Federal Reserve Bulletin, 1978-03

M A R C H 1978 FEDERAL RESERVE BULLETIN Household Borrowing in the Recovery Treasury and Federal Reserve Foreign Exchange Operations Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 'Copy of the Federal Reserve Bulletin is sent to each member bank without charge; Member bunks desiring additional copes may secme Item at a special $111,00 annual rate. The regular subfcriptioii price In fh§ United States and Its possessions., and In Bolivia, Canada, Chile, Cofotnbi*, Gotti Rkft, Cuba, Domwiloftti Republic, Ecuador, Guatemala, Haiti, Republic of Honduras, Mexico* Nicaragua, Panama, Paraguayt?Itani, B! Salvador, Uruguay, and Venezuela is $20.©0 per annum or $2.00 per copy; elsewhere, $24,00 per annum or $2.50 per copy. Group subscriptions in the United States to 10 or more copies to one address* St.75 per copy per month, or $18.00 for 12 months. The BunLLiTiM may be obtained from the- Division of Administrative Services,, Board of CSovefaors of .tiie Federal Reserve System, Washington, D.C. 20551, and remittance should be made payable to the order of the Board of Governors of the Federal Reserve System in a form collectible at par in U.S, currency, (Stamps and coupons are not accepted',} Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NUM BER 3 □ VO LUM E 64 □ M ARCH 1978 FEDERAL RESERVE BULLETIN Board of Governors of the Federal Reserve System Washington, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman □ Stephen H. Axilrod □ John M. Denkler Janet O. Hart □ James L. Kichline n Edwin M. Truman Richard H. Puckett, Staff Director The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. Direction for the art work is provided by Mack R. Rowe. Editorial support is furnished by the Economic Editing Unit headed by Elizabeth B. Sette. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 153 Household Borrowing in the 190 Chairman Miller reports on the per­ Recovery formance of the economy over the past year before the Committee on the Borrowing by households in U.S. Budget, U.S. Senate, March 15, 1978. credit markets has accelerated sharply over the 3-year economic upswing, 195 Record of Policy Actions of the with only moderate increases in the Federal Open Market Committee cost of credit and with strong growth in personal income and asset hold­ At the conclusion of the discus­ ings. sion of policy at the meeting held on January 17, 1978, the Committee de­ 161 Treasury and Federal Reserve cided that operations in the period Foreign Exchange Operations immediately ahead should be directed toward maintaining prevailing money For the period from August 1977 market conditions, as represented by through January 1978, according to the current 63A per cent level of the the semiannual report on foreign ex­ Federal funds rate. However, the change operations, the U.S. dollar members agreed that if growth in the came under generalized selling pres­ aggregates should appear to approach sure in increasingly disorderly market or move beyond the limits of their conditions. specified ranges, the operational ob­ jective for the weekly-average Fed­ 179 Statements to Congress eral funds rate should be varied in an Philip E. Cold well, member of the orderly fashion within a range of 6V2 Board of Governors, comments on to 7 per cent. It was understood that the basic findings and purposes of the very strong evidence of weakness in Competition in Banking Act of 1977, a the monetary aggregates would be bill that would have far-reaching im­ required before operations were di­ plications for the regulation of bank­ rected toward reducing the Federal ing structure in the United States, be­ funds rate from its current level. For fore the Committee on Banking, the annual rates of growth in M-l and Housing and Urban Affairs, U.S. M-2 over the January-February pe­ Senate, March 7, 1978. riod, the Committee specified ranges of 2Vi to IV2 per cent and 5 to 9 per 185 G. William Miller, Chairman of the cent, respectively. It also agreed that Board of Governors, presents the in assessing the behavior of the aggre­ Federal Reserve’s quarterly report gates, the Manager should give ap­ on the conduct of monetary policy— proximately equal weight to the be­ the first report since passage of the havior of M-l and M-2. Federal Reserve Reform Act of 1977— before the Committee on Banking, 211 Law Department Finance and Urban Affairs, U.S. House of Representatives, March 9, Amendment to Regulation O; in­ 1978. terpretation of Regulation Y; various Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

bank holding company and bank mer­ Proposed amendment to Regulation ger orders; and pending cases. Y (Bank Holding Companies) would permit bank holding companies and 229 Directors of Federal Reserve their subsidiaries to sell, at retail, Banks and Branches money orders and similar instru­ ments, travelers checks, U.S. savings List shows name of each director bonds, and consumer-oriented finan­ with the principal business affiliation, cial management courses. Proposed the class of directorship, and the ex­ amendment to Regulation F (Securi­ piration date of the term. ties of Member State Banks) would bring the Board’s rules for member 246 Membership of the Board of bank disclosures into conformity with Governors of the recent rule revisions by the Securities Federal Reserve System, 1913-78 and Exchange Commission. List of appointive and ex officio A computer tape of preliminary members. data from the reports of condition and income and related supplements filed 248 Announcements by insured commercial banks will Appointment of G. William Miller soon be available to the public. as a member and as Chairman of the Change in Board staff. Board of Governors. Three State banks were admitted to Designation of Arthur F. Burns as membership in the Federal Reserve Acting Chairman of the Board of Gov­ System. ernors. Resignation of David M. Lilly as a 253 Industrial Production member of the Board of Governors. Output increased an estimated 0.5 per The Federal Reserve’s reciprocal cent in February. currency arrangement with the Ger­ man Federal Bank has been increased Al Financial and Business $2 billion to a total of $4 billion. Statistics Meeting of Consumer Advisory A3 Domestic Financial Statistics Council. A46 Domestic Nonfinancial Statistics A54 International Statistics A new consumer pamphlet “The Equal Credit Opportunity Act and . . . A70 Board of Governors and Staff Credit Rights in Housing” has been issued by the Board. A72 Open Market Committee and Staff; Advisory Councils Amendment to Regulation O (Loans to Executive Officers of Member A73 Federal Reserve Banks, Banks) increases from $1,000 to $5,000 Branches, and Offices the limit imposed on extension of A74 Federal Reserve Board credit by member banks to their exec­ Publications utive officers through the use of bank credit cards. A76 Index to Statistical Tables Exemption of State-chartered banks in A78 Map of Federal Reserve System New Jersey from the requirements of Inside Back Cover: Regulation C (Home Mortgage Dis­ Guide to Tabular Presentation closure). and Statistical Releases Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Household Borrowing in the Recovery This article was prepared by David F. Seiders example, consumer finance rates for various and Charles A. Luckett of the Mortgage and types of loans ranged within Vi of a percentage Consumer Finance Section, Division of Re­ point up or down. Average mortgage rates search and Statistics. increased less than Vx of a percentage point over the year, although they have risen some­ what further in 1978. Even so, mortgage rates Borrowing by households in U.S. credit mar­ remain well below the cyclical highs reached kets has accelerated sharply during the busi­ in 1974. ness cycle upswing of the last 3 years. In 1977 Meanwhile, growth in personal income and the amount of new funds raised was nearly asset holdings has enhanced the ability of triple the volume of borrowing 2 years earlier. households to meet required payments on a Because of this rapid growth, total household larger indebtedness. Nevertheless, such aggre­ debt outstanding—including home mortgages, gate measures as debt outstanding and current consumer instalment and noninstalment repayment obligations relative to disposable credit, and other types—has expanded by a personal income reached record levels during third during the recovery period. 1977. This development has generated some In spite of heavy demands for household concern about the capacity of households both credit, supplies of credit have in general been to repay debts on schedule and to maintain a ample, and there have been only moderate rate of consumption expenditure supportive of increases in credit costs. During 1977, for continued economic growth. 1. Sources of funds to households in mortgage and consumer credit markets—1977 Home mortgage1 Consumer Total Holder Billions Percentage Billions Percentage Billions Percentage of distri­ of distri­ of distri­ dollars bution dollars bution dollars bution All sources .................................. 93.1 100 35.6 100 128.7 100 Savings and loans .................. 47.5 51 1.2 3 48.7 38 Commercial banks ................ 15.2 16 17.| 48 32.3 25 Mortgage pools2 .................... 19.0 20 (3) (3) 19.0 15 Credit unions .......................... .3 (3) 6.5 18 6.8 5 Finance and mortgage companies .......................... 1.0 1 5.3 15 6.3 5 Mutual savings banks .......... 4.5 5 .4 1 4.9 4 Federal and related agencies .............................. .3 (3) (3) (3) .3 (3) Others ...................................... 5.3 6 5.1 14 10.4 8 ‘Home mortgage credit figures include a small amount of construction loans to other than households. 2Pools of mortgages backing pass-through securities guaranteed by the Government National Mortgage Association, Federal Home Loan Mortgage Corporation, or Farmers Home Administration, some of which may have been purchased by the institutions shown separately and reported among their nonmortgage assets. 3Less than $0.1 billion or 0.5 per cent. Note.—Data from Federal Reserve flow of funds accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

154 Federal Reserve Bulletin □ March 1978 VOLUME OF BORROWING and a sizable portion—more than one-sixth— of home mortgage credit. Savings and loan Home mortgages, as usual, have accounted associations, which specialize in mortgage fi­ for the largest share of net new borrowing nance, supplied half of all mortgage funds by households. In 1977 outstanding home raised by households but advanced only a mortgage debt of households grew 15 per cent, small amount of consumer credit. Lending to as net mortgage borrowing reached a record households by mutual savings banks was con­ $87 billion, up from $61 billion in 1976 and $38 centrated in the mortgage markets, whereas billion in 1975. This rapid expansion of credit unions and finance companies were mortgage debt helped to finance a sharply major suppliers of consumer credit. Reflecting higher sales volume of new and previously the expanding role of Federally guaranteed owned homes during the last 2 years. By late mortgage-backed securities, mortgage pools 1977 total home sales reached a record annual accounted for one-fifth of the net increase in rate of nearly 5 million units, before dropping home mortgage credit. (See Table 1.) sharply in January when the weather was un­ usually adverse. Mortgage borrowing has been exceptionally strong, even in relation to the record volume TERMS OF CREDIT of capital outlays by households on new and existing homes. As discussed later, house­ Households were able to finance their record holds as a group have evidently borrowed borrowing last year on credit terms that were against equity in existing homes, freeing funds little changed from the preceding 2 years. for uses other than the purchase of homes. Interest rates on commitments for conven­ In consumer credit markets, too, house­ tional new-home mortgages, for instance, av­ holds raised a record net volume of funds last eraged slightly above 9 per cent in the fourth year, although higher rates of growth in credit quarter of 1977, compared with slightly below outstanding have been recorded in some ear­ 9 per cent in the last quarter of 1976 and 9XA lier periods, such as 1973. Instalment credit per cent in early 1975. Average maturities on outstanding expanded during 1977 by $31 bil­ new-home loans closed have lengthened lion, or 15V^ per cent, well in excess of the gradually since early 1975, and average loan/ increases of $21 billion in 1976 and $8 billion in value ratios have increased from a cyclical 1975. The smaller noninstalment portion rose low of 74 per cent to a high of 77 per cent in $4V^ billion (12 per cent) in 1977, considerably mid-1977. more than in either of the two preceding years. Finance rates on consumer loans, which had Automobile credit accounted for more than declined on balance during the early stages of two-fifths of the growth in total instalment the recovery, were little changed in 1977. credit outstanding in 1977. Bank-card credit Some rates—for example, on direct new-car outstanding posted the largest percentage in­ loans at banks and on personal loans at finance crease of any type of instalment credit but companies—continued to edge down last year, remained a relatively small component of the and most other rates rose only moderately. total. Home improvement credit and the large During the business upswing, contract “all other” category—which includes personal maturities have generally lengthened for most cash loans and retail store credit—expanded types of consumer credit. Almost one-half of about in line with the rate of increase of total all contracts for new-car loans made during instalment credit. Only mobile home credit 1977 had longer maturities than 36 months— lagged significantly, as shipments of new the standard maturity as recently as 1974. mobile homes remained far below their volume These liberalized auto-loan maturities, along in the early 1970’s. with gradually rising loan/value ratios and Commercial banks supplied close to half of increased price levels, resulted in a sharp the net flow of total instalment credit last year increase in the average size of auto loans. By Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Household Borrowing in the Recovery 155 the end of 1977, a new-car contract (including 1. Household capital expenditures on homes finance charges) averaged $5,900, up more and net mortgage borrowing than 30 per cent since early 1975. Millions of dollars BORROWING AGAINST EQUITY IN HOMES The exceptional strength of mortgage borrow­ ing by the household sector during the current Expenditures economic expansion stems from a number of Borrowing influences. In part, the volume of such financ­ ing has been associated with abundant supplies of mortgage funds, at relatively stable interest rates, to finance transactions in both new and existing homes. Early in the business Borrowing less expenditures recovery, the revival in mortgage borrowing and housing activity reflected, to some extent, pent-up demand resulting from purchases postponed during the recession. More re­ cently, the strong demand for mortgage funds appears to have been associated in part with capital gains resulting from rapid increases in Net change in home mortgage debt of households and household capital expenditures on new and existing homes—other than prices of homes. mobile homes—at seasonally adjusted annual rates, from the F.R. During the past 2 years, net mortgage bor­ quarterly flow of funds accounts. rowing by households exceeded, by a wide sumption and net mortgage debt formation. margin, their capital outlays on conventionally By the end of 1977, estimated housing equity built new and existing homes. Such an “ex­ that was available to serve as potential col­ cess” of net mortgage borrowing occurred lateral for additional mortgage borrowing only one other time since World War II—dur­ exceeded $900 billion—about double the ing the housing boom of the early 1970’s amount estimated for 1970. (Chart 1). The unusually large recent rise in home Extent of Borrowing mortgage debt, relative to capital expendi­ Against Home Equity tures, reflects heavy borrowing by the house­ hold sector against equity interests in the The difference between net mortgage borrow­ stock of existing homes. Houses are, by far, ing and capital expenditures on homes in­ the major tangible asset of the household dicates that borrowing against equity in exist­ sector, and rapid inflation in prices of existing ing homes has increased sharply in recent homes—spurred partly by expectations of years (Chart 1). Capital expenditures, how­ further price appreciation—has boosted the ever, contain large and/or nonquantified value of the housing stock. Since 1970, the elements—such as downpayments on new median selling price of existing homes has houses and some additions and alterations to about doubled. existing homes—that may not be financed by Due to the inflated prices of houses, house- mortgage debt. So the difference is not a hold-sector equity in homes has continued to precise measure of borrowing against home rise in recent years. The increase has resulted equity for nonhousing purposes. even though capital expenditures on homes An alternative, more comprehensive meas­ have fallen short of the sum of capital con- ure of net funds raised by households against Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

156 Federal Reserve Bulletin □ March 1978 2. Net increase in mortgage debt against accumulated equity by taking out on stock of existing homes junior mortgages, or they may increase the size Billions of dollars of outstanding first mortgages through re­ financing. Those who own homes outright may take out new first mortgages. These types of borrowing, however, do not appear to have been the major force behind the recent upsurge in mortgage credit secured Try existing homes. Some creditors are still averse to lending for junior mortgages— despite indications that recent repayment ex­ perience on such loans has been good— because the value of the collateral may be uncertain in the event of foreclosure. Other Constant dollars factors limiting the supply of funds to this market include Federal or State regulatory restrictions on powers of various types of financial institutions to invest in junior F.R. staff estimates, at seasonally adjusted annual rates, based on mortgages, State-imposed ceilings on the the net increase in home mortgage debt of households and maximum rates that may be charged on such originations of mortgages for the purchase of new conventionally built homes. Constant-dollar series is the current-dollar series de­ loans, and State constitutional restrictions on flated by the consumer price index (all items), 1967= 100. junior mortgage lending for some purposes. equity in the stock of existing homes can be con­ Even when junior mortgage funds have been structed for the period since 1970. This measure offered without restrictions, interest rates— equals total home mortgage funds raised by normally ranging between 12 and 15 per cent households in a given period less estimated or higher—have probably limited the quantity amounts of mortgage funds raised for the demanded by households. purchase of new homes. The residual repre­ Funds borrowed by homeowners through sents net borrowing by households, for what­ refinancing outstanding first mortgages, or by ever purpose, against previously existing taking out new first mortgages against housing collateral. properties owned outright, have no doubt The existing-home component of household been limited by the high cost of trans­ mortgage borrowing rose to a seasonally ad­ actions—for such items as property ap­ justed annual rate of more than $40 billion in praisal, title search, and recording of deeds the fourth quarter of 1977 (Chart 2). During the and other documents. Refinancing activity has past 2 years, it has accounted for nearly half of also been constrained in recent periods be­ total home mortgage debt formation—about cause interest rates on new first mortgages double the proportion during the previous have generally remained above rates on most 5 years. In terms of volume, this component older loans already outstanding. exceeded the net increase in short- and A survey of consumer finances, conducted intermediate-term consumer credit during the in September 1977, indicates that the propor­ current economic expansion, a sharp contrast tions of households with junior mortgages or to experience earlier in the 1970’s. refinanced first mortgages are only marginally above those recorded early in the 1970’s. As indicated by participants in the survey, no Junior Mortgages more than 6 per cent of households with first and Refinancings mortgage debt also had a junior mortgage Households can raise funds in a number of (Table 2). And 7 per cent reported having ways against equity in existing homes. Those refinanced their first mortgages at some time who have not sold their homes may borrow in the past in order to raise additional funds. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Household Borrowing in the Recovery 157 The survey data suggest, however, that 3. Sales of single-family homes such activity has picked up somewhat in re­ Ratio scale, millions of units cent periods, particularly junior mortgage bor­ rowing. Junior mortgages ordinarily are intermediate-term loans, and about half of the number of such mortgages reported by the households in the survey have been originated since the beginning of 1976. Moreover, it appears that the bulk of junior mortgage financing has reflected borrowing against equity by homeowners, rather than extension by home sellers of “purchase-money” mortgage credit to homebuyers. Recent junior mortgage lending activity has been most pronounced on the West Coast, although in­ creasing numbers of financial institutions in other parts of the country have been marketing junior mortgage credit on homes. Transactions in Existing Homes In contrast to junior mortgage borrowing or refinancing, most funds raised by the house­ 1969 1971 1973 1975 1977 hold sector against housing equity have appar­ Merchant-builder sales of new homes as reported monthly by the ently been generated through transactions in Census Bureau, and existing home sales as reported monthly by the National Association of Realtors, both at seasonally adjusted previously owned homes at increased prices. annual rates. Sales of existing homes reached unprece­ dented levels in 1977, and the dominance of existing-home transactions in the market has Uses of Funds Raised intensified in the past several years (Chart 3). Against Home Equity Moreover, net credit use for existing-home Funds raised by the household sector against transactions has increased as average home equity in the stock of existing homes may be prices have risen markedly while average used to support personal consumption expen­ loan/value ratios on conventional first mort­ ditures as well as capital outlays—including gages have been historically high. downpayments on new homes and additions The marginal costs of borrowing against ac­ and alterations to existing homes. On the other cumulated equity through new first mortgages hand, borrowing against housing equity could for those households already engaged in selling substitute for other forms of household debt or and buying homes are low per dollar raised be matched by increases in holdings of relative to the costs of junior mortgages or re­ financial assets. financing for homeowners who have not While it is difficult to identify precisely the moved. Transactions costs associated with uses of the funds raised against housing new first mortgages are incurred by the home­ equity, a significant share of these funds prob­ buyers, regardless of the size of the mortgages ably has gone toward supporting capital and received. Moreover, the relatively low interest personal consumption expenditures during the rates on first mortgages—which averaged last few years. Other types of household bor­ about 9 per cent during 1977—ordinarily are rowing have been quite strong, and net acqui­ not highly sensitive to increases in loan/value sitions of financial assets have not been ratios, except at high levels of this ratio. robust in relation to growth of household Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

158 Federal Reserve Bulletin □ March 1978 2. Mortgage borrowing by households pace of future consumption outlays, although Numbers of respondents any slowdown might reflect a temporary All respondents ............................................................ 2,563 satisfaction of the underlying demand for With first mortgages ............................ ................. 1,035 durable goods as well as a restraining effect of With junior mortgages ........................................... 64 82 the indebtedness itself. Junior mortgages Debt-to-Income Ratios Primary use of junior mortgage funds: Downpayment on primary or second home........ 11 Home improvement or repair .............................. 13 Household debt positions may be evaluated by Remodel or add to house .................................... 10 relating net borrowing, outstanding debt, or Pay bills, taxes, medical and education expenses 11 Buy appliances ..................................................... 2 volume of debt repayments to household in­ Other1 .................................................................... 17 come. Although income data apply to debt- Refinancing of first mortgages free households as well as to those with debts, the 1977 survey of household credit usage Refinanced primarily to obtain lower interest rate or longer maturity ................................................. 11 suggests that the proportion of households Refinanced primarily to raise additional funds ......... 71 with instalment debt has changed little since a Primary use of additional funds: similar survey conducted in 1970 (Table 3). On Downpayment or purchase of second home ___ 6 Home improvement or repair .............................. 15 the other hand, the proportion of households Remodel or add to house .................................... 19 Pay bills, taxes, medical and education expenses 13 with home mortgage debt has risen over this Other2...................................................................... 18 period. Net credit flows, scaled by income in includes six cases where the primary use of funds was not ascertained. Chart 4, provide a measure of the pace or includes one case where the primary use of funds was not intensity of current borrowing activity. The ascertained. rate of total credit flows to households rela­ Note.—Data from 1977 Consumer Credit Survey conducted by tive to disposable personal income reached a the University of Michigan’s Survey Research Center on behalf of the Federal Reserve Board, the Federal Deposit Insurance record high in the second quarter of 1977— Corporation, and the Comptroller of the Currency. well above most other periods—and declined income. Moreover, survey results indicate only slightly during the next two quarters. As that substantial proportions of the funds raised shown, the principal impetus to this large through junior mortgages or refinancings have build-up of debt has been home mortgage bor­ been used for capital expenditures on homes rowing. In contrast, consumer debt formation or for various types of consumption expendi­ relative to income, though high, has not quite tures, some of which are related to housing reached the record pace of early 1973. (Table 2). The ratio of debt outstanding to disposable income (Chart 4) expresses total household liabilities, regardless of maturity, relative to HOUSEHOLD DEBT BURDENS The rapid growth of household debt has raised 3. Percentage of households a question as to whether higher required debt with debt repayments payments might induce households to curtail their future consumption outlays below levels Consumer Home instalment mortgage that would continue to support economic ex­ Year debt debt pansion. If growth in income should falter, the 1960 47 35 relatively high level of consumer indebtedness 1965 49 36 1968 48 35 could contribute to a sharper cutback in con­ 1969 51 34 1970 49 36 sumer spending than would otherwise be 1977 50 40 likely. Moreover, even if income growth re­ mains strong, the large build-up of consumer Note.—Data from Survey Research Center of the University of Michigan, 1970 Survey of Consumer Finances and earlier surveys; debt might still be associated with a slower and 1977 Consumer Credit Survey. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Household Borrowing in the Recovery 159 consumer debt combined, relative to income, 4. Home mortgage and consumer credit Per cent have reached past highs. The mortgage re­ payments ratio has exceeded its previous high, NET FLOWS/DPI while the consumer instalment repayments ratio, restrained by the general lengthening of loan maturities, remains somewhat below levels reached in the early 1970’s. Nondiscretionary Spending Consumer Further perspective on the ability of house­ holds to repay debts and to maintain expendi­ LEVELS/DPI tures near recent rates can be found by exam­ ining outlays other than debt repayments that might also be considered nondiscretion­ ary—such as expenditures for food, fuel, and household operating costs. After rising some­ what relative to disposable personal income in 1975 and 1976, these expenditures have absorbed a gradually declining share of in­ Consumer come since early 1977 (Chart 5). Even when essential consumption out­ REPAYMENTS/DPI lays are combined with consumer instalment and mortgage debt repayments and then re­ Consumer lated to disposable personal income, it appears that total nondiscretionary uses of income edged down last year. This measure suggests that despite higher household indebtedness, a relatively large margin of consumer income, in the aggregate, may still be available for discre­ tionary spending. Amounts outstanding and seasonally adjusted net flows at annual rates include home mortgage and consumer instalment and nonin­ stalment debt of the household sector from the F.R. quarterly flow of funds accounts. Mortgage repayments are F.R. staff estimates 5. Nondiscretionary household outlays of scheduled payments of principal and interest on mortgage debt Per cent Per cent secured by one-unit homeowner properties. Consumer credit in­ terest and principal payments are for instalment credit only. Shad­ ing indicates periods of recession as designated by the National Bureau of Economic Research. DPI=disposable personal income. the usual source of funds for retiring such debts. As a result of the unusually large volume of mortgage borrowing, the ratios of both mortgage and total household debt out­ standing to disposable income have risen to new highs. Outstanding consumer credit rela­ tive to income is still somewhat below earlier peak levels. The ratio of repayments to disposable in­ Nondiscretionary expenditure is an F.R. staff estimate based on come provides perspective on the ability of Commerce Department data for outlays on food, fuel oil and coal, households to service their debts out of cur­ housing services and fractions of household operating costs, gasoline and oil, and “other” services. Debt repayments include rent income. Repayments on mortgage and both mortgage and consumer instalment debt (see note to Chart 4). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

160 Federal Reserve Bulletin □ March 1978 Household Balance Sheets high in 1976 and remained within 2 per cent of that level during 1977. As discussed earlier, the The household-sector balance sheet provides sharp rise in home values, in fact, has appar­ another viewpoint from which to analyze in­ ently been a major force behind the large fluences on consumption expenditures, since volume of mortgage borrowing by house­ assets as well as income may be drawn upon to holds. meet debt obligations or to support current spending. Following 2 years of improvement, the fi­ DEBT PAYMENT EXPERIENCE nancial net worth of the household sec­ tor (Chart 6) deteriorated somewhat during Direct measures of payment experience, such 1977. The value of financial asset holdings— as loan delinquency rates, indicate the extent expressed in constant dollars—declined stead­ to which the expansion in mortgage and in­ ily after the first quarter of last year, while stalment loan indebtedness might be creating debt obligations rose in real terms. Much of undue pressure on household financial re­ the decline in assets was attributable to fall­ sources. ing values in the stock market. But even with Most such measures provide little evidence equities removed from the balance sheet, the that households were falling behind in their difference between assets and liabilities debt payments during 1977. A series on con­ showed only marginal improvement in real sumer instalment loans delinquent 30 days or terms in 1977 and was below levels reached in more at commercial banks, for example, 1972. changed little during the year, after having Financial net worth, of course, takes no declined sharply from mid-1975 through 1976. account of changes in the value of tangible Other series on consumer instalment loan assets. For the household sector, the real delinquencies—at finance companies and re­ value of total net worth—spurred by rapidly tail firms—moved down last year. increasing home prices—reached a record Home mortgage delinquency rates also de­ clined, according to most available series. At savings and loan associations, which supply . Household sector net worth 6 the largest share of mortgage funds to house­ Trillions of 1967 dollars holds, the proportion of mortgage loans delin­ quent 60 days or longer fell sharply during 1977. In the fourth quarter the rate was around 1 per cent, more than a third below the peak in early 1976. Improvements in other mortgage delinquency series were less pronounced but generally confirmed the view that the ability of households to meet mortgage payments was well maintained during the year. Finally, measures of more serious house­ hold financial problems, such as repossession or foreclosure rates, generally improved as well during the year. Personal bankruptcy filings continued a downward trend begun in the first quarter of 1976. Although the number of bankruptcy cases, after seasonal adjust­ Financial net worth is total assets less total liabilities of the house­ hold sector from the F.R. quarterly flow of funds accounts. Total ment, edged up slightly in the second and third household net worth is financial net worth plus consumer durable quarters of 1977, it fell sharply in the fourth goods, residential structures, land, and certain other tangible quarter to a 4-year low. □ assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

161 Treasury and Federal Reserve Foreign Exchange Operations This 32nd joint interim report reflects the The depreciation of the dollar came in the Treasury-Federal Reserve policy of making context of deepening concern over the lack of available additional information on foreign progress in resolving serious economic imbal­ exchange operations from time to time. The ances among major industrial nations. The Federal Reserve Bank of New York acts as United States had swung into a record trade agent for both the Treasury and the Federal deficit from $9 billion in 1976 to $31 billion in Open Market Committee of the Federal Re­ 1977 as a whole. Correspondingly, the U.S. serve System in the conduct of foreign ex­ current-account deficit widened from $1 bil­ change operations. lion in 1976 to $19 billion in 1977. This deterio­ This report was prepared by Alan R. ration reflected not only an increasing de­ Holmes, Manager, System Open Market Ac­ pendence on foreign oil to complement domes­ count, and Executive Vice President in charge tic energy sources but also the more rapid of the Foreign Function of the Federal Re­ economic growth in the United States than serve Bank of New York, and by Scott E. abroad. Pardee, Deputy Manager for Foreign Opera­ By contrast, among the other industrial tions of the System Open Market Account and countries Japan’s massive trade and currenta Vice President in the Foreign Function of account surplus continued to mount partly the Federal Reserve Bank of New York. It because of structural reasons and partly be­ covers the period August 1977 through Janu­ cause of the lack of sufficient domestic ary 1978. Previous reports have been pub­ lished in the March and September B ulle­ 1. Federal Reserve tins of each year beginning with September reciprocal currency arrangements 1962. Millions of dollars During the 6-month period under review, the Amount of facility, U.S. dollar came under generalized selling Institution Jan. 31, 1978 pressure in increasingly disorderly market Austrian National Bank ........................ 250 National Bank of Belgium .................... 1,000 conditions. By the end of January, the dollar Bank of Canada ....................................... 2,000 had declined against a broad spectrum of National Bank of Denmark ................. 250 Bank of England ..................................... 3,000 major currencies, falling a net 21 per cent Bank of France ....................................... 2,000 against the Swiss franc, 10 per cent against the German Federal Bank .......................... 2,000 Bank of Italy ............................................ 3,000 Japanese yen, 8 per cent against the German Bank of Japan .......................................... 2,000 mark and currencies linked to it in the Euro­ Bank of Mexico ....................................... 360 pean Community (EC) “snake” arrangement, Netherlands Bank ................................... 500 Bank of Norway ..................................... 250 and 12 per cent against the pound sterling. The Bank of Sweden ..................................... 300 decline against the French franc, 3 per cent, Swiss National Bank ............................ 1,400 and the Italian lira, 1 Vi per cent, was smaller. Bank for International Settlements: Swiss francs/dollars .......................... 600 As exceptions, the dollar rose some 3Vi per Other authorized European currencies/dollars .......................... 1,250 cent against the Canadian dollar and 6 per cent Total ......................................... 20,160 against the Swedish krona. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

162 Federal Reserve Bulletin □ March 1978 2. Federal Reserve System activity under its reciprocal swap lines Millions of dollars equivalent System Drawings, or repayments (-) System commit­ commit­ Transactions with— ments, 1977 1978 ments, Jan. 1, Jan.31, 1977 Ql Q2 Q3 Q4 Jan. 1978 35.4 800.1 451.1 j. German Federal Bank ........ 14.9 | -14.9 -35.4 1,251.2 Swiss National Bank .......... 18.9 18.9 35.4 800.1 470.0 j. Total .................................. 14.9 { -14.9 -35.4 ... . ) 1,270.1 N ote.—Data are on a value-date basis with the exception of the last two columns, which include transactions executed in late January for value after the reporting period. demand to boost imports. Germany, too, re­ the Congress for an energy program that could mained in substantial trade and current- reduce oil imports. U.S. officials continued account surplus while experiencing a disap­ their efforts to persuade other governments to pointingly slow pace of economic growth. promote more rapid growth of their economies While other European countries made prog­ and thereby to take on some of the burden of ress in their efforts to curb previously high adjustment. Moreover, the administration inflation rates and large payments deficits, real faced hard bargaining in containing protec­ growth in their respective economies also ta­ tionist pressures at home while seeking to pered off. negotiate a further reduction of restrictive As the size of these imbalances became trading practices abroad. But, on exchangeapparent during the summer, market partici­ rate policy, U.S. authorities, reaffirming the pants became increasingly apprehensive about philosophy that dollar rates should move in the prospects for the dollar. Concern focused line with economic fundamentals, felt assured on the net supply of dollars coming on the that a strong, noninflationary domestic econ­ market as a result of the current-account defi­ omy would help keep the dollar strong. cit itself. With so many industrial countries These assurances, and a firming of U.S. suffering from a combination of high unem­ interest rates in early August, tended to settle ployment and low profits, protectionist senti­ the markets through the rest of the summer. ment became increasingly vocal, thereby un­ This enabled the Federal Reserve to repay the derscoring the need for early action to redress modest amount of swap debt in German marks these imbalances if an increasingly restrictive incurred in July. Otherwise the Federal Re­ environment for trade were to be avoided. In serve operations in the exchange markets the event other adjustment policies were not were minimal through mid-September. adopted here or abroad, dealers were fearful that exchange rates would ultimately emerge as the means of achieving adjustment. 3. Federal Reserve System repayments Late in July, Chairman Burns and Secretary under special swap arrangement Blumenthal had stressed their belief in the with the Swiss National Bank need for a strong dollar for the United States Millions of dollars equivalent and for the world generally. A healthy expan­ Commitments, Jan. 1, 1977 ....................................... 1,051.0 sion of the U.S. economy was well under way. Repayments: And, as U.S. authorities had pointed out, U.S. 1977—Q j ...................................................................... -148.4 Q2 ................................................................ -143.6 goods had generally retained their price com­ Q3 ................................................................ -143.6 petitiveness in international markets, and our Q4 ................................................................ -108.9 1978—Jan.................................................................. -36.4 inflation rate—while still uncomfortably Commitments, Jan. 31, 1978 .................................. 470.1 high—was among the lowest in the world. To be sure, further action was still required N ote.—Data are on a value-date basis with the exception of the last two entries, which include transactions executed in late in controversial areas. Legislation was before January for value after the reporting period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 163 4. Drawings and repayments on Federal Reserve System by its swap partners Millions of dollars Drawings or repayments (-) Banks drawing on System Outstanding, 1977 1978 Outstanding, Jan. 1, 1977 Jan.31,1978 Ql Q2 Q3 Q4 Jan. Bank of Mexico .................. 150.0 -150.0 Bank for International Settlements* (against German marks) . 1 i/~] oo 147.0| 147.0 Total .............................. 150.0 -150.0 ( ( -3 3 5 5 . . 0 0 147.0 | 147.0 * BIS drawings and repayments of dollars against European currencies other than Swiss francs to meet temporary cash requirements, By that time, however, the energy bill had were sensitive to recurring reports of substan­ bogged down in the Congress. Moreover, re­ tial portfolio diversification by private and cent indicators showed that economic growth official dollar-holders. Under such circum­ had slowed in several foreign countries. Al­ stances, the exchange market became increas­ though new stimulative measures were an­ ingly one way and unresponsive to economic nounced in Japan, Germany, and elsewhere, fundamentals. Movements in exchange rates they were expected to have little effect before were abrupt, bid-asked spreads widened, and 1978. And, taking those measures into ac­ market professionals were increasingly unwill­ count, many public and private forecasters ing to take dollars offered to them into their saw little prospect for an early improvement positions even for brief intervals. In response, for the U.S. trade deficit. These concerns foreign central banks continued to intervene in were featured during the annual meeting of the their respective currency markets. For its International Monetary Fund (IMF) and the part, the Federal Reserve intervened fre­ World Bank in late September, when finan­ quently and on an increasing scale in the New cial officials thrashed out the whole range of York market. economic policy issues but emerged with little Meanwhile, officials were convinced that apparent consensus on what to do next. policies already adopted or soon to be put in Reports from these meetings triggered im­ place here and abroad would, in time, substan­ mediate reaction in the markets. In view of tially reduce the imbalances that concerned Japan’s huge trade surplus, the yen came into the market. The pressing need was to deal renewed demand. The Swiss franc, the tradi­ effectively with the disorder in the exchange tional haven in times of uncertainty, also came market and thereby to provide breathing room into heavy demand. The flow of funds into both for the measures to take effect and for sterling, already huge throughout most of market participants to take stock of fundamen­ 1977, became even larger. Demand pressures tals. soon spread to the German mark and other In a statement on December 21, President European currencies. Although circumstances Carter announced several measures to reduce varied for individual currencies, the dollar was U.S. imports of oil and to stimulate exports, generally on offer through most of the last 3 and stressed that U.S. authorities would inter­ months of 1977. vene to the extent necessary to counter disor­ With currencies being dealt around the derly conditions. In early January U.S. au­ clock in Asia, Europe, or North America, thorities followed up with several measures to unsettled conditions in any one market tended restore a sense of balance to the exchanges. to spill over into the others. The further the On January 4, the Federal Reserve and the dollar fell, the greater was the shift out of U.S. Treasury announced that the Treasury dollars into other currencies through specula­ had entered into a new swap arrangement with tive positioning, commercial leads and lags, the German Federal Bank and that this facil­ and hedging operations. In addition, traders ity, together with the Federal Reserve swap Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

164 Federal Reserve Bulletin □ March 1978 5. U.S. Treasury securities, In sum, for the period August 1, 1977— foreign currency series January 31, 1978, covered by this report, the issued to the Swiss National Bank Federal Reserve sold a total of $1,310.5 mil­ In millions of dollars equivalent; issues, or redemptions (-) lion equivalent of marks. It repaid $35.4 mil­ lion equivalent of previous drawings in marks Commitments, Jan. 1, 1977 .................................... 1,545.7 on the German Federal Bank and drew a total Transactions: of $1,251.2 million equivalent to finance oper­ 1977—Qi ................................................................ -84.6 Q2 ................................................................ -85.8 ations during the period. The remaining sales Q3 ................................................................ -85.8 Q4 ................................................................ -120.5 were financed from balances. U.S. Treasury 1978—jan.................................................................. -50.9 sales of marks after January 4 amounted to Commitments, Jan. 31, 1978 .................................. 1,118.0 $407.4 million equivalent, financed by draw­ Note.—Because of rounding, figures do not add to totals. ings on its swap arrangement with the German Data are on a value-date basis except for last two entries, Federal Bank. In addition, in intervention which include transactions executed in late January for value after the reporting period. during the period, the Federal Reserve sold $18.9 million of Swiss francs drawn under the network, would be actively utilized to check swap arrangement with the Swiss National Bank. Otherwise, as detailed in the Swiss speculation and to restore order in the ex­ franc section, the Federal Reserve repaid change market. Beginning that afternoon, the Federal Reserve’s foreign exchange Trading $235.3 million equivalent and the Treasury repaid $223.5 million equivalent of Swiss Desk shifted to a more open and forceful approach to the market than it had used in francs from obligations remaining from August previous months. On January 6, the Board of 1971. Governors of the Federal Reserve System approved a Vi per cent discount rate increase, specifically on international considerations, GERMAN MARK and the Federal Reserve’s domestic Trading Desk acted to firm money market conditions In contrast to the solid economic expansion somewhat. under way in the United States, the growth of These steps, coming in the context of con­ output in Germ any was losing momentum by tinuing debate on virtually all of the other midsummer 1977. New orders from abroad issues that had troubled the exchange market were lower, partly reflecting the generally for months on end, at first received a mixed slack conditions elsewhere in Western Europe reaction. Although the dollar staged a brief and partly in response to the previous appreci­ initial rally, it came heavily on offer again the ation of the mark against most major curren­ following week. The New York Federal Re­ cies. In addition, German firms were reluctant serve, in close consultation with the German to invest in new plant and equipment in view Federal Bank, continued to intervene force­ of uncertain prospects for sales, particularly in fully. These mark sales were financed by export markets, and because of postpone­ drawings in equal amounts on the System and ments in the face of environmental protests of Treasury swap lines with the Federal Bank. major public investment projects that had By mid-January, the intervention was be­ been intended to provide fiscal stimulus. ginning to take effect and the exchange market Monetary policy remained fairly accom­ gradually came into better balance. In fact, modative. The monetary aggregates were with the market settling into active two-way growing somewhat more rapidly than targeted, trading, the Desk did not intervene for several and bank lending expanded vigorously as days running for the first time since interest rates declined. But by early August a November. And, thereafter, intervention was public debate had emerged on the need for limited to modest amounts in German marks further fiscal impetus for the domestic econ­ and, for the first time since 1975, in Swiss omy. On the external side, Germany had francs. been identified by its trading partners as a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 165 major current-account surplus country that, it Therefore, after the discussions at the latewas hoped, would increase domestic demand, September meeting of the IMF and the World thereby boosting imports and helping to re­ Bank in Washington over the difficulties in lieve strains on the payments balances of other reducing the U.S. trade deficit, the German countries. mark soon became caught up in the wave of As talk about stimulative measures emerged dollar selling. At first, the rise of the mark in Germany during August and early Septem­ lagged behind other currencies. But, as the ber, exchange-market participants turned gen­ markets became increasingly unsettled, the erally cautious toward the mark. By that time, demand for marks intensified. The German also, U.S. reassurances on exchange-rate pol­ Federal Bank intervened, on occasion heavily, icy, along with a firming of U.S. interest rates, in the Frankfurt market. When pressure had contributed to an easing of the mark from spilled into the New York market, the Federal the highs it had reached in late July. In all, the Reserve intervened on eight trading days be­ decline was some 4 per cent, to a low of tween September 30 and October 31 and sold $0.4268 in mid-August. The Federal Reserve $228.7 million equivalent of marks, of which took the opportunity to acquire marks in the $181.1 million equivalent was drawn on the market and from correspondents, which were swap line with the German Federal Bank and used in part to liquidate the $35.4 million the rest from balances. equivalent of swap drawings on the German The generalized pressure against the dollar Federal Bank incurred when the market was continued in November, although to a lesser unsettled in July. When the New York market extent. In that month the Federal Reserve turned nervous prior to the announcement of intervened on five trading days selling $80.9 U.S. trade figures on August 24, the Federal million equivalent of marks, financed by $77.3 Reserve sold $8 million equivalent of marks million equivalent drawn under the swap ar­ out of balances. Otherwise, the Federal Re­ rangement with the German Federal Bank and serve refrained from intervening through Au­ the remainder from balances. Nevertheless, gust and most of September. the mark continued to advance, reaching Meanwhile, the German authorities acted to $0.4502 by the end of November for a rise of give an additional boost to the economy. On 43A per cent since September. August 25, the German Federal Bank an­ Although economic growth in Germany re­ nounced a reduction in commercial bank re­ sumed as the end of the year approached, the serve requirements and higher rediscount exchange market remained sensitive to the quotas for the banks. In the context of a possibility that foreign pressure would con­ further firming of interest rates in the United tinue for Germany either to boost domestic States in late August and early September, demand or to find other ways to reduce its these measures increased the interest differ­ current-account surplus, which was widening ential to 1 to 2 percentage points per annum in once more. Amid uncertainty over these pol­ favor of placements in dollars as against icy issues, the mark emerged in the forefront marks. Moreover, on September 14, the Ger­ of market attention, rising more rapidly man Government announced a package of against the dollar than most other currencies measures designed to inject an additional 12 in early December. But the German au­ billion marks (nearly 1 per cent of gross na­ thorities, having put into place a stimulative tional product) into the economy through the package, which would take effect mainly in end of 1978. This package included tax relief, 1978, were reluctant to adopt further measures particularly to encourage business investment, for fear of rekindling inflationary pressures. and increased public sector expenditures. As it was, the monetary aggregates were Even so, current indicators were still revealing growing in excess of the German Federal the extent to which the German economy had Bank’s targets for 1977, partly as a result of slowed, and many of the proposed measures the recent intervention in the exchange mar­ were expected to have only a delayed impact. ket. Nevertheless, the rise in the mark had Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

166 Federal Reserve Bulletin □ March 1978 already carried the rate to levels that the intervene virtually daily to avoid even greater German authorities and many market partici­ disorder. In December the Federal Reserve pants considered to be excessive, particularly sold a total of $545 million of marks in the New as compared with relative rates of inflation, York market, drawn on the swap line with the and was regarded as likely to undermine German Federal Bank, raising total drawings chances for more rapid growth of the econ­ outstanding by the end of the year to $803.4 omy. And so, to reduce pressures on the million equivalent. Germany’s external re­ mark, the German Federal Bank on December serves rose by $2.9 billion in December, for an 16 lowered its discount and Lombard rates by increase of $5.2 billion over the last 3 months Vi percentage point each. Moreover, to dis­ of 1977. courage speculative inflows and to absorb Exchange-market disorder carried over into some of the liquidity created by exchange- early 1978, as professional demand pushed the market intervention, minimum reserve re­ mark up a further 2Vi per cent to a peak of quirements on foreign deposits were increased $0.4885. Additional intervention by the Ger­ and the existing ban on nonresident purchases man Federal Bank and the Federal Reserve, of German bonds was extended to include which sold another $40.1 million equivalent on securities with maturities of up to 4 years. January 3, was scarcely noticed. Instead, Following these measures, interest differ­ commentary in the market and in the press entials in favor of dollar placements over mark focused on what was considered an apparent placements widened to 2 to 3 percentage reluctance of the Federal Reserve to inter­ points per annum. But in the generally bearish vene. atmosphere for the dollar that was emerging, On January 4 the Federal Reserve and the considerations that were favorable to the dol­ U.S. Treasury issued a joint statement: lar were ignored as participants jumped to The Exchange Stabilization Fund of the protect themselves from any further rise in the United States Treasury will henceforth be mark. Thus, the demand for marks became utilized actively together with the $20 billion broad based, reflecting a combination of pro­ swap network operated by the Federal Re­ fessional positioning, portfolio shifting, com­ serve System. A swap agreement has just mercial leads and lags, and corporate hedging been reached by the Treasury with the of balance-sheet items before the end of the Deutsche Bundesbank and is already in force. year. Joint intervention by the Treasury, the Fed­ In this atmosphere, trading became increas­ eral Reserve, and foreign central banks is ingly one way. Any news report or rumor that designed to check speculation and reestablish could be considered adverse to the dollar, or order in the foreign exchange markets. favorable to the mark, triggered a further rush When this statement came across the news into marks. Moreover, the mark had become services early that afternoon, the Federal Re­ firmly established at the top of the EC snake, serve’s foreign exchange Trading Desk fol­ generating renewed speculation that a lowed up with simultaneous offers of marks to realignment of currencies within that group of several banks in the New York market. This currencies would soon be inevitable. As a prompted a quick scramble for cover by some result, the mark came into additional heavy professionals who were short of dollars, and demand against other participating currencies. the mark dropped back by some 4 per cent that In response, there was sizable intervention by afternoon without the Desk actually having the German Federal Bank and its EC partners sold any marks. Some further short covering in both snake currencies and dollars to main­ during the next morning in Frankfurt pushed tain the limits of the joint float. the mark even lower to $0.4640. But, with In all, the mark rose by a further 6 per cent many other uncertainties hanging over the against the dollar in December to $0.4767 at dollar, some dealers began to doubt that the the end of the year. Both the Federal Reserve central banks could halt the dollar’s disorderly and the German Federal Bank continued to decline through intervention alone. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 167 Once it became clear that the monetary trading days, January 10-13, the mark was bid authorities were not seeking to push dollar up to as high as $0.4782. The German and U.S. rates up or to hold them at any particular level, authorities, while not holding the mark rate at dealers sought to regain the initiative through any particular level, continued to intervene renewed heavy bidding for marks. This bid­ forcefully. On those days, mark sales by the ding, over the next 2 days, was concentrated U.S. authorities amounted to $509.9 million in the hours toward the European close, after equivalent, split evenly between the Federal the German Federal Bank had ceased its own Reserve and the Treasury and financed by dealings. The Desk countered forcibly, dealing drawings on the respective swap lines with the both directly with banks and through agents, German Federal Bank. and sold a total of $253 million equivalent of This show of force by the authorities made marks over the 2 days. The Desk’s sales were its point. By that Friday, dealers began to gain split evenly between the Federal Reserve and a feeling of two-way risk in the market, and the U.S. Treasury, financed by drawings on natural buyers of dollars began to appear. In their respective swap arrangements with the the following week, January 16-20, the market German Federal Bank. in fact came into rough balance with good These exchange operations were followed two-way dealing, providing the first 5-day by a hike in the Federal Reserve discount rate, stretch since last November in which the announced on January 6, and by the action of Federal Reserve did not intervene at all. The the domestic open market trading desk to Desk subsequently entered the market on promote somewhat firmer conditions in the three occasions through the end of the month U.S. money market. By the following Mon­ and sold $52.1 million equivalent of marks. In day, January 9, the exchange market came all, mark sales by the U.S. authorities after into better balance and the Desk did not January 4 amounted to $815 million equiva­ intervene on that day. lent. On January 31, Federal Reserve swap Even so, the market remained sensitive to debt to the German Federal Bank amounted to the wide range of policy issues that were still $1,251.2 million equivalent of marks while the under debate at the time. Over the next 2 days, U.S. Treasury drawings were $407.4 million bearish sentiment toward the dollar was rein­ equivalent. By the end of the month the mark forced by reports of a division of opinion was trading quietly at $0.4740, some 3 per cent within the United States over the latest mone­ below the January 4 peak. tary policy actions and by suggestions that foreign central bankers had been critical of the United States in the monthly Bank for Interna­ STERLING tional Settlements (BIS) meeting in Basle. (Actual participants at the meeting sub­ By midsummer 1977 the measures the British sequently made clear that the U.S. policy Government had adopted during the previous actions had in fact been warmly received.) year to curb inflation, to contain Britain’s Moreover, routine public statements by gov­ current-account deficit, and to stabilize ster­ ernment officials in Germany and in the ling were strongly taking hold. The govern­ United States essentially repeating their posi­ ment’s 2-year policy of voluntary pay re­ tions on broader economic policy issues were straints had succeeded in bringing the rate of taken as an additional sign of disagreement. wage increases far below the rate of price In this atmosphere of seeming policy dis­ inflation. Although its strategy was modified cord, many market participants concluded in July in the face of stiff opposition to any that the U.S. intervention approach had only continued limit on negotiated wage increases, grudging support in Washington and the government had obtained union agreement elsewhere and might be abandoned at any to space out pay negotiations over the next 12 time. The dollar therefore came under re­ months and to limit wage increases within the newed heavy selling pressure. Over the four public sector. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

168 Federal Reserve Bulletin □ March 1978 Strict cash limits on government spending Against this background, the Bank of Eng­ and increased government receipts had com­ land’s decision in August to allow two suc­ bined to cut sharply the public-sector borrow­ cessive V^-percentage-point reductions in its ing requirement to well below the levels an­ minimum lending rate to 7 per cent was well ticipated in Britain’s standby arrangement received in the market. This move revived with the IMF. The authorities had also acted expectations of still further declines in British to slow the decline in short-term interest rates interest rates and of renewed potential for from the crisis levels of late 1976, in part by near-term capital gains on British securities. large sales of government securities outside Meanwhile, the yields on longer-term securi­ the banking sector. In this situation, nonresi­ ties remained attractive relative to those on dents joined in the bidding for attractively comparable securities elsewhere. As a result, priced gilt-edged securities, shifting large the inflow of foreign funds again built up and amounts of foreign funds into sterling- the strength of the demand soon led the market denominated assets. to believe that the British authorities would Consequently, sterling had come into strong have to permit an additional appreciation of demand in the exchanges. For some time the sterling in the market. Bank of England had intervened heavily to This expectation was further fueled during hold the rate around the $1.72 level, thereby September by news of a large $1.4 billion rebuilding Britain’s reserve position in the reserve gain in August, release of favorable process. But, as the dollar’s decline had per­ economic indicators, and a strong vote up­ sisted during July, the Bank of England shifted holding the 12-month rule on wage increases at to an intervention approach keyed to a the Trade Union Congress. The Bank of Eng­ weighted index of major currencies, and the land met the demand for sterling with large spot rate rose to $1.7385 by early August. purchases of dollars almost every day. In its Meanwhile, Britain was winding down its rate other operations, it attempted to mop up the of inflation in response to the easing of wage excess liquidity generated by these dollar pur­ pressures, the renewed strength of the pound, chases and to slow any further drop in interest and the decline in commodity prices rates. But during September the minimum worldwide. lending rate was again lowered in two steps to The improvement in Britain’s financial posi­ 6 per cent, as short-term British interest rates tion and prospects for inflation had been fell significantly below comparable U.S. rates achieved, however, at the cost of continued for the first time since December 1969. sluggishness in production and a high level of Early in October, the rush into sterling unemployment. For the time being, the pro­ intensified. With the dollar then on offer gen­ longed stagnation in the domestic economy erally in the exchanges, dealers expected the was continuing to depress British imports, spot pound would rise at least partly in line while manufactured exports were benefiting with other currencies. In addition, in the dis­ from the previous year’s slide in the pound. cussions at the annual meeting of the IMF and Moreover, North Sea oil was beginning to the World Bank on the need to counter disap­ bolster the balance of payments. Thus, Brit­ pointing economic performance worldwide, ain’s current account had shifted from large Britain had been identified by some as one of deficit to solid surplus, and this turnaround the countries that could now contribute by provided a continuing source of commercial providing some stimulus to the domestic econ­ demand for sterling in the exchanges. Looking omy. In response to this expression of confi­ ahead, the market came to expect that the dence, the flow of funds pouring into Lon­ government would soon take advantage of its don’s financial markets swelled to massive room to maneuver, within the specified limits proportions. for monetary expansion and public-sector bor­ British short-term interest rates continued rowing, to provide some needed stimulation to to ease, with the Bank of England’s minimum the domestic economy. lending rate dropping to a 6-year low of 5 per Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 169 cent on October 17, and the authorities found external position was showing further im­ it increasingly difficult to neutralize the impact provement: the trade account had been in solid of these inflows on domestic money markets. surplus for three consecutive months, and the The Chancellor’s proposals for mild fiscal over-all current account had been in sizable stimulus immediately and further tax cuts in surplus already by the third quarter. On the the spring were, by the time they were an­ other hand, renewed labor disputes threatened nounced on October 26, well within what the to undermine the government’s policy for market had come to expect. But the market wages. Also, the large-scale rise in reserves of had also anticipated new measures to stem the previous months left the market uncertain inflows of foreign funds, which were beginning over the outlook for monetary expansion in to jeopardize the authorities’ target for mone­ the near future. As the market weighed these tary expansion. When no measures were an­ considerations, the pound settled in around nounced, the rush into sterling continued. By $1.82 until early December while, on a trade- October 28, the pound had risen some 2Vx per weighted basis, it fluctuated narrowly around cent above early-August levels to $1.7780. The 63.5. In general, sterling was bolstered by Bank of England continued to intervene to continuing commercial demand. Although oc­ limit the rise in the effective exchange rate casionally the pound showed a slight tendency index, which had edged up only marginally to come on offer, intervention was quite mod­ since early August to 62.6 per cent of its 1971 est. Smithsonian level. The heavy dollar purchases By that time, however, the caution that had of the central bank accounted for the bulk of overshadowed sterling was dissipating. The the nearly $7 billion increase in British re­ government had made substantial progress in serves over the 3 months. sidestepping the highly visible claims of a few To protect the money supply from the ex­ unions for pay increases significantly above a pansionary effect of further large inflows, the norm of 10 per cent per annum. Uncertainties authorities ended on October 31 their policy of about a rise in interest rates that might prompt intervening to prevent a rise in sterling’s effec­ sizable withdrawals of foreign funds were tive exchange rate. As a British Treasury cleared away after the Bank of England an­ statement acknowledging a change in official nounced on November 25 a hike in its intervention policy flashed over the news serv­ minimum lending rate to 7 per cent. Further­ ices, the pound was pushed up in a wave of more, domestic activity was showing signs of speculative demand to a high of $1.8625 the picking up, and, with balance of payments following day in London. But suddenly the considerations now placing less of a constraint market turned around when that same day on growth than at any time since World War British mine workers unexpectedly voted II, the British economy was expected during down a management proposal for a labor set­ 1978 to begin a sustained upturn. tlement and resubmitted demands for a 90 per Consequently, when the dollar again began cent pay raise. At the same time, large sec­ to weaken early in December and market tions of the country were subjected to brief professionals turned their attention to the electrical blackouts, as power station workers strong continental currencies, the pound was staged an official “work to rule” in support of carried along in the generalized upsurge claims for improved fringe benefits. Im­ against the dollar. News of the abolition of the mediately, funds flowed from sterling into rule requiring surrender of 25 per cent of the marks, and the pound plunged back as much proceeds from investment currency premiums as 3Vi per cent to $1.7960 by November 3. from sales of foreign securities and relaxations Trading in sterling quieted as the market of some other restrictions on outflows had no adopted a more guarded attitude toward the impact on trading. Instead, pulled up by the pound’s immediate prospects. On the one rise of the mark and Swiss franc and bolstered hand, Britain’s rate of inflation continued to by year-end commercial demand, the pound fall toward single-digit levels. Moreover, the was bid up to $1.92 by December 30. Then, in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

170 Federal Reserve Bulletin □ March 1978 the new year the pound was bid up in heavy by Switzerland’s traditionally large earnings professional demand and joined the Swiss on overseas investments. franc in leading the rise of foreign currencies Thus, sentiment in the exchange markets against the dollar. By January 4 it soared to as toward the Swiss franc had become increas­ high as $1.9932, 15V4 per cent above early- ingly bullish by late summer. The franc re­ August levels. mained in demand, even after the German The market then turned around and the mark and the Japanese yen eased back amidst pound fell 6 per cent to $1.8750 after the uncertainty over the implications of new announcement by the Federal Reserve and the stimulatory measures being planned in those U.S. Treasury of a more active U.S. interven­ countries. By the end of September, the franc tion approach. But sterling remained buoyant had risen more than 2 per cent against the against both the dollar and the mark through dollar to $0.4260 and 4 per cent against the the rest of January. Signs that monetary German mark from levels at the end of July. growth was back within the targeted range To counter this pressure, the Swiss National reassured the market, and foreign funds were Bank intervened forcefully in Zurich and in again attracted into sterling, especially just New York through the agency of the Federal prior to a Vi percentage point reduction to 6V2 Reserve Bank of New York. per cent in the Bank of England’s minimum On September 27, the Swiss authorities also lending rate. The spot rate thus moved back imposed an immediate ban on the sale to up against the dollar to end the period at nonresidents of forward francs with a maturity $1.95—\2V4 per cent above early-August of less than 1 month, to prevent evasion of a levels. Sterling also rose 4 per cent against the negative interest charge on nonresident de­ mark during the 6-month period and, on a posits through use of these short-dated swaps trade-weighted effective basis, advanced some with Swiss commercial banks. By this time, 73A per cent to 66.5. From November to the cumulative intervention in Swiss francs January official reserves increased a further was beginning to add more liquidity to the $947 million to a record $21.4 billion on Janu­ domestic money market than was called for by ary 31. the National Bank’s target for monetary growth of 5 per cent for the year. The central bank continued to absorb some of this li­ quidity by selling dollars to nonresident bor­ SWISS FRANC rowers of Swiss francs under the official capi­ By the summer of last year, the Swiss econ­ tal export conversion requirement. But, in omy was expanding faster than anticipated. addition, it began to sell dollars in the market At the same time Switzerland’s inflation rate, on a 3-month swapped basis, which, in effect, at slightly above 1 per cent per annum, re­ temporarily absorbed domestic funds until mained lowest among the industrial countries, they would be needed for year-end purposes. partly as a result of the previous substantial With concern heightening after the lateappreciation of the Swiss franc. This incipient September meetings of the IMF and the recovery was fueled in part by a modest rise in World Bank over the implications for the consumption and investment. In addition, exchange markets of the persistent trade im­ with many Swiss firms starting to take advan­ balances among major nations, exchange tage of the low inflation rate to maintain their dealers and investors around the world again competitive position, exports were particu­ began to move into Swiss francs. Despite the larly buoyant. The growth of the Swiss econ­ limited availability of convenient instruments omy prompted an even faster rise in imports for investing in Swiss francs, low interest than in exports, so that Switzerland’s trade ac­ rates, and the barricade of controls created by count shifted back into deficit. But the current the Swiss authorities to inhibit “hot money” account remained in sizable surplus, bolstered inflows, the rush to acquire francs in whatever Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 171 form led to a cumulative bidding-up of the swung back into surplus, partly reflecting franc rate. Both commercial and professional changes in the valuation of Swiss imports and interests bought francs on the expectation that exports. To prevent year-end needs for francs the rate would rise, shifting funds mainly out by Swiss commercial banks from buoying the of dollars but, on occasion, out of currencies rate even more, the Swiss authorities reversed such as the pound sterling and the German an earlier decision to scale down the volume of mark as well. Corporate borrowers that had their customary assistance and announced previously financed short- and long-term they would provide unlimited temporary credit needs in Switzerland now hastened to year-end liquidity at favorable rates. But the buy francs to limit exchange losses on their franc was still swept up in heavy demand from liabilities. Speculation in the form of foreign both commercial and professional interests. acquisition of Swiss franc currency notes in­ From early December to January 4, the franc tensified. In this highly dynamic exchange- rose to $0.5270, up a further \Wi per cent market situation, the franc at times led the rise against the dollar and 5 per cent against the in other currencies against the dollar while mark. at other times the rise in other currencies Following the announcement of a more ac­ prompted an additional bidding-up of the tive intervention policy by U.S. authorities, franc. the franc rate immediately dropped back by 8 On balance, however, the franc rose more per cent to as low as $0.4844 on January 5. rapidly than most other major currencies. By Subsequently, as the market sought to test the the end of November, the rate had surged authorities’ resolve to avoid a renewed rise in another 9 per cent above late September levels the rate, the Swiss franc was bid upward to $0.4637 and advanced 4lA per cent against again. Even when the markets settled down the mark. The Swiss National Bank continued more generally after mid-January, the franc to try to contain the franc’s rise, buying sub­ remained subject to bouts of buying that stantially more dollars in the spot market than threatened to trigger broader unsettlement in it sold directly to nonresident borrowers of the markets. Consequently, on January 24, the francs under the capital export conversion Federal Reserve resumed intervention for its program. It also acted to prohibit prepayment own account in Swiss francs in New York. On clauses in new foreign loan contracts. But that day, the Federal Reserve sold $18.9 mil­ heavy demand for francs persisted. Prepay­ lion of francs drawn under the swap line with ments on outstanding loans were unaffected the Swiss National Bank, in addition to the by the new prohibition. Also, the authorities francs sold by the Desk that day on behalf of had indicated their concern about the con­ the Swiss National Bank. By the end of the tinued injection of new liquidity by announc­ month the franc was trading more steadily at ing their intention to issue sterilization notes $0.5043, for a net rise of 21 per cent against the and by providing only limited liquidity assist­ dollar and 13 per cent against the mark for the ance over the end of the month. 6-month period. Even so, as trading conditions deteriorated During the period, the Federal Reserve and generally in December, the franc continued to the U.S. Treasury continued with the program rise in sporadic bursts of demand. In the agreed to in October 1976 for an orderly exchange market this further upward move­ repayment of pre-August 1971 franc-denom­ ment became overshadowed for a few days by inated liabilities. The Federal Reserve repaid the surge in demand for German marks. But $235.3 million equivalent of special swap within Switzerland businessmen reacting to indebtedness, while the Treasury redeemed the uncertainties generated by the apprecia­ $223.5 million equivalent of Swiss franction of the franc began to curtail investment denominated securities by the end of January. spending plans. Domestic output flagged, the Most of the francs for these repayments were rise in imports stalled, and the trade balance acquired directly from the Swiss National Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

172 Federal Reserve Bulletin □ March 1978 Bank against dollars. However, the Federal abandoning its over-all anti-inflationary Reserve also bought francs from the National stance. Bank against the sale of $76.3 million equiva­ On August 31, the Bank of France cut the lent of German marks and $61.3 million equiv­ official discount rate by 1 percentage point to alent of French francs, which were in turn 9.5 per cent, and interest rates on other money either covered in the market or drawn from market instruments were allowed to ease in existing balances. By the end of January, the line with declining money market rates for Federal Reserve’s special swap debt to the other currencies. Early in September, the Swiss National Bank stood at $470.1 million government announced a mild fiscal stimulus equivalent, while the Treasury’s Swiss franc- for the economy, introducing new measures to denominated obligations had been reduced to spend 5 billion French francs (0.3 per cent of $1,118.0 million equivalent. GNP) in 1977. In the wake of these policy initiatives and in response to a slowdown in external borrowings, the franc tended to come on offer during September. But by the FRENCH FRANC month-end the franc had become caught up in During the first half of 1977, the French econ­ the advance of European currencies against omy had begun to respond to the govern­ the dollar, rising 2% per cent to as high as ment’s concerted efforts to curb inflation and $0.2088 on November 1. to stabilize the French franc. The pace of wage By this time, however, the market began to increases had slowed, inflationary pressures at question whether the French franc could be the wholesale level were moderating con­ expected to keep pace with the German siderably, and the rate of increase in consumer mark’s rapid rise against the dollar. As some prices had stayed just below 10 per cent even market participants sought to hedge their mark after a temporary price freeze had been al­ commitments by selling francs against marks, lowed to lapse. At the same time, France’s the franc weakened in the exchanges. trade account was moving into surplus for the Moreover, rapidly rising agricultural prices in first time in 2 years and the current-account France were slowing the progress in reducing deficit was narrowing considerably. In addi­ inflation. Premier Barre, in a televised speech tion, interest rates had declined more slowly in on November 3, again warned about the dan­ France than elsewhere, and French residents, gers of inflation and soon thereafter the gov­ including public and semipublic entities, had ernment announced a freeze in a variety of accelerated their borrowing activities abroad retail food prices. But leaders of opposition during the summer months. Thus, the French parties argued that the continued rise in prices franc had joined in the rise in European cur­ was indicative of the failure of the govern­ rencies against the dollar to trade around ment’s anti-inflation policies. $0.2050 in early August, even as the Bank of In an atmosphere of growing political sen­ France had taken in reserves from time to time sitivity ahead of the general elections sched­ in moderating its rise. uled for March 1978, the selling of francs The cost to France’s domestic economy of gained momentum during early November. its improved external position had been se­ The franc thus eased back against the dollar to vere, however. Consumer demand was ex­ $0.2048 even as the dollar remained on offer panding more slowly than projected, invest­ against the other European currencies and the ment demand and industrial production were yen. both flat, and unemployment was rising. With To moderate the franc’s fall, the Bank of the improvement in France’s current-account France, which on occasion had sold both position now giving the government more dollars and marks in the Paris market through room to maneuver, it followed up measures the autumn, stepped up its intervention. taken in the spring with selective actions to Moreover, the central bank moved to tighten improve the employment situation without interest rates’. Nevertheless, by early Decem­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 173 ber the franc had weakened some 4 per cent reinforced with a sharp hike in interest rates against the mark, which was buoyed by a and strict controls to limit the extension of groundswell of speculative inflows out of dol­ credit. And steps were undertaken to modify lars. Italy’s wage indexation system with the view By the year-end, the economic indicators to bringing the rate of inflation down from 22 for the French economy were pointing to per cent to 13 per cent by spring 1978. further improvement. The rise in the con­ The completion of this program and the sumer price index was now slowing, and un­ conclusion of a standby agreement had been employment showed a small decline. The welcomed in the market. It provided Italy with trade figures for December had registered a $530 million of new IMF credit and assured sizable surplus once again, after an unexpect­ the availability of a further $500 million from edly large deficit the month before, and the the EC. In addition, it paved the way for more OECD had forecast a narrowing of the private external borrowing since—with the current-account deficit from $3 billion to $2 outlook for the lira now more assured and with billion in 1978. As a result, the French franc, availability of domestic credit greatly buoyed also by commercial month-end and restricted—Italian banks and companies had a year-end demand, rose sharply at the end of strong incentive to meet their financing needs December. In fact, it kept roughly in pace with abroad. Bolstered by these and other capital the German mark as it rose to $0.2178 on inflows, the lira had steadied around $0.001130 January 3. (885 lire) through early summer. The au­ After the joint Federal Reserve-Treasury thorities bought substantial amounts of dollars announcement the following day, the franc in adding to Italy’s foreign exchange reserves, dropped back against the dollar somewhat less which rose to $7.1 billion. than against other European currencies. But By early August, the pace of these capital as the month of January progressed, commer­ inflows had begun to slow as the tapering-off cial leads and lags started shifting against the of seasonal tourist receipts left the market franc once more, as uncertainties over the uncertain about the vulnerability of the lira to outcome of the March elections continued to renewed downward pressure. But Italy’s cur­ hang over the market. By the end of the month rent account, now benefiting from the impact the franc, trading at $0.2108, was 2% per cent of the lira’s 22 per cent fall in 1976 and of above early-August levels, while over the the new austerity program, swung toward sur­ 6-month period the franc had fallen 5Vi per plus. Therefore, continuing commercial needs cent against the mark. As of January 31, kept the lira in demand throughout the late French foreign exchange reserves stood at summer. $4.7 billion, little changed over the 6-month The Bank of Italy again took in dollars, period. albeit at a more modest pace. The central bank also took advantage of the favorable climate in the exchange markets to cut the Bank of Italy’s discount rate 1 Vz percentage points to ITALIAN LIRA WVi per cent in late August. The authorities To curb inflation, to restore equilibrium in the made further repayments of credits to the IMF balance of payments, and to stabilize the Ital­ and in September repaid a $500 million tranche ian lira, Italy’s minority government had im­ on a $2 billion gold-dollar swap the Bank of plemented by mid-April 1977 a comprehensive Italy had with the German Federal Bank. program that served as the basis for a new Even with these repayments, Italy’s foreign standby agreement with the IMF. As part of exchange reserves declined only $518 million the three-point program, the public-sector during August and September. deficit was to be reduced through tax in­ By October the lira, too, had become caught creases, spending cuts, and higher prices for up in the generalized advance against the public services. Monetary policy had been dollar. Demand for lire intensified, and with the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

174 Federal Reserve Bulletin □ March 1978 Bank of Italy acting to limit the rise in the rate overriding concern at the time was the dollar’s its purchase of dollars increased. The unpeg­ continuing decline. Nevertheless, the lira ging of sterling at the end of October triggered weakened against the other major currencies even more favorable shifts in commercial on the Continent, with the Bank of Italy selling leads and lags, as market participants came to dollars on balance during these 2 months. But expect the Italian authorities might follow suit. against the dollar the lira rose to trade at As a result, by the end of November, Italy’s $0.001153 (867.3 lire) on January 31. Over all, foreign exchange reserves had risen $1.6 bil­ it rose \5/s per cent for the period, while on lion while the spot rate advanced to $0.001140 balance Italy’s foreign exchange reserves in­ (877.2 lire). creased to $7.6 billion. Meanwhile, Italy’s current account had strengthened further, swinging from a $2.8 billion deficit in 1976 to a near $2 billion EC SNAKE surplus in 1977. Moreover, the government’s new austerity program had succeeded in bring­ During the period under review, most of the ing the inflation rate down toward 16 per cent currencies within the EC snake were pulled up in just half a year. But these improvements sharply by the rise in the German mark against resulted in a considerable slowing of the the dollar. An exception was the Swedish domestic economy. Industrial production had krona, which after coming on offer through the dropped off sharply to levels below those of summer in reaction to a continued deteriora­ the previous year. Unemployment rose, and tion in Sweden’s trade and price performance with corporate profits squeezed by the high was withdrawn for the time being from the cost of borrowing funds, the prospects for an joint float on August 29. At that time, it was improvement in the labor market seemed dim. devalued by 10 per cent in relation to a basket Pressure was mounting for new action to of currencies (weighted according to their im­ stimulate the domestic economy now that portance in Sweden’s foreign trade). This en­ some progress had been achieved on the infla­ tailed a marking-down of the krona by 9 per tion and balance-of-payments fronts. At the cent against the dollar, before it steadied on an same time, however, the public-sector deficit unwinding of short positions and commercial had exceeded the limit specified in the standby leads and lags. agreement and subsequent discussions with Simultaneously, with this exchange-rate ad­ the IMF. justment by a major trading partner, Norway The minority government entered into a and Denmark each adjusted downward the new round of negotiations with the opposition intervention points of their currencies by 5 per parties and the trade unions on new measures cent against the other currencies in the snake. to increase public service prices and to reduce Following this adjustment—the third in less expenditures. But by this time the Communist than a year—the Danish krone and Norwegian Party and the trade unions were facing grow­ krone moved into first and second position in ing opposition from within their own ranks the newly realigned joint float. The mark sank against the tacit support they were providing to the bottom, thereby affording the National for government policies. Bank of Denmark an opportunity to take Uncertainties over the outcome of these marks into its reserves. negotiations, which ultimately led to the res­ Over the next 2 months, trading relation­ ignation of Premier Andreotti’s 1 ^-year-old ships were comfortable within the joint float. government, overshadowed the market for lire But by mid-November, the mark had moved during December and January. Flows into back up to the top of the snake. In the increas­ Italy slowed substantially, and the lira came ingly unsettled climate that was developing, on offer at times. But the pressure did not the market began once again to question the cumulate because the market remained aware durability of the current rate relationships of Italy’s ample exchange reserves and the within the snake. As the mark surged further Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 175 upward against the dollar, the remaining cur­ to respond. Businessmen were reluctant to rencies became caught on the floor of a rising increase investment in new plant and equip­ joint float. ment in view of the worsening squeeze on Rumors of another imminent realignment or profit margins, the recent rise in the yen, and break-up of the snake surfaced repeatedly. the fear of protectionist actions against Each time, the selling of weaker currencies Japanese goods abroad. intensified, with the greatest pressures coming The continued sluggishness of the Japanese before weekends and during the December 5-6 economy had exerted a powerful drag on EC summit meeting. In response, there was imports. Exports had continued to expand in large official intervention in both dollars and line with more buoyant economic conditions marks, and several EC central banks tightened elsewhere, particularly in the United States. their domestic money markets to maintain the As a result, Japan’s current account had joint float intervention limits. mounted to a massive $10 billion at an annual Following these initiatives, tensions within rate, generating considerable concern interna­ the EC snake eased in late December and tionally. market participants came increasingly to focus As the exchange markets had responded to on the dollar generally. Thus, the currencies at these developments, the yen had advanced 4 the bottom of the joint float moved off the per cent in the late spring and early summer. floor of the band, thereby enabling the respec­ But then, as dealers came to expect the gov­ tive central banks to relax monetary pressures ernment to take stronger steps to bolster the and to purchase marks in the exchange market domestic economy, the spot rate settled in the in order to repay debt to the German Federal vicinity of 267 yen ($0.003745) through Au­ Bank. gust. In early September, the government For the most part, trading remained quiet in proposed a 2 trillion yen package of increased the joint float through the end of the period. public expenditures, along with special pro­ But one currency, the Norwegian krone, con­ grams to aid industry and to speed up raw tinued to require official support from the materials imports. In addition, the Bank of Bank of Norway and the German Federal Japan cut its discount rate by % of a per cent Bank to keep pace with the mark. In mid- to 4lA per cent while also reducing reserve February, to restore a more competitive rela­ requirements to facilitate a sustainable eco­ tionship with its major trading partners, the nomic recovery through a further decline of Norwegian authorities announced an 8 per general interest rates. cent downward adjustment of their currency Market reaction to the measures was mild, against the other snake currencies. since few of the provisions were expected to have an immediate effect. But the lowering of Japanese short-term interest rates, at a time when U.S. rates were rising, gave further JAPANESE YEN incentive for Japanese companies to reduce During the summer of 1977, economic growth their trade financing in dollars in favor of in Japan was still far below the pace projected credits in yen. In addition, capital outflows, by the Japanese authorities. Fear of mounting such as foreign borrowings in Japan, were layoffs in a country where the security of encouraged. With these outflows offsetting to lifetime employment has been a tradition was some degree the continuing current-account becoming an increasingly important domestic surplus, the yen market remained in rough issue. The government had acted, through balance through mid-September. both fiscal spending programs and a lowering Nevertheless, Japan was still cumulating of interest rates, to provide modest stimula­ massive trade surpluses each month, while the tion without aggravating the rate of inflation United States continued to run a trade deficit that was still running more than 8 per cent per at an annual rate of $30 billion. Concerns over annum. But the private sector had been slow this continued imbalance remained strong, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

