -2.5 -17.0 17.3 -2.1 -.4 1.3 2.3 .4 189.5 15 Farm products — 1.1 -1.7 26.5 '-21.7 r —22.5 22.6 -4.3 -.2 2.4 3.0 -.3 188.3 16 Processed foods and feeds -1.1 5.8 15.4 r10.8 r —13.9 14.2 -.8 -.6 .8 1.7 .9 189.3 17 Industrial commodities 6.4 6.7 8.1 '5.5 r7.4 6.0 .5 .8 .6 .4 .5 200.0 Materials, supplies, and components of which: 18 Crude materials 2 13.5 11.5 21.7 r—2.1 '9.1 18.2 1.9 .3 -.2 1.3 3.2 292.4 19 Intermediate materials 3 6.4 6.3 8.0 r4.5 '7.5 5.2 .5 .7 .5 .2 .5 206.5 Finished goods, excluding foods: 20 Consumer 4.9 6.1 8.7 r6.5 '5.0 4.4 .3 .7 .6 .3 .2 176.2 21 Durable 3.9 6.1 7.0 r6.3 '5.1 6.1 1.0 .1 1.1 , i .3 156.8 22 Nondurable 5.4 6.2 10.0 r6.7 '4.6 3.7 0.0 1.0 .3 '.4 .2 189.1 23 Producer 6.4 7.2 5.5 r6.1 '5.8 11.4 .4 .5 1.5 .7 .5 191.5 MEMO: 24 Consumer foods -2.5 6.6 12.7 r13.8 -7.5 9.2 -.9 -.3 .3 .4 1.5 192.9 1 Not seasonally adjusted. 3 Excludes intermediate materials for food manufacturing and manu- 2 Excludes crude foodstuffs and feedstuffs, plant and animal fibers, factured animal feeds. oilseeds, and leaf tobacco. SOURCE.—Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • February 1978 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 1975 1976 1977* Q3 Q4 Ql Q2 Q3 QAP Gross national product 1 Total 1,528.8 1,706.5 1,890.4 1,727.3 1,755.4 1,810.8 1,869.9 1,915.9 1,965.1 By source: 2 Personal consumption expenditures... 980.4 1,094.0 1,210.0 1,102.2 1,139.0 1,172.4 1,194.0 1,218.9 1,255.3 3 Durable goods 132.9 158.9 179.4 159.3 166.3 177.0 178.6 Ml.6 184.6 4 Nondurable goods 409.3 442.7 480.1 444.7 458.8 466.6 474.4 481.8 497.7 5 Services 438.2 492.3 550.6 498.2 513.9 528.8 541.1 559.5 572.9 6 Gross private domestic investment 189.1 243.3 294.3 254.3 243.4 271.8 294.9 303.6 307.0 7 Fixed investment 200.6 230.0 276.6 232.8 244.3 258.0 273.2 280.0 295.1 8 Nonresidential 149.1 161.9 185.6 164.9 167.6 177.0 182.4 187.5 195.5 9 Structures 52.9 55.8 61.6 56.0 57.0 57.9 61.0 62.6 64.9 10 Producers' durable equipment 96.3 106.1 124.0 109.0 110.6 119.2 121.4 124.9 130.7 11 Residential structures 51.5 68.0 90.9 67.8 76.7 81.0 90.8 92.5 99.5 12 Nonfarm 49.5 65.7 88.4 65.7 74.3 78.5 88.2 89.9 97.0 13 Change in business inventories... -11.5 13.3 17.8 21.5 -.9 13.8 21.7 23.6 11.9 14 Nonfarm -15.1 14.9 17.5 22.0 1.4 14.1 22.4 23.1 10.4 15 Net exports of goods and services.... 2.0 7.8 -9.0 7.9 3.0 -8.2 -9.7 -7.5 -10.8 16 Exports 147.3 162.9 175.6 168.4 168.5 170.4 178.1 179.9 174.3 17 Imports 126.9 155.1 184.7 160.6 165.6 178.6 187.7 187.4 185.1 18 Govt, purchases of goods and services. 338.9 361.4 395.0 363.0 370.0 374.9 390.6 400.9 413.6 19 Federal 123.3 130.1 145.4 130.2 134.2 136.3 143.6 148.1 153.8 20 State and local 215.6 231.2 249.5 232.7 235.8 238.5 247.0 252.9 259.8 By major type of product: 21 Final sales, total 1,540.3 1,693.1 1,872.7 1,705.8 1,756.3 1,797.0 1,848.2 1,892.2 1,953.2 22 Goods 686.2 764.2 834.5 746.0 774.7 805.9 827.1 843.5 861.5 23 Durable goods 258.2 303.4 342.0 313.4 312.6 334.4 341.0 342.3 350.4 24 Nondurable 428.0 460.9 492.5 464.1 460.6 471.5 486.1 501.2 511.1 25 Services 699.2 782.0 868.4 791.8 813.8 833.7 855.3 881.6 903.1 26 Structures 143.5 160.2 187.5 159.6 166.9 171.2 187.5 190.7 200.4 27 Change in business inventories -11.5 13.3 17.8 21.5 -.9 13.8 21.7 23.6 11.9 28 Durable goods -9.2 4.1 8.8 10.7 .6 7.8 11.5 10.3 5.5 29 Nondurable goods -2.2 9.3 9.0 12.4 -3.1 6.0 10.2 13.4 6.4 30 MEMO: Total GNP in 1972 dollars... 1,202.1 1,274.7 1,337.6 1,283.7 1,287.4 1,311.0 1,330.7 1,347.4 1,361.4 National income 31 Total 1,217.0 1,364.1 1,520.3 1,379.6 1,402.1 11,,445500..22 1,505.7 1,540.5 32 Compensation of employees 930.3 1,036.3 1,155.8 1,046.5 1,074.2 11,,110099..99 1,144.7 1,167.4 1,201.3 33 Wages and salaries 805.7 891.8 989.5 900.2 923.2 995511..33 980.9 998.9 1,027.1 34 Government and Government enterprises 175.4 187.2 199.9 188.2 192.5 119944..88 197.2 200.6 206.9 35 Other 630.3 704.6 789.6 712.0 730.7 775566..44 783.6 798.3 820.2 36 Supplement to wages and salaries 124.6 144.5 166.3 146.3 150.9 115588..66 163.8 168.5 174.2 37 Employer contributions for social insurance 59.8 68.6 11.1 69.1 70.9 75.4 77.1 78.2 80.2 38 Other labor income 64.9 75.9 88.6 77.3 80.0 83.2 86.7 90.3 94.0 4 3 0 9 Pro B p u r s ie in to e r s s s ' a i n n d c o p m r e o 1 f essional1 8 6 6 2 .0 .8 6 88 9 .0 .4 7 97 8 .9 .4 8 7 6 0 .2 .0 7 88 2 . . 7 0 9 7 5 4 .1 .3 7 97 7 .0 .3 9 8 5 0 .5 .0 10 8 4 2 .2 .0 41 Farm1 23.2 18.6 19.5 16.2 16.6 20.7 19.7 15.5 22.1 42 Rental income of persons2 22.3 23.3 25.3 23.3 24.1 24.5 24.9 25.5 26.4 43 Corporate profits1 99.3 128.1 140.8 133.5 123.1 125.4 140.2 149.0 44 Profits before tax 3 123.5 156.9 172.1 159.9 154.8 161.7 174.0 172.8 45 Inventory valuation adjustment -12.0 -14.1 -14.5 -11.7 -16.9 -20.6 -17.8 -5.9 -13.8 46 Capital consumption adjustment -12.2 -14.7 -17.2 -14.7 -14.8 -15.6 -15.9 -17.9 -19.4 47 Net interest 79.1 88.4 100.9 90.1 92.0 95.3 98.9 103.1 106.4 1 With inventory valuation and capital consumption adjustments. 3 For after-tax profits, dividends, etc., see Table 1.50. 2 With capital consumption adjustments. SOURCE.—Survey of Current Business (U.S. Dept. of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

National Income Accounts A53 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1976 1977 11997755 1976 1977P Account Q3 Q4 Q1 Q2 QQ33 Q4p Personal income and saving 1 Total personal income 1,253.4 1,382.7 1,536.1 1,393.9 1,432.2 1,476.8 1,517.2 1,549.8 1,600.5 2 Wage and salary disbursements 805.7 891.8 989.5 900.2 923.2 951.3 980.9 998.9 1,027.1 3 Commodity-producing industries 275.0 308.4 346.3 310.8 317.7 328.9 345.4 351.0 359.7 211.0 238.2 267.2 240.2 245.1 255.4 265.9 270.0 277.5 5 Distributive industries. 195.4 217.1 242.5 220.2 226.4 234.5 240.5 244.4 250.7 6 Service industries 159.9 179.0 200.8 180.9 186.7 193.0 197.7 202.8 209.7 7 Government and government enterprises 175.4 187.2 199.9 188.2 192.5 194.8 197.2 200.6 206.9 8 Other labor income 64.9 75.9 88.6 77.3 80.0 83.2 86.7 90.3 94.0 86.0 88.0 97.9 86.2 88.7 95.1 97.0 95.5 104.2 10 Business and professional1 62.8 69.4 78.4 70.0 72.0 74.3 77.3 80.0 82.0 11 Farm1 23.2 18.6 19.5 16.2 16.6 20.7 19.7 15.5 22.1 12 Rental income of persons2 22.3 23.3 25.3 23.3 24.1 24.5 24.9 25.5 26.4 13 Dividends 32.4 35.8 41.2 36.0 38.4 38.5 40.3 42.3 43.6 115.6 130.3 147.9 132.2 136.4 140.3 145.4 150.3 155.6 176.8 192.8 206.9 194.3 198.0 203.5 203.0 208.7 212.5 16 Old-age survivors, disability, and health insurance benefits 81.4 92.9 105.0 95.8 98.4 99.9 101.8 110088..55 109.8 17 LESS: Personal contributions for social insurance 50.4 55.2 61.2 55.6 56.6 59.6 60.8 6611..77 62.9 18 EQUALS: Personal income 1,253.4 1,382.7 1,536.1 1,393.9 1,432.2 1,476.8 1,517.2 1,549.8 1,600.5 19 LESS: Personal tax and nontax payments.... 169.0 196.9 227.5 200.6 209.5 224.4 224.8 226.1 234.6 20 EQUALS: Disposable personal income 1,084.4 1,185.8 1,308.6 1,193.3 1,222.6 1,252.4 1,292.5 1,323.8 1,365.9 21 LESS: Personal outlays 1,004.2 1,119.9 1,240.9 1,128.5 1,166.3 1,201.0 1,223.9 1,250.5 1,288.1 80.2 65.9 67.8 64.8 56.3 51.4 68.5 73.3 77.8 MEMO ITEMS: Per capita (1972 dollars): 5,629 5,924 6,167 5,961 5,966 6,064 6,143 66,,220066 66,,225599 24 Personal consumption expenditures 3,629 3,817 3,966 3,820 3,892 3,934 3,943 3,963 4,029 4,014 4,137 4,290 4,135 4,177 4,202 4,268 4,305 4,383 7.4 5.6 5.2 5.4 4.6 4.1 5.3 5.5 5.7 Gross saving 27 Gross private saving 222555999...444 222777222...555 222999444...777 222777777...222 222666111...666 222666222...999 222999222...111 333111000...555 888000...222 666555...999 666777...888 666444...888 555666...333 555111...444 666888...555 777333...333 77.8 29 Undistributed corporate profits1 111666...777 222777...666 222999...999 333111...666 222000...888 222222...555 333000...333 333777...444 30 Corporate inventory valuation adjustment.... ---111222...000 ---111444...111 ---111444...555 ---111111...777 ---111666...999 ---222000...666 ---111777...888 ---555...999 -13.8 Capital consumption allowances: 31 Corporate 111000111...777 111111111...888 111222111...999 111111222...999 111111555...222 111111777...666 111111999...444 111222333...777 127.0 32 Noncorporate 666000...888 666777...222 777555...111 666888...000 666999...222 777111...444 777333...888 777666...222 78.9 34 Government surplus, or deficit (—), national income and product accounts ----66664444....3333 ----33335555....6666 ----22220000....4444 ----33332222....4444 ----22229999....4444 ----11111111....5555 ----11114444....9999 ----22226666....0000 35 Federal ----77770000....2222 ----55554444....0000 ----44449999....6666 ----55553333....5555 ----55555555....9999 ----33338888....8888 ----44440000....3333 ----55558888....9999 36 State and local 5555....9999 11118888....4444 22229999....2222 22221111....1111 22226666....5555 22227777....3333 22225555....4444 33332222....9999 37 Capital grants received by the United States, 38 Investment 220011..00 224422..55 227755..33 225522..88 223377..55 225544..77 227766..11 228855..44 284.9 118899..11 224433..33 229944..33 225544..11 224433..33 227711..88 229944..99 330033..66 307.0 40 Net foreign 1111..88 --..99 --1199..11 --11..55 --55..99 --1177..11 --1188..88 --1188..22 -22.1 41 Statistical discrepancy 55..99 55..55 11..00 88..00 55..33 33..33 --11..22 ..99 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