176 Federal Reserve Bulletin □ March 1978 in late September the market came to realize October and November, Japan’s reserves in­ that both private and official forecasters were creased by $4.5 billion since the end of July. projecting an even larger U.S. deficit in 1978. On November 28, Prime Minister Fukuda Under these circumstances, Japanese offi­ announced a reshuffling of his cabinet in an cials attending the meeting of the IMF and attempt to accelerate efforts to prepare a pro­ World Bank in Washington were openly urged gram to reduce the trade surplus while also to take further steps to expand the Japanese stimulating the economy. These moves gave economy and to open their markets more to new impetus to bilateral trade negotiations foreign goods, or they would risk further pro­ between the United States and Japan in prepa­ tectionist measures in their major export ration for the Tokyo round of multilateral markets. Within Japan itself a hot debate was negotiations on reducing tariff and nontariff also taking place over whether further refla- barriers to trade. In this more positive atmos­ tionary measures were needed to revive the phere, the yen fluctuated narrowly in the first domestic economy. half of December, even as the dollar was In this atmosphere, a new wave of demand weakening against other major currencies. built up for the yen. As the spot yen rose, even Nevertheless, most of the underlying prob­ broader demand came into the market on the lems affecting the Japanese trade imbalance expectation of higher yen rates to come. The remained. The uncertainties over the Japanese forward yen also strengthened, thereby open­ economic outlook generated by the yen’s con­ ing up an incentive for nonresident placement tinued rise was keeping the domestic economy of funds, on a covered basis, in “free” yen sluggish, lowering import growth, and pre­ deposits and investment in Japanese Govern­ venting the leveling off of export volume from ment securities. cutting the trade surplus. In fact, the trade Most of the pressure on the yen was con­ surplus was actually becoming somewhat centrated in the Tokyo market. But it also wider as a result of the impact of the yen’s spilled into the European and U.S. exchange appreciation on the terms of trade. markets where, with the dollar generally on For 1977 as a whole, the total surplus offer, the rise in the yen reinforced and was reached $17.5 billion, up $7.6 billion from reinforced by the rise in other major curren­ 1976. In this context, dealers remained sensi­ cies. Thus, in 7 weeks through mid- tive to public statements about the ongoing November, the yen advanced by 9 per cent to trade negotiations, indicating that a dramatic some 245 yen ($0.004080), even as the Bank of change in Japanese trade flows could not be Japan intervened forcefully on occasion to expected in the short term. Moreover, as the slow the rise. year-end approached, the exchange markets By that time, the rush into yen was far for the dollar generally had become more exceeding the surplus on either trade or cur­ disorderly. Consequently, the yen came into rent account. Inflows of speculative funds sporadic bouts of demand through the rest of were accentuating the yen’s sharp rise and December and into early 1978. The Bank of threatening to disrupt the domestic money Japan continued to intervene forcefully in the market. In response, the authorities an­ Tokyo market and, beginning in late Decem­ nounced on November 17 the suspension of ber, supplemented these operations by occa­ public offerings of Japanese Treasury bills and sionally intervening in the New York market the imposition of a 50 per cent marginal re­ through the New York Bank. Even so, the yen serve requirement on “free” yen deposits. On continued to be bid up to reach a high of 236.5 November 24, the Bank of Japan followed up yen ($0.004228) in New York on January 4. with very heavy intervention, which settled Following the announcement by U.S. au­ the market with the yen trading at around the thorities of a more active intervention ap­ 240 yen ($0.004167) level. Reflecting in large proach, the yen rate fell back some 2 per cent. part the Bank of Japan’s intervention during Thereafter, the yen moved more narrowly in a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 177 reasonably balanced market. Announcement ments had been cleared up. Moreover, a de­ of proposed budget changes gave promise of cline in Canadian interest rates earlier in the additional fiscal stimulation to the Japanese year had already eroded interest incentives for economy. Later in January, a joint statement short-term flows into Canada, and when U.S. by the Japanese and American trade interest rates started to firm after midyear, negotiators also helped remove some of the market participants expected their interest tension in the market. By the end of the rate differentials to narrow further. In re­ month, the yen was trading around 241.5 yen sponse, the Canadian dollar had already come ($0.004140) for a net rise of 10!4 per cent over heavily on offer in the exchange markets. the 6-month period under review. During that From November 1976 through mid-August time, Japanese reserves had risen, largely 1977 it had dropped a full 93A per cent to as low through official intervention purchases, by as $0.9269 before steadying somewhat to trade $5.7 billion to $23.4 billion. around $0.9320 through the end of September. By early October, however, bearish senti­ ment toward the Canadian dollar resurfaced. The calendar for new Canadian external bor­ CANADIAN DOLLAR rowings over the near term appeared light, and For 2 years the Canadian authorities had in conversions of previous borrowing tapered place broad monetary and fiscal restraints as off. Looking ahead, some market participants well as income controls to curb the severe were apprehensive that the government might inflationary pressures that had afflicted the announce substantial reflationary measures in Canadian economy. Although these efforts an economic policy message scheduled for had brought some early success, the au­ later in the month. Others concluded from thorities acknowledged last July that, with the official reaffirmation of Canada’s floating increase in prices still hovering around a rate exchange-rate policy that the authorities were of 9 per cent, their 6 per cent target could not prepared for the rate to go substantially lower. be achieved during 1977. Moreover, reports that the provincial govern­ Meanwhile, the slow pace of economic ac­ ment might “nationalize” certain key in­ tivity for the second quarter and the rise in dustries in Quebec, coming on top of an earlier unemployment—especially in Quebec and the move to adopt French as the official provincial Maritime Provinces—had become apparent. language, further heightened tensions in the Political and social tensions generated by the market. presence in Quebec of a government commit­ In this atmosphere, a wave of selling ted over the long term to establishing the gathered momentum. Market professionals province’s independence also introduced un­ sold Canadian dollars short, commercial leads certainties that exerted a drag on spending by and lags shifted against the currency, and both businessmen and consumers. Many in some U.S. corporations chose to repatriate the market, therefore, came to expect that the funds ahead of the usual year-end date. The government would shift its priorities away rate was thereby driven down late in October from containing inflation and toward stimulat­ to a low of $0.8950. The Bank of Canada’s ing an early rise in employment. intervention to maintain orderly markets Externally, Canada’s current-account defi­ under the circumstances resulted in sizable cit remained above the $4 billion level at an dollar sales during October, as reflected in a annual rate. Unlike 1976, this deficit was not decline of $605 million in external reserves for fully covered by capital inflows generated by that month alone. This decline brought Cana­ long-term borrowing abroad. Instead Cana­ da’s external reserves down to $4.2 billion by dian public authorities had postponed some of October 31, the lowest level for Canadian their financing until doubts over foreign capi­ reserves since May 1970. tal market receptiveness to Canadian place­ By this time, however, the Canadian econ­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

178 Federal Reserve Bulletin □ March 1978 omy was beginning to gain strength and proceeds of these and recent issues into Cana­ Canada’s trade account was starting to re­ dian dollars. These demands more than offset spond to the decline in the exchange rate. The whatever commercial year-end selling re­ government had presented its economic mes­ mained to meet debt servicing requirements sage, which contained only moderately and foreign dividend payments. Thus, the rate stimulative measures. Finance Minister Chre­ advanced to as high as $0.9202, some 2% per tien also had announced the dismantling of the cent above its October lows. In smoothing the wage-price control program, but gradually rise, the Bank of Canada was a net buyer of rather than immediately as some in the market U.S. dollars. had anticipated. For its part, the Bank of In January, however, renewed concern over Canada had lowered its monetary growth the economic and political outlook contributed target to continue to exert a moderating influ­ to more volatile trading in the Canadian dollar. ence on inflation. Moreover, the Canadian Moreover, U.S. short-term interest rates had authorities arranged a 7-year Euro-dollar risen further to levels above comparable rates standby credit of $1.5 billion with Canadian in Canada, and the calendar for new Canadian banks to replenish, if needed, official dollar borrowings appeared to have thinned out. The reserves. spot rate thus fluctuated lower, and the Bank These developments helped to steady the of Canada was again a net seller of U.S. Canadian dollar during November and De­ dollars. The Canadian dollar had eased to cember. Dealers who had gone short Canadian $0.9031 by January 31, ending the period V/i dollars earlier in the year began to bid for the per cent below its level at the end of July 1977. currency to square their positions before the Canada’s external reserves stood at $4.4 bil­ end of the year. Moreover, Canadian public lion, up $234 million from the low point authorities began again to borrow heavily in reached last October but down $604 million foreign capital markets and to convert the from the level 6 months earlier. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

179 Statements to Congress Statement by Philip E. Coldwell, Member, cent to 45.0 per cent over this period. A Board of Governors of the Federal Reserve similar pattern is found at the statewide level. System, before the Committee on Banking, Moreover, it is important to note that the most Housing and Urban Affairs, U.S. Senate, concentrated States—all of which permitted March 7, 1978. statewide branching—typically had declines in concentration. (See table.) The results of Mr. Chairman, I am pleased to appear before our review of over 400 local markets, in­ this Committee on behalf of the Board of cluding 213 standard metropolitan statistical Governors of the Federal Reserve System to areas (SMSA’s), between 1966 and 1975, indi­ testify on S. 72, the Competition in Banking cate that the majority tended to become less Act of 1977. This bill would have far-reaching concentrated and to exhibit a more competi­ implications for the regulation of banking tive structure irrespective of the measures structure in the United States. It affects not used in the review. We also note that even only the standards and administrative proce­ these figures tend to overstate concentration dures employed by the Federal banking agen­ since they do not reflect the rapid growth of cies in acting on proposed bank mergers but bank type activities at savings and loans, also those applied by the Board of Governors mutual savings banks, and credit unions. In in reviewing proposed new activities for bank many States, thrift institutions now provide holding companies and deciding on particular substantial competition for commercial banks. acquisitions. Before addressing the major sub­ The sharpest growth in our largest banking stantive provisions in the bill, I believe that it organizations has been in the foreign sector, is important to comment briefly on the four and it is only when deposits held abroad are basic findings and purposes of the bill, which included that there appears to be an increase presumably provide the rationale for many of in banking concentration. While it might be its specific provisions. argued that foreign financial activities of U.S. The bill’s first finding is that there has been banks contribute to their over-all economic a continuing trend toward concentration of power, this argument is not particularly ger­ banking resources in the United States. How­ mane to the proposed bill, which focuses on ever, recent Board studies fail to indicate that domestic and not worldwide concentration there has been a significant trend toward in­ and competition. creased concentration of domestic banking The second finding of the bill points to the resources nationally, statewide, or in most of fact that an increasing portion of the Nation’s the country’s 400 most significant local bank­ banking resources have come under bank ing markets. In fact, concentration appears to holding company control. The registered bank be declining. holding company share of domestic U.S. de­ For example, at the national level between posits did increase from 16 per cent in 1970 to 1968 and mid-1977, the 10 largest banking 70.8 per cent in 1977, but about two-thirds of organizations’ share of domestic deposits de­ this increase resulted from the inclusion of clined from 20.4 per cent to 18.3 per cent, and over 1,100 one-bank holding companies under the share of the top 25 dropped from 31.9 per the umbrella of the act in 1971. This includes cent to 28.0 per cent. The share of the 100 16 of the Nation’s 25 largest banks. Also, it is largest organizations declined from 49.7 per important to note that while bank holding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

180 Federal Reserve Bulletin □ March 1978 Percentage of domestic statewide companies account for 70.8 per cent of domes­ commercial bank deposits in three largest tic bank deposits, all but about 8 per cent of categories of banking organizations these deposits are in the lead banks of holding companies. Thus, expansion of bank holding 1960 1976 Change companies’ share of deposits has been due State Statewide branching States principally to conversion in the legal status of existing banking organizations to the holding Arizona .................... 95.8 86.8 -9.0 Nevada ...................... 93.5 83.2 -10.3 company form and not to acquisitions of exist­ Rhode Island............ 92.8 87.4 -5.0 Hawaii ...................... 89.2 78.6 - 10.6 ing banks by multibank holding companies. Oregon ...................... 86.7 78.3 -8.4 A third finding of the bill is that bank Delaware .................. 79.8 76.9 -2.9 Idaho ........................ 74.5 75.3 .8 holding companies have expanded into ac­ A Ca la li s f k o a rn ia .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 6 8 5 . . 2 7 6 6 7 0 . . 5 4 -5 -. . 7 3 tivities beyond those directly related to bank­ Utah .......................... 65.6 60.5 -5.1 ing. Specific activities cited are: insurance Washington .............. 61.1 61.7 .6 agency and underwriting services, leasing, ac­ North Carolina ........ 46.8 49.2 2.4 Connecticut .............. 42.7 46.6 3.9 counting, travel, and courier services; man­ Maryland .................. 42.7 44.6 1.9 South Carolina ........ 42.4 42.8 .4 agement and data processing services; and South Dakota .......... 37.5 44.3 6.8 marketing securities. While these descriptions Maine ........................ 34.7 46.6 11.9 Vermont .................. 25.6 44.0 18.4 do not comport with the list of permissible Virginia .................... 20.2 34.6 14.4 activities issued by the Board, several points Average .......... 61.3 61.5 .2 are worth noting with respect to this general finding. Limitedbranching States In administering Section 4(c)(8), the Board has generally determined various activities to Massachusetts ........ 49.3 45.7 -3.6 Georgia .................... 48.6 37.8 - 10.8 be “closely related” to banking if they satis­ New Mexico ............ 43.0 46.0 3.0 fied one or more of the following four criteria: Michigan .................. 40.8 34.2 -6.6 New York ................ 40.0 40.0 -0.0 Wisconsin ................ 31.4 27.4 -4.0 Alabama.................... 31.2 37.5 6.3 1. The activity was one in which a signifi­ Louisiana .................. 29.3 17.8 -11.5 cant number of banks have engaged in P Te e n n n n e s s y s l e v e a n . i . a .. . . . . . . . . . . . . . . . . . . . . . . . . 2 2 7 8 . .7 9 2 2 2 8 . . 9 8 -5. . 0 1 for some years (for example, trust ser­ Kentucky .................. 27.6 20.9 -6.7 vices); Mississippi................ 24.9 27.7 2.8 New Hampshire---- 24.3 33.6 9.3 2. The activity involves either the accept­ Ohio .......................... 24.2 24.6 .4 Indiana ...................... 23.8 18.0 -5.8 ance of deposits or lending (for example, New Jersey .............. 16.8 22.2 5.4 consumer finance companies); Average .......... 32.0 30.3 -1.7 3. The activity is complementary to the provision of a banking service (for exam­ ple, acting as an insurance agent for Unitbanking States credit related policies); Minnesota ................ 58.6 51.6 -7.0 4. The activity is one in which banks pos­ Montana.................... 48.7 45.5 -3.2 North Dakota .......... 46.6 40.6 -6.0 sess considerable expertise (for example, Colorado .................. 37.9 41.0 3.1 Illinois ...................... 35.5 31.8 -3.7 data processing for banks). Wyoming .................. 35.1 40.3 5.2 Oklahoma ................ 32.6 20.5 - 12.1 So far, the Board has only approved 17 ac­ Nebraska .................. 31.6 20.0 - 11.6 tivities as being permissible for bank holding Missouri .................... 26.6 28.9 2.3 Texas ........................ 21.1 20.5 -.6 companies—12 by rulemaking and 5 by order. Florida ...................... 17.9 24.5 6.6 An additional 11 were denied, including travel Arkansas .................. 17.3 14.2 -3.1 West Virginia .......... 17.3 9.3 -8.0 agencies (mistakenly mentioned above in the Kansas ...................... 14.3 9.0 -5.3 Iowa .......................... 14.2 15.1 .9 findings of the bill as an approved activity) as well as property management, real estate Average .......... 30.4 27.5 -2.9 brokerage, and operating a savings and loan Average for all association. Generally, activities approved, States .......... 42.7 41.3 -1.4 except underwriting of credit life insurance, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 181 were, in fact, permissible activities for na­ The causal factors cited in the bill for such tional banks or their subsidiaries at the time misallocation of resources are that the Federal they were authorized. Moreover, the Board Reserve has not adequately protected the pub­ did not provide for carte blanche entry into lic interest in approving activities in which those activities as is implied by the findings of bank holding companies could engage and has the bill. In many cases, the activities were not maintained continued oversight over the severely restricted to those that are bank or activities of bank holding companies in a man­ finance related and, in some instances, such ner that protects the public interest. In my services may only be provided to a customer view, the facts would not support either find­ in connection with a bank related service ing. A review of Board orders issued in con­ (such as the sale of credit life insurance). nection with action on applications clearly Furthermore, by far the largest number of demonstrates that all statutory factors, that is, bank holding company expansions in the non­ competition, convenience and needs of the bank area have been de novo and not by public, and financial and managerial re­ acquisition; over 3,100 de novo nonbank sources, are carefully weighed. In the area of notifications were received between January public benefits, the Board has taken definitive 1971 and September 10,1977, as compared with action such as obtaining commitments for re­ only 461 acquisitions of existing firms ap­ duced rates on reinsurance activities. With proved by the Board; 54 applications were respect to financial considerations, the Board denied. has long held to the philosophy that bank Finally, despite the number of acquisitions holding companies should serve as a source of acted upon by the Board and de novo notifica­ strength for their subsidiary banks. In many tions received, nonbanking assets still account instances, the Board has obtained commit­ for less than 4 per cent of bank holding com­ ments from holding companies to supply addi­ pany assets. In view of these considerations, tional capital to their subsidiary banks and has we question whether this finding of the bill urged that nonbank subsidiaries be adequately describes a development of any real signifi­ capitalized. In 1974, when certain banking cance to the economy. firms began to experience sharp increases in The fourth finding is that credit resources of problem loan situations, the Board instituted a the Nation have been misallocated by bank go-slow policy with respect to further expan­ holding companies. The basis of this finding is sion. Consistent with this policy, the Board not stated and is unclear. Objectively, there has denied a number of applications, some for appear to be several reasons why bank holding the Nation’s largest banking organizations. companies might be expected to facilitate a Since 1970, the Board has taken a number of more efficient allocation of credit. Bank hold­ steps to improve its ongoing surveillance and ing company expansion in restrictive branch­ supervision of bank holding companies. For ing States, together with the provision of vari­ example, as a supplement to its other surveil­ ous bank-type lending services on an interstate lance activities, the Board recently announced basis through nonbank affiliates, probably has a new inspection program whereby most large resulted in increased competition in local and bank holding companies will be subject to an regional markets and has facilitated interre­ on-site inspection annually. The Board also gional credit flows. Both could be expected to collects detailed information on intraholding provide more rapid and efficient allocation of company transactions that are routinely moni­ loan funds geographically. Similarly, the abil­ tored. Additionally, recent changes in the re­ ity to attract funds from cheaper sources porting forms for banks have been instituted through the debt and equity markets, particu­ and special emphasis is being placed on the larly during periods of tight money, may have analysis of foreign operations and risk expo­ moderated financing pressures on holding sure of large organizations. company banks and helped maintain their abil­ As my comments suggest, our review of the ity to accommodate credit demands. facts reveals little in the way of evidence or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

182 Federal Reserve Bulletin □ March 1978 analytical support for the bill’s four principal assets from the national and international findings. This gives rise to a general conclu­ markets. These institutions’ domestic expan­ sion on the part of the Board that the actual sion by acquisition within a State would be adverse effects, which the bill seeks to re­ curtailed even though they might hold a sig­ dress, are small. The Board feels that restric­ nificantly smaller proportion of the business tions should not be imposed nor regulation originating within the State than other smaller intensified without demonstrated need, espe­ institutions. The focus on bank assets also cially when the longer-run effects may be to overlooks the fact that expanded powers of inhibit competition, or to protect existing nonbank financial intermediaries, such as firms from competitive forces. At the same thrift institutions, are blurring the distinction time, we also recognize that there may be between banks and these other institutions some specific areas affecting the Federal regu­ and are increasing competition in the markets lation of bank and bank holding company for some banking services. structure that need review, and the Board Should the Congress choose to adopt such a would support Committee efforts in these percentage limitation, the Board believes that areas. I shall now turn to the major substan­ it should be based on domestic resources. tive features of the bill and our reactions to However, because of the uniqueness of each them. State, the Board strongly feels that no single The proposed legislation would establish an percentage figure would be appropriate. Use outright prohibition of any bank merger or of a single figure would ignore important fac­ holding company acquisition of a bank in tors such as (a) the number and powers of which the resulting company would control competing institutions operating in each State, more than 20 per cent of the banking assets in (b) their size distribution, (c) the general eco­ any State. The one exception would be when nomic environment in each State, and (d) re­ the proposed acquisition is necessary in order strictions on branching and geographical ex­ to prevent a bank failure and no less anticom­ pansion. Federal imposition of an over-all petitive alternative is available. The Board constraint would interfere with the right of a questions the desirability of such an absolute State to decide what type of structure best limit, especially in view of the wide differ­ meets its needs. The Board feels that the ences in bank structures in the various States present case-by-case approach better serves and the lack of evidence that there has been a the public interest, since it provides the Board trend toward concentration of resources at the needed flexibility to weigh the unique the statewide level. We are particularly con­ competitive, structural, and other important cerned that such a limitation would have the factors associated with a given State. anticompetitive effect of protecting some Despite concern for the bill’s asset limita­ banks from actual competition or the threat of tion, which the Board opposes, there are sev­ future competition that could result from rela­ eral other provisions pertaining to bank merg­ tively modest additional acquisitions by large ers and holding company acquisitions of banking organizations. Undoubtedly, the ef­ banks that provide useful clarifications of fect of the instant legislation would also be to existing law. In particular, the Board favors significantly inhibit the growth of some bank­ those provisions that permit denial of acquisi­ ing organizations by even the de novo route. tions even when the level of the possible The Board believes that there are few in­ anticompetitive effects does not constitute stances when such expansion would not be violation of the antitrust laws or the 20 per procompetitive and to restrict de novo expan­ cent limitation, if the responsible agency be­ sion would not be in the public interest. lieves that the proposed acquisition would not The proposed percentage limitation, as be in the public interest and the anticompeti­ drafted in terms of total assets, would also tive effects are not clearly outweighed by the discriminate against those institutions that de­ probable consequences for community con­ rive a significant portion of their business venience and needs. This feature has the de­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 183 sirable effect of clarifying that competitive lieves that this study, as well as all other considerations should dominate the banking available evidence, should be carefully re­ agencies’ decisions on proposed acquisitions. viewed and considered before changing the As currently drafted, S. 72 would result in present standards for permissible activities. major changes in Section 4(c)(8) of the Bank The provisions of S. 72 would also alter the Holding Company Act, which governs the “public benefits” test of Section 4(c)(8), mak­ nonbanking activities of holding companies. ing it substantially more stringent. The present At present, bank holding company proposals statute requires that a proposed activity “can to engage in nonbanking activities must pass reasonably be expected to produce benefits to two tests—the “closely related” test and the the public that outweigh possible adverse ef­ “public benefits” test. S. 72 would make both fects.” S. 72 would require that the activity tests more stringent. “is likely to produce substantial benefits to the The “closely related” test now contained in public which clearly and significantly out­ Section 4(c)(8) requires that a proposed activ­ weigh possible adverse effects.” The specific ity be “so closely related to banking or manag­ factors to be considered in determining sub­ ing or controlling banks as to be a proper stantial benefits and adverse effects would incident thereto.” In contrast, S. 72 would also be expanded. require that a proposed activity be “so closely The Board believes that the meaning of the and directly related to banking or managing or proposed “public benefits” test is likely to controlling banks as to be a proper and neces­ produce controversy. But more important, the sary incident thereto.” It is not clear what Board does not believe that the proposed these additions would mean for the “closely public benefits test would serve the public as related” test. One possibility is that it would well as the existing test. Under the proposed limit permissible 4(c)(8) activities to “banking test, the Board would have to deny nonbank­ activities,” that is, activities in which banks ing applications if the benefits were less than themselves generally can engage. If so, the substantial or if even substantial benefits existing list of permissible activities would not would only slightly outweigh adverse effects be greatly affected, since banks can now en­ In contrast, the Board can approve such appli­ gage in most of the present 4(c)(8) activities, cations under the present standard. The Boarc including such important ones as mortgage sees no reason to deny the public the opportu­ banking, consumer lending, leasing, factoring, nity to derive benefits when there is a reason­ and data processing. But there are other pos­ able probability that these benefits, on bal­ sible interpretations of the proposed wording ance, will outweigh any adverse effects. changes in the “closely related” test, and S. 72 would provide grandfather rights foi these different interpretations could have sig­ bank holding companies engaged in nonbank­ nificantly different effects. In any event, the ing activities that would be made impermissi­ Board believes that it is important to draft any ble by the bill. If S. 72 is enacted, the Board wording changes in the “closely related” test would strongly support grandfather provi­ so as to minimize subsequent controversy sions but would urge that the effective grand­ over the meaning of the test. father date be the date that the bill was intro­ The Board also believes that there should be duced in the current Congress, rather than no changes in the “closely related” test with­ November 1, 1975, as proposed in S. 72. Also, out a thorough review and analysis of the we would suggest the elimination of the provi­ impact that bank holding companies have had sion in S. 72 that would prevent a holding in the various nonbanking areas since the company from increasing to any significant passage of the 1970 amendments. As the degree the volume of business of a grand­ Committee is aware, the Board’s staff is near­ fathered nonbanking subsidiary. Such a provi­ ing completion of a comprehensive review of sion would tend to discourage the holding recent research on all aspects of the bank company subsidiary from competing aggres­ holding company movement. The Board be­ sively and meeting the needs of the public. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

184 Federal Reserve Bulletin □ March 1978 The bill also specifies that the Board shall all loans be fully secured by high-grade collat­ require that bank holding companies and their eral. Indeed, the collateral requirements on subsidiaries be capitalized and otherwise fi­ bank loans to affiliates tend to be significantly nanced in a safe and sound manner. Certainly more stringent than collateral provisions on this objective cannot be criticized. However, bank loans to nonaffiliated borrowers. The it should be recognized that the Bank Holding Board feels that a better way to deal with Company Act already requires the Board in transactions involving intracompany fund bank acquisitions to “take into consideration flows is through Section 23A. In this connection, the financial and managerial resources and a new proposal to modernize and strengthen future prospects of the company or companies Section 23A has been completed by the Board and the banks concerned.” Similarly, Section and is being transmitted to the Congress. 4(c)(8) of the act requires the Board to con­ S. 72 contains a provision that would re­ sider such possible adverse effects as unsound quire each bank holding company to submit to banking practices in nonbank acquisitions. In the Board each year a report detailing the carrying out both of these charges, the Board terms and conditions of all intracompany carefully considers the capitalization and loans and investments. Moreover, the Board over-all financial condition of the holding would be required to make such reports avail­ company and its subsidiaries. Furthermore, as able to the public. The Board does not believe part of its ongoing responsibilities for super­ that these provisions are necessary. First, the vising bank holding companies, the Federal Board is already receiving an intracompany Reserve conducts inspections of the parent transactions report on a quarterly basis from companies and their nonbanking subsidiaries, medium and large size bank holding com­ examines subsidiary banks that are State panies. Second, bank examiners carefully re­ member banks, and reviews the examination view transactions between bank subsidiaries reports of other subsidiary banks that are and the rest of the holding company system, examined by either the Comptroller of the and the Federal Reserve now periodically in­ Currency or the Federal Deposit Insurance spects the financial affairs of parent com­ Corporation (FDIC). panies and nonbank subsidiaries. In the The bill also specifies that the Board require Board’s judgment, these examinations and in­ bank subsidiaries to refrain from discriminat­ spections, along with existing reports, supply ing in favor of their parents and nonbank the supervisory authorities with sufficient in­ affiliates in making loans or establishing terms formation on intracompany transactions. In and conditions of credit. The Board agrees that addition, the potential reporting burden as­ the practices referred to are improper if the sociated with such a proposal would be sub­ terms or conditions of the loan are more stantial, especially since most intracompany favorable than the bank would make to a transactions individually would not be mate­ nonaffiliated borrower of comparable rial. The general problem of the appropriate creditworthiness. But we oppose the provision level of public disclosure of insider transac­ with respect to the making of loans to sub­ tions, of which intracompany transactions are sidiaries, which could have the effect of un­ a subset, is currently under review by the duly restricting the flow of funds within the Securities and Exchange Commission (SEC), holding company organization. At present, the accounting profession, the banking agen­ bank examiners closely review bank loans to cies, and the Congress. We believe it prefera­ affiliates and will criticize a loan to an affiliate ble to wait until the general issues have been made on preferential terms that are adverse to resolved before legislating reporting in this the bank. It should also be noted that bank area. loans to holding company affiliates are Turning to that portion of the bill dealing covered by Section 23A of the Federal Re­ with administrative procedures and judicial serve Act. This Act places quantitative limita­ review, the Board strongly objects to the tions on such loans, as well as requiring that proposals contained in Section 601. These Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 185 proposals represent a step backward to the are in dispute, the Board’s procedures cur­ burdensome and time-consuming procedures rently provide for a formal hearing, after of the Bank Holding Company Act prior to the which the case is decided on the basis of the 1970 amendments. Section 601 would depart hearing record. When no such disputed facts from the basic concept of the Administrative exist, there is no need for a formal hearing. Procedure Act embodied in the Board’s cur­ Section 601 would eliminate this administra­ rent procedures by requiring a formal hearing tive flexibility to the detriment of the public for the issuing of new regulations and for all interest. individual case determinations. We are equally concerned with the provi­ We believe that the precedents in adminis­ sions of Section 701 that would require the trative law clearly demonstrate that the public Board to process a petition to commence a interest is best served by avoiding the cumber­ proceeding to consider the issuance, amend­ some procedures of formal adversary hearings ment, or repeal of any order or regulation except in those instances contemplated by the relating to nonbank activities. We note that Administrative Procedure Act. In connection under the Administrative Procedure Act any with rulemaking, the experience of those few person already has the right to petition the agencies that have used formal hearings as Board for the adoption or amendment of a opposed to informal proceedings has been that regulation. Additionally, we believe that the such rulemaking proceedings are unreason­ procedure established to challenge the opera­ ably lengthy. At a time when the Government tion of individual companies would provide a is endeavoring to accelerate the decision­ continuing possibility of attacks on a bank making process within administrative agencies, holding company wishing to engage in a bankthe proposal would impose the burdensome related activity. This possibility could deter procedures of formal rulemaking and its many bank holding companies from engaging attendant formal hearings upon a type of in nonbanking activities or seriously impair decision-making generally recognized by the their nonbanking subsidiaries’ abilities to Administrative Procedure Act and the courts compete with unaffiliated companies engaged as not requiring an adversary-type proceeding. in the same activity. Such an outcome would The Board’s present procedures provide tend to reduce competition and innovation in opportunity for the presentation of views by bank-related fields and could hardly be in the interested parties. In situations where facts public interest. □ Statement by G. William Miller, Chairman, held quarterly in recent years. These hearings Board of Governors of the Federal Reserve have provided a useful forum for discussion of System, before the Committee on Banking, economic and financial conditions and mone­ Finance and Urban Affairs, U.S. House of tary policy. I have no doubt that they will Representatives, March 9, 1978. continue to do so, and look forward to partici­ pation in them. I am pleased to appear today, for the first During the past year, the Federal Reserve time, to present the report of the Board of continued to pursue the objective of fostering Governors of the Federal Reserve System on financial conditions consistent with expansion the conduct of monetary policy. This will also of economic activity and moderation of infla­ be our first report since passage of the Federal tionary pressures. Gross national product Reserve Reform Act of 1977, which originated (GNP)—the broadest measure of economic in this committee and which wrote into law the activity—rose 53A per cent in real terms during monetary oversight hearings that have been 1977, about the same rapid pace as we experi­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

186 Federal Reserve Bulletin □ March 1978 enced on average in the earlier stages of the for our exports. As a result, our trade deficit current recovery. However, the rate of infla­ deepened from about $10 billion in 1976 to tion remained disturbingly high. more than $30 billion in 1977. Very recently, sales and production have The widening of the trade deficit contrib­ weakened, but this seems to reflect mainly—if uted importantly to the downward pressure on not entirely—the temporary effects of the un­ the exchange value of the dollar over the past usually severe winter weather and the coal several months. The Federal Reserve, in strike. While prolongation of the strike could cooperation with the Treasury, has taken lead to more extensive economic disruption, steps to counter disorder in foreign exchange basically our economy is strong, and the year markets and to emphasize U.S. concern about 1978 should see continued expansion in eco­ the integrity of the dollar. But the key to a nomic activity at a moderate pace and a sound dollar and a stable world financial sys­ further reduction in the unemployment rate. tem lies ultimately in the resolution of some of At the same time, recent trends provide little our fundamental, longer-range economic prob­ basis for optimism with regard to an abate­ lems. In particular, we must establish an en­ ment of inflationary pressures. ergy policy that promises to reduce our re­ The brisk increase in production last year liance on foreign sources of petroleum; we made it possible to reduce unemployment sig­ must create a better climate for business in­ nificantly despite further large growth in the vestment, so as to enhance labor productivity size of the Nation’s labor force. In the past 12 and to increase our international competitive­ months, the jobless rate has fallen more than a ness; and most importantly, we must make percentage point. Total employment has risen progress toward the restoration of domestic by more than 4 million, and the proportion of price stability. our population that is employed stands at the One of the great disappointments of the past highest level in the postwar period. year has been the lack of progress in reducing The advance of production and employment the pace of inflation. Wage increases have during the past year was broadly based, with continued to outstrip gains in output per hour most of the major sectors of aggregate demand worked; unit labor costs in private industry registering good gains. Consumer spending have again risen substantially; and prices have followed an uneven course during 1977, but been trending upward at about a 6 per cent for the year as a whole growth was substantial annual rate. by historical standards. Residential construc­ Prudent monetary management is, of tion continued to provide considerable im­ course, an essential ingredient in the control of petus to expansion, with single-family housing inflation over the longer run. Too much money starts reaching an exceptionally high level and growth would add to inflationary pressures multifamily building also posting appreciable and would tend to encourage still larger in­ gains from earlier depressed levels. Business creases in wages, costs, and prices. fixed investment expanded somewhat more Confronted with very strong demands for rapidly in 1977 than in earlier years of the money and credit this past year, the Federal recovery, although such investment continued Reserve took actions to moderate monetary to lag well behind its performance in previous growth and to help ensure that inflationary cyclical upswings. The pace of governmental forces would not get out of hand. Although spending—at both the Federal and the State interest rates have risen, domestic financial and local levels—also picked up last year. markets have remained supportive of eco­ As domestic activity expanded rapidly, our nomic growth. Supplies of credit have been imports of goods from abroad continued their ample, with the total volume of funds raised in steep climb, boosted by our increasing appe­ the Nation’s money and capital markets ap­ tite for imported oil. Meanwhile, the sluggish proaching $400 billion in 1977—a record both performance of economic activity in other in dollar terms and as a percentage of GNP. major industrial countries limited the demand In the household sector, mortgage loans Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 187 accounted for the bulk of an unprecedented at rates near the upper end of the ranges that increase in indebtedness. Families sought had been adopted by the Federal Reserve in mortgage credit not only to finance the pur­ early 1977. chase of homes but also to fund other expendi­ Knowing that a sustained, rapid monetary tures and to add to their holdings of financial expansion would threaten a build-up over time assets. Meanwhile, consumer instalment of inflationary pressures, the Federal Reserve credit grew very rapidly, especially during the began in early spring to be less accommodative first half of the year when sales of new cars in its provision of reserves to the banking were strongest. system. The adjustment of policy was a Borrowing by nonfinancial business firms cautious one, in view of the possibility that also rose sharply in 1977. The volume of new the burst of monetary expansion that had publicly offered bond issues fell off somewhat developed might reflect simply a transitory from the preceding year, as many of the larger, swing in the public’s demand for cash balances. higher-rated companies had completed the re­ But as relatively rapid monetary expansion structuring of their debt in 1975 and 1976. But continued, the Federal Reserve gradually lower-rated firms continued to place large exerted increasing restraint in the provision of quantities of bonds privately with life insur­ bank reserves relative to the strong demands ance companies and other lenders. And com­ for them. panies of all types tapped financial institutions As a result, the Federal funds rate—the rate for increased amounts of mortgage and term banks pay to borrow reserves from one loans, as well as for short-term credit. another on an overnight basis—rose about 1% Governmental demands for credit in 1977 percentage points from April to October, remained exceptionally large by historical reaching a level of about 6lA per cent. And the standards. Borrowing by State and local units discount rate at Federal Reserve B&nks was surpassed previous levels by a wide margin. A raised in two steps to 6 per cent by late substantial portion of the increase in tax- October. Subsequently, in early January, the exempt bond issuance was for the advance discount rate was increased to 6V2 per cent and refunding of debt obligations incurred in prior the Federal funds rate was moved slightly years when interest rates were higher, but higher to help stabilize conditions in the mar­ States and municipalities also borrowed large ket for dollars on international exchanges. amounts for current and future capital outlays. Over all, since last April short-term market At the Federal level, the outstanding volume rates of interest have risen about 2 percentage of Treasury debt rose by the third largest points. Intermediate- and long-term yields amount in history, as a consequence of the have also risen, with increases largest in the U.S. Government’s large budget deficit. market for Treasury securities, where rates Financing of the continued Federal deficit have adjusted upward by % to W2 percentage contributed to upward pressures on interest points over the past 10 months. These in­ rates last year—a year in which private credit creases in interest rates on longer-term securi­ demands were especially strong. ties may well have reflected some increase in In an environment of briskly expanding the inflation premium, as investors reacted to economic activity and credit demands, the the lack of progress in reducing inflation. monetary aggregates also tended to grow more Nevertheless, despite the increases of the past rapidly last year. The public’s demand for year, most short-term rates are still less than 1 M-l—currency and checking account percentage point above their levels at the balances—strengthened considerably, and beginning of the present economic expansion growth in this measure of money accelerated. in early 1975, and corporate and municipal Over the year as a whole, M-l grew about IVi bond yields are significantly below their levels per cent, well in excess of the range estab­ then. lished by the Federal Reserve. The broader Growth rates for all the monetary aggre­ monetary aggregates—M-2 and M-3—grew gates have slackened appreciably, on average, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

188 Federal Reserve Bulletin □ March 1978 in the last few months. Growth in M-2 and uptrend that began about 3 years ago and M-3 has slowed, in part, because the rise in presage further expansion in business fixed interest rates on market instruments has made investment. In addition, the rate of inventory them more attractive to some savers than accumulation is likely to accelerate in coming interest-bearing deposits at banks and thrift months; inventory investment had slowed in institutions. At the same time, however, de­ the fourth quarter, and stocks are lean in many mands for loans at depositary institutions have product lines. Moreover, with prospects for remained strong. Under the circumstances, our exports improved by the likelihood of these institutions have had to supplement their stronger economic growth abroad this year, it deposit flows by borrowing and by reducing appears that our foreign trade deficit will not their holdings of liquid assets. deteriorate further. Although these pressures may be causing Over all, it is the Federal Reserve’s judg­ depositary institutions to become a bit more ment that trends in the national economy favor cautious in their lending policies, credit continued expansion at a moderate rate in supplies still appear to be ample. Moreover, economic activity and a further reduction in the financial condition of the key nonfinancial the rate of unemployment over the course of sectors remains generally strong. It is true that 1978. There is, however, less reason to be household debt burdens, as measured, for sanguine about progress in curbing the rate of example, by the ratio of consumer and inflation. Food and material prices have risen mortgage loan repayments to disposable in­ substantially in recent months. And labor come, are historically high, and they deserve costs continue to rise at a relatively rapid rate. careful monitoring. But to date, there has been The decline in the value of the dollar on no rise in delinquency rates, so families international exchanges is another cause for appear thus far to be handling their in­ concern. It not only contributes to upward creased indebtedness well. Businesses added pressures on domestic prices but also further to their liquid assets last year, and threatens to erode business confidence here corporate balance sheets on the whole ap­ and abroad. pear to be strong, although there *s con­ The monetary growth ranges that were siderable variation from firm to firm. And adopted by the Federal Open Market Commit­ State and local governments, with record tee (FOMC) at its February meeting are ex­ operating surpluses in 1977, appear in the pected to prove consistent with continued aggregate to enjoy a healthy financial position. expansion in economic activity, as well as Thus, financial conditions remain support­ with a gradual winding down of inflation over ive of expansion in economic activity. As the longer run. For the year ending with the 1977 drew to a close, aggregate demands for fourth quarter of 1978, the M-l growth range goods and services were strong. As I noted was set at 4 to 6V2 per cent. A range of 6V2 to 9 earlier, severe winter weather and the coal per cent was established for M-2, which strike have caused some steep declines in includes, in addition to M-l, time and savings economic indicators recently. However— deposits other than large certificates of deposit assuming a reasonably prompt resumption of (CD’s) at commercial banks. And a growth activity in the coal industry—we can expect range of IV2 to 10 per cent was adopted for favorable underlying trends soon to reassert M-3—which includes, besides M-2, deposits themselves. Growth of employment and in­ at nonbank thrift institutions. come has been substantial over recent quar­ The ranges for M-l and M-2 are identical ters, and consumer confidence has remained to those that the Committee previously had high. Consumer spending, therefore, should adopted for the year ending in the third quarter grow at a reasonably good pace and would be of 1978. The range for M-3, however, has bolstered later this year by the proposed tax been adjusted downward by V2 percentage cuts. In the business sector, new orders for point in light of the higher level of market nondefense capital goods have continued the interest rates now prevailing and the apparent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 189 effect of these rates in retarding growth in time denomination time deposits may represent a and savings deposits at thrift institutions. All one-time shift of highly interest-sensitive of the ranges adopted by the FOMC anticipate funds; if so, once the shift has been com­ a deceleration of monetary expansion from pleted, deposit growth should strengthen the growth rates actually recorded in 1977. somewhat. Moreover, the fact that longer- Progress over time in this direction is neces­ term time certificates, which are subject to sary to ensure the ultimate achievement of heavy penalties for early withdrawal, account reasonable price stability. today for a larger share of interest-bearing Specification of growth rates for the aggre­ deposits—especially at thrift institutions— gates is, of course, subject to considerable suggests that over-all deposit growth should uncertainty. The rate of growth in money be less volatile than in the past. needed to support economic expansion de­ Nonetheless, if heavy demands for money pends in part on changes in the velocity of and credit should place further upward pres­ money—that is, on the rate at which the public sure on market interest rates, deposits subject uses the existing stock of money to finance to regulatory rate ceilings will be placed at a transactions. In recent years, regulatory substantial competitive disadvantage. In such changes and financial innovations have en­ a circumstance, growth in M-2 and M-3 couraged increases in the velocity of M-l by could fall short of the ranges. Upward adjust­ enabling the public to economize on demand ments in the ceiling rates on some or all deposits. However, the retarding effect of such categories of time deposits may be required to changes and innovations on the demand for avoid a potential distortion in the flow of M-l apparently diminished in 1977, when credit through our financial system, to pro­ M-l growth accelerated. Thus far in 1978, mote equity for small savers, and to ensure the growth in M-l has been quite moderate, but it availability of loans to home buyers and others is far too early to say whether this marks a who rely on institutional sources of credit. slower trend in growth or is simply a transitory We recognize the considerable uncertainties development in a highly volatile series. surrounding the shorter-run relationship be­ The behavior of the broader aggregates— tween growth rates of the monetary aggregates, M-2 and M-3—will be affected in the year on the one hand, and the behavior of output ahead by the constraint placed on the ability of and prices on the other. The Federal Reserve depositary institutions to attract funds under will continue, therefore, to maintain a vigilant existing regulatory ceilings on deposit rates. and flexible approach, putting the long-run Banks have adjusted to the recent marked performance of the economy above the pursuit slowing of inflows of deposits subject to rate of any fixed monetary growth rates. ceilings in part by offering increased amounts Economic and financial developments in the of large-denomination time deposits, which current year, it should be noted, will depend to are not subject to ceilings. Some of these an appreciable extent on governmental deposits, mainly large-denomination deposits policies beyond the province of the Federal issued in nonnegotiable form, are included in Reserve. The outcome of legislative action on M-2 and M-3; they have tended to sustain energy policy and on taxation will have a growth in these aggregates, especially M-2, in considerable influence on the strength of busi­ recent months. ness investment and on international confi­ There are other factors that may work to dence in the dollar. So, too, will this Nation’s sustain growth in the broader aggregates in the ability to find a way to reduce the upward year ahead. To some extent, the recent slow­ wage-price pressures that continue to plague down in inflows of savings and also small- our economy. □ Additional Statement follows. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

190 Federal Reserve Bulletin □ March 1978 Statement by G. William Miller, Chairman, Although last year’s sizable gains in em­ Board of Governors of the Federal Reserve ployment and income brought a greater meas­ System, before the Committee on the Budget, ure of prosperity to millions of American U.S. Senate, March 15, 1978. families, we cannot afford to overlook some distinctly negative economic developments Mr. Chairman, I welcome this opportunity to that occurred in 1977 and that will require our meet with the Senate Budget Committee as it continued attention in the months and years considers the Federal budget for fiscal year ahead. As news headlines have highlighted in 1979. The Federal Reserve and the Congress the past few months, 1977 saw a substantial both have important parts to play in shaping the further widening of our foreign trade deficit and future course of the national economy. Discus­ a sharp decline in the value of the dollar in sions, such as this today, of our economic international exchange. Furthermore, the Na­ prospects and problems can enhance mutual tion continued to suffer from a disturbingly understanding and thereby aid in the develop­ rapid inflation. ment of constructive monetary and fiscal The deterioration in our trade balance, which policies. really began more than 2 years ago, partly The performance of the economy over the reflects the success we have had in rebounding past year or so has been marked by some from the deep recession of 1973-75. As domes­ notable achievements. Gross national product tic income has recovered strongly, so too has (GNP) rose 53A per cent during 1977—about the the demand for imported goods. This, of same rapid pace as we experienced on average course, includes oil, for which we have become in the earlier stages of the current economic increasingly dependent on foreign sources. expansion. This brisk increase in production Meanwhile, our trading partners by and large made possible a reduction in the over-all un­ have experienced more sluggish economic ex­ employment rate of more than a percentage pansion, and this has both limited their demand point despite extremely large growth in the size for U.S. exports and intensified their interest in of the Nation’s labor force. Total employment penetrating the U.S. market. increased more than 4 million, raising the The link between the U.S. trade balance and proportion of our population that is employed the international value of the dollar is a loose to the highest level of the postwar era. one. In fact, the average value of the dollar in The advance of production and employment foreign exchange markets rose almost continu­ last year was broadly based, as most of the ously from early 1975 to mid-1976 and then major sectors of aggregate demand registered remained steady through mid-1977, even good gains. Consumer spending followed an though the U.S. trade position was moving uneven course during 1977, but for the year as a from surplus to substantial deficit throughout whole growth was substantial by historical this period. Since mid-1977, however, a grow­ standards. Residential construction continued ing concern about the persistence of our deficit to provide considerable impetus to expansion, appears to have contributed importantly to the with single-family housing starts reaching an downward pressure on the exchange value of exceptionally high level and multifamily build­ the dollar. ing also posting appreciable gains from earlier This concern is based in part on the fact that, depressed levels. Business spending for plant in contrast to the slower rates of wage and price and equipment expanded more rapidly in 1977 advance recorded by some other major indus­ than it had earlier in the recovery, although trial countries last year, inflation showed no such investment continued to lag well behind sign of abatement in the United States. its performance in previous cyclical upswings. Moreover, as one surveys the economic pros­ And the growth of government spending on pects for 1978, it is difficult to be optimistic goods and services—at both the Federal and about progress in curbing inflationary pres­ State and local levels—also picked up last year. sures. Because wage increases continued to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 191 outstrip gains in output per hour worked, unit stronger economic growth abroad this year and labor costs in private industry rose by almost 6 by changes in relative currency values, we are per cent last year, and these higher costs will be hopeful that our foreign trade deficit will not feeding through to prices for some time. The deteriorate further. recent increase in the minimum wage has added Our generally favorable assessment of the further to labor costs. The same is true of outlook for economic activity is also based on increases in employer contributions for social our judgment that financial conditions remain security and unemployment insurance, al­ supportive of continued economic expansion. though they have some offsetting impact on Demands for money and credit were excep­ inflationary pressures through the reduction of tionally strong last year. Total borrowing the Federal deficit. In addition, the deprecia­ reached record levels—both in dollar terms and tion of the dollar is raising the prices of imports as a proportion of GNP. And growth of the and reducing competitive restraints on domes­ monetary aggregates tended to equal or, in the tic prices. And the surge over the past several case of the narrow money stock (M-l), to months in the prices of basic industrial com­ exceed the upper ends of the ranges set by the modities and agricultural products suggests Federal Reserve. additional upward pressures on the structure of Recognizing that such rapid monetary costs and prices. expansion—if sustained—would threaten a Even though the outlook for inflation is not build-up of inflationary pressures, the Federal bright and must be regarded with concern, Reserve between April and October exerted prospects for production and employment in increasing restraint in the provision of bank 1978 seem generally favorable. It is the Federal reserves relative to the strong demands for Reserve’s judgment that trends in the economy them. More recently, in early January, the favor continued expansion at a moderate rate in System fostered a further firming in money real gross national product and a further reduc­ market conditions through adjustments in the tion in the rate of unemployment. discount rate and in open market operations— As 1977 drew to a close, aggregate demands these actions being taken to help stabilize for goods and services were strong; final sales conditions in foreign exchange markets and to in the fourth quarter showed the largest gain of emphasize U.S. concern about the integrity of the year. Severe winter weather and the coal the dollar. strike have caused steep declines in some Over all, since last April short-term market economic indicators in the past 2 months; but if rates of interest have risen about 2 percentage there is a prompt resumption of activity in the points. Intermediate- and long-term yields also coal industry, the favorable underlying trends have risen, with the increases largest in the in the economy can be expected soon to market for Treasury securities, where rates reassert themselves. Growth of employment have gone up % to 1 Vi percentage points. These and real disposable income has been strong in increases in yields on long-term securities may recent quarters, and consumer sentiment has well have reflected some increase in the infla­ remained fairly high. Consumer spending, tion premium, as investors reacted to the lack therefore, is likely to grow at a reasonably good of progress in reducing inflation. Nevertheless, pace. In the business sector, new orders for despite the increases of the past year, most nondefense capital goods have continued to short-term rates are still less than 1 percentage trend upward, pointing to further expansion in point above their levels at the beginning of the business fixed investment. In addition, the rate present economic expansion in early 1975, and of inventory accumulation should accelerate in corporate and municipal bond yields are signif­ coming months; inventory investment slowed icantly below their levels then. in the fourth quarter, and stocks are now lean in Growth rates for all the monetary aggregates many product lines. Moreover, with prospects have slackened appreciably, on average, in the for our exports improved by the likelihood of last few months. Growth of M-2 and M-3 has Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

192 Federal Reserve Bulletin □ March 1978 slowed in part because the rise in interest rates ute to the ultimate achievement of reasonable on market instruments has made them more price stability. attractive to some savers than interest-bearing We recognize, of course, the considerable deposits at banks and thrift institutions. At the uncertainties surrounding the shorter-term re­ same time, however, demands for loans at lationship between growth rates of the mone­ depositary institutions have remained strong. tary aggregates, on the one hand, and the Under the circumstances, these institutions behavior of output and prices, on the other. have had to supplement their deposit flows by The Federal Reserve will continue, therefore, borrowing and by reducing their holdings of to maintain a vigilant and flexible approach, liquid assets. putting the long-run performance of the econ­ Although these pressures may be causing omy above the pursuit of any fixed monetary depositary institutions to become a bit more target. cautious in their lending policies, credit I must emphasize, however, that the solution supplies still appear to be ample. Moreover, the to the Nation’s problems of high unemploy­ financial condition of the key nonfinancial ment and rapid inflation does not rest with sectors remains generally strong. It is true that monetary policy alone. More stimulative mon­ household debt burdens, as measured, for etary action would perhaps have some positive example, by the ratio of consumer and effect on output and employment for a time, but mortgage loan repayments to disposable in­ the resultant intensification of inflationary come, are historically high, and they deserve forces would soon lead to a reversal of those careful monitoring. But to date there has been gains. A significantly more restrictive mone­ no rise in delinquency rates, so families are tary policy, in the face of the strong upward thus far handling their increased indebtedness trends built into financial flows by rising costs well. Businesses added further to their liquid and prices and the prospective heavy credit assets last year, and corporate balance sheets demands from the private and public sectors, on the whole seem to be strong, although there would run the risk of serious market disruption is considerable variation from firm to firm. And and economic dislocation. Clearly, other tools State and local governments, with record of public policy must be marshalled in the effort operating surpluses in 1977, appear in the to improve economic performance. aggregate to enjoy a healthy financial position. A major objective of our efforts must be to Last week, in testimony before the House quicken the growth of labor productivity. Im­ Banking Committee, I announced the growth proving labor productivity—besides being the ranges for the monetary aggregates that the principal source of rising living standards for Federal Open Market Committee has estab­ our people—serves to retard the advance of lished for the year ending with the fourth unit labor costs. This, then, is a key element in quarter of 1978. The range of increase specified slowing inflation and in increasing the competi­ for M-1 is 4 to 6 Vi per cent; for M-2, it is 6Vi to 9 tiveness of U.S. industry in international trade. per cent; and for M-3, it is 7Vi to 10 per cent. Despite some pick-up in productivity growth Growth in each of the aggregates is thus recently—as usually occurs during a business expected to be less than was experienced last upswing—the longer-term pattern has not been year. In the judgment of the Committee, these encouraging. During the past decade output per ranges should be consistent with the pattern of hour worked in the private business sector rose economic activity that I outlined earlier— at an average annual rate of only \3A per cent, namely, moderate economic expansion, suffi­ roughly half the rate of advance recorded over cient to produce some decline in the unem­ the preceding 20 years. A significant cause of ployment rate. While it is not anticipated that this lagging productivity growth has been the any significant reduction will be achieved in the poor performance of business capital forma­ rate of inflation this year, the Committee be­ tion. For many years the United States has lieves that the deceleration in monetary expan­ invested a smaller proportion of its total output sion implied by the current ranges will contrib­ in new plant and equipment than have most Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 193 other industrial nations. Though international businesses to step up their spending on new comparisons are imprecise, it is clear that the plant and equipment. New investments are share of GNP devoted to nonresidential fixed made when the prospective rate of return is investment in the United States has been less sufficiently attractive and predictable. The than half the share allocated in Japan and traditional Government approach to increasing considerably less than the shares in Germany, the rate of recovery of fixed investment costs France, and Canada as well. has been to reduce corporate income tax rates, Experience has taught us that substantial to accelerate depreciation allowances, and to investment in plant and equipment is a critical liberalize the investment tax credit. These ingredient for longer-term economic growth. policies would help induce an acceleration of Furthermore, an ample capital stock is neces­ capital spending today. sary if we are to avoid production bottlenecks The effect of such actions, however, would that stifle expansion in output and employment be blunted unless measures also are taken to and that aggravate inflationary forces. The reduce business uncertainty about the future. encouragement of greater capital spending In the past few years, heightened uncertainty must, therefore, be an integral part of any has become a significant impediment to the comprehensive national policy to achieve full willingness of businesses to undertake new employment, price stability, and a sound dollar capital projects. While this uncertainty has a internationally. Our efforts in this regard variety of causes, including unresolved tax and should be directed at both increasing the flow energy policies, one important source is the of savings available to private businesses and fear of high and volatile future rates of inflation increasing the willingness of firms to undertake over the life of the investment. Rapidly rising productive investment. prices bring unpredictable costs and uncertain An important step toward assuring an profit margins; they exacerbate public pres­ adequate flow of savings to the private sector is sures for controls; and—as we have learned— the careful management of Government fi­ they increase the likelihood of subsequent nances. The record here has not been good. As recession. It is most difficult for businesses to the members of this committee well know, the calculate a rate of return that is acceptable in an Federal budget has been in deficit every fiscal environment of rapid inflation. Moreover, in­ year but one since 1960. In periods of high flation also contributes directly to the cost unemployment and inadequate total demand, of modernizing and replacing obsolete equip­ Federal deficits may provide a needed stimulus ment. With depreciation allowances based to aggregate economic activity. As the economy on the original cost of equipment, the gap moves toward fuller utilization of its resources, between the original cost and resources avail­ however, Federal deficits become competitive able for replacement widens as prices rise. with private capital formation. The Congress Our attempts to restrain inflation by using has made progress in reducing an evident bias conventional stabilization techniques have toward deficit spending by establishing im­ been less than satisfactory. Three years of high proved procedures under the Budget Act of unemployment and underutilized capital stock 1974. This committee, which was created by have been costly in terms both of lost produc­ that act, has worked hard to exert better tion and of the denial to many of the dignity that control over the Federal budget. I hope that its comes from holding a productive job. Yet, efforts, in combination with a growing public despite this period of substantial slack in the awareness of the danger of persistent govern­ economy, we still have a serious inflation mental deficits, will prove effective in helping problem. to narrow the gap between Federal outlays and Prudent monetary and fiscal policies are, of expenditures as full employment is ap­ course, essential if inflation is to be controlled. proached. But such policies need to be complemented by Along with freeing financial resources for programs designed to enhance competition and use by the private sector, we must encourage to correct structural problems, in particular Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

194 Federal Reserve Bulletin □ March 1978 labor and product markets. And any program number of economic difficulties confronting to control inflation would be incomplete with­ the Nation. However, our history amply dem­ out a conscious effort to avoid, where possible, onstrates the resilience and problem-solving those Government initiatives that place up­ capacity of the American people and their ward pressure on prices. There can be little economic institutions. The prospects for over­ doubt that Government has become a signifi­ coming our current difficulties thus are promis­ cant contributor to the inflationary bias of the ing, if Government pursues policies that pro­ economy—not only by incurring persistent vide a stable and healthy environment for budgetary deficits but also through regulatory American enterprise. We must recognize, of and other actions. It is time to search for course, that results will not come quickly; but if alternative, less inflationary methods to we set our course and pursue it with patience, achieve our social goals. we can look forward to a better economic Mr. Chairman, I have discussed today a future for our Nation. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

195 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON JANUARY 17, 1978 1. Domestic Policy Directive The information reviewed at this meeting suggested that real output of goods and services had grown in the fourth quarter of 1977 at a pace close to that of the third quarter, which the Commerce Department had revised upward to an annual rate of 5.1 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 have stepped up somewhat from the annual rate of 5.0 per cent estimated for the third quarter. Staff projections for the year from the fourth quarter of 1977 to the fourth quarter of 1978—which now were based on assumptions that included reductions next fall in Federal income taxes—suggested a moderately faster expansion than the projections prepared just before the December meeting of the Committee. According to the latest projections, growth in real gross national product (GNP) would be sustained at a good pace throughout 1978. It was also expected that the rise in prices would remain relatively rapid and that the unemployment rate would decline moderately further over the year ahead. The staff estimates for the fourth quarter of 1977 suggested that final sales of goods and services had risen substantially more than in the third quarter, but that the rate of business inventory accumula­ tion had slowed considerably after a slight rise in the third quarter. With respect to final sales in real terms, gains had been particularly strong in consumer spending for both durable and nondurable goods and in residential construction. Staff projections for the year ahead reflected expectations that the growth of consumer spending in real terms would moderate during the first quarter from the exceptionally rapid pace in the fourth quarter of 1977 and then would pick up as the year progressed— particularly during the fourth quarter, following the reduction in personal income taxes assumed to take effect on October 1. Busi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

196 Federal Reserve Bulletin □ March 1978 ness fixed investment was projected to expand moderately, owing in part to stimulative modifications of the investment tax credit that were assumed to be retroactive to the beginning of 1978. It was still anticipated that the rise in residential construction outlays would taper off as the year progressed and that the increase in Federal purchases of goods and services would be smaller than over the past year. In December industrial production expanded 0.2 per cent, com­ pared with 0.4 per cent in November. However, the December increase was held down by a strike that had caused a reduction of nearly 50 per cent in output of bituminous coal. Auto assemblies were curtailed somewhat, but output of other consumer goods and of business equipment continued to rise. For the fourth quarter as a whole, growth in industrial production slowed to an annual rate of about 2lA per cent from about 4lA per cent in the third quarter, reflecting in part the reduction in the rate of business inventory accumulation. Nonfarm payroll employment continued to rise in December, and after adjustment for strikes, the gain was as large as in November. Employment increases were again substantial in trade, services, and State and local government. In manufacturing too, the gain was sizable, but the average workweek declined, in part because of the curtailment in assemblies of autos. The unemployment rate dropped to 6.4 per cent in December from a (revised downward) rate of 6.7 per cent in November. The dollar value of retail sales, according to the Census Bureau’s advance estimate, had declined a little in December after having risen sharply in the preceding 2 months. For the fourth quarter as a whole sales rose by almost 4 per cent, about equaling the large rise in the fourth quarter of 1976. Unit sales of new domestic and foreign autos increased somewhat in December, returning to about the October level, and sales were almost as high in the fourth quarter as in the third. Private housing starts, as had been reported before the Commit­ tee’s December meeting, edged down in November to an annual rate of about 2.1 million units. The average number of starts for October and November was 5 per cent above the third-quarter average, which in turn was the highest of the current expansion. The latest Department of Commerce survey of business spending Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 197 plans, taken in late November and December, suggested that spending for plant and equipment would expand 10.1 per cent in 1978. Such spending had increased 13.7 per cent in 1977. Manufacturers’ new orders for nondefense capital goods declined 5 per cent in November, but the October-November average was about 6V2 per cent above the third-quarter average. Contract awards for commercial and industrial buildings—measured in terms of floor space—advanced sharply in November after having declined in October. The average for the 2 months was somewhat higher than that for the third quarter. The index of average hourly earnings for private nonfarm produc­ tion workers increased relatively little in December, as it had in November. However, from December 1976 to December 1977 the index rose 7.4 per cent, which compared with an increase of 6.9 per cent over the preceding 12 months. The wholesale price index for all commodities rose 0.5 per cent in December, considerably less than in October and November. Aver­ age prices of farm products and foods advanced only 0.4 per cent in December, compared with an average increase of 1.8 per cent over the preceding 2 months. The 0.5 per cent rise in prices of industrial commodities in December equaled the October-November average. The consumer price index rose 0.5 per cent in November, somewhat more than in any of the preceding 4 months. Retail prices of foods increased 0.6 per cent, in contrast with an average between 0.1 and 0.2 per cent in the July-October period. The pace of advance in nonfood commodities also picked up, mainly because of increases for new autos, but the rise in prices of services remained at a reduced rate. In foreign exchange markets the dollar continued under strong downward pressure from mid-December to just after the turn of the year, and during that period its trade-weighted value against major foreign currencies declined about 2V2 per cent. On January 4, 1978, it was announced that the Exchange Stabilization Fund of the U.S. Treasury would henceforth be utilized actively, together with the swap network operated by the Federal Reserve System, to check speculation and to help re-establish order in the foreign exchange markets. On January 6 the Board of Governors announced approval of an increase in Federal Reserve discount rates from 6 to 6V2 per cent, and in an accompanying press release noted that the recent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

198 Federal Reserve Bulletin □ March 1978 disorder in foreign exchange markets constituted a threat to orderly expansion of the domestic and international economy. The Board expressed the hope that the need for this increase would prove temporary. It also noted that the condition of the domestic economy was sound and that credit supplies to sustain the economic expansion would remain ample. From January 4 to the time of this meeting the trade-weighted value of the dollar recovered about \3A per cent. The U.S. foreign trade deficit declined substantially in November after a sharp increase in October. The dock strike that had halted containerized shipments through Atlantic and Gulf Coast ports between October 1 and November 29 appeared to have depressed recorded exports and imports by similar amounts in November, whereas in October the strike had caused much more of a reduction in recorded exports than imports. At U.S. commercial banks, total credit contracted slightly in December, but because it had grown rapidly in October and November, expansion for the fourth quarter as a whole remained close to the third-quarter pace. The December halt in growth of bank credit reflected both a sharp slackening in loan expansion and a further contraction in holdings of securities. While the reduced loan expansion at banks in December stemmed in part from a large net reduction in securities loans, business loan growth also slowed appreciably. Sales of commercial paper ex­ panded by a roughly similar amount, however, so total short-term credit to nonfinancial businesses from these sources rose at about the same pace in December as in November. The narrowly defined money stock (M-l)1 grew at a 7.6 per cent annual rate in December and at a 6.8 per cent annual rate for the fourth quarter as a whole. From the fourth quarter of 1976 to the fourth quarter of 1977, M-l grew 7.4 per cent, compared with 5.6 per cent in 1976 and 4.4 per cent in 1975. In the third quarter of 1977 M-l had grown nearly as fast as nominal GNP, so the income velocity of M-l—the ratio of nominal GNP to M-l—had shown little change. It appeared, however, that income velocity had increased significantly in the fourth quarter as a result of both faster growth in GNP and a slower rise in M-l. 1 M-l is composed of private demand deposits and currency in circulation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 199 Growth in M-22 increased somewhat in December from the low November rate. Virtually all of the growth in the time and savings deposit component of M-2 occurred in large-denomination time deposits not subject to ceiling rates; savings deposits remained about unchanged for the second consecutive month and smalldenomination time deposits, which had contracted in November, expanded only a little. From the fourth quarter of 1976 to the fourth quarter of 1977, M-2 grew 9.6 per cent, compared with 10.9 per cent in 1976 and 8.3 per cent in 1975. Deposit growth at nonbank thrift institutions slowed further in December, and M-33 expanded at a 7.5 per cent annual rate—about the same as in November. Most of the December growth in deposits at thrift institutions presumably occurred in longer-maturity instru­ ments on which the effective offering rates still exceeded yields available on Treasury securities of comparable maturity. For 1977 as a whole, M-3 grew 11.6 per cent. At its December meeting the Committee had decided that opera­ tions in the period immediately ahead should be directed toward maintaining about the prevailing money market conditions, provided that the monetary aggregates appeared to be growing at approxi­ mately the rates then expected. Specifically, the Committee sought to maintain the weekly-average Federal funds rate at about 6V2 per cent, so long as M-l and M-2 appeared to be growing over the December-January period at annual rates within ranges of 2Vi to 8V2 per cent and 6 to 10 per cent, respectively. However, members also 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 6V4 to 6% per cent. The Committee also had included in 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 finan­ cial market conditions, including the unsettled conditions in foreign exchange markets.” This instruction had been added to provide the Manager with somewhat greater flexibility, in part because of the 2 M-2 includes M-1 and commercial bank time and savings deposits other than large-denomination certificates of deposit. 3 M-3 includes M-2 and deposits at nonbank thrift institutions (savings and loan associations, mutual savings banks, and credit unions). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

200 Federal Reserve Bulletin □ March 1978 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. With the monetary aggregates apparently expanding at rates well within the Committee’s specified ranges, the Manager of the System Account continued to aim for a Federal funds rate of around 6V2 per cent in the last weeks of December and the first statement week of January. Due to technical factors, however—including the usual money market churning around year-end—Federal funds actually traded at rates somewhat above this level. The Manager in early January also shaded his Federal funds rate objective slightly upward because of downward pressures on the dollar in foreign exchange markets. On January 9, following the January 6 increase in Federal Reserve discount rates to 6V2 per cent, the Federal Open Market Committee concurred in the Chairman’s recommendation to raise the inter-meeting range for the Federal funds rate to 6V2 to 7 per cent and to instruct the Manager to aim for a rate of around 63A per cent over the next few days. In the days remaining until this meeting, the funds rate averaged 6.75 per cent. During the initial weeks of the inter-meeting period other short­ term interest rates showed little net change, while longer-term rates tended to move higher. After the discount rate action and the increase in the funds rate to 63A per cent, short-term market rates adjusted sharply upward, with the largest net increases—ranging from 35 to 45 basis points—occurring on Treasury bills. Bond yields also rose somewhat further over this period but significantly less than bill rates. Auctions of 2-year notes and 15-year bonds netted the U.S. Treasury $2.7 billion of new money during the inter-meeting period—including $600 million of 2-year notes sold directly to foreign official institutions on a noncompetitive basis. For the fourth quarter as a whole, net Treasury sales of marketable debt to the public totaled nearly $19 billion, a substantial share of which was purchased by foreign official institutions. The volume of bonds offered publicly by nonfinancial corpora­ tions in December was somewhat less than in previous months, as industrial firms reduced their flow of new issues. Financial concerns continued to borrow heavily in long-term debt markets, however. Offerings of State and local government bonds expanded con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 201 traseasonally in December, raising the total for the fourth quarter almost to the high level of the third quarter. Most of the December rise was attributable to advance refunding issues. Net mortgage lending in the fourth quarter appeared to be running close to the record third-quarter rate. Savings and loan associations managed to sustain an unusually high level of lending— notwithstanding their slower deposit inflows—by increasing their borrowings, particularly from Federal home loan banks. Such borrowing rose $2.6 billion during the quarter, the largest expansion in more than 3 years. In the Committee’s discussion of the economic situation, most members agreed that the staffs projection of the growth rate in real GNP over the full year 1978 was reasonable. However, there was some difference of opinion regarding the probable profile of the expansion during the course of the year. Specifically, a number of members thought that growth might be faster in the first half of 1978 and slower in the second half than had been projected. In this connection, it was suggested that in the early part of 1978 production would be stimulated by business efforts to restore inventories depleted by the surge in sales that had occurred in the fourth quarter of 1977. It was observed, however, that if production increased as expected and growth in sales slowed, the consequent inventory build-up could lead to a need for correction and hence to slower growth in output later in the year. There was some feeling also that the proposed reductions in Federal income taxes might have less stimulative effect in the fourth quarter than expected by the staff, and it was noted that payroll taxes for social security and unemployment insurance were scheduled to rise at the beginning of 1979. One member was of the opinion that a number of forces, including the depreciation of the dollar that had occurred in foreign exchange markets, would induce a faster rise in prices than the staff had anticipated and that inflation would tend to slow the expansion in activity as the year progressed. However, none of the members who expressed concern about the growth of real GNP late in the year anticipated that the economy would move into a recession during 1978. Other members were more optimistic about the economic out­ look. One noted that at this time of the year forecasters almost invariably expressed more uncertainty about the prospects for the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

202 Federal Reserve Bulletin □ March 1978 second half than for the first half. Another indicated that he expected the expansion to be sustained by a gradual improvement in business and consumer confidence. This member and others also stressed the stimulative effects of the prospective tax reduction, and one noted that if necessary the reduction could be larger than presently contemplated. These differences of view were generally associated with different expectations for major sectors of the economy. Thus, one member expressed the opinion that residential construction activity would remain at a high level during 1978, in part because individuals were tending to perceive homeownership as an effective hedge against inflation. At the same time, this member noted that the recent spurt in consumer spending had been financed in considerable measure by credit; he did not expect the rapid expansion to continue, and he thought it would be an unhealthy development if it did. Another member said he anticipated an appreciable decline in the rate of housing starts during the year, and a third expressed concern about the possible consequences for housing activity if thrift institutions should cut back significantly on new mortgage commitments be­ cause of the record volume already outstanding and because of increased uncertainty about the pace of deposit inflows. The latter member also doubted that consumer purchases of new automobiles would be sustained at the levels of 1976 and 1977 for another year, as projected by the staff, especially in view of the downtrend in sales that appeared to have been under way since last spring. With respect to business fixed investment, the results suggested by the recent Commerce Department survey of business spending plans for 1978 were described as disappointing. It was also observed, however, that a more favorable outlook for capital investment was presented by such indicators as new orders for nondefense capital goods, construction contracts for commercial and industrial build­ ings, formation of new businesses, and newly approved capital appropriations, and that over the years such measures had provided better indications of future business fixed investment than had surveys of spending plans. It was noted that the administration’s tax program would include new incentives for business fixed invest­ ment, and one member suggested that such investment was likely to be stimulated by rising rates of capacity utilization, such as those being forecast for the coming year. However, another member Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 203 offered the hypothesis that the need for new plants in this country was being reduced by a trend toward remodeling and re-equipping existing structures and by a tendency for multinational corporations to rely on their plants abroad for needed capacity. It was observed during the discussion that the course of business fixed investment depended on the state of business confidence in general and on profit expectations in particular. Some members reported that they had recently detected some deterioration of business confidence, but others felt that the state of confidence had remained unchanged or had improved. One member remarked that businessmen had long been deeply disturbed about the persistence of inflation, and that recently some who followed monetary de­ velopments closely had begun to question the System’s determina­ tion to slow the rates of growth of the monetary aggregates. One member observed that the recent behavior of the stock market— including the low levels to which price/earnings ratios had fallen— was not indicative of the kind of business confidence that normally would be accompanied by rising investment. Another member remarked that low price/earnings ratios probably reflected in part the realization by investors that reported earnings overstated real earnings as a result of the use of conventional accounting procedures in a period of inflation. It also was suggested that in making investment decisions businessmen were now insisting on shorter expected “payout” periods than they had earlier because they perceived the risks to be greater. Serious concern continued to be expressed about the dollar’s weakness in foreign exchange markets, although it was noted that the dollar had recovered somewhat over the past 2 weeks. The observation was made that the conventional theory concerning depreciation of a currency did not apply to the dollar because of its special role in international trade and finance. Specifically, it was suggested that depreciation of the dollar tended to weaken confi­ dence here and abroad and to cause postponement of decisions to spend or to invest in new facilities; that the counterpart of the dollar’s depreciation—appreciation of foreign currencies—ad­ versely affected exports of other major countries and generated risks of stagnation or recession in economic activity; and that this negative impact on aggregate demand abroad could have adverse effects on the U.S. foreign trade balance that greatly outweighed the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

204 Federal Reserve Bulletin □ March 1978 favorable effects of the improved competitiveness of U.S. products in markets here and abroad. As at the December meeting, 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 meeting in October 1977 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 IOV2 per cent. The associated range for the rate of growth in commercial bank credit was 7 to 10 per cent. It had also been agreed that the longer-run ranges, as well as the particular aggregates for which such ranges were specified, would be subject to review and modifi­ cation at subsequent meetings. However, no further modification was made at this meeting. In the Committee’s discussion of policy for the period im­ mediately ahead, a number of members suggested that any signifi­ cant easing of money market conditions would be undesirable at this time because of the weakness of the dollar in foreign exchange markets and—in the view of some—because of the cumulative growth rates in the monetary aggregates over recent months. Each of the three members who had dissented from the decision of January 9 to seek a higher Federal funds rate indicated that he would not now advocate a rollback since that decision had been im­ plemented and absorbed by the financial markets. At the same time, there was little sentiment for further firming actions in the coming inter-meeting period unless the monetary aggregates appeared to be growing at rapid rates. Consistent with these views, most members expressed a prefer­ ence for continuing to give greater weight than usual to money market conditions in conducting operations in the period until the next meeting of the Committee. However, a few favored basing operating decisions primarily on the behavior of the monetary aggregates, particularly if growth rates appeared to be higher than desired. While there was general agreement that operations should be directed initially toward maintaining the current Federal funds Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 205 rate of about 6% per cent, various suggestions were made with respect to the range in which the funds rate might be varied if the growth rates in the monetary aggregates appeared to be deviating markedly from expectations. Thus, some members favored retaining the present range of 6V2 to 7 per cent, but others were inclined to raise the lower limit to 6% or 6% per cent; some in the latter group also suggested raising the upper limit. In addition, there were some differences of view with respect to the specifications for growth in M-l over the January-February period, relating to both the width and the level of the range. A number of members suggested that the range be narrowed from the spread of 6 percentage points used in the last few directives to one of 5 or 4 points, while others were willing to retain the wider range. Suggestions for the lower limit of the M-l range varied from IV2 to 3lA per cent and those for the upper limit varied from 7 to SV2 per cent. For M-2 the majority of members favored a range of 5 to 9 per cent, although one advocated a substantial reduction in the lower limit and another was inclined to reduce both limits slightly. At the conclusion of the discussion the Committee decided that operations in the period immediately ahead should be directed toward maintaining prevailing money market conditions, as repre­ sented by the current 6% per cent 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 6V2 to 7 per cent. It was understood that very strong evidence of weakness in the monetary aggregates would be required before operations were directed toward reducing the Federal funds rate from its current level. For the annual rates of growth in M-l and M-2 over the January-February period, the Committee specified ranges of 2Vi to IV2 per cent and 5 to 9 per cent, respectively. It 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 retain in the directive the sentence calling for account to be taken of “emerging financial market conditions, including the unsettled conditions in foreign exchange markets” in the conduct of day-to-day open market operations. As Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

206 Federal Reserve Bulletin □ March 1978 already noted, this instruction had been included in the previous directive in part because of the Committee’s view that the nature and timing of operations might appropriately be influenced by pressures on the dollar in foreign exchange markets. As customary, it was understood that the Chairman might call upon the Committee to consider the need for supplementary instruc­ tions before the next scheduled meeting if significant inconsistencies appeared to be developing among the Committee’s various objec­ tives. The following domestic policy directive was issued to the Federal Reserve Bank of New York: The information reviewed at this meeting suggests that growth in real output of goods and services in the fourth quarter was close to the pace in the third quarter. The dollar value of total retail sales declined in December, but the gain from the third to the fourth quarter was substantial. Industrial production expanded somewhat further in December, although the rise was limited by a strike in coal mining. Employment increased appreciably, and the unemployment rate declined from 6.7 per cent to 6.4 per cent. The wholesale price index for all commodities rose considerably less in December than in the preceding 2 months, reflecting a much smaller increase in average prices of farm products and foods. Prices of industrial commodities advanced at about the average pace in the preceding 2 months. The index of average hourly earnings advanced slightly faster during 1977 than it had during 1976. Exchange market pressure on the dollar has continued in recent weeks. On January 4 it was announced that the Exchange Stabiliza­ tion Fund would be utilized actively together with the swap network operated by the Federal Reserve System to help re-establish order in the foreign exchange markets. On January 6 an increase in Federal Reserve discount rates from 6 to 6V2 per cent was announced. The trade-weighted value of the dollar against major foreign currencies declined about 2Vi per cent further from mid-December to the early days of January but subsequently recovered about \3A per cent. M-l—which had declined slightly in November—rose in December. Growth in M-2 remained relatively slow, as inflows to banks of time and savings deposits other than negotiable CD’s were sharply cur­ tailed. Inflows to nonbank thrift institutions slowed somewhat further. Market interest rates edged up in late December, and rates—particularly for short-term securities—rose substantially further in the early weeks of January. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 207 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 lOVi per cent, respectively, from the third 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 approxi­ mately 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 Commit­ tee 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 January-February period at annual rates within ranges of 2Vi to IV2 per cent and 5 to 9 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 6V2 to 7 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, Lilly, Mayo, Morris, Partee, Roos, and Wallich. Votes against this action: None. Absent and not voting: Mr. Jackson. 2. Authorization for Foreign Currency Operations Paragraph ID of the Committee’s authorization for foreign currency operations authorizes the Federal Reserve Bank of New York for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

208 Federal Reserve Bulletin □ March 1978 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 had authorized an open position of $1.5 billion. At this meeting the Committee authorized an open position of $1.75 billion. This action was taken in view of the scale of recent and potential Federal Reserve operations in the foreign exchange mar­ kets undertaken pursuant to the Committee’s foreign currency directive. Votes for this action: Messrs. Burns, Volcker, Coldwell, Gardner, Guffey, Lilly, Mayo, Morris, Partee, Roos, and Wallich. Votes against this ac­ tion: None. Absent and not voting: Mr. Jackson. 3. Authorization for Domestic Open Market Operations At this meeting the Committee amended, effective immediately, the authorization for domestic open market operations by adding the following paragraph, designated paragraph 4: In order to ensure the effective conduct of open market operations, while assisting in the provision of short-term investments for foreign and international accounts maintained at the Federal Reserve Bank of New York, the Federal Open Market Committee authorizes and directs the Federal Reserve Bank of New York, (a) for System Open Market Account, to sell U.S. Government securities to such foreign and international accounts on the bases set forth in paragraph 1(a) under agreements providing for the resale by such accounts of those securities within 15 calendar days on terms comparable to those available on such transactions in the market; and (b) for New York Bank account, when appropriate, to undertake with dealers, subject to the conditions imposed on purchases and sales of securities in paragraph 1(c), repurchase agreements in U.S. Government and agency securities, and to arrange corresponding sale and repurchase agreements between its own account and foreign and international accounts maintained at the Bank. Transactions undertaken with such accounts under the provisions of this paragraph may provide for a service fee when appropriate. Votes for this action: Messrs. Burns, Volcker, Coldwell, Gardner, Guffey, Lilly, Mayo, Morris, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 209 Partee, Roos, and Wallich. Votes against this action: None. Absent and not voting: Mr. Jackson. Since mid-1974 the Federal Reserve Bank of New York had made available to its foreign official accounts a facility for making repur­ chase agreements (Rp’s) involving U.S. Government and Federal agency securities. The facility not only provided a service for foreign central banks but also added a useful dimension of flexibility to System open market operations. In arranging Rp’s for foreign official accounts the New York Bank had—depending on the System’s operating objectives at the moment—either served as an agent in arranging the transactions with the market or made the transactions with the System Open Market Account (SOMA). Arrangements of the former type were not under the jurisdiction of the Federal Open Market Committee; those of the latter type were authorized by the Committee under the general authority to buy or sell U.S. Government or agency securities for SOMA contained in paragraph 1(a) of the authorization for domestic open market operations. In May 1977 the New York Bank had learned of an Internal Revenue Service (IRS) ruling on the treatment of Rp’s by a taxpayer that suggested that a tax liability might be incurred in connection with income earned by some foreign official accounts on Rp’s with the market. At the same time it did not appear probable that a tax liability would be incurred in the case where Rp’s were arranged between foreign official accounts and some entity of the Federal Reserve System. Accordingly, after Committee discussion, the New York Bank ceased acting as agent for foreign official accounts in making Rp’s with the market, and it requested an IRS determination of the tax consequences of Rp’s made for foreign official accounts with various entities. The IRS subsequently ruled that income received by foreign central banks on Rp’s made with SOMA, or with the Federal Reserve Bank of New York acting as a principal, was exempt from Federal income tax. In light of that ruling, the Committee amended its authorization for domestic open market operations to authorize the New York Bank to arrange foreign official account Rp’s with the Bank as a principal, and to make corresponding Rp’s with the market, again with the Bank acting as principal. It was understood that such Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

210 Federal Reserve Bulletin □ March 1978 “back-to-back” arrangements would be undertaken under circum­ stances similar to those in which, before May 1977, the Bank had served as agent in arranging foreign official account Rp’s with the market. While the authority for the New York Bank to make foreign official account Rp’s with SOMA had been viewed as contained in paragraph 1(a) of the authorization, for the sake of clarity and completeness the Committee decided to include language explicitly authorizing such transactions in the new paragraph 4, along with the authority for the New York Bank to act as a principal in “back-toback” Rp transactions. Subsequent to this meeting, on February 15, 1978, Committee members voted to increase from $3 billion to $4 billion the limit of changes between Committee meetings in System Account holdings of U.S. Government and Federal agency securities specified in paragraph 1(a) of the authorization for domestic open market operations, effective immediately, for the period ending with the close of business on February 28, 1978. Votes for this action: Messrs. Burns, Volcker, Coldwell, Gardner, Guffey, Jackson, Mayo, Morris, Partee, and Roos. Votes against this action: None. Absent and not voting: Messrs. Lilly and Wallich. This action was taken on recommendation of the System Account Manager. The Manager had advised that large-scale sales of Treas­ ury securities since the January meeting—required mainly to counter the effect of seasonal declines in required reserves and currency in circulation—had reduced the leeway for further sales to $780 million, and that it appeared likely that the leeway would shortly be reduced further, to $300 million or less, as a result of the completion of an anticipated transaction with a foreign account. The Manager also noted that the current inter-meeting period had been lengthened by a change in the date of the next meeting from February 22 to February 28, and that projections suggested the need for further reserve-absorbing operations during the interval ending with the latter date. ^ Records of policy actions taken by the Federal Open Market Committee at each meeting, in the form in which they will appear in the Board’s Annual Report, are released about a month after the meeting and are subsequently published in the Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

211 Law Department Statutes, regulations, interpretations, and decisions LOANS TO EXECUTIVE OFFICERS OF Act (the “Act”) establishes a statutory presump­ MEMBER BANKS tion that where certain specified relationships exist between a transferor and transferee of shares, the The Board of Governors has amended its Regula­ transferor (if it is a bank holding company, or a tion O to increase from $1,000 to $5,000 the limit company that would be such but for the transfer) imposed upon member banks’ extensions of credit continues to own or control indirectly the trans­ to their own executive officers through the use of ferred shares.1 This presumption arises by opera­ bank credit cards and similar plans. tion of law, as of the date of the transfer, without Effective March 24, 1978, section 215.2(c)(iv) is the need for any order or determination by the amended to read as follows: Board. Operation of the presumption may be termi­ nated only by the issuance of a Board determina­ tion, after opportunity for hearing, “that the trans­ Section 215.2—Definitions feror is not in fact capable of controlling the trans­ feree.”2 The purpose of section 2(g)(3) is to provide the (c) “Extension of credit” and “extend credit”.*** Board an opportunity to assess the effectiveness of divestitures in certain situations in which there may be a risk that the divestiture will not result in the complete termination of a control relationship. By Such terms, however, do not include: presuming control to continue as a matter of law, section 2(g)(3) operates to allow the effectiveness of the divestiture to be assessed before the divesting company is permitted to act on the assumption that (iv) indebtedness arising by reason of general the divestiture is complete. Thus, for example, if a arrangements under which a bank (a) acquires holding company divests its banking interests under charge or time credit accounts or (b) makes pay­ circumstances where the presumption of continued ments to or on behalf of participants in a bank credit control arises, the divesting company must con­ card plan, check credit plan, or similar plan, except tinue to consider itself bound by the Act until an that this subdivision (iv) shall not apply to indebt­ appropriate order is entered by the Board dispelling edness of an executive officer to his own bank to the presumption. Section 2(g)(3) does not establish the extent that the aggregate amount thereof ex­ a substantive rule that invalidates transfers to ceeds $5,000 or to any such indebtedness to his own which it applies, and in a great many cases the bank that involves prior individual clearance or Board has acted favorably on applications to have approval by the bank other than for the purpose of the presumption dispelled. It merely provides a determining whether his participation in the ar­ procedural opportunity for Board consideration of rangement is authorized or whether any dollar limit the effect of such transfers in advance of their being under the arrangement has been or would be ex­ deemed effective. Whether or not the statutory ceeded. presumption arises, the substantive test for assess­ ^he presumption arises where the transferee “is indebted to the transferor, or has one or more officers, directors, trustees, or INTERPRETATION OF REGULATION Y beneficiaries in common with or subject to control by the trans­ feror.” 2The Board has delegated to its General Counsel the authority to Section 2(g)(3) of the Bank Holding Company issue such determinations. 12 CFR § 265.2(b)(1). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

212 Federal Reserve Bulletin □ March 1978 ing the effectiveness of a divestiture is the same— It should be noted that where a transfer takes the that is, the Board must be assured that all control form of a pro-rata distribution, or “spinoff,” of relationships between the transferor and the trans­ shares to a company’s shareholders, officers and ferred property have been terminated and will not directors of the transferor company are likely to be reestablished.3 receive a portion of such shares. The presumption In the course of administering section 2(g)(3) the of continued control would, of course, attach to any Board has had several occasions to consider the shares transferred to officers and directors of the scope of that section. In addition, questions have divesting company, whether by “spinoff’ or out­ been raised by and with the Board’s staff as to right sale. However, the presumption will be of coverage of the section. Accordingly, the Board legal significance—and will thus require an applica­ believes it would be useful to set forth the following tion under section 2(g)(3)—only where the total interpretations of section 2(g)(3): number of shares subject to the presumption ex­ 1. The terms “transferor” and “transferee,” as ceeds one of the applicable thresholds in the Act. used in section 2(g)(3), include parents and sub­ For example, where officers and directors of a sidiaries of each. Thus, for example, where a trans­ one-bank holding company receive in the aggregate feree is indebted to a subsidiary of the transferor,4 25 per cent or more of the stock of a bank sub­ or where a specified interlocking relationship exists sidiary being divested by the holding company, the between the transferor or transferee and a sub­ holding company would be presumed to continue to sidiary of the other (or between subsidiaries of control the “divested” bank. In such a case it each), the presumption arises. Similarly, if a parent would be necessary for the divesting company to of the transferee is indebted to a parent of the demonstrate that it no longer controls either the transferor, the presumption arises. The presump­ divested bank or the officer/director transferees. tion of continued control also arises where an However, if officers and directors were to receive interlock or debt relationship is retained between in the aggregate less than 25 per cent of the bank’s the divesting company and the company being stock (and no other shares were subject to the divested, since the divested company will be or presumption), section 2(g)(3) would not have the may be viewed as a “subsidiary” of the transferee legal effect of presuming continued control of the or group of transferees. bank.6 In the case of a divestiture of nonbank 2. The terms “officers,” “directors,” and “trus­ shares, an application under section 2(g)(3) would tees,” as used in section 2(g)(3), include persons be required whenever officers and directors of the performing functions normally associated with such divesting company received in the aggregate more positions (including general partners in a partner­ than 5 per cent of the shares of the company being ship and limited partners having a right to partici­ divested, pate in the management of the affairs of the partner­ 3. Although section 2(g)(3) refers to transfers of ship) as well as persons holding such positions in an “shares” it is not, in the Board’s view, limited to advisory or honorary capacity. The presumption disposition of corporate stock. General or limited arises not only where the transferee or transferred partnership interests, for example, are included company has an officer, director or trustee “in within the term “shares.” Furthermore, the trans­ common with” the transferor, but where the trans­ fer of all or substantially all of the assets of a feree himself holds such a position with the trans­ company, or the transfer of such a significnat feror.5 volume of assets that the transfer may in effect constitute the disposition of a separate activity of the company, is deemed by the Board to involve a transfer of “shares” of that company. 3It should be noted, however, that the Board will require termination of any interlocking management relationships be­ Section 2(g)(3) provides that a Board determinatween the divesting company and the transferee or the divested company as a precondition of finding that a divestiture is com­ plete. Similarly, the retention of an economic interest in the divested company that would create an incentive for the divesting company to attempt to influence the management of the divested with the transferor. Such an interpretation would, in the Board’s company will preclude a finding that the divestiture is complete. view, create an unwarranted gap in the coverage of section 2(g)(3). (See the Board’s Order in the matter of International Bank, 1977 Furthermore, because the presumption clearly arises where the Federal Reserve Bulletin 1106, 1113). transferee is an individual who is indebted to the transferor such 4The indebtedness giving rise to the presumption is not limited an interpretation would result in an illogical internal inconsistency to debt incurred in connection with the transfer; it includes any in the statute. 6 debt running to the transferor or its subsidiaries. 0f course, the fact that section 2(g)(3) would not operate to 5It has been suggested that the words “in common with” in presume continued control would not necessarily mean that con­ section 2(g)(3) evidence an intent to make the presumption appli­ trol had in fact been terminated if control could be exercised cable only where the transferee is a company having an interlock through other means. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 213 tion that a transferor is not in fact capable of the publication of Federal Register notice of such controlling a transferee shall be made after oppor­ applications has not served a useful purpose, the tunity for hearing. It has been the Board’s routine Board has decided to alter its procedures in such practice since 1966 to publish notice in the Federal cases. In the future, Federal Register notice of Register of applications filed under section 2(g)(3) section 2(g)(3) applications will be published only in and to offer interested parties an opportunity for a cases in which the Board’s General Counsel, acting hearing. Virtually without exception no comments under delegated authority, has determined not to have been submitted on such applications by par­ grant such an application and has referred the ties other than the applicant and, with the exception matter to the Board for decision.7 of one case in which the request was later with­ drawn, no hearings have been requested in such 7It should be noted that in the event a third party should take cases. Because the Board believes that the hearing exception to a Board order under section 2(g)(3) finding that provision in section 2(g)(3) was intended as a pro­ control has been terminated, any rights such party might have would not be prejudiced by the order. If such party brought facts tection for applicants who are seeking to have the to the Board’s attention indicating that control had not been presumption overcome by a Board order, a hearing terminated the Board would have ample authority to revoke its order and take necessary remedial action. would not be of use where an application is to be Orders issued under section 2(g)(3) are published in the Federal granted. In light of the experience indicating that Reserve Bulletin. BANK HOLDING COMPANY AND BANK MERGER ORDERS ISSUED BY THE BOARD OF GOVERNORS Orders Under Section 3 all of the voting shares of Firestone Financial of Bank Holding Company Act Corporation, Newton Centre, Massachusetts, a commercial finance company engaged in financing purchases and sales of commercial equipment, Depositors Trust Company, financing real estate development, and extending Augusta, Maine credit secured by mortgages on real estate. Such activities have been determined by the Board to be closely related to banking (12 CFR § 225.4(a)(1)). Order Denying Notice of the applications, affording opportunity Formation of Bank Holding Company for interested persons to submit comments and views, has been given in accordance with §§3 and 4 of the Act. The time for filing comments and views Depositors Trust Company, Augusta, Maine, has has expired, and the Board has considered the applied for the Board’s approval under § 3(a)(1) of applications, together with all comments received, the Bank Holding Company Act (12 U.S.C. § 1842 in light of the factors set forth in § 3(c) of the Act. (a)(1)) of formation of a bank holding com­ Applicant, a commercial bank chartered by the pany through the acquisition of all of the assets of State of Maine, is not a member of the Federal Depositors Corporation, Augusta, Maine, consist­ Reserve System but is an “insured bank” as that ing of 90 per cent or more of the voting shares of term is defined in § 3(h) of the Federal Deposit each of the following banks: The Liberty National Insurance Act (12 U.S.C. § 1813(h)). The proposal Bank in Ellsworth, Ellsworth, Maine; The First by Applicant, the largest banking subsidiary (de­ National Bank of Aroostook, Fort Fairfield, posits of $202 million)1 of Depositors Corporation Maine; Depositors Trust Company of Bangor, Ban­ contemplates an internal reorganization of De­ gor, Maine; Springvale National Bank, Springvale, positors Corporation whereby Applicant would re­ Maine; and Depositors Trust Company of Portland, ceive all of the assets and assume all of the Portland, Maine. Applicant has also applied, pur­ liabilities of Depositors Corporation in exchange for suant to § 4(c)(8) of the Bank Holding Company Act 707,055 newly issued shares of Applicant’s voting (12 U.S.C. § 1843(c)(8)) and § 225.4(b)(2) of the Board’s Regulation Y (12 CFR § 225.4(b)(2)), for Unless otherwise indicated, banking data are as of December permission to acquire from Depositors Corporation 31, 1976. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

214 Federal Reserve Bulletin □ March 1978 stock.2 Upon consummation of the transaction, the siderations of financial factors and future prospects shareholders of Depositors Corporation would be­ under the proposed reorganized structure are come shareholders of Applicant by virtue of their nonetheless unsatisfactory and require denial of pro rata receipt of Applicant’s newly issued shares this proposal. from Depositors Corporation in exchange for their Under the proposed corporate structure, the shares of Depositors Corporation. Board is concerned that depositors’ funds would be Depositors Corporation is the second largest invested in subsidiaries of the parent bank. A commercial banking organization in the State of nonbank parent company and its other sub­ Maine, controlling approximately 15 per cent of sidiaries do not have the use of depositors’ funds of total deposits in commercial banks in the State. In its bank subsidiaries, while depositors’ funds of a view of the nature of the proposed reorganization, parent bank could readily be a source of funds for consummation of the proposal would not have an bank and nonbank subsidiaries. In the instant case, effect upon the concentration of banking resources upon reorganization, Applicant would utilize de­ in the State, nor would it have any effects on positors’ funds to retire $7 million of long-term competition within the State. The Board concludes notes of Depositors Corporation,8 a substantial that competitive considerations regarding banking portion of the original proceeds of which provided resources are consistent with approval. equity capital to subsidiaries of Depositors Corpo­ The instant application under § 3(a)(1) presents ration. By retiring the notes with depositors’ funds, the rather unusual prospect of a bank becoming a Applicant would in effect be using depositors’ funds bank holding company. As a matter of public pol­ to augment the capital of its subsidiaries. The icy, the purchase of stock by national banks and inappropriateness of such a use of depositors’ funds State member banks for their own account is gen­ is even more apparent when depositors’ funds are erally prohibited.3 The instant proposal is possible used directly to purchase shares of bank and non­ because of Applicant’s status as a nonmember bank bank companies. and because of provisions of Maine law permitting In instances in which depositors’ funds are used banks authorized to do business in Maine to acquire for corporate purposes, the depositors of the parent stock for their own account4 and to engage in bank would be bearing a risk that should be borne closely related nonbank activities on the same basis only by shareholders, a risk which, in the nonbank as a parent bank holding company.5 The Board has parent company situation, is borne by shareholders given careful consideration to the public policy and not forced upon depositors. Further, when a considerations underlying the stock purchase pro­ parent bank uses depositors’ funds rather than new hibition in Federal law and has concluded that the equity capital to make a bank acquisition, the Bank Holding Company Act’s requirement that the parent bank would be increasing its total deposit Board consider the future prospects of companies base but would continue with the same amount of and proposed subsidiary banks,6 as defined in the capital as before the acquisition, thus resulting in a Act, when applied in a case in which a bank structure less financially secure. When a parent proposes to acquire stock for its own account, bank acquires another bank by this method, true weighs heavily for denial of any application reflect­ equity capital would be, in essence, eliminated from ing such a proposal. Thus, while the present finan­ the Nation’s banking system and depositors’ funds cial and managerial resources of Applicant itself substituted therefor. The accessibility of de­ and of each of its proposed subsidiary banks are positors’ funds of a parent bank for acquisition generally satisfactory, as are the future prospects of purposes might also encourage bank management each absent consummation of this proposal,7 con­ to pursue a goal of corporate expansion rather than to be guided by prudent investment policies. The Board’s concern that a bank holding company must serve as a source of strength for its bank and 2Applicant, a wholly-owned subsidiary of Depositors Corpora­ nonbank subsidiaries has been expressed on numer­ tion, is an affiliate of Depositors Corporation, and the five other ous occasions. Although it may seem at first subsidiary banks and subsidiary finance company of Depositors Corporation. Because the Board denies these applications, it is not necessary for the Board to determine whether § 23 A of the Federal Reserve Act (12 U.S.C. § 371c) is applicable to Applicant’s proposed acquisition of the stock of its affiliates. to inject equity capital into one of the subsidiary banks and to 312 U.S.C. § 24(7) (national banks) and 12 U.S.C. § 335 (State review the capital needs of another subsidiary bank and make an member banks). injection of equity capital into that bank if necessary. 49-B M.R.S.A. § 463. 8These notes of Depositors Corporation would have to be 59-B M.R.S.A. § 446. retired upon reorganization because their acceleration provisions 612 U.S.C. § 1842(c). make them unacceptable to the Federal Deposit Insurance Corpo­ 7Applicant has committed upon consummation of this proposal ration as capital notes. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 215 paradoxical, a bank cannot serve as a source of necessarily homogeneous with those of commercial strength to subsidiaries as readily as can a separate banks. In order to enable nonbank subsidiaries of corporation serving as a bank holding company. The bank holding companies to compete effectively, the Board believes that the concept of a separate bank Board has permitted those subsidiaries to structure holding company with its own asset and debt their financial affairs on a basis comparable to that structure and separate permissible activities is very within their particular industries. The traditional much in the public interest. bank holding company organization by interposing Applicant believes that a parent bank in Maine the parent between the nonbank and bank sub­ could more easily obtain funds to inject into a sidiaries is particularly conducive to more flexibil­ troubled subsidiary than could a parent bank hold­ ity for meeting the financial needs of nonbank ing company. However, a parent bank is con­ subsidiaries, and is consistent with traditional con­ siderably more constrained than is a parent bank cepts of bank soundness and depositor protection. holding company in raising capital, particularly Under the proposal, Applicant would no longer be debt capital. The permissible type, maturity, and isolated as a separate entity from the problems that level of bank borrowings are generally limited by might develop from nonbanking investments since statute or regulation whereas debt of bank holding there would be no corporate barrier between the companies is not subject to such limitations. If a bank and nonbank subsidiaries. troubled subsidiary required capital support, the In assessing financial factors and convenience parent bank might have to increase its own lever­ and needs considerations, the Board believes that aged position to aid the subsidiary. It is not incon­ the protection of the interests of depositors must be ceivable that regulatory authorities, properly con­ given great weight in considering whether a bank cerned with the parent bank’s soundness, might holding company application is acceptable for pur­ limit beyond limits imposed by statute and regula­ poses of public policy. Adequate bank capital is tion the parent bank’s borrowing to provide capital considered a major source of depositor protection to subsidiary banks in need of capital. Moreover, in and the proper measure of capital adequacy of any any event, no regulatory authority would know­ commercial bank is the degree of overall risk its ingly permit a parent bank to swap high quality capital must bear. Applicant would remain a com­ assets for poor quality assets in the portfolios of its mercial bank after the proposed reorganization, but subsidiary banks. Such swaps between bank hold­ proposes to assume and expose its depositors to the ing companies and their subsidiaries have served as increased risks associated with bank holding com­ a useful means of improving the soundness of pany status. These risks include those associated subsidiary banks to the ultimate benefit of bank with the ownership of equity securities and the depositors. conduct of nonbank activities. While a bank holding These limitations on the ability of a bank to come company answerable to shareholders and not to to the assistance of subsidiary banks, not present in depositors may assume such risks, Federal and the case of a separately incorporated bank holding most State statutes and regulations, in order to company, substantially impair a parent bank’s abil­ protect depositors, prohibit the assumption of such ity to serve as a source of strength for its subsidiary risks by banks. Although capital is neither created banks. The reorganization of Depositors Corpora­ nor destroyed in the accounting transactions neces­ tion here proposed would clearly eliminate a source sary to effectuate the reorganization, Applicant of strength for its subsidiary banks. Furthermore, would assume a consolidated capital position gen­ even if Applicant as a bank holding company were erally not considered satisfactory for a commercial to come to the aid of a troubled subsidiary in the bank of its size. Applicant has proposed that its manner utilized by traditional bank holding com­ consolidated capital adequacy be measured against panies by acquiring bad assets or low quality in­ that of other bank holding companies and not that vestments, or advancing funds, such actions would of other banks. However, as a bank, Applicant has likely be adverse to the financial condition of Ap­ a responsibility to its own depositors and therefore plicant. must be judged against the more demanding capital The Board’s concern is not limited to the rela­ standards applicable to other banks. Applicant pro­ tionship between a parent bank and subsidiary poses that its capital not be measured on a consoli­ banks after the proposed reorganization. While the dated basis when considering its capital adequacy activities of nonbank subsidiaries would be limited as a bank. However, the proper measure of the to those closely related to banking, the risks and capital adequacy of any bank is the degree of risk financial structures of nonbank subsidiaries are not that the bank’s capital must bear. When a parent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

216 Federal Reserve Bulletin □ March 1978 bank issues capital notes or stock to provide equity ness in Maine to own the shares of and control capital for its subsidiary banks,9 the capital would other financial institutions and companies engaged appear on the balance sheet of the parent bank and in closely related nonbank activities on the same also on the balance sheets of the subsidiary banks, basis as a parent bank holding company. Serving as creating an illusion that the same capital simulta­ depositories for the funds of the public, commercial neously protects the deposits of separate institu­ banks historically have been prohibited from pur­ tions. Therefore, when a parent bank with bank chasing the stock of corporations for their own subsidiaries is analyzed for capital adequacy, the account. The National Banking Act and the Federal assets and liabilities of the subsidiary banks should Reserve Act prohibit national banks and State be combined with those of the parent bank, and the member banks from acquiring for their own account equity of the subsidiary banks that represents this stock of corporations, including shares of domestic double counting must be eliminated to measure the banks. Most State laws also prohibit State char­ true amount of deposit protection within the total tered banks from acquiring corporate stock for their organization. Similarly, when the parent bank bor­ own account. Upon careful consideration, the wis­ rows to provide equity capital for its subsidiary dom of those prohibitions is quite apparent and banks, that equity capital would be eliminated upon their purpose would clearly be frustrated were the consolidation.10 While Applicant’s capital is cur­ Board to approve applications by banks under the rently adequate, its pro forma capital on a consoli­ Act to acquire stock. The foregoing discussion dated basis would be reduced to an unsatisfactory suggests that considerations regarding financial re­ level. sources and future prospects in such cases, as a In the type of reorganization proposed by Appli­ general rule, will be substantially adverse. cant, long-term debt supporting capital provided to Furthermore, consummation of this type of pro­ subsidiaries by a parent company would become posal would neither increase the convenience of the obligation of a bank, thus increasing the risk to bank customers nor meet the needs of any commu­ the parent bank. A nonbank parent company could nity for banking services. The fact that depositors encounter difficulty handling its debt and fail with­ would be exposed to greater risks, as discussed out necessarily causing the failure of any of its above, adversely reflects on the convenience and subsidiary banks. When a parent bank is obligor on needs considerations. Applicant has asserted that such debt, the risk of bank failure would increase certain cost savings may be realized from the simply by virtue of that debt per se. Furthermore, proposed reorganization. It does not necessarily the investments of the parent bank in the subsidiary appear that cost savings to Applicant are encom­ banks would not be the passive investments nor­ passed within “the convenience and needs of the mally held by commercial banks. Under the parent community to be served” standard set forth in § 3(c) bank concept, any reduction in the capital accounts of the Act, and the Board is not convinced that of a bank or nonbank subsidiary, because of operat­ the cost savings that Applicant would realize under ing losses or other reasons, would result in a the proposed reorganization are as extensive as dollar-for-dollar loss in the capital accounts of the Applicant hopes they will be. In any event, alterna­ parent bank. tive means are available to Applicant to realize any As previously noted, the proposal of Applicant is cost savings, for example merger of Applicant’s attributable to an amendment to Maine law which affiliated banks into Applicant.11 permits financial institutions authorized to do busi­ On the basis of the facts of record, the application to become a bank holding company is denied for the above reasons. In light of that action, the applica­ tion under § 4(c)(8) to acquire shares of Firestone 9Paragraph 6 of § 23 A of the Federal Reserve Act exempts from Financial Corporation has become moot in that § 23A limitations transactions between a member bank and an such an application is required only of bank holding insured bank if more than 50 per cent of the voting shares of the companies. insured bank is owned by the member bank. Pursuant to 12 U.S.C. § 1828(j), § 23A is also applicable to insured nonmember State By order of the Board of Governors, effective banks such as Applicant. February 2, 1978. 10After the proposed reorganization, with Applicant as the parent organization, the equity capital in the five bank subsidiaries that was raised as a result of borrowing originally by Depositors Corporation is eliminated when the assets and liabilities of the five bank subsidiaries of Applicant are combined with those of the 11 Maine law permits statewide branch banking. (9-B M.R.S.A. parent bank. § 333.2). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 217 Voting for this action: Chairman Burns and Governors acquisition of 100 per cent, less directors’ qualify­ Wallich, Coldwell, Partee, and Lilly. Voting against this ing shares, of the voting shares of First National action: Vice Chairman Gardner and Governor Jackson. Bank, Rogers, Arkansas (“Bank”). Notice of the application, affording opportunity (Signed) G riffith L. Garwood, for interested persons to submit comments and [seal] Deputy Secretary of the Board. views, has been given in accordance with section 3(b) of the Act (42 Federal Register 58804 (1977)). Dissenting Statement of The time for filing comments and views has ex­ Vice Chairman Gardner and Governor Jackson pired, and the application and all comments re­ ceived have been considered in light of the factors We would approve both applications. The Board, set forth in section 3(c) of the Act (12 U.S.C. in its action denying the corporate reorganization § 1842(c)). proposed by Applicant, has based its decision on Applicant is a nonoperating Delaware corpora­ concern over the general proposition of a bank tion organized for the purpose of becoming a bank becoming a holding company. We do not share the holding company through the acquisition of Bank. Board’s concern; moreover, the Board’s concern Bank holds deposits of approximately $39.1 million, should be mitigated by the facts of these particular representing 0.6 per cent of the total deposits in applications. commercial banks in Arkansas.1 Upon consumma­ Applicant is a well-capitalized, competitive, con­ tion of the proposed transaction, Applicant would servatively managed and profitable bank and is in be the 41st largest banking organization in the satisfactory condition. Under the proposed reor­ State. ganization, Applicant would have limited involve­ Bank, which controls 7.4 per cent of the deposits ment in a nonbanking business that is financially in the Fayetteville banking market, is the fifth strong and profitable. Under the proposed corpo­ largest of 17 banks operating in the market.2 The rate structure, the Board would continue to have subject proposal represents a restructuring of control over nonbank acquisitions by Applicant. Bank’s ownership from individuals to a corporation After consummation of the proposed reorganiza­ owned by the same individuals. However, in order tion, Applicant would have only minimal debt out­ to analyze the competitive effects of the subject standing and would have the flexibility to serve as a proposal, it is necessary to consider that principals source of strength for its bank and nonbank sub­ of Applicant are also principals of two other banks sidiaries. To deny these applications will prevent located in the Fayetteville market.3 The two banks, Applicant from taking advantage of new corporate Bank of Bentonville and Bank of Pea Ridge, hold powers authorized by the State of Maine as well as aggregate deposits of approximately $43.3 million, certain cost reductions that would result from a representing 8.2 per cent of the market’s total more efficient corporate structure. deposits, and rank as the sixth and seventeenth The Board should not be as wedded to a single largest banks in the market, respectively. While form of holding company as today’s denial suggests approval of the subject proposal would further that it is. We believe that Applicant has demon­ solidify the existing relationship between Bank and strated that the reorganization will strengthen its the two affiliated banks and reduce the likelihood organization primarily through improvement in ef­ that Bank would become an independent comficiencies and through the reduction of certain costs. Therefore, we would approve both applica­ tions. 1A11 banking data are as of June, 1977. Northwest Arkansas Bancshares, Inc., 2The Fayetteville banking market, the relevant geographic mar­ ket for purposes of analyzing the competitive effects of the Bentonville, Arkansas proposed transaction, is approximated by the Fayetteville, Arkan­ sas SMSA. 3In assessing the competitive effects of a proposal involving the Order Approving restructuring of a bank’s ownership into corporate form, the Formation of Bank Holding Company Board takes into consideration the competitive effects of the original purchase of the subject bank by an applicant’s principals. Northwest Arkansas Bancshares, Inc., Benton­ See the Board’s Order of May 11, 1977, denying the application of Mahaska Investment Company, Oskaloosa, Iowa, to become a ville, Arkansas, has applied for the Board’s ap­ bank holding company (63 Federal Reserve Bulletin 579 (1977)), proval under section 3(a)(1) of the Bank Holding and the Board’s Order of November 18, 1977, denying the application of Citizens Bancorp, Inc., Hartford City, Indiana, to Company Act of 1956 (12 U.S.C. § 1842(a)(1)) of become a bank holding company (63 Federal Reserve Bulletin formation of a bank holding company through the 1083 (1977)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

218 Federal Reserve Bulletin □ March 1978 petitor in the future, it is the Board’s view that slightly adverse competitive effects that might re­ consummation of this proposal would have only sult from consummation of the proposal. Based slightly adverse effects on competition in the rele­ upon the foregoing and other considerations re­ vant market. flected in the record, it is the Board’s judgment that Although the acquisition of control of Bank by the proposed acquisition is in the public interest and principals of Applicant in 1975 eliminated some that the application should be approved. competition that existed between Bank and the On the basis of the record, the application is other two banks controlled by Applicant’s princi­ approved for the reasons summarized above. The pals, such acquisition had only slightly adverse transaction shall not be made (a) before the thirtieth effects on competition in the market. The Fayette­ calendar day following the effective date of this ville market is not highly concentrated; the four Order or (b) later than three months after the largest banks control 54.7 per cent of total deposits effective date of this Order, unless such period is in the market. Together, the three banks controlled extended for good cause by the Board, or by the by Applicant’s principals hold aggregate deposits Federal Reserve Bank of St. Louis pursuant to representing 15.6 per cent of the total deposits in delegated authority. the market. The aggregate deposits of these banks By order of the Board of Governors, effective are slightly less than the deposits held by the February 8, 1978. market’s largest bank, while only slightly more than Voting for this action: Vice Chairman Gardner and the deposits held by either of the market’s second Governors Wallich, Coldwell, Jackson, Partee, and Lilly. and third largest banks. Moreover, there are 14 Absent and not voting: Chairman Burns. independent banks remaining in the market that serve as alternative sources of banking services. In (Signed) G riffith L. Garwood, view of the relative sizes of the banks controlled by [seal] Deputy Secretary of the Board. Applicant’s principals and the number of other banks operating in the market, the Board concludes that consummation of the subject proposal would have only slightly adverse effects on competition, Sueco, Inc., and, as discussed below, it is the Board’s view that El Dorado, Kansas such adverse effects are outweighed by con­ Order Approving siderations relating to the convenience and needs of Formation of Bank Holding Company the community to be served. The financial and managerial resources and fu­ Sueco, Inc., El Dorado, Kansas, has applied for ture prospects of Applicant are dependent upon the Board’s approval under § 3(a)(1) of the Bank those of Bank. Applicant proposes to service the Holding Company Act (12 U.S.C. § 1842(a)(1)) of debt it will incur as a result of the proposed formation of a bank holding company by acquiring transaction over a period of approximately nine 82.3 per cent of the voting shares of The Pot win years. Applicant appears to have the necessary State Bank, Potwin, Kansas (“Bank”). financial flexibility to retire its acquisition debt over Notice of the application, affording opportunity a reasonable period of time while maintaining an for interested persons to submit comments and adequate capital position for Bank. The managerial views, has been given in accordance with § 3(b) of resources of Applicant and Bank are considered the Act. The time for filing comments and views has satisfactory and the future prospects for each ap­ expired, and the Board has considered the applica­ pear favorable. Accordingly, considerations relat­ tion and all comments received in light of the ing to banking factors are consistent with approval factors set forth in § 3(c) of the Act (12 U.S.C. of the application. § 1842(c)). Since the acquisition of Bank by Applicant’s Applicant is a nonoperating corporation or­ principals, the Bank has improved and expanded its ganized under the laws of Kansas for the purpose of physical facilities. In addition, Bank has recently becoming a bank holding company by acquiring established two branch offices to serve the banking Bank ($3.5 million in deposits).1 Upon acquisition needs of its customers. Upon approval of the sub­ of Bank, Applicant would control the 509th largest ject application, Applicant proposes to further im­ prove the facilities of Bank and expand the services offered to Bank’s customers. These convenience and need factors are sufficient to outweigh any 1 All banking data are as of December 31, 1976. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 219 commercial bank in the State of Kansas and would flexibility to meet its debt service requirements control approximately 0.04 per cent of the total without adversely affecting the financial condition deposits held by commercial banks in that State. of Bank. Furthermore, the financial and managerial Bank is the seventh largest of ten commercial resources of the other banking organizations with banks located in the relevant market2 and holds which Applicant’s principal is associated are re­ approximately 3.1*per cent of the total deposits in garded as generally satisfactory. Accordingly, con­ commercial banks in that market. Applicant pro­ siderations relating to banking factors are regarded poses to become a one-bank holding company as consistent with approval of the application. through the purchase of 82.3 per cent of Bank’s Applicant proposes to increase originations and stock. Applicant’s principal, who would become servicing of home mortgage loans and student loan chairman of the board of Bank, is also associated financing. Accordingly, considerations relating to with two additional banks and one registered one- the convenience and needs of the community to be bank holding company in Kansas.3 One of these served are consistent with approval. Therefore, it is organizations is the largest commercial bank that the Board’s judgment that consummation of the operates in the relevant market controlling 23 per proposed transaction would be consistent with the cent of the total deposits in commercial banks in the public interest and that the application should be market. Consummation of the proposal would in­ approved. crease the market share controlled by Applicant’s On the basis of the record, the application is principal to 26.1 per cejit. Although the acquisition approved for the reasons summarized above. The would result in the elimination of some existing transaction shall not be made (a) before the thirtieth competition within the relevant banking market, the calendar day following the effective date of this overall effect on competition would not be suffi­ Order or (b) later than three months after the ciently adverse to warrant denial of the proposal. effective date of this Order, unless such period is Among the factors limiting the effect of consumma­ extended for good cause by the Board, or by the tion of this proposal on existing competition are Federal Reserve Bank of Kansas City pursuant to Bank’s relatively small size and the fact that six delegated authority. unaffiliated banking alternatives would thereafter By order of the Board of Governors, effective remain in the market. Accordingly, based on the February 27, 1978. above and other facts of record, the Board con­ Voting for this action: Vice Chairman Gardner and cludes that the proposed acquisition of Bank by Governors Jackson and Partee. Voting against this action: Applicant would not have any significant adverse Governor Coldwell. Absent and not voting: Chairman effect on either existing or potential competition or Burns and Governors Wallich and Lilly. have any other adverse effects on any other banks in the relevant market. Thus the Board concludes (Signed) G riffith L. Garwood, that competitive considerations are consistent with [seal] Deputy Secretary of the Board. approval of the application. The financial resources of Applicant, which are dependent upon those of Bank, and the managerial Dissenting Statement of Governor Coldwell resources of Applicant and Bank are regarded as In my opinion, approval of this case is inconsis­ satisfactory, and their future prospects appear fa­ tent with the concern that the Board has expressed vorable. Although Applicant will incur some debt in regarding the use of one-bank holding companies connection with this proposal, it appears that in­ under common individual ownership to act as come from dividends to be declared by Bank and multi-bank holding companies without meeting the benefits derived from filing a consolidated tax re­ regulatory constraints imposed on multi-bank hold­ turn will provide Applicant with sufficient financial ing companies. I am concerned that the Board’s action in this case may encourage the formation of “chain banking” arrangements that can facilitate evasions of the regulatory and statutory framework 2The relevant market is approximated by the southern position of of the Bank Holding Company Act. Marion County and all but the southwestern portion of Butler The facts of record indicate that Applicant’s County. principal, who is a director and vice president of 3The principal is President and a director of Benton State Bank, Benton, Kansas, and of First National Bank and Trust Co., El Applicant, is also President and director of First Dorado, Kansas. This principal also owns 50 per cent of the shares National Bank and Trust Co., El Dorado, Kansas, of Exchange Investors, Inc., a one-bank holding company that which is in the same banking market as Potwin controls First National Bank and Trust Co. Bank competes in the same market as First National Bank and Trust Co. State Bank, the bank to be acquired, and owns 50 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

220 Federal Reserve Bulletin □ March 1978 per cent of the common stock of the holding com­ group of individuals. In this case, Applicant’s prin­ pany that controls First National Bank and Trust cipal controls the largest banking organization in Co. In addition, Applicant’s principal controls the relevant market, with 23 per cent of that mar­ another Kansas bank not located in the same mar­ ket’s total deposits. Acquisition of Potwin bank will ket as Potwin bank. On approval of this application, result in Applicant’s principal controlling 26.1 per Applicant proposes to acquire 82.3 per cent of the cent of market deposits. The Board has previously outstanding voting shares of Potwin bank. Appli­ denied multi-bank holding company acquisitions cant’s principal currently holds no position with that would result in holding company control of Potwin bank, but would become chairman of the comparable market shares.3 In addition, this pro­ board upon consummation of this proposal. It ap­ posal violates the guidelines set forth by the Depart­ pears that Applicant’s principal employs the one- ment of Justice for horizontal acquisitions in highly bank holding company form to facilitate his indi­ concentrated markets.4 vidual ownership of several banks in Kansas, a In favorably assessing the financial and manage­ State that prohibits multi-bank holding companies. rial considerations associated with this proposal, The one-bank holding companies related through the Board has applied the more restrictive stan­ Applicant’s principal comprise a “chain banking” dards appropriate for evaluating multi-bank holding arrangement that functions as a substitute for either companies. Applying those same multi-bank stan­ a multi-bank holding company or branch banking dards in assessing competitive considerations facilities. Such arrangements permit closely inter­ should, in my opinion, have led to a decision of locked one-bank holding companies to act as denial. Accordingly, I would deny this application. multi-bank holding companies but to avoid the Accordingly, because I am of the opinion that the regulatory restrictions imposed on multi-bank hold­ Board should apply its multi-bank holding company ing companies. In this sense, they constitute eva­ standards in assessing all of the statutory factors in sions of the Bank Holding Company Act which the section 3(c) of the Act in cases involving “chain Board should not sanction. I am concerned that banking” holding company arrangements, I would “chain banking” may result in undue concentration deny this application. of financial power such as the Board would prohibit in its regulation of multi-bank holding companies. In acting upon one-bank holding company forma­ tions in previous situations where individuals have Orders Under Section 4 been involved in “chain banking,” the Board has of Bank Holding Company Act stated that it is more appropriate to analyze the financial considerations and managerial resources Ancorp Bancshares, Inc., of such organizations under the standards that are Chattanooga, Tennessee normally applicable in analyzing acquisitions by multi-bank holding companies.1 In addition, the Order Approving Acquisition Board has indicated that it is inappropriate to ignore of Certain Assets of General Finance Company the identity of interests between an applicant and affiliated banking organizations in assessing the Ancorp Bancshares, Inc., Chattanooga, Tennes­ competitive effects of a proposal that would bring see, a bank holding company within the meaning of an additional bank into the affiliated group through the Bank Holding Company Act, has applied for the the formation of a bank holding company.2 This is Board’s approval, under § 4(c)(8) of the Act (12 especially pertinent where a proposed acquisition U.S.C. § 1843(c)(8)) and § 225.4(b)(2) of the Board’s involves the use of a holding company by an Regulation Y (12 CFR § 225.4(b)(2)), to acquire individual or group of individuals to acquire control of a bank that is a competitor of another bank under the control of essentially the same individual or 3See Board’s Order dated September 17, 1975 denying the acquisition by Alabama Bancorporation, Birmingham, Alabama, of Muscle Shoals National Bank, Muscle Shoals, Alabama. See also Board’s Order dated April 1, 1977, denying the acquisition by ^ee Board’s Order dated June 14, 1976, denying the formation Commerce Bankshares, Inc., Kansas City, Missouri, of Farmers of a bank holding company by Nebraska Banco, Inc., Ord, State Bank, St. Joseph, Missouri. Nebraska, 62 Federal Reserve Bulletin 638 (1976). 4In markets where the four-firm concentration ratio is greater 2See Board Order, dated May 11, 1977, denying the formation of than 75.0 per cent, the Department of Justice may challenge an a bank holding company by Mahaska Investment Company, acquisition if a firm with 15.0 per cent or more of the market is Oskaloosa, Iowa, 1977 Federal Reserve Bulletin 579 (June). acquiring a firm with 1.0 per cent or more. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 221 indirectly through its wholly-owned subsidiary, pended the making of new consumer loans pending Ancorp Finance Company (“AFC”), certain assets revision of the State law. ANB is continuing to of General Finance Company, Rossville, Georgia, make consumer loans in the market, however, and (“Company”), a company that engages in the ac­ accordingly, the acquisition would at least, elimi­ tivities of making or acquiring for its own account nate some existing competition between Company or the account of others, loans and other extensions and ANB. Nonetheless, inasmuch as Company of credit such as would be made by a finance accounts for only one tenth of one per cent of the company, and acting as agent or broker in the sale total consumer instalment loans in the market, the of insurance directly related to such extensions of amount of competition that would be eliminated is credit. Such activities have been determined by the not viewed as significant and the resulting increase Board to be closely related to banking (12 CFR in Applicant’s market share is viewed as negligible. § 225.4(a)(1) and (9)). Accordingly, the Board finds that Applicant’s ac­ Notice of the application, affording opportunity quisition of Company would not have any signifi­ for interested persons to submit comments and cant effect upon competition. views on the public interest factors, has been duly It appears that consummation of this proposal published (42 Fed. Reg. 63465 (1977)).The time for would not result in any undue concentration of filing comments and views has expired, and the resources, conflicts of interests, unsound banking Board has considered the application and all com­ practices, or any other adverse effects upon the ments received in the light of the public interest public interest. factors set forth in § 4(c)(8) of the Act (12 U.S.C. As a result of this proposal, AFC would be able § 1843(c)(8)). to offer Company’s customers a greater variety of Applicant, the seventh largest banking organiza­ loans than those now offered by Company. In tion in Tennessee, controls two banks with total addition, AFC would be able to continue to service deposits of $518.4 million, representing approxi­ its present customers from this office. In the mately 3.6 per cent of the total deposits in commer­ Board’s judgment the public benefits of this pro­ cial banks in the State.1 Company maintains one posal outweigh any anticompetitive effects and lend office, and engages in the activities of making weight toward approval. secured consumer loans, purchasing retail instal­ Based upon the foregoing and other con­ ment sales contracts and selling credit life insurance siderations reflected in the record, the Board has and credit accident and health insurance related to determined that the balance of the public interest its consumer credit transactions. Applicant pro­ factors the Board is required to consider under poses to acquire assets of Company valued at § 4(c)(8) is favorable. Accordingly, the application approximately $179,000 consisting of receivables, is hereby approved. This determination is subject to furniture and fixtures, Company’s license to do the conditions set forth in § 225.4(c) of Regulation business in Georgia and Company’s leasehold Y and to the Board’s authority to require such interest at its office location. It is proposed that modification or termination of the activities of a AFC operate Company’s sole office. holding company or any of its subsidiaries as the One of Applicant’s subsidiary banks, American Board finds necessary to assure compliance with National Bank and Trust Company of Chattanooga, the provisions and purposes of the Act and the (“ANB”) and AFC both engage in consumer fi­ Board’s regulations and orders issued thereunder, nance activities in competition with Company in the or to prevent evasion thereof. Chattanooga market.2 In light of a recent decision The transaction shall be made not later than of the Tennessee Supreme Court, which has had the three months after the effective date of this Order, effect of limiting the maximum annual percentage unless such period is extended for good cause by that may be charged by a lender in consumer the Board or by the Federal Reserve Bank of finance transactions to 10 per cent.3 AFC has sus­ Atlanta pursuant to authority hereby delegated. By order of the Board of Governors, effective February 23, 1978. 1 Unless otherwise noted all banking data are as of December 31, Voting for this action: Governors Wallich, Cold well, 1976. Jackson, and Partee. Absent and not voting: Chairman 2The Chattanooga market consists of Hamilton County in Burns and Governors Gardner and Lilly. southeastern Tennessee and Walker County in northwestern Georgia. 3Cumberland Capital Corporation v. Patty 556 S.W. 2d 516 (Signed) G riffith L. Garwood, (Tenn. 1977). [seal] Deputy Secretary of the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

222 Federal Reserve Bulletin □ March 1978 United Bancorp, In determining whether an activity is permissible Roseburg, Oregon under § 4(c)(8) of the Act, the Board must first determine that the nonbank activity involved is Order Approving Formation “closely related to banking or managing or control­ of United Bancorp Municipals, Inc. ling banks”. In its order of October 19, 1976, (41 United Bancorp, Roseburg, Oregon, a bank hold­ Fed. Reg. 47083(1976)), the Board concluded as a ing company within the meaning of the Bank Hold­ general matter that the activity of underwriting and ing Company Act, has applied for the Board’s dealing in certain government and municipal securi­ approval, under § 4(c)(8) of the Act (12 U.S.C. ties was closely related to banking. That conclusion § 1843(c)(8)) and § 225.4(b)(2) of the Board’s Regu­ was affirmed in its January 26, 1978 Order, cited lation Y (12 CFR § 225.4(b)(2)), to form United above. In each instance the Board’s determination Bancorp Municipals, Inc., Roseburg, Oregon, a was based primarily upon the fact that banks gen­ company that will engage de novo in the activities erally are authorized to, and many banks in fact do, of underwriting and dealing in certain government engage directly in the described activity. securities. Before permitting a bank holding company to Notice of the application, affording opportunity engage in a “closely related” activity, the Board for interested persons to submit comments and must examine any public benefits that may rea­ views, has been given in accordance with § 4 of the sonably be expected to derive from bank holding Act (39 Fed. Reg. 13007 (1974)). The time for filing company performance of the activity and weigh comments and views has expired, and the Board them against the possible adverse effects of such has considered the application and all comments performance to determine whether the activity is a received in light of the public interest factors set “proper incident” to banking or managing or con­ forth in § 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)). trolling banks. The instant proposal essentially Applicant, the twelfth largest banking organiza­ represents a corporate reorganization wherein Ap­ tion in Oregon, controls one subsidiary bank with plicant would form a de novo nonbank subsidiary to aggregate deposits of approximately $48.1 million, conduct securities dealing and underwriting ac­ representing about 0.7 per cent of the total deposits tivities currently being conducted by its subsidiary in commercial banks in the State.1 United Bancorp bank, Douglas National Bank, Roseburg, Oregon. Municipals, Inc. would engage de novo in the Inasmuch as the proposal would result in a shifting activities of underwriting and dealing in such obli­ of an activity within the same corporate structure, gations of the United States, general obligations of approval of the application would have no adverse various States and of political subdivisions thereof competitive effects. and other obligations that State member banks of The Board notes that Douglas National Bank has the Federal Reserve System may from time to time conducted its government securities operation to be be authorized to deal in under § 24 (Paragraph transferred to United Bancorp Municipals, Inc., in Seventh) and § 335 of Title 12 of the United States a conservative manner. It appears that a continua­ Code. By notice of proposed rulemaking published tion of such practices in the future by United in the Federal Register on April 10, 1974, (39 Fed. Bancorp Municipals, Inc., subsequent to such a Reg. 13007 (1974)), the Board proposed to add this transfer would ensure that the transfer would have activity to the list of activities that it has determined no adverse effects on the financial soundness of by regulation to be so closely related to banking or Applicant or any of its subsidiaries. Furthermore, managing or controlling banks as to be a proper there is no evidence in the record indicating that incident thereto (§ 225.4(a) of Regulation Y). In its consummation of this proposed transaction would Order of January 26, 1978, published in the Federal result in any undue concentration of resources, Register on February 8, 1978, (43 Fed. Reg. 5382 unfair competition, conflicts of interests, unsound (1978)), the Board announced its decisions to ter­ banking practices, or other adverse effects upon the minate a previously announced suspension of con­ public interest. sideration of the activity; not to adopt the proposed On the other hand, on the facts of this case, it amendment to the regulation; to terminate the appears that certain operating efficiencies may be rule-making proceeding; and to permit the activity, realized by separating securities underwriting and if at all, by order. The reasons for those decisions dealing activities from Applicant’s subsidiary bank are summarized in that Statement. and incorporating them into a separate subsidiary. Moreover, Applicant would expand its underwrit­ XA11 banking data are as of June 30, 1977. ing and dealing services. These improvements in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 223 operations and the expansion of activities should Act (41 Fed. Reg. 14334 (1976)). The time for filing result in benefits to the public in terms of increased comments and views has expired, and the Board competition and services. Upon a consideration of has considered the application and all comments all the relevant facts, the Board concludes that the received in light of the public interest factors set public benefits that may be reasonably expected to forth in § 4(c)(8) of the Act. result from approval of the instant application out­ Applicant, the 188th largest of 614 banking or­ weigh any possible adverse effects. ganizations in the State, is a corporation that con­ Accordingly, the application is hereby approved. trols two direct subsidiaries. The first is Quindaro This determination is subject to the conditions set Bancshares, Inc., Kansas City, Kansas (“Quin­ forth in § 225.4(c) of Regulation Y and to the daro”) a one-bank holding company. The other is Board’s authority to require such modification or A. F. Stepp Investments, Inc., Kansas City, Mis­ termination of the activities of a holding company souri (“Stepp Investments”). Quindaro’s sub­ of any of its subsidiaries as the Board finds neces­ sidiary is Arrowhead State Bank of Kansas City, sary to assure compliance with the provisions and Kansas City, Kansas (“Bank”). Bank holds de­ purposes of the Act and the Board’s regulations and posits of $14.8 million. orders issued thereunder, or to prevent evasion Applicant has applied to the Board for approval thereof. to retain shares of Stepp Investments, a company The transaction shall be made not later than three that engages in underwriting obligations of the months after the effective date of this Order, unless United States, obligations of various States and of such period is extended for good cause by the political subdivisions thereof and other obligations Board or by the Federal Reserve Bank of San that State member banks of the Federal Reserve Francisco pursuant to delegated authority. System may from time to time be authorized to By order of the Board of Governors, effective underwrite and deal in under sections 24 (Paragraph February 27, 1978. Seventh) and 335 of Title 12 of the United States Code. By notice of proposed rulemaking published Voting for this action: Vice Chairman Gardner and in the Federal Register on April 10, 1974 (39 Fed. Governors Coldwell, Partee, and Lilly. Absent and not Reg. 13007 (1974)), the Board proposed to add this voting: Chairman Burns and Governors Wallich and activity to the list of activities that it has determined Jackson. by regulation to be “so closely related to banking or (Signed) G riffith L. Garwood, managing or controlling banks as to be a proper [seal] Deputy Secretary of the Board. incident thereto” (§ 225.4(a) of the Board’s Regula­ tion Y). In an Order of January 26, 1978 (43 Fed. Stepp, Inc., Reg. 5382 (1978)), the Board announced its deci­ Mission Hills, Kansas sions to terminate the previously announced sus­ pension of consideration of the activity; not to Order Approving adopt the proposed amendment to the regulation; to Retention of A. F. Stepp Investments, Inc. terminate the rulemaking proceeding; and to permit Stepp, Inc., Mission Hills, Kansas, a bank hold­ the activity, if at all, by order. The reasons for those ing company within the meaning of the Bank Hold­ decisions are summarized in that Order. ing Company Act, has applied pursuant to § 4(c)(8) In determining whether an activity is permissible of the Bank Holding Company Act (12 U.S.C. under § 4(c)(8) of the Act, the Board must first § 1843(c)(8)) and § 225.4(b)(2) of the Board’s Regu­ determine that the nonbank activity involved is lation Y (12 CFR § 225.4(b)(2)) for permission from “closely related to banking or managing or control­ the Board to retain shares of A. F. Stepp Invest­ ling banks”. In its order of October 19, 1976, (41 ments, Inc., a company engaged in government Fed. Reg. 47083(1976)), the Board concluded as a securities underwriting activities.1 general matter that the activity of underwriting and Notice of the application, affording opportunity dealing in certain government and municipal securi­ for interested persons to submit comments and ties was closely related to banking. That conclusion views, has been given in accordance with § 4 of the was affirmed in its January 26, 1978, Order, cited above. In each instance the Board’s determination *On October 22, 1976, the Board announced the release of its was based primarily upon the fact that banks gen­ Order approving the application of Stepp, Inc., to become a bank erally are authorized to, and many banks in fact do, holding company by acquiring Quindaro Bancshares, Inc., Kansas engage directly in the described activity. City, Kansas. In that Order the Board also announced its deferral of the instant application. Before permitting a bank holding company to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

224 Federal Reserve Bulletin □ March 1978 engage in a “closely related” activity, the Board regulations and orders issued thereunder or to must examine any public benefits that may be prevent evasion thereof. reasonably expected to derive from bank holding By order of the Board of Governors, effective company performance of the activity, and weigh February 27, 1978. them against the possible adverse effects of such performance to determine whether the activity is a Voting for this action: Vice Chairman Gardner and Governors Cold well, Partee, and Lilly. Absent and not “proper incident” to banking or managing or con­ voting: Chairman Burns and Governors Wallich and trolling banks. In this case, therefore, the Board Jackson. sought to determine whether public benefits that may be reasonably expected to derive from Appli­ (Signed) G riffith L. Garwood, cant’s continuing to engage in this activity outweigh [seal] Deputy Secretary of the Board. any possible adverse effects. Approval of this application would simply ratify a Order Under Sections 3 & 4 current and longstanding relationship between of Bank Holding Company Act Stepp Investments and Bank and would have no adverse effects on existing competition. Moreover, The Weld State Company, the history of that relationship suggests that the Fort Lupton, Colorado affiliation has neither had, nor is likely to cause, Order Approving any other adverse effects. In arriving at this conclu­ Formation of Bank Holding Company sion, the Board considered the conservative man­ and Performance of Insurance Agency Activities ner in which the affiliated companies have con­ ducted these activities in the past. The Weld State Company, Fort Lupton, Col­ Approval of the proposal should have some posi­ orado, has applied for the Board’s approval under tive effects. Stepp Investments’ activities include § 3(a)(1) of the Bank Holding Company Act (12 underwriting general obligations of local govern­ U.S.C. § 1842(a)(1)) of formation of a bank holding ment issuers in its primary market and competing in company by acquiring 90 per cent (or more) of the the Midwest region with others offering govern­ voting shares of The Fort Lupton State Bank, Fort ment securities services. The Board concludes that Lupton, Colorado (“Bank”). The factors that are approval of this application would be in the public considered in acting on this application are set forth interest since the local municipal issuers would in § 3(c) of the Act (12 U.S.C. § 1842(c)). Applicant continue to be served by Stepp Investments and the has also applied, pursuant to § 4(c)(8) of the Bank company would continue to serve as an alternative Holding Company Act (12 U.S.C. § 1843(c)(8)) and source for government securities services. § 225.2(b) of the Board’s Regulation Y, for permis­ There is no evidence in the record indicating that sion to engage de novo in the sale of credit life and continuation of the existing relationship would re­ credit accident and health insurance directly related sult in any undue concentration of resources, unfair to extensions of credit by Bank. Such activities competition, conflicts of interest, unsound banking have been determined by the Board to be closely practices, or other adverse effects upon the public related to banking (12 CFR § 225.4(a)(9)(ii)(a)). interest. Notice of the applications, affording opportunity Accordingly, upon a consideration of all the for interested persons to submit comments and relevant facts the Board concludes that the public views, has been given in accordance with §§ 3 and 4 benefits that may be reasonably expected to result of the Act (42 Fed. Reg 63659 (1977)). The time for from approval of the instant application outweigh filing comments and views has expired, and the any possible adverse effects, and, therefore, the Board has considered the applications and all com­ application is approved for the reasons summarized ments received in light of the factors set forth in above. This determination is subject to the condi­ § 3(c) of the Act (12 U.S.C. § 1842(c)), and the tions set forth in § 225.4(c) of Regulation Y and to considerations specified in § 4(c)(8) of the Act (12 the Board’s authority to require reports by, and U.S.C. § 1843(c)(8)). make examinations of, holding companies and their Applicant, a nonoperating company with no sub­ subsidiaries and to require such modification or sidiaries, was organized for the purpose of becom­ termination of the activities of a bank holding ing a bank holding company by acquiring Bank. company or any of its subsidiaries as the Board Upon acquisition of Bank, Applicant would control finds necessary to assure compliance with the pro­ the 129th largest bank in Colorado with .16 of one visions and purposes of the Act and the Board’s per cent of total deposits in commercial banks in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 225 State. Bank, with deposits of $13.5 million,1 is the Although consummation of this proposal would sixth largest of seventeen banks in the Weld County have no immediate effect on the banking services banking market2 and controls 4.0 per cent of the offered by Bank, convenience and needs con­ total deposits therein. siderations are consistent with approval of the Principals of Applicant are affiliated with 11 other application. Accordingly, it is the Board’s judgment one-bank holding companies, nine of which are that Applicant’s proposal to form a bank holding located in Nebraska, one in Kansas, and one in company would be consistent with the public inter­ Wyoming. In addition, several of Applicant’s prin­ est and that the application should be approved. cipals are affiliated with four other banks in the In connection with the application to become a State of Nebraska. The subsidiary banks of the bank holding company, Applicant has also applied holding companies and the four other banks with pursuant to § 225.4(a)(9) of Regulation Y, to engage which Applicant’s principals are affiliated are lo­ de novo in the sale of credit life and credit accident cated in separate banking markets from Bank. and health insurance directly related to extensions Consummation of the proposal would neither elimi­ of credit by Bank. Credit related insurance sales are nate existing or potential competition nor would it currently conducted by Bank’s officers and it does increase the concentration of banking resources in not appear that approval of Applicant’s proposal the relevant market. Furthermore, it does not ap­ would have any significant effect on existing or pear that consummation of this proposal would be potential competition. Approval of the application, in furtherance of an anticompetitive arrangement on the other hand, would assure customers of Bank involving Applicant’s principals. On the basis of the of a convenient source of such insurance services. facts of record, the Board concludes that competi­ Furthermore, there is no evidence in the record tive considerations are consistent with approval of indicating that consummation of the proposal would the application. result in any undue concentration of resources, Where principals of an applicant are also engaged unfair competition, conflicts of interests, unsound in operating a chain of one-bank holding com­ banking practices, or other adverse effects on the panies, the Board applies multi-bank holding com­ public interest. pany standards in assessing the financial and man­ Based upon the foregoing and other con­ agerial resources and future prospects both of an siderations reflected in the record, the Board has applicant seeking to become a one-bank holding determined, in accordance with the provisions of company and of its proposed subsidiary bank.3 § 4(c)(8) of the Act, that consummation of this Based upon such analysis in this case, the financial proposal can reasonably be expected to produce and managerial resources and future prospects of benefits to the public that outweigh possible ad­ Applicant appear to be satisfactory. Although Ap­ verse effects and that the application to engage in plicant would incur some debt in connection with credit related insurance activities should be ap­ this proposal, it appears that Applicant would be proved. able to meet its debt servicing requirements without On the basis of the record, the applications are adversely affecting the financial position of Bank. approved for the reasons summarized above. The The financial and managerial considerations with acquisition of Bank shall not be made (a) before the respect to the other one-bank holding companies thirtieth calendar day following the effective date of and their respective subsidiary banks with which this Order or (b) later than three months after the Applicant’s principals are associated are regarded effective date of this Order, unless such period is as generally satisfactory, suggesting that Applicant extended for good cause by the Board, or by the would conduct its operations and those of Bank in a Federal Reserve Bank of Kansas City pursuant to generally satisfactory manner. Therefore, the con­ delegated authority. The approval of Applicant’s siderations relating to banking factors in regard to insurance activities is subject to the conditions set this proposal are consistent with approval of the forth in section 225.4(c) of Regulation Y and to the application. Board’s authority to require reports by, and make examinations of, holding companies and their sub­ sidiaries and to require such modification or termi­ nation of the activities of a bank holding company or any of its subsidiaries as the Board finds neces­ 1A\\ banking data are as of December 31, 1976. 2The Weld County banking market is approximated by Weld sary to assure compliance with the provisions and County. purposes of the Act and the Board’s regulations and 3See, e.g., the Board’s Order dated June 14, 1976, denying the orders issued thereunder, or to prevent evasion application of Nebraska Banco, Inc., Ord, Nebraska, 62 Federal Reserve Bulletin 638 (1976). thereof. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

226 Federal Reserve Bulletin □ March 1978 By order of the Board of Governors, effective whereby it acquired ownership and control of an February 16, 1978. additional 68,838 shares of Bank, thereby increas­ ing its percentage of ownership in Bank to 99 per Voting for this action: Chairman Burns and Governors cent of the outstanding voting shares of bank. Gardner, Coldwell, Jackson, and Partee. Absent and not 3. GATX became a bank holding company on voting: Governors Wallich and Lilly. December 31, 1970, as a result of the 1970 Amend­ (Signed) G riffith L. Garwood, ments to the BHC Act, by virtue of its ownership [seal] Deputy Secretary of the Board. and control at that time of more than 25 per cent of the outstanding voting shares of Bank, and it regis­ tered as such with the Board on November 8, 1971. Prior C ertification Pursuant to the GATX would have been a bank holding company Bank H olding Company Tax A ct of 1976 on July 7, 1970, if the BHC Act Amendments of GATX Corporation, 1970 had been in effect on such date, by virtue of its Chicago, Illinois ownership and control on that date of more than 25 per cent of the outstanding voting share of Bank. [Docket No. TCR 76-102] On November 30, 1973, GATX owned and con­ GATX Corporation (formerly General American trolled 682,591 shares, representing 98 per cent of Transportation Corporation), Chicago, Illinois the outstanding voting shares, of Bank. GATX (“GATX”) has requested a prior certification pur­ presently owns and controls 582,491 shares, repre­ suant to section 6158(a) of the Internal Revenue senting 84 per cent of the outstanding voting shares, Code (“Code”), as amended by section 3(a) of the of Bank. Bank Holding Company Tax Act of 1976 (“Tax 4. GATX holds property acquired by it on or Act”), that its sale on November 30, 1973, of before July 7, 1970, the disposition of which would 100,000 shares (“Bank Shares”), representing 14 be necessary or appropriate under section 4 of the per cent of the outstanding voting shares, of BHC Act if GATX were to remain a bank holding LaSalle National Bank, Chicago, Illinois (“Bank”), company beyond December 31, 1980, and which was necessary or appropriate to effectuate the property is “prohibited property” within the mean­ policies of the Bank Holding Company Act (12 ing of section 1103(c) of the Code. U.S.C. § 1841 et seq.) (“BHC Act”). The Bank 5. On March 31, 1971, GATX filed with the Shares were sold for $40 per share in cash to the Board an irrevocable declaration pursuant to sec­ following purchasers: First Highland Corporation, tion 225.4(d) of the Board’s Regulation Y that it Highland Park, Illinois (34,000 Bank shares); Fi­ would cease to be a bank holding company prior to nancial Investments Corporation, Chicago, Illinois January 1, 1981, by divesting itself of all of its (34,000 Bank shares); North State Investment Cor­ interest in Bank. In accordance with that portion of poration, Chicago, Illinois (16,000 Bank shares); the regulation and GATX’s commitment, GATX and, Elk Grove Investment Corporation, Elk has been permitted to expand its nonbanking ac­ Grove, Illinois (16,000 Bank shares). Each of the tivities without seeking the Board’s prior approval. purchasers is a one-bank holding company with 6. The sale of the Bank Shares was the first step respect to banks other than Bank. in GATX’s plan to divest all of its interest in Bank. In connection with this request, the following On November 8, 1973, GATX contracted with information is deemed relevant for purposes of Messrs. Harrison I. Steans and James G. Costakis issuing the requested certification:1 (together referred to as “S-C”) for the purchase of 1. GATX is a corporation organized on July 5, Bank Shares. S-C, in turn, assigned their rights in 1916, under the laws of the State of New York. the Bank Shares to the four purchasers of the 2. On November 20, 1968, GATX completed an shares. Pursuant to that agreement GATX has also exchange offer whereby it acquired ownership and granted S-C options exercisable in 1980 to purchase control of 614,243 shares, representing 91 per cent the remaining 582,491 shares of Bank now held by of the outstanding voting shares , of Bank. On July 1, GATX. 1969, GATX completed a second exchange offer 7. GATX has committed to the Board that upon the sale of the remaining shares of Bank, no person holding an office or position (including an advisory This information derives from GATX’s correspondence with or honorary position) with GATX or any of its the Board concerning its request for this certification and GATX’s subsidiaries as a director, policymaking employee Registration Statement filed with the Board pursuant to the BHC Act. or consultant, or who performs (directly, or through Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 221 an agent, representative or nominee) functions This certification is based upon the representa­ comparable to those normally associated with such tions and commitments made to the Board by office or position, will hold any such office or GATX and upon the facts set forth above. In the position or perform any such function with Bank or event the Board should determine that facts mate­ any of its present or future affiliates. rial to this certification are otherwise than as repre­ On the basis of the foregoing information, it is sented by GATX, or that GATX has failed to hereby certified that: disclose to the Board other material facts or to (A) GATX is a qualified bank holding corporation fulfill any commitments made to the Board in within the meaning of section 1103(b) of the Code, connection herewith, it may revoke the certifica­ and satisfies the requirements of that section; tion. (B) Bank Shares covered by the instant request By order of the Board of Governors, acting (i.e., the 100,000 shares of Bank sold on November through its Acting General Counsel, pursuant to 30, 1973) are part of the property by reason of delegated authority (12 CFR 265.2(b)(3)), effective which GATX controlled (within the meaning of February 21, 1978. section 2(a) of the BHC Act) a bank; and (C) the sale of such shares was necessary or (Signed) Theodore E. A llison, appropriate to effectuate the policies of the BHC [seal] Secretary of the Board. Act. ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By The Board of Governors During February 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) B-O-B Financial Corporation, Bank of Bismarck, 2/23/78 Bismarck, Missouri Bismarck, Missouri Financial Bancshares, Inc., The Kansas State Bank 2/17/78 Topeka, Kansas in Holton, Holton, Kansas National Detroit Corporation, NBD-Portage Bank, 2/16/78 Detroit, Michigan Portage, Michigan Pittsburg Bancshares, Inc., The National Bank of 2/10/78 Pittsburg, Kansas Pittsburg, Pittsburg, Kansas West Point Bancorp, Inc., The Farmers & Merchants 2/8/78 West Point, Nebraska National Bank of West Point, West Point, Nebraska First Financial Bancshares, Mountain Grove National 2/6/78 Inc., Nevada, Missouri Bank, Mountain Grove, Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

228 Federal Reserve Bulletin □ March 1978 PENDING CASES INVOLVING THE BOARD OF GOVERNORS* Michigan National Corporation v. Board of First Security Corporation v. Board of Gover­ Governors, filed January 1978, U.S.C.A. for nors, filed August 1976, U.S.C.A. for the the Sixth Circuit. Tenth Circuit. Wisconsin Bankers Association v. Board of Gov­ Central Wisconsin Bankshares, Inc. v. Board of ernors, filed January 1978, U.S.C.A. for the Governors, filed June 1976, U.S.C.A. for the District of Columbia. Seventh Circuit. Gelfand v. Board of Governors, filed December National Urban League, et. al. v. Office of the 1977, U.S.C.A. for the Fifth Circuit. Comptroller of the Currency, et. al., filed April Vickars-Henry Corp. v. Board of Governors, 1976, U.S.D.C. for the District of Columbia filed December 1977, U.S'C.A. for the Ninth Circuit. Circuit. Association of Bank Travel Bureaus, Inc. v. Emch v. The United States of America, et. al., Board of Governors, filed February 1976, filed November 1977, U. S. D. C. for the Eastern U.S.C.A. for the Seventh Circuit. District of Wisconsin. Memphis Trust Company v. Board of Governors, Consumers Union of the United States, Inc. v. filed February 1976, U.S.D.C. for the Western Board of Governors, filed October 1977, District of Tennessee. U.S.D.C. for the District of Columbia. First Lincolnwood Corporation v. Board of Gov­ Corbin v. Federal Reserve Bank of New York, ernors , filed February 1976, U.S.C.A. for the Board of Governors, et. al., filed October 1977, Seventh Circuit. U.S.D.C. for the Southern District of New Roberts Farms, Inc. v. Comptroller of the Cur­ York. rency, et. al., filed November 1975, U.S.D.C. Central Bank v. Board of Governors, filed Octo­ for the Sourthern District of California. ber 1977, U.S.C.A. for the District of Colum­ Florida Association of Insurance Agents, Inc. v. bia. Board of Governors, and National Association Investment Company Institute v. Board of Gov­ of Insurance Agents, Inc. v. Board of Gover­ ernors, filed September 1977, U.S.C.A. for nors , filed August 1975, actions consolidated in the District of Columbia. U.S.C.A. for the Fifth Circuit. Plaza Bank of West Port v. Board of Governors, tDavid R. Merrill, et. al. v. Federal Open Market filed September 1977, U.S.C.A. for the Eighth Committee of the Federal Reserve System, Circuit. filed May 1975, U.S.D.C. for the District of First State Bank of Abilene, Texas v. Board of Columbia. Governors, filed August 1977, U.S.C. A. for the Louis J. Roussel v. Board of Governors, filed District of Columbia. April 1975, U.S.D.C. for the Eastern District of BankAmerica Corporation v. Board of Gover­ Louisiana. nors, filed May 1977, U.S.D.C. for the North­ Georgia Association of Insurance Agents, et. al. ern District of California. v. Board of Governors, filed October 1974, BankAmerica Corporation v. Board of Gover­ U.S.C.A. for the Fifth Circuit. nors, filed May 1977, U.S.C.A. for the Ninth Alabama Association of Insurance Agents, et. al. Circuit. v. Board of Governors, filed July 1974, First Security Corporation v. Board of Gover­ U.S.C.A. for the Fifth Circuit. nors, filed March 1977, U.S.C.A. for the Tenth Bankers Trust New York Corporation v. Board of Circuit. Governors, filed May 1973, U.S.C.A. for the Farmers State Bank of Crosby v. Board of Second Circuit. Governors, filed January 1977, U.S.C.A. for the Eighth Circuit. National Automobile Dealers Association, Inc. * This list of pending cases does not include suits against the Federal Reserve Banks in which the Board of Governors is not v. Board of Governors, filed November 1976, named a party. U.S.C.A. for the District of Columbia. t The Board of Governors is not named as a party in this action. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

229 Directors of Federal Reserve Banks and Branches Following is a list of the directorates of the Federal groups, each of which consists of banks of similar Reserve Banks and Branches as at present consti­ capitalization, and each group elects one Class A tuted. The list shows, in addition to the name of and one Class B director. Class C directors are each director, his principal business affiliation, the selected to represent the public with due but not class of directorship, and the date when his term exclusive consideration to the interests of agricul­ expires. Each Federal Reserve Bank has nine ture, commerce, industry, services, labor, and con­ directors: three Class A and three Class B di­ sumers, and may not be officers, directors, em­ rectors, who are elected by the stockholding ployees, or stockholders of any bank. One Class C member banks, and three Class C directors, who director is designated by the Board of Governors as are appointed by the Board of Governors of the Chairman of the Board of Directors and Federal Federal Reserve System. All Federal Reserve Bank Reserve Agent and another is appointed Deputy directors are chosen without discrimination on the Chairman. Federal Reserve Branches have either basis of race, creed, color, sex, or national origin. five or seven directors, of whom a majority are Class A directors are representative of the stock­ appointed by the Board of Directors of the parent holding member banks. Class B directors repre­ Federal Reserve Bank; the others are appointed by sent the public and are elected with due but not the Board of Governors of the Federal Reserve exclusive consideration to the interests of agricul­ System. One of the directors appointed by the ture, commerce, industry, services, labor, and con­ Board of Governors at each Branch is designated sumers, and may not be officers, directors, or annually as Chairman of the Board in such a employees of any bank. manner as the Federal Reserve Bank may prescribe. For the purpose of electing Class A and Class B In this list of the directorates, names followed by directors, the member banks of each Federal Re­ footnote 1 (x) are Chairmen, those by footnote 2 (2) serve district are classified by the Board of Gover­ are Deputy Chairmen, and those by footnote 3 (3) nors of the Federal Reserve System into three indicate new appointments. DISTRICT 1—BOSTON Term expires Class A Dec. 31 John D. Robinson President, Firstbank, N.A., Farmington, Me. 1978 John Hunter, Jr. President, Vermont National Bank, Brattleboro, Vt. 1979 Richard D. Hill3 Chairman of the Board, First National Boston Corporation, 1980 Boston, Mass. Class B Alfred W. Van Sinderen President, The Southern New England Telephone Company, 1978 New Haven, Conn. Vacancy 1979 Weston P. Figgins Chairman of the Board, Wm. Filene’s Sons Company, 1980 Boston, Mass. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

230 Federal Reserve Bulletin □ March 1978 DISTRICT 1—BOSTON—Continued Term expires Class C Dec. 31 Louis W. Cabot1 Chairman of the Board, Cabot Corporation, Boston, Mass. 1978 Kenneth I. Guscott President, Ken Guscott Associates, Boston, Mass. 1979 Robert M. Solow2 Institute Professor, Massachusetts Institute of Technology, 1980 Cambridge, Mass. DISTRICT 2—NEW YORK Class A Vacancy 1978 Ellmore C. Patterson Chairman of the Executive Committee, Morgan Guaranty 1979 Trust Company of New York, New York, N.Y. Raymond W. Bauer Chairman and President, United Counties Trust Company, 1980 Elizabeth, N.J. Class B John R. Mulhearn President, New York Telephone Company, New York, 1978 N.Y. Maurice F. Granville Chairman of the Board, Texaco Inc., White Plains, N.Y. 1979 William S. Sneath Chairman of the Board, Union Carbide Corporation, New 1980 York, N.Y. Class C Gertrude Michelson3 Senior Vice President-Consumer Affairs, Macy’s New York, 1978 New York, N.Y. Boris Yavitz2 Dean, Graduate School of Business, Columbia University, 1979 New York, N.Y. Robert H. Knight1 Partner, Shearman and Sterling, Attorneys, New York, 1980 N.Y. —BUFFALO BRANCH Appointed by Federal Reserve Bank Kent O. Parmington President, The Bank of New York—Western Region, 1978 Buffalo, N.Y. M. Jane Dickman Partner, Touche Ross & Co., Buffalo, N.Y. 1979 William B. Webber Chairman and Chief Executive Officer, Lincoln First Bank 1979 of Rochester, Rochester, N.Y. William S. Gavitt3 President, The Lyons National Bank, Lyons, N.Y. 1980 Appointed by Board of Governors Donald R. Nesbitt1 Owner-Operator, Silver Creek Farms, Albion, N.Y. 1978 Frederick D. Berkeley Chairman of the Board and President, Graham Manufactur- 1979 ing Company, Inc., Batavia, N.Y. Paul A. Miller President, Rochester Institute of Technology, Rochester, 1980 N.Y. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 231 DISTRICT 3—PHILADELPHIA Term expires Class A Dec. 31 James Patchell President and Chief Executive Officer, National Bank and 1978 Trust Company of Gloucester County, Woodbury, N ,J. W. J. Smouse President, The First National Bank in Bedford, Bedford, 1979 Pa. Wilson M. Brown, Jr.3 President and Chief Executive Officer, Southeast National 1980 Bank of Pennsylvania, Chester, Pa. Class B Harold A. Shaub President and Chief Executive Officer, Campbell Soup Co., 1978 Camden, N.J. William S. Masland President, C. H. Masland & Sons, Carlisle, Pa. 1979 Jack K. Busby Chairman and Chief Executive Officer, Pennsylvania Power 1980 & Light Company, Allentown, Pa. Class C John W. Eckman1 Chairman, Rorer Group Inc., Fort Washington, Pa. 1978 Jean Crockett Professor of Finance, University of Pennsylvania, Phila- 1979 delphia, Pa. Werner C. Brown2 President, Hercules Incorporated, Wilmington, Del. 1980 DISTRICT 4—CLEVELAND Class A Richard P. Raish President, First National Bank, Bellevue, Ohio 1978 John W. Alford President, The Park National Bank, Newark, Ohio 1979 John A. Gelbach3 Chairman and Chief Executive Officer, Central National 1980 Bank of Cleveland, Cleveland, Ohio Class B John J. Dwyer President, Oglebay Norton Co., Cleveland, Ohio 1978 Charles Y. Lazarus Chairman, The F. & R. Lazarus Co., Columbus, Ohio 1979 Hays T. Watkins3 Chairman and President, Chessie System, Inc., Cleveland, 1980 Ohio Class C Otis A. Singletary2 President, University of Kentucky, Lexington, Ky. 1978 Robert E. Kirby1 Chairman and Chief Executive Officer, Westinghouse 1979 Electric Corp., Pittsburgh, Pa. Arnold R. Weber3 Provost, Office of Provost, Carnegie-Mellon University, 1980 Pittsburgh, Pa. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