A 54 International Statistics • February 1978 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1976 1977 Item credits or debits 1974 1975 1976 Ql Q3 Q4 Ql Q2 Q3 1 Merchandise exports 98,306 107,088 114,694 27,000 29,603 29,711 29,458 30,590 30,869 2 Merchandise imports 103,673 98,043 124,014 28,343 32,411 33,305 36,561 38,347 38,378 3 Merchandise trade balance 2 -5,367 9,045 -9,320 -1,343 -2,808 -3,594 -7,103 -7,757 -7,509 4 Military transactions, net -2,083 -876 366 -65 235 235 516 311 577 5 Investment income, net 8,744 5,954 9,808 2,437 2,667 2,424 3,252 3,504 3,215 6 Other service transactions, net 865 2,042 2,743 523 781 598 340 553 767 7 Balance on goods and services 3 2,160 16,164 3,596 1,552 875 -337 -2,995 -3,389 -2,950 8 Remittances, pensions, and other transfers -1,714 -1,719 -1,878 -485 -461 -473 -526 -492 -567 9 U.S. Govt, grants (excluding military) -5,475 -2,893 -3,146 -544 -1,475 -572 -637 -723 -785 10 Balance on current account -5,028 11,552 -1,427 523 -1,061 -1,382 -4,158 -4,604 -4,302 11,,445588 --33,,880099 330033 --33,,440099 —4 821 — 6 940 12 Change in U.S. Govt, assets, other than official reserve assets, net (increase, —) 365 -3,463 -4,213 -723 -1,405 -1,142 -909 -825 -1,175 13 Change in U.S. official reserve assets (increase, —) -1,434 -607 r—2,530 — 773 -407 r228 -388 6 151 14 Gold --5588 15 Special Drawing Rights (SDR's) -172 -66 -78 -45 -18 — 29 — 83 _9 16 Reserve position in International Monetary Fund (IMF). -1,265 -466 -2,212 -237 -716 -461 -389 -80 133 17 Foreign currencies 3 -75 -240 -491 327 718 59 169 27 18 Change in U.S. private assets abroad (increase, —) -25,960 -27,478 -36,216 -9,254 -6,597 -13,108 1,627 -9,464 -2,372 -19,516 -13,532 -20,904 -3,630 -3,372 -9,148 3,446 -4,553 244 20 Long-term -1,183 -2,357 -2,124 -289 -978 -480 -306 23 -441 21 Short-term -18,333 -11,175 -18,780 -3,341 -2,394 -8,668 3,752 4,576 685 22 Nonbank-reported claims -3,221 -1,447 -1,986 -738 723 -967 -722 -1,129 674 23 Long-term -474 -432 10 -191 66 -10 45 68 47 24 Short-term -2,747 -1,015 -1,996 -547 657 -957 -767 -1,197 627 25 U.S. purchase of foreign securities, net -1,854 '-6,235 -8,730 -2,460 -2,743 -2,171 -692 -1,784 -2,190 26 U.S. direct investments abroad, net -1,368 -6,264 -4,596 -2,427 -1,205 -822 -404 -1,998 -1,100 27 Change in foreign official assets in the United States (in- 10,981 6,960 17,945 3,847 3,070 6,977 5,719 7,908 8,243 28 U.S. Treasury securities 3,282 4,408 9,333 1,998 1,260 3,909 5,149 5,124 6,943 29 Other U.S. Govt, obligations 902 905 566 68 66 116 100 609 627 30 Other U.S. Govt, liabilities 4 724 1,701 4,938 1,524 1,819 852 712 456 319 31 Other U.S. liabilities reported by U.S. banks 5,818 -2,158 893 -412 -599 1,769 -420 752 -152 32 Other foreign official assets 5 254 2,104 2,215 669 524 331 178 967 506 33 Change in foreign private assets in the United States (increase, +) 22,631 7,376 16,575 3,009 '5,131 5,102 -3,209 5,873 4,680 34 U.S. bank-reported liabilities 16,017 628 10,982 672 1,774 5,008 -5,298 6,344 2,498 35 Long-term 9 -280 175 -105 75 221 47 105 192 36 Short-term 16,008 908 10,807 111 1,699 4,787 -5,345 6,239 2,306 1,844 240 -616 161 -297 -242 -374 -405 -90 38 Long-term -90 334 -947 -233 -241 -311 -229 -183 -48 39 Short-term 1,934 -94 331 394 -56 69 -145 -222 -42 40 Foreign private purchases of U.S. Treasury securities, net 697 2,590 2,783 437 3,026 -88 1,047 -1,370 1,247 41 Foreign purchases of other U.S. securities, net 378 2,503 1,250 1,030 68 21 879 736 514 42 Foreign direct investments in the United States, net.... 3,695 1,414 2,176 709 561 403 537 568 511 43 Allocation of SDR's -1,555 55,,666600 9,866 3,372 1,268 3,325 1,317 1,106 -5,225 45 Owing to seasonal adjustments 111111 --22,,662222 11,,778800 552244 --221155 --22,,550066 46 Statistical discrepancy in recorded data before seasonal -1,555 5,660 9,866 2,655 3,890 1,545 793 1,321 -2,719 MEMO ITEMS * Changes in official assets: 47 U.S. official reserve assets (increase, —) -1,434 -607 -2,530 -773 -407 228 -388 6 151 48 Foreign official assets in the United States (increase, -f) • 10,257 5,259 13,007 2,323 1,251 6,125 5,007 77,,445522 77,,992244 49 Changes in Organization of Petroleum Exporting Countries (OPEC) official assets in the United States (part of line 27 above) 10,841 7,092 9,324 3,482 1,774 805 3,249 11,,007733 11,,444411 50 Transfers under military grant programs (excluded from lines 1, 4, and 9 above) 1,817 2,217 386 50 156 94 46 27 32 1 Seasonal factors are no longer calculated for lines 13 through 50. excludes certain military sales to Israel from exports and excludes U.S. 2 Data are on an international accounts (IA) basis. Differs from the Govt, interest payments from imports. Census basis primarily because the IA basis includes imports into the 4 Primarily associated with military sales contracts and other transac- U.S. Virgin Islands, and it excludes military exports, which are part of tions arranged with or through foreign official agencies. Line 4. 5 Consists of investments in U.S. corporate stocks and in debt securi- 3 Differs from the definition of "net exports of goods and services" in ties of private corporations and state and local governments. the national income and product (GNP) account. The GNP definition NOTE.—Data are from Bureau of Economic Analysis, Survey of 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 June July Aug. Sept. Oct. Nov. Dec. 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 97,908 107,130 114,802 10,112 10,150 9,563 10,916 9,190 9,304 11,029 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 100,252 96,115 120,678 12,932 12,476 12,232 12,631 12,288 11,386 13,059 3 Trade balance -2,344 4-11,014 -5,876 -2,820 -2,326 -2,669 -1,715 -3,098 -2,082 -2,030 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 1978 TTyyppee 11997744 11997755 11997766 July Aug. Sept. Oct. Nov. Dec. Jan.f 1 Total 15,883 16,226 18,747 18,927 19,055 18,988 19,048 19,155 19,317 319,455 2 Gold stock, including Exchange Stabilization Fund1 11,652 11,599 11,598 11,658 11,658 11,658 11,658 11,658 11,719 11,719 3 Special Drawing Rights2 2,374 2,335 2,395 2,498 2,483 2,489 2,530 2,548 2,629 32,629 4 Reserve position in International Monetary Fund 1,852 2,212 4,434 4,716 4,859 4,776 4,842 4,933 4,951 3 4,934 5 Convertible foreign currencies 5 80 320 55 55 65 18 16 18 173 1 Gold held under earmark at F.R. Banks for foreign and international SDR based on a weighted average of exchange rates for the currencies accounts is not included in the gold stock of the United States; see Table of 16 member countries. The U.S. SDR holdings and reserve position in 3.24. the IMF also are valued on this basis beginning July 1974. At valuation 2 Includes allocations by the International Monetary Fund (IMF) of used prior to July 1974 (SDR1 = $1.20635) total U.S. reserve assets SDR's as follows: $867 million on Jan. 1, 1970; $717 million on Jan. 1, at end of Jan. amounted to $19,278; SDR holdings, $2,610, and reserve 1971; and $710 million on Jan. 1, 1972; plus net transactions in SDR's. position in IMF, $4,776. 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

A 56 International Statistics • February 1978 3.13 SELECTED U.S. LIABILITIES TO FOREIGNERS Millions of dollars, end of period 1977 HHoollddeerr,, aanndd ttyyppee ooff lliiaabbiilliittyy 11997744 11997755 11997766 June July Aug. Sept. Oct. Nov.? Dec.** 1 Total 119,164 126,552 151,356 163,545 168,799 166,319 174,657 178,934 184,896 192,122 2 Foreign countries 115,842 120,929 142,873 155,362 162,379 159,163 167,243 171,538 177,263 184,477 3 Official institutions1 7766,,882233 80,712 9911,,997755 103,656 107,601 108,134 111,183 117,054 123,123 125,848 4 Short-term, reported by banks in the United States.2 53,079 49,530 53,619 57,413 60,059 56,810 5566,,778833 59,835 62,204 64,393 U.S. Treasury bonds and notes: 5 Marketable3 5,059 6,671 11,788 18,345 19,393 23,089 2255,,558822 28,634 31,514 32,112 6 Nonmarketable4 1166,,333399 1199,,997766 2200,,664488 20,917 20,837 2200,,665555 21,128 2200,,335511 2200,,446622 2200,,444433 7 Other readily marketable liabilities5 2,346 4,535 5,920 6,981 7,312 7,580 7,690 8,234 8,943 8,900 Commercial banks abroad: 8 Short-term, reported by banks in the United States2,6 30,106 29,516 37,329 36,687 39,946 35,789 4400,,339922 38,755 38,158 42,532 9 Other foreigners 88,,991133 10,701 1133,,556699 1155,,001199 1144,,883322 15,240 15,668 1155,,772299 1155,,998822 1166,,009977 10 Short-term, reported by banks in the United States2 88,,441155 10,000 1122,,559922 13,623 13,377 13,684 14,041 1144,,003388 14,209 14,333 11 Marketable U.S. Treasury bonds and notes3,7 498 701 977 1,396 1,455 1,556 11,,662277 1,691 1,773 1,764 12 Nonmonetary international and regional organization8 3,322 5,623 8,483 8,183 66,,442200 77,,115566 7,414 77,,339966 7,633 7,645 13 Short-term, reported by banks in the United States2 33,,117711 55,,229922 55,,445500 5,727 3,834 44,,221166 33,,555555 33,,339966 33,,225588 22,,889999 14 Marketable U.S. Treasury bonds and notes3 151 331 3,033 2,456 2,586 2,940 3,859 4,000 4,375 4,746 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 June July Aug. Sept. Oct. Nov.f Dec.f 1 Total 76,823 80,712 91,975 103,656 107,601 108,134 111,183 117,054 123,123 125,848 2 Western Europe * 44,328 45,701 45,882 53,342 55,669 57,741 60,701 65,039 68,137 70,561 3 Canada 3,662 3,132 3,406 2,699 2,653 2,553 2,508 1,863 1,919 2,334 4 Latin American republics 4,419 4,450 4,906 4,240 4,340 4,246 4,466 4,269 4,843 4,601 5 Asia 18,627 22,551 34,108 39,839 41,162 40,438 40,330 42,697 45,442 45,667 6 Africa 3,160 2,983 1,893 1,938 2,458 2,265 2,144 2,027 1,792 1,742 7 Other countries 2 2,627 1,895 1,780 1,598 1,319 891 1,034 1,159 990 943 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

Nonbank-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 June July Aug. Sept. Oct. NOV.P Dec.? All foreigners, excluding the International 94,771 9944,,333388 108,990 113,448 111177,,221166 110,499 114,773 111166,,002244 117,829 124,157 2 Payable in dollars 94,004 93,781 108,266 112,773 116,256 109,610 114,027 115,260 116,997 123,345 Deposits: 3 14,051 13,564 16,803 16,287 17,496 15,942 16,893 16,895 16,462 18,961 4 Time1 9,907 10,250 11,316 12,079 11,833 11,749 11,604 11,515 11,384 11,518 5 U.S. Treasury bills and certificates2 35,662 37,414 40,744 44,110 44,413 42,254 43,181 44,700 47,130 48,943 6 Other short-term liabilities3 34,384 32,552 39,403 40,296 42,515 39,664 42,349 42,150 42,021 43,924 7 Payable in foreign currencies 766 558 724 675 960 889 745 764 832 811 8 Nonmonetary international and regional organizations4 3,171 5,293 5,450 5,728 3,834 4,216 3,555 3,396 3,258 2,899 9 Payable in dollars 3,171 5,284 5,445 5,715 3,819 4,178 3,523 3,376 3,237 2,889 Deposits: 10 139 139 290 228 112222 142 214 117733 173 223311 11 Time1 111 148 205 156 154 147 134 140 142 139 12 U.S. Treasury bills and certificates 497 2,554 2,701 2,521 2,191 1,990 1,875 802 767 706 13 Other short-term liabilities5 2,424 2,443 2,250 2,811 1,352 1,900 1,300 2,261 2,155 1,813 14 Payable in foreign currencies 8 5 13 15 38 32 20 20 11 15 Official institutions, banks, and other foreigners.. 