232 Federal Reserve Bulletin □ March 1978 DISTRICT 4—CLEVELAND—Continued Term expires —CINCINNATI BRANCH Dec. 31 Appointed by Federal Reserve Bank Robert A. Kerr Chairman and Chief Executive Officer, Winters National 1978 Bank and Trust Co., Dayton, Ohio Lawrence Hawkins Senior Vice President, University of Cincinnati, Cincinnati, 1978 Ohio William N. Liggett Chairman of the Board and Chief Executive Officer, The 1979 First National Bank of Cincinnati, Cincinnati, Ohio Walter W. Hillenmeyer, Jr.3 President, First Security National Bank, Lexington, Ky. 1980 Appointed by Board of Governors Martin B. Friedman President, Formica Corporation, Cincinnati, Ohio 1978 J. L. Jackson President, Falcon Coal Company, Inc. Lexington, Ky. 1979 Lawrence H. Rogers, II1 President and Chief Executive Officer, Omega Communi- 1980 cations, Inc., Cincinnati, Ohio —PITTSBURGH BRANCH Appointed by Federal Reserve Bank R. Burt Gookin Vice Chairman and Chief Executive Officer, H.J. Heinz 1978 Co., Pittsburgh, Pa. William E. Midkiff, III Chairman of the Board, The First National Bank and 1978 Trust Company in Steubenville, Ohio Peter Mortensen President, F.N.B. Corporation, Sharon, Pa. 1979 William E. Bierer3 President, Equibank, N.A., Pittsburgh, Pa. 1980 Appointed by Board of Governors William H. Knoell President, Cyclops Corporation, Pittsburgh, Pa. 1978 G. Jackson Tankersley1 President, Consolidated Natural Gas Company, Pittsburgh, 1979 Pa. Lloyd McBride3 President, United Steelworkers of America, Pittsburgh, Pa. 1980 DISTRICT 5—RICHMOND Class A J. Owen Cole Chairman of the Board and President, First National Bank 1978 of Maryland, Baltimore, Md. Frank B. Robards, Jr. President, Rock Hill National Bank, Rock Hill, S.C. 1979 Frederic H. Phillips3 President, New Bank of Roanoke, Roanoke, Va. 1980 Class B Paul E. Reichardt Chairman of the Board, Chief Executive Officer and Presi- 1978 dent, Washington Gas Light Company, Washington, D.C. Andrew L. Clark President, Andy Clark Ford, Inc., Princeton, W. Va. 1979 Thomas A. Jordan3 Secretary-Treasurer, Stuart Furniture Industries, Inc., 1980 Asheboro, N.C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 233 DISTRICT 5—RICHMOND— Continued Term expires ^ Dec. 31 Class C Maceo A. Sloan2 Executive Vice President, North Carolina Mutual Life In- 1978 surance Co., Durham, N.C. E. Angus Powell1 Partner, Midlothian Company, Midlothian, Va. 1979 Steven Muller3 President, The Johns Hopkins University, Baltimore, Md. 1980 —BALTIMORE BRANCH Appointed by Federal Reserve Bank Pearl C. Brackett3 Assistant/Deputy Manager, Baltimore Regional Chapter of 1978 American Red Cross, Baltimore, Md. Lacy I. Rice, Jr. President, The Old National Bank of Martinsburg, Martins- 1979 burg, W. Va. A. R. Reppert President, The Union National Bank of Clarksburg, 1979 Clarksburg, W. Va. Joseph M. Gough, Jr.3 President, The First National Bank of St. Mary’s, Leonard- 1980 town, Md. Appointed by Board of Governors David W. Barton, Jr. President, The Barton-Gillet Company, Baltimore, Md. 1978 I. E. Killian1 President, Killian Enterprises, Inc., Gibson Island, Md. 1979 Catherine Byrne Doehler Senior Vice President, Chesapeake Financial Corporation, 1980 Baltimore, Md. —CHARLOTTE BRANCH Appointed by Federal Reserve Bank William W. Bruner Chairman and President, First National Bank of South 1978 Carolina, Columbia, S.C. Thomas L. Benson President, The Conway National Bank, Conway, S.C. 1979 W. B. Apple, Jr. President, First National Bank of Reidsville, Reidsville, 1979 N.C. John T. Fielder President, J. B. Ivey and Company, Charlotte, N.C. 1980 Appointed by Board of Governors Robert C. Edwards1 President, Clemson University, Clemson, S.C. 1978 Naomi G. Albanese Dean, School of Home Economics, University of North 1979 Carolina at Greensboro, Greensboro, N.C. Robert E. Elberson3 President, Chief Executive Officer and Director, Hanes 1980 Corporation, Winston-Salem, N.C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

234 Federal Reserve Bulletin □ March 1978 DISTRICT 6—ATLANTA Term expires Class A Dec. 31 Sam I. Yarnell Chairman, American National Bank and Trust Co., Chatta- 1978 nooga, Tenn. John T. Oliver, Jr. President, First National Bank of Jasper, Jasper, Ala. 1979 Hugh M. Willson3 President, Citizens National Bank, Athens, Tenn. 1980 Class B George W. Jenkins Chairman, Publix Super Markets, Inc., Lakeland, Fla. 1978 Jean McArthur Davis3 President, McArthur Dairy, Inc., Miami, Fla. 1979 Ulysses V. Goodwyn Executive Vice President, Southern Natural Resources, 1980 Inc., Birmingham, Ala. Class C Fred Adams, Jr. President, Cal-Maine Foods, Inc., Jackson, Miss. 1978 Clifford M. Kirtland, Jr.1 President, Cox Broadcasting Corporation, Atlanta, Ga. 1979 William A. Fickling, Jr.3 Chairman and President, Charter Medical Corp., Macon, 1980 Ga. —BIRMINGHAM BRANCH Appointed by Federal Reserve Bank Robert H. Woodrow, Jr. Chairman of the Board and Chief Executive Officer, First 1978 National Bank of Birmingham, Birmingham, Ala. Drury Flowers President, First Alabama Bank of Dothan, Dothan, Ala. 1979 Martha H. Simms Huntsville, Ala. 1979 George S. Shirley3 President, The First National Bank of Tuscaloosa, Tusca- 1980 loosa, Ala. Appointed by Board of Governors Frank P. Samford, Jr. Chairman of the Board, Liberty National Life Insurance 1978 Co., Birmingham, Ala. William H. Martin, IIP Executive Vice President, Martin Industries, Inc., Sheffield, 1979 Ala. Harold B. Blach, Jr. President, J. Blach & Sons, Inc., Birmingham, Ala. 1980 —JACKSONVILLE BRANCH Appointed by Federal Reserve Bank John T. Cannon, III President, Barnett Bank of Cocoa, N.A., Cocoa, Fla. 1978 Richard E. Ehlis President, Florida National Bank at Lakeland, Lakeland, 1979 Fla. William E. Arnold, Jr. President, William E. Arnold Company, Jacksonville, Fla. 1979 DuBose Ausley President and Chief Executive Officer, Capital City First 1980 National Bank, Tallahassee, Fla. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 235 DISTRICT 6—ATLANTA—Continued Term expires —JACKSONVILLE BRANCH—Continued Dec. 31 Appointed by Board of Governors James E. Lyons1 President, Lyons Industrial Corporation, Winter Haven, 1978 Fla. Copeland D. Newbern President, Newbern Groves, Inc., Tampa, Fla. 1979 Joan Stein3 Partner, Ownership/Management, Regency Square Shop- 1980 ping Center, Jacksonville, Fla. —MIAMI BRANCH Appointed by Federal Reserve Bank Sherrill E. Woods President, First National Bank and Trust Company of 1978 Naples, Naples, Fla. Jane C. Cousins3 President, Cousins Associates, Inc., Miami, Fla. 1978 Aristides R. Sastre President, Republic National Bank, Miami, Fla. 1979 Fred R. Millsaps3 Chairman and President, Landmark Banking Corporation, 1980 Fort Lauderdale, Fla. Appointed by Board of Governors Alvaro Luis Carta1 President, Gulf -I- Western Americas Corporation, Vero 1978 Beach, Fla. Castle W. Jordan President, Aegis Corporation, Coral Gables, Fla. 1979 David G. Robinson President, Edison Community College, Fort Myers, Fla. 1980 —NASHVILLE BRANCH Appointed by Federal Reserve Bank John W. Andersen President, The First National Bank of Sullivan County, 1978 Kingsport, Tenn. Virgil H. Moore, Jr. President, First Farmers and Merchants National Bank, 1979 Columbia, Tenn. Frank C. Thomas Executive Vice President, Blue Diamond Coal Company, 1979 Knoxville, Tenn. James R. Austin3 Chairman and Chief Executive Officer, Peoples National 1980 Bank, Shelbyville, Tenn. Appointed by Board of Governors John C. Bolinger1 Management Consultant, Knoxville, Tenn. 1978 Cecelia Adkins Executive Director, Sunday School Publishing Board, 1979 Nashville, Tenn. Robert C. H. Mathews President, R.C. Mathews, Contractor, Inc., Nashville, 1980 Tenn. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

236 Federal Reserve Bulletin □ March 1978 DISTRICT 6—ATLANTA—Continued Term expires Dec. 31 -NEW ORLEANS BRANCH Appointed by Federal Reserve Bank Wilmore W. Whitmore President and Chief Executive Officer, First National Bank 1978 of Houma, Houma, La. Martin C. Miler Chairman of the Board and President, The Hibernia Na- 1979 tional Bank, New Orleans, La. George P. Hopkins, Jr. President, George P. Hopkins, Inc., Gulfport, Miss. 1979 William E. Howard, Jr.3 Chairman of the Board, Commercial National Bank and 1980 Trust Company of Laurel, Laurel, Miss. Appointed by Board of Governors Edwin J. Caplan President, Caplan’s Men’s Shops, Inc., Alexandria, La. 1978 Levere C. Montgomery President of Time Saver Stores, Inc., New Orleans, La. 1979 George C. Cortright, Jr.1 Partner, George C. Cortright Co., Rolling Fork, Miss. 1980 DISTRICT 7— CHICAGO Class A A. Robert Abboud Chairman of the Board, The First National Bank of Chicago, 1978 Chicago, 111. Jay J. DeLay President, Huron Valley National Bank, Ann Arbor, 1979 Mich. John F. Spies President, Iowa Trust and Savings Bank, Emmetsburg, 1980 Iowa Class B Oscar G. Mayer Chairman of the Executive Committee, Oscar Mayer & 1978 Co., Inc., Madison, Wis. Paul V. Farver Vice Chairman, Rolscreen Company, Pella, Iowa 1979 Arthur J. Decio3 Chairman of the Board and President, Skyline Corporation, 1980 Elkhart, Ind. Class C Edward F. Brabec3 Business Manager, Chicago Journeymen Plumbers, Local 1978 130, Chicago, 111. Robert H. Strotz1 President, Northwestern University, Evanston, 111. 1979 John Sagan2,3 Vice President-Treasurer, Ford Motor Company, Dear- 1980 born, Mich. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 237 DISTRICT 7—CHICAGO—Continued Term expires Dec. 31 —DETROIT BRANCH Appointed by Federal Reserve Bank Joseph B. Foster Chairman of the Board, Ann Arbor Bank, Ann Arbor, 1978 Mich. Charles R. Montgomery President, Michigan Consolidated Gas Company, Detroit, 1978 Mich. Rodkey Craighead3 Chairman and Chief Executive Officer, DETROITBANK 1979 Corporation, Detroit, Mich. Lawrence A. Johns3 President, Isabella Bank and Trust, Mount Pleasant, Mich. 1980 Appointed by Board of Governors Herbert H. Dow Director and Secretary, The Dow Chemical Company, 1978 Midland, Mich. Jordan B. Tatter1 President and Chief Executive Officer, Southern Michigan 1979 Cold Storage Co., Benton Harbor, Mich. Vacancy 1980 DISTRICT 8—ST. LOUIS Class A William E. Weigel Executive Vice President and Chief Executive Officer, 1978 First National Bank and Trust Co., Centralia, 111. Raymond C. Burroughs President and Chief Executive Officer, The City National 1979 Bank of Murphysboro, Murphysboro, 111. Donald N. Brandin Chairman of the Board and President, The Boatmen’s Na- 1980 tional Bank of St. Louis, St. Louis, Mo. Class B Tom K. Smith, Jr. Senior Vice President, Monsanto Company, St. Louis, Mo. 1978 Virginia M. Bailey Owner, Eldo Properties, Little Rock, Ark. 1979 Ralph C. Bain Vice President, Wabash Plastics, Inc., Evansville, Ind. 1980 Class C William B. Walton2 Vice Chairman of the Board, Holiday Inns, Inc., Memphis, 1978 Tenn. Armand C. Stalnaker1 Chairman and President, General American Life Insurance 1979 Company, St. Louis, Mo. William H. Stroube3 Associate Dean-College of Science and Technology, Western 1980 Kentucky University, Bowling Green, Ky. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

238 Federal Reserve Bulletin □ March 1978 DISTRICT 8—ST. LOUIS—Continued Term expires Dec. 31 —LITTLE ROCK BRANCH Appointed by Federal Reserve Bank T. G. Vinson President, The Citizens Bank, Batesville, Ark. 1978 Field Wasson President, First National Bank, Siloam Springs, Ark. 1978 B. Finley Vinson Chairman of the Board, The First National Bank in Little 1979 Rock, Little Rock, Ark. Thomas E. Hays, Jr. President and Chief Executive Officer, The First National 1980 Bank of Hope, Hope, Ark. Appointed by Board of Governors G. Larry Kelley1 President, Pickens-Bond Construction Co., Little Rock, 1978 Ark. E. Ray Kemp, Jr.2 Vice Chairman of the Board and Chief Administrative Of- 1979 ficer, Dillard Department Stores, Inc., Little Rock, Ark. Ronald W. Bailey Executive Vice President and General Manager, Producers 1980 Rice Mill, Inc., Stuttgart, Ark. —LOUISVILLE BRANCH Appointed by Federal Reserve Bank Tom G. Voss President, The Seymour National Bank, Seymour, Ind. 1978 Fred B. Oney President, The First National Bank of Carrollton, Carroll- 1978 ton, Ky. Howard Brenner Vice Chairman of the Board, Tell City National Bank, Tell 1979 City, Ind. J. David Grissom Chairman and Chief Executive Officer, Citizens Fidelity 1980 Bank and Trust Company, Louisville, Ky. Appointed by Board of Governors James H. Davis Chairman and Chief Executive Officer, Porter Paint Com- 1978 pany, Louisville, Ky. James F. Thompson Professor of Economics, Murray State University, Murray, 1979 Ky. Richard O. Donegan3 Vice President and Group Executive, Major Appliance Busi- 1980 ness Group, General Electric Company, Louisville, Ky. —MEMPHIS BRANCH Appointed by Federal Reserve Bank William Wooten Mitchell Chairman, First Tennessee Bank N.A., Memphis, Tenn. 1978 Stallings Lipford President, First-Citizens National Bank of Dyersburg, 1978 Dyersburg, Tenn. W. M. Campbell Chairman of the Board and Chief Executive Officer, First 1979 National Bank of Eastern Arkansas, Forrest City, Ark. Charles S. Youngblood President and Chief Executive Officer, First Columbus Na- 1980 tional Bank, Columbus, Miss. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 239 DISTRICT 8— ST. LOUIS—Continued lerm —MEMPHIS BRANCH—Continued exPires Dec. 31 Appointed by Board of Governors Jeanne L. Holley1 Associate Professor of Business Education and Office Ad- 1978 ministration, University of Mississippi, University, Miss. Robert E. Healy Partner-in-Charge, Price Waterhouse & Co., Memphis, 1979 Tenn. Frank A. Jones, Jr. President, Cook Industries, Inc., Memphis, Tenn. 1980 DISTRICT 9— MINNEAPOLIS Class A John S. Rouzie President, First National Bank of Bowman, Bowman, 1978 N. Dak. Nels E. Turnquist President, National Bank of South Dakota, Sioux Falls, 1979 S. Dak. James H. Smaby3 President, Commercial National Bank & Trust Co., Iron 1980 Mountain, Mich. Class B Russell G. Cleary Chairman, President and Chief Executive Officer, G. Heile- 1978 man Brewing Company, LaCrosse, Wis. Warren B. Jones Secretary-Treasurer, General Manager, Two Dot Land & 1979 Livestock Co., Harlowton, Mont. Donald P. Helgeson Secretary-Treasurer, Jack Frost, Inc., St. Cloud, Minn. 1980 Class C James P. McFarland1 Retired Chairman, General Mills, Inc., Minneapolis, Minn. 1978 Charles W. Poe President, Metropolitan Economic Development Associa­ 1979 tion, Minneapolis, Minn. Stephen F. Keating2 Chairman of the Board, Honeywell, Inc., Minneapolis, 1980 Minn. —HELENA BRANCH Appointed by Federal Reserve Bank George H. Selover President and General Manager, Selover Buick-Jeep, Inc., 1978 Billings, Mont. William B. Andrews President, Northwestern Bank of Helena, Helena, Mont. 1978 Lynn D. Grobel3 President, First National Bank of Glasgow, Glasgow, Mont. 1979 Appointed by Board of Governors Patricia P. Douglas1 Special Assistant to the President, University of Montana, 1978 Missoula, Mont. Norris E. Hanford Wheat and Barley Operator, Fort Benton, Mont. 1979 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

240 Federal Reserve Bulletin □ March 1978 DISTRICT 10— KANSAS CITY Term expires Class A Dec. 31 James M. Kemper, Jr. Chairman and President, Commerce Bancshares, Inc., 1978 Kansas City, Mo. Philip Hamm President, First National Bank & Trust Company, El 1979 Dorado, Kans. Craig Bachman President, First National Bank of Centralia, Centralia, 1980 Kans. Class B Alan R. Sleeper Rancher, Alden, Kans. 1978 John A. McKinney3 President and Chief Executive Officer, Johns-Manville 1979 Corp., Denver, Colo. James G. Harlow, Jr.3 President, Oklahoma Gas and Electric Co., Oklahoma City, 1980 Okla. Class C Harold W. Andersen1 President, Omaha World-Herald Company, Omaha, Nebr. 1978 Paul H. Henson Chairman and Chief Executive Officer, United Tele- 1979 communications, Inc., Westwood, Kans. Joseph H. Williams2 President, The Williams Companies, Tulsa, Okla. 1980 —DENVER BRANCH Appointed by Federal Reserve Bank William H. Vernon Director, and Retired Chairman and Chief Executive Of- 1978 ficer, Santa Fe National Bank, Santa Fe, N. Mex. Delano E. Scott President and Chairman, The Routt County National Bank 1978 of Steamboat Springs, Steamboat Springs, Colo. Felix Buchenroth, Jr. President, The Jackson State Bank, Jackson, Wyo. 1979 Appointed by Board of Governors Edward R. Lucero Chairman and Chief Executive Officer, Colorado Equity 1978 Capital Corporation, Denver, Colo. A. L. Feldman1 President and Chief Executive Officer, Frontier Airlines, 1979 Denver, Colo. —OKLAHOMA CITY BRANCH Appointed by Federal Reserve Bank V. M. Thompson, Jr. President, Utica National Bank and Trust Co., Tulsa, Okla. 1978 W. L. Stephenson, Jr. Chairman of the Board, Central National Bank & Trust Co. 1978 of Enid, Enid, Okla. J. A. Maurer Chairman, Security National Bank & Trust Co., Duncan, 1979 Okla. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 241 DISTRICT 10—KANSAS CITY—Continued Term expires —OKLAHOMA CITY BRANCH—Continued Dec. 31 Appointed by Board of Governors Harley Custer General Manager, National Livestock Commission Asso­ 1978 ciation, Oklahoma City, Okla. Christine H. Anthony1’3 Oklahoma City, Okla. 1979 —OMAHA BRANCH Appointed by Federal Reserve Bank F. Phillips Giltner President, First National Bank of Omaha, Omaha, Nebr. 1978 Roy G. Dinsdale Chairman of the Board, Farmers National Bank of Central 1979 City, Central City, Nebr. Joe J. Huckfeldt3 President, Gering National Bank & Trust Co., Gering, Nebr. 1979 Appointed by Board of Governors Edward F. Owen President, Paxton & Vierling Steel Company, Omaha, Nebr. 1978 Durward B. Varner1 Chairman and Chief Executive Officer, University of Ne­ 1979 braska Foundation, Lincoln, Nebr. DISTRICT 11—DALLAS Class A Robert H. Stewart, III Chairman of the Board, First International Bancshares, 1978 Inc., Dallas, Tex. Gene D. Adams President, The First National Bank of Seymour, Seymour, 1979 Tex. Frank Junell Chairman of the Board, The Central National Bank of San 1980 Angelo, San Angelo, Tex. Class B Thomas W. Herrick Cattle and Investments, Amarillo, Tex. 1978 Stewart Orton President, Foley’s, Division of Federated Dept. Stores, 1979 Inc., Houston, Tex. Gerald D. Hines Owner, Gerald D. Hines Interests, Houston, Tex. 1980 Class C Charles T. Beaird2 Publisher, Shreveport Journal, Shreveport, La. 1978 Margaret S. Wilson Chairman of the Board and Chief Executive Officer, Scar­ 1979 broughs, Austin, Tex. Irvmg A. Mathews1 Chairman of the Board and Chief Executive Officer, 1980 Frost Bros., Inc., San Antonio, Tex. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

242 Federal Reserve Bulletin □ March 1978 DISTRICT 11—DALLAS—Continued Term expires Dec. 31 —EL PASO BRANCH Appointed by Federal Reserve Bank Reed H. Chittim President, First National Bank of Lea County, Hobbs, 1978 N. Mex. Arnold B. Peinado, Jr. Partner, AVC Development, El Paso, Tex. 1978 Arthur L. Gonzales3 President, First City National Bank of El Paso, El Paso, 1979 Tex. Claude E. Leyendecker3 President, Mimbres Valley Bank, Deming, N. Mex. 1980 Appointed by Board of Governors Josefina A. Salas-Porras1 Executive Director, BI Language Services, El Paso, Tex. 1978 A. J. Losee President, Losee & Carson, P.A., Artesia, N. Mex. 1979 Chester J. Kesey3 Partner, Kesey Bros. Enterprises, Pecos, Tex. 1980 —HOUSTON BRANCH Appointed by Federal Reserve Bank Bookman Peters President, The City National Bank of Bryan, Bryan, Tex. 1978 Nat S. Rogers President, First City National Bank of Houston, Houston, 1978 Tex. Page K. Stubblefield Chairman of the Board, Victoria Bank & Trust Company, 1979 Victoria, Tex. J. Earl Williams3 Director, Institute of Labor and Industrial Relations, Uni­ 1980 versity of Houston, Houston, Tex. Appointed by Board of Governors Alvin I. Thomas1 President, Prairie View A&M University, Prairie View, 1978 Tex. Jerome L. Howard Chairman of the Board and Chief Executive Officer, Mort- 1979 gage & Trust, Inc., Houston, Tex. Gene M. Woodfin Chairman of the Board and Chief Executive Officer, Mara- 1980 thon Manufacturing Company, Houston, Tex. —SAN ANTONIO BRANCH Appointed by Federal Reserve Bank Richard W. Calvert Chairman of the Board, National Bank of Commerce of 1978 San Antonio, San Antonio, Tex. John H. Holcomb Owner-Manager, Progreso Haciendas Company, Progreso, 1978 Tex. Ben R. Low Vice President, Commerce North Bank, N.A., San Antonio, 1979 Tex. John H. Garner3 President and Chief Executive Officer, Corpus Christi Na- 1980 tional Bank, Corpus Christi, Tex. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 243 DISTRICT 11—DALLAS—Continued Term expires —SAN ANTONIO BRANCH—Continued Dec. 31 Appointed by Board of Governors Pete J. Morales, Jr.1 President and General Manager, Morales Feed Lots, Inc., 1978 Devine, Tex. Pat Legan Owner, Legan Properties, San Antonio, Tex. 1979 John J. McKetta3 E.P. Schoch Professor of Chemical Engineering, Uni- 1980 versity of Texas, Austin, Tex. DISTRICT 12— SAN FRANCISCO Class A Ronald S. Hanson President and Chief Executive Officer, The First National 1978 Bank of Logan, Logan, Utah Frederick G. Larkin, Jr. Chairman of the Board and Chief Executive Officer, Se- 1979 curity Pacific National Bank, Los Angeles, Calif. Ole R. Mettler3 President and Chairman of the Board, Farmers & Merchants 1980 Bank of Central California, Lodi, Calif. Class B Malcolm T. Stamper President, The Boeing Company, Seattle, Wash. 1978 Clair L. Peck, Jr. Chairman of the Board, C.L. Peck Contractor, Los Angeles, 1979 Calif. J. R. Vaughan3 Chairman, President and Chief Executive Officer, Knudsen 1980 Corporation, Los Angeles, Calif. Class C Joseph F. Alibrandi1 President and Chief Executive Officer, Whittaker Corp., 1978 Los Angeles, Calif. Dorothy Wright Nelson Dean and Professor of Law, University of Southern Cali- 1979 fornia Law Center, Los Angeles, Calif. Cornell C. Maier2 President and Chief Executive Officer, Kaiser Aluminum & 1980 Chem. Corp., Oakland, Calif. —LOS ANGELES BRANCH Appointed by Federal Reserve Bank W. Gordon Ferguson President, National Bank of Whittier, Whittier, Calif. 1978 J. J. Pinola Chairman and Chief Executive Officer, Western Bancorpo- 1979 ration, Los Angeles, Calif. Fern Jellison3 General Manager, Social Service Department, City of Los 1979 Angeles, Los Angeles, Calif. James D. McMahon3 President, Santa Clarita National Bank, Newhall, Calif. 1980 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

244 Federal Reserve Bulletin □ March 1978 DISTRICT 12—SAN FRANCISCO—Continued Term expires —LOS ANGELES BRANCH—Continued Dec. 31 Appointed by Board of Governors Harvey A. Proctor Chairman of the Board, Southern California Gas Company, 1978 Los Angeles, Calif. Armando M. Rodriguez President, East Los Angeles College, Monterey Park, Calif. 1979 Caroline Ahmanson1 Chairman of the Board, Caroline Leonetti, Ltd., Beverly 1980 Hills, Calif. —PORTLAND BRANCH Appointed by Federal Reserve Bank Robert F. Wallace Chairman of the Board, First National Bank of Oregon, 1978 Portland, Oreg. Robert A. Young President, Northwest National Bank, Vancouver, Wash. 1978 Merle G. Bryan3 President, Forest Grove National Bank, Forest Grove, 1979 Oreg. Kenneth L. Smith General Manager, The Confederated Tribes of Warm 1980 Springs, Warm Springs, Oreg. Appointed by Board of Governors Jean Mater Partner and General Manager, Mater Engineering, Corvallis, 1978 Oreg. Phillip W. Schneider3 Northwest Regional Executive, National Wildlife Federa- 1979 tion, Portland, Oreg. Loran L. Stewart1 Director, Bohemia Inc., Eugene, Oreg. 1980 —SALT LAKE CITY BRANCH Appointed by Federal Reserve Bank David P. Gardner President, University of Utah, Salt Lake City, Utah 1978 Robert E. Bryans Chairman of the Board, Walker Bank and Trust Company, 1978 Salt Lake City, Utah Fred H. Stringham3 President, Valley Bank and Trust Company, South Salt 1979 Lake, Utah Mary S. Jensen Chairman, Idaho State Bank, Glenns Ferry, Idaho 1980 Appointed by Board of Governors Sam Bennion1 President, V-l Oil Company, Idaho Falls, Idaho 1978 Robert A. Erkins3 White Arrow Ranch, Bliss, Idaho 1979 Joseph L. Terteling3 Chief Executive Officer, J.A. Terteling & Sons, Inc., 1980 Boise, Idaho Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 245 DISTRICT 12—SAN FRANCISCO—Continued Term expires Dec. 31 —SEATTLE BRANCH Appointed by Federal Reserve Bank Douglas S. Gamble President and Chief Executive Officer, Pacific Gamble 1978 Robinson Co., Seattle, Wash. Harry S. Goodfellow Chairman of the Board and Chief Executive Officer, Old 1978 National Bank of Washington, Spokane, Wash. Donald L. Mellish3 Chairman of the Board, National Bank of Alaska, An- 1979 chorage, Alaska Rufus C. Sfriith Chairman, The First National Bank of Enumclaw, Enum- 1980 claw, Wash. Appointed by Board of Governors Lloyd E. Cooney1 President and General Manager, KIRO—Radio & Tele- 1978 vision, Seattle, Wash. Merle D. Adlum3 President, Inland Boatmen’s Union of the Pacific, Seattle, 1979 Wash. Virginia Parks3 Vice President—Business and Finance, Seattle University, 1980 Seattle, Wash. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

246 Membership of the Board of Governors of the Federal Reserve System, 1 9 1 3 - 7 8 APPOINTIVE MEMBERS1 Federal Reserve- Date of initial Other dates and information relating Name district oath of office to membership2 Charles S. Hamlin........... .. Boston................. Aug. 10, 1914 Reappointed in 1916 and 1926. Served until Feb. 3, 1936.3 Paul M. Warburg................. New York......... .do . Term expired Aug. 9, 1918. Frederic A. Delano............ Chicago ............. .do . Resigned July 21, 1918. W. P. G. Harding ............... Atlanta............... .do . Term expired Aug. 9, 1922. Adolph C. Miller............... . San Francisco .. .do . Reappointed in 1924. Reappointed in 1934 from the Richmond District. Served until Feb. 3, 1936.3 Albert Strauss ..................... New York........... Oct. 26, 1918 Resigned Mar. 15, 1920. Henry A. Moehlenpah .. .. Chicago............... Nov. 10, 1919 Term expired Aug. 9, 1920. Edmund Platt....................... New York........... June 8, 1920 Reappointed in 1928. Resigned Sept. 14, 1930. David C. Wills..................... Cleveland........... Sept. 29, 1920 Term expired Mar. 4, 1921. ..J..o..h...n.. .R.... . MMiticnhneella polis___ May 12, 1921 Resigned May 12, 1923. Milo D. Campbell.............,. Chicago............... Mar. 14, 1923 Died Mar. 22, 1923. Daniel R. Crissinger.......... Cleveland........... May 1, 1923 Resigned Sept. 15, 1927. George R. James................. St. Louis............. May 14, 1923 Reappointed in 1931. Served until Feb. 3, 1936.3 Edward H. Cunningham ,.. Chicago ............. .do . Died Nov. 28, 1930. Roy A. Young..................... Minneapolis Oct. 4, 1927 Resigned Aug. 31, 1930. Eugene Meyer..................... New York........... Sept. 16, 1930 Resigned May 10, 1933. Wayland W. Magee..........,. Kansas City----- May 18, 1931 Term expired Jan. 24, 1933. Eugene R. Black ............. .. Atlanta ............... May 19, 1933 Resigned Aug. 15, 1934. M. S. Szymczak ................. Chicago............... June 14, 1933 Reappointed in 1936 and 1948. Re­ signed May 31, 1961. J. J. Thomas......................... Kansas City .... .do . Served until Feb. 10, 1936.3 Marriner S. Eccles ............ San Francisco .. Nov. 15, 1934 Reappointed in 1936, 1940, and 1944. Resigned July 14, 1951. Joseph A. Broderick.......... New York........... Feb. 3, 1936 Resigned Sept. 30, 1937. John K. McKee................... Cleveland........... .do . Served until Apr. 4, 1946.3 Ronald Ransom................. . Atlanta............... .do . Reappointed in 1942. Died Dec. 2, 1947. Ralph W. Morrison........... . Dallas ................. Feb. 10, 1936 Resigned July 9, 1936. Chester C. Davis............... . Richmond........... June 25, 1936 Reappointed in 1940. Resigned Apr. 15, 1941. Ernest G. Draper............... . New York........... Mar. 30, 1938 Served until Sept. 1, 1950.3 Rudolph M. Evans ...........,. Richmond........... Mar. 14, 1942 Served until Aug. 13, 1954.3 James K. Vardaman, Jr. .. St. Louis............. Apr. 4, 1946 Resigned Nov. 30, 1958. Lawrence Clayton.............,. Boston................. Feb. 14, 1947 Died Dec. 4, 1949. Thomas B. McCabe ........,. Philadelphia___ Apr. 15, 1948 Resigned Mar. 31, 1951. Edward L. Norton ............ Atlanta ............... Sept. 1, 1950 Resigned Jan. 31, 1952. Oliver S. Powell.................. Minneapolis----- .do . Resigned June 30, 1952. Wm. McC. Martin, Jr, ,. New York........... Apr. 2, 1951 Reappointed for term beginning Feb. 1, 1956. Term expired Jan. 31, 1970. A. L. Mills, Jr....................... San Francisco .. Feb. 18, 1952 Reappointed in 1958. Resigned Feb. 28, 1965. J. L. Robertson................... Kansas City___ .do . Reappointed for term beginning Feb. 1, 1964. Resigned Apr. 30, 1973. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Membership of the Board of Governors, 1913-78 247 Federal Reserve Date of initial Other dates and information relating Name district oath of office to membership2 Aug. 13, 1954 Died Oct. 21, 1954. Aug. 12, 1954 Served through Feb. 28, 1966. Mar. 17, 1955 Retired Apr. 30, 1967. G. H. King, Jr.......................Atlanta Mar. 25, 1959 Reappointed in 1960. Resigned Sept. 18, 1963. George W. Mitchell.............Chicago.................AAuugg.. 31, 1961 Reappointed for term beginning Feb. 1962. Served until Feb. 13, 1976.3 Nov. 29, 1963 Served until Mar. 8, 1974.3 Sherman J. Maisel...............San Francisco Apr. 30, 1965 Served through May 31, 1972. Andrew F. Brimmer...........Philadelphia .. Mar. 9, 1966 Resigned Aug. 31, 1974. William W. Sherrill.............Dallas ............... May 1, 1967 Reappointed for term beginning Feb. 1, 1968. Resigned Nov. 15, 1971. Arthur F. Burns...................New York. Jan. 31, 1970 Term began Feb. 1, 1970. John E. Sheehan.................St. Louis .. Jan. 4, 1972 Resigned June 1, 1975. June 5, 1972 Resigned Jan. 2, 1976. Robert C. Holland...............Kansas City June 11, 1973 Resigned May 15, 1976. Henry C. Wallich ...............Boston.......... Mar. 8, 1974 Oct. 29, 1974 Philip C. Jackson, Jr............Atlanta July 14, 1975 Jan. 5, 1976 Stephen S. Gardner.............Philadelphia .. Feb. 13, 1976 David M. Lilly.....................Minneapolis .. June 1, 1976 Resigned Feb. 24, 1978. G. William Miller.................San Francisco Mar. 8, 1978 CHAIRMEN4 VICE CHAIRMEN4 Charles S. Hamlin . .Aug. 10, 1914-Aug. 9, 1916 Frederic A. Delano . .Aug. 10, 1914--Aug. 9, 1916 W. P. G. Harding .. .Aug. 10, 1916-Aug. 9, 1922 Paul M. Warburg .. .Aug. 10, 1916--Aug. 9, 1918 Daniel R. Crissinger .May 1, 1923-Sept. 15, 1927 Albert Strauss...........Oct. 26, 1918--Mar. 15, 1920 Roy A. Young...........Oct. 4, 1927-Aug. 31, 1930 Edmund Platt.............July 23, 1920-Sept. 14, 1930 Eugene Meyer...........Sept. 16, 1930-May 10, 1933 J. J. Thomas .............Aug. 21, 1934--Feb. 10, 1936 Eugene R. Black-----May 19, 193 3-Aug. 15, 1934 Ronald Ransom.........Aug. 6, 1936--Dec. 2, 1947 Marriner S. Eccles . .Nov. 15, 1934-Jan. 31, 1948 C. Canby Balderston Mar. 11, 1955--Feb. 28, 1966 Thomas B. McCabe .Apr. 15, 1948-Mar. 31, 1951 J. L. Robertson.........Mar. 1, 1966--Apr. 30, 1973 Wm. McC. Martin, Jr.Apr. 2, 1951-Jan. 31, 1970 George W. Mitchell .May 1, 1973--Feb. 13, 1976 Arthur F. Burns -----Feb. 1, 1970-Jan. 31, 1978 Stephen S. Gardner .Feb. 13, 1976- G. William Miller .. .Mar. 8, 1978- EX-OFFICIO MEMBERS1 SECRETARIES OF THE TREASURY COMPTROLLERS OF THE CURRENCY W. G. McAdoo.........Dec. 23, 1913-Dec. 15, 1918 John Skelton WilliamsFeb. 2,1914-Mar. 2, 1921 Carter Glass...............Dec. 16, 1918-Feb. 1, 1920 Daniel R. Crissinger .Mar. 17, 1921-Apr. 30, 1923 David F. Houston .. .Feb. 2, 1920-Mar. 3, 1921 Henry M. Dawes ...May 1, 1923-Dec. 17, 1924 Andrew W. Mellon . .Mar. 4, 1921-Feb. 12, 1932 Joseph W. McIntosh Dec. 20, 1924-Nov. 20, 1928 Ogden L. Mills .........Feb. 12, 1932-Mar. 4, 1933 J. W. Pole...................Nov. 21, 1928-Sept. 20, 1932 William H. Woodin .Mar. 4, 1933-Dec. 31, 1933 J. F. T. O’Connor.. .May 11, 1933-Feb. 1, 1936 Henry Morgenthau, Jr. Jan. 1, 1934-Feb. 1, 1936 xUnder the provisions of the original Federal Reserve Act the of the Currency should continue to serve as members until Feb. Federal Reserve Board was composed of seven members, in­ 1, 1936; that the appointive members in office on the date of cluding five appointive members, the Secretary of the Treasury, that Act should continue to serve until Feb. 1, 1936, or until who was ex-officio chairman of the Board, and the Comptroller their successors were appointed and had qualified; and that of the Currency. The original term of office was 10 years, and thereafter the terms of members should be 14 years and that the the five original appointive members had terms of 2, 4, 6, 8, designation of Chairman and Vice Chairman of the Board should and 10 years, respectively. In 1922 the number of appointive be for a term of 4 years. members was increased to six, and in 1933 the term of office 2Date after words “Resigned” and “Retired” denotes final was increased to 12 years. The Banking Act of 1935, approved day of service. Aug. 23, 1935, changed the name of the Federal Reserve Board Successor took office on this date. to the Board of Governors of the Federal Reserve System and 4Chairman and Vice Chairman were designated Governor and provided that the Board should be composed of seven appointive Vice Governor before Aug. 23, 1935. members; that the Secretary of the Treasury and the Comptroller Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

248 Announcements G. WILLIAM MILLER: his intellect, his talents are known, and he is Appointment as a Member and well loved and respected throughout the world. Chairman of the Board of Governors I never expected to be a central banker, but On December 28, 1977, President Carter announced when the President invited me to do so, the warm response that Arthur Burns gave and his intention to appoint G. William Miller of the support and help he has given me is more California as a member of the Board of Governors than a reward in itself. It has been a great for the 14-year term beginning February 1, 1978, experience for me and one which I shall with designation as Chairman for 4 years. His always cherish. nomination was confirmed by the Senate on Well, it is obvious that I have had giants as March 3, and he took the oath of office in predecessors, and so I face a very demanding a White House ceremony on March 8. Mr. Miller standard in trying to carry out the duties of this great institution. I can tell you that I will made the following statement at that time: do my best to make a contribution to the best of my ability. President Carter, I know I speak for my family and friends and associates in thanking We do, Mr. President, I believe, have the you for having us here in the White House for ability to pledge to you that the entire Federal this occasion. It is an important occasion for Reserve family will devote itself to the most me and my family, and I am sure I speak for professional conduct of its affairs so that it everyone in expressing our appreciation. can contribute to our national goals of growth and price stability. The Federal Reserve is a unique American institution. It represents a solution to central It is going to be difficult. We face many banking that is typically American where you problems. And it will take time. And it will blend the national responsibilities with local take some self-discipline for all of us to do our and regional participation. And it is a system part in moderation and in contributing indi­ that has well stood the test of time. vidually to the solution. For 65 years, it has served through good On the other hand, the Federal Reserve has times and bad times, and has shown its ability enormous resources to call upon to carry out to respond to a changing world and a chang­ its programs. In the first place, it has in the ing America. We have seen unprecedented family of the Federal Reserve System dedi­ changes in technology, social, economic de­ cated and competent men and women who velopment, and the Federal Reserve has been are devoted to professionalism. able to adapt and respond to provide for the needs of a growing America. It has an able Board of Governors. It has men of high quality as Presidents of the The Federal Reserve System has also had Reserve Banks. And those human resources remarkable leadership. Since the present or­ are very important. The Federal Reserve also ganization was established in the 1930’s, has the resource of adaptability. It has shown there have been four Chairmen of the Board of Governors of the Federal Reserve System, itself to be a living institution that can change and can respond and can innovate, and that and two of them are with us here now. will be a strength. William McChesney Martin, who was It also operates in an American system that Chairman for a longer period than any other has shown itself to have the strength of Chairman, has a record that speaks for itself flexibility. In the last 10 years, we have been and is a beacon of excellence. impacted by many substantial and adverse Arthur Burns, well, he is a legend in his forces that have had great consequences in own time, and I cannot say any more gracious the economy of the United States and the words than the President has already said, world economies. And yet how remarkably but I would like to second them and third our system has responded, shown its resili­ them and applaud them, because he has been ence and capacity to absorb and to selfa great fighter against inflation. His integrity, correct, and it is on that process now. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 249 We also have the strength of national lead­ He was co-chairman of both the U.S.-U.S.S.R. ership which, represented by President Trade and Economic Council and the Polish-U.S. Carter, is taking on the responsibility to Economic Council. In 1977 Mr. Miller was Chair­ re-establish the confidence of the American man of the U.S. Industrial Payroll Savings Bond public in their public institutions. Committee, and he has also served as the first And finally, we have the greatest resource Chairman of the Industry Advisory Committee of of all, the boundless resource of the Ameri­ the President’s Committee on Equal Employment can people. Opportunity and as a member of the National Americans are basically optimistic and Council on the Humanities. they have a right to be. It is justified by their Mr. Miller is married to the former Ariadna past accomplishments. Rogajarski. For many years now, we have had a certain Mr. Miller succeeds David M. Lilly as a member amount of self-examination about that op­ of the Board. He succeeds Arthur F. Burns as timism. It seems to me the time is here when that is coming out into a recognition of self- Chairman. confidence. And as we individually gain our self-confidence, I am sure that collectively as each of us plays our role, the cumulative ARTHUR F. BURNS: effect will be to establish, re-establish the direction and vitality and the strength of this Designation as Acting Chairman Nation. of the Board of Governors Mr. President, with those resources, the Federal Reserve should be able to make a On February 2, 1978, President Carter issued the contribution, and to the best of my energies following Order: and talents, I will try to play my part. I hereby designate Arthur F. Burns to serve Thank you. as Acting Chairman of the Board of Gover­ At the time of his appointment, Mr. Miller was nors of the Federal Reserve System until such time as his successor as Chairman is Chairman of Textron, Inc., a diversified company designated, or until his resignation as a headquartered in Providence, Rhode Island, with member of the Board of Governors, already 180 plants and facilities in the United States and in received and accepted, becomes effective, several foreign countries. Textron employs 65,000 whichever first occurs. persons and had sales in 1976 of $2.6 billion. The White House, Mr. Miller was also a director of the Federal February 2, 1978 Reserve Bank of Boston, Chairman of the Confer­ ence Board, and Chairman of the National Alliance of Businessmen. DAVID M. LILLY: Mr. Miller is a native of Oklahoma—born in Resignation as a Member Sapulpa in 1925—and was raised in the Southwest. of the Board of Governors He graduated from the U.S. Coast Guard Academy in 1945, serving as an officer in the Far Pacific and The Board of Governors has announced the res­ China. ignation of David M. Lilly as a member of the In 1952, Mr. Miller received his J.D. degree from Board, effective February 24, 1978. Mr. Lilly’s the University of California and practiced law in letter of resignation follows: New York with the firm of Cravath, Swaine and February 23, 1978 Moore before joining Textron in 1956 as Assistant Secretary. The President In June of 1960, at age 35, Mr. Miller was elected The White House Washington, D.C. 20500 President of Textron and in 1968 he assumed the additional post of Chief Executive Officer. Mr. President: In 1974 he was elected Chairman of the Board. I wish to tender herewith my resignation as a At the time of his appointment, Mr. Miller was a Member of the Board of Governors of the director of the Allied Chemical Corporation, Con Federal Reserve System effective February 24, Rail, and Federated Department Stores; a 1978. As you know, my official term of office expired January 31, 1978. I have been since member of the Business Council and the Business that date serving as a Member of the Board Roundtable; and Chairman of the President’s Com­ awaiting the appointment and qualification of mittee for HIRE (veterans’ employment). my successor. I regret that personal con­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

250 Federal Reserve Bulletin □ March 1978 siderations make impossible further service on change on request its own currency for the cur­ the Board. rency of the other party up to a specified amount It has been a great privilege to serve our over a limited period of time. country as a member of its central banking The Federal Reserve swap network was initiated authority, and I am most grateful for the oppor­ in 1962. In all reciprocal currency arrangements the tunity afforded me to participate and contrib­ Federal Reserve Bank of New York acts on behalf ute in the formulation of monetary policy. of the Federal Reserve under the direction of the Please be assured that I stand ready to Federal Open Market Committee. contribute further in the service of our Nation The Federal Reserve’s reciprocal currency ar­ should future circumstances give rise to such rangements are now as follows (in millions of calling. dollars): Yours respectfully, Austrian National Bank..........................................250 National Bank of Belgium.................................1,000 David M. Lilly Bank of Canada....................................................2,000 National Bank of Denmark...................................250 Bank of England ..................................................3,000 Bank of France.......................................................2,000 MEETING OF German Federal Bank..........................................4,000 CONSUMER ADVISORY COUNCIL Bank of Italy...........................................................3,000 Bank of Japan.........................................................2,000 Bank of Mexico.........................................................360 The Board of Governors has announced that the Netherlands Bank....................................................500 System’s Consumer Advisory Council met at the Bank of Norway.......................................................250 Board on March 8 and 9, 1978. Bank of Sweden .......................................................300 Swiss National Bank............................................1,400 The Council advises the Board on carrying out its responsibilities in regard to consumer credit laws Bank for International Settlements: Swiss francs/dollars ............................................600 and regulations. Chaired by Mrs. Leonor Sullivan, Other European currencies/dollars ..........1,250 the Council was recently expanded to 28 members, Total 22,160 who come from all parts of the Nation and who represent consumer and creditor interests. At the March meeting the Council discussed the NEW CONSUM Ek PAMPHLET recommendations of the Privacy Commission on consumer credit, Federal Trade Commission trade A new consumer pamphlet explaining credit rights regulation rules, and uniform enforcement in housing is now available for public distribution. guidelines proposed by financial institutions for The pamphlet, entitled “The Equal Credit Op­ Truth in Lending enforcement. portunity Act and . . . Credit Rights in Housing,” There was also a preliminary review of the con­ seeks to educate consumers and lenders about sumer aspects of electronic fund systems. major provisions of the Equal Credit Opportunity Act as it affects housing. That act forbids discrimi­ nation in credit transactions on the basis of sex or CHANGE IN SWAP marital status, race, color, religion, national origin, age, receipt of income from public assistance pro­ ARRANGEMENTS grams, and good faith exercise of rights under the As part of the cooperative effort announced by Consumer Credit Protection Act. U.S. Secretary of the Treasury Blumenthal and The housing pamphlet also explains the Home Minister Matthoefer of the Federal Republic of Mortgage Disclosure Act, which requires most lend­ Germany, the Federal Reserve announced on ers in metropolitan areas to inform the public once March 13, 1978, that its reciprocal currency (swap) a year where they make their mortgage and home arrangement with the German Federal Bank has improvement loans. been increased by $2 billion, bringing the total of Other consumer pamphlets that the Board has that arrangement to $4 billion. published include: The increase enlarges the System’s swap net­ —The Equal Credit Opportunity Act and Age work with 14 central banks and the Bank for —The Equal Credit Opportunity Act and Inci­ International Settlements to $22.16 billion. dental Creditors A swap arrangement is a renewable, short-term —The Equal Credit Opportunity Act and Women facility under which a central bank agrees to ex­ —Fair Credit Billing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 251 —If You Borrow to Buy Stock PROPOSED AMENDMENTS —What Truth in Lending Means To You The Board of Governors has issued for public Copies of the consumer information pamphlets comment a proposed amendment to its Regulation may be obtained singly or in bulk free of charge Y (Bank Holding Companies) that would permit from the Board of Governors in Washington or bank holding companies and their nonbank sub­ from any of the 12 Federal Reserve Banks. Re­ sidiaries to sell, at retail, money orders and similar quests should be addressed to the Board’s Publica­ instruments, traveler’s checks, U.S. savings bonds, tions Services or to Publications Departments at the and consumer-oriented financial management Federal Reserve Banks of Boston, New York, courses. The Board requested comment by March Philadelphia, Cleveland, Richmond, Atlanta, 14, 1978. Chicago, St. Louis, Minneapolis, Kansas City, The Board of Governors also has proposed a Dallas, or San Francisco. revision to its Regulation F (Securities of Member State Banks) to bring the Board’s rules for member bank disclosures to stockholders into conformity REGULATION O: Amendment with recent rule revisions by the Securities and Exchange Commission. The Board asked for com­ The Board of Governors has amended its Regula­ ment by May 1, 1978. tion O (Loans to Executive Officers of Member The Board also proposed a change in require­ Banks). The amendment increases from $1,000 to ments for inclusion of stocks in the Board’s list $5,000 the limit imposed upon member banks’ ex­ of over-the-counter (OTC) stocks that are subject tension of credit to their own executive officers to margin requirements, as amendments to Regula­ through the use of bank credit cards. This amend­ tions G (Securities Credit by Persons Other Than ment to the Board’s Regulation O was effective Banks, Brokers, or Dealers), T (Credit by Brokers March 24, 1978. and Dealers), and U (Credit by Banks for the The Board amended this provision of the regula­ Purpose of Purchasing or Carrying Margin Stock). tion because it felt the current limit, established in The Board asked for comment by April 14, 1978. 1967, should be adjusted, given the increase in consumer prices and the expansion of bank creditcard usage and acceptability since that time. DATA FROM REPORTS OF CONDITION AND INCOME REGULATION C: Exemption A computer tape of preliminary data from the The Board of Governors on February 16, 1978, reports of condition and income and related sup­ granted an exemption from the requirements of its plements that insured commercial banks are re­ Regulation C (Home Mortgage Disclosure) and of quired to file will soon be made available to the the Federal Home Mortgage Disclosure Act to State public by the three bank supervisory agencies. banks that are subject to a substantially similar The Board of Governors of the Federal Reserve New Jersey law. System, the Comptroller of the Currency, and the The Federal act requires depositories subject to it Federal Deposit Insurance Corporation, in making to disclose the geographic location of the total the announcement, said the preliminary data will be number and dollar amount of purchase-money available from 40 to 60 days earlier than the “sub­ mortgage loans and home improvement loans they scription service” computer tape now offered to the originate or purchase during a year. The act also public by the Federal Reserve. authorizes the Board to exempt State-chartered The target date of the quarterly release of data on financial institutions subject to a State law that is magnetic tape will be from 80 to 90 days following substantially similar, including adequate provisions the date of the report. The December 31 reports, for for enforcement. example, will be made available the latter part of The Board determined that the New Jersey law March. The actual date of availability will depend meets these standards. on particular problems in the editing and correction The Board has previously exempted certain cycle. classes of State-chartered institutions in California, The new procedure will begin with reports filed Illinois, Massachusetts, and New York. by insured commercial banks for December 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

252 Federal Reserve Bulletin □ March 1978 Both the preliminary version of the tape and the CHANGE IN BOARD STAFF more thoroughly edited version that is currently The Board of Governors has announced the ap­ released will be available to the public in the same pointment of Neal L. Petersen as General Counsel, format. These tapes will also include for the first effective about April 3, 1978, to succeed John D. time data from the large-bank supplements and the Hawke, Jr. fully consolidated balance sheet for banks with Mr. Petersen is Vice President and Assistant foreign offices. General Counsel of Bank of America N.T. & S.A., The accelerated schedule will provide data that San Francisco, California. He holds a B.A. from has not been fully edited and corrected by the the University of California at Berkeley and an agencies. Thus, the preliminary tape may contain LL.B. from Harvard University. some errors and omissions not found in the current “subscription service” tape or later versions, and the preliminary data should be used with care. SYSTEM MEMBERSHIP: The Federal Reserve will handle the distribution Admission of State Banks of the tapes for the three agencies. The charges will be the same as for the present tape, $50 for the re­ The following banks were admitted to membership port of income data and $50 for the report of condi­ in the Federal Reserve System during the period tion. Requests for copies of the tape should be February 16, 1978, through March 15, 1978: addressed to the Division of Administrative Serv- Illinois ives of the Board of Governors of the Federal Chicago..........................Drovers Bank of Chicago Reserve System, Washington, D.C. 20551. How­ Oklahoma ever, each agency is responsible for the data from Oklahoma City...............United Oklahoma Bank the banks that it supervises and is also responsible for determining the appropriate time to release the Virginia preliminary results. Hayes .........................................First Settlers Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

253 Industrial Production Released for publication March 16 February. Increases in production of durable and nondurable materials were offset by a decrease in Industrial production increased by an estimated 0.5 production of energy materials of 1.8 per cent, per cent in February, following a decline of 0.8 mainly because of limitations on the use of electric per cent in January. The February output was re­ power for industrial purposes. strained by severe weather in some regions of the country and by limitations on the use of electric power due to dwindling coal supplies in some Seasonally adjusted, ratio scale, 1967=100 States. These secondary effects of the coal strike are estimated to have reduced the February increase in total industrial production by roughly 0.2 per­ centage point. At 139.2 per cent of the 1967 average, the index is about the same as the average in the fourth quarter of 1977 and 4.5 per cent higher than in February 1977. Output of consumer durable goods increased 2.7 per cent in February but remained below the December level. Auto assemblies increased 3.8 per cent to an annual rate of 8.2 million units, after a very large drop in January. Production of home goods, such as appliances, carpeting, and furniture, recovered almost two-thirds of the January decline. Output of business equipment, after a 0.5 per cent decline in January, advanced 0.9 per cent in Febru­ ary and is now 6 per cent above the pre-recession peak reached in the third quarter of 1974. Output of construction supplies continued to rise at a strong rate. F.R. indexes, seasonally adjusted. Latest figures: February. Output of materials was about unchanged in *Auto sales and stocks include imports. Seasonally adjusted, 1967 = 100 Per cent changes from— Industrial production 1977 1978 Nov. Dec. Jan. p Feb/ Month ago Year ago Q3 to Q4 Total ................................ 139.3 139.6 138.5 139.2 .5 4.5 .7 Products, total .................. 139.5 140.3 139.0 140.0 .7 4.8 .7 Final products ............... 137.0 137.7 135.8 136.9 .8 4.0 .4 Consumer goods .... 145.2 145.8 142.5 144.0 1.1 2.5 .2 Durable goods .... 155.2 156.4 147.0 150.9 2.7 3.3 .0 Nondurable goods . 141.2 141.6 140.6 141.3 .5 2.2 .4 Business equipment . 153.5 154.1 153.4 154.8 .9 7.9 1.3 Intermediate products . 148.4 150.0 150.9 151.7 .5 7.1 1.6 Construction supplies 146.5 148.3 149.0 150.1 .7 10.7 3.2 Materials ............................. 139.0 138.6 137.7 137.8 .1 3.8 .5 p Preliminary. e Estimated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Al 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 Policy Instruments A25 Gross demand deposits of individuals, 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 Monetary and Credit Aggregates Federal Finance A13 Bank debits and deposit turnover A30 Federal fiscal and financing operations A14 Money stock measures and components A31 U.S. Budget receipts and outlays A15 Aggregate reserves and deposits of A32 Federal debt subject to statutory member banks limitation A15 Loans and investments of all A32 Gross public debt of U.S. Treasury— commercial banks Types and ownership A33 U.S. Government marketable 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

A2 Federal Reserve Bulletin □ March 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 A37 Corporate securities—Net change in A55 U.S. reserve assets amounts outstanding A56 Selected U.S. liabilities to foreigners A37 Open-end investment companies—Net and to foreign official institutions sales and asset position A38 Corporate profits and their distribution Reported by Banks in the United States: A38 Nonfinancial corporations—Assets and A57 Short-term liabilities to foreigners liabilities A59 Long-term liabilities to foreigners A38 Business expenditures on new plant A60 Short-term claims on foreigners and equipment A61 Long-term claims on foreigners A39 Domestic finance companies—Assets and liabilities; business credit A62 Foreign branches of U.S. banks— Balance sheet data Real Estate A40 Mortgage markets Securities Holdings and Transactions A41 Mortgage debt outstanding A64 Marketable U.S. Treasury bonds and notes—Foreign holdings and Consumer Instalment Credit transactions A42 Total outstanding and net change A64 Foreign official 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 SPECIAL TABLE A50 Housing and construction A51 Consumer and wholesale prices A69 Sales, revenue, profits, and dividends A52 Gross national product and income of large manufacturing corporations A53 Personal income and saving INSIDE BACK COVER Guide to Tabular Presentation and Statistical Releases Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Statistics A3 1.10 MONETARY AGGREGATES AND INTEREST RATES 1977 1977 1978 Item Ql Q2 Q3 Q4 Sept. Oct. Nov. Dec. Jan. Monetary and credit aggregates (annual rates of change, seasonally adjusted m per cent)12 Member bank reserves 1 Total.................................................................................... 2.7 3.0 9.0 5.6 -.5 9.1 3.7 6.6 22.6 3.0 3.5 8.6 5.8 -.8 9.1 2.4 8.7 20.2 2.6 1.9 3.4 2.9 14.6 -14.1 19.3 16.7 25.9 Concepts of money 1 4 M-l...................................................................................... 4.2 8.4 9.3 6.8 7.3 12.0 -1.4 7.6 7.2 5 M-2...................................................................................... 9.9 9.2 10.3 7.6 7.9 10.1 4.7 5.7 8.2 6 M-3...................................................................................... 11.3 10.0 12.4 10.8 12.3 12.5 7.5 7.4 7.9 Time and savings deposits Commercial banks: 7 Total................................................................................ 12.5 8.3 10.0 12.9 7.6 14.6 18.3 12.2 11.2 8 Other than large CD’s.................................................... 14.0 9.8 10.9 8.1 8.6 8.6 9.0 4.3 8.9 13.4 11.2 15.5 15.4 18.8 15.9 11.8 9.8 7.2 10 Total loans and investments at commercial banks 3.......... 9.5 13.3 9.8 9.3 3.8 13.5 11.8 -.7 12.1 1977 1977 1978 Ql Q2 Q3 Q4 Oct. Nov. Dec. Jan. Feb. Interest rates (levels, per cent per annum) Short-term rates 11 Federal funds 4................................................................... 4.66 5.16 5.82 6.51 6.47 6.51 6.56 6.70 6.78 12 Federal Reserve discount 5................................................ 5.25 5.25 5.42 5.93 5.80 6.00 6.00 6.37 6.50 4.63 4.84 5.50 6.11 6.16 6.10 6.07 6.44 6.45 14 Commercial paper (90- to 119-day) ?............................... 4.74 5.15 5.74 6.56 6.51 6.54 6.61 6.75 6.76 Long-term rates Bonds: 15 U.S. Govt. 8.................................................................... 7.62 7.68 7.60 7.78 7.71 7.76 7.87 8.14 8.22 5.88 5.70 5.59 5.57 5.64 5.49 5.57 5.71 5.62 17 Aaa utility (new issue) io.............................................. 8.17 8.21 8.09 8.27 8.23 8.27 8.34 8.68 8.69 18 Conventional mortgages 11............................................... 8.82 8.95 9.00 9.05 9.00 9.05 9.10 9.15 1 M-l equals currency plus private demand deposits adjusted. 7 Beginning Nov. 1977, unweighted average of offering rates quoted by M-2 equals M-l plus bank time and savings deposits other than large five dealers. Previously, most representative rate quoted by these dealers. negotiable certificates of deposit (CD’s). 8 Market yields adjusted to a 20-year maturity by the U.S. Treasury. M-3 equals M-2 plus deposits at mutual savings banks, savings and 9 Bond Buyer series for 20 issues of mixed quality. loan associations, and credit union shares. i o Weighted averages of new publicly offered bonds rated Aaa, Aa, 2 Savings and loan associations, mutual savings banks, and credit and A by Moody’s Investors Service and adjusted to an Aaa basis. unions. Federal Reserve compilations. 3 Quarterly changes calculated from figures shown in Table 1.23. 11 Average rates on new commitments for conventional first mortgages 4 Seven-day averages of daily effective rates (average of the rates on on new homes in primary markets, unweighted and rounded to nearest a given date weighted by the volume of transactions at those rates). 5 basis points, from Dept, of Housing and Urban Development. 5 Rate for the Federal Reserve Bank of New York. 12 Unless otherwise noted, rates of change are calculated from average 6 Quoted on a bank-discount rate basis. amounts outstanding in preceding month or quarter. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Financial Statistics □ March 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 1978 Dec. Jan. Feb.33 Jan. 11 Jan. 18 Jan. 25 Feb. 1 Feb. 8 Feb. 15*> Feb. 22p SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding.... 116,382 118,598 115,402 117,750 117,182 118,311 120,178 117,212 114,927 115,313 2 100,185 100,076 98,739 99,635 100,482 99,710 98,728 100,144 96,846 99,545 3 Bought outright......................... 98,957 99,544 98,032 99,313 100,105 99,646 97,867 99,620 96,451 98,517 4 Held under repurchase agree- 1,228 532 707 322 377 64 861 524 395 1,028 5 Federal agency securities............. 7,763 8,119 8,069 8,090 8,119 8,010 8,138 8,069 8,002 8,119 6 Bought outright......................... 7,541 8,004 7,982 8,004 8,004 8,004 8,001 7,982 7,982 7,982 7 Held under repurchase agree­ ment ....................................... 222 115 87 86 115 6 137 87 20 137 8 Acceptances................................... 326 178 106 124 112 31 91 135 63 135 9 Loans............................................. 558 481 405 442 418 592 426 493 282 442 10 Float.............................................. 5,308 7,065 5,522 7,062 5,494 7,141 10,014 5,509 6,760 4,948 11 Other Federal Reserve assets.... 2,242 2,679 2,561 2,396 2,557 2,827 2,782 2,862 2,974 2,123 12 Gold stock......................................... 11,696 11,719 11,718 11,719 11,719 11,719 11,719 11,718 11,718 11,718 13 Special Drawing Rights certificate account....................................... 1,208 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 14 11,354 11,392 11,423 11,385 11,392 11,396 11,406 11,413 11,421 11,429 ABSORBING RESERVE FUNDS 15 Currency in circulation..................... 102,862 102,090 101,190 103,157 102,136 101,173 100,698 100,846 101,414 101,402 16 Treasury cash holdings................... 408 395 389 393 397 397 393 390 389 390 Deposits, other than member bank reserves with F.R. Banks: 17 Treasury......................................... 5,640 7,519 5,707 6,422 5,257 8,210 10,866 8,213 5,018 4,670 18 Foreign........................................... 298 335 297 436 305 283 288 291 295 266 19 Other 2............................................ 658 839 772 647 759 966 740 802 754 668 20 Other F.R. liabilities and capital---- 3,718 3,652 3,926 3,419 3,610 3,753 4,090 3,629 3,953 4,213 21 Member bank reserves with F.R. Banks............................................. 27,057 28,129 27,512 27,629 29,077 27,893 27,479 27,423 27,493 28,101 End-of-month figures Wednesday figures 1977 1978 1978 Feb.* Jan.11 Jan. 18 Jan. 25 Feb. 1 Feb. 8 Feb.15? Feb. 22p SUPPLYING RESERVE FUNDS 22 Reserve Bank credit outstanding. ... 118,745 112,788 111,906 111,852 118,907 118,739 118,572 116,630 117,245 117,572 23 U.S. Govt, securities1....................... 102,819 97.004 98.450 94.462 99,958 98,337 101,644 96.720 99,508 101,282 24 Bought outright......................... 100,918 97.004 98.450 94.462 99,615 97,888 96,196 96.720 97,107 98,044 25 Held under repurchase agree­ ment ......................................... 1,901 8,232423 449 5,448 2,401 3,238 26 Federal agency securities................. 8,455 8.004 7.982 8.004 8,044 8,664 7.982 8,116 8,446 27 Bought outright......................... 8,004 8.004 7.982 8.004 8,004 8,004 7,982 7.982 7,982 7,982 28 Held under repurchase agree­ ment ......................................... 451 218 40 682 134 464 29 Acceptances.................................... 954 214 214 414 349 453 30 Loans............................................... 265 758 303 792 553 2,332 889 326 600 318 31 Float.................................................. 3,810 4,083 3,272 6,197 7,482 7,116 4,013 8,270 6,371 5,100 32 Other Federal Reserve assets 2,442 2,939 1,899 2,397 2,478 2,696 2,948 3,332 2,301 1,973 33 Gold stock.......................................... 11,718 11,718 11,718 11,719 11,719 11,719 11,718 11,718 11,718 11,718 34 Special Drawing Rights certificate account............................................ 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 35 Treasury currency outstanding. 11,331 11,380 11,435 11,386 11,395 11,398 11,412 11,416 11,429 11,432 ABSORBING RESERVE FUNDS 36 Currency in circulation.................... 103,811 100,819 101,400 102,918 101,907 101,076 100,905 101,383 101,707 101,597 37 Treasury cash holdings..................... 392 387 400 395 396 396 392 388 389 387 Deposits, other than member bank reserves with F.R. Banks: 38 Treasury.......................................... 7,114 11,228 3,615 5,360 6,155 9,841 9,643 6,787 3,710 3,831 39 Foreign............................................ 379 422 445 289 253 262 282 271 All 311 40 Other 2.............................................. 1,187 871 698 660 641 640 792 842 831 667 41 Other F.R. liabilities and capital.., 3,292 4,109 3,933 3,466 3,666 3,874 4,221 3,641 4,093 3,907 42 Member bank reserves with F.R. Banks............................................... 26,870 19,301 25,819 23,118 30,252 27,017 26,716 27,702 30,485 31,272 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. June July Aug. Sept. Oct. Nov. Dec. Jan. Feb.p All member banks Reserves: 1 At F.R. Banks............................. 26,430 25,646 26,663 26,373 26,152 26,933 26,783 27,057 28,129 27,512 2 Currency and coin...................... 8,548 8,609 8,622 8,712 8,887 8,820 8,932 9,351 9,980 9,321 3 Total held i................................... 35,136 34,406 35,391 35,186 35,156 35,860 35,782 36,471 38,185 36,908 4 Required.................................. 34,964 34,293 35,043 34,987 34,965 35,521 35,647 36,297 37,880 36,602 5 Excess1..................................... 172 113 348 199 191 339 135 174 305 306 Borrowings at F.R. Banks:2 6 Total............................................ 62 262 336 1,071 634 1,319 840 558 481 405 7 Seasonal....................................... 12 55 60 101 112 114 83 54 32 51 Large banks in New York City 8 Reserves held................................... 6,520 6,241 6,359 6,272 6,025 6,175 6,181 6,244 6,804 6,339 9 Required...................................... 6,602 6,188 6,342 6,247 6,022 6,120 6,175 6,279 6,775 6,584 10 Excess.......................................... -82 53 17 25 3 55 6 -35 29 -245 11 Borrowings2.................................... 15 36 74 157 75 133 132 48 77 13 Large banks in Chicago 12 Reserves held................................... 1,632 1,662 1,573 1,653 1,655 1,666 1,607 1,593 1,733 1,597 13 Required...................................... 1,641 1,627 1,606 1,622 1,634 1,656 1,609 1,613 1,684 1,634 14 Excess.......................................... -9 35 -33 31 21 10 -2 -20 49 -37 15 Borrowings2.................................... 4 15 6 5 12 24 23 26 14 Other large banks 16 Reserves held................................... 13,117 12,869 13,438 13,290 13,362 13,711 13,607 13,993 14,487 13,657 17 Required...................................... 13,053 12,943 13,286 13,270 13,355 13,598 13,602 13,931 14,504 13,856 18 Excess.......................................... 64 -74 152 20 7 113 5 62 -17 -199 19 Borrowings2.................................... 14 80 79 530 183 681 355 243 164 151 AU other banks 20 Reserves held................................... 13,867 13,634 14,021 13,971 14,114 14,308 14,387 14,641 15,161 14,616 21 Required...................................... 13,668 13,535 13,809 13,848 13,954 14,147 14,261 14,474 14,917 14,528 22 Excess........................................... 199 99 212 123 160 161 126 167 244 88 23 Borrowings2.................................... 29 131 111 379 364 481 330 241 226 241 Weekly averages of daily figures for weeks ending— 1977 1978 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25 Feb. 1 Feb. 8 Feb.15* Feb. 22p AH member banks Reserves: 24 At F.R. Banks................. 27,584 27,394 28,422 27,629 29,077 27,893 27,479 27,423 27,493 28,101 25 Currency and coin.......... 8,923 9,360 9,421 9,536 10,678 10,119 9,893 9,803 9,728 8,566 26 Total heldi...................... 36,570 36,807 37,902 37,240 39,834 38,091 37,450 37,304 37,290 36,742 27 Required....................... 36,425 36,562 37,615 36,935 39,573 37,776 37,292 36,934 36,920 36,373 28 Excess1......................... 145 245 287 305 261 315 158 370 370 369 Borrowings at F.R. Banks:2 29 Total............................... 527 686 506 442 418 592 470 493 282 442 30 Seasonal........................... 53 53 31 26 27 36 44 49 48 53 Large banks in New York City 31 Reserves held........................ 6,419 6,273 6,640 6,641 7,437 6,566 6,606 6,667 6,546 6,281 32 Required........................... 6,401 6,268 6,699 6,517 7,473 6,563 6,558 6,680 6,683 6,692 33 Excess............................... 18 5 -59 124 -36 3 48 -13 -137 -411 34 Borrowings2.......................... 50 32 101 27 211 14 36 Large banks in Chicago 35 Reserves held........................ 1,562 1,600 1,774 1,549 1,866 1,643 1.630 1,685 1,651 1,535 36 Required........................... 1,574 1,593 1,693 1,596 1,835 1,661 1.630 1,668 1,703 1,589 37 Excess................................ -12 7 81 -47 31 -18 17 -52 -54 38 Borrowings2.......................... 27 73 14 29 19 Other large banks 39 Reserves held....................... 13,990 14,161 14,443 14,150 15,211 14,526 14,185 14,151 13,830 13,379 40 Required........................... 13,992 14,083 14,399 14,118 15,181 14,490 14,239 13,962 14,091 13,588 41 Excess............................... -2 78 44 32 30 36 -54 189 -261 -209 42 Borrowings2.......................... 229 292 129 204 211 138 178 237 71 178 All other banks 43 Reserves held....................... 14,599 14,773 15,045 14,900 15,320 15,356 15,029 14,801 14,701 14,502 44 Required.......................... 14,458 14,618 14,824 14,704 15,084 15,062 14,865 14,624 14,443 14,504 45 Excess............................... 141 155 221 196 236 294 164 111 258 -2 46 Borrowings2......................... 221 289 276 197 178 224 292 242 175 264 1 Adjusted to include waivers of penalties for reserve deficiencies in nonmember bank joins the Federal Reserve System. For weeks for which accordance with Board policy, effective Nov. 19, 1975, of permitting figures are preliminary, figures by class of bank do not add to total transitional relief on a graduated basis over a 24-month period when a because adjusted data by class are not available. nonmember bank merges into an existing member bank, or when a 2 Based on closing figures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Financial Statistics □ March 1978 1.13 FEDERAL FUNDS TRANSACTIONS Money Market Banks Millions of dollars, except as noted 1978, week ending— Type Jan. 4 Jan. 11 Jan. 18 Jan. 25 Feb. 1 Feb. 8 Feb. 15 Feb. 22 Total, 46 banks Basic reserve position 1 Excess reserves1.................................................... 84 86 37 57 3 170 126 121 Less: 2 Borrowings at F.R. Banks............................... 156 129 128 277 76 221 54 102 3 Net interbank Federal funds transactions.... 15,135 20,710 20,198 18,005 15,436 18,143 18,273 17,604 Equals: Net surplus, or deficit (—): 4 Amount............................................................. -15,207 -20,754 -20,290 -18,225 -15,508 -18,193 -18,201 -17,584 5 Per cent of average required reserves............... 94.4 132.5 115.9 114.0 98.3 115.2 114.0 113.4 Interbank Federal funds transactions Gross transactions: 6 Purchases.......................................................... 25,020 28,330 27,896 24,683 22,456 25,246 25,118 25,101 7 Sales................................................................... 9,885 7,620 7,968 6,678 7,020 7,103 6,845 7,497 8 Two-way transactions2........................................ 6,092 5,221 5,511 5,575 5,351 5,671 5,990 6,078 Net transactions: 9 Purchases of net buying banks....................... 18,928 23,110 22,385 19,108 17,105 19,575 19,128 19,024 10 Sales of net selling banks................................. 3,794 2,400 2,188 1,102 1,669 1,432 855 1,420 Related transactions with U.S. Govt, securities dealers 11 Loans to dealers3................................................. 4,004 5,050 2,912 4,006 4,451 3,719 4,308 2,937 12 Borrowing from dealers4.................................... 1,693 1,462 1,776 2,340 2,462 2,091 1,946 2,474 13 Net loans.............................................................. 2,312 3,588 1,136 1,666 1,990 1,628 2,362 464 8 banks in New York City Basic reserve position 14 Excess reserves1.................................................... -46 94 21 30 52 23 4 45 Less: 15 Borrowings at F.R. Banks............................... 101 27 211 14 36 16 Net interbank Federal funds transactions.... 6,528 7,766 6,373 5,314 4,045 5,065 4,874 5,286 Equals: Net surplus, or deficit (—): 17 Amount............................................................. -6,675 -7,699 -6,352 -5,496 -3,993 -5,056 -4,906 -5,241 18 Per cent of average required reserves................ 109.4 129.8 93.1 92.6 67.3 83.2 80.6 85.4 Interbank Federal funds transactions Gross transactions: 19 Purchases.......................................................... 7,291 8,342 7,297 6,246 5,032 6,432 6,121 6,665 20 Sales................................................................... 763 576 924 932 988 1,367 1,247 1,379 21 Two-way transactions2........................................ 764 576 924 932 988 1,194 1,246 1,279 Net transactions: 22 Purchases of net buying banks....................... 6,527 7,766 6,373 5,314 4,045 5,238 4,874 5,386 23 Sales of net selling banks................................. 173 100 Related transactions with U.S. Govt, securities dealers 24 Loans to dealers3................................................. 2,718 2,902 1,747 2,200 2,250 2,283 1,941 1,580 25 Borrowing from dealers4..................................... 1,031 1,147 1,168 1,509 1,224 1,068 973 1,287 26 Net loans.............................................................. 1,687 1,755 579 691 1,026 1,215 968 294 38 banks outside New York City Basic reserve position 27 Excess reserves1.................................................... 130 -9 16 27 -49 146 122 76 Less: 28 Borrowings at F.R. Banks............................... 55 102 128 66 76 206 18 102 29 Net interbank Federal funds transactions.... 8,607 12,944 13,825 12,691 11,391 13,077 13,399 12,318 Equals: Net surplus, or deficit (—): 30 Amount............................................................. -8,533 -13,055 -13,938 -12,729 -11,516 -13,137 -13,295 -12,344 31 Per cent of average required reserves................ 85.2 134.1 130.4 126.6 117.1 135.2 134.5 131.7 Interbank Federal funds transactions Gross transactions: 32 Purchases........................................................ 17,729 19,988 20,599 18,437 17,423 18,814 18,997 18,436 33 Sales................................................................... 9,122 7,045 6,774 5,746 6,032 5,737 5,598 6,118 34 Two-way transactions2.................................... 5,328 4,645 4,587 4,643 4,363 4,478 4,744 4,798 Net transactions: 35 Purchases of net buying banks....................... 12,401 15,343 16,012 13,794 13,060 14,336 14,253 13,638 36 Sales of net selling banks................................. 3,794 2,400 2,188 1,102 1,669 1,259 855 1,320 Related transactions with U.S. Govt, securities dealers 37 Loans to dealers3................................................. 1,287 2,148 1,165 1,805 2,201 1,436 2,368 1,357 38 Borrowing from dealers4..................................... 662 315 608 830 1,238 1,023 973 1,187 39 Net loans.............................................................. 625 1,833 558 975 963 413 1,395 170 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Funds Al 1.13 Continued 1978, week ending— Type Jan. 4 Jan. 11 Jan. 18 Jan. 25 Feb. 1 Feb. 8 Feb. 15 Feb. 22 5 banks in City of Chicago Basic reserve position 40 Excess reserves1.................................................... 91 -20 19 8 -1 20 17 7 Less: 14 29 19 42 Net interbank Federal funds transactions.... 5,447 6,502 6,654 6,168 5,492 5,926 6,180 5,535 Equals: Net surplus, or deficit (—): 43 Amount............................................................. -5,356 -6,536 -6,663 -6,179 -5.493 -5,906 -6,163 -5,528 44 Per cent of average required reserves.............. 339.2 441.5 387.7 399.2 361.6 379.4 387.7 373.8 Interbank Federal funds transactions Gross transactions: 6,539 7,492 7,928 7,256 6,714 7,063 7,056 6,931 46 Sales................................................................... 1,092 991 1,274 1,088 1,222 1,138 876 1,396 1,018 911 1,217 1,049 1,184 1,118 873 1,370 Net transactions: 48 Purchases of net buying banks....................... 5,522 6,582 6,710 6,206 5,530 5,946 6,183 5,561 49 Sales of net selling banks................................. 74 80 57 39 38 20 3 26 Related transactions with U.S. Govt, securities dealers 50 Loans to dealers3................................................. 180 387 201 206 341 253 283 242 51 Borrowing from dealers4.................................... 246 34 228 290 463 230 263 423 52 Net loans.............................................................. -66 353 -28 -84 -122 23 20 -182 33 other banks Basic reserve position 53 Excess reserves1.................................................... 39 11 -3 20 -47 ill 105 70 Less: 54 Borrowings at F.R. Banks............................... 55 88 100 47 76 206 18 102 55 Net interbank Federal funds transactions.. .. 3,160 6,442 7,172 6,523 5,899 7,152 7,219 6,783 Equals: Net surplus, or deficit (—): 56 Amount............................................................. -3,177 -6,519 -7,275 -6,550 -6,022 -7,231 -7,132 -6,815 57 Per cent of average required reserves.............. 37.7 79.0 81.1 77.0 72.4 88.6 86.0 86.3 Interbank Federal funds transactions Gross transactions: 58 Purchases.......................................................... 11,189 12,496 12,672 11,181 10,709 11,751 11,941 11,505 59 Sales................................................................... 8,030 6,054 5,500 4,658 4,810 4,599 A,111 A,111 60 Two-way transactions2........................................ 4,310 3,734 3,370 3,594 3,179 3,360 3,871 3,428 Net transactions: 61 Purchases of net buying banks....................... 6,879 8,762 9,302 7,588 7,531 8,391 8,070 8,077 62 Sales of net selling banks................................. 3,719 2,320 2,131 1,064 1,631 1,239 852 1,294 Related transactions with U.S. Govt, securities dealers 63 Loans to dealers3................................................. 1,107 1,761 965 1,600 1,860 1,184 2,085 1,116 64 Borrowing from dealers4..................................... 416 281 379 540 775 793 7*0 764 65 Net loans.............................................................. 691 1,480 585 1,059 1,086 391 1,375 352 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 Financial Statistics □ March 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 Secs. 13 and 13a1 Bank Regular rate Special rate3 Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous 2/28/78 date rate 2/28/78 date rate 2/28/78 date rate 2/28/78 date rate Boston.................. 6*4 1/10/78 6 7 1/10/78 6 Vi 7Vi 1/10/78 7 9V4 1/10/78 9 New York............ 6% 1/9/78 6 7 1/9/78 6 Vi 71/4 1/9/78 7 9V4 1/9/78 9 Philadelphia......... 61/2 1/20/78 6 7 1/20/78 6 Vi 7% 1/20/78 7 9V4 1 /20/78 9 Cleveland............. 6% 1/20/78 6 7 1/20/78 6 Vi 71/4 1/20/78 7 9V4 1/20/78 9 Richmond............ 6*4 1/13/78 6 7 1/13/78 6 Vi 71/4 1/13/78 7 91/4 1/13/78 9 Atlanta................. 6*4 1/16/78 6 7 1/16/78 6 Vi 7Vi 1/16/78 7 9Vi 1/16/78 9 Chicago................ 6 *4 1/9/78 6 7 1/9/78 6% 71/4 1/9/78 7 91/2 1/9/78 9 St. Louis............... 6 Vi 1/13/78 6 7 1/13/78 6*i 71/2 1/13/78 7 9V4 1/13/78 9 Minneapolis......... 6^/2 1/10/78 6 7 1/10/78 6Vi 7 Vi 1/10/78 7 91/4 1/10/78 9 Kansas City......... 6% 1/10/78 6 7 1/10/78 6 Vi 71/2 1/10/78 7 91/2 1/10/78 9 Dallas................... 6% 1/13/78 6 7 1/13/78 61/4 7% 1/13/78 7 9*4 1/13/78 9 San Francisco.... 6 Vi 1/13/78 6 7 1/13/78 61/4 7Vi 1/13/78 7 9*4 1/13/78 9 Range of rates in recent years5 Range F.R. Range F.R. Range F.R. Effective date (or level)— Bank Effective date or level)— Bank Effective date or level)— Bank All F.R. of All F.R. of All F.R. of Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1970....... 5*4 5V4 1973—Jan. 15................. 5 5 1975—Jan. 6................. 7*4-734 734 Feb. 26................. 5-5*4 5*4 10................. 7*4-734 71/4 1971—Jan. 8.................. 514-5*4 5*4 Mar. 2................. 5*4 5*4 24.................. 7*4 7*4 15.................. 5% 5*4 Apr. 23................. 5*4-534 5*4 Feb. 5................. 634-7*4 634 19.................. 5 -5% 5*4 May 4................. 534 5% 7................. 634 634 22.................. 5 -5*4 5 11................. 534-6 6 Mar. 10................. 61/4-634 6*4 29.................. 5 5 18................. 6 6 14.................. 61/4 6*4 Feb. 13.................. 434-5 5 June 11. . . .. 6-6*4 6*4 May 16................. 6-614 6 19.................. 434 434 15................. 6V4 6*4 23................. 6 6 July 16.................. 434-5 5 July 2................. 7 7 23.................. 5 5 Aug. 14................. 7-7*4 7*4 1976—Jan. 19................. 5*4-6 5*4 Nov. 11................... 434-5 5 23................. 7V4 7*4 23.................. 5*4 5*4 19................... 434 434 Nov. 22................. 514-5*4 51/4 Dec. 13.................. 4*4-434 434 1974—Apr. 25................ 7*4-8 8 26................. 5*4 514 17.................. 4V4-434 4V4 30................ 8 8 24.................. 4*4 4Vi Dec. 9................. 734-8 734 1977—Aug. 30................. 5*4-53,4 514 16................. 734 734 31................. 5*4-534 534 Sept. 2................. 534 534 Oct. 26................. 6 6 1978—Jan. 9................. 6-6 V4 6*4 20................. 6*4 6*4 In effect Feb. 28, 1978.. . 6*4 6*4 1 Discounts of eligible paper and advances secured by such paper or by 4 Advances to individuals, partnerships, or corporations other than U.S. Govt, obligations or any other obligations eligible for F.R. Bank member banks secured by direct obligations of, or obligations fully purchase. guaranteed as to principal and interest by, the U.S. Govt, or any agency 2 Advances secured to the satisfaction of the F.R. Bank. Advances thereof. secured by mortgages on 1- to 4-family residential property are made at 5 Rates under Secs. 13 and 13a (as described above). For description the Section 13 rate. and earlier data, see the following publications of the Board of Governors: 3 Applicable to special advances described in Section 201.2(e)(2) of Banking and Monetary Statistics, 1914-1941, Banking and Monetary Regulation A. Statistics, 1941-1970, 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 Feb. 28, 1978 Type of deposit, and deposit interval in millions of dollars Per cent Effective date Per cent Effective date Net demand:2 7 12/30/76 m 2/13/75 2-10................................................................................................. 9!/i 12/30/76 10 2/13/75 10-100............................................................................................. uy4 12/30/76 12 2/13/75 100-400........................................................................................... ny4 12/30/76 13 2/13/75 Over 400......................................................................................... 161/4 12/30/76 16% 2/13/75 Time: 2,3 Savings............................................................................................ 3 3/16/67 m 3/2/67 Other time: 0-5, maturing in— 30-179 days............................................................................ 3 3/16/67 3% 3/2/67 4 m 1/8/76 3 3/16/67 4 1 10/30/75 3 3/16/67 Over 5, maturing in— 6 12/12/74 5 10/1/70 4 2% 1/8/76 3 12/12/74 4 years or more...................................................................... 4 1 10/30/75 3 12/12/74 Legal limits, Feb. 28, 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 re­ banks. 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 Domestic Financial Statistics □ March 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 Type and maturity of deposit In effect Feb. 28,1978 Previous maximum In effect Feb. 28,1978 Previous maximum Per cent Effective Per cent Effective Per cent Effective Per cent Effective date date date date 1 Savings........................................................ 7/1/73 4% 1/21/70 51/4 («) (7) 2 Negotiable order of withdrawal (NOW) accounts1...................................... 1/1/74 5 1/1/74 Time (multiple- and single-maturity unless otherwise indicated):2 30-89 days: 4 3 S M in u g lt l i e p - l m e- a m tu a r t i u ty ri . t . y .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7/1/73 4 5 % 9 1 / / 2 2 6 1 / / 6 7 6 0 (8) (8) 90 days to 1 year: 5 6 M Sin u g lt l i e p - l m e- a m tu a r t i u ty ri . t . y .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5% 7/1/73 9 7 / / 2 2 6 0 / / 6 6 6 6 3 534 (6) 5% 1/21/70 7 8 2 1 t t o o 2 2 Y y 2 e y ar e s a 3 rs .. 3 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7/1/73 5 5V % 4 1 1 / / 2 2 1 1/ / 7 7 0 0 6% (6) 5 6 % 1 1 / / 2 2 1 1 / / 7 7 0 0 9 2Vi to 4 years3..................................... 6Vi 7/1/73 5V4 1/21/70 6y4 (6) 6 1/21/70 10 4 to 6 years4........................................ m 11/1/73 (9) 7% 11/1/73 (9) 11 6 years or more4................................... m 12/23/74 m 11/1/73 73/4 12/23/74 7V4 11/1/73 12 Governmental units (all maturities)... m 12/23/74 7% 11/27/74 734 12/23/74 7% 11/27/74 13 Individual retirement accounts and Keogh (H.R. 10) plans 5............ m 7/6/77 (8) 7% 7/6/77 (8) 1 For authorized States only. Federally insured commercial banks, 9 Between July 1, 1973, and Oct. 31, 1973, there was no ceiling for savings and loan associations, cooperative banks, and mutual savings certificates maturing in 4 years or more with minimum denominations banks were first permitted to offer NOW accounts on Jan. 1, 1974. of $1,000; however, the amount of such certificates that an institution Authorization to issue NOW accounts was extended to similar institu­ could issue was limited to 5 per cent of its total time and savings deposits. tions throughout New England on Feb. 27, 1976. Sales in excess of that amount, as well as certificates of less than $1,000, 2 For exceptions with respect to certain foreign time deposits see the were limited to the 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 commer­ to an Individual Retirement Account (IRA) or a Keogh (H.R. 10) Plan es­ cial banks, mutual savings banks, and savings and loan associations are tablished pursuant to the Internal Revenue Code. The $1,000 minimum established by the Board of Governors of the Federal Reserve System, requirement was removed for such accounts in December 1975 and No­ the Board of Directors of the Federal Deposit Insurance Corporation, vember 1976, respectively. and the Federal Home Loan Bank Board under the provisions of 12 5 3-year minimum maturity. CFR 217, 329, and 526, respectively. The maximum rates on time de­ 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 1978 Type of transaction 1975 1976 July Aug. Sept. Oct. Nov. Dec. U.S. GOVT. SECURITIES Outright transactions (excl. matched salepurchase transactions) Treasury bills: 1 Gross purchases. 11,562 14,343 13,738 118 812 2,005 3,109 696 2 Gross sales.......... 5,599 8,462 7,241 753 176 303 1,877 436 311 1,323 3 Redemptions 26,431 2 5,017 2,136 500 317 300 Others within 1 year:1 Gross purchases.................... 3,886 472 3,017 2,616 99 56 Gross sales............................. Exchange, or maturity shift. -4 792 4.499 238 2,321 *"320' -45 1,352 623 -511 Redemptions......................... 3,549 2.500 2,500 1 to 5 years: 8 Gross purchases.................... 2 3,284 2 3,202 2,833 681 628 311 9 Gross sales............................ 177 10 Exchange, or maturity shift. 3,854 -2,588 -6,649 -238 -1,664 -320 45 -1,267 -623 5U 5 to 10 years: 11 Gross purchases.................. 1,510 1,048 758 96 166 89 12 Gross sales............................ 13 Exchange, or maturity shift. -4,697 1,572 584 -782 -325 Over 10 years: 14 Gross purchases.................. 1,070 642 128 108 100 15 Gross sales............................ 16 Exchange, or maturity shift. 848 225 1,565 125 240 All maturities:1 17 Gross purchases. 221,313 219,707 20,898 118 812 5,526 4,110 1,252 18 Gross sales.......... 5,599 8,639 7,241 753 176 303 1,877 436 311 1,323 19 Redemptions 29,980 25,017 4,636 500 317 2,500 300 Matched sale-purchase transactions 20 Gross sales..................................... 151,205 196,078 425,214 27,947 45,831 39,552 48,204 56,899 32,320 54,859 21 Gross purchases............................ 152,132 196,579 423,841 27,301 46,170 39,694 44,772 57,477 35,001 51,016 Repurchase agreements 22 Gross purchases 140,311 232,891 178,683 13,973 4,397 16,700 9,578 6,472 18,071 10,229 23 Gross sales................. 139,538 230,355 180,535 15,719 5,648 15,469 11,889 4,433 18,208 12,130 24 Net change in U.S. Govt, securities......... 7,434 9,087 5,798 -3,528 -276 6,279 -10,118 6,342 -5,815 FEDERAL AGENCY OBLIGATIONS Outright transactions: 25 Gross purchases......................................... 1,616 891 1,433 707 26 Gross sales.................................................. 27 Redemptions.............................................. 246 169 223 c69 25 32 Repurchase agreements: 28 Gross purchases......................................... 15,179 10,520 13,811 1,672 265 1,136 741 615 2,712 1,680 29 Gross sales.................................................. 15,566 10,360 13,638 1,938 459 978 1,051 484 2,392 2,131 BANKERS ACCEPTANCES 30 Outright transactions, net. .. 163 -545 -196 -24 -15 -4 31 Repurchase agreements, net. -35 410 159 -204 -247 351 -478 248 705 -954 32 Net change in total System Account. 8,539 9,833 7,143 -4,020 -801 6,764 -10,910 2,260 8,042 -7,220 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 holdings of 2 in 1975, the System obtained $421 million of 2-year Treasury notes the System Open Market Account; all other figures increase such holdings. m exchange for maturing bills. In 1976 there was a similar transaction Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics □ March 1978 1.18 FEDERAL RESERVE BANKS Condition and F.R. Note Statements Millions of dollars Wednesday End of month 1978 1977 1978 Jan. 25 Feb. 1 Feb. 8 Feb. 15? Feb. 22p Dec. Jan. Feb.p Consolidated condition statement ASSETS 1 Gold certificate account.............................. 11,719 11,718 11,718 11,718 11,718 11,718 11,718 11,718 2 Special Drawing Rights certificate account. 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 3 Coin1............................................................. 322 335 340 343 339 282 334 339 Loans: Member bank borrowings............... 2,332 889 326 600 318 265 758 303 Other.................................................. Acceptances: Bought outright................................. Held under repurchase agreements.. 214 414 349 453 954 Federal agency obligations: Bought outright................................. 8,004 7,982 7,982 7,982 7,982 ,004 8,004 7,982 Held under repurchase agreements.. 40 682 134 464 451 U.S. Govt, securities Bought outright: Bills................................................ 37,974 36,282 36,806 37,193 38,130 41,561 37,090 38,536 Certificates—Special..................... Other....................... Notes.............................................. 50,965 50,965 50,965 50,516 50,516 50,509 50,965 50,516 Bonds............................................. 8,949 8,949 8,949 9,398 9,398 8,848 8,949 9,398 Total 2................................................. 97,888 96,196 96,720 97,107 98,044 100,918 97,004 98,450 Held under repurchase agreements. 449 5,448 2,401 3,238 1,901 Total U.S. Govt, securities. 98,337 101,644 96,720 99,508 101,282 102,819 97,004 98,450 Total loans and securities.. 108,927 111,611 105,028 108,573 110,499 112,493 105,766 106,735 19 Cash items in process of collection— 13,277 10,507 13,758 13,898 14,068 9,617 10,999 10,262 20 Bank premises...................................... 379 380 380 380 381 378 379 380 Other assets: 21 Denominated in foreign currencies. 262 282 271 427 311 18 422 445 22 All other............................................ 2,055 2,286 2,681 1,494 1,281 2,046 2,138 1,074 23 Total assets. 138,191 138,369 135,426 138,083 139,847 137,802 133,006 132,203 LIABILITIES 24 F.R. notes.......................................... 90,396 90,219 90,695 91,010 90,891 93,153 90,159 90,703 Deposits: 25 Member bank reserves.................. 27,017 26,716 27,702 30,485 31,272 26,870 19,301 25,819 26 U.S. Treasury—General account. 9,841 9,643 6,787 3,710 3,831 7,114 11,228 3,615 27 Foreign.......................................... 262 282 271 427 311 379 422 445 28 Other3............................................ 640 792 842 831 667 1,187 871 698 29 Total deposits. 37,760 37,433 35,602 35,453 36,081 35,550 31,822 30,577 Deferred availability cash items........... 6,161 6,496 5.488 7,527 8,968 5,807 6,916 6,990 Other liabilities and accrued dividends. 1,348 1,570 1,418 1,732 1,417 1,234 1,474 1,328 32 Total liabilities................................... 135,665 135,718 133,203 135,722 137,357 135,744 130,371 129,598 CAPITAL ACCOUNTS Capital paid in............. 1,035 1,039 1,039 1,041 1,041 1.029 1,039 1,044 Surplus......................... 1,029 1,029 1,029 1,029 1,029 1.029 1,029 1,029 Other capital accounts. 462 283 155 291 420 567 532 36 Total liabilities and capital accounts..................... 138,191 138,369 135,426 138,083 139,847 137,802 133,006 132,203 37 Memo: Marketable U.S. Govt, securities held in custody for foreign and inti, account............. 79,725 80,147 79,459 80,275 81,340 76,055 80,009 83,261 Federal Reserve note statement 38 F.R. notes outstanding (issued to Bank)............. 102,112 102,496 102,644 102,595 102,664 100,534 102,355 102,773 Collateral held against notes outstanding: 39 Gold certificate account................................... 11,719 11,718 11,718 11,718 11,718 11,713 11,718 11,718 40 Special Drawing Rights certificate account..., 1,250 1,250 1,250 1,250 1,250 880 1,250 1,250 41 Eligible paper................................................... 2,317 854 321 545 303 733 292 42 U.S. Govt, securities........................................ 86,826 88,674 89,355 89,082 89,393 89,675 88,654 89,513 43 Total collateral. 102,112 102,496 102,644 102,595 102,664 102,268 102,355 102,773 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 1978 1977 1978 Jan. 25 Feb. 1 Feb. 8 Feb.15 Feb. 22 Dec. 31 Jan. 31 Feb. 28 1 Loans.......................... 2,332 890 329 600 318 266 757 303 2 Within 15 days 2,324 876 306 586 308 256 740 294 3 16 days to 90 days. 14 23 14 10 10 17 9 4 91 days to 1 year... 5 Acceptances................ 214 414 349 453 954 6 Within 15 days 214 414 349 453 954 7 16 days to 90 days. 8 91 days to 1 year... U.S. Govt, securities............ 98,337 101,644 96,720 99,508 101,282 102,819 97,004 98,450 Within 15 days1............... 4,073 10,978 5,127 4,799 6,007 4,947 5,836 2,512 16 days to 90 days........... 15,752 13,558 13,980 17,595 18,217 20,362 13,155 19,549 91 days to 1 year............. 33,336 31,749 32,254 30,829 30,773 32,539 32,654 30,377 Over 1 year to 5 years... 27,532 27,715 27,715 29,097 29,097 27,516 27,715 28,824 Over 5 years to 10 years. 10,477 10,477 10,477 9,571 9,571 10,388 10,477 9,571 Over 10 years................... 7,167 7,167 7,167 7,617 7,617 7,067 7,167 7,617 16 Federal agency obligations.. 8,044 8,664 7,982 8,116 8,446 8,455 8,004 7,982 17 Within 15 days i.............. 105 682 264 594 540 65 222 18 16 days to 90 days........... 354 375 375 279 279 423 375 140 19 91 days to 1 year............. 886 908 908 874 874 740 865 1,127 20 Over 1 year to 5 years. . . 4,175 4,175 4,175 4,175 4,175 4,149 4,175 3,954 21 Over 5 years to 10 years. 1,623 1,644 1,644 1,644 1,644 1,648 1,623 1,659 22 Over 10 years................... 901 880 880 880 880 955 901 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 1978 Bank group, or type 1974 1975 1976 of customer Sept. Oct. Nov. Dec. Jan. Debits to demand deposits 2 (seasonally adjusted) 1 All commercial banks............... 22,937.8 25,028.5 29,180.4 36.321.9 37,068.4 36,831.9 37,331.1 2 Major New York City banks.. 8,434.8 9,670.7 11.467.2 14.388.9 14.976.2 14,216.3 14,633.3 3 Other banks............................... 14,503.0 15,357.8 17.713.2 21,933.0 22.092.2 22,615.7 22,697.8 Debits to savings deposits 3 (not seasonally adjusted) 4 All customers............................. 345.5 360.0 334.6 359.2 5 Business 1................................... 46.9 47.7 45.3 54.7 <> Others......................................... 298.6 312.3 289.4 304.5 Demand deposit turnover 2 (seasonally adjusted) 7 All commercial banks............... 99.0 105.3 116.8 133.7 134.2 133.5 134.3 8 Major New York City banks. . 321.6 356.9 411.6 533.8 533.9 524.4 539.2 9 Other banks............................... 70.6 72.9 79.8 89.6 89.0 90.9 90.5 Savings deposit turnover 3 (not seasonally adjusted) 10 All customers............................. 1.6 1.7 1.6 1.7 11 Business 1.................................. 4.4 4.4 4.1 5.0 12 Others......................................... 1.5 1.5 1.4 1.5 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 Financial Statistics □ March 1978 1.21 MONEY STOCK MEASURES AND COMPONENTS Billions of dollars, averages of daily figures 1977 1978 1974 1975 1976 1977 Dec. Dec. Dec. Dec. Item Aug. Sept. Oct. Nov. Dec. Jan. Seasonally adjusted MEASURES i 1 M-l...................................................... 283.1 294.8 312.4 335.4 328.4 330.4 333.7 333.3 335.4 337.4 2 M-2...................................................... 612.4 664.3 740.3 806.5 787.7 792.9 799.6 802.7 806.5 812.0 3 M-3...................................................... 981.5 1,092.6 1,237.1 '1,374.0 1,329.5 1,343.1 1,357.1 1,365.6 rl,374.0 1,383.0 4 M-4...................................................... 701.4 746.5 803.5 881.2 850.9 856.2 865.9 873.5 881.2 888.3 5 M-5...................................................... 1,070.5 1,174.7 1,300.3 1,448.8 1,392.7 1,406.3 1,423.5 1,436.5 1,448.8 1,459.3 COMPONENTS 6 Currency.............................................. 67.8 73.7 80.5 88.4 85.5 86.4 87.1 87.8 88.4 89.2 Commercial bank deposits: 7 Demand........................................... 215.3 221.0 231.9 247.0 242.9 244.0 246.6 245.5 247.0 248.2 8 Time and savings............................. 418.3 451.7 491.1 545.8 522.5 525.8 532.2 540.3 545.8 550.9 9 Negotiable CD’s2........................ 89.0 82.1 63.3 74.7 63.2 63.2 66.4 70.9 74.7 76.3 10 Other............................................ 329.3 369.6 427.9 471.1 459.3 462.6 465.9 469.4 471.1 474.6 11 Nonbank thrift institutions3.............. 369.1 428.3 496.8 567.6 541.7 550.2 557.5 563.0 567.6 571.0 Not seasonally adjusted MEASURES1 12 M-l...................................................... 291.3 303.2 321.3 344.9 325.2 328.2 332.5 335.4 344.9 343.8 13 M-2...................................................... 617.5 669.3 745.3 811.7 784.4 788.9 796.4 800.0 811.7 817.2 14 M-3...................................................... 983.8 1,094.3 1,237.9 •■1,374.2 1,326.6 1,337.1 1,350.6 1,357.4 '■1,374.2 1,385.3 15 M-4...................................................... 708.0 752.8 809.5 887.6 848.8 854.3 864.7 871.6 887.6 893.6 16 M-5...................................................... 1,074.3 1,177.7 1,302.1 1,450.2 1,391.1 1,402.6 1,419.0 1,429.0 1,450.2 1,461.6 COMPONENTS 17 Currency............................................. 69.0 75.1 82.0 90.0 85.8 86.1 86.9 88.4 90.0 88.6 Commercial bank deposits: 18 Demand........................................... 222.2 228.1 239.3 254.9 239.3 242.1 245.6 247.0 254.9 255.2 19 Member....................................... 159.7 162.1 168.5 176.3 166.3 167.5 170.0 170.3 176.3 175.8 20 Domestic nonmember................ 58.5 62.6 67.3 74.3 69.1 70.4 71.3 72.4 74.3 74.9 21 Time and savings............................. 416.7 449.6 488.2 542.7 523.7 526.1 532.2 536.2 542.7 549.8 22 Negotiable CD’s2....................... 90.5 83.5 64.3 75.9 64.5 65.4 68.3 71.6 75.9 16A 23 Other........................................... 326.3 366.2 423.9 466.8 459.2 460.7 463.8 464.6 466.8 473.4 24 Nonbank thrift institutions3.............. 366.3 424.9 492.6 r562.5 542.3 548.2 554.3 557.4 r562.5 568.1 25 U.S. Govt, deposits (all commercial banks).......................................... 4.9 4.1 4.7 5.5 3.7 5.4 4.1 3.8 5.5 4.6 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 banks other than domestic interbank and U.S. Govt., less cash items in see “Money Stock Measures: Revision” in the March 1977 Bulletin, pp. process of collection and F.R. float; (2) foreign demand balances at F.R. 305 and 306. Banks; and (3) currency outside the Treasury, F.R. Banks, and vaults Latest monthly and weekly figures are available from the Board’s H.6 of commercial banks. release. Back data are available from the Banking Section, Division of M-2: M-l plus savings deposits, time deposits open account, and time Research and Statistics. certificates of deposit (CD’s) other than negotiable CD’s of $100,000 or 2 Negotiable time CD’s issued in denominations of $100,000 or more more of large weekly reporting banks. by large weekly reporting commercial banks. M-3: M-2 plus the average of the beginning- and end-of-month deposits 3 Average of the beginning- and end-of-month figures for deposits of of mutual savings banks, savings and loan shares, and credit union shares mutual savings banks, for savings capital at savings and loan associations, (nonbank thrift). and for credit union shares. NOTES TO TABLE 1.23: 1 Adjusted to exclude domestic commercial interbank loans. there were increases of about $500 million in loans, $100 million in 2 Loans sold are those sold outright to banks’ own foreign branches, “Other” securities, and $600 million in “Total loans and investments.” nonconsolidated nonbank affiliates of the bank, the banks’ holding As of 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 of one large bank. Reductions in other items were: “Total loans,” $1.0 had been defined somewhat differently, and the reporting panel of banks billion (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 re­ 3 Reclassification of loans reduced these loans by about $1.2 billion classifications at another large bank. as of Mar. 31, 1976. 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 1977 1978 Item 1974 1975 1976 Dec. Dec. Dec. June July Aug. Sept. Oct. Nov. Dec. Jan. Seasonally adjusted 1Reserves 1................................................................... 36.60 34.73 34.95 34.86 35.35 35.64 35.63 35.90 36.01 36.21 36.89 2 Nonborrowed......................................................... 35.87 34.60 34.90 34.60 35.03 34.58 35.00 34.59 35.15 35.64 36.40 3 Rermired....................................................................... 36.34 34.47 34.68 34.71 35.08 35.44 35.42 35.69 35.76 36.02 36.62 4 Dennst'ts suhierf tn reserve rennirements 2................. 486.2 505.4 529.6 544.5 547.7 551.4 552.9 559.4 564.6 569.9 575.7 5 Time and savings................................................... 322.1 337.9 355.0 367.0 369.2 370.8 372.4 377.1 383.5 387.7 390.5 Demand: 6 Private................................................................. 160.6 164.5 171.4 173.8 175.8 177.0 176.9 179.0 177.6 178.5 182.3 7 U.S. Govt............................................................ 3.5 3.0 3.2 3.7 2.8 3.6 3.7 3.3 3.5 3.7 3.0 Not seasonally adjusted 8 Dennsite snhiert fn reserve renniremenfs 2................. 491.8 510.9 534.8 544.5 547.6 548.3 552.1 558.2 562.1 575.3 581.3 9 Time and savings.................................................... 321.7 337.2 353.6 367.8 369.5 371.7 373.0 377.5 380.7 386.4 390.3 Demand: 10 Private................................................................. 166.6 170.7 177.9 173.0 175.6 174.1 175.2 178.0 178.7 185.1 187.9 11 U S. Govt............................................................ 3.4 3.1 3.3 3.7 2.6 2.5 3.8 2.7 2.6 3.8 3.1 1 Series reflects actual reserve requirement percentages with no adjust- 2 Includes total time and savings deposits and net demand deposits as ment to eliminate the effect of changes in Regulations D and M. There defined by Regulation D. Private demand deposits include all demand are breaks in series because of changes in reserve requirements effective deposits except those due to the U.S. Govt., less cash items in process of Dec. 12, 1974; Feb. 13, May 22, and Oct. 30,1975; Jan. 8, and Dec. 30,1976. collection and demand balances due from domestic commercial banks. In addition, effective Jan. 1, 1976, statewide branching in New York was instituted. The subsequent merger of a number of banks raised Note.—Back data and estimates of the impact on required reserves required reserves because of higher reserve requirements on aggregate and changes in reserve requirements are shown in Table 14 of the Board’s deposits at these banks. Annual Statistical Digest, 1971-1975. 1.23 LOANS AND INVESTMENTS All Commercial Banks Billions of dollars; last Wednesday of month except for June 30 and Dec. 31 1977 1978 1973 1974 1975 1976 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Category 5 Sept. 28 Oct. 26 Nov. 30 Dec. 31 Jan. 25 Feb. 22 p V p p p p Seasonally adjusted 1 Loans and investments1......................................... 633.4 690.4 721.1 784.4 848.4 857.9 866.1 865.4 874.3 881.9 2 Including loans sold outright2.......................... 637.7 695.2 725.5 788.2 852.4 862.0 870.5 870.0 878.8 886.2 Loans: 3 Total................................................................... 449.0 500.2 496.9 538.9 592.2 602.5 611.2 612.9 622.4 625.4 4 Including loans sold outright2...................... 453.3 505.0 501.3 542.7 596.2 606.6 615.6 617.5 626.9 629.7 5 Commercial and industrial 3.4.......................... 156.4 183.3 176.0 179.5 195.1 199.3 201.6 202.2 204.6 207.1 159^.0 186.0 178.5 181.9 197.9 202.2 204.7 205.5 207.7 210.1 Investments: 7 U.S. Treasury..................................................... 54.5 50.4 79.4 97.3 100.1 97.8 95.0 93.5 92.5 97.5 8 Other................................................................... 129.9 139.8 144.8 148.2 156.1 157.6 159.9 159.0 159.4 159.0 Not seasonally adjusted 9 Loans and investments1......................................... 647.3 705.6 737.0 801.6 848.4 856.1 866.4 884.5 872.7 875.0 10 Including loans sold outright........................... 651.6 710.4 741.4 805.4 852.4 860.2 870.8 889.1 877.2 879.3 Loans: 11 Total1.................................................................. 458.5 510.7 507.4 550.2 594.0 601.3 610.1 625.7 617.0 617.9 12 Including loans sold outright2...................... 462.8 515.5 511.8 554.0 598.0 605.4 614.6 630.4 621.5 622.2 13 Commercial and industrial 3.4.......................... 159.4 186.8 179.3 182.9 195.5 198.6 200.8 206.0 202.5 205.0 14 Including loans sold outright2-3’4............... 162.0 189.5 181.8 185.3 198.3 201.5 203.9 209.3 205.6 208.0 Investments : 15 U.S. Treasury..................................................... 58.3 54.5 84.1 102.5 98.5 97.7 97.9 98.9 97.2 98.9 16 Other................................................................... 130.6 140.5 145.5 148.9 155.9 157.1 158.4 159.8 158.5 158.1 For notes see bottom of opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics □ March 1978 1.24 COMMERCIAL BANK ASSETS AND LIABILITIES Last-Wednesday-of-Month Series Billions of dollars except for number of banks 1976 1977 3 1978 Account Dec.3 May June July35 Aug.? Sept.* Oct.* Nov.* Dec.* Jan.* Feb.* All commercial 1 846.4 860.4 877.5 875.0 886.8 891.4 897.7 915.0 931.6 919.9 924.4 2 Loans, gross........................... 594.9 604.6 621.9 620.7 632.2 637.1 642.9 658.7 673.4 664.2 667.4 Investments: 3 U.S. Treasury securities... 102.5 102.4 101.6 100.0 99.4 98.5 97.7 97.8 98.9 97.2 98.9 4 Other................................... 148.9 153.4 154.1 154.3 155.2 155.9 157.1 158.4 159.3 158.5 158.1 5 136.1 120.6 139.1 126.9 135.5 128.7 129.4 138.8 150.1 128.0 146.5 6 12.1 13.1 12.7 13.5 13.7 13.9 13.9 14.7 15.8 14. 1 13.9 7 Reserves with F.R. Banks... 26.1 24.0 25.5 27.2 28.2 30.0 28.3 26.3 32.1 26.6 31.0 8 Balances with banks.............. 49.6 42.4 47.4 42.4 45.3 42.7 44.4 46.8 48.8 43.3 47.4 9 Cash items in process of collection.. 48.4 41.0 53.4 43.9 48.3 42.1 42.8 51.0 53.5 44.0 54.2 10 Total assets/total liabilities and capital l................................... 1,030.7 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 1,136.7 11 Deposits...................................... 838.2 824.4 861.9 843.2 857.6 852.1 858.8 883.5 908.5 880.3 895.8 Demand: 12 45.4 35.7 46.5 38.2 39.6 37.1 37.5 41.8 43.7 37.3 42.8 13 U.S. Govt........................... 3.0 3.6 2.8 3.8 2.5 8.0 3.6 4.7 7.2 4.5 5.8 14 Other................................... 288.4 264.3 288.1 273.9 285.1 272.5 279.4 293.2 307.0 283.8 287.8 Time: 15 9.2 8.5 8.9 8.3 8.0 8.3 8.5 9.0 9.6 9.2 8.8 16 Other................................... 492.2 512.3 515.6 519.0 522.6 526.1 529.9 534.8 541.1 545.5 550.7 17 Borrowings................................. 80.2 89.0 88.2 92.2 94.8 96.5 96.8 101.0 107.1 101.7 105.7 18 Total capital accounts2.............. 78.1 78.2 81.8 79.0 79.6 80.1 80.5 81.4 81.6 82.2 82.6 19 Memo: Number of banks......... 14,671 14,695 14,718 14,709 14,713 14,724 14,718 14,718 14,703 14,702 14,702 Member 20 Loans and investments............... 620.5 620.1 632.8 628.9 637.9 640.8 645.2 658.6 670.8 659.5 661.8 21 Loans, gross........................... 442.9 441.5 453.4 451.3 459.9 463.0 467.1 479.0 489.9 481.8 483.1 Investments: 22 U.S. Treasury securities. .. 74.6 72.6 72.6 70.8 70.5 69.6 68.9 69.2 69.9 67.7 69.2 23 103.1 106.0 106.7 106.8 107.5 108.3 109.3 110.3 111.1 110.0 109.5 24 Cash assets, total...................... 108.9 95.7 110.6 101.2 108.6 103.1 102.3 110.6 121.7 102.2 117.2 25 9.1 9.7 9.3 9.9 10.0 10.2 10.2 10.8 11.7 10.4 10.2 26 Reserves with F.R. Banks... 26.0 24.0 25.6 27.2 28.2 30.0 28.3 26.3 32.1 26.6 31.0 27 Balances with banks.............. 27.4 22.6 24.4 22.0 24.0 22.5 22.8 24.7 26.6 23.0 24.6 28 Cash items in process of collection.. 46.5 39.3 51.3 42.1 46.4 40.4 41.0 48.9 51.3 42.2 51.4 29 Total assets/total liabilities and capital i................................ 772.9 763.9 795.2 780.1 796.3 793.2 796.5 823.9 847.0 818.0 835.7 30 618.7 597.4 628.7 611.0 622.2 617.0 620.9 641.8 660.8 636.8 649.2 Demand: 31 42.4 32.9 43.4 35.3 36.6 34.3 34.6 38.7 40.4 34.4 39.5 32 U.S. Govt........................... 2.1 2.7 2.0 2.8 1.7 6.4 2.6 3.6 5.3 3.4 4.4 33 Other................................. 215.5 195.1 213.9 202.2 211.0 200.3 205.3 216.4 226.3 208.4 211.8 Time: 34 Interbank.......................... 7.2 6.5 6.9 6.3 6.0 6.3 6.5 6.8 7.4 7.1 6.7 35 Other................................. 351.5 360.3 362.5 364.4 366.9 369.6 372.0 376.2 381.4 383.5 386.9 36 Borrowings............................... 71.7 77.5 77.0 80.4 82.5 84.0 83.8 87.8 93.4 88.0 90.8 37 58.6 58.7 60.8 59.4 59.9 60.2 60.6 61.2 61.4 61.7 62.1 38 Memo: Number of banks___ 5,759 5,708 5,721 5,701 5,676 5,692 5,686 5,686 5,668 5,656 5,656 1 Includes items not shown separately. Note.—Figures include all bank-premises subsidiaries and other sig­ Effective Mar. 31, 1976, some of the item “reserve for loan losses” nificant majority-owned domestic subsidiaries. and all of the item “unearned income on loans” are no longer reported Commercial banks: All such banks in the United States, including as liabilities. As of that date the “valuation” portion of “reserve for member and nonmember banks, stock savings banks, nondeposit trust loan losses” and the “unearned income on loans” have been netted companies, and U.S. branches of foreign banks, but excluding one na­ against “other assets,” and against “total assets” as well. tional bank in Puerto Rico and one in the Virgin Islands. Total liabilities continue to include the deferred income tax portion of Member banks: The following numbers of noninsured trust companies “reserve for loan losses.” that are members of the Federal Reserve System are excluded from mem­ 2 Effective Mar. 31, 1976, includes “reserves for securities” and the ber banks in Tables 1.24 and 1.25 and are included with noninsured banks contingency portion (which is small) of “reserve for loan losses.” in Table 1.25: 1974—June, 2; December, 3; 1975—June and December, 3 Figures partly estimated except on call dates. 4; 1976 (beginning month shown)—July, 5; December, 7; 1977-January, 8. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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................................ 762,400 773,701 827,692 854,736 441,135 443,959 476,602 488,240 Loans: 2 Gross............................................................... 535,170 539,021 578,710 601,141 315.738 315,628 340,679 351,311 3 Net................................................................... (2) 520,976 560,062 581,163 (2) 305,280 329,968 339,955 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 7 944,654 942,519 1,004,001 1,040,952 553,285 548,702 583,315 599,743 8 Deposits.................................................................. 775,209 776,957 825,010 847,373 447,590 444,251 469,378 476,381 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................................................................ 276,384 265,671 285,201 284,544 159,840 152,383 163,347 161,358 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................................. 137,620 136,915 144,000 144,597 183,645 192,825 207,089 221,898 Loans: 18 Gross............................................................... 100,823 98,889 102,277 102,144 118,609 124,503 135,753 147,685 19 Net................................................................... (2) 96,037 99,474 99,200 (2) 119,658 130,618 142,008 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.................................................................. 143,409 142,061 149,491 152,471 184,210 190,644 206,140 218,519 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................................................................ 50,984 49,659 52,204 52,571 65,560 63,629 69,649 70,615 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................................. 13,674 15,905 18,819 22,940 197,319 208,730 225,909 244,839 Loans: 34 Gross............................................................... 11,283 13,209 16,336 20,865 129,892 137,712 152,090 168,551 35 Net................................................................... (2) 13,092 16,209 20,679 (2) 132,751 146,828 162,687 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 13,325 14,658 195,533 202,380 219,466 233,177 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 2,555 3,236 3,588 67,868 66,184 72,885 74,203 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 Financial Statistics □ March 1978 1.26 COMMERCIAL BANK ASSETS AND LIABILITIES Detailed Balance Sheet, September 30, 1977 Asset and liability items are shown in millions of dollars. Member banks1 Insured Non­ Asset account commercial Large banks member banks banks1 Total All other New York City of Other City Chicago large 1 140,401 119,931 37,228 4,748 43,071 34,883 20,477 2 11,322 8,309 786 166 2,741 4,618 3,012 3 25,582 25,582 2,658 1,592 11,035 10,297 4 Demand balances with banks in United States..................... 34,233 21,301 9,956 242 2,979 8,124 12,939 5 Other balances with banks in United States......................... 4,544 2,559 50 8 948 1,552 1,986 6 Balances with banks in foreign countries............................. 3,570 3,206 346 174 1,785 900 365 7 61,150 58,974 23,433 2,565 23,583 9,392 2,176 8 Total securities held—Book value.............................................. 253,100 178,314 22,398 8,518 57,243 90,155 74,798 9 U.S. Treasury.......................................................................... 98,633 70,747 11,319 3,700 23,234 32,494 27,897 10 Other U.S. Govt, agencies...................................................... 35,232 21,954 1,435 629 5,911 13,979 13,278 11 States and political subdivisions............................................ 113,002 81,356 9,276 3,953 26,854 41,273 31,646 12 6,142 4,198 368 236 1,224 2,370 1,944 n Unclassified total.................................................................... 91 58 19 39 33 14 6,524 6,399 2,912 762 2,465 260 125 15 U.S. Treasury....................................................................... 3,824 3,815 2,019 458 1,232 105 9 16 Other U.S. Govt, agencies.................................................. 629 612 228 125 224 35 18 17 States and political subdivisions........................................ 1,471 1,438 536 97 726 79 32 18 All other trading acct. securities........................................ 510 477 129 82 264 2 33 19 91 58 19 39 33 20 246,575 171,914 19,486 7,756 54,777 89,895 74,673 21 U.S. Treasury....................................................................... 94,810 66,932 9,300 3,242 22,002 32,389 27,887 22 Other U.S. Govt, agencies.................................................. 34,603 21,343 1,207 504 5,687 13,945 13,261 23 States and political subdivisions........................................ 111,531 79,918 8,740 3,856 26,128 41,194 31,614 24 All other portfolio securities.............................................. 5,632 3,721 239 154 960 2,368 1,911 25 F.R. stock and corporate stock................................................. 1.590 1,342 296 105 489 452 248 26 Federal funds sold and securities resale agreement..................... 42,200 33,672 3.450 1,366 17,721 11,135 8,623 27 34,701 26,484 1,461 1,180 13,524 10,319 8,311 28 5,104 4,960 1,337 143 2,828 652 144 29 2,396 2,228 652 43 1,369 163 168 581,099 435,012 72,932 22,648 161,728 177,704 146,088 31 14,273 9,632 600 85 3,116 5,831 4,641 32 Reserves for loan loss.................................................. 6,549 5,216 1,225 326 1,923 1,742 1,333 33 560,277 420,164 71,107 22,237 156,689 170,130 140,113 Other loans, gross, by category 34 Real estate loans...................................................................... 169,334 117,012 9,227 2,172 42,901 62,713 52,322 35 Construction and land development................................. 19,606 14.940 2,327 429 7,169 5,014 4,666 36 Secured by farmland........................................................... 7,607 3,259 20 12 335 2,893 4,348 37 Secured by residential......................................................... 96,512 67,990 4,516 1.146 25,297 37,030 28,522 38 91,776 64,582 4,038 1,041 24,008 35,496 27,194 39 FHA-insured or VA-guaranteed................................. 7,723 6,708 568 60 3,518 2,562 1,016 40 Conventional................................................................ 84,053 57,874 3,470 981 20,490 32,934 26,179 41 Multifamily residences..................................................... 4,736 3,408 479 105 1,289 1,535 1,328 42 FHA-insured................................................................ 367 306 106 22 107 71 61 43 4,369 3,102 373 83 1,183 1,463 1,267 44 Secured by other properties................................................ 45,609 30,824 2,364 585 10,099 17,776 14,786 45 Loans to financial institutions.................................................. 33,962 32,105 11,365 4,050 13,800 2,890 1,858 46 To REIT’s and mortgage companies................................. 9,039 8.690 2,813 1,009 4,180 688 350 47 To domestic commercial banks.......................................... 2,581 2,074 679 113 1,029 253 507 48 To banks in foreign countries............................................ 6,621 6,446 3,008 286 2,624 528 175 49 1,250 1,100 98 47 718 237 150 50 To other financial institutions............................................ 14,472 13,795 4,768 2,595 5,249 1,183 677 51 11,478 11,239 6,508 1,693 2,808 231 239 52 4,257 3,542 418 342 1,819 964 715 53 Loans to farmers—except real estate..................................... 26,271 14,434 154 127 3.392 10,760 11,836 54 186,730 151,470 36,443 11,083 58,955 44,989 35,260 55 134,381 92,783 6,237 1,966 32,768 51,813 41,597 56 107,454 74,070 4,616 1,210 26,608 41,636 33,384 57 47,716 30,562 887 149 8,950 20,576 17,154 58 Residential-repair/modernize.......................................... 7,071 4,711 297 61 1,682 2,671 2,359 59 Credit cards and related plans........................................ 16,348 14,377 1,929 815 7,932 3,701 1,971 60 12,697 11,334 1,281 776 6,403 2,874 1,363 61 3,651 3,043 648 39 1,529 826 608 62 Other retail consumer goods.......................................... 17,214 11,737 365 60 4,263 7,049 5,477 63 9,051 6,365 183 24 2,283 3,875 2,686 64 Other............................................................................. 8,163 5,372 182 36 1,980 3,175 2,791 65 19,105 12,682 1,138 125 3,780 7,639 6,423 66 Single-payment loans to individuals.................................. 26,927 18,714 1,621 757 6,160 10,177 8,213 67 All other loans......................................................................... 14,687 12,426 2,581 1,214 5,286 3,345 2,261 857,167 633,492 97,251 32,226 232,142 271,872 223,782 5,433 5,094 964 136 3,125 871 339 70 Fixed assets—Buildings, furniture, real estate.......................... 20,681 15,388 2,191 721 5,882 6,593 5,296 71 Investment in unconsolidated subsidiaries................................ 2,816 2,775 1,290 234 1,161 90 41 72 Customer acceptances outstanding............................................ 11,822 11,357 5,459 794 4,800 303 465 73 Other assets................................................................................. 28,438 24,850 8,359 1,246 10,811 4,434 3,653 74 Total assets.................................................................................. 1,066,758 812,886 152,743 40,105 300,993 319,045 254,052 For notes see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A19 1.26 Continued N[ember bank:si Insured Non­ Liability or capital account commercial Large banks member banks banks1 Total All other New York City of Other City Chicago large 334,879 260,255 60,788 10,020 93,342 96,105 74,633 76 Mutual savings banks........................................................... 1,355 1,180 596 1 258 325 175 77 Other individuals, partnerships, and corporations............. 255,804 191,532 31,048 7,343 72,990 80,151 64,273 78 U.S. Govt............................................................................... 5,279 4,095 356 138 1,815 1,787 1,184 79 States and political subdivisions.......................................... 16,719 11,572 773 264 3,498 7,037 5,147 80 Foreign governments, central banks, etc............................. 1,478 1,444 1,192 16 214 22 34 81 34,016 32,875 16,823 1,718 10,513 3,819 1,151 82 Banks in foreign countries.................................................... 6,713 6,571 5,203 199 1,013 157 142 83 Certified and officers’ checks, etc......................................... 13,516 10,987 4,797 341 3,042 2,807 2,529 309,412 223,635 32,640 13,458 77,932 99,605 85,777 85 Accumulated for personal loan payments........................... 122 98 11 87 24 86 307 295 i22 69 88 17 12 87 Other individuals, partnerships, and corporations............. 245,125 176,081 24,649 10,037 60,163 81,233 69,043 88 U.S. Govt............................................................................... 811 660 50 46 356 208 151 89 States and political subdivisions.......................................... 48,847 33,495 1,517 1,309 13,623 17,046 15,352 90 Foreign governments, central banks, etc............................. 7,189 6,883 3,999 1,308 1,522 54 306 91 Commercial banks in United States.................................... 5,428 4.700 1,517 607 1,896 681 728 92 Banks in foreign countries.................................................... 1,583 1,422 787 82 274 280 161 217,555 152,871 11,515 3,027 55,808 82,521 64,684 94 Individuals and nonprofit organizations............................. 201,982 141,902 10,541 2,828 51,981 76,553 60,081 95 Corporations and other profit organizations....................... 10,618 7,618 596 179 3,182 3,661 3,000 96 U.S. Government.................................................................. 57 49 4 16 29 8 97 States and political subdivisions.......................................... 4,859 3,267 355 20 617 2,274 1,593 QR All ................................................................................ 38 35 20 11 5 3 99 Total deposits............................................................................. 861,847 636,761 104,944 26,506 227,081 278,231 225,095 100 Federal funds purchased and securities sold under agreements 80,475 76,053 19,246 8,847 37,148 10,811 4,422 101 Commercial banks................................................................. 40,568 38,676 7,239 5,918 21,034 4,485 1,892 102 Brokers and dealers............................................................... 10,327 9,920 1,872 1,551 5,197 1,299 408 103 29,580 27,457 10,135 1,378 10,917 5,027 2,123 104 Other liabilities for borrowed money...................................... 6,941 6,594 2,305 134 3,299 855 347 105 Mortgage indebtedness............................................................. 822 587 75 16 293 202 236 106 Bank acceptances outstanding.................................................. 12,448 11,983 6,063 802 4,813 305 465 21,082 18,543 6,979 980 6,972 3,612 2,701 108 Total liabilities........................................................................... 983,615 750,520 139,612 37,285 279,697 294,016 233,266 109 Subordinated notes and debentures........................................ 5,452 4,296 1,116 81 1,920 1,179 1,156 77,691 58,070 12,014 2,740 19,466 23,850 19,630 111 Preferred stock....................................................................... 76 31 2 29 45 112 Common stock...................................................................... 16.800 12,196 2,534 570 3,869 5,223 4,608 113 Surplus................................................................................... 30.310 22,243 4,550 1,325 7,901 8,467 8,070 114 28,784 22,414 4,891 791 7,289 9,442 6,373 115 1,721 1,187 39 53 405 690 534 116 Total liabilities and equity capital............................................ 1,066,758 812,866 152,743 40,105 300,993 319,045 254,052 Memo items : 117 Demand deposits adjusted2...................................................... 234,434 164,312 20,176 5,599 57,431 81,106 70,123 Average for last 15 or 30 days: 118 Cash and due from bank...................................................... 130,354 111,396 32,164 4,734 41,131 33,367 18,964 119 Federal funds sold and securities purchased under agree­ ments to resell............................................................... 45,457 35,524 4,308 1,467 17,459 12,290 9,997 120 Total loans............................................................................. 562,308 421,470 71,435 22,100 157,150 170,785 140,838 121 Time deposits of $100,000 or more..................................... 137,978 112.438 26,334 10,410 46,080 29,613 25,540 122 845,729 622,100 96,770 25,565 233,052 276,712 223,636 123 Federal funds purchased and securities sold under agree­ ments to repurchase...................................................... 85,514 81,480 23,101 10,134 37,645 10,600 4,034 124 Other liabilities for borrowed money.................................. 6,792 6,436 2,125 110 3,470 732 356 125 Standby letters of credit outstanding...................................... 13,068 12,223 6,744 1,036 3,515 928 845 126 Time deposits of $100,000 or more......................................... 141,125 114,857 26,424 10,626 47,351 30,276 26,268 127 118,970 96,381 22,542 9,270 38,845 25,724 22,589 128 22,155 18,477 3,882 1,356 8,686 4,553 3,679 129 14,420 5,691 12 9 154 5,516 8,739 1 Member banks exclude and nonmember banks include 10 noninsured Note.—Data include consolidated reports, including figures for all trust companies that are members of the Federal Reserve System, and bank-premises subsidiaries and other significant majority-owned do­ member banks exclude 2 national banks outside the continental United mestic subsidiaries. Securities are reported on a gross basis before deduc­ States. tions of valuation reserves. Holdings by type of security will be reported 2 Demand deposits adjusted are demand deposits other than domestic as soon as they become available. commercial interbank and U.S. Govt., less cash items reported as in Back data in lesser detail were shown in previous Bulletins. Details process of collection. may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics □ March 1978 1.27 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1978 Adjust­ Account ment bank, Jan. 4 Jan.11 Jan.18 Jan. 25 Feb. 1* Feb. 8* Feb.15* Feb. 22* 19778 1Total loans and investments.................................. 453,160 452,083 444,035 442,065 444,949 448,987 445,160 442,355 1,011 Loans: 2 Federal funds sold1................................................ 27,991 29,645 25,977 24,861 26,535 27,886 24,933 23,237 21 3 To commercial banks................................... 22,882 20,841 20,637 17,959 19,919 21,462 19,689 18,747 21 To brokers and dealers involving— 4 3,101 5,383 2,969 4,308 3,509 3,244 2,507 2,134 5 654 864 612 579 594 567 513 467 6 1,354 2,557 1,759 2,015 2,513 2,613 2,224 1,889 7 Other, gross............................................................. 322,462 320,146 316,951 316,597 317,778 320,329 318,754 318,039 652 8 Commercial and industrial........................... 125,905 124,873 124,128 123,814 124,345 124,475 125,122 125,465 -13 9 Agricultural.................................................... A,122 4,673 4,655 4,616 4,562 4,538 4,540 4,525 16 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities........................ 1,767 3,031 1,285 1,802 1,537 2,655 1,205 981 1 11 9,126 8,441 9,029 8,617 8,715 8,867 8,702 8,465 To others: 1? 107 106 107 102 101 101 100 105 13 Other securities...................................... 2,618 2,634 2,639 2,644 2,630 2,657 2,656 2,636 7 To nonbank financial institutions: 14 Personal and sales finance cos., etc......... 7,759 7,812 7,371 7,222 7,353 7,433 7,467 7,308 -99 15 Other.......................................................... 16,025 15,475 15,169 15,187 15,218 15,211 15,186 15,027 24 16 Real estate..................................................... 74,459 74,805 74,927 75,094 75,231 75,383 75,540 75,708 462 To commercial banks: 17 2,992 2,846 2,367 2,220 2,249 2,403 2,058 1,982 18 Foreign....................................................... 6,637 6,270 5,940 6,065 6,076 6,834 6,221 6,259 1 19 Consumer instalment.................................... 46,651 46,655 46,722 46,791 46,853 46,722 46,657 46,670 199 70 1,608 1,569 1,566 1,639 1,713 1,716 1,694 1,663 21 All other loans.............................................. 22,086 20,956 21,046 20,784 21,195 21,334 21,606 21,245 54 22 Less : Loan loss reserve and unearned income 9,361 9,395 9,411 9,428 9,446 9,480 9,510 9,551 19 23 313,101 310,751 307,540 307,169 308,332 310,849 309,244 308,488 633 Investments: 24 U.S. Treasury securities........................................ 45,964 45,032 44,235 43,552 44,588 44,359 45,405 44,944 142 25 Bills................................................................ 8,422 7,689 7,111 6,774 7,013 7,141 7,435 7,064 9 Notes and bonds, by maturity: 26 9,024 9,020 9,020 8,779 8,871 8,991 8,698 8,487 20 27 24,624 24,283 24,044 23,897 24,532 24,207 24,603 24,684 105 28 After 5 years.............................................. 3,894 4,040 4,060 4,102 4,172 4,020 4,669 4,709 8 29 Other securities....................................................... 66,104 66,655 66,283 66,483 65,494 65,893 65,578 65,686 215 Obligations of States and political subdivisions: 30 Tax warrants, short-term notes, and bills..................................................... 7,834 8,026 7,754 7,667 7,113 7,551 7,070 7,046 28 31 42,913 43,315 43,132 43,389 43,036 43,143 43,362 43,286 120 Other bonds, corporate stocks, and securities: 32 Certificates of participation2.................... 2,678 2,719 2,693 2,696 2,729 2,708 2,672 2,686 33 All other, including corporate stocks 12,679 12,595 12,704 12,731 12,616 12,491 12,474 12,668 67 34 Cash items in process of collection..................... 51,631 40,780 41,590 38,378 43,456 36,089 43,688 46,640 41 35 Reserves with F.R. Banks.................................... 20,443 15,808 23,590 19,925 21,098 21,688 23,182 23,944 41 36 Currency and coin................................................ 6,841 6,829 6,538 6,435 6,050 5,785 6,180 6,347 32 37 Balances with domestic banks............................. 16,461 14,122 14,494 13,736 14,210 13,642 14,247 14,612 64 38 Investments in subsidiaries not consolidated.... 2,952 2,971 3,002 3,037 3,042 3,171 3,059 3,128 39 Other assets........................................................... 60,190 60,450 60,627 60,896 62,596 61,513 60,140 60,545 65 40 Total assets/total liabilities................................... 611,678 593,043 593,876 584,472 595,401 590,875 595,656 597,571 1,254 Deposits: 41 Demand deposits..................................................... 205,515 186,285 187,552 179,295 188,209 180,560 187,057 187,327 412 42 Individuals, partnerships, and corps............ 146,604 136,019 135,666 129,747 134,151 130,684 133,696 132,827 369 43 States and political subdivisions................... 6,888 6,010 6,361 6,081 7,108 5,944 6,961 5,991 14 44 U.S. Govt....................................................... 1,679 1,712 2,975 2,296 2,105 1,200 1,988 3,056 5 Domestic interbank: 45 Commercial................................................ 33,238 26,403 26,203 25,095 27,986 25,968 28,406 28,423 46 Mutual savings.......................................... 1,155 993 905 881 927 942 958 879 7 Foreign: 47 Governments, official institutions, etc.... 1,363 1,191 1,185 1,925 1,283 1,309 1,440 1,422 48 Commerial banks...................................... 7,115 6,500 6,241 6,204 6,748 8,005 6,711 7,572 49 Certified and officers’ checks....................... 7,473 7,457 8,016 7,066 7,901 6,508 6,897 7,157 17 50 252,158 251,956 251,853 252,386 252,397 253,094 252,874 253,808 646 51 Savings4......................................................... 92,940 93,149 92,892 92,728 92,546 92,785 92,741 92,775 371 52 Time: 159,218 158,807 158,961 159,658 159,851 160,309 160,133 161,033 275 53 Individuals, partnerships, and corps........ 120,810 120,250 120,441 120,910 120,898 121,142 121,053 121,619 241 54 States and political subdivisions............... 23,312 23,601 23,711 23,908 23,982 24,258 24,163 24,570 33 55 Domestic interbank................................... 5,610 5,334 5,252 5,202 5,147 5,143 5,034 5,071 56 Foreign govts., official institutions, etc... 7,947 8,091 8,061 8,078 8,318 8,292 8,390 8,354 57 Federal funds purchased, etc.5........................... 77,365 78,807 78,324 74,746 77,435 79,568 78,248 78,978 32 Borrowings from: 58 F.R. Banks........................................................ 862 650 392 2,107 592 133 442 99 59 Others................................................................ 5,100 4,989 4,905 5,005 5,072 5,140 4,992 5,056 13 60 Other liabilities, etc.6........................................... 25,914 25,591 26,140 25,955 26,531 27,173 26,895 27,106 12 61 Total equity capital and subordinated notes/debentures7......................................... 44,764 44,765 44,710 44,978 45,165 45,207 45,148 45,197 139 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. 8 Adjustment bank data for all large weekly reporting banks published Digitized for F5R InAcSluEdeRs securities sold under agreements to repurchase. in the February Bulletin were incorrect. 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. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25 Feb. 1 v Feb. 8p Feb.15p Feb. 22p 1Total loans and investments.................................. 98,160 97,936 96,265 93,212 92,371 92,830 96,597 93,020 91,938 Loans: 2 Federal funds sold1............................................ 5,198 5,060 4,885 4,111 4,274 5,367 6,807 4,442 4,166 3 To commercial banks................................... 2,981 3,835 3,119 2,896 2,312 3,829 5,346 2,970 2,981 To brokers and dealers involving— 4 U.S. treasury securities............................. 1,227 1,049 1,106 911 1,401 846 783 691 596 5 5 6 To others........................................................ 990 176 660 304 561 692 673 781 589 7 Other gross........................................................ 73,139 73,088 71,278 69,489 69,017 68,439 71,057 69,236 68,723 8 Commercial and industrial........................... 36,389 35,816 35,152 34,780 34,068 33,817 33,750 33,789 34,004 9 Agricultural................................................... 168 166 168 172 167 167 159 159 162 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities........................ 799 1,585 2,327 1,142 1,661 1,355 2,355 1,052 833 11 Other securities...................................... 5,730 4,952 4,586 4,914 4,433 4,523 4,628 4,724 4,479 To others: 12 U.S. Treasury securities........................ 21 21 21 21 21 20 20 21 26 13 Other securities...................................... 380 390 390 378 377 360 366 372 359 To nonbank financial institutions: 14 Personal and sales finance cos., etc.......... 2,929 2,434 2,621 2,364 2,283 2,336 2,423 2,473 2,394 15 Other.......................................................... 5,077 5,174 5,054 4,995 5,068 4,934 5,020 5,051 5,035 16 Real estate...................................................... 8,812 9,042 8,995 8,994 9,011 9,020 9,019 9,035 9,046 To commercial banks: 17 Domestic.................................................... 812 1,214 723 642 627 617 905 607 584 18 Foreign...................................................... 2,965 3,221 2,643 2,501 2,660 2,607 3,336 2,861 2,981 19 4,433 4,415 4,409 4,427 4,435 4,403 4,349 4,336 4,330 20 Foreign govts, official institutions, etc......... 290 352 277 242 266 281 262 264 231 21 All other loans.............................................. 4,334 4,306 3,912 3,917 3,940 3,999 4,465 4,492 4,259 22 Less : Loan loss reserve and unearned income on loans................................................ 1,672 1,648 1,656 1,657 1,647 1,675 1,670 1,674 1,694 23 Other loans, net................................................. 71,467 71,440 69,622 67,832 67,370 66,764 69,387 67,562 67,029 Investments : 24 10,661 11,102 11,015 10,740 10,208 10,712 10,361 11,056 10,622 25 Bills................................................................ 2,178 2,324 2,565 2,362 2,128 1,990 1,910 2,093 1,824 Notes and bonds, by maturity: 26 Within 1 year............................................. 1,536 1,895 1,917 1,863 1,700 1,769 1,797 1,766 1,594 27 1 to 5 years................................................ 6,203 6,131 5,671 5,679 5,478 5,993 5,793 5,875 5,970 28 After 5 years.............................................. 744 752 862 836 902 960 861 1,322 1,234 29 10,834 10,334 10,743 10,529 10,519 9,987 10,042 9,960 10,121 Obligations of States and political subdivisions: 30 Tax warrants, short-term notes, and bills. 2,132 1,781 1,915 1,841 1,790 1,417 1,433 1,361 1,354 31 All other.................................................... 6,589 6,561 6,865 6,757 6,802 6,723 6,736 6,766 6,761 Other bonds, corporate stocks, and securities: 32 Certificates of participation2.................... 190 424 425 424 425 423 425 410 404 33 All other, including corporate stocks.... 1,923 1,568 1,538 1,507 1,502 1,424 1,448 1,423 1,602 34 Cash items in process of collection..................... 15,216 15,350 13,971 14,283 13,938 14,559 10,462 14,819 14,686 35 Reserves with F.R. Banks.................................... 6,017 4,200 3,293 6,543 5,262 5,548 5,781 7,067 6,515 36 Currency and coin................................................ 1,045 1,034 1,006 968 952 932 887 952 973 37 Balances with domestic banks............................. 7,825 7,084 6,322 6,698 6,806 6,459 5,582 6,634 6,481 38 Investments in subsidiaries not consolidated.... 1,427 1,463 1,489 1,492 1,508 1,515 1,518 1,515 1,535 39 Other assets........................................................... 21,295 22,517 22,877 22,581 22,869 24,520 24,116 22,994 23,746 40 Total assets/total liabilities................................... 150,985 149,584 145,223 145,777 143,706 146,363 144,943 147,001 145,874 Deposits: 41 Demand deposits................................................ 57,799 56,880 51,521 52,644 51,230 54,430 51,114 53,174 53,113 42 Individuals, partnerships, and corps............ 31,242 31,730 28,341 28,829 27,531 28,971 27,641 28,557 27,681 43 States and political subdivisions.................. 584 516 509 597 611 904 509 690 522 44 U.S. Govt....................................................... 595 186 280 547 431 258 117 357 568 Domestic interbank: 45 Commercial................................................ 14,229 14,462 12,612 12,794 12,489 13,927 12,096 13,585 13,033 46 Mutual savings.......................................... 459 648 569 494 486 507 492 535 453 Foreign: 47 Governments, official institutions, etc.... 1,625 1,091 931 935 1,681 1,024 1,058 1,198 1,183 48 Commercial banks..................................... 6,010 5,437 4,869 4,580 4,753 5,247 6,447 5,295 6,143 49 Certified and officers’ checks....................... 3,055 2,810 3,410 3,868 3,248 3,592 2,754 2,957 3,530 50 44,505 44,452 44,695 44,785 45,168 45,508 45,134 45,021 45,300 51 Savings4......................................................... 9,929 10,018 10,057 10,015 10,004 9,965 9,996 9,990 9,989 52 Time............................................................... 34,576 34,434 34,638 34,770 35,164 35,543 35,138 35,031 35,311 53 Individuals, partnerships and corps......... 25,920 25,813 25,853 25,888 26,230 26,413 26,036 25,911 26,291 54 States and political subdivisions.............. 1,650 1,565 1,564 1,606 1,575 1,598 1,595 1,599 1,634 55 Domestic interbank................................... 1,679 1,642 1,703 1,711 1,700 1,745 1,719 1,669 1,631 56 Foreign govts., official institutions, etc... 4,611 4,651 4,766 4,808 4,836 5,013 5,017 5,076 5,047 57 Federal funds purchased, etc.5........................... 22,320 21,301 22,470 21,743 18,972 19,343 21,214 21,591 20,159 Borrowings from: 58 F.R. Banks........................................................ 225 505 190 1,478 100 250 59 Others................................................................ 2,344 2,206 2,321 2,457 2,467 2,332 2,410 2,257 2,227 60 Other liabilities, etc.6........................................... 11,014 11,414 11,157 11,298 11,534 11,804 12,008 11,719 12,074 61 Total equity capital and subordinated notes/ debentures7.................................................... 12,778 12,826 12,869 12,850 12,857 12,946 12,963 12,989 13,001 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 oans. 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