91,600 89,046 103,540 107,720 113,382 106,283 111,218 112,628 114,571 121,258 16 Payable in dollars 90,834 88,496 102,821 107,058 112,*37 105,431 111100,,550044 111,884 113,759 120,457 Deposits: 17 Demand 13,912 13,426 16,513 16,060 17,374 15,801 16,679 1166,,772222 16,288 18,730 18 Time1 9,796 10,102 11,112 11.924 11,679 11,603 11,471 11,375 11,241 11,379 19 U.S. Treasury bills and certificates2 35,165 34,860 38,042 41,589 42,221 40,264 41,306 43,898 46,364 48,237 20 Other short-term liabilities3 31,961 30,109 37,153 37,486 41,163 37,764 41,048 39,889 39,866 42,111 21 Payable in foreign currencies 766 549 719 662 945 851 713 744 812 801 22 Official institutions6 53,079 49,530 53,619 57,413 60,059 56,810 56,783 59,835 62,204 64,393 23 Payable in dollars 52,952 49,530 53,619 57,413 60,059 56,810 56,783 59,835 62,204 64,393 Deposits: 24 Demand 2,951 2,644 33,,339944 2,705 3,642 3,122 3,133 22,,999900 2,557 33,,550044 25 Time1 4,167 3,423 2,321 2,506 2,401 2,248 1,987 1,903 1,848 1,799 26 U.S. Treasury bills and certificates2 34,656 34,199 37,725 41,322 41,926 39,825 40,780 43,424 45,849 47,857 27 Other short-term liabilities5 11,178 9,264 10,179 10,880 12,090 11,615 10,882 11,518 11,950 11,233 98 Vnvnhlo in fnrpian riirrenries 127 29 Banks and other foreigners 38,520 39,515 49,921 50,307 53,323 49,473 54,435 52,793 52,367 56,864 30 Payable in dollars 37,881 38,966 49,202 49,645 52,378 48,622 53,721 52,049 51,555 56,064 31 Banks7 29,467 28,966 36,610 3366,,002255 3399,,000011 3344,,993377 3399,,667799 38,011 37,347 41,732 Deposits: 32 8,231 7,534 99,,110044 9,565 10,136 8,928 9.676 9,677 9,666 1100,,994422 33 Time1 1,885 1,856 2,267 2,124 1,826 1,865 1,849 1,858 1,805 2,036 34 U.S. Treasury bills and certificates 232 335 119 100 144 112 121 127 141 141 35 Other short-term liabilities3 19,119 19,241 25,120 24,236 26,895 24,033 28,033 26,349 25,734 28,613 36 8,414 10,000 12,592 1133,,662200 1133,,337766 1133,,668844 1144,,004422 14,037 14,208 14,332 Deposits: 37 Demand 2,729 3,248 4,015 3,790 3,595 3,751 3,870 4,055 4,065 4,283 38 Time1 3,744 4,823 6,524 7,294 7,453 7,490 7,634 7,614 7,588 7,544 39 U.S. Treasury bills and certificates 277 325 198 167 151 328 404 346 373 240 40 Other short-term liabilities5 1,664 1,604 1,854 2,370 2,177 2,116 2,133 2,022 2,182 2,265 41 639 549 719 662 945 851 713 744 812 801 1 Excludes negotiable time certificates of deposit, which are included 4 Principally the International Bank for Reconstruction and Developin "Other short-term liabilities.** ment, and the Inter-American and Asian Development Banks. 2 Includes nonmarketable certificates of indebtedness and Treasury 5 Principally bankers acceptances, commercial paper, and negotiable bills issued to official institutions of foreign countries. time certificates of deposit. 3 Includes liabilities of U.S. banks to their foreign branches, liabilities 6 Foreign central banks and foreign central governments and their of U.S. agencies and branches of foreign banks to their head offices and agencies, and Bank for International Settlements. foreign branches of their head offices, bankers acceptances, commercial 7 Excludes central banks, which are included in "Official institutions." paper, and negotiable time certificates of deposit. NOTE.—"Short-term obligations" are those payable on demand, or having an original maturity of 1 year or less. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • February 1978 3.16 SHORT-TERM LIABILITIES TO FOREIGNERS Reported by Banks in the United States By Country Millions of dollars, end of period 1977 Area and country 1974 1975 1976 June July Aug. Sept. Oct. Nov.f Dec.? 1 Total c94,771 94,338 108,990 113,448 117,216 110,499 114,773 116,024 117,829 2 Foreign countries <91,600 89,046 103,540 107,720 113,382 106,283 111,218 112,628 114,571 3 Europe c48,813 43,988 46,938 49,627 50,604 48,953 51,431 52,910 54,419 4 Austria 607 754 348 465 455 498 448 410 375 5 Belgium-Luxembourg 2,506 2,898 2,275 2,704 2,822 2,691 2,667 2,736 2,662 6 Denmark 369 332 363 1,178 1,154 1,032 1,172 1,250 1,264 7 Finland 266 391 422 258 209 217 248 232 263 8 France 4,287 7,733 4,875 5,089 4,745 4,894 4,799 5,006 4,683 9 Germany 9,429 4,357 5,965 4,271 4,937 4,413 4,289 5,280 5,590 10 Greece 248 284 403 556 573 709 629 648 643 11 Italy c2,577 1,072 3,206 4,636 5,422 5,538 5,770 6,320 6,778 12 Netherlands 3,234 3,411 3,007 3,545 3.397 3,328 3,216 3,088 2,986 13 Norway 1,040 996 785 1.195 1,203 1,140 1,190 1,023 641 14 Portugal 310 195 239 163 222 169 173 191 266 15 Spain 382 426 561 667 642 543 723 724 647 16 Sweden 1,138 2,286 1,693 2,390 1,963 1,782 2,483 2,734 3,136 17 Switzerland 10,139 8,514 9,458 9,323 9,162 9,386 9,920 9,757 9.909 18 Turkey 152 118 1(6 127 101 203 93 106 118 19 United Kingdom 7,584 6,886 10,004 10,701 11,250 10,226 11,427 11,096 12,144 20 Yugoslavia 183 126 188 115 125 110 119 130 171 21 Other Western Europe1 4,073 2,970 2,672 2,009 1,973 1,855 1,839 1,948 1.910 22 U.S.S.R 82 40 51 73 88 70 53 68 66 23 Other Eastern Europe 206 200 255 162 160 151 173 162 167 24 Canada 3,520 3,076 4,784 4,253 4,456 4,631 4,492 4,913 4,706 25 Latin America. 11,754 14,942 19,026 20,786 23,038 21,412 24,470 22,354 22,527 26 Argentina 886 1,147 1,538 1,699 1,754 2,022 2,187 2,421 2,594 27 Bahamas 1,054 1,827 2,750 3,777 5,518 4,283 940 3,769 3,469 28 Brazil 1,034 1,227 1,432 ,357 1.398 1,233 101 1,055 950 29 Chile 276 317 335 393 373 353 342 340 322 30 Colombia 305 417 1,017 1, 196 1,220 1,164 156 1,182 1,152 31 Cuba 7 6 6 7 6 6 6 6 6 32 Mexico 1,770 2,066 2,848 2,832 2,869 2,790 823 2,741 2,850 33 Panama 510 1,099 1,140 941 1,015 954 947 946 986 34 Peru 272 244 257 224 241 273 288 259 235 35 Uruguay 165 172 245 234 242 230 245 226 258 36 Venezuela 3,413 3,289 3,095 2,478 2,532 2,887 037 3,212 3,780 37 Other Latin American republics 1,316 1,494 2,081 2,376 2,238 2,154 320 2,199 2,125 38 Netherlands Antilles2 158 129 140 207 158 180 169 156 184 39 Other Latin America 589 1,507 2,142 3,066 3,476 2,886 908 3,840 3,616 40 Asia 21,130 21,539 28,472 28,456 30,296 26,931 26,457 28,165 28,948 41 China, People's Republic of (Mainland)... 50 123 47 44 49 46 44 48 52 42 China, Republic of (Taiwan) 818 1,025 989 1.196 1,259 925 924 899 926 43 Hong Kong 530 623 892 931 1,028 1,066 1,153 993 971 44 India 261 126 648 814 746 743 850 886 980 45 Indonesia 1,221 369 340 282 782 589 453 905 739 46 Israel 389 386 391 547 484 467 416 465 490 47 Japan 10,931 10,218 14,380 12,387 12,837 11,691 11,440 13,272 14,835 48 Korea 384 390 437 534 633 527 600 596 572 49 Philippines 747 698 627 614 653 561 559 630 603 50 Thailand 333 252 275 257 281 293 264 271 251 51 Middle East oil-exporting countries3 4,623 6,461 8,073 9,283 9,976 8,828 8,525 7,933 7,365 52 Other 845 867 1,372 1,568 1,568 1,195 1,230 1,267 1,164 53 Africa 3,551 3,373 2,300 2,671 3,284 3,177 3,023 2,786 2,560 54 Egypt 103 343 333 314 401 603 484 393 331 55 Morocco 38 68 88 81 73 61 68 61 31 56 South Africa 130 169 143 237 264 185 208 232 240 57 Zaire 84 63 35 30 40 38 36 33 30 58 Oil-exporting countries4 2,814 2,239 1,116 1,145 1,541 1,430 1,564 1,403 1,214 59 Other 383 491 585 866 966 860 664 664 715 60 Other countries 2,831 2,128 2,019 1,926 1,704 1,179 1,345 1,500 1,411 61 Australia 2,742 2,014 1,911 1,800 1,553 1,007 1,198 1,348 1,276 62 All other 89 114 108 126 151 172 146 152 135 63 Nonmonetary international and regional organizations 3,171 5,293 5,450 5,728 3,834 4,216 3,555 3,396 3,258 64 International 2,900 5,064 5,091 5,365 3,484 3,816 3,186 3,079 2,922 65 Latin American regional 202 187 136 144 165 187 157 134 128 66 Other regional 69 42 223 218 186 213 212 183 208 For notes see bottom of p. A59. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-reported Data A59 3.17 SHORT-TERM LIABILITIES TO FOREIGNERS Reported by Banks in the United States Supplemental "Other" Countries 1 Millions of dollars, end of period 1975 1976 1977 1975 1976 Area and country Area and country Apr. Dec, Apr. Dec, Apr. Apr. Dec. Apr. Dec. Other Western Europe Other Asia 1 Cyprus 17 6 38 68 58 25 Afghanistan 19 41 57 2 Iceland 20 33 43 40 32 26 Bangladesh 50 54 44 3 Ireland, Republic of. 29 75 43 236 131 27 Burma 49 31 34 28 Cambodia 4 4 3 Other Eastern Europe 29 Jordan 30 39 23 4 Bulgaria 13 19 14 34 30 Laos 5 2 2 5 Czechoslovakia 32 11 19 31 Lebanon 180 117 132 6 German Democratic Republic. 18 17 3 11 32 Malaysia 92 77 130 7 Hungary 11 13 11 18 16 33 Nepal 22 28 34 8 Poland 42 66 74 75 64 34 Pakistan 118 74 92 9 Rumania 14 44 29 19 23 35 Singapore 215 256 344 36 Sri Lanka (Ceylon) 13 13 10 Other Latin American republics 37 Vietnam 70 62 66 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 13 Ecuador 157 120 150 319 311 39 Ghana 13 23 45 14 El Salvador 144 171 212 176 214 40 Ivory Coast 11 18 17 15 Guatemala 255 260 368 340 392 41 Kenya 32 19 39 16 Haiti 34 38 48 46 68 42 Liberia 33 53 63 17 Honduras 92 99 137 134 210 43 Southern Rhodesia 3 1 1 18 Jamaica 62 41 59 34 43 44 Sudan 14 12 17 19 Nicaragua 126 133 158 113 133 45 Tanzania 21 30 20 20 Paraguay 38 43 50 47 60 46 Tunisia 23 29 34 21 Surinam 2 13 29 17 47 Uganda 38 22 50 22 Trinidad and Tobago 31 131 44 167 85 48 Zambia 18 78 14 Other Latin America: All Other 23 Bermuda 100 170 197 177 199 49 New Zealand 36 42 48 24 British West Indies. 627 1,311 2,284 ,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 June July Aug. Sept. Oct. Nov.*3 Dec.? 1 Total 1,285 1,812 2,432 2,376 2,322 2,336 2,526 2,579 2,747 2,779 2 Nonmonetary international and regional 822 415 269 279 269 313 330 352 352 373 3 Foreign countries 464 1,397 2,163 2,097 2,053 2,023 2,196 2,227 2,396 2,406 4 Official institutions, including central banks. .. 124 931 1,337 1,135 1,081 1,006 1,074 1,089 1,313 1,309 5 Banks, excluding central banks 261 366 621 650 644 680 713 715 707 716 79 100 204 312 329 337 409 422 376 382 Area or country : 226 330 570 628 634 664 708 719 704 696 8 Germany 146 214 346 312 307 308 307 308 309 307 9 United Kingdom 59 66 124 147 162 169 200 205 200 180 10 Canada 19 23 29 35 33 27 27 27 26 33 11 Latin America 115 140 230 280 287 304 341 339 330 343 12 Middle East oil-exporting countries1 94 894 1,286 1,130 1,075 987 1,056 1,064 1,285 1,285 13 Other Asia 7 8 46 18 18 34 38 53 42 42 14 African oil-exporting countries 2 * * * * * * * 1 1 * 15 Other Africa 1 1 * 6 6 6 23 22 6 5 16 All other countries * * 1 1 1 1 1 2 1 1 1 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, NOTE.—Long-term obligations are those having an original maturity and United Arab Emirates (Trucial States). of more than 1 year. 2 Comprises Algeria, Gabon, Libya, and Nigeria. NOTES TO TABLE 3.16: 1 Includes Bank for International Settlements. 4 Comprises Algeria, Gabon, Libya, and Nigeria. 2 Surinam included with Netherlands Antilles until January 1976. 