All Domestic Financial Statistics □ March 1978 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS OUTSIDE NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1977 1978 Account Dec. 28 Jan. 4 Jan.11 Jan. 18 Jan. 25 Feb. \p Feb. Sp Feb. 15p Feb. 22p 1Total loans and investments.................................. 354,537 355,224 355,818 350,823 349,694 352,119 352,390 352,140 350,417 Loans: 2 Federal funds sold1................................................ 22,704 22,931 24,760 21,866 20,587 21,168 21,079 20,491 19,071 3 To commercial banks................................... 19,058 19,047 17,722 17,741 15,647 16,090 16,116 16,719 15,766 To brokers and dealers involving— 4 U.S. treasury securities............................. 1,618 2,052 4,277 2,058 2,907 2,663 2,461 1,816 1,538 5 Other securities.......................................... 839 654 864 612 579 594 562 513 467 6 To others........................................................ 1,189 1,178 1,897 1,455 1,454 1,821 1,940 1,443 1,300 7 247,510 249,374 248,868 247,462 247,580 249,339 249,272 249,518 249,316 8 Commercial and industrial........................... 89,272 90,089 89,721 89,348 89,746 90,528 90,725 91,333 91,461 9 Agricultural................................................... 4,537 4,556 4,505 4,483 4,449 4,395 4,379 4,381 4,363 For purchasing or carrying securities: To brokers and dealers: 10 U.S. treasury securities......................... 150 182 704 143 141 182 300 153 148 11 Other securities...................................... 4,226 4,174 3,855 4,115 4,184 4,192 4,239 3,978 3,986 To others: 12 U.S. Treasury securities........................ 81 86 85 86 81 81 81 79 79 13 Other securities...................................... 2,243 2,228 2,244 2,261 2,267 2,270 2,291 2,284 2,277 To nonbank financial institutions: 14 Personal and sales finance cos., etc.......... 5,187 5,325 5,191 5,007 4,939 5,017 5,010 4,994 4,914 15 Other.......................................................... 10,665 10,851 10,421 10,174 10,119 10,284 10,191 10,135 9,992 16 Real estate..................................................... 65,325 65,417 65,810 65,933 66,083 66,211 66,364 66,505 66,662 To commercial banks: 17 Domestic................................................... 1,791 1,778 2,123 1,725 1,593 1,632 1,498 1,451 1,398 18 Foreign...................................................... 3,363 3,416 3,627 3,439 3,405 3,469 3,498 3,360 3,278 19 Consumer instalment.................................... 42,001 42,236 42,246 42,295 42,356 42,450 42,373 42,321 42,340 20 Foreign govts., official institutions, etc........ 1,226 1,256 1,292 1,324 1,373 1,432 1,454 1,430 1,432 21 All other loans.............................................. 17,443 17,780 17,044 17,129 16,844 17,196 16,869 17,114 16,986 22 Less: Loan reserve and unearned income on loans........................................................ 7,755 7,713 7,739 7,754 7,781 7,771 7,810 7,836 7,857 23 Other loans, net...................................................... 239,755 241,661 241,129 239,708 239,799 241,568 241,462 241,682 241,459 Investments: 24 35,308 34,862 34,017 33,495 33,344 33,876 33,998 34,349 34,322 25 Bills................................................................ 6,675 6,098 5,124 4,749 4,646 5,023 5,231 5,342 5,240 Notes and bonds, by maturity: 26 Within 1 year............................................ 7,017 7,129 7,103 7,157 7,079 7,102 7,194 6,932 6,893 27 1 to 5 years................................................ 18,472 18,493 18,612 18,365 18,419 18,539 18,414 18,728 18,714 28 After 5 years.............................................. 3,144 3,142 3,178 3,224 3,200 3,212 3,159 3,347 3,475 29 Other securities....................................................... 56,770 55,770 55,912 55,754 55,964 55,507 55,851 55,618 55,565 Obligations of States and political sub­ divisions : 30 Tax warrants, short-term notes, and bills. 6,593 6,053 6,111 5,913 5,877 5,696 6,118 5,709 5,692 31 All other.................................................... 36,554 36,352 36,450 36,375 36,587 36,313 36,407 36,596 36,525 Other bonds, corporate stocks, and securities: 32 Certificates of participation2.................... 2,301 2,254 2,294 2,269 2,271 2,306 2,283 2,262 2,282 33 All other, including corporate stocks---- 11,322 11,111 11,057 11,197 11,229 11,192 11,043 11,051 11,066 34 Cash items in process of collection..................... 31,522 36,281 26,809 27,307 24,440 28,897 25,627 28,869 31,954 35 Reserves with F.R. Banks.................................... 19,267 16,243 12,515 17,047 14,663 15,550 15,907 16,115 17,429 6,237 5,807 5,823 5,570 5,483 5,118 4,898 5,228 5,374 37 Balances with domestic banks............................. 8,404 9,377 7,800 7,796 6,930 7,751 8,060 7,613 8,131 38 Investments in subsidiaries not consolidated.... 1,469 1,489 1,482 1,510 1,529 1,527 1,653 1,544 1,593 39 Other assets........................................................... 37,150 37,673 37,573 38,046 38,027 38,076 37,397 37,146 36,799 458,586 462,094 447,820 448,099 440,766 449,038 445,932 448,655 451,697 Deposits: 41 142,052 148,635 134,764 134,908 128,065 133,779 129,446 133,883 134,214 42 111,924 114,874 107,678 106,837 102,216 105,180 103,043 105,139 105,146 43 States and political subdivisions.................. 5,749 6,372 5,501 5,764 5,470 6,204 5,435 6,271 5,469 44 U.S. Govt...................................................... 3,143 1,493 1,432 2,428 1,865 1,847 1,083 1,631 2,488 Domestic interbank: 45 15,044 18,776 13,791 13,409 12,606 14,059 13,872 14,821 15,390 46 Mutual savings.......................................... 401 507 424 411 395 420 450 423 426 Foreign: 47 Governments, official institutions, etc.... 288 272 260 250 244 259 251 242 239 48 1,620 1,678 1,631 1,661 1,451 1,501 1,558 1,416 1,429 49 Certified and officers’ checks....................... 3,883 4,663 4,047 4,148 3,818 4,309 3,754 3,940 3,627 50 207,271 207,706 207,261 207,068 207,218 206,889 207,960 207,853 208,508 51 82,161 82,922 83,092 82,877 82,724 82,581 82,789 82,751 82,786 52 125,110 124,784 124,169 124,191 124,494 124,308 125,171 125,102 125,722 53 Individuals, partnerships, and corps........ 95,239 94,997 94,397 94,553 94,680 94,485 95,106 95,142 95,328 54 21,710 21,747 22,037 22,105 22,333 22,384 22,663 22,564 22,936 55 Domestic interbank.................................. 4,113 3,968 3,631 3,541 3,502 3,402 3,424 3,365 3,440 56 Foreign govts., official institutions, etc... 3,278 3,296 3,325 3,253 3,242 3,305 3,275 3,314 3,307 57 Federal funds purchased, etc.5............................ 58,038 56,064 56,337 56,581 55,774 58,092 58,354 56,657 58,819 Borrowings from: 58 1,315 357 460 392 629 592 33 192 99 59 Others................................................................ 3,078 2,894 2,668 2,448 2,538 2,740 2,730 2,735 2,829 60 Other liabilities, etc.6.......................................... 15,043 14,500 14,434 14,842 14,421 14,727 15,165 15,176 15,032 61 Total equity capital and subordinated 31,789 31,938 31,896 31,860 32,121 32,219 32,244 32,159 32,196 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 Digitized for F4R FAoSr aEmRo unts of these deposits by ownership categories, see Table 1.30. for loans. 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 Adjust­ Account ment bank, Jan. 4 Jan. 11 Jan. 18 Jan. 25 Feb. 1 p Feb. Feb.15* Feb. 22p 19778 Total loans (gross) and investments adjusted1 1 Large Banks...................................................... 436,647 437,791 430,442 431,314 432,227 434,602 432,923 431,177 1,009 2 New York City banks................................... 94,535 94,079 91,331 91,079 90,059 92,016 91,117 90,067 61 342,112 343,712 339,111 340,235 342,168 342,586 341,806 341,110 942 Total loans (gross), adjusted 4 Large banks....................................................... 324,579 326,104 319,924 321,279 322,145 324,350 321,940 320,547 652 5 New York City banks................................... 73,099 72,321 70,062 70,352 69,360 71,613 70,101 69,324 49 6 Banks outside New York City..................... 251,480 253,783 249,862 250,927 252,785 252,737 251,839 251,223 603 Demand deposits, adjusted2 118,967 117,390 116,784 113,526 114,662 117,303 112,975 109,208 366 8 New York City banks................................... 26,882 24,658 25,020 24,372 25,686 28,439 24,413 24,826 24 92,085 92,732 91,764 89,154 88,976 88,864 88,562 84,382 342 Large negotiable time CD’s included in time and savings deposits3 Total: 77,072 76,066 75,852 76,201 76,602 76,736 76,545 77,112 22 23,632 23,721 23,824 24,133 24,551 24,159 24,022 24,366 12 Banks outside New York City..................... 53,440 52,345 52,028 52,068 52,051 52,577 52,523 51,146 22 Issued to IPC’s: 13 Large banks....................................................... 52,501 51,491 51,350 51,622 51,765 51,730 51,527 51,896 12 16,508 16,430 16,440 16,751 16,941 16,583 16,447 16,827 15 Banks outside New York City..................... 35,993 35,061 34,910 34,871 34,824 35,147 35,080 35,069 12 Issued to others: 24,571 24,575 24,502 24,579 24,837 25,006 25,018 25,216 10 17 New York City banks................................... 7,124 7,291 7,384 7,382 7,610 7,576 7,575 7,539 18 Banks outside New York City..................... 17,447 17,284 17,118 17,197 17,227 17,430 17,443 17,677 10 AH other large time deposits4 Total: 29,903 30,455 30,753 31,065 31,009 31,190 31,103 31,342 21 5,944 6,071 6,132 6,193 6,209 6,180 6,182 6,075 14 21 Banks outside New York City..................... 23,959 24,384 24,621 24,872 24,800 25,010 24,921 25,267 7 Issued to IPC’s: 16,733 17,156 17,436 17,602 17,578 17,732 17,788 17,878 10 4,571 4,691 4,755 4,761 4,808 4,768 4,758 4,729 8 24 Banks outside New York City..................... 12,162 12,465 12,681 12,841 12,770 12,964 13,030 13,149 2 Issued to others: 13,170 13,299 13,317 13,463 13,431 13,458 1$,315 13,489 11 26 New York City banks................................... 1,373 1,380 1,377 1,432 1,401 1,412 1,424 1,346 6 27 Banks outside New York City..................... 11,797 11,919 11,940 12,031 12,030 12,046 11,891 12,143 5 Savings deposits, by ownership category Individuals and nonprofit organizations: 86,482 86,619 86,432 86,258 86,160 86,272 86,275 86,289 345 29 New York City banks................................... 9,297 9,321 9,283 9,244 9,212 9,223 9,236 9,224 17 30 Banks outside New York City..................... 77,185 77,298 77,149 77,014 76,948 77,049 77,039 77,065 328 Partnerships and corporations for profit:5 4,997 4,988 4,950 4,974 4,925 4,962 4,929 4,925 20 32 New York City banks................................... 502 500 491 489 488 487 484 484 1 33 Banks outside New York City..................... 4,495 4,488 4,459 4,485 4,437 4,475 4,445 4,441 19 Domestic governmental units: 1,438 1,520 1,484 1,466 1,429 * 1,522 1,507 1,523 6 207 222 227 254 246 270 254 264 6 36 Banks outside New York City..................... 1,231 1,298 1,257 1,212 1,183 1,252 1,253 1,259 All other:6 23 22 26 30 32 29 30 38 38 New York City banks................................... 12 14 14 17 19 16 16 17 39 Banks outside New Yotk City..................... 11 8 12 13 13 13 14 21 Gross liabilities oi banks to their foreign branches 40 Large banks....................................................... 6,375 5,491 5,414 5,155 5,803 6,322 7,366 5,135 41 New York City banks................................... 4,176 3,595 3,502 3,999 3,933 3,748 5,355 2,899 42 Banks outside New York City..................... 2,199 1,896 1,912 1,156 1,870 2,574 2,011 2,236 Loans sold outright to selected institutions by all large banks7 43 Commercial and industrial............................... 3,172 3,159 3,063 3,074 3,054 3,060 3,038 2,998 44 Real estate......................................................... 219 224 236 236 231 235 231 234 45 All other............................................................ 1,184 1,167 1,168 1,161 1,163 1,171 1,157 1,071 1 Exclusive of loans and Federal funds transactions with domestic 6 Domestic and foreign commercial banks, and official international commercial banks. organizations. 2 All demand deposits except U.S. Govt, and domestic commercial 7 To bank’s own foreign branches, nonconsolidated nonbank af­ banks, less cash items in process of collection. filiates of the bank, the bank’s holding company (if not a bank), and 3 Certificates of deposit (CD’s) issued in denominations of $100,000 or nonconsolidated nonbank subsidiaries of the holding company. more. 8 Adjustment bank data for all weekly reporting banks and weekly 4 All other time deposits issued in denominations of $100,000 or more reporting banks outside New York City published in the February not included in large negotiable (CD’s). Bulletin were incorrect- 5 Other than commercial banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Financial Statistics □ March 1978 1.31 LARGE WEEKLY REPORTING COMMERCIAL BANKS Commercial and Industrial Loans Millions of dollars Outstanding Net change during— Industry classification 1978 1977 1977 1978 Jan. 25 Feb. 1 Feb. 8 Feb.15 Feb. 22* Q3 Q4 Dec. Jan. Feb.* Total loans classified2 1 Total.................................................... 101,089 101,449 101,487 101,957 102,287 266 4,395 1,527 -911 1,198 Durable goods manufacturing: 2 Primary metals............................... 2,567 2,596 2,580 2,623 2,686 74 256 392 -183 119 3 Machinery....................................... 4,670 4,715 4,790 4,906 4,958 -233 -4 29 103 288 4 Transportation equipment............. 2,400 2,462 2,497 2,514 2,555 -15 -89 -151 103 155 5 Other fabricated metal products... 2,003 2,020 2,047 2,065 2,079 11 -26 -7 54 76 6 Other durable goods....................... 3,349 3,372 3,378 3,424 3,388 66 -231 -64 -152 39 Nondurable goods manufacturing: 7 Food, liquor, and tobacco............. 3,766 3,698 3,742 3,750 3,774 128 324 37 -14 8 8 Textiles, apparel, and leather........ 3,176 3,216 3,316 3,350 3.341 166 -663 -270 -181 165 9 Petroleum refining........................... 2,700 2,726 2,679 2,628 2,659 91 235 23 -248 -41 10 Chemicals and rubber..................... 2,901 2,939 3,079 3,036 3,145 92 -37 -81 57 244 11 Other nondurable goods................ 2,256 2,276 2,168 2,212 2,239 181 74 95 14 -17 12 Mining, including crude petroleum and natural gas........................... 9,043 9,012 9,039 9,109 9,131 88 537 305 274 88 Trade: 13 Commo dity dealers......................... 2,192 2,213 2,250 2,172 2,173 -379 502 6 366 -19 14 Other wholesale.............................. 7,772 7,789 7,882 7,934 7,999 103 439 187 473 227 15 Retail............................................... 7,045 7,228 7,128 7,299 7,329 309 -235 -510 80 284 16 Transportation.................................... 5,222 5,228 5,197 5,271 5,276 -68 17 -25 237 54 17 Communication.................................. 1,455 1,567 1,516 1,550 1,512 72 115 -15 72 57 18 Other public utilities........................... 5,524 5,428 5,374 5,318 5,346 -512 290 260 194 -178 19 Construction....................................... 4,478 4,463 4,510 4,486 4,464 243 -31 -67 5 -14 20 Services................................................ 11,862 11,937 11,961 12,061 12,041 -270 286 184 563 179 21 All other domestic loans.................... 7,446 7,618 7,673 7,643 7,627 197 419 225 -895 181 22 Bankers acceptances........................... 4,378 4 ,-029 3,743 3,767 3,804 86 2,455 980 -1,843 -574 23 Foreign commercial and industrial loans............................................ 4,884 4,917 4,938 4,839 4,761 -164 -238 -6 10 -123 Memo Items: 24 Commercial paper included in total classified loans1........................... 147 136 -85 -75 20 -11 -11 25 Total commercial and industrial loans of all large weekly re­ porting banks.............................. 123,814 124,345 124,475 125,122 125,465 682 5,440 2,054 -1,847 1,651 1977 1978 1977 1977 1978 Oct. 26 Nov. 30 Dec. 28 Jan. 25 Feb. 22 Q3 Q4 Dec. Jan. Feb. “Terms” loans classified3 26 Total.................................................... 46,631 46,660 46,626 48,215 48,810 -242 352 -34 1,589 595 Durable goods manufacturing: 27 Primary metals................................ 1,420 1,405 1,546 1,559 1,564 38 120 141 13 5 28 Machinery....................................... 2,384 2,319 2,286 2,403 2,473 -183 -51 -33 117 70 29 Transportation equipment............. 1,373 1,339 1,317 1,432 1,466 47 -112 -22 115 34 30 Other fabricated metal products... 831 838 834 882 877 -57 59 -4 48 -5 31 Other durable goods....................... 1,774 1,742 1,698 1,630 1,602 52 -76 -44 -68 -28 Nondurable goods manufacturing: 32 Food, liquor, and tobacco............. 1,441 1,442 1,498 1,436 1,492 -35 98 56 -62 56 33 Textiles, apparel, and leather........ 1,173 1,142 1,058 973 983 4 -96 -84 -85 10 34 Petroleum refining.......................... 2,129 2,167 2,268 2,136 1,992 59 271 101 -132 -144 35 Chemicals and rubber..................... 1,746 1,770 1,727 1,926 2,017 99 -18 -43 199 91 36 Other nondurable goods................ 1,094 1,119 1,147 1,198 1,182 -34 53 28 51 -16 37 Mining, including crude petroleum and natural gas........................... 6,328 6,412 6,501 6,569 6,811 -91 217 89 68 242 Trade: 38 Commodity dealers......................... 209 234 236 294 262 23 42 2 58 -32 39 Other wholesale.............................. 1,588 1,592 1,665 1,874 1,928 57 125 73 209 54 40 Retail............................................... 2,495 2,583 2,448 2,476 2,539 75 48 -135 28 63 41 Transportation.................................... 3,622 3,651 3,484 3,726 3,747 -24 -141 -167 242 21 812 835 840 901 908 38 54 5 61 7 43 Other public utilities........................... 3,413 3,294 3,266 3,802 3,855 -469 -36 -28 536 53 44 Construction....................................... 1,956 2,007 1,990 2,002 1,973 178 -21 -17 12 -29 45 Services................................................ 5,185 5,250 5,366 5,746 5,807 -20 85 116 380 61 2,502 2,641 2,726 2,627 2,750 110 184 85 -99 123 47 Foreign commercial and industrial loans............................................ 3,156 2,878 2,725 2,623 2,582 -109 -453 -153 -102 -41 1 Reported for the last Wednesday of each month. all outstanding loans granted under a formal agreement—revolving credit 2 Includes “term” loans, shown below. or standby—on which the original maturity of the commitment was in 3 Outstanding loans with an original maturity of more than 1 year and excess of 1 year. 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Deposits and Commercial Paper A25 1.32 GROSS DEMAND DEPOSITS of Individuals, Partnerships, and Corporations Billions of dollars, estimated daily-average balances At commercial banks Type of holder 1976 1977 1972 1973 1974 1975 Dec. Dec. Dec. Dec. Sept. Dec. Mar. June Sept. Dec. 1 All holders, IPC..................................................... 208.0 220.1 225.0 236.9 236.1 250.1 242.3 253.8 252.7 274.4 2 Financial business.................................................. 18.9 19.1 19.0 20.1 19.7 22.3 21.6 25.9 23.7 25.0 3 Nonfinancial business............................................ 109.9 116.2 118.8 125.1 122.6 130.2 125.1 129.2 128.5 142.9 4 Consumer............................................................... 65.4 70.1 73.3 78.0 80.0 82.6 81.6 84.1 86.2 91.0 5 Foreign.................................................................... 1.5 2.4 2.3 2.4 2.3 2.7 2.4 2.5 2.5 2.5 6 Other....................................................................... 12.3 12.4 11.7 11.3 11.5 12.4 11.6 12.2 11.8 12.9 At weekly reporting banks 1977 1978 1973 1974 1975 1976 Dec. Dec. Dec. Dec. Aug. Sept. Oct. Nov. Dec. Jan.p 7 All holders, IPC..................................................... 118.1 119.7 124.4 128.5 128.0 129.2 131.4 133.0 139.1 137.1 8 Financial business.................................................. 14.9 14.8 15.6 17.5 18.0 17.4 18.0 17.9 18.5 18.3 9 Nonfinancial business............................................ 66.2 66.9 69.9 69.7 68.8 70.0 72.1 72.2 76.3 73.8 10 Consumer............................................................... 28.0 29.0 29.9 31.7 32.4 32.8 32.4 33.4 34.6 *5.2 2.2 2.2 2.3 2.6 2.5 2.4 2.3 2.5 2.4 14 12 Other....................................................................... 6.8 6.8 6.6 7.1 6.4 6.6 6.7 7.0 7.4 7.4 Note.—Figures include cash items in process of collection. Estimates of Data for August 1976 have been revised as follows: All h61|$j^ #c, gross deposits are based on reports supplied by a sample of commercial 119.4; financial business, 15.3; nonfinancial business, 65;5; ^ristithfer, 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 1978 1975 1976 1977 Instrument Dec.r Dec.r Dec.r July r Aug.r Sept.r Oct.r Nov.r Dec.r Jan. Commercial paper (seasonally adjusted) 1All issuers................................................................ 48,459 53,025 65,112 59,697 60,014 61,542 62,724 62,753 65,112 65,190 Financial companies:1 Dealer-placed paper;2 2 Total................................................................ 6,202 7,250 8,871 8,228 8,149 8,471 8,540 8,497 8,871 9,018 3 Bank-related.................................................... 1,762 1,900 2,132 1,744 1,650 1,846 1,961 1,980 2,132 2,035 Directly-placed paper:3 4 Total................................................................ 31,374 32,500 40,399 36,646 36,847 37,850 38,803 38,954 40,399 41,288 5 6,892 5,959 7,003 6,344 6,394 7,069 7,012 6,567 7,003 7,109 10,883 13,275 15,842 14,823 15,018 15,221 15,381 15,302 15,842 14,884 Dollar acceptances (not seasonally adjusted) 7 Total....................................................................... 18,727 22,523 25,654 23,499 23,091 23,317 23,908 24,088 25,654 25,252 Held by: 8 Accepting banks.................................................. 7,333 10,442 10,434 7,601 7,647 7,473 8,673 8,952 10,434 7,785 9 Own bills......................................................... 5,899 8,769 8,915 6,464 6,580 6,566 7,248 7,702 8,915 6,772 10 Bills bought.................................................... 1,435 1,673 1,519 1,137 1,067 907 1,424 1,251 1,519 1,013 F.R. Banks: 11 Own account.................................................. 1 126 991 954 393 131 482 248 954 12 ’293 375 362 296 304 287 422 392 362 37 i 13 Others.................................................................. 9,975 13,447 13,904 15,209 15,009 15,075 14,813 14,495 13,904 17,096 Based on: 14 3,726 4,992 6,532 5,570 5,446 5,654 5,886 5,973 6,532 6,637 15 Exports from United States.............................. 4,001 4,818 5,895 5,842 5,747 5,544 5,584 5,803 5,895 5,840 16 All other.............................................................. 11,000 12,713 13,227 12,088 11,899 12,119 12,438 12,312 13,227 12,774 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 a 11 financial company paper sold by dealers in the open retail trade, transportation, and services. market. 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A26 Domestic Financial Statistics □ March 1978 1.34 PRIME RATE CHARGED BY BANKS on Short-term Business Loans Per cent per annum Month Average Month Average Effective date Rate Effective date Rate rate rate 1976—June 1............. 7 1977—May 13........... 6 Vi 1976—July...................... 7.25 1977—May..................... 6.41 7............. m 31........... 6 % Aug...................... 7.01 June..................... 6.75 Sept...................... 7.00 July...................... 6.75 Aug. 2............. 7 Aug. 22............ 7 Oct....................... 6.78 Aug...................... 6.83 Nov...................... 6.50 Sept...................... 7.13 Oct. 4............ 6Va Sept. 16............ 7% Dec...................... 6.35 Oct........................ 7.52 Nov...................... 7.75 Nov. 1............. 6 Vi Oct. 7............. 7Vi 1977—jan....................... 6.25 Dec....................... 7.75 Oct. 24............. m Feb...................... 6.25 Dec. 13............. 61/4 Mar..................... 6.25 1978—Jan...................... 7.93 1978—Jan. 10............ 8 Apr...................... 6.25 Feb....................... 8.00 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 '851,244 419,038 665,606 1,424,620 452,092 2,260,100 2 Number of loans............................................................. r160,328 '128,055 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 8.75-9.38 7.98-9.75 '7.95-9.11 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................................................... 8.75-9.92 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)....................... *■708,677 '146,348 '136,967 93,587 103,885 81,366 146,525 27 Number of loans. . . .................................................... '53,761 '39,139 '9,627 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 i................................................... 8.68-9.40 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 33 Other current operating expenses.......................... 9.20 9.09 9.09 9.14 8.88 9.23 9.60 34 Farm machinery and equipment........................... 9.18 9.41 9.27 9.17 8.83 8.62 (2) 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. 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Securities Markets A ll 1.36 INTEREST RATES Money and Capital Markets Averages, per cent per annum 1977 1978 1978, week ending- Instrument 1975 1976 1977 Nov. Dec. Jan. Feb. Feb. 4 Feb. lljFeb. 18Feb. 25 Money market rates 1Federal funds 1........................................................... 5.82 5.05 5.54 6.51 6.56 6.70 6.78 6.80 6.75 6.76 6.78 Prime commercial paper 2 2 90- to 119-dav......................................................... 6.26 5.24 5.54 6.54 6.61 6.75 6.76 6.76 6.76 6.77 6.78 3 4- to 6-month.......................................................... 6.33 5.35 5.60 6.59 6.64 6.79 6.80 6.81 6.79 6.80 6.82 4 Finance company paper, directly placed, 3- to 6month 3............................................................... 6.16 5.22 5.49 6.49 6.52 6.69 6.74 6.75 6.75 6.75 6.73 5 Prime bankers acceptances, 90-day 4....................... 6.30 5.19 5.59 6.58 6.60 6.86 6.82 6.82 6.81 6.83 6.83 Large negotiable certificates of deposit 6 3-month, secondary market 5................................ 6.43 5.26 5.58 6.68 6.72 6.71 6.89 6.90 6.88 6.90 6.91 7 5.15 5.52 6.56 6.64 6.83 6.77 6.82 6.75 6.75 6.75 8 Euro-dollar deposits, 3-month 7............................... 6.97 5.57 6.05 7.09 7.15 7.32 7.28 7.36 7.20 7.23 7.33 U.S. Govt, securities Bills: 8 Market yields: 9 3-month........................................................... 5.80 4.98 5.27 6.10 6.07 6.44 6.45 6.42 6.44 6.48 6.45 10 6-month........................................................... 6.11 5.26 5.53 6.41 6.40 6.70 6.74 6.70 6.73 6.79 6.75 11 1-year............................................................... 6.30 5.52 5.71 6.52 6.52 6.80 6.86 6.80 6.84 6.90 6.88 Rates on new issue: 12 3-month........................................................... 5.838 4.989 5.265 6.160 6.063 6.448 6.457 6.440 6.476 6.452 6.460 13 6-month........................................................... 6.122 5.266 5.510 6.433 6.377 6.685 6.740 6.715 6.743 6.745 6.755 Constant maturities: 9 14 1-year................................................................... 6.76 5.88 6.09 6.95 6.96 7.28 7.34 7.28 7.31 7.38 7.38 Capital market rates Government notes and bonds U.S. Treasury Constant maturities:9 15 2-year............................................................... 6.45 7.14 7.18 7.49 7 57 7 47 7.52 7 61 7.64 16 3-year............................................................... 7.49 6.77 6.69 7.22 1.30 7! 61 1.61 7 *.58 1.62 l\l\ 7 ".74 17 5-year............................................................... 7.77 7.18 6.99 7.34 7.48 7.77 7.83 7.74 7.79 7.87 7.90 18 7-year............................................................... 7.90 7.42 7.23 7.46 7.59 7.86 7.94 7.85 7.91 7.99 7.99 19 10-year............................................................. 7.99 7.61 7.42 7.58 7.69 7.96 8.03 7.96 8.00 8.08 8.08 20 20-year............................................................. 8.19 7.86 7.67 7.76 7.87 8. 14 8.22 8.17 8.20 8.25 8.25 21 30-year............................................................. 7.85 7.94 8. 18 8.25 8.20 8.24 8.28 8.29 Notes and bonds maturing in *0— 22 3 to 5 years...................................................... 7.55 6.94 6.85 7.28 7.40 7.71 7.76 7.68 7.71 7.81 7.83 23 Over 10 years (long-term).............................. 6.98 6.78 7.06 7.14 7.23 7.50 7.60 7.54 7.55 7.63 7.66 State and local: Moody’s series:11 24 Aaa.................................................................. 6.42 5.66 5.20 5.15 5.07 5.20 5.24 5.30 5.27 5.20 5.20 25 Baa................................................................... 7.62 7.49 6.12 5.94 5.79 5.91 5.82 5.80 5.78 5.90 5.80 26 Bond Buyer series 12.......................................... 7.05 6.64 5.68 5.49 5.57 5.71 5.62 5.63 5.59 5.61 5.65 Corporate bonds Seasoned issues 13 27 All industries....................................................... 9.57 9.01 8.43 8.48 8.54 8.74 8.78 8.78 8.77 8.77 8.80 By rating groups: 28 Aaa................................................................... 8.83 8.43 8.02 8.08 8.19 8.41 8.47 8.46 8.46 8.47 8.49 29 Aa..................................................................... 9.17 8.75 8.24 8.34 8.40 8.59 8.65 8.64 8.63 8.63 8.68 30 A...................................................................... 9.65 9.09 8.49 8.56 8.57 8.76 8.79 8.82 8.76 8.79 8.80 31 Baa................................................................... 10.61 9.75 8.97 8.95 8.99 9.17 9.20 9.20 9.21 9.19 9.21 Aaa utility bonds:14 32 New issue............................................................ 9.40 8.48 8.19 8.27 8.34 8.68 8.69 8.65 8 69 8.71 33 Recently offered issues....................................... 9.41 8.49 8.19 8! 24 8*. 38 8! 60 8.61 8^60 8! 64 8.68 8!70 Dividend/price ratio 34 Preferred stocks.................................................. 8.38 7.97 7.60 7.67 7.85 7.93 7.99 7.99 7.99 7.99 8.04 35 Common stocks.................................................. 4.31 3.77 4.56 5.02 5.11 5.32 5.49 5.36 5.52 5.52 5.66 1 Weekly figures are 7-day averages of daily effective rates for the week 7 Averages of daily quotations for the week ending Wednesday. ending Wednesday; the daily effective rate is an average of the rates on 8 Except for new bill issues, yields are computed from daily closing a given day weighted by the volume of transactions at these rates. bid prices. Yields for all bills are quoted on a bank-discount basis. 2 Beginning Nov. 1977, unweighted average of offering rates quoted 9 Yields on the more actively traded issues adjusted to constant by five dealers. Previously, most representative rate quoted by those maturities by the U.S. Treasury, based on daily closing bid prices. dealers. I o Unweighted averages for all outstanding notes and bonds in maturity, 3 Averages of the most representative daily offering rates published by ranges shown, based on daily closing bid prices. “Long-term” includes finance companies for varying maturities in this range. all bonds neither due nor callable in less than 10 years. 4 Beginning Aug. 15, 1974, the rate is the average of the midpoint of II General obligations only, based on figures for Thursday, from the range of daily dealer closing rates offered for domestic issues; prior Moody’s Investors Service. data are averages of the most representative daily offering rate quoted by 12 Twenty issues of mixed quality. dealers. 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 at large New York City banks; monthly System. figures are averages of total days 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 by large New York City banks. Rates prior to 1976 not available. restrictions), on Friday close-of-business quotations. Weekly figures are for Wednesday dates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Financial Statistics □ March 1978 1.37 STOCK MARKET Selected Statistics 1977 1978 Indicator 1975 1976 1977 Aug. Sept. Oct. Nov. Dec. Jan. Feb. 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 53.51 52.66 51.37 51.87 51.83 49.89 49.41 2 Industrial............................................................ 51.88 60.44 57.84 57.30 56.41 54.99 55.62 55.55 53.45 52.80 30.73 39.57 41.07 41.04 39.99 38.33 39.30 39.75 39.15 38.90 4 Utility................................................................. 31.45 36.97 40.91 41.50 40.93 40.38 40.33 40.36 39.09 39.02 5 Finance............................................................... 46.62 52.94 55.23 56.52 55.33 53.24 54.04 53.85 50.91 50.60 6 Standard & Poor’s Corporation (1941-43 = 10)1.. 85.17 102.01 98.18 97.75 96.23 93.78 94.28 93.82 90.28 88.98 7 American Stock Exchange (Aug. 31,1973 = 100). 83.15 101.63 116.18 119.33 118.08 115.41 117.80 124.88 121.73 123.35 Volume of trading (thousands of shares)2 8 New York Stock Exchange.............................. 18,568 21,189 20,936 18,831 18,270 19,689 23,557 21,475 *•20,388 19,400 9 American Stock Exchange................................ 2,150 2,565 2,514 2,140 2,080 2,080 2,061 3,008 '2,254 2,300 Customer financing (end-of-period balances, in millions of dollars) 10 Regulated margin credit at brokers/dealers 10,866 and banks3........................................ 6,500 9,011 10,866 10,592 10,617 10,583 10,680 Brokers, total............................................ 5,540 8,166 9,993 9,763 9,793 9,756 9,859 9,993 Margin stock4...................................... 5,390 7,960 9,740 9,560 9,590 9,560 9,610 9,740 Convertible bonds................................ 147 204 250 196 196 192 246 250 Subscription issues............................... 3 2 3 7 7 4 3 3 Banks, total............................................... 960 845 873 829 824 827 822 873 Margin stocks....................................... 909 800 827 787 783 783 778 827 Convertible bonds................................ 36 30 30 23 24 27 28 30 Subscription issues............................... 15 15 16 19 17 17 16 16 19 Unregulated nonmargin stock credit at banks5 ... 2,281 2,817 2,568 2,587 2,581 2,579 2,604 2,568 Memo: Free credit balances at brokers6 20 Margin-account............................................ 475 585 640 605 600 615 630 640 21 Cash-account................................................ 1,525 1,855 2,060 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 By equity class (in per cent):7 23 Under 40............................... 24.0 12.0 19.0 17.4 18.0 27.0 17.0 19.0 24 40-49...................................... 28.8 23.0 34.0 32.0 36.0 35.0 33.0 34.0 25 50-59...................................... 22.3 35.0 24.0 27.0 23.0 18.0 26.0 24.0 26 60-69...................................... 11.6 15.0 11.0 12.0 11.0 9.8 12.0 11.0 27 70-79...................................... 6.9 8.7 7.0 7.0 6.0 6.0 7.0 7.0 28 80 or more........................... 5.3 6.0 5.0 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 9,660 9,640 9,640 9,710 9,910 Distribution by equity status (per cent) 30 Net credit status................................................ 43.8 41.3 43.4 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 46.2 45.9 43.8 45.5 44.9 32 Less than 60 per cent..................................... 15.4 10.9 11.7 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 ex­ surance 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 re­ data from a sample of reporting banks. quired for additional purchases. Balances may arise as transfers based In addition to assigning a current loan value to margin stock generally, on loan values of other collateral in the customer’s margin account or Regulations T and U permit special loan values for convertible bonds deposits of cash (usually sales proceeds) occur. and stock acquired through exercise of subscription rights. 4 A distribution of this total by equity class is shown below. Note.—For table on “Margin Requirements” see p. A-10, Table 1.161. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Thrift Institutions A29 1.38 SAVINGS INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1977 1978 1974 1975 1976 May June July Aug. Sept. Oct. Nov. Dec.r Jan. Savings and loan associations 1 Assets..................................... 295,545 338,233 391,907 421,768 426,943 433,728 440,101 444,383 450,563 455,644 459,282 464,185 2 Mortgages............................. 249,301 278,590 323,005 344,500 350,632 355,856 361,582 366,838 371,714 376,468 381,216 384,192 3 Cash and investment securities1........................... 23,251 30,853 35,724 39,707 39,693 41,057 41.,069 39,709 40,642 40,522 39,197 40,305 4 Other...................................... 22,993 28,790 33,178 37,561 36,618 36,815 37;,450 37,836 38,207 38,654 38.869 39,688 5 Liabilities and net worth........ 295,545 338,233 391,907 All,16% 426,943 433,728 440,,101 444,383 450,563 455,644 459,282 464,185 6 Savings capital....................... 242,974 285,743 335,912 357,840 364,222 368,385 371.,247 377,208 379,604 381,333 386,875 389,625 7 Borrowed money................... 24,780 20,634 19,083 19,800 20,756 20,960 22.,026 22,920 24,206 25,547 27,803 27,797 8 FHLBB.............................. 21,508 17,524 15,708 15,000 15,595 15,724 16;,255 16,908 17,546 18,282 19,952 20,109 9 Other.................................. 3,272 3,110 3,375 4,800 5,161 5,236 5.,771 6,012 6,660 7,265 7,851 7,688 10 Loans in process................... 3,244 5,128 6,840 8,511 9,129 9,338 9;,662 9,741 9,856 9,924 9,932 9,847 11 Other...................................... 6,105 6,949 8,074 12,348 9,374 11,280 13.,053 10,176 12,226 13,839 9,491 11.475 12 Net worth2............................ 18,442 19,779 21,998 23,269 23,462 23,765 24;,113 24,338 24,671 25,001 25,181 25,441 13 Memo : Mortgage loan com­ mitments outstanding3.. 7,454 10,673 14,826 22,270 22,032 21,907 21.,901 21,631 21,555 21,270 19,886 19,566 Mutual savings banks 14 Assets..................................... 109,550 121,056 134,812 140,593 141,778 143,036 143,815 144,666 145,651 146,346 147,190 Loans: 15 Mortgage........................... 74,891 77,221 81,630 83,075 84,051 84,700 85,419 86,079 86,769 87,333 88,104 16 Other.................................. 3,812 4,023 5,183 6,650 6,887 7,176 7,119 6,878 7,115 7,241 6,240 Securities: 17 U.S. Govt........................... 2,555 4,740 5,840 6,248 c6,104 6,101 6,019 6,192 6,101 6,071 5,901 18 State and local government. 930 1,545 2.417 2,539 2,544 2,594 2,762 2,777 2,808 2,809 2,828 19 Coroorate and other4....... 22,550 27,992 33,793 36,455 36,349 36,674 36,878 36,927 37,073 37,221 37,909 20 Cash....................................... 2,167 2,330 2,355 1,922 2,071 2,001 C1,857 1,992 2,011 1,887 2,416 21 Other assets........................... 2,645 3,205 3,593 3,703 3,771 3,789 3,760 3,821 3,773 3,783 3,792 22 Liabilities............................... 109,550 121,056 134,812 140,593 141,778 143,036 143,815 144,666 145,651 146,346 147,190 23 DeDosits................................. 98,701 109,873 122,877 127,791 129,332 130,111 130,381 131,688 132,250 132,537 133,892 24 Regular:5........................... 98,221 109,291 121,961 126,587 128,071 128,748 129,030 130,230 130,913 131,319 132,608 25 Ordinary savings........... 64,286 69,653 74,535 76,384 77,033 77,069 77,163 77,640 77,503 77,460 77,930 26 Time and other......... 33,935 39,639 47,426 50,203 51,038 51,679 51,867 52,590 53,410 53,859 54,678 27 480 582 916 1,204 1,261 1,363 1,351 1,458 1,337 1,208 1,284 28 Other liabilities..................... 2,888 2,755 2,884 3,381 2,939 3,379 3,779 3,254 3,632 3,938 3,319 29 General reserve accounts.... 7,961 8,428 9,052 9,422 9,506 9,546 9,654 9,723 9,769 9.882 9,980 30 Memo: Mortgage loan commitments outstanding6.. 2,040 1,803 2,439 3,521 4,079 4,049 4,198 4,254 4,423 4,458 4,066 Life insurance companies 31 Assets..................................... 263,349 289,304 321,552 331,028 334,386 336,651 338,964 341,382 343,738 347,182 350,506 Securities: 32 Government........................ 10,900 13,758 17,942 18,475 18,579 18,916 19,174 19,515 19,519 19,681 19,508 33 3,372 A,736 5,368 5,396 5,400 5,628 5,831 5.883 5,810 5,993 5,693 34 State and local............... 3,667 4,508 5,594 5,797 5,813 5,847 5,881 5,994 5,979 5,967 6,016 35 Foreign 8......................... 3,861 4,514 6,980 7,282 7,366 7,441 7,462 7,638 \130 7,721 7,799 36 Business.............................. 119,637 135,317 157,246 164,126 166,859 168,498 169,747 170,606 172,005 174,109 175,204 37 Bonds............................. 97,717 107,256 122,984 131,568 133,497 135,262 136,752 138,046 139,909 141,354 142,095 38 21,920 28,061 34,262 32,558 33,362 33,236 32,995 32,560 32,096 32,755 33,109 39 Mortgages............................. 86,234 89,167 91,552 92,358 92,854 93,106 93,326 94,070 94,684 95,110 96,765 40 Real estate............................. 8,331 9,621 10,476 10,822 10,897 10,901 * 10,926 10,930 11,024 11,113 11,201 22,862 24,467 25,834 26,500 26,657 26,780 26,946 27,087 27,220 27,355 27,508 42 Other assets........................... 15,385 16,971 18,502 18,747 18,540 18,450 18,845 19,174 19,286 19,814 20,320 Credit unions 43 Total assets/liabilities and capital............................ 31,948 38,037 45,225 48,999 50,186 50,218 50,904 52,136 52,412 53,141 54,084 54,084 44 Federal.............................. 16,715 20,209 24,396 26.594 27,364 27,290 27,632 28,384 28,463 28,954 29,574 29,574 45 State................................... 15,233 17,828 20,829 22,405 22,822 22,928 23,272 23,752 23,949 24,187 24,510 24,510 46 Loans outstanding................ 24,432 28,169 34,384 36,987 38,201 38,657 39,711 40,573 40,865 41,427 42,055 42,055 Al Federal............................. 12,730 14,869 18,311 19,680 20,420 20,591 21,194 21,692 21,814 22,224 22,717 22,717 48 State................................. 11,702 13,300 16,073 17,307 17,781 18,066 18,517 18,881 19,051 19,203 19,338 19,338 49 Savings................................. 27,518 33,013 39,173 42,504 43,552 43,658 43,982 45,103 45,441 45,977 46,832 46,832 50 Federal (shares)............... 14,370 17,530 21,130 23,169 23,825 23,873 24,080 24,775 24,945 25,303 25,849 25,849 51 State (shares and deposits), 13,148 15,483 18,043 19,335 19,727 19,785 19,902 20,328 20,496 20,674 20,983 20,983 For notes see bottom of page A30. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Financial Statistics □ March 1978 1.39 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year Transition Fiscal quarter Fiscal Type of account or operation year (July- year 1976 1977 1977 1978 1976 Sept. 1977 1976) H2 HI H2 Nov. Dec. Jan. U.S. Budget 1 Receipts 1........................................ 299,197 '81,687 356,861 157.868 189,410 175,787 27,596 32,794 33,201 2 Outlays 1,2,3 .................................. 365,658 94,659 401,896 -193,629 199,482 216,747 36,864 37,646 36,918 3 Surplus, or deficit (—)................. -66,461 -12,972 -45,035 -35,761 -10,072 - 40.961 -9,269 -4,852 -3,717 4 Trust funds.................................. 2,409 -1,952 7,833 -4,621 7,332 4,293 457 700 -3,946 5 Federal funds 4............................ -68,870 -11,020 -52,868 -31,140 -17,405 -45,254 -9,726 -5,552 230 Off-budget entities surplus, or deficit (—) 6 Federal Financing Bank outlays. . -5,915 -2,575 -8,415 -5,176 -2,075 -6,663 -250 -1,462 -907 7 Other 2,5......................................... -1,355 793 -269 3,809 -2,086 428 -183 59 -267 U.S. Budget plus off-budget, in­ cluding Federal Financing Bank 8 Surplus, or deficit ( —)................... -73,731 -14,755 -53,718 -37,125 -14,233 -47,196 -9,702 -6,255 -4,891 Financed by: 9 Borrowing from the public 3. . . 82,922 18,027 53,516 35,457 16,480 40,284 8,854 9,971 6,027 10 Cash and monetary assets (de­ crease, or increase (—)).... -7,796 -2,899 -2,238 2,153 -4,666 4,317 2,278 -5,290 -229 11 Other 6........................................ -1,396 -373 2,440 -485 2,420 2,597 -1,429 1,573 -907 Memo items : 12 Treasury operating balance (level, end of period).................................... 14,836 17,418 19,104 11,670 >16,255 12,274 5,471 12,274 12,481 13 F.R. Banks..................................... 11,975 13,299 15,740 10,393 r15,183 7,114 2,562 7,114 11,228 14 Tax and loan accounts.................. 2,854 4,119 3,364 1,277 rl,072 5,160 2,909 5,160 1,253 15 Other demand accounts 7.............. 7 1 Effective June 1977, earned income credit payments in excess of an Electrification; Telephone Revolving Fund, Rural Telephone Bank; and individual’s tax liability, formerly treated as outlays, are classified as 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 abjustment. 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 Fiscal quarter Fiscal Source or type year (July- year 1976 1977 1977 1978 1976 Sept. 1977 1976) H2 HI H2 Nov. Jan. Receipts 1 299,197 *•81,687 356,861 157,868 189,410 175,786 27,596 32,794 33,201 2 Individual income taxes, net.............. 130,794 r38,715 156,725 75,899 77,948 82,877 13,171 13,941 20,217 3 Withheld......................................... 123,408 32,949 144,820 68,023 73,303 75,480 12,916 13,351 13,111 4 Presidential Election Campaign Fund....................................... 34 1 37 1 37 1 1 5 Non withheld................................... 35,528 6,809 42,062 8,426 32,959 9,397 430 770 7,154 6 Refunds 1........................................ 28,175 *•1,043 30,194 1,541 28,350 2,001 174 179 48 7 Corporation income taxes: 8 Gross receipts................................. 46,783 9,808 60,057 20,706 37,133 25,121 1,386 9,549 2,273 9 Refunds.......................................... 5,374 1,348 5,164 2,886 2,324 2,819 466 337 282 10 Social insurance taxes and contribu­ tions, net..................................... 92,714 25,760 108,683 47,596 58,099 52,347 10,404 6,647 7,997 11 Payroll employment taxes and contributions 2....................... 76,391 21,534 88,196 A0,All 45,242 44,384 8,750 6,030 6,898 12 Self-employment taxes and contributions 3....................... 3,518 269 4,014 286 3,687 316 7 259 13 Unemployment insurance.............. 8,054 2,698 11,312 4,379 6,575 4,936 1,216 123 403 14 Other net receipts 4....................... 4,752 1,259 5,162 2,504 2,595 2,711 438 486 437 15 Excise taxes........................................ 16,963 4,473 17,548 8,910 8,432 9,284 1,615 1,463 1,492 16 Customs.............................................. 4,074 1,212 5,150 2,361 2,519 2,848 459 501 494 17 Estate and gift................................... 5,216 1,455 7,327 2,943 4,332 2,837 439 482 447 18 Miscellaneous receipts 5.................... 8,026 1,612 6,536 3,236 3,269 3,292 587 549 563 Outlays 19 AH types *, 6................................... 365,658 94,659 401,896 193,629 199,482 216,747 36,864 37,646 36,918 20 National defense............................ 89,996 22,518 96,721 45,002 48,721 50,873 8,974 8,417 7,974 21 International affairs 6................... 5,067 1,997 5,593 3,028 2,522 2,896 251 371 300 22 General science, space, and technology............................... 4,370 1,161 4,677 2,377 2,108 2,318 389 382 370 23 Natural resources, environment, and energy.............................. 11,282 3,324 14,335 7,206 6,855 8,527 1,527 1,561 1,152 24 Agriculture..................................... 2,502 584 5,330 2,019 2,628 5,477 1,553 1,697 1,790 25 Commerce and transportation.... 17,248 4,700 14,731 9,643 5,945 10,743 1,777 1,551 1,359 26 Community and regional development........................... 5,300 1,530 7,394 3,192 3,149 4,924 1,058 795 755 27 Education, training, employment, and social services.................. 18,167 5,013 19,718 9,083 9,775 10,800 1,834 1,778 1,996 28 Health............................................. 33,448 8,720 38,838 19,329 18,654 19,422 2,613 3,554 2,680 29 Income security 1........................... 126,598 32,710 137,151 65,367 69,917 71,047 12,635 12,105 12,912 30 Veterans benefits and services.......... 18,432 3,962 18,040 8,542 9,382 9,864 1,571 2,613 686 31 Law enforcement and justice............ 3,320 859 3,589 1,839 1,783 1,723 321 293 307 32 General government.......................... 2,927 878 3,338 1,734 1,587 1,749 376 320 166 33 Revenue sharing and general purpose fiscal assistance............ 7,119 2,024 9,404 4,729 4,333 4,926 249 37 2,317 34 Interest 7............................................. 34,589 7,246 38,092 18,409 18,927 19,962 2,758 6,236 2,628 35 Undistributed offsetting receipts 7,8 -14,704 -2,567 -15,053 -7,869 -6,803 -8,506 -1,021 -4,063 -475 1 Effective June 1977, earned income credit payments in excess of an from off-budget status to unified budget status. Export-Import Bank individual’s tax liability, formerly treated as outlays, are classified as in­ certificates of beneficial interest (effective July 1, 1975) and loans to the come tax refunds retroactive to January 1976. Private Export Funding Corp. (PEFCO), a wholly owned subsidiary of 2 Old-age, disability and hospital insurance, and Railroad Retirement the Export-Import Bank, are treated as debt rather than asset sales. accounts. 7 Effective September 1976, “Interest” and “Undistributed Offsetting 3 Old-age, disability, and hospital insurance. Receipts” reflect the accounting conversion for the interest on special 4 Supplementary medical insurance premiums, Federal employee re­ issues for U.S. Govt, accounts from an accrual basis to a cash basis. tirement contributions, and Civil Service retirement and disability fund. 8 Consists of interest received by trust funds, rents and royalties on 5 Deposits of earnings by F.R. Banks and other miscellaneous receipts. the Outer Continental Shelf, and U.S. Govt, contributions for em­ 6 Outlay totals reflect the reclassification of the Export-Import Bank ployee retirement. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Financial Statistics □ March 1978 1.41 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1974 1975 1976 1977 Dec. 31 June 30 Dec. 31 June 30 Sept. 30 Dec. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding........ 504.0 544.1 587.6 631.9 2 646.4 665.5 685.2 709.1 729.2 2 Public debt securities.............. 492.7 533.7 576.6 620.4 634.7 653.5 674.4 698.8 718.9 3 Held by public................... 351.5 387.9 437.3 470.8 488.6 506.4 523.2 543.4 564.1 4 Held by agencies................ 141.2 145.3 139.3 149.6 146.1 147.1 151.2 155.5 154.8 5 Agency securities..................... 11.3 10.9 10.9 11.5 11.6 12.0 10.8 10.3 10.2 6 Held by public.................... 9.3 9.0 8.9 9.5 29.7 10.0 9.0 8.5 8.4 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 493.0 534.2 577.8 621.6 635.8 654.7 675.6 r700.0 720.1 9 Public debt securities............. 490.5 532.6 576.0 619.8 634.1 652.9 673.8 r698.2 718.3 10 Other debt1............................. 2.4 1.6 1.7 1.7 1.7 1.7 1.7 1.7 1.7 11 Memo: Statutory debt limit.. 495.0 577.0 595.0 636.0 636.0 682.0 700.0 r700.0 752.0 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 Oct. Nov. Dec. Jan. Feb. 469.9 492.7 576.6 653.5 697.4 708.0 718.9 721.6 729.8 By type: 2 Interest-bearing debt.............................................. 467.8 491.6 575.7 652.5 696.3 707.0 715.2 720.6 728.5 3 270.2 282.9 363.2 421.3 447.4 454.9 459.9 466.8 470.8 4 Bills................................................................ 107.8 119.7 157.5 164.0 156.2 156.7 161.1 161.2 161.8 5 Notes............................................................. 124.6 129.8 167.1 216.7 245.6 251.1 251.8 257.1 258.5 6 37.8 33.4 38.6 40.6 45.7 47.1 47.0 48.5 50.5 7 197.6 208.7 212.5 231.2 248.9 252.1 255.3 253.8 257.7 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 21.1 21.7 22.2 22.8 22.6 10 60.8 63.8 67.9 72.3 76.2 76.6 77.0 11A 77.8 11 108.0 119.1 119.4 129.7 136.9 138.6 139.8 136.4 139.4 By holder:6 12 U.S. Govt, agencies and trust funds................ 123.4 138.2 145. 3 149.6 152.2 153.9 154.8 13 F.R. Banks........................................................ 75.0 80.5 84.7 94.4 94.6 96. 5 102.5 14 Private investors................................................ 260.9 271.0 349.4 409.5 450.6 457.6 461.3 15 Commercial banks........................................ 60. 3 55.6 85.1 103.8 100.5 101.4 102.4 16 Mutual savings banks................................... 2.9 2.5 4.5 5.7 6.0 6.0 6.0 17 Insurance companies.................................... 6.4 6.2 9.5 12.5 14.7 15. 3 15.6 18 Other corporations....................................... 10.9 11.0 20.2 26.5 23.8 23.4 22.2 19 State and local governments........................ 29.2 29.2 34.2 41.6 54.5 55. 6 55.1 Individuals: 20 Savings bonds............................................ 60.3 63.4 67.3 72.0 76.0 76.4 76.7 21 Other securities.......................................... 16.9 21.5 24.0 28.8 28.4 28. 5 28.6 22 Foreign and international7........................... 54.7 58.8 66.5 78.1 101.3 106.7 109.6 23 Other miscellaneous investors 8.................... 19.3 22.8 38.0 40.5 45.3 44.2 45.0 1 Includes $1.3 billion of non-interest-bearing debt (of which $611 7 Consists of the investments of foreign balances and international million on Feb. 28, 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, cor­ positary 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 1 Vi per cent, 5-year marketable Treasury notes. Convertible bonds that have Note.—Gross public debt excludes guaranteed agency securities and, been so exchanged are removed from this category and recorded in the beginning in July 1974, includes Federal Financing Bank security issues. notes category above. Data by type of security from Monthly Statement of the Public Debt of 4 Nonmarketable foreign government dollar-denominated and foreign the United States (U.S. Treasury Dept.); data by holder from Treasury currency denominated series. Bulletin. 5 Held only by U.S. Govt, agencies and trust funds. 6 Data for F.R. Banks and U.S. Govt, agencies and trust funds are 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 1978 1977 1978 Type of holder 1976 1975 1976 Dec. Jan. Dec. Jan. All maturities 1 to 5 years 1 All holders......................................... 363,191 421,276 459,927 466,780 112,270 141,132 151,264 156,195 2 U.S. Govt, agencies and trust funds 19.397 16,485 14,420 14,403 7,058 6,141 4,788 4,788 3 F. R. Banks....................................... 87,934 96,971 101,191 97,004 30,518 31,249 27,012 27,715 A Private investors................................ 255,860 307,820 344,315 355,374 74,694 103,742 119,464 123,692 5 Commercial banks........................ 64.398 78,262 75,363 73,965 29,629 40,005 38,691 39,254 6 Mutual savings banks................... 3,300 4,072 4,379 4,279 1,524 2,010 2,112 2,121 7 Insurance companies.................... 7,565 10,284 12,378 12,165 2,359 3,885 A,129 4,679 8 Nonfinancial corporations........... 9,365 14,193 9,474 9,965 1,967 2,618 3,183 3,345 9 Savings and loan associations.... 2,793 4.576 4,817 4,942 1,558 2,360 2,368 2,396 10 State and local governments........ 9,285 12.252 15,495 15,172 1,761 2,543 3,875 3,795 11 All others....................................... 159,154 184,182 222,409 234,885 35,894 50,321 64,505 68,102 Total, within 1 year 5 to 10 years 12 All holders......................................... 199,692 211,035 230,691 231,175 26,436 43,045 45,328 45,319 13 U.S. Govt, agencies and trust funds 2,769 2,012 1,906 1,889 3,283 2.879 2,129 2,129 14 F.R. Banks....................................... 46,845 51,569 56,702 51,645 6,463 9,148 10,404 10,477 15 Private investors................................ 150,078 157,454 172,084 177,642 16,690 31,018 32,795 32,712 16 Commercial banks........................ 29,875 31,213 29,All 27,207 4,071 6,278 6,162 6,280 17 Mutual savings banks................... 983 1,214 1,400 1,291 448 567 584 578 18 Insurance companies.................... 2,024 2,191 2,398 2,216 1,592 2,546 3,204 3,246 19 Nonfinancial corporations............ 7,105 11,009 5,770 5,910 175 370 307 421 20 Savings and loan associations.... 914 1,984 2,236 2,334 216 155 143 140 21 State and local governments........ 5,288 6,622 7,917 7,639 782 1,465 1,283 1,260 22 All others............... ................... 103,889 103,220 122,885 131,045 9,405 19,637 21,112 20,788 Bills, within 1 year 10 to 20 years 23 All holders......................................... 157,483 163,992 161,081 161,221 14,264 11,865 12,906 14,371 24 U.S. Govt, agencies and trust funds 207 449 32 17 4,233 3,102 3,102 3,102 25 F. R. Banks....................................... 38,018 41,279 42,004 37,090 1,507 1,363 1,510 1,536 26 Private investors................................ 119,258 122,264 119,035 124,115 8,524 7,400 8,295 9,733 27 Commercial banks........................ 17,481 17,303 11,996 9,706 552 339 456 660 28 Mutual savings banks................... 554 454 484 403 232 139 137 139 29 Insurance companies..................... 1,513 1,463 1,187 1,026 1,154 1,114 1,245 1,207 30 Nonfinancial corporations............ 5,829 9,939 4,329 4,439 61 142 133 159 31 Savings and loan associations... . 518 1.266 806 874 82 64 54 54 32 State and local governments........ 4,566 5,556 6,092 5,841 896 718 890 967 33 All others....................................... 88,797 86,282 94,152 101,826 5,546 4,884 5,380 6,547 Other, within 1 year Over 20 years 34 All holders......................................... 42,209 47,043 69,610 69,954 14,200 19,738 19,721 35 U.S. Govt, agencies and trust funds 2,562 1,563 1.874 1,872 2,053 2,350 2,495 2,494 36 F. R. Banks....................................... 8,827 10,290 14,698 14,555 2,601 3,642 5,564 5,632 37 Private investors................................ 30,820 35,190 53,039 53,527 5,876 8,208 11,679 11,595 38 Commercial banks........................ 12,394 13,910 15,482 17,501 271 427 578 564 39 Mutual savings banks................... 429 760 916 888 112 143 146 150 40 Insurance companies..................... 511 728 1,211 1,190 436 548 802 818 41 Nonfinancial corporations............ 1,276 1,070 1,441 1,471 57 55 81 131 42 Savings and loan associations.... 396 718 1,430 1,460 22 13 16 17 43 State and local governments........ 722 1,066 3.875 3,795 558 904 1,530 1,511 44 All others....................................... 15,092 16,938 28,733 29,219 4,420 6,120 8,526 8,403 Note.—Direct public issues only. Based on Treasury Survey of Owner­ banks, 465 mutual savings banks, and 728 insurance companies, each ship from Treasury Bulletin (U.S. Treasury Dept.). about 90 per cent; (2) 436 nonfinancial corporations and 486 savings Data complete for U.S. Govt, agencies and trust funds and F.R. Banks, and loan assns., each about 50 per cent; and (3) 496 State and local but data for other groups include only holdings of those institutions govts., about 40 per cent. that report. The following figures show, for each category, the number “All others,” a residual, includes holdings of all those not reporting and proportion reporting as of Jan. 31, 1978; (1) 5,489 commercial in the Treasury Survey, including investor groups not listed separately. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Financial Statistics □ March 1978 1.44 U.S. GOVERNMENT SECURITIES DEALERS Transactions Par value; averages of daily figures, in millions of dollars 1977 1978 1978, week ending Wednesday— Item 1974 1975 1976 Nov. Dec. Jan. Jan. 4 Jan. 11 Jan. 18 Jan. 25 Feb. 1 Feb. 8 1 U.S. Govt, securities............. 3,579 6,027 10,449 11,086 9,303 10,740 12,497 13,711 10,778 8,028 9,721 8,557 By maturity: 2 Bills.................................... 2,550 3,889 6,676 6,689 5,834 6,956 8,111 8,920 7,331 5,206 5,775 5,039 3 Other within 1 year.......... 250 223 210 257 264 400 425 308 541 249 440 180 4 1-5 years........................... 465 1,414 2,317 2,136 1,865 1,923 1,871 2,374 1,568 1,695 2,245 1,541 5 5-10 years......................... 256 363 1,019 1,372 729 720 851 984 748 408 751 1,144 6 Over 10 years.................... 58 138 229 631 611 741 1,239 1,125 590 470 510 654 By type of customer: 7 U.S. Govt, securities dealers........................ 652 885 1,360 1,157 1,317 1,358 1,855 1,603 1,279 1,192 1,278 1,252 8 U.S. Govt, securities brokers....................... 965 1,750 3,407 3,912 2,818 3,663 3,477 5,392 3,545 2,604 3,030 2,426 9 Commercial banks............ 998 1,451 2,426 2,048 1,756 2,180 2,905 2,734 2,118 1,614 2,056 1,671 10 All others i......................... 964 1,941 3,257 3,968 3,412 3,540 4,261 3,982 3,837 2,618 3,358 3,208 11 Federal agency securities.... 965 1,043 1,548 1,697 1,444 1,460 1,281 1,521 1,722 1,077 1,567 982 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, week ending 1978, week ending 1977 1978 Wednesday— Wednesday— 1974 1975 1976 Nov. Dec. Jan. Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan. 18 Positions2 1 U.S. Govt, securities............. 2,580 5,884 7,592 4,351 5,114 4,373 5,534 5,178 5,436 5,671 6,009 3,385 2 Bills.................................... 1,932 4,297 6,290 3,784 4,312 4,052 5,090 4,923 4,062 4,431 5,639 3,613 3 Other within 1 year.......... -6 265 188 120 210 91 179 169 296 191 147 76 4 1-5 years........................... 265 886 515 -135 377 120 93 -27 845 595 2 -389 5 5-10 years......................... 302 300 402 383 66 -117 35 13 68 50 -96 -146 6 Over 10 years.................... 88 136 198 199 147 227 137 100 167 405 315 230 7 Federal agency securities.... 1,212 943 729 914 788 504 1,003 759 486 571 524 387 Sources of financing3 8 All sources............................. 3,977 6,666 8,715 9,209 11,429 9,976 12,066 12,684 10,726 10,349 11,924 9,421 Commercial banks: 9 New York City................. 1,032 1,621 1,896 914 1,255 926 1,500 1,599 939 1,167 1,257 639 10 Outside New York City... 1,064 1,466 1,660 1,802 2,246 2,342 2,457 2,479 2,165 1,836 3,109 2,483 11 Corporations1....................... 459 842 1,479 2.893 2,839 2,492 3,019 3,022 2,654 2,489 2,881 2,626 12 All others.............................. 1,423 2,738 3,681 3,599 5,090 4,216 5,090 5,585 4,968 4,857 4,676 3,673 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 July Aug. Sept. Oct. Nov. Dec. 1 Federal and Federally sponsored agencies........... 89,381 97,680 103,325 108,243 107,868 108,379 109,046 109,427 110,409 2 Federal agencies.................................................... 12,719 19,046 21,896 22,232 22,322 23,055 23,143 23,257 23,245 1,312 1,220 1,113 1,035 1,024 1,016 1,006 991 983 4 Export-Import Bank2,3.................................... 2,893 7,188 7,801 8,742 8,742 9,246 9,246 9,246 9,156 5 Federal Housing Administration4................... 440 564 575 583 579 579 583 585 581 6 Government National Mortgage Association participation certificates 5......................... 4,280 4,200 4,120 3,768 3,768 3,768 3,768 3,768 3,743 7 Postal Service6.................................................. 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 5,410 5,490 5,705 5,785 5,905 6,015 9 United States Railway Association6............... 3 209 104 263 288 310 324 331 336 76,662 78,634 81,429 86,011 85,546 85,324 85,903 86,170 87,164 11 Federal home loan banks................................. 21,890 18,900 16,811 17,328 17,196 17,162 17,325 17,867 18,345 12 Federal Home Loan Mortgage Corporation.. 1,551 1,550 1,690 1,698 1,686 1,686 1,686 1,686 1,686 13 Federal National Mortgage Association........ 28,167 29,963 30,565 31,566 31,301 31,491 31,572 31,333 31,890 14 Federal land banks.......................................... 12,653 15,000 17.127 18,719 18,719 18,719 19,118 19,118 19,118 15 Federal intermediate credit banks................... 8,589 9,254 10,494 11,654 11,786 11,693 11,623 11,421 11,174 16 Banks for cooperatives..................................... 3,589 3,655 4,330 4,604 4,356 4,061 4,052 4,208 4,434 17 Student Loan Marketing Association7............ 220 310 410 440 500 510 525 535 515 18 Other.................................................................. 3 2 2 2 2 2 2 2 2 Memo items : 4,474 17,154 28,711 32,443 33,800 35,418 36,722 37,095 38,580 Lending to Federal and Federally sponsored agencies: 20 Export-Import Bank3....................................... 4,595 5,208 5,420 5,420 5,924 5,924 5,924 5,834 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........... 220 310 410 440 500 510 525 535 515 23 Tennessee Valley Authority............................. 895 1,840 3,110 3,585 3,665 3,880 3,960 4,080 4,190 24 United States Railway Association6............... 3 209 104 263 288 310 324 331 336 Other lending:9 25 Farmers Home Administration....................... 2,500 7,000 10.750 13,650 14,465 14,615 15,295 15,295 16,095 26 Rural Electrification Administration.............. 566 1,415 2,105 2,184 2,382 2,467 2,535 2,647 27 Other.................................................................. 356 1,134 4,966 4,799 5,097 5,616 6,046 6,214 6,782 1 Consists of mortgages assumed by the Defense Department between 7 Unlike other Federally sponsored agencies, the Student Loan 1957 and 1963 under family housing and homeowners assistance programs. Marketing Association may borrow from the Federal Financing Bank 2 Includes participation certificates reclassified as debt beginning (FFB) since its obligations are guaranteed by the Department of Health, Oct. 1, 1976. Education, and Welfare. 3 Off-budget Aug. 17,1974, through Sept. 30,1976; on-budget thereafter. 8 The FFB, which began operations in 1974, is authorized to purchase 4 Consists of debentures issued in payment of Federal Housing Ad­ or sell obligations issued, sold, or guaranteed by other Federal agencies. ministration insurance claims. Once issued, these securities may be sold Since FFB incurs debt solely for the purpose of lending to other agencies, privately on the securities market. its debt is not included in the main portion of the table in order to avoid 5 Certificates of participation issued prior to fiscal 1969 by the Govern­ double counting. ment National Mortgage Association acting as trustee for the Farmers 9 Includes FFB purchases of agency assets and guaranteed loans; Home Administration; Department of Health, Education, and Welfare; the latter contain loans guaranteed by numerous agencies with the Department of Housing and Urban Development; Small Business Ad­ guarantees of any particular agency being generally small. The Farmers ministration; and the Veterans Administration. Home Administration item consists exclusively of agency assets, while the 6 Off-budget. Rural Electrification Administration entry contains both agency assets and guaranteed loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Financial Statistics □ March 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 June July Aug. Sept. Oct. Nov. State and local government 1 24,315 30,607 35,313 r5,789 3,116 4,121 4,022 3,816 3,338 By type of issue: 2 General obligation............................................................. 13,563 16,020 18,040 '2,495 1,038 1,189 1,267 1,521 982 3 10,212 14,511 17,140 '3,291 2,075 2,929 2,746 2,286 2,350 4 Housing Assistance Administration 2.............................. 461 5 79 76 133 3 3 3 9 9 6 By type of issuer: 6 4,784 7,438 7,054 r915 166 397 401 837 299 7 8,638 12,441 15,304 '2,044 1,732 2,308 2,364 1,607 1,592 8 Municipalities, counties, townships, school districts.... 10,817 10,660 12,845 '2,827 1,215 1,413 1,247 1,363 1,441 23,508 29,495 32,108 r4,871 2,539 2,813 2,376 3,082 2,514 By use of proceeds: 10 4,730 4,689 4,900 r705 344 350 356 352 381 11 1,712 2,208 2,586 r651 140 220 176 327 113 12 5,634 7,209 9,594 r606 914 442 659 402 474 13 3,820 4,392 6,566 '867 496 773 672 1,069 691 14 494 445 483 '763 233 455 313 455 589 15 7,118 10,552 7,979 '1,279 412 573 200 477 266 Corporate 38,313 53,619 53,356 5,321 4,074 3,322 3,905 4,032 5,120 32,066 42,756 42,262 4,286 3,379 2,765 3,279 3,098 3,274 By type of offering: 18 25,903 32,583 26,453 2,045 2,360 1,947 2,059 2,189 2,211 19 6,160 10,172 15,808 2,241 1,019 818 1,220 909 1,063 By industry group: 20 9,867 16,980 13,243 1,006 1,165 932 513 623 688 21 1,845 2,750 4,361 363 526 380 623 521 517 22 1,550 3,439 4,357 25 143 241 131 113 150 23 8,873 9,658 8,297 1,237 480 347 1,014 854 836 24 3,710 3,464 2,787 371 258 45 319 8 285 25 6,218 6,469 9,222 1,284 807 819 679 979 798 6,247 10,863 11,094 1,035 695 557 626 934 1,846 By type: 27 2,253 3,458 2,789 332 327 178 347 299 290 28 3,994 7,405 8,305 703 368 379 279 635 1,556 By industry group: 29 544 1,670 2,237 176 144 34 38 83 56 30 940 1,470 1,183 437 66 94 86 325 97 31 22 1 24 103 100 40 50 32 Public utility ...................................................................... 3,964 6,235 6,101 229 363 150 403 395 829 33 Communication................................................................. 217 1,002 776 45 19 45 7 725 34 562 488 771 45 3 279 55 131 88 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. tha 3 n F i 1 g u y r e e a s r , , w so h l i d c h f o re r p c r a e s s h en i t n g th ro e s s U n pr it o e c d e e S d t s a te o s f , i a s r s e u e p s r in m c a ip tu a r l i n a g m i o n u n m t o o re r As S s o o u ci r a c ti e o s n .— ; c S o ta rp te o r a a n te d s l e o c c u a r l i ti g es o , v e S r e n c m ur e it n i t e s s e a c n u d r it E ie x s c , ha S n e g c e u ri C tie o s m I m n i d s u si s o tr n y . number of units multiplied by offering price. Excludes offerings of less Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Corporate Finance A37 1.48 CORPORATE SECURITIES Net Change in Amounts Outstanding Millions of dollars 1975 1976 Source of change, or industry 1974 1975 1976 Q2 Q3 Q4 Ql Q2 Q3 Q4 All issues1 1 New issues.............................................................. 39.344 53,255 53,123 15,602 9,079 13,363 13,671 14,229 11,385 13,838 2 Retirements............................................................ 9,935 10,991 12,184 3,211 2,576 3,116 2,315 3,668 2,478 3,723 3 Net change.............................................................. 29,399 42,263 40,939 12,390 6,503 10,247 11,356 10,561 8,907 10,115 Bonds and notes 4 New issues.............................................................. 31,354 40,468 38,994 11,460 6,654 9,595 9,404 10,244 8,701 10,645 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 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 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 4,302 10,377 11,055 3,266 1,960 3,200 3,355 3,477 2,032 2,191 By industry: 17 1,607 2,634 500 412 433 838 1,120 744 -68 17 Commercial and other2.................................... -135 1,137 762 490 108 462 88 318 117 239 18 Transportation, including railroad................... -20 65 96 7 53 4 5 25 17 49 19 Public utility....................................................... 3,834 6,015 6,171 1,866 1,043 1,537 2,174 1,300 932 1,765 398 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 1978 Item 1976 1977 July Aug. Sept. Oct. Nov. Dec. Jan. INVESTMENT COMPANIES excluding money market funds 1 Sales of own shares1........................................ 4,226 *•6,401 573 501 558 542 511 *•557 638 2 Redemptions of own shares2.......................... 6,802 r6,027 515 493 469 519 430 r562 465 3 Net sales............................................................ -2,496 *•357 58 8 89 23 81 r5 173 4 47,537 45,049 45,651 45,038 45,046 43,435 45,050 45,049 43,000 5 Cash position4.............................................. 2,747 3,274 3,068 3,135 3,403 3,481 3,487 3,274 3,608 6 Other............................................................. 44,790 41,775 42,583 41,903 41,643 39,954 41,563 41,775 39,392 1 Includes reinvestment of investment income dividends. Excludes 4 Also includes all U.S. Govt, securities and other short-term debt reinvestment of capital gains distributions and share issue of conversions securities. from one fund to another in the same group. 2 Excludes share redemption resulting from conversions from one fund Note.—Investment Company Institute data based on reports of mem­ to another in the same group. bers, which comprise substantially all open-end investment companies 3 Market value at end of period, less current liabilities. registered with the Securities and Exchange Commission. Data reflect newly formed companies after their initial offering of securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Financial Statistics □ March 1978 1.50 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1976 1977 Account 1974 1975 1976 Ql Q2 Q3 Q4 Ql Q2 Q3 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 4 Dividends................................................................. 31.0 32.4 35.8 33.6 35.0 36.0 38.4 38.5 40.3 42.3 5 Undistributed profits............................................... 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 Account 1972 1973 1974 1975 Q2 Q3 Q4 Ql Q2 Q3 1Current assets......................................................... 574.4 643.2 712.2 731.6 775.4 791.8 816.8 845.3 874.7 909.8 2 Cash.................................................................. 57.5 61.6 62.7 68.1 70.8 71.1 77.0 75.0 77.9 79.1 3 U.S. Govt, securities......................................... 10.2 11.0 11.7 19.4 23.3 2.3.9 26.4 27.3 24.1 24.1 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 Current liabilities.................................................... 352.2 401.0 450.6 457.5 475.9 484.1 499.9 516.6 532.0 556.3 10 Notes and accounts payable............................... 234.4 265.9 292.7 288.0 293.8 291.7 302.9 309.0 318.9 329.7 11 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 15 Net working capital............................................... 222.2 242.3 261.5 274.1 299.5 307.7 316.9 328.7 342.8 353.5 1 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. 1976 1977 Industry 1976 1977 Ql Q2 Q3 Q4 Ql Q2 Q3r Q4r 2 1 All industries.......................................................... 120.82 136.79 114.72 118.12 122.55 125.22 130.16 134.24 140.38 142.38 Manufacturing 2 Durable goods industries................................... 23.50 28.17 21.63 22.54 24.59 25.50 26.30 27.26 29.23 29.88 3 Nondurable goods industries............................ 29.22 32.66 27.58 28.09 30.20 28.93 30.13 32.19 33.79 34.54 Nonmanufacturing 4 Mining................................................................ 3.98 4.44 3.83 3.83 4.21 4.13 4.24 4.49 4.74 4.30 Transportation: 5 Railroad.......................................................... 2.35 2.92 2.08 2.64 2.69 2.63 2.71 2.57 3.20 3.18 6 Air................................................................... 1.31 1.69 1.18 1.44 1.12 1.41 1.62 1.43 1.69 2.01 7 Other............................................................... 3.56 2.47 3.29 4.16 3.44 3.49 2.96 2.96 1.96 1.98 Public utilities: 8 Electric............................................................ 18.90 21.71 18.56 18.82 18.22 19.49 21.19 21.14 21.90 22.60 9 Gas and other................................................ 3.47 4.36 3.36 3.03 3.45 3.96 4.16 4.16 4.32 4.81 1 11 0 C Co o m m m m e u r n c i i c a a l t a io n n d . . o ... t . h .. e .. r .. 1 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1 0 2 . . 8 9 7 3 2 1 2 5 . . 8 3 5 0 2 1 0 2 . . 6 5 8 4 2 1 0 2 . . 9 62 4 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 2 1 3 6 . . 1 4 4 0 | 39.09 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 Account 1972 1973 1974 1975 Q3 Q4 Ql Q2 Q3 Q4 ASSETS Accounts receivable, gross 1 Consumer............................................................ 31.9 35.4 36.1 36.0 37.6 38.6 39.2 40.7 42.3 44.0 2 Business.............................................................. 27.4 32.3 37.2 39.3 42.4 44.7 47.5 50.4 50.6 55.2 3 Total................................................................ 59.3 67.7 73.3 75.3 80.0 83.4 86.7 91.2 92.9 99.2 4 Less: Reserves for unearned income and losses 7.4 8.4 9.0 9.4 10.2 10.5 10.6 11.1 11.7 12.7 5 Accounts receivable, net....................................... 51.9 59.3 64.2 65.9 69.9 72.9 76.1 80.1 81.2 86.5 6 Cash and bank deposits........................................ 2.8 2.6 3.0 2.9 2.6 2.6 2.7 2.5 2.5 2.6 7 Securities................................................................ .9 .8 .4 1.0 1.2 1.1 1.0 1.2 1.8 .9 8 All other................................................................. 10.0 10.6 12.0 11.8 12.7 12.6 13.0 13.7 14.2 14.3 9 Total assets............................................................. 65.6 73.2 79.6 81.6 86.4 89.2 92.8 97.5 99.6 104.3 LIABILITIES 10 Bank loans............................................................. 5.6 7.2 9.7 8.0 5.5 6.3 6.1 5.7 5.4 5.9 11 Commercial paper.................................................. 17.3 19.7 20.7 22.2 21.7 23.7 24.8 27.5 25.7 29.6 Debt: 12 Short-term, n.e.c................................................. 4.3 4.6 4.9 4.5 5.2 5.4 4.5 5.5 5.4 6.2 13 Long-term, n.e.c................................................. 22.7 24.6 26.5 27.6 31.0 32.3 34.0 35.0 34.8 36.0 14 Other................................................................... 4.8 5.6 5.5 6.8 9.5 8.1 9.5 9.4 13.7 11.5 15 Capital, surplus, and undivided profits................ 10.9 11.5 12.4 12.5 13.4 13.4 13.9 14.4 14.6 15.1 16 Total liabilities and capital.................................... 65.6 73.2 79.6 81.6 86.4 89.2 92.8 97.5 99.6 104.3 Note.—Components may not add to totals due to rounding. 1.522 DOMESTIC FINANCE COMPANIES Business Credit Millions of dollars, seasonally adjusted except as noted Changes in accounts Extensions Repayments Accounts receivable during— receivable Type outstand­ ing Dec. 31, 1977 1977 1977 19771 Oct. Nov. Dec. Oct. Nov. Dec. Oct. Nov. Dec. 1 Total................................................................. 55,053 1,522 499 906 12,461 12,655 13,386 10,939 12,156 12,480 2 Retail automotive (commercial vehicles)....... 11,985 152 146 332 942 961 1,156 790 815 824 3 Wholesale automotive..................................... 11,966 741 -96 294 5,488 5,104 5,731 4,747 5,200 5,437 4 Retail paper on business, industrial, and farm equipment........................................ 14,441 415 357 96 1,096 1,176 1,003 681 819 907 5 Loans on commercial accounts receivable... 3,901 -128 16 53 2,032 2,428 2,334 2,160 2,412 2,281 6 Factored commercial accounts receivable.... 2,253 248 15 -43 1,506 1,466 1,599 1,258 1,451 1,642 7 All other business credit................................. 10,507 94 61 174 1,397 1,520 1,563 1,303 1,459 1,389 1 Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Financial Statistics □ March 1978 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1977 1978 Item 1975 1976 1977 Aug. Sept. Oct. Nov. Dec. Jan. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms:1 1 Purchase price (thous. dollars)..................... 44.6 48.4 54.3 54.9 56.0 54.0 56.4 57.7 58.0 2 Amount of loan (thous. dollars)................. 33.3 35.9 40.5 40.8 41.7 40.2 42.0 42.6 43.3 3 Loan/price ratio (per cent)........................... 74.7 74.2 76.3 76.5 76.3 76.1 76.5 '75.5 76.4 4 Maturity (years)............................................ 26.8 27.2 27.9 28.2 28.2 27.6 28.2 28.0 28.3 5 Fees and charges (per cent of loan amount) 2. 1.54 1.44 1.33 1.30 1.34 1.35 1.38 *•1.32 1.41 6 Contract rate (per cent per annum)............ 8.75 8.76 8.80 8.81 8.82 8.84 8.85 8.87 8.93 Yield (per cent per annum): 7 FHLBB series 3.............................................. 9.01 8.99 9.01 9.02 9.04 9.07 9.07 *•9.09 9.15 8 HUD series4.................................................. 9.10 8.99 8.95 9.00 9.00 9.00 9.05 9.10 8.95 SECONDARY MARKETS Yields (per cent per annum) on— 9.19 8.82 7.96 8.74 8.72 8.78 8.78 8.91 9.11 8.52 8.17 8.04 8.03 8.03 8.16 8.19 8.29 8.56 FNMA auctions:7 9.26 8.99 8.73 8.76 8.74 8.74 8.85 8.94 9.17 , 9.37 9.11 8.98 9.06 9.05 9.05 9.16 9.19 9.32 i Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 13 Total................................................................... 31,824 32,904 34,370 34,029 34,149 34,123 34,192 34,370 34,756 19,732 18,916 18,457 18,785 18,704 18,602 18,535 18,457 18,500 15 VA-guaranteed.............................................. 9,573 9,212 9,315 9,388 9,344 9,287 9,267 9,315 9,398 2,519 4,776 6,597 5,866 6,100 6,234 6,389 6,597 6,858 Mortgage transactions (during period) 17 Purchases........................................................... 4,263 3,606 4,780 405 385 251 352 497 636 18 Sales................................................................... 2 86 67 5 Mortgage commitments:8 19 Contracted (during period)............................. 6,106 6,247 9,729 531 364 897 975 1,333 1,810 4,126 3,398 4,698 4,717 3,522 3,702 4,192 4,698 5,781 Auction of 4-month commitments to buy— Government-underwritten loans: 21 Offered9......................................................... 7,042.6 4,929.8 7,974.1 314.9 112.9 613.2 105.2 *•1,184.5 1,779.8 22 Accepted........................................................ 3,848.3 2,787.2 4,846.2 221.4 75.4 400.5 *■152.7 *•794.0 970.9 Conventional loans: 23 Offered9.......................................................... 1,401.3 2,595.7 5,675.2 370.2 246.4 758.1 *•537.6 *•591.6 949.9 24 Accepted........................................................ 765.0 1,879.2 3,917.8 236.7 184.4 529.0 *•386.3 *■359.4 449.6 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)10 25 Total.................................................................. 4,987 4,269 3,276 3,424 3,376 3,402 3,266 3,276 3,163 26 FHA/VA........................................................ 1,824 1,618 1,395 1,463 1,443 1,424 1,406 1,395 1,382 27 Conventional................................................. 3,163 2,651 1,881 1,961 1,933 1,978 1,860 1,881 1,782 Mortgage transactions (during period) 28 Purchases........................................................... 1,716 1,175 3,900 455 479 428 576 489 401 29 Sales................................................................... 1,020 1,396 4,131 479 386 354 677 477 503 Mortgage commitments:11 30 Contracted (during period)............................. 982 1,477 5,546 567 547 465 574 361 367 31 Outstanding (end of period)............................. 111 333 1,063 1,352 1,353 1,329 1,233 1,063 1,063 1 Weighted averages based on sample surveys of mortgages originated securities, assuming prepayment in 12 years on pools of 30-year FHA/VA by major institutional lender groups. Compiled by the Federal Home Loan mortgages carrying the prevailing ceiling rate. Monthly figures are Bank Board in cooperation with the Federal Deposit Insurance Cor­ unweighted averages of Monday quotations for the month. poration. 7 Average gross yields (before deduction of 38 basis points for mortgage 2 Includes all fees, commissions, discounts, and “points” paid (by servicing) on accepted bids in Federal National Mortgage Association’s the borrower or the seller) in order to obtain a loan. auctions of 4-month commitments to purchase home mortgages, assuming 3 Average effective interest rates on loans closed, assuming prepayment prepayment in 12 years for 30-year mortgages. No adjustments are made at the end of 10 years. for FNMA commitment fees or stock related requirements. Monthly 4 Average contract rates on new commitments for conventional first figures are unweighted averages for auctions conducted within the month. mortgages, rounded to the nearest 5 basis points; from Dept, of Housing 8 Includes some multifamily and nonprofit hospital loan commitments and Urban Development. in addition to 1- to 4-family loan commitments accepted in FNMA’s 5 Average gross yields on 30-year, minimum-downpayment, Federal free market auction system, and through the FNMA-GNMA Tandem Housing Administration-insured first mortgages for immediate delivery plans. in the private secondary market. Any gaps in data are due to periods of 9 Mortgage amounts offered by bidders are total bids received. adjustment to changes in maximum permissible contract rates. 10 Includes participations as well as whole loans. 6 Average net yields to investors on Government National Mortgage 11 Includes conventional and Government-underwritten loans. Association-guaranteed, mortgage-backed, fully-modified pass-through Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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 Q4» 1All holders.................................................. 682,321 742,512 801,537 889,327 912,582 948,959 985,695 1,019,688 ?, 1- to 4-family........................................ 416,211 449,371 490,761 556,557 573,861 600,370 626,628 650,397 3 Multifamily............................................ 93,132 99,976 100,601 104,516 105,309 107,106 109,052 111,450 4 Commercial........................................... 131,725 146,877 159,298 171,223 174,257 179,591 185,935 192,093 5 Farm...................................................... 41,253 46,288 50,877 57,031 59,155 61,892 64,080 65,748 6 Maior financial institutions....................... 505,400 542,560 581,193 647,650 663,210 690,473 717,502 741,544 7 Commercial banks1............................... 119,068 132,105 136,186 151,326 155,448 162,778 170,378 176,678 8 1- to 4-family..................................... 67,998 74,758 77,018 86,234 88,886 93,393 97,746 101,361 9 Multifamily........................................ 6,932 7,619 5,915 8,082 7,974 8,003 8,383 8,692 10 Commercial....................................... 38,696 43,679 46,882 50,289 51,624 54,038 56,565 58,657 11 Farm.................................................. 5,442 6,049 6,371 6,721 6,964 7,344 7,684 7,968 12 Mutual savings banks............................ 73,230 74,920 77,249 81,639 82,273 84,076 86,079 87,960 13 1- to 4-family..................................... 48,811 49,213 50,025 53,089 53,502 55,000 56,313 57,543 14 Multifamily........................................ 12,343 12,923 13,792 14,177 14,291 14,602 14,952 15,279 15 Commercial....................................... 12,012 12,722 13,373 14,313 14,422 14,422 14,762 15,085 16 Farm.................................................. 64 62 59 60 58 52 52 53 17 Savings and loan associations............... 231,733 249,301 278,590 323,130 333,703 350,765 366,975 381,246 18 1- to 4-family.................................... 187,078 200,987 223,903 260,895 269,932 284,541 296,846 308,390 19 Multifamily........................................ 22,779 23,808 25,547 28,436 29,199 30,517 32,110 33,359 20 Commercial....................................... 21,876 24,506 29,140 33,799 34,572 35,707 38,019 39,497 21 Life insurance companies...................... 81,369 86,234 89,168 91,555 91, 786 92,854 94,070 95,660 22 1- to 4-family..................................... 20,426 19,026 17,590 16,088 15,699 15,418 15,022 14,722 23 Multifamily........................................ 18,451 19,625 19,629 19,178 18,921 18,891 18,831 18,881 24 Commercial....................................... 36,496 41 ,256 45,196 48,864 49,526 50,405 51,742 53,438 25 Farm.................................................. 5,996 6,327 6,753 7,425 7,640 8,140 8,475 8,619 26 Federal and related agencies.................... 46,721 58,320 66,891 66,753 66,065 68,338 69,068 70,175 27 Government National Mortgage Assn... 4,029 4,846 7,438 4,241 4,013 3,912 3,599 3,636 28 1- to 4-family..................................... 1 ,455 2,248 4,728 1,970 1,670 1,654 1,522 1,538 29 Multifamily........................................ 2,574 2,598 2,710 2,271 2,343 2,258 2,077 2,098 30 Farmers Home Admin........................... 1,366 1,432 1,109 1,064 500 1,043 1,292 1,467 31 1- to 4-family.................................... 743 759 208 454 98 410 548 622 32 Multifamily........................................ 29 167 215 218 28 97 192 218 33 Commercial....................................... 218 156 190 72 64 126 142 162 34 Farm.................................................. 376 350 496 320 310 410 410 465 35 Federal Housing and Veterans Admin... 3,476 4,015 4,970 5,150 5,223 5,259 5,130 5,291 36 1- to 4-family..................................... 2,013 2,009 1 ,990 1,676 1,730 1,711 1,566 1,706 37 Multifamily........................................ 1 ,463 2,006 2,980 3,474 3,493 3,548 3,564 3,585 38 Federal National Mortgage Assn.......... 24,175 29,578 31,824 32,904 32,830 33,918 34,148 34,369 39 1- to 4-family..................................... 20,370 23,778 25,813 26,934 26,836 27,933 28,178 28,504 40 Multifamily........................................ 3,805 5,800 6,011 5,970 5,994 5,985 5,970 5,865 41 Federal land banks................................. 11,071 13,863 16,563 19,125 19,942 20,818 21,523 22,136 42 1- to 4-family..................................... 123 406 549 601 611 628 649 670 43 Farm.................................................. 10,948 13,457 16,014 18,524 19,331 20,190 20,874 21,466 44 Federal Home Loan Mortgage Corp.... 2,604 4,586 4,987 4,269 3,557 3,388 3,376 3,276 45 1- to 4-family..................................... 2,446 4,217 4,588 3,889 3,200 2,901 2,818 2,738 46 Multifamily........................................ 158 369 399 380 357 487 558 538 18,040 23,799 34,138 49,801 55,462 58,748 64,667 70,202 48 Government National Mortgage Assn... 7,890 11,769 18,257 30,572 34,260 36,573 41,089 44,896 49 1- to 4-family..................................... 7,561 11,249 17,538 29,583 33,190 35,467 39,865 43,555 50 Multifamily........................................ 329 520 719 989 1,070 1,106 1,224 1,341 51 Federal Home Loan Mortgage Corp... 766 757 1,598 2,671 3,570 4,460 5,332 6,610 52 1- to 4-family..................................... 617 608 1,349 2,282 3,112 3,938 4,642 5,621 53 Multifamily........................................ 149 149 249 389 458 522 690 989 54 Farmers Home Admin........................... 9,384 11,273 14,283 16,558 17,632 17,715 18,426 18,696 55 1- to 4-family..................................... 5,458 6,782 9,194 10,219 10,821 10,814 11,127 11,379 56 Multifamily........................................ 138 116 295 532 786 111 768 779 57 Commercial....................................... 1 ,124 1,473 1,948 2,440 2,570 2,680 2,824 2,963 58 Farm.................................................. 2,664 2,902 2,846 3,367 3,455 3,444 3,527 3,575 59 Individuals and others3............................. 112,160 117,833 119,315 125,123 127,845 131,400 134,458 137,767 60 1- to 4-family..................................... 51,112 53,331 56,268 62,643 64,574 66,592 69,786 72,048 61 Multifamily........................................ 23,982 24,276 22,140 20,420 20,395 20,313 19,733 19,826 62 Commercial....................................... 21,303 23,085 22,569 21,446 21,479 22,213 21,881 22,291 63 Farm.................................................. 15,763 17,141 18,338 20,614 21,397 22,312 23,058 23,602 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 □ March 1978 1.55 CONSUMER INSTALMENT CREDIT Total Outstanding, and Net Change Millions of dollars 1977 1978 Holder, and type of credit 1975 1976 1977 July Aug. Sept. Oct. Nov. Dec. Jan. Amounts outstanding (end of period) 1Total.................................................... 164,955 185,489 216,572 199,971 204,358 207,294 209,141 212,074 '216,572 215,925 By holder: 2 78,667 89,511 105,291 97,794 100,059 101,564 102,504 103,469 c105,291 105,466 3 Finance companies......................... 35,994 38,639 44,015 41,398 41,987 42,333 42,704 43,322 '44,015 43,970 4 Credit unions................................... 25,666 30,546 37,036 34,122 35,077 35,779 35,993 36,488 37,036 36,851 5 Retailers1......................................... 18,002 19,052 21,082 18,137 18,475 18,725 18,961 19,629 21,082 20,525 6 6,626 7,741 9,149 8,520 8,760 8,894 8,978 9,166 9,149 9,114 By type of credit: 7 55,879 66,116 79,352 74,304 76,027 77,207 77,845 78,757 r79,352 79,376 8 31,553 37,984 46,119 43,211 44,262 44,933 45,399 45,845 46,119 46,247 9 18,353 21,176 25,370 23,735 24,277 24,717 24,972 25,228 25,370 25,476 10 13,200 16,808 20,749 19,476 19,985 20,216 20,427 20,616 20,749 20,771 11 11,155 12,489 14,263 13,597 13,783 13,930 13,998 14,205 '14,263 14,260 12 12,741 15,163 18,385 16,938 17,412 17,761 17,867 18,113 18,385 18,293 13 Others........................................... 430 480 585 558 570 584 581 594 585 576 14 Mobile homes................................... 14,423 14,572 15,014 14,713 14,812 14,880 14,929 14,999 r15,014 14,978 15 Commercial banks...................... 8,649 8,734 8,862 8,761 8,794 8,828 8,839 8,856 8,862 8,819 16 Finance companies..................... 3,451 3,273 3,109 3,126 3,114 3,119 3,116 3,123 '3,109 3,115 17 Home improvement.......................... 9,405 10,990 12,952 12,025 12,329 12,532 12,703 12,879 12,952 12,904 18 Commercial banks...................... 4,965 5,554 6,473 6,022 6,158 6,265 6,377 6,447 6,473 6,445 Revolving credit: 19 Bank credit cards........................ 9,501 11,351 14,262 11,754 12,227 12,651 12,829 13,096 14,262 14,369 20 Bank check credit....................... 2,810 3,041 3,724 3,295 3,409 3,504 3,551 3,601 3,724 3,776 21 All other........................................... 72,937 79,418 91,269 83,880 85,554 86,519 87,283 88,743 91,269 90,522 22 Commercial banks, total............ 21,188 22,847 25,850 24,752 25,209 25,383 25,510 25,626 25,850 25,809 23 Personal loans......................... 14,629 15,669 17,740 16,922 17,238 17,373 17,452 17,555 17,740 17,708 24 Finance companies, total............ 21,238 22,749 26,498 24,538 24,951 25,143 25,448 25,850 '26,498 26,452 25 Personal loans......................... 17,263 18,554 21,302 19,808 20,118 20,256 20,498 20,852 '21,302 21,248 26 Credit unions............................... 10,754 12,799 15,518 14,297 14,697 14,991 15,081 15,289 15,518 15,440 27 Retailers....................................... 18,002 19,052 21,082 18,137 18,475 18,725 18,961 19,629 21,082 20,525 28 Others.......................................... 1,755 1,971 2,321 2,157 2,221 2,277 2,283 2,350 2,321 2,296 Net change (during period)3 29 7,504 20,533 31,090 2,464 2,651 2,351 2,626 2,853 '2,736 2,424 By holder: 30 Commercial banks.......................... 2,821 10,845 15,779 1,150 1,448 1,228 1,315 1,384 '1,611 1,115 31 Finance companies......................... -90 2,644 5,376 524 321 378 487 543 500 460 32 Credit unions................................... 3,771 4,880 6,490 368 All 458 469 566 641 495 33 Retailers *........................................ 69 1,050 2,032 286 170 144 280 184 -12 309 34 Others 2............................................ 933 1,115 1,413 136 240 143 75 111 -3 44 By type of credit: 35 Automobile....................................... 3,007 10,238 13,235 1,069 1,054 1,105 850 1,241 ' 1,297 1,185 36 Commercial banks...................... 559 6,431 8,135 584 725 714 587 725 835 637 37 Indirect..................................... -334 2,823 4,194 290 357 466 295 444 486 407 38 Direct....................................... 894 3,608 3,941 294 368 248 292 281 349 230 39 Finance companies..................... 532 1,334 1,774 275 65 128 52 242 '127 247 40 Credit unions............................... 1,872 2,422 3,222 208 237 228 222 263 328 244 41 Other............................................ 44 50 105 2 27 34 -11 10 7 56 42 Mobile homes................................... -195 150 441 57 55 32 44 74 '76 52 43 Commercial banks...................... -323 85 128 19 3 10 15 23 60 1 44 Finance companies..................... -73 -111 -164 -12 -18 -3 -11 4 '-8 36 45 Home improvement......................... 881 1,585 1,967 165 183 143 201 211 173 105 46 Commercial banks...................... 271 588 920 76 62 11 115 99 110 70 Revolving credit: 47 Bank credit cards........................ 1,220 1,850 2,911 184 315 279 287 243 250 160 48 Bank check credit....................... 14 231 683 39 60 49 57 27 46 65 49 All other........................................... 2,577 6,479 11,853 951 984 743 1,188 1,057 r895 857 50 Commercial banks, total............ 1,080 1,659 3,003 248 283 99 254 267 310 180 51 Personal loans......................... 858 1,040 2,070 143 161 56 142 183 235 81 52 Finance companies, total........... -348 1,509 3,749 260 273 251 448 293 '378 177 53 Personal loans......................... 279 1,290 2,748 228 186 223 353 235 '254 162 54 Credit unions............................... 1,580 2,045 2,719 129 200 197 204 252 252 205 55 Retailers....................................... 69 1,050 2,032 286 170 144 280 184 -12 309 56 Others........................................... 196 217 350 28 59 52 2 61 -33 -15 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 $44.2 billion at the end 3 Net change equals extensions minus liquidations (repayments, charge- of 1977, $38.7 billion at the end of 1976, $35.7 billion at the end of 1975, offs, and other credits); figures for all months are seasonally adjusted. and $33.8 billion at the end of 1974. Comparable data for Dec. 31, 1978, will be published in the February 1979 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 1978 Holder, and type of credit 1975 1976 1977 July Aug. Sept. Oct. Nov. Dec. Jan. Extensions3 1Total.................................................... 164,169 193,328 225,645 18,631 19,204 19,164 19,787 19,680 r20,138 19,586 By holder: 2 77,312 94,220 no,in 9,143 9,426 9,442 9,802 9,688 10,226 9,625 3 Finance companies......................... 31,173 36,028 41,770 3,335 3,459 3,514 3,653 3,602 r3,743 3,575 4 24,096 28,587 33,592 2,663 2,806 2,773 2,858 2,920 3,093 2,820 5 Retailers1........................................ 27,049 29,188 33,202 2,951 2,840 2,860 2,961 2,857 2,647 3,102 6 4,539 5,305 6,303 540 673 575 512 612 428 464 By type of credit: 7 51,413 62,988 72,888 5,966 6,158 6,109 6,083 6,330 r6,721 6,263 8 Commercial banks...................... 28,573 36,585 42,570 3,553 3,616 3,640 3,642 3,717 3,941 3,650 9 Indirect..................................... 15,766 19,882 22,904 1,905 1,925 2,028 1,976 2,076 2,153 2,026 10 Direct....................................... 12,807 16,704 19,666 1,649 1,692 1,612 1,666 1,641 1,788 1,624 11 Finance companies..................... 9,674 11,209 12,635 963 1,036 1,013 989 1,097 '1,143 1,088 12 Credit unions............................... 12,683 14,675 17,041 1,402 1,434 1,376 1,414 1,458 1,581 1,421 13 Others.......................................... 483 518 642 48 72 80 38 58 55 105 14 Mobile homes.................................. 4,323 4,841 5,244 455 479 424 457 464 r460 449 15 Commercial banks...................... 2,622 3,071 3,153 267 261 261 270 280 300 250 16 Finance companies..................... 764 690 615 55 55 51 61 54 '60 101 17 Home improvement......................... 5,556 6,736 8,066 671 733 679 718 761 '722 618 18 Commercial banks...................... 2,722 3,245 3,968 330 332 340 373 370 384 321 Revolving credit: 19 Bank credit cards........................ 20,428 25,862 31,761 2,566 2,711 2,847 2,973 2,828 2,973 2,948 20 Bank check credit....................... 4,024 4,783 5,886 499 510 485 487 492 531 556 21 All other.......................................... 78,425 88,117 101,754 8,476 8,612 8,620 9,067 8,804 ' 8,731 8,751 22 Commercial banks, total............ 18,944 20,673 23,439 1,928 1,990 1,870 2,056 2,001 2,096 1,893 23 Personal loans......................... 13,386 14,480 '16,828 1,350 1,404 1,346 1,463 1,434 1,518 1,338 24 Finance companies, total........... 20,657 24,087 28,349 2,309 2,361 2,440 2,596 2,441 '2,530 2,380 25 Personal loans......................... 16,944 19,579 22,323 1,836 1,870 1,938 2,044 1,914 '1,975 1,851 26 Credit unions............................... 10,134 12,340 14,604 1,113 1,207 1,240 1,282 1,285 1,326 1,236 27 Retailers...................................... 27,049 29,188 33,202 2,951 2,840 2,860 2,961 2,857 2,647 3,102 28 Others.......................................... 1,642 1,830 2,160 175 214 211 172 221 131 138 Liquidations3 29 156,665 172,795 194,533 16,167 16,553 16,814 17,160 16,826 '17,402 17,162 By holder: 30 Commercial banks......................... 74,491 83,376 94,998 7,992 7,978 8,214 8,487 8,305 8,615 8,509 31 Finance companies......................... 31,263 33,384 36,372 2,811 3,138 3,135 3,166 3,059 '3,244 3,114 32 Credit unions.................................. 20,325 23,707 27,103 2,295 2,333 2,316 2,389 2,354 2,452 2,325 33 Retailers1........................................ 26,980 28,138 31,170 2,665 2,670 2,716 2,681 2,673 2,659 2,793 34 Others2............................................ 3,606 4,191 4,890 404 433 432 437 435 432 420 By type of credit: 35 Automobile....................................... 48,406 52,750 59,610 4,897 5,104 5,005 5,234 5,089 r5,424 5,078 36 28,014 30,154 34,435 2,969 2,891 2,926 3,055 2,991 3,106 3,013 37 Indirect..................................... 16,101 17,059 18,710 1,615 1,568 1,562 1,681 1,632 1,667 1,619 38 Direct....................................... 11,913 13,095 15,726 1,354 1,324 1,364 1,374 1,360 1,439 1,394 39 Finance companies..................... 9,142 9,875 10,819 688 970 885 937 855 '1,017 841 40 10,811 12,253 13,819 1,194 1,197 1,148 1,193 1,195 1,253 1,177 41 Others.......................................... 439 468 536 46 45 46 49 48 48 48 42 Mobile homes.................................. 4,517 4,691 4,793 397 424 392 413 390 r384 398 43 Commercial banks...................... 2,944 2,986 3,025 248 264 251 255 257 240 248 44 Finance companies..................... 837 867 806 68 73 54 72 50 '68 65 45 4,675 5,151 6,098 506 551 536 517 550 549 514 46 Commercial banks...................... 2,451 2,657 3,048 254 270 263 257 272 274 257 Revolving credit: 47 19,208 24,012 28,851 2,382 2,396 2,567 2,687 2,585 2,723 2,788 48 Bank check credit....................... 4,010 4,552 5,202 459 450 436 430 466 485 491 49 75,849 81,638 89,977 7,525 7,628 7,877 7,880 7,747 r7,836 7,894 50 Commercial banks, total............ 17,864 19,014 20,436 1,680 1,707 1,771 1,802 1,734 1,786 1,713 51 12,528 13,439 14,757 1,207 1,243 1,291 1,321 1,250 1,284 1,258 52 Finance companies, total........... 21,005 22,578 24,676 2,049 2,089 2,189 2,148 2,148 '2,152 2,203 53 Personal loans......................... 16,665 18,289 19,596 1,609 1,684 1,714 1,692 1,678 '1,722 1,688 54 Credit unions............................... 8,554 10,295 11,884 984 1,008 1,043 1,078 1,033 1,075 1,031 55 Retailers....................................... 26,980 28,138 31,170 2,665 2,670 2,716 2,681 2,673 2,659 2,793 56 Others........................................... 1,446 1,613 1,811 146 155 158 170 159 165 153 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 □ March 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 1974 1975 1976 1977 Transaction category, or sector HI H2 HI H2 HI H2 Nonfinancial sectors 189.6 205.6 268.3 335.9 180.8 230.4 254.5 282.1 306.2 365.6 1 2 185.8 195.5 257.8 327.4 170.3 220.8 241.1 274.4 297.3 357.5 2 By sector and instrument: 3 U.S. Govt........................................................ 11.8 85.4 69.0 56.8 79.6 91.2 73.1 64.9 40.3 73.2 3 4 12.0 85.8 69.1 57.6 80.4 91.3 73.0 65.3 40.9 74.4 4 5 -.2 -.4 -.1 -.9 -.8 -.1 .1 -.3 -.6 -1.2 5 6 177.8 120.2 199.2 279.1 101.1 139.2 181.4 217.1 265.9 292.4 6 7 3.8 10.0 10.5 8.5 10.5 9.6 13.3 7.6 8.9 8.1 7 8 Debt instruments....................................... 174.0 110.1 188.8 270.6 90.7 129.6 168.0 209.5 257.0 284.3 8 9 Private domestic nonfinancial sectors........ 162.4 107.0 179.0 266.9 93.1 120.9 166.2 191.7 260.9 272.9 9 10 4.1 9.9 10.5 8.1 10.3 9.5 13.3 7.7 8.2 8.0 10 11 158.3 97.1 168.4 258.8 82.8 111.4 152.9 184.0 252.7 265.0 11 12 Debt capital instruments..................... 98.7 95.8 122.7 172.8 93.8 97.8 111.7 133.7 159.3 186.2 12 13 State and local obligations............ 17.1 13.6 15.1 28.1 12.3 14.9 14.7 15.5 28.3 27.9 13 14 19.7 27.2 22.8 18.0 33.4 21.1 20.4 25.3 14.4 21.6 14 Mortgages: 15 34.8 39.5 63.6 90.0 33.4 45.6 57.1 70.2 85.5 94.5 15 16 Multifamily residential............... 6.9 * 1.6 7.0 .4 -.4 .6 2.6 5.3 8.8 16 17 15.1 11.0 13.4 20.9 9.4 12.6 13.9 12.9 16.7 25.0 17 18 5.0 4.6 6.1 8.7 5.1 4.0 5.0 7.3 9.0 8.5 18 19 59.6 1.3 45.7 86.1 -11.0 13.6 41.2 50.3 93.4 78.7 19 20 10.2 9.4 23.6 35.6 2.2 16.6 22.9 24.2 35.5 35.7 20 21 29.1 -14.5 3.7 30.0 -20.9 -8.2 -.3 7.8 37.4 22.5 21 22 6.6 -2.6 4.0 2.5 -1.4 -3.8 6.4 1.6 4.4 .6 22 23 Other............................................... 13.7 9.0 14.4 18.0 9.0 9.0 12.2 16.7 16.0 19.9 23 24 162.4 107.0 179.0 266.9 93.1 120.9 166.2 191.7 260.9 272.9 24 25 State and local governments.............. 16.2 11.2 14.6 24.8 10.0 12.3 13.0 16.3 21.7 27.9 25 26 49.2 48.6 89.8 130.9 37.3 59.9 83.9 95.6 129.6 132.2 26 27 7.9 8.7 11.0 15.1 8.7 8.8 10.6 11.6 16.6 13.6 27 28 7.4 2.0 5.2 10.8 -1.1 5.1 2.7 7.6 10.9 10.7 28 29 81.8 36.6 58.3 85.3 38.3 34.8 56.1 60.5 82.1 88.4 29 30 15.4 13.2 20.3 12.2 8.0 18.3 15.2 25.4 5.0 19.5 30 31 -.2 .1 ♦ .4 .1 .1 * -.1 .6 .2 31 32 15.7 13.0 20.3 11.8 7.9 18.2 15.1 25.5 4.3 19.3 32 33 2.1 6.2 8.4 5.0 5.7 6.8 7.3 9.5 4.3 5.7 33 34 4.7 3.7 6.7 .6 -.4 7.8 3.4 10.0 -5.8 7.0 34 35 7.3 .3 1.9 2.8 -.8 1.4 1.5 2.4 2.7 3.0 35 36 1.6 2.8 3.3 3.4 3.4 2.2 2.9 3.6 3.1 3.6 36 Financial sectors 37 Total funds raised.............................................. 39.4 14.0 28.6 62.7 15.1 12.8 27.8 29.4 63.1 62.3 37 By instrument: 38 U.S. Govt, related.......................................... 23.1 13.5 18.6 26.1 14.5 12.6 18.6 18.6 25.7 26.6 38 39 Sponsored credit agency securities............ 16.6 2.3 3.3 6.9 1.9 2.8 4.5 2.1 10.1 3.7 39 40 Mortgage pool securities........................... 5.8 10.3 15.7 20.4 11.5 9.2 14.2 17.2 17.9 22.9 40 41 Loans from U S Govt............................... .7 .9 -.4 -1.2 1.1 .6 * - .7 -2.3 ..............41 42 Private financial sectors................................. 16.3 .4 10.0 36.5 .6 .2 9.1 10.8 37.4 35.7 42 43 .3 * .7 -.1 .1 -.1 -.7 2.2 -.3 .1 43 44 16.0 .4 9.2 36.6 .6 .3 9.8 8.6 37.7 35.6 44 45 Corporate bonds..................................... 2.1 2.9 5.8 8.7 2.3 3.5 7.0 4.5 8.1 9.2 45 46 Mortgages............................................... -1.3 2.3 2.1 3.1 1.4 3.2 1.4 2.8 3.1 3.1 46 47 4.6 -3.6 -3.7 -.2 -4.7 -2.5 -3.0 -4.4 -2.7 2.3 47 48 Open market paper and Rp’s............... 3.9 2.8 7.1 20.8 8.2 -2.6 6.1 8.1 25.8 15.7 48 49 6.7 -4.0 -2.0 4.3 -6.6 -1.3 -1.6 -2.4 3.5 5.2 49 By sector: 50 Sponsored credit agencies............................. 17.3 3.2 2.9 5.7 3.0 3.4 4.5 1.4 7.8 3.7 50 51 5.8 10.3 15.7 20.4 11.5 9.2 14.2 17.2 17.9 22.9 51 52 16.3 .4 10.0 36.5 .6 .2 9.1 10.8 37.4 35.7 52 53 -1.1 1.7 7.4 11.1 5.7 -2.3 9.0 5.9 14.7 7.5 53 54 Bank affiliates............................................. 3.5 .3 -.8 1.3 .9 -.3 -1.3 -.3 1.3 1.2 54 55 Savings and loan associations................... 6.3 -2.2 * 11.9 -6.8 2.3 .5 -.5 11.0 12.8 55 56 .9 1.0 1.0 1.0 .9 1.0 1.0 1.0 1.0 1.0 56 57 Finance companies..................................... 4.5 .5 6.4 15.1 -1.4 2.4 5.7 7.1 14.3 15.9 57 58 REIT’s.................................................... .6 -2.0 -2.8 -2.4 -2.0 -1.9 -2.5 -3.0 -2.9 -1.8 58 59 -.7 -.1 -1.0 -1.5 .7 -.9 -2.5 .5 -1.4 -1.6 59 60 2.4 1.3 -.3 .1 2.6 * -.7 .2 -.5 .8 60 All sectors 61 229.0 219.5 296.8 398.6 195.9 243.2 282.2 311.4 369.2 427.9 61 62 Investment company shares.......................... -.7 -.1 -1.0 -1.5 .7 -.9 -2.5 .5 -1.4 -1.6 62 63 Other corporate equities............................... 4.8 10.2 12.2 9.9 9.8 10.5 15.1 9.3 10.0 9.8 63 64 Debt instruments............................................ 224.9 209.5 285.6 390.2 185.4 233.6 269.6 301.6 360.7 419.7 64 65 U.S. Govt, securities................................. 34.3 98.2 88.1 84.2 93.1 103.2 91.9 84.3 68.4 99.9 65 66 State and local obligations........................ 17.1 13.6 15.1 28.1 12.3 14.9 14.7 15.5 28.3 27.9 66 67 Corporate and foreign bonds.................... 23.9 36.3 37.0 31.7 41.3 31.3 34.7 39.3 26.8 36.5 67 68 Mortgages................................................... 60.5 57.2 86.8 129.7 49.5 65.0 77.9 95.7 119.5 139.8 68 69 Consumer credit......................................... 10.2 9.4 23.6 35.6 2.2 16.6 22.9 24.2 35.5 35.7 69 70 38.4 -14.4 6.7 30.4 -25.9 -2.9 .1 13.4 28.9 31.8 70 71 Open market paper and Rp’s................... 17.8 .5 13.0 26.1 6.1 -5.0 14.0 12.0 32.9 19.3 71 72 22.7 8.7 15.3 24.5 6.9 10.5 13.4 17.2 20.2 28.7 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 1974 1975 1976 1977 HI H2 HI H2 HI H2 1 Total funds advanced in credit markets to 185.8 195.5 257.8 327.4 170.3 220.8 241.1 274.4 297.3 357.5 1 By public agencies and foreign: 2 Total net advances.............................................. 52.7 44.3 54.6 84.6 55.0 33.6 53.2 56.0 73.6 95.5 2 11.9 22.5 26.8 39.7 33.4 11.6 27.1 26.5 30.6 48.8 3 14.7 16.2 12.8 20.4 16.9 15.5 12.1 13.5 20.1 20.8 4 5 FHLB advances to S&L’s............................. 6.7 -4.0 -2.0 4.3 -6.6 -1.3 -1.6 -2.4 3.5 5.2 5 6 Other loans and securities............................. 19.5 9.5 16.9 20.2 11.3 7.8 15.6 18.3 19.5 20.8 6 Totals advanced, by sector 7 U.S. Govt........................................................ 9.8 15.1 8.9 10.9 15.9 14.3 6.4 11.4 6.0 15.8 7 25.6 14.5 20.6 26.8 16.5 12.6 20.7 20.6 27.5 26.1 8 9 Monetary authorities..................................... 6.2 8.5 9.8 7.1 7.6 9.5 14.5 5.2 11.6 2.7 9 10 Foreign............................................................ 11.2 6.1 15.2 39.7 15.0 -2.7 11.6 18.8 28.5 50.9 10 11 Agency borrowing not included in line 1........ 23.1 13.5 18.6 26.1 14.5 12.6 18.6 18.6 25.7 26.6 11 Private domestic funds advanced 12 Total net advances.............................................. 156.1 164.8 221.8 269.0 129.8 199.7 206.6 237.0 249.4 288.6 12 13 U.S. Govt, securities..................................... 22.4 75.7 61.3 44.5 59.7 91.6' 64.8 57.8 37.9 51.2 13 14 State and local obligations............................ 17.1 13.6 15.1 28.1 12.3 14.9 14.7 15.5 28.3 27.9 14 15 Corporate and foreign bonds....................... 20.9 32.8 30.3 19.2 38.8 26.8 26.8 33.9 15.6 22.7 15 16 Residential mortgages................................... 26.9 23.2 52.4 76.5 16.7 29.6 45.5 59.2 70.7 82.4 16 17 Other mortgages and loans........................... 75.4 15.6 60.8 105.0 -4.3 35.5 53.2 68.3 100.3 109.7 17 6.7 -4.0 -2.0 4.3 -6.6 -1.3 -1.6 -2.4 3.5 5.2 18 Private financial intermediation 19 Credit market funds advanced by private 126.3 119.9 187.2 242.7 99.8 140.0 167.6 206.8 235.5 250.0 19 20 Commercial banking..................................... 64.6 27.6 58.0 79.8 14.4 40.7 44.5 71.5 80.6 79.1 20 26.9 52.0 71.7 86.4 48.5 55.4 71.8 71.7 84.7 88.0 21 22 Insurance and pension funds........................ 30.0 41.5 47.6 61.1 38.3 44.7 47.8 47.3 58.2 63.9 22 23 Other finance.................................................. 4.7 -1.1 9.9 15.5 -1.4 -.7 3.4 16.3 11.9 19.0 23 24 Sources off unds.................................................. 126.3 119.9 187.2 242.7 99.8 140.0 167.6 206.8 235.5 250.0 24 25 Private domestic deposits.............................. 69.4 90.9 122.8 135.4 90.3 91.5 106.1 139.5 122.9 147.8 25 26 Credit market borrowing............................... 16.0 .4 9.2 36.6 .6 .3 9.8 8.6 37.7 35.6 26 27 Other sources.................................................. 40.9 28.6 55.1 70.7 9.0 48.2 51.7 58.7 74.9 66.6 27 28 Foreign funds............................................. 14.5 . -.4 3.1 1.3 -5.6 4.8 -2.6 8.8 -2.9 5.5 28 29 Treasury balances...................................... -5.1 -1.7 -.1 4.2 -3.5 .1 2.9 -3.1 -1.1 9.5 29 30 Insurance and pension reserves................ 26.0 29.0 35.8 48.6 26.4 31.5 35.1 36.5 47.2 50.0 30 31 Other, net.................................................... 5.4 1.7 16.4 16.6 -8.3 11.7 16.2 16.6 31.7 1.5 31 Private domestic nonfinancial investors 32 Direct lending in credit markets........................ 45.9 45.3 43.8 62.9 30.6 60.0 48.8 38.8 51.6 74.2 32 33 U.S. Govt, securities..................................... 18.2 22.2 19.4 23.8 6.0 38.4 22.6 16.1 11.3 36.3 33 34 State and local obligations............................ 10.0 6.3 4.7 5.6 7.2 5.5 3.9 5.5 7.0 4.3 34 35 Corporate and foreign bonds....................... 4.7 8.2 4.0 .2 10.8 5.6 4.9 3.1 -1.9 2.2 35 36 Commercial paper......................................... 4.8 3.1 4.0 16.6 1.5 4.7 6.7 1.3 18.8 14.4 36 37 Other............................................................. 8.2 5.5 11.8 16.6 5.1 6.0 10.8 12.8 16.4 16.9 37 38 Deposits and currency........................................ 75.7 97.1 130.1 143.6 96.0 98.2 111.0 149.3 127.2 160.0 38 39 Time and savings accounts............................. 66.7 84.8 113.0 120.9 73.0 96.5 98.3 127.6 106.7 135.1 39 40 Large negotiable CD’s............................... 18.8 -14.0 -14.2 10.8 -27.8 -.2 -18.0 -10.4 -2.7 24.2 40 41 Other at commercial banks....................... 26.1 39.4 58.1 40.4 39.3 39.4 50.2 66.0 41.9 38.9 41 42 At savings institutions.................................... 21.8 59.4 69.1 69.7 61.5 57.4 66.1 72.1 67.4 72.0 42 43 Money............................................................. 8.9 12.3 17.2 22.7 23.0 1.7 12.7 21.6 20.5 25.0 43 44 Demand deposits....................................... 2.6 6.1 9.9 14.5 17.3 -5.0 7.8 11.9 16.2 12.8 44 45 Currency..................................................... 6.3 6.2 7.3 8.2 5.7 6.7 4.9 9.8 4.3 12.2 45 46 Total of credit market instruments, deposits 121.5 142.4 174.0 206.5 126.6 158.2 159.8 188.1 178.8 234.2 46 47 Public support rate (in per cent)................... 28.4 22.7 21.2 25.8 32.3 15.2 22.1 20.4 24.8 26.7 47 48 Private financial intermediation (in per cent) 80.9 72.8 84.4 90.2 76.9 70.1 81.1 87.3 94.4 86.6 48 49 Total foreign funds........................................ 25.7 5.8 18.3 41.0 9.4 2.1 9.0 27.6 25.6 56.4 49 Memo : Corporate equities not included above 50 Total net issues................................................... 4.1 10.0 11.2 8.4 10.5 9.5 12.6 9.8 8.5 8.2 50 51 Mutual fund shares....................................... -.7 -.1 -1.0 -1.5 .7 -.9 -2.5 .5 -1.4 -1.6 51 52 Other equities................................................ 4.8 10.2 12.2 9.9 9.8 10.5 15.1 9.3 10.0 9.8 52 53 Acquisitions by financial institutions............... 5.8 9.4 12.3 6.7 10.7 8.1 12.6 12.0 4.4 9,1 53 54 Other net purchases........................................... -1.6 .6 -1.1 1.6 -.2 1.4 * -2.2 4.1 -.9 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 □ March 1978 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1977 1978 1975 1976 \911p July Aug. Sept. Oct. Nov. Dec. 1 Industrial production............................... 117.8 129.8 137.0 138.7 138.1 138.5 138.9 139.3 139.6 138.5 139.2 Market groupings: 2 Products, total................................. 119.3 129.3 137.1 138.7 138.4 138.8 138.9 139.5 140.3 139.0 140.0 3 Final, total................................... 118.2 127.2 *■134.9 136.8 136.3 136.8 136.5 137.0 137.7 135.8 136.9 4 Consumer goods...................... 124.0 136.2 *■143.4 145.4 144.7 144.9 144.9 145.2 ■145.8 142.5 144.0 5 Equipment............................... 110.2 114.6 '123.2 124.8 124.9 125.6 125.0 125.8 r126.6 126.5 127.1 6 Intermediate................................. 123.1 137.2 145.1 146.3 146.1 146.5 147.8 148.4 150.0 150.9 151.7 7 Materials.......................................... 115.5 130.6 136.9 138.9 137.6 137.9 138.9 139.0 ■138.6 137.7 137.8 Industry groupings: 8 Manufacturing................................. 116.3 129.5 137.1 138.5 138.6 139.0 139.4 139.9 140.5 138.9 139.7 Capacity utilization (per cent)1 in— 9 Manufacturing..................................... 73.6 80.2 82.4 83.1 82.9 82.9 82.9 82.9 83.0 81.8 82.0 10 Industrial materials industries............ 73.6 80.4 81.9 82.9 82.0 82.0 82.4 82.3 *■81.8 81.0 80.9 11 Construction contracts2......................... 162.3 190.2 253.0 218.0 267.0 279.0 244.0 258.0 299.0 270.0 12 Nonagricultural employment, total3....... 117.0 120.6 124.7 125.1 125.2 125.7 125.9 126.4 126.7 127.1 127.7 13 Goods-producing, total....................... 97.1 100.3 104.1 104.9 104.5 104.7 105.0 105.4 105.4 105.7 106.4 14 Manufacturing, total....................... 94.3 97.5 100.6 101.1 100.8 100.8 101.1 101.4 102.2 102.7 103.3 15 Manufacturing, production-worker 91.3 95.2 98.3 98.9 98.4 98.5 98.8 99.1 100.0 100.7 101.3 16 Service-producing............................... 127.8 131.7 136.0 136.2 136.6 137.1 137.3 137.9 138.3 138.8 139.3 17 Personal income, total4........................... 200.0 220.7 245.1 245.6 247.2 249.2 252.8 255.3 258.2 18 Wages and salary disbursements........ 188.5 208.6 231.5 232.3 233.4 235.2 239.1 240.4 241.3 19 Manufacturing..................................... 157.3 177.7 199.3 201.2 200.7 202.2 205.3 206.9 208.3 20 Disposable personal income................... 199.2 217.8 240.3 241.3 244.9 21 Retail sales5............................................ 184.6 203.5 224.4 223.7 225.5 225.4 232.2 *•235.3 r236.8 *•228.1 229.6 Prices:6 22 Consumer7.......................................... 161.2 170.5 181.6 182.6 183.3 184.0 184.5 185.4 186.1 23 Wholesale............................................ 174.9 183.0 194.2 194.8 194.6 195.8 196.3 197.0 198.2 199.9 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 7 Beginning Jan. 1978, based on new index for all urban consumers. Informations Systems Company, F. W. Dodge Division. 3 Based on data in Employment and Earnings (U.S. Dept, of Labor). Note.—Basic data (not index numbers) for series mentioned in notes Series covers employees only, excluding personnel in the Armed Forces. 3, 4, and 5, and indexes for series mentioned in notes 2 and 6 may also be 4 Based on data in Survey of Current Business (U.S. Dept, of Com­ found in the Survey of Current Business (U.S. Dept, of Commerce). merce). Series for disposable income is quarterly. Figures for industrial production for the last 2 months are preliminary 5 Based on Bureau of Census data published in Survey of Current and estimated, respectively. Business (U.S. Dept, of Commerce). 2.11 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1977 1977 1977 Series Ql Q2 Q3 Q4 r Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 r 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................................... 140.1 146.3 147.3 148.2 170.2 171.8 173.5 175.1 82.3 85.1 84.9 84.6 3 Advanced processing............................... 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 5 129.2 135.1 136.0 137.7 169.0 170.3 171.6 172.8 76.5 79.4 79.2 79.7 6 Basic metal........................................... 108.6 116.4 109.4 109.4 144.8 145.1 145.3 145.5 75.0 80.2 75.3 75.2 7 Nondurable goods................................... 149.5 154.6 154.4 154.8 175.6 177.2 178.8 180.4 85.1 87.2 86.3 85.8 8 Textile, paper, and chemical............... 153.9 159.9 159.2 159.2 183.6 185.4 187.1 188.9 83.8 86.3 85.1 84.3 9 Textile............................................... 111.3 110.9 112.3 118.2 141.4 141.9 142.5 143.0 78.7 78.1 78.8 82.6 10 Paper................................................. 131.7 134.3 135.1 132.0 148.9 150.1 151.3 152.5 88.4 89.5 89.3 86.6 11 Chemical........................................... 181.6 191.8 189.5 188.2 216.2 218.7 221.2 223.6 84.0 87.7 85.7 84.2 12 Energy...................................................... 122.0 122.6 123.4 121.7 144.3 144.7 145.2 145.7 84.5 84.8 85.0 83.5 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 Category 1975 1976 1977p July Aug. Sept. Oct. Nov. Dec.4 Jan.4 Household survey data 1 Noninstitutional population1.............. 153,449 156,048 158,559 158,682 158,899 159,114 159,334 159,522 159,736 159,937 2 Labor force (including Armed Forces)1....................................... 94,793 96,917 99,534 99,442 99,751 99,887 100,205 101,009 101,048 101,228 92,613 94,773 97,401 97,307 97,614 97,756 98,071 98,877 98,919 99,107 Employment: 4 Nonagricultural industries2........ 81,403 84,188 87,302 87,382 87,569 87 889 88,140 88,857 89,286 89,527 5 Agriculture................................... 3,380 3,297 3,244 3,206 3,224 3,199 3,243 3,357 3,323 3.354 Unemployment: 6 Number....................................... 7,830 7,288 6,855 6,719 6,821 6,668 6,688 6,663 6,310 6,226 7 Rate (per cent of civilian labor force).................................... 8.5 7.7 7.0 6.9 7.0 6.8 6.8 6.7 6.4 6.3 58,655 59,130 59,025 '59,241 '59,147 '59,227 59,130 58,512 '58,688 58,709 Establishment survey data 9 Nonagricultural payroll employment3 ’17,051 r79,443 82,142 82,407 82,474 82,763 82,902 83,245 83,432 83,685 10 18,347 '18,956 19,555 19,666 19,594 19,612 19,666 19,715 19,879 19,983 11 745 783 831 833 818 856 859 863 713 720 12 r3,512 3,594 3,845 3.913 3,893 3,892 3,911 3,950 3,956 3,949 13 Transportation and public utilities. r4,498 '4,509 4,589 4,572 4,581 4,616 4.610 4,634 4,650 4,628 14 Trade................................................ '17,000 '17,694 18,291 18,322 18,377 18,431 18,414 18,512 18,592 18,686 15 Finance............................................ 4,223 '4,316 4,508 4,506 4,524 4,545 4,572 4,597 4,609 4,619 16 r14,006 '14,644 15,333 15,372 15.448 15,482 15,533 15,608 15,659 15,713 17 Government.................................... r14,720 14,948 15,190 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 rand 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). 4 Revised figures will be published in April Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics □ March 1978 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value Monthly data are seasonally adjusted. 1967 1976 1977 1978 Grouping pro­ 1977* por­ aver­ tion age Dec. Jan. Feb. July Aug. Sept. Oct. Nov.r Dec. Jan.* Feb.* Index (1967 == 100) MAJOR MARKET 1Total index.............................................................. 100.00 137.0 133.0 132.3 133.2 138.7 138.1 138.5 138.9 139.3 139.6 138.5 139.2 60.71 137.1 133.4 133.1 133.6 138.7 138.4 138.8 138.9 139.5 140.3 139.0 140.0 3 47.82 134.9 131.5 130.8 131.6 136.8 136.3 136.8 136.5 137.0 137.7 135.8 136.9 4 Consumer goods............................................. 27.68 143.4 141.3 139.9 140.5 145.4 144.7 144.9 144.9 145.2 145.8 142.5 144.0 5 Equipment....................................................... 20.14 123.2 118.0 118.4 119.2 124.8 124.9 125.6 125.0 125.8 126.6 126.5 127.1 6 Intermediate products........................................ 12.89 145.1 140.5 142.2 141.6 146.3 146.1 146.5 147.8 148.4 150.0 150.9 151.7 39.29 136.9 132.0 131.1 132.7 138.9 137.6 137.9 138.9 139.0 138.6 137.7 137.8 Consumer goods 8 Durable consumer goods..................................... 7.89 153.2 150.5 145.4 146.1 158.0 154.7 155.6 156.8 155.2 156.4 147.0 150.9 9 Automotive products..................................... 2.83 174.3 178.8 164.2 161.7 184.8 Ml.2 177.0 179.4 173.6 173.9 157.2 162.8 10 Autos and utility vehicles........................... 2.03 169.3 176.9 155.8 152.7 184.1 173.1 172.6 176.1 167.6 167.3 145.5 153.0 11 Autos........................................................ 1.90 148.4 156.3 136.9 132.8 161.4 150.9 151.6 154.3 147.5 143.6 127.4 131.5 12 Auto parts and allied goods. .................... .80 186.8 183.4 185.6 184.3 186.6 187.3 188.1 187.6 188.7 190.8 187.3 187.7 13 Home goods.................................................... 5.06 141.3 134.5 134.8 137.3 142.9 142.1 143.6 144.2 145.0 146.5 141.2 144.3 14 Appliances, A/C, and TV........................... 1.40 127.3 110.3 113.4 118.5 130.1 129.6 129.4 128.6 131.4 132.9 119.6 128.1 IS Appliances and TV................................. 1.33 130.5 112.3 116.0 121.1 134.4 133.0 134.1 131.6 133.0 134.6 121.0 16 Carpeting and furniture............................. 1.07 152.2 144.7 143.7 146.0 154.1 154.8 159.0 160.5 160.0 161.5 158.2 17 Misc. home goods...................................... 2.59 144.3 143.6 142.7 144.0 145.1 143.6 144.9 145.8 146.3 147.7 145.9 146.7 18 Nondurable consumer goods............................... 19.79 139.6 137.6 137.1 138.3 140.3 140.6 140.7 140.1 141.2 141.6 140.6 141.3 19 Clothing........................................................... 4.29 125.2 124.1 123.7 123.6 124.1 126.4 128.3 128.0 126.4 126.9 20 Consumer staples............................................ 15.50 143.6 141.3 141.7 142.2 144.8 144.6 144.1 143.5 145.3 145.8 \A5.i U6.2 71 8.33 135.5 131.8 131.5 133.3 137.1 137.9 137.1 135.2 136.7 137.6 136.7 22 Nonfood staples.......................................... 7.17 152.9 152.3 153.4 152.6 153.8 152.4 152.4 153.4 155.1 155.3 156.3 156.7 23 Consumer chemical products................. 2.63 180.5 177.5 178.5 175.7 179.4 181.8 182.5 183.7 186.9 186.5 187.5 24 Consumer paper products...................... 1.92 117.1 116.6 116.0 113.3 117.4 117.0 116.4 117.6 118.5 119.8 121.2 25 Consumer energy products..................... 2.62 151.5 153.1 155.8 158.3 154.9 148.9 148.6 149.1 149.9 150.3 151.0 26 Residential utilities............................. 1.45 162.1 166.7 167.1 Equipment 27 Business equipment.............................................. 12.63 149.2 142.3 142.3 143.5 151.2 151.1 152.1 152.6 153.5 154.1 153.4 154.8 28 Industrial equipment...................................... 6.77 138.5 132.3 131.3 133.2 140.7 140.4 141.4 141.8 142.6 143.3 144.4 145.3 29 Building and mining equipment................ 1.44 202.5 183.7 187.4 192.9 210.6 203.9 204.5 205.7 206.7 208.3 211.3 212.0 30 Manufacturing equipment......................... 3.85 113.9 110.8 107.8 108.5 114.3 115.3 117.6 118.5 118.7 118.9 119.1 120.1 31 Power equipment........................................ 1.47 140.2 137.9 137.5 139.3 141.2 143.7 141.4 139.8 142.1 143.7 145.0 146.0 32 Commercial transit, farm equipment............ 5.86 161.5 154.1 155.0 155.3 163.3 163.4 164.4 165.1 165.9 166.5 163.8 165.8 33 Commerical equipment............................... 3.26 191.6 184.3 185.2 185.6 191.7 193.0 193.7 195.4 197.4 198.8 199.1 199.5 34 Transit equipment....................................... 1.93 117.3 108.0 108.4 108.7 121.5 121.9 125.1 122.3 118.9 119.4 112.8 118.6 35 Farm equipment......................................... .67 142.3 140.3 142.5 142.5 144.6 139.2 134.9 142.1 147.8 144.5 139.0 36 Defense and space equipment............................. 7.51 79.6 77.2 78.0 78.5 80.4 80.8 80.9 78.9 79.3 80.3 81.4 80.7 Intermediate products 37 Construction supplies......................................... 6.42 140.7 135.5 136.2 135.6 141.2 141.7 143.2 144.9 146.5 148.3 149.0 150.1 38 Business supplies................................................ 6.47 149.4 145.3 148.0 147.6 151.3 150.6 149.7 150.5 150.1 151.9 152.7 39 Commercial energy products.. .............. 1.14 164.0 162.7 164.9 164.9 168.2 165.0 162.7 163.0 160.9 162.0 161.3 Materials 40 20.35 134.5 128.7 127.4 128.4 136.8 135.4 135.7 137.1 137.2 138.9 138.0 138.5 41 Durable consumer parts................................. 4.58 132.1 126.3 121.8 124.1 137.2 135.2 135.8 135.4 136.5 136.6 133.3 133.9 42 Equipment parts............................................. 5.44 143.1 138.8 135.1 137.3 145.0 145.6 146.8 147.6 147.2 149.2 148.9 150.1 43 Durable materials n.e.c.................................. 10.34 131.1 124.3 125.9 125.5 132.4 130.1 129.8 132.4 132.3 134.3 134.2 134.4 44 Basic metal materials................................. 5.57 110.9 104.8 106.6 105.5 112.6 108.7 106.8 110.0 107.9 110.3 109.9 45 Nondurable goods materials............................... 10.47 153.4 145.8 144.8 150.4 154.1 155.1 153.9 154.4 155.4 154.6 153.1 154.6 46 Textile, paper, and chem. mat....................... 7.62 158.2 150.3 149.3 153.9 158.9 159.6 159.0 160.0 159.3 158.4 158.6 159.7 47 Textile materials.......................... 1.85 113.1 113.7 111.0 109.8 110.1 112.2 114.5 118.5 117.8 118.2 114.6 48 Paper materials........................................... 1,62 133.4 127.6 127.6 133.5 134.3 135.7 135.2 134.4 132.2 129.5 131.5 49 Chemical materials..................................... 4.15 188.0 175.5 175.1 181.6 190.3 190.1 188.2 188.5 188.6 187.6 188.8 50 Containers, nondurable................................. 1.70 151.0 143.8 139.5 150.2 152.4 156.2 151.2 148.9 156.7 155.5 148.8 51 Nondurable materials n.e.c........................... 1.14 125.1 119.8 122.6 126.8 124.9 122.4 124.1 125.4 128.5 127.9 122.7 52 Energy materials................................................. 8.48 122.3 123.4 123.3 120.8 125.2 121.4 123.5 124.0 123.0 118.1 117.9 115.8 53 Primary energy............................................... 4.65 107.3 107.0 102.9 103.1 108.9 106.8 110.0 112.2 111.6 102.9 101.5 54 Converted fuel materials................................ 3.82 140.6 143.4 148.1 142.4 145.1 139.1 140.0 138.4 136.9 136.6 137.9 Supplementary groups 55 Home goods and clothing................................. 9.35 133.9 129.7 129.7 131.0 134.3 134.9 136.5 136.8 136.5 137.4 132.4 134.8 56 Energy, total........................................................ 12.23 132.4 133.3 134.1 132.9 135.6 131.4 132.5 133.0 132.3 129.1 129.0 127.5 57 3.76 155.3 156.0 158.5 160.3 158.9 153.7 153.0 153.3 153.2 153.9 154.2 58 Materials.......................................................... 8.48 122.3 123.4 123.3 120.8 125.2 121.4 123.5 124.0 123.0 118.1 117.9 * i i 58 For Note see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Output A49 2.13 Continued 1967 1976 1977 1978 Grouping SIC pro­ 1977^ code por­ aver­ tion age Dec. Jan. Feb. July Aug. Sept. Oct. Nov.r Dec. Jan.P Feb.* Index (1967 = 100) MAJOR INDUSTRY 1 Mining and utilities. 12.05 136.1 135.4 137.0 137.1 139.4 134.4 135.1 135.8 135.5 133.3 134.1 134.5 2 Mining................. 6.36 117.8 115.4 112.8 116.3 119.8 115.4 118.0 119.6 118.8 113.3 113.3 114.1 3 Utilities................ 5.69 156.4 157.9 163.8 160.3 161.4 155.7 154.1 154.0 154.2 155.7 157.1 157.3 4 Electric............. 3.88 175.4 176.1 183.6 179.1 5 Manufacturing. 87.95 137.1 132.5 131.6 132.6 138.5 138.6 139.0 139.4 139.9 140.5 138.9 139.7 6 Nondurable., 35.97 148.1 143.3 143.4 145.3 148.6 149.4 149.5 149.6 150.1 150.5 149.7 150.1 7 Durable........ 51.98 129.5 125.0 123.4 124.0 131.6 131.3 131.7 132.4 132.7 133.6 131.5 132.4 Mining 8 Metal mining.................... 10 .51 105.4 126.8 130.6 128.5 101.9 70.0 71.4 80.0 84.8 104.3 121.2 9 Coal................................... 11,12 .69 118.0 120.6 95.3 100.8 120.7 113.6 133.0 141.4 140.6 74.6 54.8 * 5615 10 Oil and gas extraction___ 13 4.40 118.0 112.8 112.0 115.8 120.6 119.3 119.6 119.4 117.8 118.3 119.0 119.8 11 Stone and earth minerals. 14 .75 124.9 118.0 121.6 124.9 126.7 125.0 126.7 128.1 127.2 126.5 127.7 Nondurable manufactures 12 Foods................................. 8.75 137.9 132.9 134.2 136.4 138.3 139.3 138.3 137.3 139.4 140.0 139.3 13 Tobacco products............. .67 114.0 119.2 114.8 116.8 114.5 117.0 113.5 113.8 117.5 118.6 14 Textile mill products........ 2.68 137.1 133.7 132.2 132.3 137.2 136.6 140.7 142.4 141.6 144.2 138.0 15 Apparel products.............. 3.31 124.2 124.9 123.0 124.4 121.1 124.1 127.7 129.0 125.1 125.7 16 Paper and products.......... 3.21 137.3 131.4 130.6 136.5 139.2 140.3 139.1 137.9 137.8 138.9 138.0 138.4 17 Printing and publishing....... 4.72 124.7 123.0 124.7 122.4 124.9 125.0 124.2 125.7 126.2 127.5 129.0 129.5 18 Chemicals and products 7.74 180.6 173.1 172.2 174.9 182.6 182.6 181.3 182.3 183.1 181.9 182.9 19 Petroleum products............. 1.79 141.0 138.9 139.7 145.2 140.4 139.9 141.9 141.4 140.5 139.3 139.7 138.8 20 Rubber & plastic products. 2.24 232.2 216.9 218.9 220.3 235.2 237.4 239.5 236.3 238.5 240.9 240.0 21 Leather and products.......... .86 75.2 74.2 74.8 75.0 74.1 74.5 74.0 77.0 78.1 75.8 75.2 Durable manufactures 22 Ordnance, pvt. & govt.... 19,91 3.64 74.1 71.3 72.6 72.6 75.0 75.5 75.1 74.4 74.1 75.2 74.4 72.8 23 Lumber and products........ 24 1.64 133.4 128.1 132.7 132.2 132.9 131.8 137.1 135.7 137.5 138.1 137.1 24 Furniture and fixtures........ 25 1.37 140.9 135.7 135.1 137.1 143.0 142.9 145.6 146.6 146.0 146.6 145.6 25 Clay, glass, stone products. 32 2.74 146.1 142.8 137.1 139.0 148.0 148.8 145.5 148.0 152.8 152.8 151.1 26 Primary metals................... 33 6.57 110.2 101.5 100.8 100.2 114.4 112.5 109.0 113.5 111.2 111.0 107.4 107.0 27 Iron and steel.................. 331.2 4.21 103.4 93.4 89.7 91.3 110.9 110.6 104.6 107.7 104.3 103.8 100.3 28 Fabricated metal products. 34 5.93 130.9 128.1 125.7 125.8 132.0 134.0 133.6 133.8 135.8 136.4 136.8 * i37 *4 29 Nonelectrical machinery... 35 9.15 144.8 141.5 139.9 139.8 145.7 145.2 147.4 148.9 149.7 151.7 150.7 151.5 30 Electrical machinery.......... 36 8.05 141.9 135.1 134.0 137.6 143.6 143.9 144.6 144.2 146.0 147.3 145.8 147.7 31 Transportation equipment.. 37 9.27 121.1 117.4 113.5 120.5 125.6 124.3 125.5 124.3 122.0 122.2 116.8 119.0 32 Motor vehicles & parts... 371 4.50 159.6 155.0 145.5 161.2 166.2 164.4 165.6 168.4 163.0 161.7 147.2 153.8 33 Aerospace & misc. tr. eq. 372-9 4.77 84.7 81.9 83.4 82.3 87.3 86.5 87.7 82.8 83.3 84.9 88.1 86.2 34 Instruments........................... 38 2.11 159.1 155.8 153.7 157.0 159.0 158.3 160.3 162.2 163.1 164.7 162.9 164.5 35 Miscellaneous mfrs.............. 39 1.51 149.1 146.8 147.8 147.9 150.4 147.5 150.7 151.0 151.8 152.5 152.7 153.2 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products, total............ 1507.4 583.9 571.2 564.8 569.4 590.5 590.2 590.1 591.3 591.3 594.2 584.4 592.9 37 Final products.......... 1390.9 452.1 443.8 436.7 441.1 457.8 456.9 456.8 457.8 457.3 458.6 448.4 454.8 38 Consumer goods. 1277.5 317.5 315.1 308.8 312.2 321.5 320.0 319.1 319.5 320.0 320.5 312.3 316.9 39 Equipment........... , U13.4 134.6 128.4 127.9 128.9 136.2 137.0 137.6 138.1 137.3 138.4 135.9 137.9 40 Intermediate products. . U16.6 131.8 127.1 128.2 128.4 132.8 133.1 133.5 133.8 134.1 135.6 136.2 137.9 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 □ March 1978 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates. Exceptions noted. 1977 1978 Item 1975 1976 1977 July Aug. Sept. Oct.r Nov.r Dec. Jan. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized.. 927 1,296 18,133 1,639 1,772 1,695 1,850 1,893 V1,811 1,533 2 1-family............... 669 894 12,265 1,089 1,156 1,135 1,216 1,257 1,210 1,021 3 2-or-more-family. 278 402 5,861 550 616 560 634 636 *•601 521 A Started.................... 1,160 1,540 1,986 r2,072 r2,038 *2,012 2,139 2,096 r2,194 1,549 5 1-family.............. 892 1,163 1,451 rl,453 *•1,454 rl,508 1,532 1,544 *-1,568 1,139 6 2-or-more-family. 268 377 535 r619 r584 '504 607 552 *■626 410 7 Under construction, end of period 1 1,003 1,147 1,442 1,344 1,359 r 1,367 1,415 1,444 1,494 8 1-family..................................... 531 655 829 793 799 r191 822 844 872 9 2-or-more-family....................... All 492 613 551 559 570 592 601 621 10 Completed............... 1,297 1,362 1,652 1,671 1,699 r1,901 1,627 1,780 1,604 11 1-family.............. 866 1,026 1,254 1,267 1,282 rl,489 1,217 1,272 1,257 12 2-or-more-family. 430 336 398 404 417 r412 410 508 347 13 Mobile homes shipped................ 213 250 613 251 270 300 319 318 324 312 Merchant builder activity in 1-family units: 14 Number sold............................... 544 639 819 m i r881 r845 870 818 *■847 762 15 Number for sale, end of period1. 383 433 407 r375 *•389 >■389 398 402 r405 407 Price (thous. of dollars)2 Median: 16 Units sold............................ 39.3 44.2 48.9 48.6 49.0 48.5 51.4 51.6 *■52.8 51.7 17 Units for sale....................... 38.9 41.6 48.2 44.8 45.1 45.9 46.7 Al J 48.2 Average: 13 Units sold............................ 42.5 48.1 54.4 53.6 54.3 53.9 57.2 57.8 r57.6 58.9 EXISTING UNITS (1-family) 19 Number sold........................... 2,452 3,002 3,572 3,510 3,720 3,880 3,930 4,160 4,140 3,780 Price of units sold (thous. of dollars):2 20 Median................................. 35.3 38.1 42.9 43.7 43.9 43.8 44.0 44.5 44.2 45.5 21 Average................................ 39.0 42.2 Al .9 48.0 48.1 47.9 48.2 48.5 48.3 50.3 Value of new construction 3 (millions of dollars) CONSTRUCTION 22 Total put in place. • 134,293 147,481 170,685 173,035 172,001 175,929 177,802 177,784 180,189 173,218 23 Private..................................... . 93,624 109,499 133,652 133,795 133,774 136,676 140,103 142,143 143,907 139,486 24 Residential........................... . 46,472 60,519 81,067 80,825 80,718 82,365 85,697 87,661 90,011 84,334 25 Nonresidential, total........... . 47,152 48,980 52,585 52,970 53,056 54,311 54,406 54,482 53,896 55,152 Buildings: 26 Industrial..................... 8,017 7,182 7,182 7,210 7,646 7,484 1,519 7,716 7,132 7,142 27 Commercial.................. 12,804 12,757 14,604 15,533 15,257 16,054 15,846 15,404 14,627 14,581 28 Other............................ 5,585 6,155 6,226 6,474 6,294 6,370 6,337 6,437 6,200 6,158 29 Public utilities and other. 20,746 22,886 24,573 23,753 23,859 24,404 24,644 24,925 25,937 27,271 30 Public................................. . 40,669 37,982 37,033 39,240 38,228 39,253 37,699 35,641 36,282 33,732 31 Military.......................... 1,392 1,508 1,478 1.538 1,460 1,493 1,381 1,286 1,387 1,410 32 Highway......................... . 10,861 9,756 9,170 9.539 9,449 9,051 9,507 8,281 7,791 33 Conservation and develo 3,256 3,722 3,765 4,252 4,120 4,878 3,141 3,464 3,878 34 Other4............................. . 25,160 22,996 22,620 23,911 23,199 23,831 23,670 22,610 23,226 1 Not at annual rates. Note.—Census Bureau estimates for all series except (a) mobile 2 Not seasonally adjusted. homes, which are private, domestic shipments as reported by the Manu­ 3 Value of new construction data in recent periods may not be strictly factured Housing Institute and seasonally adjusted by the Census Bureau, comparable with data in prior periods due to changes by the Bureau of and (b) sales and prices of existing units, which are published by the the Census in its estimating techniques. For a description of these changes National Association of Realtors. All back and current figures are avail­ see Construction Reports (C-30-76-5), issued by the Bureau in July 1976. able from originating agency. Permit authorizations are for 14,000 4 Beginning Jan. 1977 Highway imputations are included in Other. jurisdictions reporting to the Census Bureau. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Prices A51 2.15 CONSUMER AND WHOLESALE PRICES Percentage changes based on seasonally adjusted data, except as noted. 12 months to— 3 months (at annual rate) to— 1 month to— Index level Item 1977 r 1977 r 1978 Jan. 1977 1978 1978 Jan. Jan. (1967 Mar. June Sept. Dec. Sept. Oct. Nov. Dec. Jan.2 = 100)1 Consumer prices2 1 All items........................................ 5.2 6.8 7.1 8.9 6.1 4.7 .4 .3 .4 .4 .8 187.2 2 Commodities................................. 3.9 6.2 7.1 8.6 4.6 3.7 .3 .3 .5 .5 .9 179.2 3 Food.......................................... 1.4 8.6 7.7 13.4 6.6 3.0 .2 .2 .5 .4 1.3 199.2 4 Commodities less food............ 5.4 5.0 6.5 5.8 3.5 4.0 .3 .4 .5 .5 .7 168.6 5 Durable................................ 6.6 4.8 7.3 6.3 2.5 3.3 .2 .3 .4 .5 1.0 166.6 6 Nondurable......................... 4.7 4.8 6.0 5.8 4.1 4.3 .4 .5 .5 .3 .4 169.7 7 Services........................................ n.i 7.8 7.4 9.6 8.5 6.3 .6 .4 .4 .4 .6 202.0 8 Rent......................................... r5.9 6.2 6.1 6.6 6.5 6.5 .6 .5 .6 .5 .6 158.8 9 Services less rent..................... n.3 8.0 7.5 9.9 8.9 6.3 .6 .3 .4 .4 .6 209.8 Other groupings: 10 All items less food.................. 6.3 6.3 7.0 7.6 6.0 5.1 .4 .3 .4 .4 .8 183.8 11 All items less food and energy 6.2 6.4 6.4 7.7 6.0 5.2 .5 .3 .4 .5 .9 181.4 12 Homeownership...................... 4.2 9.3 5.8 10.9 9.4 7.8 .6 .3 .7 .7 1.0 215.0 Wholesale prices 13 Al 1 commodities............................................ r4.8 6.3 11.1 4.0 1.9 6.9 .3 .6 .7 .4 .9 199.1 14 Farm products, and processed foods and feeds....................................................... .1 4.0 19.3 -3.1 -15.0 14.7 -.5 .9 2.3 .3 1.1 192.1 15 Farm products......................................... .4 -.7 26.5 -20.3 -21.3 17.9 -.4 1.3 3.1 -.3 1.7 192.2 16 Processed foods and feeds....................... -.1 6.7 15.6 8.2 -11.3 13.0 -.6 .7 1.8 .6 .8 191.3 17 Industrial commodities................................. r6.2 7.0 8.8 6.4 7.0 4.7 .5 .5 .3 .5 .7 201.5 Materials, supplies, and components of which: 18 Crude nonfood materials3................... r12.1 10.1 25.6 -8.1 -5.6 18.8 -.2 .7 1.9 1.8 1.4 267.5 19 Intermediate materials 4....................... r6.3 6.6 8.9 5.5 7.3 3.8 .5 .3 .2 .4 .9 208.2 Finished goods, excluding foods: 20 Consumer.............................................. 5.2 5.9 9.0 7.8 4.2 4.2 .7 .3 .3 .3 .5 111.2 21 Durable............................................. 4.2 6.2 7.0 6.9 5.4 5.6 .2 .6 .3 .4 .7 158.2 22 Nondurable....................................... r5.8 5.7 10.5 7.7 3.3 4.1 .8 .2 .4 .4 .4 189.8 23 Producer................................................ r6.0 7.3 5.0 6.8 6.0 10.5 .5 1.3 .5 .6 .5 192.8 Memo: 24 Consumer foods........................................... -1.2 7.3 17.9 4.3 -2.9 8.1 -.3 .3 1.2 .5 1.1 194.8 1 Not seasonally adjusted. 4 Excludes intermediate materials for food manufacturing and manu­ 2 Beginning January 1978 figures for consumer prices are those for all factured animal feeds. urban consumers. Source.—Bureau of Labor Statistics. 3 Excludes crude foodstuffs and feedstufFs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics □ March 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 Q4 Gross national product 1 1,528.8 1,706.5 1,890.1 1,727.3 1,755.4 1,810.8 1,869.9 1,915.9 1,963.7 By source: 2 Personal consumption expenditures................... 980.4 1,094.0 1,211.4 1,102.2 1,139.0 1,172.4 1,194.0 1,218.9 1,260.2 3 Durable goods.............................................. 132.9 158.9 179.9 159.3 166.3 177.0 178.6 177.6 186.3 4 Nondurable goods........................................ 409.3 442.7 480.7 444.7 458.8 466.6 474.4 481.8 500.0 5 Services.......................................................... 438.2 492.3 ' 550.8 498.2 513.9 528.8 541.1 559.5 573.9 6 Gross private domestic investment.................... 189.1 243.3 293.9 254.3 243.4 271.8 294.9 303.6 305.2 7 Fixed investment........................................... 200.6 230.0 216 A 232.8 244.3 258.0 273.2 280.0 294.5 8 Nonresidential............................................ 149.1 161.9 185.5 164.9 167.6 177.0 182.4 187.5 194.9 9 Structures............................................... 52.9 55.8 61.6 56.0 57.0 57.9 61.0 62.6 64.8 10 Producers’ durable equipment............. 96.3 106.1 123.9 109.0 110.6 119.2 121.4 124.9 130.1 11 Residential structures............................... 51.5 68.0 91.0 67.8 76.7 81.0 90.8 92.5 99.6 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 17.4 21.5 -.9 13.8 21.7 23.6 10.7 14 Nonfarm.................................................... -15.1 14.9 16.4 22.0 1.4 14.1 22.4 23.1 6.2 15 2.0 7.8 -10.1 7.9 3.0 -8.2 -9.7 -7.5 -15.1 16 Exports.......................................................... 147.3 162.9 175.5 168.4 168.5 170.4 178.1 179.9 173.6 17 Imports.......................................................... 126.9 155.1 185.6 160.6 165.6 178.6 187.7 187.4 188.7 18 Govt, purchases of goods and services.............. 338.9 361.4 394.9 363.0 370.0 374.9 390.6 400.9 413.4 19 Federal........................................................... 123.3 130.1 145.5 130.2 134.2 136.3 143.6 148.1 153.8 20 State and local.............................................. 215.6 231.2 249.5 232.7 235.8 238.5 247.0 252.9 259.6 By major type of product: 21 Final sales, total................................................ 1,540.3 1,693.1 1,872.6 1,705.8 1,756.3 1,797.0 1,848.2 1,892.2 1,953.0 22 Goods............................................................. 686.2 764.2 834.4 746.0 774.7 805.9 827.1 843.5 861.1 23 Durable goods........................................... 258.2 303.4 341.4 313.4 312.6 334.4 341.0 342.3 347.9 24 Nondurable................................................ 428.0 460.9 493.0 464.1 460.6 471.5 486.1 501.2 513.2 25 699.2 782.0 868.3 791.8 813.8 833.7 855.3 881.6 902.4 26 143.5 160.2 187.4 159.6 166.9 171.2 187.5 190.7 200.2 27 -11.5 13.3 17.4 21.5 -.9 13.8 21.7 23.6 10.7 28 Durable goods............................................... -9.2 4.1 8.7 10.7 .6 7.8 11.5 10.3 5.0 29 Nondurable goods........................................ -2.2 9.3 8.8 12.4 -3.1 6.0 10.2 13.4 5.7 30 Memo: Total GNP in 1972 dollars................... 1,202.1 1,274.7 1,337.5 1,283.7 1,287.4 1,311.0 1,330.7 1,347.4 1,360.7 National income 1,217.0 1,364.1 1,519.8 1,379.6 1,402.1 1,450.2 1,505.7 1,540.5 32 Compensation of employees................................ 930.3 1,036.3 1,156.2 1,046.5 1,074.2 1,109.9 1,144.7 1,167.4 1,202.8 33 Wages and salaries............................................ 805.7 891.8 989.9 900.2 923.2 951.3 980.9 998.9 1,028.5 34 Government and Government enterprises.. 175.4 187.2 199.9 188.2 192.5 194.8 197.2 200.6 206.9 35 Other.............................................................. 630.3 704.6 790.0 712.0 730.7 756.4 783.6 798.3 821.6 36 Supplement to wages and salaries..................... 124.6 144.5 166.3 146.3 150.9 158.6 163.8 168.5 174.2 37 Employer contributions for social 59.8 68.6 11.1 69.1 70.9 75.4 11.1 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 86.0 88.0 98.1 86.2 88.7 95.1 97.0 95.5 105.0 40 Business and professional1............................... 62.8 69.4 78.5 70.0 72.0 74.3 77.3 80.0 82.4 41 Farm1................................................................ 23.2 18.6 19.7 16.2 16.6 20.7 19.7 15.5 22.7 42 Rental income of persons2................................... 22.3 23.3 25.3 23.3 24.1 24.5 24.9 25.5 26.4 43 Cnrnnrafp nrnfit«s 1................................................... 99.3 128.1 139.3 133.5 123.1 125.4 140.2 149.0 44 Profits before tax3............................................ 123.5 156.9 171.2 159.9 154.8 161 7 174.0 172.8 45 Inventory valuation adjustment....................... -12.0 -14.1 -14.6 -11.7 -16.9 -20.6 -17.8 -5.9 -14.1 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 88.4 100.8 90.1 92.0 95.3 98.9 103.1 106.0 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 1975 1976 1977 Q3 Q4 Ql Q2 Q3 Q4 Personal income and saving 1 Total personal income. 1.253.4 1.382.7 1.536.7 1.393.9 1.432.2 1.476.8 1.517.2 1.549.8 1,602.8 2 Wage and salary disbursements....................... 805.7 891.8 989.9 900.2 923.2 951.3 980.9 998.9 1,028.5 3 Commodity-producing industries.............. 275.0 308.4 346.4 310.8 317.7 328.9 345.4 351.0 360.1 4 Manufacturing........................................ 211.0 238.2 267.3 240.2 245.1 255.4 265.9 270.0 277.9 5 Distributive industries................................. 195.4 217.1 242.9 220.2 226.4 234.5 240.5 244.4 251.7 6 Service industries........................................ 159.9 179.0 200.8 180.9 186.7 193.0 197.7 202.8 207.8 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 9 Proprietors' income1............. 86.0 88.0 98.1 86.2 88.7 95.1 97.0 95.5 105.0 10 Business and professional1 62.8 69.4 78.5 70.0 72.0 74.3 77.3 80.0 82.4 11 Farm1............................... 23.2 18.6 19.7 16.2 16.6 20 J 19.7 15.5 22.7 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 14 Personal interest income... 115.6 130.3 147.9 132.2 136.4 140.3 145.4 150.3 155.4 15 Transfer payments......................................... 176.8 192.8 206.9 194.3 198.0 203.5 203.0 208.7 212.7 16 Old-age survivors, disability, and health insurance benefits............................... 81.4 92.9 105.0 95.8 98.4 99.9 101.8 108.5 110.0 17 Less: Personal contributions for social insurance........................................... 50.4 55.2 61.2 55.6 56.6 59.6 60.8 61.7 62.9 18 Equals: Personal income.............................. 1.253.4 1.382.7 1.536.7 1.393.9 1.432.2 1.476.8 1.517.2 1.549.8 1,602.8 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 1,309.2 1,193.3 1,222.6 1,252.4 1,292.5 1.323.8 1,368.2 21 Less: Personal outlays............................... 1,004.2 1.119.9 1,242.1 1,128.5 1.166.3 1,201.0 1,223.9 1,250.5 1,293.0 22 Equals: Personal saving............................... 80.2 65.9 67.1 64.8 56.3 51.4 68.5 73.3 75.2 Memo items: Per capita (1972 dollars): 23 Gross national product..................... 5.629 5,924 6,166 5,961 5,966 6,064 6,143 6,206 6,256 24 Personal consumption expenditures. 3.629 3,817 3,970 3,820 3,892 3,934 3,943 3,963 4,045 25 Disposable personal income............. 4,014 4,137 4,292 4,135 4,177 4,202 4,268 4,305 4,391 26 Saving rate (per cent)............................ 7.4 5.6 5.1 5.4 4.6 4.1 5.3 5.5 5.5 Gross saving 27 Gross private saving. 259.4 272.5 293.4 277.2 261.6 262.9 292.1 310.5 28 Personal saving.................................................. 80.2 65.9 67.1 64.8 56.3 51.4 68.5 73.3 75.2 29 Undistributed corporate profits1..................... 16.7 21.6 29.3 31.6 20.8 22.5 30.3 37.4 30 Corporate inventory valuation adjustment.... -12.0 -14.1 -14.6 -11.7 -16.9 -20.6 -17.8 -5.9 -14.1 Capital consumption allowances: 31 Corporate...................................................... 101.7 111.8 121.9 112.9 115.2 117.6 119.4 123.7 127.0 32 Noncorporate................................................ 60.8 67.2 75.1 68.0 69.2 71.4 73.8 76.2 78.9 33 Wage accruals less disbursements................... 34 Government surplus, or deficit (—), national income and product accounts................... -64.3 -35.6 -20.6 -32.4 -29.4 -11.5 -14.9 -26.0 35 Federal......................................................... -70.2 -54.0 -49.9 -53.5 -55.9 -38.8 -40.3 -58.9 36 State and local............................................ 5.9 18.4 29.3 21.1 26.5 27.3 25.4 32.9 37 Capital grants received by the United States, net.............................................................. 38 Investment......................... 201.0 242.5 273.8 252.8 237.5 254.7 276.1 285.4 279.0 39 Gross private domestic. 189.1 243.3 293.9 254.1 243.3 271.8 294.9 303.6 305.2 40 Net foreign................... 11.8 -.9 -20.1 -1.5 -5.9 -17.1 -18.8 -18.2 -26.2 41 Statistical discrepancy. 5.9 5.5 1.0 8.0 5.3 3.3 -1.2 .9 1 With inventory valuation and capital consumption adjustments. Source.—Survey of Current Business (U.S. Dept, of Commerce). 2 With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics □ March 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 1Merchandise 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 -5,028 11,552 -1,427 523 -1,061 -1,382 -4,158 -4,604 -4,302 11 1,458 -3,809 303 -3,409 -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 -2,530 -773 -407 228 -388 6 151 14 Gold.................................................................................... — 58 15 — 172 -66 -78 — 45 — 18 — 29 Sl'X _Q 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 -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 -918 -480 -306 23 -441 21 -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 Al 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 -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 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 (in- 22,631 7,376 16,575 3,009 5,131 5,102 -3,209 5,873 4,680 34 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 Al 105 192 36 Short-term....................................................................... 16,008 908 10,807 111 1,699 4,787 -5,345 6,239 2,306 37 U.S. nonbank-reported liabilities....................................... 1,844 240 -616 161 -297 -242 -374 -405 -90 38 Long-term....................................................................... -90 334 -9A1 -233 -241 -311 -229 -183 -48 39 1,934 -94 331 394 -56 69 -145 -222 -42 40 Foreign private purchases of U.S. Treasury securities, 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 A3 Alloratinn nf SnU’s .............................................................. -1,555 5,660 9,866 3,372 1,268 3,325 1,317 1,106 -5,225 45 Owing to seasonal adjustments........................................ 717 -2,622 1,780 524 — 215 -2,506 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, +). 10,257 5,259 13,007 2,323 1,251 6,125 5,007 7,452 7,924 49 Changes in Organization of Petroleum Exporting Countries (OPEC) official assets in the United States (part 10,841 7,092 9,324 3,482 1,774 805 3,249 1,073 1,441 50 Transfers under military grant programs (excluded from 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 Cur­ rent Business (U.S. Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trade and Reserve Assets A55 3,11 U.S. FOREIGN TRADE Millions of dollars; monthly data are seasonally adjusted. 1977' 1978 Item 1975 1976' 1977 July Aug. Sept. Oct. Nov. Dec. Jan. 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments......................................... 107,130 115,155 121,144 10,385 9,674 11,037 9,375 9,475 11,007 10,014 2 GENERAL IMPORTS including merchandise for immediate con­ sumption plus entries into bonded warehouses....................................... 96,115 121,009 147,491 13,077 11,651 12,605 12,996 11,833 13,123 12,393 11,014 -5,854 -26,347 -2,692 -1,977 -1,569 -3,621 -2,358 -2,116 -2,379 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 Type 1974 1975 1976 Aug. Sept. Oct. Nov. Dec. Jan.*5 Feb.P 1 Total.................................................... 15,883 16,226 18,747 19,055 18,988 19,048 19,155 19,317 19,454 3 19,373 2 Gold stock, including Exchange Stabilization Fund1........................ 11,652 11,599 11,598 11,658 11,658 11,658 11,658 11,719 11,718 11,718 3 Special Drawing Rights2................... 2,374 2,335 2,395 2,483 2,489 2,530 2,548 2,629 2,629 3 2,671 4 Reserve position in International Monetary Fund............................... 1,852 2,212 4,434 4,859 4,776 4,842 4,933 4,951 4,934 3 4,966 5 Convertible foreign currencies.......... 5 80 320 55 65 18 16 18 173 18 Note.—Bureau of Census data reported on a free-alongside-ship SDR based on a weighted average of exchange rates for the currencies (f.a.s.) value basis. Effective January 1978, major changes were made in of 16 member countries. The U.S. SDR holdings and reserve position in coverage, reporting, and compiling procedures. Data for 1977 reflect the IMF also are valued on this basis beginning July 1974. At valuation these changes. However, the quarterly intemational-accounts-basis data used prior to July 1974 (SDR1 = $1.20635) total U.S. reserve assets in Table 3.10 will not incorporate the 1977 revisions until June. The latter at end of Feb. amounted to $19,129; SDR holdings, $2,627, and reserve data adjust the Census basis data for reasons of coverage and timing. On position in IMF, $4,776. the export sidet the largest adjustments are: (a) the addition of exports to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics □ March 1978 3.13 SELECTED U.S. LIABILITIES TO FOREIGNERS Millions of dollars, end of period 1977 1978 Holder, and type of liability 1974 1975 1976 July' Aug.r Sept.' Oct.r Nov. Dec.? Jan.? 1 Total.................................................... 119,164 126,552 151,356 168,811 166,342 174,709 178,937 184,720 192,280 194,006 2 Foreign countries................................. 115,842 120,929 142,873 162,390 159,186 167,295 171,541 177,087 184,635 186,308 3 Official institutions1............................ 76,823 80,712 91,975 107,608 108,137 111,208 117,057 123,142 126,050 129,768 4 Short-term, reported by banks in the United States.2................. 53,079 49,530 53,619 60,063 56,810 56,805 59,835 62,214 64,532 66,487 U.S. Treasury bonds and notes: 5 Marketable 3................................. 5,059 6,671 11,788 19,392 23,088 25,581 28,633 31,519 32,116 33,830 6 Nonmarketable4......................... 16,339 19,976 20,648 20,837 20,655 21,128 20,351 20,462 20,443 20,473 7 Other readily marketable liabilities5............................. 2,346 4,535 5,920 7,316 7,584 7,694 8,238 8,947 8,959 8,978 Commercial banks abroad: 8 Short-term, reported by banks in the United States2,6................ 30,106 29,516 37,329 39,946 35,800 40,414 38,755 37,981 42,500 40,337 9 Other foreigners................................... 8,913 10,701 13,569 14,836 15,249 15,673 15,729 15,964 16,085 16,203 10 Short-term, reported by banks in the United States2.................. 8,415 10,000 12,592 13,381 13,693 14,046 14,038 14,196 14,327 14,385 11 Marketable U.S. Treasury bonds 498 701 977 1,455 1,556 1,627 1,691 1,768 1,758 1,818 12 Nonmonetary international and regional organization8.................. 3,322 5,623 8,483 6,421 7,156 7,414 7,396 7,633 7,645 7,698 13 Short-term, reported by banks in the United States2.................. 3,171 5,292 5,450 3,835 4,216 3,555 3,396 3,258 2,899 3,245 14 Marketable U.S. Treasury bonds and notes 3............................... 151 331 3,033 2,586 2,940 3,859 4,000 4,375 4,746 4,453 1 Includes Bank for International Settlements. 8 Principally the International Bank for Reconstruction and Develop­ 2 Includes Treasury bills as shown in Table 3.15. ment and the Inter-American and Asian Development Banks. 3 Derived by applying reported transactions to benchmark data. 4 Excludes notes issued to foreign official nonreserve agencies. Note.—Based on Treasury Dept, data and on data reported to the 5 Includes long-term liabilities reported by banks in the United States Treasury Dept, by banks (including Federal Reserve banks) and brokers and debt securities of U.S. Federally sponsored agencies and U.S. cor­ in the United States. Data exclude the holdings of dollars of the Inter­ porations. national Monetary Fund derived from payments of the U.S. subscription, 6 Includes short-term liabilities payable in foreign currencies to com­ and from the exchange transactions and other operations of the IMF. mercial banks abroad and to other foreigners. Data also exclude U.S. Treasury letters of credit and nonnegotiable, non­ 7 Includes marketable U.S. Treasury bonds and notes held by com­ interest-bearing special U.S. notes held by nonmonetary international mercial banks abroad and other foreigners. and regional organizations. 3 .14 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1977 1978 Area 1974 1975 1976 July' Aug.' Sept.' Oct.' Nov Dec.p Jan.P 1Total.................................................... 76,823 80,712 91,975 107,608 108,137 111,208 117,057 123,142 126,050 129,768 2 44,328 45,701 45,882 55,669 57,743 60,724 65,039 68,147 70,709 72,528 3 Canada............................................ 3,662 3,132 3,406 2,653 2,557 2,508 1,863 1,919 2,334 2,078 4 Latin American republics............... 4,419 4,450 4,906 4,338 4,246 4,466 4,269 4,843 4,634 4,562 5 Asia.................................................. 18,627 22,551 34,108 41,167 40,440 40,333 42,700 45,450 45,688 48,096 6 Africa.............................................. 3,160 2,983 1,893 2,460 2,265 2,144 2,027 1,792 1,742 1,706 7 Other countries 2............................ 2,627 1,895 1,780 1,321 886 1,033 1,159 991 943 798 1 Includes Bank for International Settlements. Note.—Data represent breakdown by area of line 3, Table 3.13. 2 Includes countries in Oceania and Eastern Europe, and Western European dependencies in Latin America. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-reported Data A57 3.15 SHORT-TERM LIABILITIES TO FOREIGNERS Reported by Banks in the United States By Holder and by Type of Liability Millions of dollars, end of period 1977 1978 Holder, and type of liability 1974 1975 1976 July' Aug.' Sept.1 Oct. Nov. Dec v Jan.* 1 All foreigners, excluding the International Monetary Fund............................................... 94,771 94,338 108,990 117,225 110,519 114,820 116,024 117,649 124,258 124,454 2 Payable in dollars............................................... 94,004 93,781 108,266 116,265 109,630 114,075 115,260 116,817 123,447 123,736 Deposits: 3 Demand...................................................... 14,051 13,564 16,803 17,496 15,942 16,893 16,895 16,461 18,967 17,378 4 Time1.......................................................... 9,907 10,250 11,316 11,832 11,756 11,601 11,515 11,372 11,524 11,510 5 U.S. Treasury bills and certificates2............. 35,662 37,414 40,744 44,445 42,254 43,207 44,700 47,130 48,906 51,076 6 Other short-term liabilities3.......................... 34,384 32,552 39,403 42,492 39,678 42,373 42,150 41,854 44,050 43,772 7 Payable in foreign currencies............................. 766 558 724 960 889 745 764 832 812 718 8 Nonmonetary international and regional organizations4................................................. 3,171 5,293 5,450 3,835 4,216 3,555 3,396 3,258 2,899 3,245 9 Payable in dollars............................................... 3,171 5,284 5,445 3,820 4,178 3,523 3,376 3,237 2,889 3,234 Deposits: 10 Demand...................................................... 139 139 290 122 142 214 173 173 231 186 11 Time1.......................................................... 111 148 205 155 147 134 140 142 139 126 12 U.S. Treasury bills and certificates............... 497 2,554 2,701 2,191 1,990 1,875 802 767 706 959 13 Other short-term liabilities5.......................... 2,424 2,443 2,250 1,352 1,900 1,300 2,261 2,155 1,813 1,963 14 Payable in foreign currencies............................. 8 5 15 38 32 20 20 11 11 15 Official institutions, banks, and other foreigners.. 91,600 89,046 103,540 113,390 106,303 111,265 112,628 114,391 121,359 121,209 16 Payable in dollars............................................... 90,834 88,496 102,821 112,445 105,451 110,552 111,884 113,579 120,558 120,502 Deposits: 17 Demand...................................................... 13,912 13,426 16,513 17,374 15,801 16,679 16,722 16,288 18,736 17,192 18 Time1.......................................................... 9,796 10,119 11,142 11,678 11,609 11,468 11,375 11,229 11,385 11,384 19 U.S. Treasury bills and certificates2............ 35,165 34,860 38,042 42,253 40,264 41,331 43,898 46,364 48,200 50,117 20 Other short-term liabilities3.......................... 31,961 30,092 37,123 41,141 37,778 41,073 39,889 39,699 42,237 41,809 21 Payable in foreign currencies............................. 766 549 719 945 851 713 744 812 801 707 22 Official institutions6............................................... 53,079 49,530 53,619 60,063 56,810 56,805 59,835 62,214 64,532 66,487 23 Payable in dollars............................................... 52,952 49,530 53,619 60,063 56,810 56,805 59,835 62,214 64,532 66,487 Deposits: 24 Demand...................................................... 2,951 2,644 3,394 3,642 3,122 3,133 2,990 2,557 3,528 2,672 25 Time1.......................................................... 4,167 3,423 2,321 2,401 2,248 1,987 1,903 1,848 1,802 1,771 26 U.S. Treasury bills and certificates2............. 34.656 34,199 37,725 41,958 39,825 40,802 43,424 45,849 47,820 49,734 27 Other short-term liabilities5.......................... 11,178 9,264 10,179 12,062 11,615 10,882 11,518 11,960 11,382 12,310 2R Pnvnhlp in foreign rurrpnriex______________ 127 29 Banks and other foreigners.................................... 38,520 39,515 49,921 53,327 49,493 54,461 52,793 SI All 56,827 54,722 30 Payable in dollars............................................... 37,881 38,966 49,202 52,382 48,642 53,747 52,049 51,365 56,026 54,015 31 Banks7............................................................ 29,467 28,966 36,610 39,001 34,948 39,701 38,011 37,169 41,699 39,630 Deposits: 32 Demand.................................................. 8,231 7,534 9,104 10,136 8,928 9,676 9,677 9,666 10,933 10,276 33 Time1...................................................... 1,885 1,873 2,297 1,820 1,863 1,842 1,858 1,805 2,035 2,015 34 232 335 119 144 112 125 127 141 141 152 35 Other short-term liabilities3...................... 19,119 19,224 25,089 26,901 24,046 28,057 26,349 25,557 28,591 27,188 36 Other foreigners............................................. 8,414 10,000 12,592 13,381 13,693 14,046 14,037 14,196 14,327 14,385 Deposits: 37 Demand.................................................. 2,729 3,248 4,015 3,595 3,751 3,870 4,055 4,065 4,275 4,243 38 Time1...................................................... 3,744 4,823 6,524 7,457 7,499 7,638 7,614 7,576 7,548 7,598 39 U.S. Treasury bills and certificates........... 277 325 198 151 328 404 346 373 240 231 40 Other short-term liabilities5...................... 1,664 1,604 1,854 2,111 2,116 2,133 2,022 2,182 2,265 2,312 41 Payable in foreign currencies............................. 639 549 719 945 851 713 744 812 801 707 1 Excludes negotiable time certificates of deposit, which are included 4 Principally the International Bank for Reconstruction and Develop­ in “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 □ March 1978 3.16 SHORT-TERM LIABILITIES TO FOREIGNERS Reported by Banks in the United States By Country Millions of dollars, end of period 1977 1978 Area and country 1974 1975 1976 July r Aug.r Sept.r Oct. Nov. Dec.p Jan.** 1 94,771 94,338 108,990 117,225 110,519 114,820 116,024 117,649 124,258 124,454 2 Foreign countries.................................................... 91,600 89,046 103,540 113,390 106,303 111,265 112,628 114,391 121,359 121,209 3 Europe................................................................... 48,813 43,988 46,938 50,604 48,953 51,457 52,910 54,369 60,054 59,380 4 607 754 348 455 498 448 410 375 319 302 5 Belgium-Luxembourg.................................... 2,506 2,898 2,275 2,822 2,691 2,667 2,736 2,662 2,547 2,680 6 369 332 363 1,154 1,032 1,172 1,250 1,264 771 1,045 7 266 391 422 209 217 248 232 263 332 302 8 France............................................................. 4,287 7,733 4,875 4,745 4,894 4,'799 5,006 4,683 5,248 5,145 9 9,429 4,357 5,965 4,937 4,413 4,289 5,280 5,580 7,030 8,595 10 Greece............................................................. 248 284 403 573 709 629 648 643 603 538 11 2,577 1,072 3,206 5,422 5,538 5,792 6,320 6,778 6,862 6,207 12 3,234 3.411 3,007 3,397 3,328 3,216 3,088 2,996 2,876 2,951 13 1,040 996 785 1,203 1,140 1,190 1,023 641 949 988 14 310 195 239 222 169 173 191 266 273 205 15 382 426 561 642 543 723 724 647 609 681 16 1,138 2,286 1,693 1,963 1,782 2,483 2,734 3,136 2,718 2,717 17 10,139 8,514 9,458 9,162 9,386 9,923 9,757 9,884 12,390 12,111 18 Turkey............................................................ 152 118 166 101 203 93 106 118 130 187 19 7,584 6,886 10,004 11,250 10,226 11,427 11,096 12,119 14,035 12,484 20 Yugoslavia...................................................... 183 126 188 125 110 119 130 171 232 219 21 Other Western Europe1................................. 4,073 2,970 2,672 1,973 1,855 1,839 1,948 1,910 1,799 1,771 22 U.S.S.R........................................................... 82 40 51 88 70 53 68 66 99 68 23 Other Eastern Europe................................... 206 200 255 160 151 173 162 167 234 184 24 3,520 3,076 4,784 4,456 4,631 4,492 4,913 4,686 4,668 5,343 25 11,754 14,942 19,026 23,042 21,428 24,478 22,354 22,417 23,573 23,145 26 Argentina........................................................ 886 1,147 1,538 1,754 2,022 2,187 2,421 2,594 1,465 1,796 27 1,054 1,827 2,750 5,518 4,283 5,940 3,769 3,409 3,534 3,074 28 Brazil............................................................... 1,034 1,227 1,432 1,398 1,233 1,101 1,055 935 1,386 1,111 29 Chile................................................................ 276 317 335 373 353 342 340 322 359 386 30 Colombia........................................................ 305 417 1,017 1,220 1,164 1,156 1,182 1,152 1,213 1,219 31 7 6 6 6 6 6 6 6 7 6 32 Mexico............................................................ 1,770 2,066 2,848 2,873 2,806 2,823 2,741 2,850 2,804 2,906 33 510 1,099 1,140 1,015 954 947 946 986 2,302 2,171 34 272 244 257 241 273 288 259 235 286 264 35 165 172 245 242 230 245 226 258 242 229 36 Venezuela........................................................ 3,413 3,289 3,095 2,532 2,887 3,037 3,212 3,780 2,913 3,001 37 Other Latin American republics................... 1,316 1,494 2,081 2,238 2,154 2,320 2,199 2,140 2,472 2,368 38 158 129 140 158 180 169 156 184 188 187 39 589 1,507 2,142 3,476 2,886 3,916 3,840 3,566 4,401 4,427 40 21,130 21,539 28,472 30,300 26,935 26,463 28,165 28,948 29,217 29,706 41 China, People’s Republic of (Mainland).... 50 123 47 49 46 44 48 52 53 54 42 818 1,025 989 1,259 925 924 899 926 1,012 1,049 43 Hong Kong.................................................... 530 623 892 1,028 1,066 1,153 993 971 1,091 1,032 44 261 126 648 746 743 850 886 980 975 1,029 45 1,221 369 340 782 589 453 905 739 406 892 46 Israel................................................................ 389 386 391 484 467 416 465 490 558 490 47 10,931 10,218 14,380 12,837 11,695 11,444 13,272 14,835 14,632 14,472 48 384 390 437 633 527 600 596 572 601 606 49 747 698 627 653 561 559 630 603 696 668 50 Thailand.. ...................................................... 333 252 275 281 293 264 271 251 262 256 51 Middle East oil-exporting countries3........... 4,623 6,461 8,073 9,981 8,828 8,527 7,933 7,365 7,679 7,980 52 Other............................................................... 845 867 1,372 1,568 1,195 1,230 1,267 1,164 1,252 1,178 53 Africa.................................................................. 3,551 3,373 2,300 3,284 3,177 3,023 2,786 2,560 2,532 2,503 54 Egypt.............................................................. 103 343 333 401 603 484 393 331 404 346 55 Morocco......................................................... 38 68 88 73 61 68 61 31 66 100 56 South Africa................................................... 130 169 143 257 185 208 232 240 175 192 57 Zaire............................................................... 84 63 35 40 38 36 33 30 39 41 58 Oil-exporting countries4................................ 2,814 2,239 1,116 1,541 1,430 1,564 1,403 1,214 1,154 1,178 59 383 491 585 973 860 664 664 715 694 645 60 Other countries................................................... 2,831 2,128 2,019 1,704 1,179 1,352 1,500 1,411 1,314 1,132 61 2,742 2,014 1,911 1,553 1,007 1,206 1,348 1,269 1,154 937 62 All other.......................................................... 89 114 108 151 172 146 152 142 161 195 63 Nonmonetary international and regional 3,171 5,293 5,450 3,835 4,216 3,555 3,396 3,258 2,899 3,245 64 International...................................................... 2,900 5,064 5,091 3,488 3,820 3,186 3,079 2,922 2,636 2,995 65 202 187 136 162 183 157 134 128 98 79 66 Other regional5.................................................. 69 42 223 186 213 212 183 208 165 171 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 1977 Area and country Area and country Apr. Dec, Apr. Dec. Apr. Apr. Dec. Apr. Dec, Apr. Other Western Europe Other Asia 1 Cyprus....................... 17 68 58 25 Afghanistan................. 19 41 57 55 90 2 Iceland....................... 20 40 32 26 Bangladesh................... 50 54 44 54 3 Ireland, Republic of. 29 236 131 27 Burma........................... 49 31 34 13 28 Cambodia..................... 4 4 3 4 Other Eastern Europe 29 Jordan............................ 30 39 23 37 23 4 Bulgaria................................... 13 19 30 Laos................................ 5 2 2 1 5 Czechoslovakia........................ 11 32 31 Lebanon........................ 180 117 132 140 133 6 German Democratic Republic, 18 17 32 Malaysia........................ 92 77 130 394 511 7 Hungary................................... 11 13 16 33 Nepal.............................. 22 28 34 32 35 8 Poland..................................... 42 66 64 34 Pakistan......................... 118 74 92 188 135 9 Rumania.................................. 14 44 23 35 Singapore....................... 215 256 344 280 300 36 Sri Lanka (Ceylon)___ 13 13 10 22 27 Other Latin American republics 37 Vietnam......................... 70 62 66 50 50 10 Bolivia..................................... 93 110 117 121 135 11 Costa Rica............................... 120 124 134 134 170 Other Africa 12 Dominican Republic............... 214 169 170 274 280 38 Ethiopia (incl. Eritrea) 76 60 72 41 48 13 Ecuador................................... 157 120 150 319 311 39 Ghana............................. 13 23 45 27 37 14 El Salvador............................. 144 171 212 176 214 40 Ivory Coast................... 11 18 17 10 26 15 Guatemala............................... 255 260 368 340 392 41 Kenya............................. 32 19 39 46 185 16 Haiti......................................... 34 38 48 46 68 42 Liberia............................ 33 53 63 76 95 17 Honduras................................. 92 99 137 134 210 43 Southern Rhodesia___ 3 1 1 1 1 18 Jamaica.................................... 62 41 59 34 43 44 Sudan............................. 14 12 17 22 30 19 Nicaragua................................ 126 133 158 113 133 45 Tanzania........................ 21 30 20 48 57 20 Paraguay................................. 38 43 50 47 60 46 Tunisia......................... 23 29 34 19 15 21 Surinam 2................................ 13 29 17 47 Uganda........................... 38 22 50 43 22 Trinidad and Tobago............. 31 131 44 167 85 48 Zambia........................... 18 78 14 35 55 Other Latin America: All Other 23 Bermuda................ 100 170 197 177 199 49 New Zealand................. 36 42 48 43 75 24 British West Indies. 627 1,311 2,284 1,874 2,377 1 Represents a partial breakdown of the amounts shown in the “Other” 2 Surinam included with Netherlands Antilles until January 1976. categories on Table 3.16. 3.18 LONG-TERM LIABILITIES TO FOREIGNERS Reported by Banks in the United States Millions of dollars, end of period 1977 1978 Holder, and area or country 1974 1975 1976' July' Aug.' Sept. Oct. Nov. Dec.p Jan 1 Total....................................................................... 1,285 1,812 2,449 2,339 2,354 2,526 2,579 2,747 2,781 2,720 2 Nonmonetary international and regional 822 415 269 269 313 330 352 352 373 375 3 Foreign countries.................................................... 464 1,397 2,180 2,071 2,040 2,196 2,227 2,396 2,408 2,345 4 Official institutions, including central banks. .. 124 931 1,337 1,186 1,006 1,074 1,089 1,313 1,309 1,239 5 Banks, excluding central banks........................ 261 366 621 538 680 713 715 707 716 719 6 Other foreigners................................................. 79 100 222 346 355 409 422 376 384 387 Area or country: 7 Europe................................................................ 226 330 570 634 664 708 719 704 696 701 8 Germany......................................................... 146 214 346 307 308 307 308 309 307 313 9 United Kingdom............................................ 59 66 124 162 169 200 205 200 180 176 10 Canada................................................................ 19 23 29 33 27 27 27 26 35 39 11 Latin America.................................................... 115 140 248 304 322 341 339 330 343 342 12 Middle East oil-exporting countries1............... 94 894 1,286 1,075 987 1,056 1,064 1,285 1,285 1,216 13 7 8 46 18 34 38 53 42 42 42 14 African oil-exporting countries2....................... * * * * * * 1 1 * * 15 1 1 * 6 6 23 22 6 5 5 16 All other countries............................................. * ♦ 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 □ March 1978 3.19 SHORT-TERM CLAIMS ON FOREIGNERS Reported by Banks in the United States By Country Millions of dollars, end of period 1977 1978 Area and country 1974 1975 1976 July' Aug.' Sept.' Oct.' Nov. Dec.* Jan.* 1 39,056 50,231 '69,237 69,267 68,584 71,095 75,104 74,726 79,960 81,571 2 Foreign countries.................................................... 39,055 50,229 '69,232 69,618 68,573 71,085 75,094 74,714 79,950 81,561 3 Europe..................................................................... 6,255 8,987 '12,220 12,792 12,274 13,352 13,767 13,019 15,461 17,997 4 Austria................................................................ 21 15 44 63 53 117 15 52 52 95 5 Belgium-Luxembourg........................................ 384 352 662 505 476 558 782 751 793 897 6 Denmark............................................................ 46 49 85 86 100 140 126 107 130 140 7 Finland................................................................ 122 128 139 101 103 95 111 106 101 104 8 France................................................................. 673 1,471 1,445 1,503 1,471 1,356 1,341 1,320 1,616 1,367 9 Germany............................................................. 589 416 517 623 648 615 768 645 661 693 10 Greece................................................................. 64 49 79 66 68 103 98 107 94 86 11 Italy..................................................................... 345 370 929 963 1,011 1,065 1,104 1,157 1,284 1,127 12 Netherlands........................................................ 348 300 304 471 371 447 304 352 352 387 13 Norway............................................................... 119 71 98 121 135 109 120 122 131 141 14 Portugal.............................................................. 20 16 65 110 138 148 138 120 138 103 15 Spain................................................................... 196 249 373 323 344 346 471 401 413 425 16 Sweden............................................................... 180 167 180 153 151 139 172 143 169 179 17 Switzerland......................................................... 335 237 485 488 533 700 681 614 633 722 18 Turkey................................................................ 15 86 176 323 329 337 329 344 312 286 19 United Kingdom................................................ 2,580 4,718 '6,277 6,544 6,011 6,766 6,623 6,369 8,167 10,806 20 Yugoslavia.......................................................... 22 38 41 49 35 34 28 29 56 42 21 Other Western Europe....................................... 22 27 52 42 47 43 259 50 89 127 22 U.S.S.R............................................................... 46 103 99 88 81 89 82 81 103 112 23 Other Eastern Europe........................................ 131 127 171 169 169 146 155 150 168 158 24 Canada................................................................... 2,776 2,817 3,049 3,728 3,978 3,400 3,626 3,803 3,716 4,052 25 Latin America........................................................ 12,377 20,532 34,270 33,425 32,831 35,113 38,051 37,890 40,419 39,625 26 Argentina............................................................ 720 1,203 964 839 856 939 1,076 1,085 1,180 1,214 27 Bahamas............................................................. 3,405 7,570 15,336 15,084 13,647 15,564 18,930 18,115 19,678 18,739 28 Brazil.................................................................. 1,418 2,221 3,322 3,026 3,077 3,011 3,121 2,962 3,076 2,937 29 Chile................................................................... 290 360 387 373 382 431 435 443 502 508 30 Colombia............................................................ 713 689 586 514 542 528 570 554 573 548 31 Cuba................................................................... 14 13 13 13 13 13 10 15 10 14 32 Mexico................................................................ 1,972 2,802 3,432 3,464 3,460 3,488 3,261 3,201 2,997 2,988 33 Panama............................................................... 505 1,052 1,257 1,278 1,463 1,063 1,431 1,652 1,262 1,800 34 Peru..................................................................... 518 583 704 788 783 785 737 735 769 774 35 Uruguay.............................................................. 63 51 38 38 39 42 47 60 71 59 36 Venezuela............................................................ 704 1,086 1,564 1,421 1,435 1,656 1,654 1,714 1,836 1,736 37 Other Latin American republics....................... 852 967 1,125 1,181 1,233 1,224 1,290 1,316 1,463 1,493 38 Netherlands Antilles1........................................ 62 49 40 64 57 75 61 139 86 77 39 Other Latin America......................................... 1,142 1,885 5,503 5,342 5,844 6,293 5,426 5,898 6,917 6,738 40 16,226 16,057 17,672 17,015 16,828 16,566 16,856 17,315 17,765 17,293 41 China, People’s Republic of (Mainland)........ 4 22 3 13 9 27 20 22 12 14 42 China, Republic of (Taiwan)............................ 500 736 991 1,275 1,236 1,303 1,321 1,275 1,371 1,268 43 Hong Kong........................................................ 223 258 271 359 272 360 357 466 465 435 44 14 21 41 25 65 59 48 54 35 47 45 Indonesia............................................................ 157 102 76 65 56 67 97 60 77 56 46 Israel................................................................... 255 491 551 311 323 304 348 347 441 368 47 Japan.................................................................. 12,518 10,776 10,997 9,688 9,614 9,303 9,341 9,578 9,778 9,475 48 Korea................................................................. 955 1,561 1,714 1,981 2,069 2,001 1,998 1,876 2,069 2,208 49 Philippines.......................................................... 372 384 559 372 478 All 489 508 470 476 50 Thailand............................................................. 458 499 422 584 580 617 612 594 616 618 51 Middle East oil-exporting countries2............... 330 524 1,312 1,476 1,369 1,340 1,531 1,783 1,583 1,525 52 Other................................................................... 441 684 735 867 758 708 695 752 849 803 53 Africa..................................................................... 855 1,228 1,481 1,648 1,720 1,656 1,828 1,749 1,728 1,757 54 Egypt.................................................................. 111 101 127 158 149 134 155 130 114 122 55 Morocco............................................................. 18 9 13 36 43 48 44 31 30 48 56 South Africa....................................................... 329 545 763 821 799 802 881 823 840 868 57 Zaire................................................................... 98 34 29 8 6 15 7 7 7 8 58 Oil-exporting countries3.................................... 115 231 253 290 357 306 378 358 321 312 59 Other................................................................... 185 308 296 333 365 350 362 399 416 400 60 565 609 540 1,010 943 998 966 939 861 837 61 Australia............................................................. 466 535 441 861 795 863 839 815 743 710 62 All other............................................................. 99 73 99 150 148 135 127 124 117 127 63 Nonmonetary international and regional organizations...................................................... * 1 10 11 10 9 12 9 10 1 5 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

Bank-reported Data A61 3.20 SHORT-TERM CLAIMS ON FOREIGNERS Reported by Banks in the United States By Type of Claim Millions of dollars, end of period 1977 1978 Type 1974 1975 1976' July' Aug.' Sept.r Oct.' Nov. Dec.p Jan.p 1 39,056 50,231 69,237 69,627 68,584 71,095 75,104 74,726 79,960 81,571 2 Payable in dollars.................................................. 37,859 48,888 67,592 67,980 66,666 69,345 73,104 72,849 77,836 79,438 3 11,287 13,200 18,016 17,298 16,504 18,135 18,040 17,486 19,840 18,402 4 Official institutions, including central banks. 381 613 1,448 841 1,018 1,007 1,085 1,048 1,019 1,104 5 Banks, excluding central banks..................... 7,332 '7,635 10,974 11,303 10,412 11,736 11,305 11,103 12,859 11,442 6 All other, including nonmonetary interna­ tional and regional organizations............. 3,574 '4,951 5,594 5,153 5,074 5,392 5,649 5,335 5,962 5,856 7 Collections outstanding..................................... 5,637 5,467 5,756 6,352 6,200 6,025 6,005 6,045 6,187 6,342 8 Acceptances made for accounts of foreigners... 11,237 11,147 12,358 13,431 13,556 13,645 13,735 13,462 14,212 13,587 9 9,698 19,075 31,462 30,899 30,406 31,540 35,324 35,856 37,598 41,108 1,196 1,342 1,645 1,648 1,918 1,750 2,000 1,876 2,123 2,132 11 Deposits with foreigners.................................... 669 656 1,063 809 1,028 840 922 879 963 940 12 Foreign government securities, commercial and finance paper.......................................... 289 314 89 277 233 265 356 405 454 370 13 Other claims....................................................... 238 372 493 562 658 645 722 593 707 823 1 Includes claims of U.S. banks on their foreign branches and claims made to, and acceptances made for, foreigners; drafts drawn against of U.S. agencies and branches of foreign banks on their head offices and foreigners, where collection is being made by banks and bankers for foreign branches of their head offices. their own account or for account of their customers in the United States; and foreign currency balances held abroad by banks and bankers and Note.—Short-term claims are principally the following items payable their customers in the United States. Excludes foreign currencies held on demand or with a contractual maturity of not more than 1 year: loans by U.S. monetary authorities. 3.21 LONG-TERM CLAIMS ON FOREIGNERS Reported by Banks in the United States Millions of dollars, end of period 1977 1978 Type, and area or country 1974 1975 1976 July' Aug.' Sept.r Oct.' Nov. Dec.? Jan.p 1Total....................................................................... 7,179 9,536 11,898 12,238 12,453 12,631 12,716 12,338 12,644 12,762 By type: 2 Payable in dollars............................................... 7,099 9,419 11,750 12,037 12,235 12,416 12,486 12,106 12,389 12,522 3 Loans, total..................................................... 6,490 8,316 10,093 10,323 10,504 10,609 10,760 10,421 10,671 10,830 4 Official institutions, including central banks 1,324 1,351 1,407 1,669 1,717 1,761 1,777 1,794 1,918 1,909 5 Banks, excluding central banks................. 929 1,567 2,232 2,226 2,279 2,321 2,419 2,289 2,384 2,423 6 All other, including nonmonetary interna­ tional and regional organizations......... 4,237 5,399 6,454 6,428 6,508 6,527 6,564 6,338 6,368 6,498 7 Other long-term claims..................................... 609 1,103 1,656 1,713 1,731 1,807 1,726 1,685 1,718 1,692 8 Payable in foreign currencies............................. 80 116 148 202 218 216 229 232 254 240 By area or country: 9 Europe................................................................ 1,908 2,704 '3,328 3,682 3,745 3,707 3,664 3,402 3,484 3,439 10 Canada................................................................ 501 555 '637 485 455 456 461 424 434 426 11 Latin America.................................................... 2,614 3,468 '4,856 4,998 5,165 5,381 5,542 5,572 5,776 5,911 12 Asia..................................................................... 1,619 1,795 1,904 1,862 1,846 1,872 1,768 1,742 1,776 1,797 13 Japan............................................................... 258 296 382 391 371 359 339 320 317 337 14 Middle East oil-exporting countries1........... 384 220 146 155 170 161 173 154 181 193 15 Other Asia...................................................... 977 1,279 1,376 1,317 1,305 1,353 1,257 1,268 1,277 1,267 16 Africa.................................................................. 366 747 890 857 898 873 857 850 855 863 17 Oil-exporting countries2................................ 62 151 271 191 219 221 201 176 180 179 18 Other............................................................... 305 596 619 666 679 651 657 674 674 683 19 All other countries3........................................... 171 267 282 353 344 343 423 348 319 327 1 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 □ March 1978 3.22 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1977 Asset account 1974 1975 1976 Dec.r June' July' | Aug.' Sept.' Oct.' Nov. Dec.p All foreign countries 151,905 176,493 219,420 236,480 235,637 234,592 244,955 246,980 249,379 257,488 2 Claims on United States................. 6,900 6,743 7,889 7,398 10,683 8,192 11,914 8,232 9,074 11,730 3 4,464 3,665 4,323 3,610 7,134 4,630 8,231 4,535 5,138 1,111 4 2,435 3,078 3,566 3,788 3,549 3,562 3,683 3,697 3,836 3,953 5 Claims on foreigners........................ 138,712 163,391 204,486 221,667 217,456 218,869 225,123 230,295 231,599 237,127 6 Other branches of parent bank.. 27,559 34,508 45,955 52,406 48,387 48,317 52,071 51,901 54,280 55,189 7 Other banks................................. 60,283 69,206 83,765 86,889 84,364 85,533 87,742 91.867 89,015 92,190 8 Official institutions..................... A,011 5,792 10,613 13,200 13,579 13,829 14,193 14,456 14,854 14,634 9 Nonbank foreigners.................... 46,793 53,886 64,153 69,172 71,126 71,190 71,116 72,071 73,450 75,114 10 Other assets..................................... 6,294 6,359 7,045 7,414 7,497 7,530 7,919 8,453 8,706 8,631 105,969 132,901 167,695 182,386 179,634 179,034 188,160 187,494 188,392 193,789 12 Claims on United States................. 6,603 6,408 7,595 6,984 10,266 7,748 11,434 7,690 8,503 11,156 13 Parent bank................................. 4,428 3,628 4,264 3,590 7,095 4,560 8,177 4,448 5,145 7,664 14 2,175 2,780 3,332 3,393 3,170 3,188 3,257 3,242 3,358 3,492 15 Claims on foreigners....................... 96,209 123,496 156,896 172,011 166,057 167,716 173,191 175,842 175,772 178,633 16 Other branches of parent bank.. 19,688 28,478 37,909 43,952 39,647 39,995 42,983 42,693 44,337 44,677 17 Other banks................................. 45,067 55,319 66,331 68,815 65,875 66,826 68,789 71,591 68,924 71,095 18 Official institutions..................... 3,289 4,864 9,022 11,766 12,118 12,232 12,705 12,779 12,887 12,621 19 Nonbank foreigners.................... 28,164 34,835 43,634 47,478 48,417 48,663 48,714 48,778 49,623 50,240 20 3,157 2,997 3,204 3,391 3,312 3,570 3,535 3,963 4,117 4,000 United Kingdom 21 69,804 74,883 81,466 84,734 83,484 83,270 88,033 90,154 88,748 91,039 22 Claims on United States................. 3,248 2,392 3,354 2,450 3,129 2,307 3,422 2,729 2,955 4,326 23 Parent bank................................. 2,472 1,449 2,376 1,553 2,249 1,397 2,556 1,789 2,123 3,502 24 Other............................................ 116 943 978 897 881 910 866 940 833 823 25 Claims on foreigners...................... 64,111 70,331 75,859 80,087 78,083 78,607 82,154 84,766 83,331 84,137 26 Other branches of parent bank.. 12,724 17,557 19,753 22,121 20,909 20,015 22,363 22,178 21,476 22,138 27 Other banks................................. 32,701 35,904 38,089 39,157 37,772 38,784 39,576 41,923 40,530 39,899 28 Official institutions..................... 788 881 1,274 1,764 1,863 1,983 1,955 2,052 2,145 2,206 29 Nonbank foreigners.................... 17,898 15,990 16,743 17,045 17,538 17,826 18,259 18,613 19,180 19,895 30 Other assets..................................... 2,445 2,159 2,253 2,197 2,272 2,355 2,458 2,659 2,462 2,576 31 Total payable in U.S. dollars............. 49,211 57,361 61,587 64,841 62,815 62,686 66,895 67,243 65,369 66,741 32 Claims on United States................. 3,146 2,273 3,275 2,338 3,011 2,130 3,259 2,545 2,744 4,085 33 Parent bank................................. 2,468 1,445 2,374 1,547 2,237 1,348 2,527 1,748 2,062 3,416 34 Other............................................ 678 828 902 791 774 781 732 797 682 669 35 Claims on foreigners....................... 44,694 54,121 57,488 61,582 58,875 59,419 62,584 63,596 61,587 61,529 36 Other branches of parent bank.. 10,265 15,645 17,249 19,538 18,135 17,550 19,865 19,497 18,539 19,068 37 Other banks................................. 23,716 28,224 28,983 29,930 28,497 29,199 29,808 31,134 29,560 28,530 38 Official institutions..................... 610 648 846 1,437 1,473 1,574 1,555 1,595 1,639 1,669 39 Nonbank foreigners.................... 10,102 9,604 10,410 10,676 10,769 11,095 11,355 11,370 11,849 12,263 40 Other assets.................................... 1,372 967 824 922 930 1,138 1,052 1,103 1,038 1,126 Bahamas and Caymans 41 31,733 45,203 66,774 74,853 74,727 73,284 78,430 IS,961 76,769 79,053 42 Claims on United States................. 2,464 3,229 3,508 3,970 6,447 4,875 7,455 4,687 5,259 5,765 43 Parent bank................................. 1,081 I, All 1,141 1,394 4,062 2,465 4,861 2,104 2,552 3,038 44 Other............................................ 1,383 1,752 2,367 2,576 2,385 2,410 2,595 2,583 2,707 2,728 4 4 5 6 Cla O im th s e r o n b r f a o n re c i h g e n s e o rs f . . p .. a .. r . e .. n .. t . .. b .. a .. n .. k ... . . . 28 3 , , 4 4 5 78 3 4 5 1 , , 4 0 1 4 1 0 62 8 , ,1 0 4 4 4 8 6 9 9 , , 6 5 3 2 8 8 6 7 6 , , 5 9 8 7 6 0 6 8 7 , , 2 1 5 2 9 4 6 9 9 , , 8 6 2 8 8 0 6 9 9 , , 2 6 6 8 6 5 6 1 9 0 , ,6 8 1 3 1 9 7 1 1 1 , , 6 1 7 2 2 0 47 Other banks................................. 11,354 16,298 25,354 '27,374 '25,968 '25,482 '26,368 27,131 25,912 28,248 48 Official institutions..................... 2,022 3,576 r7,105 '8,350 '8,635 '8,599 '9,203 9,207 9,198 9,109 49 Nonbank foreigners.................... 11,599 15,756 r21,445 '24,166 '24,780 *•24,783 '24,281 24,082 24,119 23,195 50 Other assets.................................... 815 933 1,217 1,356 1,309 1,285 1,294 1,589 1,670 1,616 51 Total payable in U.S. dollars............. 28,726 41,887 62,705 '69,920 '69,535 '68,192 '72,932 70,415 71,728 73,988 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overseas Branches A63 3.22 Continued 1977 Liability account 1974 1975 1976 Dec.r Juner July r Aug.r Oct. Nov. Dec.p All foreign countries 52 Total, all currencies.......................... 151,905 176,493 219,420 236,480 235,637 234,592 244,955 246,980 249,379 257,488 20,221 53 To United States........................... 11,982 32,719 37,580 37,713 36,360 40,328 39,965 42,587 44,525 54 Parent bank............................... 5,809 12,165 19,773 23,164 19,670 19,438 20,073 22,747 25,061 24,965 55 Other.......................................... 6,173 8,057 12,946 14,416 18,043 16,922 20,255 17,218 17,526 19,560 56 To foreigners................................. 132,990 149,815 179,954 191,825 189,349 189,743 197,109 198,719 198,821 204,159 57 Other branches of parent bank. 26,941 34,111 44,370 50,291 47,015 47,221 49,933 49,862 51,475 51,971 58 Other banks............................... 65,675 72,259 83,880 84,145 86,786 86,457 91,122 89,540 89,649 93,191 59 Official institutions................... 20,185 22,773 25,829 28,368 27,218 27,776 28,014 29,888 28,667 28,080 60 Nonbank foreigners................. 20,189 20,672 25.877 29,021 28,329 28,289 28,040 29,429 29,030 30,917 61 Other liabilities............................. 6,933 6,456 6,747 7,075 8,575 8,488 7,518 8,296 7,972 8,804 62 Total payable in U.S. dollars........... 107,890 135,907 173,071 187,614 184,689 183,263 192,922 192,706 193,233 198,557 63 To United States.......................... 11,437 19,503 31,932 36,469 36,751 35.482 39,403 38,929 41,491 43,288 64 Parent bank.............................. 5,641 11,939 19,559 22,721 19,396 19,168 19,759 22,439 24,770 24,654 65 Other......................................... 5,795 7,564 12,373 13,748 17,355 16,314 19,644 16,490 16,722 18,633 66 To foreigners............................... 92,503 112,879 137,612 147,349 142,959 142,684 149,440 149,387 147,540 150,450 67 Other branches of parent bank 19,330 28,217 37,098 42,739 38,939 39.483 41,775 41,514 42,656 42,619 68 Other banks............................. 43,656 51,583 60,619 60,188 61,691 61,117 65,545 62,892 62,094 64,708 69 Official institutions................. 17,444 19,982 22.878 25,377 24,240 24,481 24,695 26,366 25,113 23,942 70 Nonbank foreigners................ 12,072 13,097 17,017 19,045 18,088 17,604 17,425 18,615 17,677 19,181 71 Other liabilities........................... 3,951 3,526 3,527 3,796 A,919 5,097 4,079 4,391 4,203 4,819 United Kingdom 72 Total, all currencies.......................... 69,804 74,883 81,466 84,734 83,484 83,270 88,033 90,154 88,748 91,039 73 To United States.......................... 3,978 5,646 5,997 6,894 8,537 7,933 7,922 7,310 7,237 7,806 74 Parent bank.............................. 510 2,122 1,198 2,150 2,217 1,611 1,425 1,364 1,375 1,557 75 Other......................................... 3,468 3,523 4,798 4,743 6,320 6,322 6,496 5,946 5,862 6,249 76 To foreigners................................. 63,409 67,240 73,228 75,683 72,585 72,848 77,580 79,837 79,087 80,387 77 Other branches of parent bank, A,762 6,494 7,092 8,936 7,987 8,395 8,934 9,187 9,491 9,376 78 Other banks.............................. 32,040 32,964 36,259 34,960 34,623 34,163 37,024 36,676 36,974 37,626 79 Official institutions.................. 15,258 16,553 17,273 18,086 17,148 17,366 18,553 .20,366 19,555 18,298 80 Nonbank foreigners................ 11,349 11,229 12,605 13,701 12,827 12,923 13,070 13,608 13,066 15,087 81 Other liabilities........................... 2,418 1,997 2,241 2,157 2,362 2,488 2,532 3,007 2,424 2,846 82 Total payable in U.S. dollars......... 49,666 57,820 63,174 65,735 63,848 63,334 67,689 68,594 66,289 67,679 83 To United States......................... 3,744 5,415 5,849 6,679 8,348 7,676 7,622 7,004 7,012 7,550 84 Parent bank............................. 484 2,083 1,182 2,083 2,184 1,563 1,363 1,288 1,339 1,522 85 Other........................................ 3,261 3,332 4,666 4,596 6,164 6,113 6,259 5,716 5,673 6,028 86 To foreigners............................... 44,594 51,447 56,372 58,136 54,550 54,539 58,962 60,304 58,285 58,720 87 Other branches of parent bank 3,256 5,442 5,874 7,660 6,583 7,131 7,535 7,724 7,871 7,505 88 Other banks............................. 20,526 23,330 25,527 24,135 23,681 23,254 25,984 25,306 24,605 25,434 89 Official institutions................. 13,225 14,498 15,423 16,301 15,295 15,252 16,430 18,053 17,171 15,462 90 Nonbank foreigners................ 7,587 8,176 9,547 10,040 8,990 8,902 9,013 9,221 8,638 10,319 91 Other liabilities........................... 1,328 959 953 920 951 1,119 1,105 1,286 991 1,409 Bahamas and Caymans 92 Total, all currencies. 31,733 45,203 66,774 74,853 74,727 73,284 78,430 75,962 76,769 79,053 9 93 4 To P U ar n e i n te t d b S a t n a k t . e . s . . 2 4 , , 6 8 3 1 6 5 1 7 1 , , 6 1 2 4 8 7 2 1 2 6 , , 7 1 2 61 1 2 1 6 8 , , 9 7 6 05 3 2 1 5 4 , , 0 8 8 35 0 2 1 4 5 , , 4 28 8 8 7 2 1 8 6 , , 7 5 4 2 1 4 2 1 8 8 , , 4 53 4 8 2 3 2 0 0 , , 6 5 4 7 1 2 3 20 2 , , 9 1 2 4 1 0 95 Other............... 2,180 3,520 6,560 8,258 10,245 9,198 12,218 9,905 10,069 11,219 9 97 6 To O fo th re e i r g b n r e a r n s c .. h .. e .. s . .. o .. f . . p .. a .. r .. e . n ... t . . b .. a .. n .. k .. . 2 7 6 , , 7 1 0 4 2 0 3 1 2 0 , , 9 5 4 6 9 9 4 1 2 3 , , 8 80 9 1 9 4 1 6 4 , , 4 6 8 62 0 4 1 7 3 , , 1 7 6 3 3 6 4 1 6 3 , , 4 2 6 06 8 4 1 8 3 , , 3 75 2 8 8 4 1 6 3 , , 0 8 3 44 4 4 1 4 3 , , 5 3 7 0 1 8 4 1 5 2 , , 2 8 9 18 4 98 Other banks............................... 14,050 16,825 21,760 22,696 24,168 23,881 26,931 23,678 23,374 24,717 99 Official institutions................... 2,377 3,308 3,573 4,216 4,322 4,592 3,184 3,357 3,053 3,000 100 Nonbank foreigners.................. 2,011 2,248 3,765 4,906 4,937 4,789 4,455 5,155 4,836 4,759 101 Other liabilities................... 778 1,106 1,154 1,410 2,484 2,330 1,361 1,485 1,557 1,619 102 Total payable in U.S. dollars. 28,840 42,197 63,417 70,787 70,367 68,627 73,733 71,187 72,286 74,464 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics □ March 1978 3.23 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions Millions of dollars 1977 1978 Country or area 1975 1976 1977' July' Aug.' Sept.' Oct.' Nov. Dec.p Jan.p Holdings (end of period) 4 1 7,703 '15,799 38,620 23,432 27,583 31,066 34,324 37,661 38,620 40,101 2 Foreign countries.................................................... 7,372 12,765 33,874 20,847 24,643 27,207 30,323 33,285 33,874 35,648 3 1,085 2,330 13,916 6,225 8,480 10,163 12,603 14,003 13,916 15,044 4 Belgi um-Luxembourg.................................... 13 14 19 19 19 19 20 20 19 19 5 215 764 3,168 1,266 1,847 1,957 2,165 2,742 3,168 3,373 6 16 288 911 503 633 719 821 911 911 930 7 276 191 100 149 155 125 125 100 100 125 8 55 261 All 485 478 488 474 476 477 391 9 United Kingdom............................................ 363 485 8,888 3,478 5,017 6,506 8,640 9,419 8,888 9,839 10 Other Western Europe.................................. 143 323 349 321 326 343 353 331 349 362 11 Eastern Europe.............................................. 4 4 4 4 4 4 4 4 4 4 12 Canada............................................................... 395 256 288 283 288 292 294 293 288 285 13 Latin America.................................................... 200 r 313 551 481 513 516 519 533 551 543 14 4 149 199 193 193 183 183 199 199 201 15 Other Latin America republics..................... 29 r36 17 18 18 18 21 11 17 10 16 Netherlands Antilles 1................................... 161 118 170 113 145 158 158 167 170 162 17 5,370 9,323 18,745 13,566 15,070 15,941 16,611 18,104 18,745 19,413 18 3,271 2,687 6,860 4,314 5,025 5,635 5,958 6,547 6,860 7,463 19 321 543 362 279 279 279 279 348 362 362 20 * * 11 13 12 16 18 5 11 2 21 Nonmonetary international and regional organizations................................................... 331 '3,034 4,746 2,585 2,940 3,859 4,001 4,376 4,746 4,453 22 322 '2,906 4,646 2,440 2,830 3,759 3,900 4,276 4,646 4,358 23 9 128 100 146 110 100 100 100 100 95 Transactions (net purchases, or sales ( during period) 24 Total....................................................................... 1,994 '8,096 22,823 1,238 4,151 3,483 3,257 3,337 959 1,481 25 Foreign countries................................................... 1,814 5,393 21,110 1,108 3,796 2,564 3,116 2,962 589 1,774 26 1,612 5,116 20,328 1,048 3,696 2,493 3,052 2,885 598 1,714 27 202 276 782 59 101 71 65 76 -9 59 28 Nonmonetary international and regional 180 '2,704 1,713 130 354 919 141 376 370 -292 Memo: Oil-exporting countries 29 1,797 3,887 4,451 -14 533 161 284 869 324 56 30 Africa 3............................................................... 170 221 -181 69 13 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 Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 Deposits................................................................. 418 353 352 534 382 425 416 424 422 445 Assets held in custody: 2 U.S. Treasury securities1................................... 55,600 60,019 66,532 75,976 79,285 83,832 89,497 '91,962 95,945 98,465 3 Earmarked gold2............................................... 16,838 16,745 16,414 16,117 16,073 15,988 15,872 15,988 15,726 15,735 1 Marketable U.S. Treasury bills, certificates of indebtedness, notes, Note.—Excludes deposits and U.S. Treasury securities held for inter­ and bonds; and nonmarketable U.S. Treasury securities payable in dollars national and regional organizations. Earmarked gold is gold held for and in foreign currencies. foreign and international accounts and is not included in the gold stock 2 The value of earmarked gold increased because of the changes in of the United States. par value of the U.S. dollar in Miay 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 1978 Transactions, and area or country 1975 1976 r 1977' July' Aug.' Sept.' Oct. Nov. Dec.* Jan.* U.S. corporate securities Stocks 1 15,355 18,227 14,154 1,373 1,023 1,012 973 1,282 1,235 1,003 2 Foreign sales...................................................... 10,678 15,485 11,479 1,163 900 847 752 899 945 878 3 Net purchases, or sales (—)............................... 4,678 2,743 2,676 210 123 165 222 383 290 125 4 Foreign countries................................................ 4,660 2,730 2,661 209 124 170 223 385 286 126 5 Europe............................................................ 2,491 329 1,006 29 37 57 109 200 156 36 6 262 256 40 -24 -13 5 27 1 -3 -12 7 Germany..................................................... 251 68 291 20 -1 14 37 64 58 44 8 Netherlands................................................ 359 -199 22 -10 -2 -18 5 10 9 -5 9 Switzerland.................................................. 899 -100 152 5 -7 6 2 34 -3 -52 10 594 333 613 57 67 80 52 106 109 57 11 Canada............................................................ 361 324 65 12 -5 -3 20 21 14 -14 12 Latin America................................................ -7 152 127 4 1 -3 -4 27 15 -10 13 1,649 1,803 1,389 171 94 108 93 128 100 107 14 Other Asia...................................................... 142 119 59 -7 -3 8 2 8 1 6 15 10 7 5 * 1 2 2 * * * 16 Other countries.............................................. 15 -4 8 * -2 1 2 2 * 1 17 Nonmonetary international and regional organizations............................................... 18 13 15 2 -1 -5 -1 -2 4 -1 Bonds2 18 Foreign purchases.............................................. 5,408 5,529 7,766 752 715 503 942 743 354 453 19 4,642 4,322 3,432 286 252 383 292 226 267 377 20 Net purchases, or sales (—).............................. 766 1,207 4,334 466 463 120 650 517 87 76 21 Foreign countries................................................ 1,795 1,248 4,238 498 438 123 650 507 41 95 22 113 91 2,005 232 130 33 376 320 19 127 23 82 39 -39 1 1 1 * -5 -11 -4 24 Germany..................................................... -6 -49 59 12 1 3 5 4 9 * 25 Netherlands................................................ -9 -29 72 11 * 21 2 20 * 7 26 Switzerland................................................. 117 158 158 34 21 12 -7 -7 -6 -7 27 -52 23 1,702 197 96 6 324 324 28 120 28 Canada............................................................ 128 96 141 30 13 15 4 1 -1 7 29 Latin America................................................ 31 94 64 12 18 13 11 -1 3 11 30 Middle East1.................................................. 1,553 1,179 1,695 153 192 79 124 159 4 -59 31 -35 -165 338 72 84 -14 135 27 16 8 32 Africa.............................................................. 5 -25 -6 * * -3 * ♦ * * 33 Other countries.............................................. 1 -21 * * * * * * * * 34 Nonmonetary international and regional -1,029 -41 96 -32 25 -2 * 10 46 -18 Foreign securities 35 Stocks, net purchases, or sales (—)...................... -188 -323 -404 -265 -63 30 106 34 59 103 1,542 1,937 2,265 159 169 168 247 214 291 255 1,730 2,259 2,669 423 232 138 141 180 232 152 -8,730 -5,005 -204 -1,004 -650 -281 -320 -330 -570 2,383 4,932 8,420 781 847 695 786 593 885 690 40 Foreign sales...................................................... 8,708 13,662 13,424 985 1,851 1,345 1,066 913 1,215 1,260 41 Net purchases, or sales ( —) of stocks and bonds.. -6,514 -9,053 -5,409 -469 -1,067 -620 -175 -285 -271 -467 42 Foreign countries.................................................... -4,323 -7,155 -3,852 -393 -228 -613 -24 -308 -293 -474 43 Europe................................................................ -53 -843 -1,099 -267 -20 -24 -33 -260 108 98 44 Canada............................................................... -3,202 -5,245 -2,402 -241 -255 -573 45 9 -175 -447 45 Latin America.................................................... -306 * -80 52 -7 35 -170 -2 -68 -6 46 Asia..................................................................... -622 -699 -5 57 55 29 136 -57 51 -114 47 Africa.................................................................. 15 48 2 1 -3 1 -2 * 1 -2 48 Other countries.............................................. -155 -416 -267 5 1 -81 1 2 -210 -3 49 Nonmonetary international and regional organizations................................................... -2,192 -1,898 -1,557 -76 -839 -6 -151 23 22 7 1 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