5 Asian, African, and European regional organizations, except BIS, 3 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, which is included in "Other Western Europe." and United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • February 1978 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 June July Aug. Sept. Oct. Nov.f Dec.? 1 Total 39,056 50,231 69,139 69,732 69,608 68,592 69,107 72,152 72,335 76,953 2 Foreign countries 39,055 50,229 69,134 69,720 69,599 68,581 69,096 72,142 72,323 76,944 3 Europe 6,255 8,987 12,122 12,923 12,763 12,277 13,352 13,767 13,010 15,366 4 Austria 21 15 44 53 63 53 117 75 52 52 5 Belgium-Luxembourg 384 352 662 759 505 476 558 782 751 793 6 Denmark 46 49 85 85 86 100 140 126 107 130 7 Finland 122 128 139 113 101 103 95 111 106 101 8 France 673 1,471 1,445 1,455 1,503 1,471 1,356 1,341 1,320 1,616 9 Germany 589 416 517 575 647 648 615 768 645 627 10 Greece 64 49 79 51 66 68 103 98 107 94 11 Italy 345 370 929 875 972 1,014 1,060 1,104 1,148 1,284 12 Netherlands 348 300 304 480 471 371 447 304 352 352 13 Norway 119 71 98 124 121 135 109 120 120 131 14 Portugal 20 16 65 97 110 138 148 138 120 138 15 Spain 196 249 373 284 323 344 346 471 401 413 16 Sweden 180 167 180 101 153 151 139 172 144 169 17 Switzerland 335 237 485 484 488 533 700 681 614 636 18 Turkey 15 86 176 333 333 329 337 329 344 312 19 United Kingdom 2,580 4,718 6,179 6,638 6,473 6,011 6,771 6,623 6,369 8,104 20 Yugoslavia 22 38 41 58 49 35 34 28 29 56 21 Other Western Europe 22 27 52 51 42 47 43 259 50 89 22 U.S.S.R 46 103 99 90 88 81 89 82 81 103 23 Other Eastern Europe 131 127 171 216 169 169 146 155 150 168 24 Canada 2,776 2,817 3,049 3,607 3,728 3,978 3,400 3,626 3,803 3,639 25 Latin America 12,377 20,532 34,270 33,413 33,415 32,826 33,076 35,099 35,495 37,640 26 Argentina 720 1,203 964 904 839 856 939 1,076 1,085 1,180 27 Bahamas 3,405 7,570 15,336 16,058 15,061 13,647 13,522 15,978 16,582 16,923 28 Brazil 1,418 2,221 3,322 3,030 3,026 3,077 3,011 3,121 2,949 3,075 29 Chile 290 360 387 349 373 382 431 435 441 503 30 Colombia 713 689 586 495 514 542 528 570 554 573 31 Cuba 14 13 13 13 13 13 13 10 15 10 32 Mexico 1,972 2,802 3,432 3,204 3,469 3,455 3,488 3,261 3,216 3,013 33 Panama 505 1,052 1,257 905 1,278 1,463 1,063 1,431 1,719 1,254 34 Peru 518 583 704 797 796 783 785 737 735 770 35 Uruguay 63 51 38 32 38 39 42 47 60 71 36 Venezuela 704 1,086 1,564 1,348 1,421 1,435 1,656 1,654 1,714 1,825 37 Other Latin American republics 852 967 1,125 1,144 1,181 1,233 1,224 1,290 1,316 1,463 38 Netherlands Antilles i 62 49 40 69 64 57 75 61 139 86 39 Other Latin America 1,142 1,885 5,503 5,066 5,342 5,844 6,298 5,426 4,968 6,895 40 Asia 16,226 16,057 17,672 16,979 17,025 16,838 16,614 16,856 17,315 17,712 41 China, People's Republic of (Mainland) 4 22 3 30 13 9 27 20 22 12 42 China, Republic of (Taiwan) 500 736 991 1,259 1,275 1,236 1,303 1,321 1,275 1,371 43 Hong Kong 223 258 271 337 359 272 360 357 466 465 44 India 14 21 41 39 25 65 59 48 54 35 45 Indonesia 157 102 76 72 65 56 67 97 60 77 46 Israel 255 491 551 334 311 323 304 348 347 425 47 Japan 12,518 10,776 10,997 9,935 9,698 9,623 9,351 9,341 9,578 9,777 48 Korea 955 1,561 1,714 1,861 1,981 2,069 2,001 1,998 1,876 2,055 49 Philippines 372 384 559 418 372 478 477 489 508 470 5 5 0 1 T M h i a d i d la le n d E ast oil-exporting countries2.... 4 3 5 3 8 0 4 5 9 2 9 4 1,3 4 1 2 2 2 1,2 5 7 5 5 8 1,4 5 7 8 6 4 1,3 5 6 8 9 0 1,3 6 4 1 0 7 1,5 6 3 1 1 2 1,7 5 8 9 3 4 1,5 6 8 1 1 4 52 Other 441 684 735 860 867 758 708 695 752 831 53 Africa 855 1,228 1,481 1,789 1,658 1,720 1,656 1,828 1,749 1,726 54 Egypt 111 101 127 157 158 149 134 155 130 114 55 Morocco 18 9 13 36 46 43 48 44 31 30 56 South Africa 329 545 763 810 821 799 802 881 822 840 57 Zaire 98 34 29 9 8 6 15 7 7 7 5 8 Oil-exporting countries 3 115 231 253 422 290 357 306 378 358 320 59 Other 185 308 296 355 333 365 350 362 400 416 60 Other countries 565 609 540 1,009 1,010 943 998 966 952 860 61 Australia 466 535 441 878 861 795 863 839 815 743 62 All other 99 73 99 132 150 148 135 127 137 117 63 Nonmonetary international and regional organizations 5 13 10 11 10 9 12 9 1 Includes Surinam until January 1976. 3 Comprises Algeria, Gabon, Libya, and Nigeria. 2 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, 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 June July Aug. Sept. Oct. Nov.33 Dec.? 1 39,056 50,231 69,139 69,732 69,608 68,592 69,107 72,152 72,335 76,953 2 Payable in dollars 37,859 48,888 67,494 67,954 67,942 66,661 67,379 70,152 70,458 74,844 3 Loans, total 11,287 13,200 18,141 16,090 17,602 16,687 18,383 18,040 17,519 19,575 4 Official institutions, including central banks. 381 613 1,448 983 851 1,018 1,007 1,085 1,048 1,023 5 Banks, excluding central banks 7,332 7,665 11,142 10,001 11,523 10,609 11,992 11,305 11,119 12,596 6 All other, including nonmonetary international and regional organizations 3,574 4,921 5,552 5,105 5,228 5,060 5,385 5,649 5,352 5,955 7 Collections outstanding 5,637 5,467 5,756 6,417 6,352 6,200 6,025 6,005 6,059 6,182 8 Acceptances made for accounts of foreigners... 11,237 11,147 12,358 13,166 13,431 13,556 13,645 13,735 13,453 14,193 9 Other claims1 9,698 19,075 31,238 32,280 30,556 30,218 29,325 32,372 33,428 34,895 10 Payable in foreign currencies 1,196 1,342 1,645 1,779 1,667 1,931 1,728 2,000 1,876 2,109 11 669 656 1,063 845 817 1,032 844 922 879 948 12 Foreign government securities, commercial and finance paper 289 314 89 302 277 233 239 356 405 454 13 238 372 493 631 572 667 645 722 593 707 i Includes claims of U.S. banks on their foreign branches and claims made to, and acceptances made for, foreigners; drafts drawn against of U.S. agencies and branches of foreign banks on their head offices and foreigners, where collection is being made by banks and bankers for foreign branches of their head offices. their own account or for account of their customers in the United States; and foreign currency balances held abroad by banks and bankers and NOTE.—Short-term claims are principally the following items payable their customers in the United States. Excludes foreign currencies held on demand or with a contractual maturity of not more than 1 year: loans by U.S. monetary authorities. 3.21 LONG-TERM CLAIMS ON FOREIGNERS Reported by Banks in the United States Millions of dollars, end of period 1977 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11997744 11997755 11997766 June July Aug. Sept. Oct. Nov.® De c.p 1 7,179 9,536 11,898 12,182 12,251 12,468 12,648 12,716 12,337 12,640 By type: 2 Payable in dollars 7,099 9,419 11,750 11,982 12,049 12,250 12,432 12,486 12,102 12,385 3 Loans, total 6,490 8,316 10,093 10,286 10,323 10,504 10,609 10,760 10,436 10,673 4 Official institutions, including central banks 1,324 1,351 1,407 1,653 1,676 1,712 1,756 1,777 1,790 1,917 5 Banks, excluding central banks 929 1,567 22,,223322 22,,226633 2,238 2,279 22,,331166 22,,442211 22,,330000 22,,338844 6 All other, including nonmonetary international and regional organizations 4,237 5,399 6,454 6,371 6,408 6,513 6,538 6,562 6,346 6,372 7 Other long-term claims 609 1,103 1,656 1,695 1,726 1,746 1,823 1,726 1,667 1,713 8 Payable in foreign currencies 80 116 148 200 202 218 216 229 235 254 By area or country: 9 Europe 1,908 2,704 3,314 3,677 3,648 3,706 3,677 3,664 3,401 3,484 10 Canada 501 555 637 483 485 455 456 461 424 430 11 Latin America 2,614 3,468 4,870 5,016 5,045 5,219 5,428 5,542 5,572 5,779 12 Asia 1,619 1,795 1,904 1,832 1,862 1,846 1,872 1,768 1,742 1,774 13 Japan 258 296 382 381 391 371 359 339 320 317 14 Middle East oil-exporting countries 1 384 220 146 151 155 170 161 173 153 181 15 Other Asia 977 1,279 1,376 1,301 1,317 1,305 1,353 1,257 1,270 1,276 16 366 747 890 860 857 898 873 857 850 855 17 Oil-exporting countries2 62 151 271 213 191 219 221 201 176 180 18 Other 305 596 619 647 666 679 651 657 674 674 19 All other countries3 171 267 282 313 353 344 343 423 348 318 l Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, 2 Comprises Algeria, Gabon, Libya, and Nigeria, and United Arab Emirates (Trucial States). 3 Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 62 International Statistics • February 1978 3.22 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1976 1977 AAsssseett aaccccoouunntt 1974 1975 Dec. Apr. May June July Aug.r Sept. | Oct.p A I All foreign countries 1 Total, all currencies 151,905 176,493 219,420 223,222 229,542 236,480 235,637 234,592 244,955 2 Claims on United States 6,900 6,743 7,889 8,676 7,361 7,398 10,683 8,192 11,914 3 Parent bank 4,464 3,665 4,323 5,276 3,928 3,610 7,134 4,630 8,231 4 Other 2,435 3,078 3,566 3,400 3,432 3,788 3,549 3,562 3,683 5 Claims on foreigners 138,712 163,391 204,486 207,573 214,784 221,667 217,456 218,869 225,123 6 Other branches of parent bank. 27,559 34,508 45,955 48,164 49,464 52,406 48,387 48,317 52,071 7 Other banks 60,283 69,206 83,765 79,782 83,937 86,887 84,363 85,532 87,741 8 Official institutions 4,077 5,792 10,609 12,517 13,045 13,194 13,572 13,820 14,182 9 Nonbank foreigners 46,793 53,886 64,157 67,110 68,337 69,180 71,134 71,200 71,128 10 Other assets 6,294 6,359 7,045 6,973 7,397 7,414 7,497 7,530 7,919 11 Total payable in U.S. dollars 105,969 132,901 167,695 172,134 176,603 182,396 179,647 179,050 188,176 12 Claims on United States 6,603 6,408 7,595 8.302 6,951 6,984 10,266 7,748 11,434 13 Parent bank 4,428 3,628 4,264 5,232 3,903 3,590 7,095 4,560 8,177 14 Other 2,175 2,780 3,332 3,070 3,049 3,393 3,170 3,188 3,257 15 Claims on foreigners 96,209 123,496 156,896 160,529 166,160 172,011 166,057 167,716 173,191 16 Other branches of parent bank, 19,688 28,478 37,909 40,300 41,350 43,952 39,647 39,995 42,983 17 Other banks 45,067 55,319 66,331 63,061 66,319 68,815 65,875 66,826 68,789 18 Official institutions 3,289 4,864 9,018 11,174 11,682 11,758 12,110 12,223 12,693 19 Nonbank foreigners 28,164 34,835 43,638 45,994 46,808 47,486 48,425 48,672 48,726 20 Other assets 3,157 2,997 3,204 3.303 3,492 3,401 3,325 3,586 3,552 United Kingdom 21 Total, all currencies. 69,804 74,883 81,466 80,150 83,178 84,734 83,484 83,270 88,033 90,154 22 Claims on United States. 3,248 2,392 3,354 2,541 2,714 2,450 3,129 2,307 3,422 2,729 23 Parent bank 2,472 1,449 2,376 1,698 1,850 1,553 2,249 1,397 2,556 1,789 24 Other 776 943 978 843 863 897 881 910 866 940 25 Claims of foreigners 64,111 70,331 75,859 75,559 78,333 80,087 78,083 78,607 82,154 84,766 26 Other branches of parent bank. 12,724 17,557 19,753 21,707 21,097 22,121 20,909 20,015 22,363 22,178 27 Other banks 32,701 35,904 38,089 35,585 38,660 39,157 37,772 38,784 39,576 41,923 28 Official institutions 788 881 1,274 1,728 1,948 1,764 1,863 1,983 1,955 2,052 29 Nonbank foreigners 17,898 15,990 16,743 16,539 16,627 17,045 17,538 17,826 18,259 18,613 30 Other assets 2,445 2,159 2,253 2,050 2,131 2,197 2,272 2,355 2,458 2,659 31 Total payable in U.S. dollars. 49,211 57,361 61,587 61,179 63,481 64,841 62,815 62,686 66,895 67,243 32 Claims on United States. 3,146 2,273 3,275 2,430 2,590 2,338 3,011 2,130 3,259 2,545 33 Parent bank 2,468 1,445 2,374 1,690 1,842 1,547 2,237 1,348 2,527 1,748 34 Other 678 828 902 740 748 791 774 781 732 797 35 Claims on foreigners 44,694 54,121 57,488 57,894 60,030 61,582 58,875 59,419 62,584 63,596 36 Other branches of parent bank. 10,265 15,645 17,249 19,232 18,619 19,538 18,135 17,550 19,865 19,497 37 Other banks 23,716 28,224 28,983 26,941 29,521 29,930 28,497 29,199 29,808 31,134 38 Official institutions 610 648 846 1,415 1,624 1,437 1,473 1,574 1,555 1,595 39 Nonbank foreigners 10,102 9,604 10,410 10,306 10,267 10,676 10,769 11,095 11,355 11,370 40 Other assets. 1,372 967 824 855 861 922 930 1,138 1,052 1,103 Bahamas and Caymans 41 Total, all currencies. 31,733 45,203 66,774 70,950 71,540 74,853 7 A,127 73,284 78,430 76,031 42 Claims on United States. 2,464 3,229 3,508 4,998 3,543 3,970 6,447 4,875 7,455 4,756 43 Parent bank 1,081 1,477 1,141 2,703 1,251 1,394 4,062 2,465 4,861 2,173 44 Other 1,383 1,752 2,367 2,295 2,292 2,576 2,385 2,410 2,595 2,583 45 Claims on foreigners 28,453 41,040 62,048 64,652 66,579 69,528 66,970 67,124 69,680 69,685 46 Other branches of parent bank. 3,478 5,411 8,144 8,095 8,703 9,638 7,586 8,259 9,828 9,266 47 Other banks 11,354 16,298 25,354 25,234 25,588 27,372 25,967 25,481 26,367 27,130 48 Official institutions 2,022 3,576 7,101 7,784 8,062 8,344 8,628 8,591 9,192 9,195 49 Nonbank foreigners 11,599 15,756 21,449 23,538 24,226 24,174 24,788 24,793 24,293 24,095 50 Other assets 815 933 1,217 1,300 1,419 1,356 1,309 1,285 1,294 1,589 51 Total payable in U.S. dollars. 28,726 41,887 62,705 66,366 66,550 69,930 69,548 68,209 72,948 70,501 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. Apr. May June July Aug.r Sept. Oct.? • All foreign countries 52 Total, all currencies 151,905 176,493 219,420 223,222 229,542 236,480 235,637 234,591 244,955 247,049 53 To United States 11,982 20,221 32,721 33,054 34,792 R37,583 37,713 36,360 38,618 38,814 54 Parent bank 5,809 12,165 19,775 18,256 20,497 r23,167 19,670 19,438 18,363 21,599 55 Other 6,173 8,057 12,946 14,798 14,295 14,416 18,043 16,922 20,255 17,215 56 To foreigners 132,990 149,815 179,953 183,203 187,619 191,822 189,347 189,739 198,817 199,929 57 Other branches of parent bank, 26,941 34,111 44,370 46,386 48,137 50,291 47,015 47,221 51,201 50,641 58 Other banks 65,675 72,259 83,878 r82,034 '83,981 r84,142 '86,784 86,453 91,561 89,974 59 Official institutions 20,185 22,773 25,829 16,297 r27,461 r28,368 '27,218 27,776 28,014 29,885 60 Nonbank foreigners 20,189 20,672 25,877 28,486 28,040 29,021 28,329 28,288 28,040 29,429 61 Other liabilities 6,933 6,456 6,747 6,965 7,130 r7,075 8,577 8,491 7,521 8,306 62 Total payable in U.S. dollars 107,890 135,907 173,071 177,270 181,813 187,643 184,722 183,298 192,958 192,812 63 To United States 11,437 19,503 31,934 32,068 33,882 '36,472 36,751 35,482 37,693 37,778 64 Parent bank 5,641 11,939 19,561 18,011 20,241 '22,724 19,396 19,168 18,049 21,291 65 Other 5,795 7,564 12,373 14,057 13,640 13,748 17,355 16,314 19,644 16,487 66 To foreigners 92,503 112,879 137,610 141,479 144,220 147,346 142,957 142,680 151,147 150,597 67 Other branches of parent bank, 19,330 28,217 37,098 39,307 AO,611 42,739 38,939 39,483 43,043 42,293 68 Other banks 43,656 51,583 60,617 r59,945 r60,861 '60,185 '61,689 61,113 65,984 63,326 69 Official institutions 17,444 19,982 22,878 r23,320 r24,439 '25,377 '24,240 24,481 24,695 26,363 70 Nonbank foreigners 12,072 13,097 17,017 18,906 18,242 19,045 18,088 17,603 17,425 18,614 71 Other liabilities 3,951 3,526 3,527 3,724 3,712 '3,825 5,013 5,136 4,118 4,437 United Kingdom 72 Total, all currencies 69,804 74,883 81,466 80,150 83,178 84,734 83,484 83,270 88,033 90,154 73 To United States 3,978 5,646 5,997 6,272 5,845 6,894 8,537 7,933 7,922 7,310 74 Parent bank 510 2,122 1,198 1,515 1,460 2,150 2,217 1,611 1,425 1,364 75 Other 3,468 3,523 4,798 4,756 4,386 4,743 6,320 6,322 6,496 5,946 76 To foreigners 63,409 67,240 73,228 71,787 75,145 75,683 72,585 72,848 77,580 79,837 77 Other branches of parent bank, A,162 6,494 7,092 1,162 8,569 8,936 7,987 8,395 8,934 9,187 78 Other banks 32,040 32,964 36,259 33,749 35,933 34,960 34,623 34,163 37,024 36,676 79 Official institutions 15,258 16,553 17,273 17,260 17,538 18,086 17,148 17,366 18,553 20,366 80 Nonbank foreigners 11,349 11,229 12,605 13,016 13,106 13,701 12,827 12,923 13,070 13,608 81 Other liabilities 2,418 1,997 2,241 2,091 2,187 2,157 2,362 2,488 2,532 3,007 82 Total payable in U.S. dollars 49,666 57,820 63,174 62,373 64,343 65,735 63,848 63,334 67,689 68,594 83 To United States 3,744 5,415 5,849 6,108 5,688 6,679 8,348 7,676 7,622 7,004 84 Parent bank 484 2,083 1,182 1,498 1,438 2,083 2,184 1,563 1,363 1,288 85 Other 3,261 3,332 4,666 4,610 4,250 4,596 6,164 6,113 6,259 5,716 86 To foreigners 44,594 51,447 56,372 55,390 57,720 58,136 54,550 54,539 58,962 60,304 87 Other branches of parent bank 3,256 5,442 5,874 6,561 7,333 7,660 6,583 7,131 7,535 7,724 88 Other banks 20,526 23,330 25,527 23,818 25,172 24,135 23,681 23,254 25,984 25,306 89 Official institutions 13,225 14,498 15,423 15,394 15,674 16,301 15,295 15,252 16,430 18,053 90 Nonbank foreigners 7,587 8,176 9,547 9,617 9,541 10,040 8,990 8,902 9,013 9,221 91 Other liabilities 1,328 959 953 875 936 920 951 1,119 1,105 1,286 Bahamas and Caymans 92 Total, all currencies 31,733 45,203 66,11A 70,950 71,540 74,853 74,727 73,284 78,430 76,031 93 To United States 4,815 11,147 22,723 23,082 25,162 '26,966 25,080 24,487 27,031 27,291 94 Parent bank 2,636 7,628 16,163 14,514 16,426 '18,708 14,835 15,288 14,814 17,390 95 Other 2,180 3,520 6,560 8,568 8,735 8,258 10,245 9,198 12,218 9,902 96 To foreigners 26,140 32,949 42,897 46,618 45,136 46,477 47,161 46,464 50,035 47,244 97 Other branches of parent bank. 7,702 10,569 13,801 14,123 14,001 14,662 13,736 13,206 15,026 14,623 98 Other banks 14,050 16,825 21,758 23,245 22,296 22,693 24,166 23,878 27,370 24,112 99 Official institutions 2,377 3,308 3,573 3,917 4,130 4,216 4,322 4,592 3,184 3,354 100 Nonbank foreigners 2,011 2,248 3,765 5,334 4,709 4,906 4,936 4,789 4,454 5,155 101 Other liabilities 778 1,106 1,154 1,249 1,243 '1,410 2,487 2,334 1,363 1,495 102 Total payable in U.S. dollars. 28,840 42,197 63,417 67,168 67,518 70,816 70,399 68,663 73,769 71,292 • Figures for November will be published in the BULLETIN for March. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 64 International Statistics • February 1978 3.23 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions Millions of dollars 1977 1977 Country or area 1975 1976 Jan.— Dec.23 June July Aug. Sept. Oct. Nov.3' Dec.p Holdings (end of period) 4 1 Estimated total 7,703 15,798 22,196 23,433 27,584 31,068 34,325 37,662 38,621 2 Foreign countries 7,372 12,765 19,740 20,848 24,644 27,209 30,324 33,286 33,875 3 Europe 1,085 2,330 5,272 6,225 8,480 10,163 12,603 14,003 13,916 4 Belgium-Luxembourg 13 14 18 19 19 19 20 20 19 5 Germany 215 764 1,261 1,266 1,847 1,957 2,165 2,742 3,168 6 Netherlands 16 288 492 503 633 719 821 911 911 7 Sweden 276 191 149 149 155 125 125 100 100 8 Switzerland 55 261 439 485 478 488 474 476 477 9 United Kingdom 363 485 2,600 3,478 5,017 6,506 8,640 9,419 8,888 10 Other Western Europe 143 323 307 321 326 343 353 331 349 11 Eastern Europe 4 4 4 4 4 4 4 4 4 12 Canada 395 256 279 283 288 292 294 293 288 13 Latin America 200 312 480 481 513 517 519 533 551 14 Venezuela 4 149 193 193 193 183 183 199 199 15 Other Latin America republics 29 35 18 18 18 18 21 11 17 16 Netherlands Antilles 1 161 118 113 113 145 159 158 167 176 17 Asia 5,370 9,323 13,407 13,567 15,071 15,942 16,612 18,105 18,746 18 Japan 3,271 2,687 4,290 4,314 5,025 5,635 5,958 6,547 6,860 19 Africa 321 543 279 279 279 279 279 348 362 20 All other * * 23 13 12 16 18 5 11 21 Nonmoorgnaentaizray tiionntesr national and regional 331 3,033 2,456 2,585 2,940 3,859 4,001 4,376 4,746 22 International 322 2,905 2,353 2,440 2,830 3,759 3,900 4,276 4,646 23 Latin American regional 9 128 103 146 110 100 100 100 100 Transactions (net purchases, or sales ( —), during period) 24 Total 1,994 8,095 22,824 2,451 1,238 4,151 3,483 3,257 3,337 959 25 Foreign countries 1,814 5,393 21,111 2,131 1,108 3,796 2,564 3,116 2,962 589 26 Official institutions 1,612 5,116 20,324 1,962 1,048 3,696 2,493 3,052 2,881 598 27 Other foreign 202 276 785 167 59 101 71 65 81 -9 28 Nonmonetary international and regional organizations 180 2,702 1,713 321 130 354 919 141 376 370 MEMO: Oil-exporting countries 29 Middle East 2 1,797 3,887 4,452 397 -14 533 161 284 869 324 30 Africa 3 117700 222211 --118811 6699 1133 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). on a benchmark survey of holdings as of Jan. 31, 1971, and monthly 3 Comprises Algeria, Gabon, Libya, and Nigeria. transactions reports. Excludes nonmarketable U.S. Treasury bonds and 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 1978 Assets 1974 1975 1976 July Aug. Sept. Oct. Nov. Dec. Jan. 1 Deposits 418 353 352 468 534 382 425 416 424 422 Assets held in custody: 2 U.S. Treasury securities1 55,600 60,019 66,532 75,443 75,976 79,285 83,832 89,497 83,832 95,945 3 Earmarked gold2 16,838 16,745 16,414 16,179 16,117 16,073 15,988 15,872 15,988 15,726 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 r 1976 Jan.- June July Aug. SSeepptt.. Oct. Nov.f Dec.p Dec.p U.S. corporate securities Stocks 1 Foreign purchases 15,355 18,227 14,141 1,196 1,373 1,023 1,012 973 1,281 1,230 2 Foreign sales 10,678 15,475 11,476 948 1,162 900 846 752 899 944 3 Net purchases, or sales (—) 4,678 2,753 2,664 248 211 123 166 222 382 286 4 Foreign countries 4,660 2,740 2,650 254 210 124 170 223 385 282 5 Europe 2,491 336 1,005 33 29 37 57 109 200 155 6 France 262 256 40 21 -24 -13 5 27 1 -3 7 Germany 251 68 291 12 20 -1 14 37 64 58 8 Netherlands 359 -199 22 * -10 -2 -18 5 10 9 9 Switzerland 899 -100 152 -20 5 -7 6 2 34 -3 10 594 340 612 35 57 67 80 52 106 107 Canada 361 324 65 -3 12 -5 -3 20 21 14 12 Latin America -7 155 127 17 4 1 -3 -4 27 15 13 Middle East1 1,649 1,803 1,380 195 171 94 108 93 128 97 14 Other Asia 142 119 59 10 -7 -3 8 2 8 1 15 Africa 10 7 5 * * 1 2 2 * * 16 Other countries 15 -4 8 2 * -2 1 2 2 * 17 Nonmonetary international and regional organizations 18 13 15 -7 2 -1 -5 -1 -3 4 Bonds2 18 Foreign purchases 5,408 5,529 7,748 976 752 715 550044 994422 743 343 19 Foreign sales 4,642 4,322 3,474 394 286 252 383 292 226 312 20 Net purchases, or sales (—) 766 1,207 4,274 582 467 463 121 650 517 31 21 Foreign countries 1,795 1,248 4,179 569 499 438 123 650 507 -14 22 Europe 113 91 1,950 314 232 130 33 376 320 -36 23 France 82 39 -39 -3 1 1 1 * -5 -11 24 Germany -6 -49 59 12 12 1 3 5 4 9 25 Netherlands -9 -29 72 57 11 * 21 2 20 * 26 Switzerland 117 158 158 17 34 21 12 -7 -7 -6 27 United Kingdom -52 23 1,647 223 197 96 6 324 324 -27 28 Canada 128 96 141 7 30 13 15 4 1 -1 29 Latin America 31 94 64 2 12 18 13 11 — 1 3 30 Middle East1 1,553 1,179 1,691 235 153 192 79 124 159 4 31 Other Asia -35 -165 338 10 72 84 -14 135 27 16 32 Africa 5 -25 -6 * * • -3 * * * 33 Other countries 1 -21 * * • * * * * * 34 Nonmonetary international and regional organizations -1,029 -41 96 13 -32 25 -2 * 10 45 Foreign securities 35 Stocks, net purchases, or sales (—) -188 -323 -404 -60 -265 -63 31 106 34 59 36 Foreign purchases 1,542 1,937 2,265 169 159 169 169 247 214 291 37 Foreign sales 1,730 2,259 2,669 229 423 232 138 141 180 232 38 Bonds, net purchases, or sales ( —) -6,326 -8,730 4,957 -765 -205 -1,003 -669 -281 -320 -330 39 Foreign purchases 2,383 4,932 8,482 636 786 852 710 786 593 885 40 Foreign sales 8,708 13,662 13,439 1,401 991 1,854 1,379 1,066 913 1,215 41 Net purchases, or sales ( — ) of stocks and bonds.. -6,514 -9,053 -5,361 -824 -469 -1,066 -639 -175 -285 -271 42 Foreign countries -4,323 -7,155 -3,804 -696 -393 -111 -632 -24 -308 -293 43 Europe -53 -843 -1,064 -272 -267 -21 -24 -33 -260 108 44 Canada -3,202 -5,245 -2,394 -292 -241 -255 -573 45 9 -175 45 Latin America -306 * -52 -42 52 -7 43 -170 -2 -68 46 Asia -622 -699 -31 -93 57 55 2 136 -57 51 47 Africa 15 48 5 3 1 * -2 * 1 48 Other countries -155 -416 -267 2 5 1 -81 1 2 -210 49 Nonmonetary international and regional organizations -2,192 -1,898 -1,557 -129 -76 -839 -6 -151 23 22 Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, 2 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 abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 66 International Statistics • February 1978 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 Sept.r Dec.r Mar. r June Sept.f Sept. r Dec.r Mar.r June Sept.P Liabilities to foreigners Claims on foreigners 1 6,427 6,597 6,582 6,421 7,119 13,160 14,154 14,951 16,144 14,866 By type: 2 Payable in dollars 5,690 5,885 5,815 5,770 6,327 12,095 13,155 13,935 15,031 13,819 3 Payable in foreign currencies 737 712 767 652 792 1,065 999 1,016 11,,111133 11,,004477 4 Deposits with banks abroad in reporter's name 592 442 431 448 414 5 Other 447733 555577 558855 666655 663322 By area or country: 6 Foreign countries 6,241 6,388 6,391 6,251 6,965 13,159 14,153 14,949 16,143 14,865 / Europe 2,387 2,228 2,126 2,208 2,314 5,158 5,282 5,232 5,820 5,009 8 Austria 15 10 9 10 12 21 21 23 26 24 9 Belgium-Luxembourg 183 166 168 138 119 195 162 170 218 230 10 Denmark 13 7 15 14 16 26 56 48 40 44 11 Finland 17 2 2 10 10 135 77 40 90 59 12 France 185 200 163 157 170 418 438 436 413 435 13 Germany 256 174 175 163 226 492 378 367 377 393 14 Greece 28 48 80 73 78 56 51 90 86 53 15 Italy 148 131 135 154 139 358 384 473 440 352 16 Netherlands 141 141 168 205 176 142 166 172 182 161 17 Norway 24 29 37 33 36 43 51 42 42 38 18 Portugal 5 13 23 20 12 28 40 35 30 34 19 Spain 36 40 52 68 74 336 369 325 322 309 20 Sweden 35 34 36 36 41 62 90 93 92 91 21 Switzerland 243 190 214 236 245 253 241 154 179 146 22 Turkey 16 13 12 21 97 23 25 32 37 32 23 United Kingdom 888 880 689 730 736 2,367 2,446 2,475 3,027 2,413 24 Yugoslavia 113 123 113 110 92 30 26 30 28 20 25 Other Western Europe 8 7 6 6 9 17 20 18 15 15 26 U.S.S.R 19 9 15 16 11 81 156 105 76 64 27 Other Eastern Europe 14 13 13 10 14 79 85 103 102 96 28 Canada 341 400 427 448 454 2,187 2,458 2,426 2,563 2,477 29 Latin America 1,028 1,037 1,118 1,017 1,025 2,828 3,575 4,397 4,925 4,489 30 Argentina 48 44 42 50 50 39 44 46 51 53 31 Bahamas 251 260 256 216 222 940 1,384 1,869 2,231 1,831 32 Brazil 58 72 49 37 76 417 682 535 457 414 33 Chile 16 17 16 24 13 26 34 35 28 40 34 Colombia 11 13 18 22 23 66 59 7755 7722 85 35 Cuba * * * * * 1 11 11 * 36 Mexico 74 99 118 117 102 352 332 317 301 304 37 Panama 10 34 12 11 12 83 74 105 121 221 38 Peru 32 25 24 21 13 35 42 32 28 30 39 Uruguay 3 4 4 3 4 22 6 5 5 40 Venezuela 222 219 260 208 225 212 190 210 240 256 41 Other Latin American republics 104 141 148 141 122 182 276 237 223377 225577 42 Netherlands Antilles 1 68 10 11 17 9 9 9 14 88 88 43 Other Latin America 129 100 160 151 154 444 441 914 1,146 984 44 11,,997788 2,040 2,057 1,890 2,492 2,401 2,276 2,316 2,315 2,390 45 China, People's Republic of (Mainland).... 11 1 3 2 1 5 3 7 7 12 46 China, Republic of (Taiwan) 127 110 113 138 152 134 197 130 131 139 47 Hong Kong 33 40 42 27 25 88 96 107 93 73 48 India 11 23 39 41 44 53 55 35 51 42 49 Indonesia 131 98 94 80 60 179 179 206 184 185 50 Israel 32 37 37 45 58 48 41 51 70 46 51 Japan 247 193 172 183 604 1,010 912 969 930 1,027 52 Korea 85 76 96 95 81 142 117 130 158 153 53 Philippines 28 53 59 73 78 93 86 86 90 111 54 Thailand 23 24 19 11 17 23 22 27 22 27 55 Other Asia 1,260 1,385 1,383 1,196 1,372 625 568 569 580 574 56 Africa 438 606 591 589 568 407 393 429 370 346 57 Egypt 25 27 29 33 45 36 28 70 24 22 58 Morocco 44 45 30 72 105 10 11 12 11 10 59 South Africa 66 54 33 27 29 78 87 80 69 75 60 Zaire 24 36 39 39 48 28 21 19 17 19 61 Other Africa 279 444 460 418 341 255 247 248 248 221 62 Other countries 69 77 72 98 111 178 170 150 149 153 63 Australia 51 59 53 78 93 112 105 114 110 113 64 All other 18 19 19 20 18 67 65 36 40 41 65 Nonmonetary international and regional organizations 186 208 192 170 154 1 1 2 1 1 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 TTyyppee aanndd ccoouunnttrryy 11997733 11997744 11997755 11997766 Juner July Aug.*- Sept.r Oct. Nov.f 1 3,185 3,357 3,799 5,468 7,679 7,444 7,735 6,859 7,623 7,587 By type: 2 Payable in dollars 2,641 2,660 3,042 4,788 6,914 6,689 6,999 6,163 6,900 6,671 3 Deposits 2,604 2,591 2,710 4,415 6,424 6,246 6,475 5,721 6,396 6,196 4 Short-term investments 1 37 69 332 373 490 443 524 442 504 475 5 Payable in foreign currencies 544 697 757 680 765 754 737 695 722 917 6 Deposits 431 429 511 373 389 396 394 35 8 374 482 7 Short-term investments 1 113 268 246 302 376 358 343 337 348 435 By country: 8 United Kingdom 1,128 1,350 11,,330066 1,837 2,318 2,170 2,194 1,781 1,858 2,097 9 Canada 775 967 1,156 1,539 1,652 1,720 1,930 1,607 1,936 1,831 10 Bahamas 597 391 546 1,264 2,114 2,157 2,220 1,765 2,361 2,117 11 336 398 343 113 177 144 134 143 150 218 12 All other 349 252 446 715 1,417 1,253 1,257 1,563 1,318 1,324 i Negotiable and other readily transferable foreign obligations payable NOTE.—Data represent the assets abroad of large nonbanking conon demand or having a contractural maturity of not more than 1 year cerns in the United States. They are a portion of the total claims on from the date on which the obligation was incurred by the foreigner. foreigners reported by nonbanking concerns in the United States and are included in the figures shown in Table 3.26. 3.28 LONG-TERM LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Nonbanking Concerns in the United States Millions of dollars, end of period 1976 1977 1976 1977 Area and country Sept. ' Dec.r Mar.r June Sept.35 Sept. ' Dec.r Mar.r June Sept.3' Liabilities to foreigners Claims on foreigners 1 Total 3,791 3,567 3,504 3,338 3,366 5,004 4,922 4,891 4,824 4,586 2 Europe 2,858 2,725 2,655 2,499 2,596 898 851 844 827 744 3 Germany 406 396 391 370 417 73 72 84 76 76 4 Netherlands 290 277 272 262 280 211 156 154 147 81 5 Switzerland 327 260 178 177 224 54 57 53 43 42 6 United Kingdom 1,470 1,420 1,388 1,276 1,275 243 238 204 219 215 7 Canada 111 89 82 81 78 1,507 1,530 1,475 1,486 1,438 8 Latin America 257 270 272 280 272 1,637 1,521 1,489 1,457 1,371 9 Bahamas 157 163 163 167 159 37 36 34 34 36 10 Brazil 5 5 5 7 7 172 133 125 125 134 11 Chile 1 1 1 1 1 244 248 210 208 201 12 Mexico 7 17 21 23 27 219 195 180 178 187 13 Asia 498 423 432 408 358 739 775 817 830 805 14 Japan 402 397 413 386 319 80 77 96 108 90 15 Africa 2 2 2 3 3 165 187 199 158 165 16 All other i 64 58 59 67 59 58 58 67 67 63 1 Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 68 International Statistics • February 1978 3.29 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Per cent per annum Rate on Jan. 31, 1978 Rate on Jan. 31, 1978 Rate on Jan. 31, 1978 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. 3.0 Dec. 1977 Sweden 8.0 Oct. 1976 Belgium.. 7.5 Jan. 1978 Italy 11.5 Aug. 1977 Switzerland 1.5 July 1977 Brazil 28.0 May 1976 Japan 4.25 Sept. 1977 United Kingdom 6.5 Jan. 1978 Canada.. 7.5 May 1977 Mexico 4.5 June 1942 Venezuela 5.0 Oct. 1970 Denmark. 9.0 Mar. 1977 Netherlands 4.5 Nov. 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 1978 CCoouunnttrryy,, oorr ttyyppee 11997755 11997766 1977 Aug. Sept. Oct. Nov. Dec. Jan. 1 Euro-dollars 7.02 5.58 6.03 6.30 6.56 7.14 7.09 7.12 7.32 2 United Kingdom 10.63 11.35 8.07 6.91 6.03 5.05 5.32 6.76 6.23 3 Canada 8.00 9.39 7.47 7.44 7.31 7.23 7.34 7.20 7.08 4 Germany 4.87 4.19 4.30 4.04 4.07 4.06 4.09 3.94 3.52 5 Switzerland 3.01 1.45 2.56 2.41 2.37 2.23 2.32 2.20 .92 6 Netherlands 5.17 7.02 4.73 3.48 4.39 4.55 5.94 6.65 5.01 7 France 7.91 8.65 9.20 8.51 8.38 8.41 9.28 9.88 9.25 8 Italy 10.37 16.32 14.26 13.94 12.42 12.05 11.74 11.38 10.99 9 Belgium 6.63 10.25 6.95 6.20 6.20 6.25 6.38 7.75 8.29 10 Japan 1111..6644 7.70 6.22 6.24 5.32 5.25 5.37 5.75 5.33 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 1978 Country/currency 1977 Aug. Sept. Oct. Nov. Dec. 1 Australia/dollar 130.77 122.15 110.82 110.47 110.37 111.90 112.70 113.36 2 Austria/shilling 5.7467 5.5744 6.0494 6.0792 6.0377 6.1567 6.2551 6.4734 3 Belgium/franc 2.7253 2.5921 2.7911 2.8107 2.7910 2.8229 2.8396 2.9608 4 Canada/dollar 98.30 101.41 94.112 93.028 93.168 91.010 90.145 91.132 5 Denmark/krone 17.437 16.546 16.658 16.590 16.188 16.359 16.327 16.833 6 Finland/markka 27.285 25.938 24.913 24.801 23.977 24.139 23.986 24.299 7 France/franc 23.354 20.942 20.344 20.415 20.314 20.574 20.614 20.844 8 Germany/deutsche mark... 40.729 39.737 43.079 43.168 43.034 43.904 44.633 46.499 9 India/rupee 11.926 11.148 11.406 11.465 11.450 11.605 11.576 11.712 10 Ireland/pound 222.16 180.48 174.49 173.97 174.31 177.11 181.78 185.46 11 Italy/lira .15328 .12044 .11328 .11332 .11318 .11353 .11388 .11416 12 Japan/yen .33705 .33741 .37342 .37499 .37486 .39263 .40872 .41491 13 Malaysia/ringgit 41.753 39.340 40.620 40.606 40.600 41.088 41,910 42.201 14 Mexico/peso 8.0000 6.9161 4.4239 4.3629 4.3776 4.4069 4.4096 4.4059 15 Netherlands/guilder 39.632 37.846 40.752 40.831 40.604 41.048 41.366 42.955 16 New Zealand/dollar 121.16 99.115 96.893 96.826 96.812 98.152 99.392 100.59 17 Norway/krone 19.180 18.327 18.789 18.863 18.226 18.232 18.328 19.056 18 Portugal/escudo 3.9286 3.3159 2.6234 2.5678 2.4606 2.4601 2.4575 2.4755 19 South Africa/rand 136.47 114.85 114.99 115.00 115.00 115.04 115.04 115.04 20 Spain/peseta 1.7424 1.4958 1.3287 1.1804 1.1824 1.1902 1.2060 1.2237 21 Sri Lanka/rupee 14.385 11.908 11.964 13.721 12.301 11.618 8.7721 6.2000 22 Sweden/krona 24.141 22.957 22.383 22.472 20.602 20.846 20.848 21.044 23 Switzerland/franc 38.743 40.013 41.714 41.523 42.115 43.909 45.507 48.168 24 United Kingdom/pound... 222.16 180.48 174.49 173.97 174.31 177.11 181.78 185.46 MEMO: 25 United States/dollar 1 82.20 89.68 89.10 89.10 89.52 8.38 87.29 85.52 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

A 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 500,000 when c Corrected the unit is millions) n.e.c. Not elsewhere classified (1) Zero, (2) no figure to be expected, or Rp's Repurchase agreements (3) figure delayed or, (4) no change (when IPC's Individuals, partnerships, and corporations figures are expected in percentages). GENERAL INFORMATION Minus signs are used to indicate (1) a decrease, (2) obligations of the Treasury. "State and local govt." a negative figure, or (3) an outflow. also includes municipalities, special districts, and other "U.S. Govt, securities" may include guaranteed political subdivisions. issues of U.S. Govt, agencies (the flow of funds figures In some of the tables details do not add to totals also include not fully guaranteed issues) as well as direct because of rounding. STATISTICAL RELEASES LIST PUBLISHED SEMIANNUALLY, WITH LATEST BULLETIN REFERENCE Issue Page Anticipated schedule of release dates for individual releases December 1977 A-78 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

70 Federal Reserve Board of Governors ARTHUR F. BURNS, Chairman HENRY C. WALLICH STEPHEN S. GARDNER, Vice Chairman PHILIP E. COLD WELL OFFICE OF BOARD MEMBERS OFFICE OF STAFF DIRECTOR FOR MONETARY POLICY THOMAS J. O'CONNELL, Counsel to the Chairman JOSEPH R. COYNE, Assistant to the Board STEPHEN H. AXILROD, Staff Director KENNETH A. GUENTHER, Assistant to the Board ARTHUR L. BROIDA, Deputy Staff Director SIDNEY L. JONES, Assistant to the Board MURRAY ALTMANN, Assistant to the Board JAY PAUL BRENNEMAN, Special Assistant to the PETER M. KEIR, Assistant to the Board Board STANLEY J. SIGEL, Assistant to the Board FRANK O'BRIEN, JR. , Special Assistant to the Board NORMAND R. V. BERNARD, Special Assistant to the JOSEPH S. SIMS, Special Assistant to the Board Board DONALD J. WINN, Special Assistant to the Board DIVISION OF RESEARCH AND STATISTICS LEGAL DIVISION JAMES L. KICHLINE, Director JOSEPH S. ZEISEL, Deputy Director ROBERT E. MANNION, Associate General Counsel EDWARD C. ETTIN, Associate Director ALLEN L. RAIKEN, Associate General Counsel JOHN H. KALCHBRENNER, Associate Director CHARLES R. MCNEILL, Assistant to the General JOHN J. MINGO, Senior Research Division Officer Counsel ELEANOR J. STOCK WELL, Senior Research Division Officer JAMES R. WETZEL, Senior Research Division Officer ROBERT A. EISENBEIS, Associate Research Division OFFICE OF THE SECRETARY Officer JARED J. ENZLER, Associate Research Division THEODORE E. ALLISON, Secretary Officer GRIFFITH L. GARWOOD, Deputy Secretary JOHN D. PAULUS, Associate Research Division *CATHY E. MINEHAN, Assistant Secretary Officer J. CORTLAND G. PERET, Associate Research Division Officer DIVISION OF CONSUMER AFFAIRS RICHARD H. PUCKETT, Associate Research Division Officer JANET O. HART, Director NATHANIEL E. BUTLER, Associate Director IHELMUT F. WENDEL, Associate Research Division Officer JERAULD C. KLUCKMAN, Associate Director JAMES M. BRUNDY, Assistant Research Division Officer ROBERT M. FISHER, Assistant Research Division DIVISION OF BANKING Officer SUPERVISION AND REGULATION STEPHEN P. TAYLOR, Assistant Research Division JOHN E. RYAN, Director Officer ^FREDERICK C. SCHADRACK, Deputy Director LEVON H. GARABEDIAN, Assistant Director FREDERICK R. DAHL, Associate Director WILLIAM W. WILES, Associate Director DIVISION OF INTERNATIONAL FINANCE JACK M. EGERTSON, Assistant Director DON E. KLINE, Assistant Director EDWIN M. TRUMAN, Director THOMAS E. MEAD, Assistant Director JOHN E. REYNOLDS, Counselor ROBERT S. PLOTKIN, Assistant Director ROBERT F. GEMMILL, Associate Director THOMAS A. SIDMAN, Assistant Director GEORGE B. HENRY, Associate Director SAMUEL H. TALLEY, Assistant Director CHARLES J. SIEGMAN, Associate Director WILLIAM TAYLOR, Assistant Director SAMUEL PIZER, Senior International Division Officer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

71 and Official Staff PHILIP C. JACKSON, JR. DAVID M. LILLY J. CHARLES PARTEE OFFICE OF OFFICE OF STAFF DIRECTOR FOR STAFF DIRECTOR FOR MANAGEMENT FEDERAL RESERVE BANK ACTIVITIES JOHN M. DENKLER, Staff Director WILLIAM H. WALLACE, Staff Director ROBERT J. LAWRENCE, Deputy Staff Director DONALD E. ANDERSON, Assistant Director for DIVISION OF FEDERAL RESERVE Construction Management BANK EXAMINATIONS AND BUDGETS JOSEPH W. DANIELS, SR., Assistant Director and Director of Equal Employment Opportunity ALBERT R. HAMILTON, Associate Director GORDON B. GRIMWOOD, Assistant Director and CLYDE H. FARNSWORTH, JR. , Assistant Director Program Director for Contingency Planning JOHN F. HOOVER, Assistant Director P. D. RING, Assistant Director DIVISION OF DATA PROCESSING DIVISION OF CHARLES L. HAMPTON, Director FEDERAL RESERVE BANK OPERATIONS BRUCE M. BEARDSLEY, Associate Director UYLESS D. BLACK, Assistant Director JAMES R. KUDLINSKI, Director GLENN L. CUMMINS, Assistant Director WALTER ALTHAUSEN, Assistant Director ROBERT J. ZEMEL, Assistant Director BRIAN M. CAREY, Assistant Director HARRY A. GUINTER, Assistant Director DIVISION OF PERSONNEL DAVID L. SHANNON, Director JOHN R. WEIS, Assistant Director CHARLES W. WOOD, Assistant Director OFFICE OF THE CONTROLLER JOHN KAKALEC, Controller EDWARD T. MULRENIN, Assistant Controller DIVISION OF ADMINISTRATIVE SERVICES WALTER W. KREIMANN, Director JOHN L. GRIZZARD, Assistant Director JOHN D. SMITH, Assistant Director *On loan from the Federal Reserve Bank of New York. tOn leave of absence. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 72 FOMC and Advisory Councils FEDERAL OPEN MARKET COMMITTEE ARTHUR F. BURNS, Chairman PAUL A. VOLCKER, Vice Chairman PHILIP E. COLD WELL PHILIP C. JACKSON, JR. J. CHARLES PARTEE Roos STEPHEN S. GARDNER DAVID M. LILLY LAWRENCE K. ROGER GUFFEY ROBERT P. MAYO HENRY C. WALLICH FRANK E. MORRIS ARTHUR L. BROIDA, Secretary THOMAS DAVIS, Associate Economist MURRAY ALTMANN, Deputy Secretary ROBERT EISENMENGER, Associate Economist NORMAND R. V. BERNARD, Assistant Secretary EDWARD C. ETTIN, Associate Economist THOMAS J. OCONNELL, General Counsel JAMES L. KICHLINE, Associate Economist EDWARD G. GUY, Deputy General Counsel JOHN E. REYNOLDS, Associate Economist STEPHEN H. AXILROD, Economist KARL SCHELD, Associate Economist ANATOL BALBACH, Associate Economist EDWIN M. TRUMAN, Associate Economist RICHARD G. DAVIS, 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 HENRY S. WOODBRIDGE, FIRST FEDERAL EDWARD BYRON SMITH, SEVENTH FEDERAL RESERVE DISTRICT RESERVE DISTRICT WALTER B. WRISTON, SECOND FEDERAL CLARENCE C. BARKSDALE, EIGHTH FEDERAL RESERVE DISTRICT RESERVE DISTRICT SAMUEL H. BALLAM, JR., THIRD FEDERAL RICHARD H. VAUGHAN, NINTH FEDERAL RESERVE DISTRICT RESERVE DISTRICT M. BROCK WEIR, FOURTH FEDERAL J. W. MCLEAN, TENTH FEDERAL RESERVE DISTRICT RESERVE DISTRICT JOHN H. LUMPKIN, FIFTH FEDERAL JAMES D. BERRY, ELEVENTH FEDERAL RESERVE DISTRICT RESERVE DISTRICT FRANK A. PLUMMER, SIXTH FEDERAL GILBERT F. BRADLEY, TWELFTH FEDERAL RESERVE DISTRICT RESERVE DISTRICT HERBERT V. PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary CONSUMER ADVISORY COUNCIL LEONOR K. SULLIVAN, St. Louis, Missouri, Chairman WILLIAM D. WARREN, LOS Angeles, California, Vice Chairman ROLAND E. BRANDEL, San Francisco, California ROBERT J. KLEIN, New York, New York AGNES H. BRYANT, Detroit, Michigan PERCY W. LOY, Portland, Oregon JOHN G. BULL, Fort Lauderdale, Florida R. C. MORGAN, El Paso, Texas ROBERT V. BULLOCK, Frankfort, Kentucky REECE A. OVERCASH, JR., Dallas, Texas LINDA M. COHEN, Washington, D.C. RAYMOND J. SAULNIER, New York, New York ROBERT R. DOCKSON, LOS Angeles, California E. G. SCHUHART, Dalhart, Texas ANNE G. DRAPER, Washington, D.C. BLAIR C. SHICK, Cambridge, Massachusetts CARL FELSENFELD, New York, New York JAMES E. SUTTON, Dallas, Texas JEAN A. Fox, Pittsburgh, Pennsylvania THOMAS R. SWAN, Portland, Maine RICHARD H. HOLTON, Berkeley, California ANNE GARY TAYLOR, Alexandria, Virginia EDNA DECOURSEY JOHNSON, Baltimore, Maryland RICHARD D. WAGNER, Simsbury, Connecticut RICHARD F. KERR, Cincinnati, Ohio RICHARD L. WHEATLEY, JR., Stillwater, Oklahoma 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 Robert H. Knight Paul A. Volcker Boris Yavitz Thomas M. Timlen Buffalo 14240 Donald R. Nesbitt John T. Keane PHILADELPHIA 19105 John W. Eckman David P. Eastburn Werner C. Brown Richard L. Smoot CLEVELAND* 44101 Robert E. Kirby Willis J. Winn Otis A. Singletary 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 Maceo A. Sloan 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 Clifford M. Kirtland, Jr. Monroe Kimbrel Vacancy Kyle K. Fossum Birmingham 35202 Harold B. Blach, Jr. Hiram J. Honea Jacksonville 32203 James E. Lyons Edward C. Rainey Miami 33152 Alvaro L. Carta F. J. Craven, Jr. Nashville 37203 John C. Bolinger Jeffrey J. Wells New Orleans 70161 Edwin J. Caplan George C. Guynn CHICAGO* 60690 Robert H. Strotz Robert P. Mayo John Sagan Daniel M. Doyle Detroit 48231 Jordan B. Tatter William C. Conrad ST. LOUIS 63166 Armand C. Stalnaker Lawrence K. Roos William B. Walton Donald W. Moriarty Little Rock 72203 Ronald W. Bailey John F. Breen Louisville 40201 Vacancy 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 Christine H. Anthony 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 Josefina Salas-Porras Fredric W. Reed Houston 77001 Alvin I. Thomas J. Z. Rowe San Antonio 78295 Pete Morales, Jr. Carl H. Moore SAN FRANCISCO ... .94120 Joseph F. Alibrandi John J. Balles Cornell C. Maier John B. Williams Los Angeles 90051 Caroline L. Ahmanson 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 Gerald R. Kelly •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, ANNUAL REPORT $.85 each. FEDERAL RESERVE BULLETIN. Monthly. $20.00 per SURVEY OF CHANGES IN FAMILY FINANCES. 1968. 321 year or $2.00 each in the United States, its posses- pp. $1.00 each; 10 or more to one address, $.85 sions, Canada, and Mexico; 10 or more of same each. issue to one address, $18.00 per year or $1.75 each. Elsewhere, $24.00 per year or $2.50 each. REPORT OF THE JOINT TREASURY-FEDERAL RESERVE STUDY OF THE U.S. GOVERNMENT SECURITIES BANKING AND MONETARY STATISTICS, 1914-1941. (Reprint of Part 1 only) 1976. 682 pp. $5.00. MARKET. 1969. 48 pp. $.25 each; 10 or more to one address, $.20 each. BANKING AND MONETARY STATISTICS, 1941-1970. JOINT TREASURY-FEDERAL RESERVE STUDY OF THE 1976. 1,168 pp. $15.00. ANNUAL STATISTICAL DIGEST, 1971-75. 1976. 339 pp. GOVERNMENT SECURITIES MARKET: STAFF STUD- $4.00 per copy for each paid subscription to Fed- IES—PART 1. 1970. 86 pp. $.50 each; 10 or more eral Reser\q Bulletin. All others, $5.00 each. to one address, $.40 each. PART 2. 1971. 153 pp. ANNUAL STATISTICAL DIGEST, 1972-76. 1977. 388 pp. and PART 3. 1973. 131 pp. Each volume $1.00; $10.00 per copy. 10 or more to one address, $.85 each. FEDERAL RESERVE MONTHLY CHART BOOK. Subscrip- OPEN MARKET POLICIES AND OPERATING PROCEtion includes one issue of Historical Chart Book. DURES—STAFF STUDIES. 1971. 218 pp. $2.00 $12.00 per year or $1.25 each in the United States, each; 10 or more to one address, $1.75 each. its possessions, Canada, and Mexico; 10 or more REAPPRAISAL OF THE FEDERAL RESERVE DISCOUNT of same issue to one address, $1.00 each. Else- MECHANISM. Vol. 1. 1971. 276 pp. Vol. 2. 1971. where, $15.00 per year or $1.50 each. 173 pp. Vol. 3. 1972. 220 pp. Each volume $3.00; HISTORICAL CHART BOOK. Issued annually in Sept. 10 or more to one address, $2.50 each. Subscription to Monthly Chart Book includes one THE ECONOMETRICS OF PRICE DETERMINATION CONissue. $1.25 each in the United States, its posses- FERENCE, October 30-31, 1970, Washington, D.C. sions, Canada, and Mexico; 10 or more to one 1972. 397 pp. Cloth ed. $5.00 each; 10 or more address, $1.00 each. Elsewhere, $1.50 each. to one address, $4.50 each. Paper ed. $4.00 each; CAPITAL MARKET DEVELOPMENTS. Weekly. $15.00 per 10 or more to one address, $3.60 each. year or $.40 each in the United States, its posses- FEDERAL RESERVE STAFF STUDY: WAYS TO MODERATE sions, Canada, and Mexico; 10 or more of same FLUCTUATIONS IN HOUSING CONSTRUCTION. 1972. issue to one address, $13.50 per year or $.35 each. 487 pp. $4.00 each; 10 or more to one address, Elsewhere, $20.00 per year or $.50 each. $3.60 each. SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF CHARTS. Weekly. $15.00 per year or LENDING FUNCTIONS OF THE FEDERAL RESERVE $.40 each in the United States, its possessions, BANKS. 1973. 271 pp. $3.50 each; 10 or more Canada, and Mexico; 10 or more of same issue to one address, $3.00 each. to one address, $13.50 per year or $.35 each. IMPROVING THE MONETARY AGGREGATES (Report of the Elsewhere, $20.00 per year or $.50 each. Advisory Committee on Monetary Statistics). THE FEDERAL RESERVE ACT, as amended through De- 1976. 43 pp. $1.00 each; 10 or more to one cember 1976, with an appendix containing provi- address, $.85 each. sions of certain other statutes affecting the Federal ANNUAL PERCENTAGE RATE TABLES (Truth in Lend- Reserve System. 307 pp. $2.50. ing—Regulation Z) Vol. I (Regular Transactions). REGULATIONS OF THE BOARD OF GOVERNORS OF THE 1969. 100 pp. Vol. II (Irregular Transactions). FEDERAL RESERVE SYSTEM 1969. 116 pp. Each volume $1.00, 10 or more PUBLISHED INTERPRETATIONS OF THE BOARD OF GOV- of same volume to one address, $.85 each. ERNORS, as of June 30, 1977. $7.50. FEDERAL RESERVE MEASURES OF CAPACITY AND CAPAC- INDUSTRIAL PRODUCTION—1976 EDITION. 1977. 304 pp. ITY UTILIZATION. 44 pp. $1.75 each, 10 or more to one $4.50 each; 10 or more to one address, $4.00 each. address, $1.50 each. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Board Publications A 75 CONSUMER EDUCATION PAMPHLETS REVISED MEASURES OF MANUFACTURING CAPACITY UTILIZATION. 10/71. (Short pamphlets suitable for classroom use. Multiple REVISION OF BANK CREDIT SERIES. 12/71. copies available without charge.) ASSETS AND LIABILITIES OF FOREIGN BRANCHES OF U.S. BANKS. 2/72. THE EQUAL CREDIT OPPORTUNITY ACT AND . . . AGE BANK DEBITS, DEPOSITS, AND DEPOSIT TURNOVER— THE EQUAL CREDIT OPPORTUNITY ACT AND . . . REVISED SERIES. 7/72. DOCTORS, LAWYERS, SMALL RETAILERS, AND YIELDS ON NEWLY ISSUED CORPORATE BONDS. 9/72. OTHERS WHO MAY PROVIDE INCIDENTAL CREDIT RECENT ACTIVITIES OF FOREIGN BRANCHES OF U.S. THE EQUAL CREDIT OPPORTUNITY ACT AND . . . BANKS. 10/72. WOMEN REVISION OF CONSUMER CREDIT STATISTICS. 10/72. FAIR CREDIT BILLING ONE-BANK HOLDING COMPANIES BEFORE THE 1970 IF YOU BORROW TO BUY STOCK AMENDMENTS. 12/72. U.S. CURRENCY YIELDS ON RECENTLY OFFERED CORPORATE BONDS. WHAT TRUTH IN LENDING MEANS TO YOU 5/73. CREDIT-CARD AND CHECK-CREDIT PLANS AT COMMER- CIAL BANKS. 9/73. STAFF ECONOMIC STUDIES RATES ON CONSUMER INSTALMENT LOANS. 9/73. NEW SERIES FOR LARGE MANUFACTURING CORPORA- Studies and papers on economic and financial subjects TIONS. 10/73. that are of general interest in the field of economic U.S. ENERGY SUPPLIES AND USES, Staff Economic research. Study by Clayton Gehman. 12/73. INFLATION AND STAGNATION IN MAJOR FOREIGN IN- SUMMARIES ONLY PRINTED IN THE BULLETIN DUSTRIAL COUNTRIES. 10/74. (Limited supply of mimeographed copies of full text THE STRUCTURE OF MARGIN CREDIT. 4/75. available upon request for single copies.) NEW STATISTICAL SERIES ON LOAN COMMITMENTS AT SELECTED LARGE COMMERCIAL BANKS. 4/75. RECENT TRENDS IN LOCAL BANKING MARKET STRUC- RECENT TRENDS IN FEDERAL BUDGET POLICY. 7/75. TURE, by Samuel H. Talley. May 1977. 26 pp. RECENT DEVELOPMENTS IN INTERNATIONAL FINANCIAL THE PERFORMANCE OF BANK HOLDING COMPANY- MARKETS. 10/75. AFFILIATED FINANCE COMPANIES, by Stephen A. MINNIE: A SMALL VERSION OF THE Rhoades and Gregory E. Boczar. Aug. 1977. 19 pp. MIT-PENN-SSRC ECONOMETRIC MODEL, Staff GREELEY IN PERSPECTIVE, by Paul Schweitzer and Joshua Economic Study by Douglas Battenberg, Jared J. Greene. Sept. 1977. 17 pp, Enzler, and Arthur M. Havenner. 11/75. STRUCTURE AND PERFORMANCE STUDIES IN BANKING: A AN ASSESSMENT OF BANK HOLDING COMPANIES, Staff SUMMARY AND EVALUATION, by Stephen A. Economic Study by Robert J. Lawrence and Rhoades. Dec. 1977. 45 pp. Samuel H. Talley. 1/76. AN ANALYSIS OF FEDERAL RESERVE ATTRITION SINCE INDUSTRIAL ELECTRIC POWER USE. 1/76. 1960, by John T. Rose. Jan. 1978. 44 pp. REVISION OF MONEY STOCK MEASURES. 2/76. PROBLEMS IN APPLYING DISCRIMINANT ANALYSIS IN SURVEY OF FINANCE COMPANIES, 1975. 3/76. CREDIT SCORING MODELS, by Robert A. Eisenbeis. Jan. 1978. 28 pp. REVISED SERIES FOR MEMBER BANK DEPOSITS AND EXTERNAL CAPITAL FINANCING REQUIREMENTS OF AGGREGATE RESERVES. 4/76. COMMERCIAL BANKS: 1977-81, by Gerald A. Han- INDUSTRIAL PRODUCTION—1976 Revision. 6/76. weck and John J. Mingo. Feb. 1978. 34 pp. FEDERAL RESERVE OPERATIONS IN PAYMENT MECHA- NISMS: A SUMMARY. 6/76. PRINTED IN FULL IN THE BULLETIN RECENT GROWTH IN ACTIVITIES OF U.S. OFFICES OF BANKS. 10/76. Staff Economic Studies shown in list below. NEW ESTIMATES OF CAPACITY UTILIZATION: MANU- FACTURING AND MATERIALS. 11/76. U.S. INTERNATIONAL TRANSACTIONS IN A RECOVERING REPRINTS ECONOMY. 4/77. (Except for Staff Papers, Staff Economic Studies, and BANK HOLDING COMPANY FINANCIAL DEVELOPMENTS some leading articles, most of the articles reprinted do IN 1976. 4/77. not exceed 12 pages.) CHANGES IN BANK LENDING PRACTICES, 1976. 4/77. SURVEY OF TERMS OF BANK LENDING—NEW SERIES. A REVISED INDEX OF MANUFACTURING CAPACITY, 5/77. Staff Economic Study by Frank de Leeuw with THE COMMERCIAL PAPER MARKET. 6/77. Frank E. Hopkins and Michael D. Sherman. 11/66. CONSUMPTION AND FIXED INVESTMENT IN THE ECO- U.S. INTERNATIONAL TRANSACTIONS: TRENDS IN NOMIC RECOVERY ABROAD. 10/77. 1960-67. 4/68. SURVEY OF TIME AND SAVINGS DEPOSITS AT ALL COM- MEASURES OF SECURITY CREDIT. 12/70. MERCIAL BANKS, October 1977. 2/78. 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 Turnover, 13 BANKERS balances, 16, 18, 20, 21, 22 Discount rates at F.R. Banks (See Interest rates) (See also Foreigners) Discounts and advances by F.R. Banks (See Loans) Banks for cooperatives, 35 Dividends, corporate, 38 Bonds (See also U.S. Govt, securities): New issues, 36, 37 EMPLOYMENT, 46, 47 Yields, 3 Euro-dollars, 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 CAPACITY utilization, 46, 47 Federal funds, 3, 6, 18, 20, 21, 22, 27, 30 Capital accounts: Federal home loan banks, 35 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 Profits, 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 (Stv specific types of debt or securities) Gross national product, 52, 53 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

165 Federal Reserve Bulletin • February 1978 HOUSING, new and existing units, 50 REAL estate loans: Banks, by classes, 18, 20-23, 29, 41 INCOME, personal and national, 46, 52, 53 Life insurance companies, 29 Industrial production, 46, 48 Mortgage terms, yields, and activity, 3, 40 Instalment loans, 42, 43 Type of holder and property mortgaged, 41 Insurance companies, 29, 32, 33, 41 Reserve position, basic, member banks, 6 Insured commercial banks, 17, 18, 19 Reserve requirements, member banks, 9 Interbank deposits, 16, 17, 20, 21, 22 Reserves: Interest rates: Commercial banks, 16, 17, 18, 20, 21, 22 Bonds, 3 Federal Reserve Banks, 12 Business loans of banks, 26 Member banks, 3, 4, 5, 15, 16, 18 Federal Reserve Banks, 3, 8 U.S. reserve assets, 55 Foreign countries, 68 Residential mortgage loans, 40 Money and capital market rates, 3, 27 Retail credit and retail sales, 42, 43, 46 Mortgages, 3, 40 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 New security issues, 36 companies) Ownership of securities of, 18, 20, 21, 22, 29 Loans (See also specific types of loans): Yields of securities, 3 Banks, by classes, 16, 17, 18, 20-23, 29 State member banks, 17 Commercial banks, 3, 15-18, 20-23, 24, 26 Stock market, 28 Federal Reserve Banks, 3, 4, 5, 8, 12, 13 Stocks (See also Securities); Insurance companies, 29, 41 New issues, 36, 37 Insured or guaranteed by U.S., 40, 41 Prices, 28 Savings and loan assns., 29 TAX receipts, Federal, 31 MANUFACTURERS: Time deposits, 3, 10, 13. 15, 16, 17, 19, 20. 21, Capacity utilization, 46, 47 22, 23 Production, 46, 49 Trade, foreign, 55 Margin requirements, 10 Treasury currency. Treasury cash, 4 Member banks: Treasury deposits, 4, 12, 30 Assets and liabilities, by classes, 16, 17, 18 Treasury operating balance, 30 Borrowings at Federal Reserve Banks, 5, 12 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 U.S. Govt, securities: rates) Bank holdings, 16, 17, 18, 20, 21, 22, 29, Money stock measures and components, 3, 14 32, 33 Mortgages (See Real estate loans) Dealer transactions, positions, and financing, 34 Mutual funds (See Investment companies) Federal Reserve Bank holdings, 4, 12, 13, 32, 33 Mutual savings banks, 3, 10, 20-22, 29, 32, 33, 41 Foreign and international holdings and transactions, 12, 32, 64 NATIONAL banks, 17, 19 Open market transactions, 11 National defense outlays, 31 Outstanding, by type of security, 32, 33 National income, 52 Ownership, 32, 33 Nonmember banks, 17, 18, 19 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 System Boundaries of Federal Reserve Districts and Their Branch Territories * o HAWAII wmmm^smm^mm^mMmmmigmmm ® 0 ' 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