A66 International Statistics □ March 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. Dec. Mar. June Sept.P Sept. Dec. Mar. June Sept.P Liabilities to foreigners Claims on foreigners 1 Total....................................................................... 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 1,113 1,047 4 Deposits with banks abroad in reporter’s 592 442 431 448 414 473 557 585 665 632 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 7 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 9 183 166 168 138 119 195 162 170 218 230 10 13 7 15 14 16 26 56 48 40 44 11 17 2 2 10 10 135 77 40 90 59 12 185 200 163 157 170 418 438 436 413 435 13 256 174 175 163 226 492 378 367 377 393 14 Greece............................................................. 28 48 80 73 78 56 51 90 86 53 15 148 131 135 154 139 358 384 473 440 352 16 141 141 168 205 176 142 166 172 182 161 17 24 29 37 33 36 43 51 42 42 38 18 5 13 23 20 12 28 40 35 30 34 19 36 40 52 68 74 336 369 325 322 309 20 35 34 36 36 41 62 90 93 92 91 21 243 190 214 236 245 253 241 154 179 146 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 28 341 400 427 448 454 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 75 72 85 35 Cuba............................................................... * * * * * 1 1 1 1 * 36 Mexico............................................................ 74 99 118 117 102 352 332 317 301 304 37 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 s 6 5 5 40 Venezuela........................................................ 222 219 260 208 225 212 190 210 240 256 41 Other Latin American republics................... 104 141 148 141 122 182 276 237 237 257 42 Netherlands Antilles 1................................... 68 10 11 17 9 9 9 14 8 8 43 Other Latin America..................................... 129 100 160 151 154 444 441 914 1,146 984 44 Asia..................................................................... 1,978 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).... 1 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 11 23 39 41 44 53 55 35 51 42 49 131 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 44 45 30 72 105 10 11 12 11 10 59 South Africa................................................... 66 54 33 27 29 78 87 80 69 75 60 24 36 39 39 48 28 21 19 17 19 61 Other Africa................................................... 279 444 460 418 341 255 247 248 248 221 62 69 77 72 98 111 178 170 150 149 153 63 51 59 53 78 93 112 105 114 110 113 64 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 i Includes Surinam until 1976. mercial concerns and other nonbanking institutions in the United States. Data exclude claims held through U.S. banks and intercompany accounts Note.—Reported by exporters, importers, and industrial and com- between U.S. companies and their affiliates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-reported Data A67 3.27 SHORT-TERM CLAIMS ON FOREIGNERS Reported by Large Nonbanking Concerns in the United States Millions of dollars, end of period 1977 Type and country 1973 1974 1975 1976 July Aug. Sept. Oct. Nov. Dec.p 1 Total....................................................................... 3,185 3,357 3,799 5,468 7,444 7,735 6,859 7,623 7,587 6,709 By type: 2 Payable in dollars................................................... 2,641 2,660 3,042 4,788 6,689 6,999 6,163 6,900 6,671 5,778 3 Deposits.......................................................... 2,604 2,591 2,710 4,415 6,246 6,475 5,721 6,396 6,196 5,346 37 69 332 373 443 524 442 504 475 432 5 Payable in foreign currencies................................ 544 697 757 680 754 737 695 722 917 931 6 Deposits.......................................................... 431 429 511 373 396 394 35 8 374 482 521 7 Short-term investments 1............................... 113 268 246 302 358 343 337 348 435 410 By country: 8 United Kingdom................................................ 1,128 1,350 1,306 1,837 2,170 2,194 1,781 1,858 2,097 1,977 9 Canada................................................................ 775 967 1,156 1,539 1,720 1,930 1,607 1,936 1,831 1,705 10 Bahamas............................................................. 597 391 546 1,264 2,157 2,220 1,765 2,361 2,117 1,755 11 Japan................................................................... 336 398 343 113 144 134 143 150 218 136 12 All other............................................................. 349 252 446 715 1,253 1,257 1,563 1,318 1,324 1,136 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. Mar. June | Sept.33 Sept. Dec. Mar. June Sept.33 Liabilities to foreigners Claims on foreigners 1Total....................................................................... 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 1.............................................................. 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

A68 International Statistics □ March 1978 3.29 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Per cent per annum Rate on Feb. 28, 1978 Rate on Feb. 28, 1978 Rate on Feb. 28, 1978 Country Country Country Per Month Per Month Per Month cent effective cent effective cent effective Argentina........................ 18.0 Feb. 1972 9.5 Aug. 1977 7.0 Feb. 1978 Austria............................. 5.5 June 1977 Germany, Fed. Rep. of. 3.0 Dec. 1977 7.5 Feb. 1978 Belgium........................... 6.5 Feb. 1978 11.5 Aug. 1977 1.0 Feb. 1978 Brazil............................... 28.0 May 1976 4.25 Sept. 1977 United Kingdom.......... 6.5 Jan. 1978 Canada............................ 7.5 May 1977 Mexico........................... 4.5 June 1942 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 Country, or type 1975 1976 1977 Sept. Oct. Nov. Dec. Jan. Feb. 1 Euro-dollars.......................................................... 7.02 5.58 6.03 6.56 7.14 7.09 7.12 7.32 7.34 2 United Kingdom.................................................. 10.63 11.35 8.07 6.03 5.05 5.32 6.76 6.23 6.99 3 Canada.................................................................. 8.00 9.39 7.47 7.31 7.23 7.34 7.20 7.08 7.18 4 Germany............................................................... 4.87 4.19 4.30 4.07 4.06 4.09 3.94 3.52 3.45 5 Switzerland............................................................ 3.01 1.45 2.56 2.37 2.23 2.32 2.20 .92 .20 6 Netherlands........................................................... 5.17 7.02 4.73 4.39 4.55 5.94 6.65 5.01 5.55 7 France................................................................... 7.91 8.65 9.20 8.38 8.41 9.28 9.88 9.25 10.78 8 Italy....................................................................... 10.37 16.32 14.26 12.42 12.05 11.74 11.38 10.99 0) 9 Belgium................................................................. 6.63 10.25 6.95 6.20 6.25 6.38 7.75 8.29 7.50 10 Japan..................................................................... 11.64 7.70 6.22 5.32 5.25 5.37 5.75 5.33 5.25 1 Unquoted. over; and Japan, loans and discounts that can be called after being held Note.—Rates are for 3-month interbank loans except for—Canada, over a minimum of two month-ends. finance company paper; Belgium, time deposits of 20 million francs and 3.31 FOREIGN EXCHANGE RATES Cents per unit of foreign currency 1977 1978 Country/currency 1975 1976 1977 Sept. Oct. Nov. Dec. Jan. Feb. 1 Australia/dollar.................. 130.77 122.15 110.82 110.37 111.90 112.70 113.36 113.82 113.56 2 Austria/shilling................... 5.7467 5.5744 6.0494 6.0377 6.1567 5.2551 6.4734 6.5698 6.6893 3 Belgium/franc..................... 2.7253 2.5921 2.7911 2.7910 2.8229 2.8396 2.9608 3.0425 3.0930 4 Canada/dollar..................... 98.30 101.41 94.112 93.168 91.010 90.145 91.132 90.810 89.850 5 Denmark/krone.................. 17.437 16.546 16.658 16.188 16.359 16.327 16.833 17.324 17.610 6 Finland/markka................. 27.285 25.938 24.913 23.977 24.139 23.986 24.299 24.816 24.527 7 France/franc....................... 23.354 20.942 20.344 20.314 20.574 20.614 20.844 21.196 20.628 8 Germany/deutsche mark... 40.729 39.737 43.079 43.034 43.904 44.633 46.499 47.220 48.142 9 India/rupee......................... 11.926 11.148 11.406 11.450 11.605 11.576 11.712 12.195 12.331 10 Ireland/pound..................... 222.16 180.48 174.49 174.31 177.11 181.78 185.46 193.53 193.96 11 Italy/lira.............................. .15328 .12044 .11328 .11318 .11353 .11388 .11416 .11469 .11619 12 Japan/yen........................... .33705 .33741 .37342 .37486 .39263 .40872 .41491 .41481 .41603 13 Malaysia/ringgit................. 41.753 39.340 40.620 40.600 41.088 41.910 42.201 42.230 42.374 14 Mexico/peso....................... 8.0000 6.9161 4.4239 4.3776 4.4069 4.4096 4.4059 4.3963 4.3972 15 Netherlands/guilder............ 39.632 37.846 40.752 40.604 41.048 41.366 42.955 44.084 44.880 16 New Zealand/dollar........... 121.16 99.115 96.893 96.812 98.152 99.392 100.59 101.95 102.07 17 Norway/krone.................... 19.180 18.327 18.789 18.226 18.232 18.328 19.056 19.401 19.025 18 Portugal/escudo................. 3.9286 3.3159 2.6234 2.4606 2.4601 2.4575 2.4755 2.4840 2.4806 19 South Africa/rand.............. 136.47 114.85 114.99 115.00 115.04 115.04 115.04 115.02 115.05 20 Spain/peseta ...................... 1.7424 1.4958 1.3287 1.1824 1.1902 1.2060 1.2237 1.2397 1.2394 21 Sri Lanka/rupee................. 14.385 11.908 11.964 12.301 11.618 8.7721 6.2000 6.2167 6.4028 22 Sweden/krona..................... 24.141 22.957 22.383 20.602 20.846 20.848 21.044 21.413 21.554 23 Switzerland/franc............... 38.743 40.013 41.714 42.115 43.909 45.507 48.168 50.353 52.422 24 United Kingdom/pound... 222.16 180.48 174.49 174.31 177.11 181.78 185.46 193.53 193.96 Memo: 25 United States/dollar 1....,. 82.20 89.68 89.10 89.52 88.38 87.29 85.52 84.05 83.74 1 Index of weighted-average exchange value of U S. dollar against cur- Note.—Averages of certified noon buying rates in New York for cable rencies of other G-10 countries plus Switzerland. May 1970 parities = 100. transfers. Weights are 1972 global trade of each of the 10 countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Business Finance A69 4.10 SALES, REVENUE, PROFITS, AND DIVIDENDS—Large Manufacturing Corporations Millions of dollars 1975 1976 1977 Industry 1976 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 Total (170 corps.) 1 Sales................................................................ 667,821 148,008 154,650 159,311 166,452 161,596 180,462 177,430 190,302 180,384 ?, Total revenue.................................................. 676,596 149,841 157,203 161,461 168,958 164,631 181,546 179,496 >■192,996 182,488 3 Profits before taxes........................................ 71,885 15,507 17,049 17,502 18,902 16,894 18,587 r18,874 *•21,468 18,136 4 Profits after taxes........................................... 34,707 7,102 7,657 8,621 9,532 8,442 8,113 9,056 10,472 9,327 5 Memo: PAT unadj.1................................. 36,016 7,054 8,471 8,636 9,490 8,550 9,340 9,107 10,553 8,656 6 14,491 3,076 3,214 3,191 3,449 3,480 4,371 3,840 4,269 3,985 Nondurable goods industries (86 corps.):2 7 362,935 82,361 84,822 86,927 87,404 88,678 99,926 95,836 101,035 97,144 8 Total revenue.................................................. 368,184 83,595 86,351 88,179 88,864 90,967 100,174 96,948 102,807 98,232 9 42,694 10,924 10,614 10,674 10,595 10,632 10,793 11,074 12,064 11,185 10 Profits after taxes........................................... 18,571 4,441 4,357 4,809 4,833 4,871 4,058 4,837 5,160 5,134 11 Memo: PAT unadj.1................................. 19,468 4,439 4,808 4,829 4,809 4,962 4,868 4,880 5,224 5,234 12 7,910 1,803 1,826 1,879 1,947 1,990 2,094 2,185 2,227 2,268 Durable goods industries (84 corps.):3 13 304,886 65,647 69,828 72,384 79,048 72,918 80,536 81,594 89,267 83,240 14 308,412 66,246 70,852 73,282 80,094 73,664 81,372 82,548 *•90,189 84,256 15 29,191 4,583 6,435 6,828 8,307 6,262 7,794 r7,800 *■9,404 6,951 16 Profits after taxes........................................... 16,136 2,661 3,300 3,812 4,699 3,571 4,055 4,219 5,312 4,193 17 Memo: PAT unadj.1................................. 16,548 2,615 3,663 3,807 4,681 3,588 4,472 4,227 5,329 3,422 18 6,577 1,273 1,388 1,308 1,502 1,490 2,277 1,655 2,042 1,717 Selected industries: Food and kindred products (28 corps.): 19 62,568 14,600 14,942 14,762 15,057 16,048 16,701 15,903 16,776 16,947 20 63,142 14,844 15,248 14,993 15,395 16,221 16,533 16,155 17,136 17,239 21 Profits before taxes........................................ 5,750 1,385 1,384 1,471 1,507 1,462 1,310 1,448 1,560 1,526 22 Profits after taxes........................................... 2,890 '/19 668 665 778 817 630 739 825 826 23 Memo: PAT unadj.1................................. 3,013 745 715 667 785 827 734 746 835 836 24 1,259 274 287 307 325 309 318 342 352 364 Chemical and allied products (22 corps.): 25 Sales................................................................ 64,125 14,660 15,128 15,756 16,081 15,878 16,410 17,103 17,347 17,586 26 64,837 14,791 15,326 15,899 16,242 16,084 16,612 17,271 17,526 17,743 27 8,197 1,858 1,955 2,179 2,117 2,008 1,893 2.112 2,290 2,062 28 Profits after taxes........................................... 4,511 1,035 993 1,244 1,208 1,130 929 1)192 1,288 1,184 29 Memo: PAT unadj.1................................. 4,622 1,028 1,123 1,225 1,153 1,163 1,081 1,181 1,289 1,178 30 1,918 429 439 444 445 481 548 514 539 553 Petroleum refining (15 corps.): 31 196,154 43,873 45,442 46,656 46,065 46,923 56,510 52,344 55,903 51,593 32 199,688 44.633 46,331 47,407 46,888 48,744 56,649 52,891 57,096 52,130 33 Profits before taxes........................................ 25,857 6,961 6,505 6,254 6,210 6,559 6,834 6,746 7,396 6,808 34 Profits after taxes........................................... 9,555 2,300 2,268 2,481 2,383 2,606 2,085 2,498 2,655 2,684 35 Memo: PAT unadj.1................................. 10,168 2,268 2,533 2,512 2,404 2,635 2,617 2,546 2,708 2,756 36 4,089 949 949 971 1,017 1,036 1,065 1,163 1,160 1,166 Primary metals and products (23 corps.): 37 54,044 12,274 11,429 12,733 14,441 13,751 13,119 13,773 15,573 14,454 38 54,825 12,479 11,669 12,904 14,650 13,958 13,313 13,963 *■15,769 14,636 39 Profits before taxes........................................ 2,834 487 708 633 924 701 576 r460 c100 239 40 Profits after taxes........................................... 1,652 396 315 409 603 513 127 260 536 493 41 Memo: PAT unadj.1................................. 1,947 381 498 416 610 521 400 274 553 287 42 926 216 229 218 227 230 251 234 246 266 Machinery (27 corps.): 43 Sales................................................................ 87,274 19,786 21,041 20,455 21.627 21,133 24,059 22,727 24,380 24,317 44 Total revenue.................................................. 88,519 19,977 21,358 20,707 22,072 21,280 24,460 23,051 24,702 24,767 45 Profits before taxes........................................ 11,320 2,233 2,640 2,469 2,781 2,700 3,370 2,900 3,318 3,264 46 Profits after taxes........................................... 6,181 1,232 1,433 1,355 1,528 1,461 1,837 1,573 1,805 1,771 47 Memo: PAT unadj.1................................. 6,202 1,239 1,490 1,354 1,517 1,467 1,864 1,571 1,804 1,782 48 2,383 523 532 537 581 602 663 712 767 702 Motor vehicles and equipment (9 corps.): 49 Sales................................................................ 107,563 21,005 23,717 26.395 28,710 24,250 28,208 31,069 33,502 28,835 50 Total revenue.................................................. 108,394 21,083 24.040 26,702 28,942 24,500 28,250 31,350 33,716 29,104 51 Profits before taxes........................................ 8,909 590 11731 2,494 3,056 1,272 2,087 2,988 3,489 1,575 52 Profits after taxes........................................... 4,870 328 819 1,331 1,668 705 1,166 1,599 1,914 892 53 Memo: PAT unadj.1................................. 4,918 280 881 1,337 1,658 704 1,219 1,603 1,926 898 54 2,062 274 277 285 422 372 983 392 698 413 1 Profits after taxes unadjusted are as reported by the individual com­ of returns, allowances, and discounts, and exclude excise taxes paid di­ panies. These data are not adjusted to eliminate differences in accounting rectly by the company. Total revenue data include, in addition to sales, treatments of special charges, credits, and other nonoperating items. income from nonmanufacturing operations and nonoperating income. 2 Includes 21 corporations in groups not shown separately. Profits are before dividend payments and have been adjusted to exclude 3 Includes 25 corporations in groups not shown separately. special charges and credits to surplus reserves and extraordinary items not related primarily to the current reporting period. Income taxes (not Note.—Data are obtained from published reports of companies and shown) include Federal, State and local government, and foreign. reports made to the Securities and Exchange Commission. Sales are net Previous series last published in June 1972 Bulletin, p. A-50. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Board of Governors G. W illiam M iller, Chairman A rthur F. Burns Stephen S. G ardner, Vice Chairman H enry C. W allich 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. Stockwell, Senior Research Division Officer James R. Wetzel, Senior Research Division Officer Robert A. Eisenbeis, Associate Research Division OFFICE OF THE SECRETARY Officer Theodore E. Allison, Secretary Ja O re ff d ic e J. r Enzler, Associate Research Division Griffith L. Garwood, Deputy Secretary J. Cortland G. Peret, Associate Research *Cathy E. Minehan, Assistant Secretary Division Officer Richard H. Puckett, Associate Research Division Officer DIVISION OF CONSUMER AFFAIRS fHELMUT F. Wendel, Associate Research Division Officer Janet O. Hart, Director Nathaniel E. Butler, Associate Director James M. Brundy, Assistant Research Division Officer Jerauld C. Kluckman, Associate Director Robert M. Fisher, Assistant Research Division Officer DIVISION OF BANKING Stephen P. Taylor, Assistant Research Division Officer SUPERVISION AND REGULATION Levon H. Garabedian, Assistant Director John E. Ryan, Director *Frederick C. Schadrack, Deputy Director DIVISION OF INTERNATIONAL FINANCE Frederick R. Dahl, Associate Director William W. Wiles, Associate Director Edwin M. Truman, Director Jack M. Egertson, Assistant Director John E. Reynolds, Counselor Don E. Kline, Assistant Director Robert F. Gemmill, Associate Director Thomas E. Mead, Assistant Director George B. Henry, Associate Director Robert S. Plotkin, Assistant Director Charles J. Siegman, Associate Director Thomas A. Sidman, Assistant Director Samuel Pizer, Senior International Division Samuel H. Talley, Assistant Director Officer William Taylor, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 and Official Staff Philip E. Coldwell J. Charles Partee Philip C. Jackson, Jr. 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 K akalec, 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 ll FOMC and Advisory Councils FEDERAL OPEN MARKET COMMITTEE G. W illiam M iller, Chairman P aul A. V olcker, Vice Chairman Ernest T. Baughman Stephen S. Gardner Henry C. Wallich Arthur F. Burns Philip C. Jackson, Jr. Mark H. Willes Philip E. C old w ell J. C harles Partee W illis J. W inn David P. Eastburn A rthur L. Broida, Secretary Richard G. Davis, Associate Economist M urray A ltm ann, Deputy Secretary Edw ard C. E ttin, Associate Economist Norm and R. V. Bernard, Assistant Secretary Ira Kam inow, Associate Economist Thomas J. O’C onnell, General Counsel Peter M. K eir, Associate Economist Edward G. Guy, Deputy General Counsel James L. K ichline, Associate Economist Robert E. M annion, Assistant General Counsel John Paulus, Associate Economist Stephen H. A xilrod, Economist John E. R eynolds, Associate Economist Joseph Burns, Associate Economist Edwin M. Truman, Associate Economist John M. Davis, Associate Economist Joseph S. Z eisel, Associate Economist A lan R. H olm es, Manager, System Open Market Account P eter D. Sternlight, Deputy Manager for Domestic Operations S cott E. Pardee, Deputy Manager for Foreign Operations FEDERAL ADVISORY COUNCIL G ilbert F. B radley, tw e lfth fed eral reserve district, President J. W. M cLean, ten th fed eral reserve district, Vice President H enry S. W oodbridge, first district Frank A. Plum m er, sixth district Walter B. Wriston, second district Edward Byron Smith, seventh district Samuel H. Ballam, Jr., third district Clarence C. Barksdale, eighth district M. Brock Weir, fourth district Richard H. Vaughan, ninth district John H. Lumpkin, fifth district James D. Berry, eleven th district H erbert V. Prochnow, Secretary W illiam J. Korsvik, Associate Secretary CONSUMER ADVISORY COUNCIL Leonor K. Su llivan, St. Louis, Missouri, Chairman W illiam D. W arren, Los Angeles, California, Vice Chairman R oland E. B randel, San Francisco, California Robert J. K lein, New York, New York Agnes H. B ryant, Detroit, Michigan Percy W. Loy, Portland, Oregon John G. B u ll, Fort Lauderdale, Florida R. C. M organ, El Paso, Texas Robert V. B ullock, Frankfort, Kentucky Reece A. O vercash, 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. B lair C. Shick, Cambridge, Massachusetts C arl F elsen feld , New York, New York James E. Sutton, Dallas, Texas Jean A. Fox, Pittsburgh, Pennsylvania Thomas R. Sw an, Portland, Maine Richard H. H olton, Berkeley, California Anne Gary T aylor, Alexandria, Virginia Edna DeCoursey Johnson, Baltimore, Maryland Richard D. W agner, Simsbury, Connecticut Richard F. K err, Cincinnati, Ohio Richard L. W heatley, Jr., Stillwater, Oklahoma Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK, Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* ................. 02106 Louis W. Cabot Frank E. Morris Robert M. Solow James A. McIntosh NEW YORK* 10045 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 William A. Fickling, Jr. 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 G. Larry Kelley John F. Breen Louisville ............... 40201 James H. Davis Donald L. Henry Memphis ................. 38101 Jeanne L. Holley 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. 2055J. 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 Report of the Joint Treasury-Federal Reserve each. Elsewhere, $24.00 per year or $2.50 each. Study of the U.S. Government Securities Banking and Monetary Statistics, 1914-1941. Market. 1969. 48 pp. $.25 each; 10 or more to (Reprint of Part 1 only) 1976. 682 pp. $5.00. one address, $.20 each. Banking and Monetary Statistics, 1941-1970. 1976. 1,168 pp. $15.00. Joint Treasury-Federal Reserve Study of the 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 Reserve 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 Proce­ tion 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 Con­ issue. $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 sions, Canada, and Mexico; 10 or more of same Federal Reserve Staff Study: Ways to Moderate issue to one address, $13.50 per year or $.35 each. Fluctuations in Housing Construction. 1972. Elsewhere, $20.00 per year or $.50 each. 487 pp. $4.00 each; 10 or more to one address, $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. Credit Rights in Housing Yields on Newly Issued Corporate Bonds. 9/72. The Equal Credit Opportunity Act and . . . Recent Activities of Foreign Branches of U.S. Doctors, Lawyers, Small Retailers, and Banks. 10/72. Others Who May Provide Incidental Credit Revision of Consumer Credit Statistics. 10/72. The Equal Credit Opportunity Act and . One-Bank Holding Companies Before the 1970 Women Amendments. 12/72. Fair Credit Billing Yields on Recently Offered Corporate Bonds. If You Borrow To Buy Stock 5/73. U.S. Currency Credit-Card and Check-Credit Plans at Commer­ What Truth in Lending Means to You 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. J C a r n e . d 1 i 9 t 7 8 S . c 2 o 8 r p in p g . Models, by Robert A. Eisenbeis. 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

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

Federal Reserve Bulletin □ March 1978 A77 HOUSING, new and existing units, 50 REAL estate loans: Banks, by classes, 18, 20-23, 29, 41 INCOME, personal and national, 46, 52, 53 Life insurance companies, 29 Industrial production, 46, 48 Mortgage terms, yields, and activity, 3, 40 Instalment loans, 42, 43 Type of holder and property mortgaged, 41 Insurance companies, 29, 32, 33, 41 Reserve position, basic, member banks, 6 Insured commercial banks, 17, 18, 19 Reserve requirements, member banks, 9 Interbank deposits, 16, 17, 20, 21, 22 Reserves: Interest rates: Commercial banks, 16, 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 markets, 3, 27 Retail credit and retail sales, 42, 43, 46 Mortgages, 3, 40 Prime rate, commercial banks, 26 SALES, revenue, profits, and dividends of large Time and savings deposits, maximum rates, 10 manufacturing corporations, 69 International capital transactions of the United Saving: States, 56-67 Flow of funds, 44, 45 International organizations, 56-61, 64-67 National income accounts, 53 Inventories, 52 Savings and loan assns., 3, 10, 29, 33, 41, 44 Investment companies, issues and assets, 37 Savings deposits (See Time deposits) Investments (See also specific types of investments): Savings institutions, selected assets, 29 Banks, by classes, 16, 17, 18, 20, 21, 22, 29 Securities (S^ also U.S. Govt, securities): Commercial banks, 3, 15, 16, 17, 18 Federal and Federally sponsored agencies, 35 Federal Reserve Banks, 12, 13 Foreign transactions, 65 Life insurance companies, 29 New issues, 36, 37 Savings and loan assns., 29 Prices, 28 Special Drawing Rights, 4, 12, 54, 55 LABOR force, 47 State and local govts.: Life insurance companies (See Insurance Deposits, 19, 20, 21, 22 companies) Holdings of U.S. Govt, securities, 32, 33 Loans (See also specific types of loans): New security issues, 36 Banks, by classes, 16, 17, 18, 20-23, 29 Ownership of securities of, 18, 20, 21, 22, 29 Commercial banks, 3, 15-18, 20-23, 24, 26 Yields of securities, 3 Federal Reserve Banks, 3, 4, 5, 8, 12, 13> State member banks, 17 Insurance companies, 29, 41 Stock market, 28 Insured or guaranteed by U.S., 40, 41 Stocks also Securities); Savings and loan assns., 29 New issues, 36, 37 Prices, 28 MANUFACTURING: Capacity utilization, 46 TAX receipts, Federal, 31 Production, 46, 49 Time deposits, 3, 10, 13, 15, 16, 17, 19, 20, 21. Margin requirements, 10 22, 23 Member banks: Trade, foreign, 55 Assets and liabilities, by classes, 16, 17, 18 Treasury currency, Treasury cash, 4 Borrowings at Federal Reserve Banks, 5, 12 Treasury deposits, 4, 12, 30 Number, by classes, 16, 17, 19 Treasury operating balance, 30 Reserve position, basic, 6 Reserve requirements, 9 UNEMPLOYMENT, 47 Reserves and related items, 3, 4, 5, 15 U.S. balance of payments, 54 Mining production, 49 U.S. Govt, balances: Mobile home shipments, 50 Commercial bank holdings, 19, 20, 21, 22 Monetary aggregates, 3,15 Member bank holdings, 15 Money and capital market rates (See Interest Treasury deposits at Reserve Banks, 4, 12, 30 rates) U.S. Govt, securities: Money stock measures and components, 3, 14 Bank holdings, 16, 17, 18, 20, 21, 22, 29, Mortgages Real estate loans) 32, 33 Mutual funds (See Investment companies) Dealer transactions, positions, and financing, 34 Mutual savings banks, 3, 10, 20-22, 29, 32, 33, 41 Federal Reserve Bank holdings, 4, 12, 13, 32, 33 Foreign and international holdings and NATIONAL banks, 17, 19 transactions, 12, 32, 64 National defense outlays, 31 Open market transactions, 11 National income, 52 Outstanding, by type of security, 32, 33 Nonmember banks, 17, 18, 19 Ownership, 32, 33 Rates in money and capital markets, 3, 27 OPEN market transactions, 11 Yields, 3 Utilities, production, 49 PERSONAL income, 53 Prices: VETERANS Administration, 40, 41 Consumer and wholesale, 46, 51 Stock market, 28 WEEKLY reporting banks, 20-24 Prime rate, commercial banks, 26 Wholesale prices, 46 Production, 46, 48 Profits, corporate, 38, 69 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 The Federal Reserve System B o u n d a ries o f F ed eral R e serv e D istricts an d T h e ir B ra n c h T errito ries February 1978 —— Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities ------ Boundaries of Federal Reserve Branch • Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Guide to Tabular Presentation and Statistical Releases GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations p Preliminary SMSA’s Standard metropolitan statistical areas r Revised REIT’s Real estate investment trusts rp Revised preliminary * Amounts insignificant in terms of the partic­ e Estimated ular unit (e.g., less than 500,000 when c Corrected the unit is millions) n.e.c. Not elsewhere classified (1) Zero, (2) no figure to be expected, or Rp’s Repurchase agreements (3) figure delayed or, (4) no change (when IPC’s Individuals, partnerships, and corporations figures are expected in percentages). General Information Minus signs are used to indicate (1) a decrease, (2) obligations of the Treasury. “State and local govt.” a negative figure, or (3) an outflow. also includes municipalities, special districts, and other “U.S. Govt, securities” may include guaranteed political subdivisions. issues of U.S. Govt, agencies (the flow of funds figures In some of the tables details do not add to totals also include not fully guaranteed issues) as well as direct because of rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for individual releases .................................................. December 1977 A-76 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis