bulletin · May 31, 1978

Federal Reserve Bulletin, 1978-06

JUNE 1978 FEDERAL RESERVE BULLETIN R ecent D evelopm ents in C orporate F inance Insured C om m ercial B ank Incom e in 1977 F oreign E xchange O perations: Interim R eport 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 banks desiring additional copies may secure them at a special $10.00 annual rate. The regular subscription price in the United States and its possessions, and in Bolivia, Canada, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, Guatemala, Haiti, Republic of Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, El Salvador, Uruguay, and Venezuela is $20.00 per annum or $2.00 per copy; elsewhere, $24.00 per annum or $2.50 per copy. Group subscriptions in the United States for 10 or more copies to one address, $1.75 per copy per month, or $18.00 for 12 months. The Bulletin may be obtained from the Division of Administrative Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551, and remittance should be made payable to the order of the Board of Governors of the Federal Reserve System in a form collectible at par in U.S. currency. (Stamps and coupons are not accepted.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NUMBER 6 □ VOLUME 64 □ JUNE 1978 FEDERAL RESERVE B o a rd o f G o v e rn o rs o f th e F e d e ra l R e se rv e S y ste m W a sh in g to n , D .C . PU BLICA TION S COM M ITTEE ’ ■ r'-» * * " ‘ " Joseph R. Coyne, Chairman e Stephen H. Axilrod □ John M. Denkler Janet O. Hart ° James L. Kichline □ Neal L. Petersen □ 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 Mendelle T. Berenson. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 431 Recent Developments in Corporate sylvania have collaborated since 1971, Finance before the Committee on Banking, Hous ing and Urban Affairs, U.S. Senate, May External financing by the Nation’s busi 22, 1978. ness firms increased sharply in 1977 as the expansion in economic activity continued 459 Chairman G. William Miller and Gover into its third year. nor Coldwell testify before the Committee on Banking, Housing and Urban Affairs, 441 Insured Commercial Bank Income in U.S. Senate, May 25, 1978, on the con 1977 dition of the U.S. banking system includ ing several fundamental changes taking Profits of insured commercial banks were place in the banking environment, the marginally higher than in 1976 but re Board’s current assessment of the condi mained below pre-1975 levels when tion of the banking system, and recent measured as returns either on assets or on trends in the principal indexes of bank equity. soundness. 448 Treasury and Federal Reserve 465 Record of Policy Actions of the Operations: Interim Report Federal Open M arket Committee This report describes the steps taken by At the meeting on April 18, 1978, the the Federal Reserve’s trading desk to Committee decided to retain the existing counter the disorderly conditions in longer-run ranges for the monetary aggre foreign exchange markets. gates. Thus, the ranges for the period from the first quarter of 1978 to the first quarter 453 Statements to Congress of 1979 were 4 to 6^ per cent for M-l, Governor Philip E. Coldwell presents the 6V2 to 9 per cent for M-2, and IV2 to 10 views of the Board on H.R. 12444, a bill per cent for M-3. The associated range for to change the size, weight, and design of growth in commercial bank credit was set the $1 coin, before the Subcommittee on at IV2 to WV2 per cent. Historic Preservation and Coinage of the For the period immediately ahead, the Committee on Banking, Finance and Committee decided that growth in M-l Urban Affairs, U.S House of Repre and M-2 over the April-May period at sentatives, May 17, 1978. The Federal annual rates within ranges of 4 to SV2 per Reserve believes that a new $1 coin should cent and 5V2 to 9xh per cent, respectively, be issued if it will result in a reduced would be appropriate. In the judgment of demand for the $1 note. the Committee such growth rates were likely to be associated with a weekly- 454 Governor Henry C. Wallich gives his per average Federal funds rate slightly above sonal views on the subject of tax-based the current level of 6% per cent. The incomes policies (TIP), particularly the members agreed that if growth rates of the approach on which he and Professor Sid aggregates over the 2-month period ap ney Weintraub of the University of Penn peared to be deviating significantly from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

the midpoints of the indicated ranges, the The Board has made the following pro operational objective for the weekly- posals: An interpretation of Regulation Z average Federal funds rate should be mod that would facilitate the computation of the ified in an orderly fashion within a range annual percentage rate for graduated pay of 63A to 7V2 per cent. It was also agreed, ment mortgages; authorization under Reg however, that an increase in the rate above ulation Y for bank holding companies to IV4 per cent would not be sought until the act as general insurance agents in towns Committee had had an opportunity for of less than 5,000 population; and a policy further consultation. statement on tax transactions between Subsequent to the regular meeting on State member banks and their parent May 5, 1978, the Committee directed the holding companies. Manager, until further instructed, to seek Changes in Board staff. to maintain the weekly-average Federal funds.rate at about IV4 per cent, with any Publication of Annual Report for 1977. deviations tending to be in the direction Ruling under Regulation Q permitting of higher rather than lower funds rates. member banks to pay up to 8 per cent interest on IRA and Keogh Plan accounts. 479 Law Department Two State banks were admitted to mem Amendments to Regulations Q, Z, G, T, bership in the Federal Reserve System. and U; supplement to Regulation Z; various rules and bank holding company 520 Industrial Production and bank merger orders; and pending cases. Output increased an estimated 0.6 per cent in May. 515 Announcements Al Financial and Business Statistics The three bank regulatory agencies have made available data from a survey on A3 Domestic Financial Statistics foreign lending by large U.S. banks as of A46 Domestic Nonfinancial Statistics December 31, 1977. A54 International Statistics Combined assets of the 730 overseas branches of member banks increased more A69 Guide to Tabular Presentation than 17 per cent during 1977. and Statistical Releases Amendment to Regulation Z requiring A70 Board of Governors and Staff certain lenders to retain for more than 2 A72 Open Market Committee and years all records of credit transactions in Staff; Advisory Councils their possession. A73 Federal Reserve Banks, Approval of actions reducing the burden Branches, and Offices on commercial banks of statistical report ing to the Board. A74 Federal Reserve Board Publications Revisions in data series on loans and in vestments at all commercial banks. A79 Index to Statistical Tables Consumer Advisory Council meeting. A81 Map of Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Corporate Finance This article was prepared by Frederick O. many of which had been able to obtain long Yohn, Jr., of the Capital Markets Section of term credit during 1975-76 only at relatively the Division of Research and Statistics. unattractive interest rates. The weather- and strike-related disruption of External financing by the Nation’s business economic activity during the first quarter of firms increased sharply in 1977 as the economic 1978 was accompanied by a drop in after-tax expansion continued into its third year. Cor operating profits of nonfinancial corporations. porations helped to sustain the advance in eco The resulting decline in internal cash flows nomic activity during 1977 by increasing their caused firms to seek an increased amount of expenditures for fixed investment and invento external funds to finance planned investment ries. Because capital spending grew more rap outlays and other current expenditures. As in idly than the flow of internal funds, the external 1977, a large proportion of funds raised early financing requirements of nonfarm nonfinancial in 1978 came from shorter-term sources, espe corporations increased, and the amount of net cially bank loans. Simultaneously, many firms funds raised by these firms in domestic credit reduced their acquisition of liquid assets. The and equity markets reached a record high when early-1978 pressures on internal cash flows ap measured in current dollars. pear to have been largely temporary, and pre Both the larger total of funds raised and the liminary data for the second quarter indicate a marked increase in short- and intermediate-term rebound in economic activity that should bolster credit contrasted with the pattern of corporate corporate earnings. Nevertheless, total external external financing during 1975 and 1976, a financing requirements are likely to remain period during which many companies had em heavy throughout 1978, with capital expendi phasized restructuring of their balance sheets. tures expected to continue rising faster than the The greater reliance on shorter-term funds in flow of internal funds. 1977, together with only a modest increase in liquid asset holdings, resulted in moderate dete rioration of the aggregate liquidity position of CAPITAL EXPENDITURES nonfinancial corporations, as measured by the ratio of liquid assets to current liabilities. Also, As the expansion of economic activity moved 1977 brought a marked reversal of the trend into its third year, aggregate spending on busi toward the lengthening of the over-all corporate ness fixed investment increased from the slug debt structure that had characterized the gish pace that had marked the earlier stages of 1975-76 period. the recovery. At the same time, businesses Even with heavy borrowing in short-term continued to add to their inventories, although markets in 1977, corporations continued to raise in a cautious manner, as they attempted to sizable amounts of long-term funds. During the maintain balance with movements in sales. earlier part of the cyclical recovery and expan Business fixed investment, the major compo sion, issues of large, highly rated firms had nent of capital expenditures by nonfinancial dominated bond offerings of nonfinancial cor corporations, absorbed a record amount of cor porations. In contrast, much of the increase in porate funds during 1977 when measured in long-term debt outstanding in 1977 was attrib current dollars, up 23 per cent from the preced utable to bond issues by lower-rated companies, ing year. Outlays for plant and equipment in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

432 Federal Reserve Bulletin □ June 1978 Capital expenditures of nonfinancial corporations of the previous year, much of the large increase in 1976 had been due to the swing from sub stantial net liquidation of inventories in 1975 to moderate accumulation in 1976. Reflecting 160 the more cautious attitudes developed earlier in the recovery, inventory investment in 1977 in 120 creased only slightly over the 1976 level. The quarterly pattern of inventory investment 80 was far from smooth in 1977. Following sizable increases during the first two quarters at rates 40 well above the average for 1976, inventory + accumulation by nonfinancial corporations as a 0 group made a strong advance during the third quarter of 1977; it then slowed sharply in the 1970 1972 1974 1976 78 fourth quarter as the pace of final sales picked up and production grew only moderately. Un Business fixed investment includes plant and equipment expenditures and investment in residential construction. Capital derlying this pattern was the rebuilding of in expenditures include business fixed investment, change in ventories in the nondurable goods manufac inventories, and purchases of mineral rights from the U.S. Government. turing sector during the first two quarters of Flow of funds quarterly data, seasonally adjusted at annual 1977 and the fairly steady inventory accumula rates. 1978 Ql preliminary. tion by durable goods producers throughout the terms of constant dollars were well above their year. Inventory investment by the trade sector 1976 level and registered their strongest advance continued at generally high levels. of the current expansion. However, cumulative Inventory to sales ratios in most sectors re gains in real business fixed investment continued mained below historical averages throughout to lag behind gains recorded during previous 1977 as businesses attempted to avoid inventory postwar recoveries, and at the end of 1977 the imbalances. These ratios were especially low at level of such investment was still 3 per cent year-end 1977, reflecting the increase in final below its earlier peak. sales during the fourth quarter of 1977 and the Much of the strength in fixed investment slowdown in inventory accumulation. In the spending during 1977 was attributable to unu first quarter of 1978, inventory investment resually heavy purchases of shorter-lived invest ment goods. The sharpest advance in current- Financing gap of nonfinancial corporations dollar outlays occurred during the first half of 1977, and it was further bolstered by increased purchases of motor vehicles by businesses in the aftermath of the auto strike in late 1976. As was true during the previous 4 years, the growth of outlays was largest in the manufac turing sector, with investment by producers of durable goods particularly robust. Although spending for new equipment has been the pri mary source of strength for capital outlays throughout most of the current expansion, com mercial and industrial construction picked up last year following 2 years of little change. Total capital expenditures by nonfinancial corporations—the sum of inventory and fixed Financing gap is capital expenditures less gross internal investment—increased 21 per cent in 1977. funds. Flow of funds quarterly data, seasonally adjusted at annual While this rate of growth was less than half that rates. 1978 Ql preliminary. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Corporate Finance 433 1. Flow of funds for nonfinancial corporations Billions of dollars 1978 Category 1973 1974 1975 1976 1977 Q Ip SOURCES OF FUNPS Internal funds........................................................... 83.8 75.7 107.8 125.8 135.9 127.8 Retained earnings 1............................................ 15.7 -4.3 11.5 19.8 20.5 4.9 Capital consumption allowances2................... 68.1 80.0 96.3 106.0 115.4 122.9 External financing................................................... 72.7 81.8 36.6 58.3 83.4 94.2 Other sources Accrued tax liabilities....................................... 2.3 i.o- -3.2 6.8 —3.6 0 Miscellaneous liabilities..................................... 1.9 3.7 1.4 2.2 1.5 .8 Total................................................................... 160.7 162.2 142.6 193.1 217.2 222.8 USES OF FUNDS Capital expenditures............................................... 123.3 134.7 98.6 140.3 170.3 179.6 Business fixed investment3................................ 106.8 115.2 109.3 122.6 150.6 162.0 Inventories............................................................ 13.3 12.9 -12.1 13.8 17.2 16.4 Other4................................................................... 3.2 6.5 1.3 4.0 2.5 1.2 Increases in liquid assets........................................ 6.7 2.1 17.8 19.6 7.7 5.7 Net trade credit....................................................... 5.4 4.4 .1 6.7 7.6 7.3 Other uses5............................................................... 7.3 3.9 9.3 10.2 10.9 11.9 Total................................................................... 142.7 145.1 126.4 176.8 196.5 204.5 Discrepancy6.................................................... 18.0 17.1 16.2 16.3 20.7 18.3 1 Includes foreign branch profits and adjustments for inventory 5 Includes miscellaneous financial assets and increases in consumer valuation and capital consumption allowance. credit. 2 Includes capital consumption adjustment. 6 Total sources of funds less total uses of funds. 3 Includes plant and equipment expenditures, and investment in p Preliminary. residential structures. Note.—Data from Federal Reserve flow of funds accounts. Quar 4 Includes purchases of mineral rights from U.S. Government. terly data are seasonally adjusted at annual rates. bounded in many business sectors despite nonfinancial corporations to other sectors in weather- and strike-related disruptions of eco creased substantially. Also, in contrast with nomic activity and the attendant slowdown in 1976, profit tax payments of these corporations final sales. Reflecting movements in both in considerably exceeded their accrued tax liabili ventories and sales, the constant-dollar inven ties, thus absorbing additional funds. tory to sales ratio for all businesses rose appre ciably in the first quarter of 1978 from its low at year-end 1977. CORPORATE PROFITS AND Total capital expenditures in current dollars INTERNAL SOURCES OF FUNDS exceeded gross internal funds by $34 billion in 1977, a $20 billion widening of the financing The internally generated funds of nonfinancial gap compared with 1976. Even though the 1977 corporations rose further during 1977, though financing gap was much smaller than the at a much slower rate than during the first 2 recession-induced $59 billion shortfall of 1974, years of the current economic recovery. More it contrasted sharply with the cash-flow surplus moderate growth in corporate profits, following of the recovery period in early 1975, when a strong rebound in 1976 from the recession-incorporations greatly reduced capital expendi duced slump in profits in 1975, was primarily tures and used much of the increasing flow of responsible for the slower expansion in internal internal funds to restructure their balance funds. After payment of taxes and dividends, sheets—adding to holdings of liquid assets and undistributed profits of corporations in 1977 repaying short-term debt. were only slightly above their 1976 level; thus Along with the widened financing gap, the most of the 8 per cent increase in total internal continued expansion of economic activity funds reflected steady growth in capital con placed other financial demands on business sumption allowances rather than an increase in firms during 1977. Net trade credit extended by retained earnings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

434 Federal Reserve Bulletin □ June 1978 2. Sources of internal funds for nonfinancial corporate business Billions of dollars Item 1973 1974 1975 1966 1977 1978 Ql* Profits before tax1.............................................................................. 95.7 107.5 104.8 134.1 146.8 142.7 39.4 42.5 40.5 53.4 56.7 52.4 Profits after tax................................................................................. 56.3 65.0 64.3 80.7 90.1 90.3 Plus inventory valuation adjustment.......................................... —18.6 -40.4 -12.0 —14.1 -14.6 -24.6 Plus capital consumption adjustment......................................... 1.8 — 3.0 -11.9 -14.6 -17.0 -20.1 39.5 21.6 40.4 52.0 58.5 45.6 23.8 25.9 28.8 32.2 38.0 40.7 Adjusted retained earnings............................................................... 15.7 -4.3 11.6 19.8 20.5 4.9 68.1 80.0 96.3 106.0 115.4 122.9 Gross internal funds............................................................................ 83.8 75.7 107.8 125.8 135.9 127.8 1 Includes foreign branch profits. Note.—Data from Federal Reserve flow of funds accounts. Quar- 2 Includes capital consumption adjustment. terly data are seasonally adjusted at annual rates. p Preliminary. The slower expansion of book profits in 1977 meeting the higher replacement costs of inven was attributable largely to pressure from rising tories and fixed assets—that is, after-tax profits unit labor costs. Profit margins—as measured with inventory valuation and capital consump by the ratio of after-tax book profits to sales— tion adjustments—remained near the 65 per cent changed little in 1977, whereas earlier in the level of the preceding 2 years. In particular, economic expansion they had increased sharply. inventory profits, as measured by the inventory For example, the over-all profit margin for valuation adjustment, were relatively stable manufacturing corporations—which, as a during 1975-77 at a level that was high by group, accounted for more than half of all historical standards but sharply lower than that nonfinancial corporate profits last year—showed in 1974. Beyond the relatively conservative no sustained increase between mid-1976 and the inventory policies of businesses and changes in end of 1977. In contrast, profit margins for their accounting techniques, this stability re manufacturing firms had improved substantially flected the more moderate rate of inflation after during the first year and a half of the recovery. 1974. For example, the wholesale price index Profit margins typically level off after the for all commodities registered annual increases early stages of economic recovery, as produc of 4 to 6 per cent in 1975-77 after having risen tivity gains slow and unit labor costs begin to 21 per cent in 1974. However, during the first rise more rapidly. During 1977, hourly com After tax profit margins of all pensation in the nonfarm business sector con manufacturing corporations tinued to rise at an 8% per cent rate, while Per cent productivity gains slowed to little more than 2 per cent, roughly half the rate of the previous year. The slowing of growth in productivity resulted in an acceleration in the growth rate of unit labor costs from AV2 per cent in 1976 to almost 6V2 per cent in 1977. With prices moving up somewhat less than unit costs, busi 2 nesses relied on growth in sales to expand their profits. Accompanying a 10V2 per cent increase in final sales, before-tax book profits on nonfi 1974 1975 1976 1977 ° nancial corporations rose 9V2 per cent; after taxes, book profits were up slightly more than Profit margins are the ratio of after-tax profits to sales for all manufacturing corporations. Federal Trade Commission 1 1 per cent. quarterly data seasonally adjusted by Bureau of Economic The proportion of corporate after-tax book Analysis as published in Business Conditions Digest. Annual profit margins, as indicated by the black outline, are derived profits available in 1977 for purposes other than from annual FTC data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Corporate Finance 435 quarter of 1978, inventory profits increased Profits of nonfinancial corporations sharply, owing in large part to a surge in food prices. The capital consumption adjustment—an es timate of the change in depreciation allowances that would result if they were computed on a uniform basis and measured at current rather than historical costs—has risen steadily since 1972, reaching $17 billion in 1977. The gradual uptrend in this figure reflects the cumulative nature of the depreciation adjustment, which depends on past as well as current prices of 1970________1972________1974 1976 78 long-lived capital goods and on expansion of Profits, before and after tax, include foreign branch profits. the capital stock. After-tax profits are before-tax profits less corporate tax accru als. Adjusted after-tax profits include inventory valuation and After-tax profits of all nonfinancial corpora capital consumption adjustments. Flow of funds quarterly data, tions rose $6.5 billion in 1977 after inventory seasonally adjusted at annual rates. 1978 Ql preliminary. valuation and capital consumption adjustments. An increase in net dividend payments of almost Profits data for other metal producers indicate $6 billion absorbed most of this rise in profits. varying performances in 1977, depending pri In light of the strong expansion in profits during marily on particular product demands. Copper the previous 2 years and the normal lag of and zinc producers, which have suffered for dividends behind earnings, the rise in the share quite some time from large worldwide stock of corporate income paid out in dividends in piles of materials and from lagging demand, 1977 is not surprising. In addition, dividend continued to experience weak earnings in 1977. payments may have been influenced by the But reasonably good gains for the year were heightened emphasis on current return that was reported by major aluminum producers. evidenced by the relative performance of equity Manufacturers of durable goods outside the prices in the stock markets during 1977. primary metals industries generally experienced Comparisons among industries reveal pro improved earnings in 1977. Spurred by strong nounced exceptions to the over-all behavior of sales of cars and trucks and continued wide profits and profit margins in 1977. The most profit margins, earnings of the cyclically sensi notable example is the steel industry, where tive automotive industry posted a second year before-tax earnings declined precipitously in the of strong expansion. And improved profit mar face of competition from foreign imports. Low gins contributed to substantial growth in profits rates of capacity utilization and rising labor among producers of electrical equipment, ma costs contributed to a sharp boost in the in chinery, and fabricated metals. Manufacturers dustry’s unit production costs, which—because of nondurable goods, especially the paper, pe of foreign competition—could not be passed on troleum and coal, food, and chemicals produc in higher prices. Early in 1978 the U.S. Gov ers, did not do so well; most of these industries ernment instituted a reference-pricing system in had lower profit margins during 1977 than a year an attempt to protect domestic production from earlier and relied on expanding sales for moder the “dumping” of imported goods in U.S. ate growth in earnings. markets—that is, selling at prices that do not fully reflect production costs. This action should allow domestic steel producers to expand sales EXTERNAL FINANCING and to pass on more of their cost increases through higher prices, thereby improving their With internal funds meeting a smaller propor earnings position for 1978. First-quarter earn tion of rising total financing needs, nonfinancial ings, however, were depressed by the long coal corporations relied much more heavily on ex strike and bad weather. ternal sources of funds in 1977. Moreover, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

436 Federal Reserve Bulletin □ June 1978 3. External financing of nonfinancial corporations Billions of dollars 1977 1978 1973 1974 1975 1976 1977 Ql Q2 Q3 Q4 Q1p 72.7 81.8 36.6 58.3 83.4 81.2 73.3 75.5 103.4 94.2 7.9 4.1 9.9 10.5 3.7 3.4 1.7 4.4 5.4 -1.7 11.0 21.3 29.8 25.3 24.5 18.8 15.3 30.4 33.5 14.6 Mortgages...................................................................... 18.2 13.7 9.6 12.8 21.0 16.0 21.8 20.3 26.1 20.2 29.3 29.9 -12.4 1.6 20.7 30.0 17.3 16.9 18.7 47.3 Commercial paper and acceptances............... 1.9 5.4 -2.7 2.7 2.7 3.4 5.8 -1.0 2.6 4.8 Other—Including finance company loans2. 4.4 7.3 2.4 5.4 10.8 9.9 11.6 4.5 17.1 9.0 1 Includes tax-exempt industrial-pollution-control revenue bonds. Note.—Data from Federal Reserve flow of funds accounts. Quar- 2 Also includes U.S. Government loans. terly data are seasonally adjusted at annual rates. p Preliminary. following 2 years in which many firms had term loans—that is, loans with initial maturities focused on rebuilding liquidity and lengthening longer than 1 year. Term loans at these banks the maturity structures of their financial liabili had declined substantially in 1976, as loans ties, financing operations during 1977 were re were repaid from the proceeds of long-term lated more directly to investment and to the need securities issues. for working capital. This was particularly evi A rapid expansion of finance company loans dent in the strong growth of short- and interme- to businesses accompanied the growth in bank diate-term financing. Of the $83 billion raised loans during 1977, extending the trend of the by nonfinancial corporations in financial markets previous year. Since 1975, finance companies during 1977, slightly more than 40 per cent, have accounted for an increasing share of total or $34 billion, was in the form of loans from short- and intermediate-term borrowings of banks or finance companies or of sales of com nonfinancial corporations, with strong growth mercial paper. in wholesale and retail automotive loans and in The expansion in business borrowings at equipment loans. Such loans, which accounted banks that had begun late in 1976 strengthened for about 80 per cent of the total growth in in 1977 as capital expenditures, including in business borrowing at finance companies in ventory investment, picked up and began to rise 1977, reflected primarily the unusually large more rapidly than internal funds of corporations. purchases of cars and trucks by businesses and Initially, the increase in bank borrowing was the build-up in inventories at automobile and greatest at banks outside the money market truck dealers. In addition, many business pur centers; but as the year progressed, loan’growth chases of durable equipment over the past 2 accelerated at money center banks, which are years have consisted of the shorter-lived, major lenders of short-term funds to very large smaller items for which finance companies are corporations. Total business borrowings at important lenders. banks continued to expand rapidly through 1977 Nonfinancial commercial paper, which nor and were very heavy in the first quarter of 1978. mally is used by a relatively small number of Data from a sample of large banks indicate that highly rated firms for short-term financing most domestic commercial and industrial sectors needs, grew at a moderate pace in 1977. Utili were participating, with credit demands espe ties were the heaviest issuers, accounting for cially strong among the manufacturing, trade, most of the net increase in outstanding paper construction, and service industries; growth in for the year as a whole. Much of the issuance borrowings was somewhat weaker in the trans of commercial paper by utilities occurred late portation, communications, and utilities groups. in the year, when cash flows apparently were In addition, as data from the same sample of inadequate to provide the temporary financing large banks indicate, a significant share of the needed to build up coal inventories in antici loans extended to firms since late 1977 has been pation of a strike. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Corporate Finance 437 4. Gross offerings of corporate bonds Billions of dollars 1976 1977 1978 Type of offering 1973 1974 1975 1976 1977 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql* Total....................................................... 21*2 32.1 42.8 42.4 42.2 10.3 11.0 9.5 11.6 10.0 10.6 9.7 11.9 8.2 13.2 25.9 32.6 26.5 24.2 7.6 7.4 4.9 6.6 6.5 5.6 6.2 5.9 4.7 Manufacturing and other indus- 2.4 10.1 18.3 11.7 8.5 4.0 2.7 2.0 3.0 2.4 1.4 2.7 1.5 1.5 Public utilities................................ 7.9 11.4 10.4 8.2 8.2 1.9 2.3 1.8 2.3 2.2 2.3 1.7 1.9 1.5 2.9 4.4 3.9 6.6 7.5 1.7 2.4 1.1 1.3 1.9 1.9 1.8 2.5 1.7 Privately placed.................................... 8.0 <5.2 10.2 15.9 18.0 2.7 3.6 4.6 5.0 3.5 5.0 3.5 6.0 3.5 Manufacturing and other indus- 4.6 4.1 5.6 9.3 12.2 1.5 2.3 2.5 3.0 2.3 3.0 2.6 4.3 2.3 1.9 1.3 3.3 4.4 3.4 .8 1.0 1.6 1.0 .7 1.4 .4 .9 .3 1.5 .8 1.3 2.2 2.4 .4 .3 .5 1.0 .5 .6 .5 .8 .9 1 Includes equipment trust certificates. Note.—Data from Securities and Exchange Commission. Quarterly 2 Bond offerings include mortgage-backed bonds but do not include figures are not seasonally adjusted and are at quarterly rates. passthroughs. * Preliminary. As the pace of short-term business borrowing year, as evidenced by the continued growth in accelerated in 1977, net bond and equity fi privately placed bond issues. nancing by U.S. corporations declined from the Typically, 90 per cent or more of privately record volumes of 1975-76, and it has contin placed corporate bonds are issued by firms with ued at a reduced pace in early 1978. The reduc lower-than-prime ratings, mostly manufacturing tion in issuance of long-term debt has been and other industrial concerns. The heavy vol primarily concentrated in public bond issues by ume of private placements in 1977 suggests that industrial corporations with relatively high rat many such firms probably were slower in re ings. After a lengthy period of restructuring, building liquidity than highly rated corporations many of these firms apparently had improved and may have taken advantage of improved their balance sheets enough to curtail their reli market conditions for further restructuring of ance on long-term sources of funds. In contrast, balance sheets as well as for meeting investment many smaller, lower-rated corporations in needs. The increasing receptivity of market in creased their issuance of long-term debt last vestors to lower-rated issues since 1975 is evi Interest rates Long-term interest rates: Moody’s Investors Service, Short term: Monthly averages of business days. Dealer monthly average bond yields for seasoned Baa and Aaa cor offering rate on 4-6 month, highest-quality commercial paper. porate issues. Rate spread is Moody’s Baa issues minus Aaa Prime rate on business loans charged by majority of commer issues. cial banks. Spread is bank prime less commercial paper. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

438 Federal Reserve Bulletin □ June 1978 denced by a number of developments. Life Corporate stock price movements insurance companies, the principal lenders in Dec. 1974=100 private bond placements, have markedly ex panded their investments in lower-rated cor 180 porate issues. In both the private and the public bond markets, lower-rated borrowers benefited 160 from the general decline in corporate security yields through most of 1977 and from the re duction in risk premiums on lower-rated obliga 140 tions. The spread between seasoned publicly traded Baa and Aaa corporate bonds, for ex 120 ample, fell steadily during 1977—down to 80 basis points late in the year, which was more than 120 basis points below the unusually wide spread of early 1975. Bond yields generally declined through the The Dow Jones industrial average, NYSE composite index, first three quarters of the year. But late in the and Standard & Poor’s utilities index are monthly averages normalized to equal 100 in December 1974. year long-term rates moved up, responding in part to earlier increases in short-term rates and to market expectations that future credit de Equity financing in 1977 was carried out mands might be greater than had been antici during a period of generally declining stock pated previously. Evidence of accelerating in prices. The broadly based New York Stock flation helped to push yields on long-term se Exchange composite index, for example, fell by curities even higher in the early months of 1978. more than 9 per cent in 1977. The shares of This rise in bond rates may have temporarily large, heavily capitalized industrial firms suf discouraged some nonfinancial corporate bor fered even greater erosion of market value, as rowers from entering into long-term borrowing reflected by a 17 per cent decline in the Dow arrangements, further slowing the pace of new Jones industrial average during the same period. bond offerings, both public and private, in the The generally lower level of share prices first quarter and contributing to the greater cor discouraged stock issuance, and net equity porate demand for bank loans. issues by nonfinancial corporations in 1977 fell The moderate pace of bond financing in 1977 below the moderate levels of 1975-76. In 1977, was accompanied by a marked increase in as in other recent years, public utilities ac mortgage borrowing by nonfarm nonfinancial counted for the larger part of gross offerings corporations. Such borrowing is estimated to of common and preferred stocks. Share prices have accounted for more than one-fourth of the for the common stock of utilities outperformed net funds raised in markets by these companies those for major industrial stocks; but the con and apparently was related to stronger activity tinued large volume of issues of utility stocks in commercial and industrial construction, as was more likely attributable to constraints on well as to the sale and refinancing of existing debt-equity structures embedded in the terms commercial structures at greatly increased mar of existing debt indentures of many utilities and ket values. About half of these commercial to their need to maintain or improve the credit mortgage funds, part of which were actually ratings of their bond issues. construction loans, were supplied by banks. Life The poor performance of the stock market insurance companies, as well as thrift institu also contributed to an increase in stock retire tions, acquired an increased amount of com ments during 1977. Many corporations, stimu mercial mortgages last year. Moreover, contin lated in part by low market prices for their stock ued strength in business mortgages was pre relative to book value, repurchased outstanding saged by a record level of outstanding mortgage equity during the past year. In some cases such commitments at a sample of life insurance repurchases were undertaken by highly liquid companies at year-end 1977. firms that feared a takeover by other corpora Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Corporate Finance 439 tions seeking to expand or to improve their cash Liquidity measures for nonfinancial corporations positions. Such fears seemed justified in light of the accelerated pace of mergers and acquisitions in 1976 and 1977. Many firms apparently found it more advantageous to expand through the purchase of existing assets than to undertake new investment. A combination of factors—low stock prices for seemingly sound firms, uncer tain returns associated with new capital projects, and the availability of substantial investment funds from large corporations—contributed to the resurgence of merger activity. Since a large Liquid assets include currency, demand and time deposits, volume of such mergers and acquisitions was U.S. Government securities, State and local obligations, and open market paper. Short-term debt consists of short-term bank financed through cash payments and, to a lesser loans, commercial paper, bankers acceptances, finance com extent, through the exchange of debt for equity, pany loans, U.S. Government loans, and construction loans. Total current liabilities include short-term debt plus trade debt the increase in this activity served to reduce and profit taxes payable. substantially the net new equity issues of non Flow of funds quarterly data seasonally adjusted. 1978 Ql preliminary. financial corporations last year. The continuing c high level of merger activity and of stock re tirements in 1978 is reflected in the net reduction had fallen below 32 per cent and was only of outstanding equity of nonfinancial corpora slightly higher than at the end of 1975. tions in the first quarter of 1978. Associated with the continued expansion of economic activity, substantial increases in the trade debt of nonfinancial corporations ac counted for half of the near-record $48 billion CORPORATE LIQUIDITY increase in current liabilities during 1977; much Nonfinancial corporations made relatively small of the remainder reflected greater short-term additions to their holdings of liquid assets during borrowings from banks and finance companies. 1977, in sharp contrast with their rapid accu The strong growth of these other current liabili mulation of financial assets during the previous ties in 1977 was partially offset by a decline 2 years. The acquisition of large amounts of in accrued profit-tax liabilities from a relatively liquid assets was characteristic of corporate fi high level in 1976. nancial behavior during this post-recession pe The large increase in the current liabilities of riod and figured importantly in the restructuring nonfinancial corporations was accompanied by of balance sheets undertaken by many corpora a rise in the ratio of short-term to total credit tions. Much of the attention that corporations market debt for these concerns in 1977. The have paid to financial structure has been in increase in this ratio indicated some deterio reaction to the extremely tight liquidity positions ration in the maturity structure of corporate and attendant financial strains experienced dur credit market debt and represented a reversal ing the 1973-75 recession. of the movement toward longer maturity struc Between the end of 1974 and the end of 1976, tures that had begun after corporate financial the ratio of liquid assets to current liabilities for imbalances were revealed during the 1974 re nonfinancial corporations—an aggregate meas cession. While the shortening of debt structures ure of liquidity positions—rose fairly steadily reflected in part the greater willingness of many to 33 per cent from an historical low of 27 per firms to assume additional short-term debt, the cent at the recession trough. However, during aggregate ratio of short-term to total credit mar 1977 the rapid growth of current liabilities, ket debt in 1977 remained below the peak of coupled with only moderate increases in liquid late 1974. asset holdings, caused this liquidity measure to Underlying the deterioration in aggregate decline appreciably. By year-end 1977 this ratio measures of corporate liquidity were varying Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

440 Federal Reserve Bulletin □ June 1978 degrees of change in the liquidity positions of term borrowings and reduced their acquisitions certain industries. For example, according to of liquid assets. These actions led to additional data compiled by the Federal Trade Commis deterioration in their liquidity ratios and, with sion, the ratio of liquid assets to current liabili the concurrent reduction in bond issuance, fur ties for nondurable goods manufacturing firms ther shortened the maturity structure of their as a whole declined significantly during 1977 debt. from its relatively high level at year-end 1976, On balance, however, the aggregate liquidity whereas the liquidity ratio for the durable goods position of nonfinancial corporations at the end manufacturing industry declined little on of the first quarter of 1978 remained signifi average from its 1976 level. These data also cantly above the recession-induced low of late indicate a slight further decline in the liquidity 1974—at a level near that prevailing in the early position of the wholesale-trade sector during 1970’s. Moreover, corporate profits are ex 1977. In contrast, the retail-trade sector in 1977 pected to rebound from their first-quarter slump. experienced little deterioration on average in its The resulting improvement in cash flows during liquidity ratio from the high level of 1976. the remainder of the year should facilitate fi As internal cash flows decreased in the early nancing of anticipated capital expenditures months of 1978, nonfinancial corporations sub without serious deterioration of corporate finan stantially increased short- and intermediate- cial positions. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

441 Insured Commercial Bank Income in 1977 Net income of insured commercial banks in 1. Income and expenses of all insured creased during 1977 by $1 billion to $8.9 bil commercial banks lion. This 13 per cent change in profits was As per cent of average assets1 slightly above the average rate of growth from 1969 through 1976. Profit rates, while margin Item 1974 1975 1976 1977 ally higher than in 1976, nevertheless remained Gross interest earned2............ 6.19 5.45 6.38 6.46 below their pre-1975 levels whether measured Gross interest expense............ 3.55 2.85 3.47 3.54 Net interest margin............. 2.64 2.60 2.91 2.92 as returns on assets or on equity. Noninterest income2............... .70 .81 .72 .71 Loan loss provision................. .23 .33 .32 .26 In general, the sharp rise in short-term market Other noninterest expense... 2.17 2.23 2.44 2.45 yields during 1977 resulted in virtually equal Income before tax............... .94 .85 .88 .92 .21 .17 .21 .23 increases in gross interest income and expenses. Other 4.............................. -.01 .01 .03 .01 Thus, there was a negligible change in aggregate Net income........................... .72 .69 .70 .71 Cash dividends declared. .28 .29 .27 .26 net interest margins—the difference between Net retained earnings............. .44 .40 .43 .45 interest earned on portfolios and interest paid Memo Items: for funds. The most important source of profit Taxable equivalent net in terest margin5.............. 3.06 3.02 3.32 3.32 strength relative to 1976 was a substantial im Average net assets, billions of dollars....................... 985 1,059 1,131 1,257 provement in the credit quality of loan portfolios as measured by loan-loss provisions. 1 Average of beginning and end-of-year fully consolidated assets net of loan-loss reserves. Industry performance results, which are sum 2 Beginning in 1976, interest on balances with banks was reported separately; prior to that it was an undefined component of other non marized in Table 1, reflect the weight of the interest income. In 1976, it amounted to .39 per cent of average assets. 3 Includes all taxes estimated to be due on income, on extraordinary largest banks. Income in 1977 at those institu gains, and on securities gains. 4 Includes securities and extraordinary gains or losses (—) gross of tions was held back by relatively weak loan taxes. 5 For each bank with profits before tax of at least $25,000, income demand from their large corporate customers. from State and local obligations was increased by the lesser of that interest income or profits before tax, but by no less than zero. For Intermediate-sized banks, those with assets be banks with profits before tax between zero and $25,000, one-third of the lesser of profits or State and local interest income was added. tween $100 million and $1 billion, experienced Note.—Shaded area reflects domestic operations only. See footnote to Appendix Table 1 regarding important definitional changes that the strongest income gains during 1977. At occurred in 1976. those banks, widened net interest margins, sup ported by strong loan demand as well as a est income increased both because of some reduction in loan-loss provisions, brought profit portfolio shifting away from generally lowerrates up by 9 per cent from 1976. yielding securities into loans and also because of a sharp rise in effective interest rates on loan portfolios. Gross interest expense increased by virtually the same amount, however, as the NET INTEREST MARGINS proportion of assets funded by interest-bearing For the commercial banking industry as a liabilities was higher, on average over the year, whole, the aggregate net interest margin than in the preceding year. changed imperceptibly from 1976. Gross inter- Gross Interest Income Note.—This article was prepared by Barbara N. Higher rates of return on loans combined with Opper of the Board’s Division of Research and Statis a portfolio shift away from securities led to an tics. Peter Lloyd-Davies prepared the Technical Note, and Nancy Pittman developed the data base. improvement in gross interest income during Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

442 Federal Reserve Bulletin □ June 1978 2. Rates of return on fully consolidated portfolios ability of banks during 1977 implied greater of all insured commercial banks1 value to the tax preference feature of those securities. Without adjusting for taxable equiv Per cent alence the average yield on State and local Item 1976 1977 obligations fell 7 basis points. There was little difference in the term structure of securities held Securities—Total........................................ 6.26 6.22 U.S. Treasury.......................................... 6.98 6.86 at the beginning and end of 1977, so returns U.S. Government agencies and corporations.................................... 7.41 7.30 were not likely to have been affected by maturity State and local........................................ 5.15 5.08 Other......................................................... 7.68 8.92 changes during the year. Loans—Gross.............................................. 8.89 9.15 Net of loan-loss provisions................... 8.24 8.63 Loan portfolio yields increased substantially 8.15 8.35 Taxable equivalent:2 during 1977. At small banks loan portfolio Total securities........................................ 8.43 8.43 State and local........................................ 10.11 10.18 returns increased more than 30 basis points. These banks have loans that tend to have fixed 1 Calculated as described in the Technical Note. rates and intermediate or longer maturities, and 2 See footnote 5 to Table 1. given strong loan growth, average returns on 1977. Table 2 presents averages of effective loans have tended to increase annually during rates of return on consolidated portfolios during the 1970’s regardless of short-term swings in 1976 and 1977.1 interest rates. Major money center banks expe The over-all return on investment securities rienced a smaller increase in loan yields during fell slightly, but on a taxable equivalent basis 1977—about half that of the small banks— it was unchanged.2 Rates of return on obliga despite a substantial increase in the prime rate tions of the U.S. Treasury and Government over the course of the year.3 agencies averaged more than 10 basis points The net return on loan portfolios increased below their 1976 levels. The taxable equivalent substantially, reflecting the improvement in loan average yield on State and local obligations credit quality from the weakness that had per increased but only because the improved profit sisted since 1973. That rate of return, computed by netting loan-loss provisions from the gross 1 See the Technical Note (p. 447) for a description interest earned on loans, rose nearly 40 basis of the method of calculating annual effective rates. points. The largest increase—almost 50 basis Discussion of specific income and expense items is confined to the years 1976 and 1977 because of prob lems of comparability with earlier years; the Note to the appendix tables (p. 446) describes the definitional 3 The money center group consists of 13 of the changes that occurred in 1976. biggest banks, which tend to have a very large portion 2 Footnote 5 to Table 1 describes the method used of assets in money market instruments and have access to derive taxable equivalent interest income. to worldwide money markets for issuing liabilities. 3. Average composition of portfolios of all insured commercial banks As per cent of total assets gross of loan-loss reserves Domestic Fully consolidated Item 1974 1975 1976 1977 1975 1976 1977 Interest-earning assets.................................................... 80.6 80.0 79.9 79.5 77.5 77.3 77.0 Loans............................................................................. 55.5 53.8 52.0 52.1 54.4 53.1 53.4 21.0 22.1 23.9 23.2 19.5 20.8 20.0 U.S. Treasury............................................................. 6.0 7.1 9.2 9.2 6.2 7.9 7.8 U.S. Government agencies...................................... 3.4 3.5 3.5 3.3 3.0 3.0 2.8 State and local........................................................... 10.9 10.7 10.6 10.2 9.3 9.1 8.7 Other bonds and stock............................................ .7 .7 .6 .5 1.0 .8 .8 4.1 4.1 4.0 4.2 3.6 3.4 3.6 Memo: Average gross assets, billions of dollars, end of period....................................................................... 866 921 958 1,056 1,060 1,116 1,244 Note.—Percentages are based on aggregate data and thus reflect preceding year and of March, June, September, and December of the the relatively heavier weighting of large banks. Data are based on current year were averaged. Before that, there were no March and averages of call dates. For 1976 and 1977, data for December of the September call dates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Insured Commercial Bank Income in 1977 443 points—occurred at banks with assets between 5. Average composition of financial claims of all $100 million and $1 billion. insured commercial banks The 1977 shift in the composition of portfo As per cent of total assets gross of loan-loss reserves lios at insured banks (Table 3) resulted in some reversal of the build-up in highly marketable D o o f m fi e ce s s tic cons F o u l l i l d y ated assets that had occurred since 1974. The general Item strength in loan demand during 1977 contrasted 1976 1977 1976 1977 with the weakness observed during 1976. The Financial claims....................... 89.1 89.4 90.1 90.4 volume of marketable securities acquired for Demand deposits................. 32.6 32.1 28.0 27.2 investment portfolios continued to expand, Interest-bearing claims........... 56.5 57.3 62.1 63.2 Time and savings accounts. 49.2 49.0 55.5 55.6 though not nearly so fast as loans. Consolidating Large time....................... 14.8 13.3 13.8 11.4 In foreign offices.............. 13.2 14.1 both foreign and domestic operations, the Other domestic................. 34.4 35.7 28.5 30.1 Subordinated notes and proportion of assets in loans increased during debentures..................... .5 .5 .4 .4 Other borrowings................. .5 .6 .8 .9 1977; by the end of the year (not shown in Table Gross Federal funds pur chased ........................... 6.3 7.2 5.4 6.2 3), that proportion had increased to approxi Memo: mately the levels of year-end 1975. Managed liabilities.............. 22.1 21.6 33.6 33.1 Average gross assets, bil lions of dollars............. 958 1,056 1,116 1,244 Gross Interest Expense 1 Of $100,000 and over issued by domestic offices. Note.—Percentages are based on aggregate data and thus reflect the relatively heavier weighting of large banks. Data are based on Banks utilized more interest-bearing liabilities averages of call dates for December of the preceding year and March, June, September, and December of the current year. on average during 1977 than 1976 and paid about the same rates of interest in both years. As a result, over-all gross interest expense in during 1977. The rise shown in Table 4 in the creased; it grew by almost the same amount as average interest paid on small time and savings had gross interest income. deposits is at least partially a statistical artifact; Average effective rates paid for funds in 1976 the average rate in 1976 was understated by the and 1977 are shown in Table 4. In all but two effect of very rapid expansion in those accounts cases, those average rates belie the sharp in near the year-end. crease in market yields that occurred toward the The average composition during the year end of 1977, an increase that brought those of financial claims at all insured commercial yields above Regulation Q ceilings on equiva banks is seen in Table 5. During the "year, lent maturity deposits. Only “Other depos interest-bearing liabilities funded a higher its”—generally small-denomination time and proportion of assets than during 1976. That savings deposits—and gross Federal funds and difference alone (that is, from 62 to 63 per cent) repurchase agreements showed rate increases accounted for about $12 billion in additional interest-bearing liabilities outstanding on average during 1977. Most of the increase oc curred in a build-up of the share of domestic 4. Rates paid for funds, fully consolidated, by all savings and small-denomination time deposits. insured commercial banks1 “Managed liabilities,” representing highly Per cent market-sensitive instruments and shown in the Type of fund 1976 1977 Memo part of Table 5, decreased as a per cent of assets on average during the year. Time and savings accounts....................... 5.74 5.72 Negotiable CD’s..................................... 5.97 5.58 Deposits in foreign offices.................... 5.97 5.94 Other deposits.......................................... 5.58 5.67 Subordinated notes and debentures.... 7.43 7.38 Other liabilities for borrowed money. .. 7.96 7.56 Gross Federal funds purchased and Rp’s 5.57 6.10 NONINTEREST INCOME Total...................................................... 5.77 5.79 Memo: Total not covered by Regula The 8 per cent advance in noninterest income tion Q.................................................... 5.96 5.92 during 1977 was about equal to average asset 1 Calculated as described in the Technical Note. growth,* leaving the ratio of the two virtually Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

444 Federal Reserve Bulletin □ June 1978 6. Noninterest income of insured commercial of $1 billion or more, which had previously banks experienced the largest increases in charge-offs. As per cent of the average of beginning and end-of-year fully Relative to average loan portfolios, net losses consolidated assets net of loan-loss reserves declined about one-fourth to 0.41 per cent. The largest banks experienced the greatest improve Item 1976 1977 ment in the rate of net loan losses. At the end Fiduciary activities.................................... .16 .16 of 1977, banks with assets of $1 billion or more Service charges on deposit accounts in domestic offices................................. .14 .14 had a loss rate only 13 basis points above that Other service charges, commissions, and fees.............................................. .19 .19 of the smallest banks; by contrast, in 1976 their Direct lease financing.............................. .05 .06 Dividends on stock.................................. .01 .01 loss rate was 24 basis points higher. (At the Trading account income (net)............... .06 .03 Equity in net income of unconsolidated beginning of the 1970’s their loss rates were subsidiaries........................................ .01 .01 All other..................................................... .11 .11 about equal.) Total........................................................ .72 .71 This abatement in the rate of loan charge-offs was an important factor sustaining profitability unchanged (Table 6). Net trading account in in 1977. Loan-loss provisions are, of course, come declined sharply during 1977, probably related to net charge-offs and have a direct in association with difficulties encountered dur influence on reported income. Provisions for ing a year of nearly steadily increasing short loan losses declined in relation to average assets term market yields. for all sizes of banks shown in Table 7. Impor tantly, the declines were largest for the banks with assets of $100 million or more; those banks had experienced the sharpest increase in loan LOAN-LOSS PROVISIONS losses in 1974 and 1975. The quality of loan portfolio credit showed very strong improvement during 1977 (Table 7). For the industry, loan charge-offs net of recoveries OTHER NONINTEREST EXPENSES dropped by $700 million from 1976. Most of that improvement occurred at banks with assets Growth in each of the major components of noninterest expenses other than loan-loss provi 7. Loan portfolio losses and recoveries of insured sions kept pace with asset growth during 1977 commercial banks (Table 8). Only in the residual category of Amounts in millions of dollars undefined operating expenses was there any Banks with assets of— change at all compared with 1976, and that was Item All a very small increase. Control of these operating banks Less than $100 $1 billion $100 million to or more1 expenses has been emphasized since 1974. To million $1 billion some extent, the reduction in loans charged off 1976 may have implied lower administrative expenses associated with monitoring problem loans. Losses charged... 4,158 788 821 2,548 Recoveries............ 684 199 159 326 Net losses......... 3,474 589 662 2,222 8. Noninterest expenses of all insured (as per cent average loans) .57 .41 .54 .65 commercial banks Loan-loss provi sion .................... 3,650 663 702 2,286 As per cent of the average of beginning and end-of-year fully consolidated assets net of loan-loss reserves 1977 Expense 1976 1977 Losses charged... 3,549 720 674 2,156 Recoveries............ 809 210 177 422 Salaries and employee benefits 1.30 1.30 Net losses......... 2,740 510 497 1,734 Occupancy expense: (as per cent Gross........................................ .29 .29 average loans) .41 .33 .37 .46 Rental income........................ .04 .04 Loan-loss provi Net............................................ .24 .24 sion .................... 3,244 632 609 2,003 Furniture and equipment........ . 15 .15 Other............................................ .75 .76 1 The net losses as a per cent of average loans in both 1976 and 1977 Total......................................... 2.44 2.45 were virtually the same at money center banks as at other banks with at least $ 1 billion in assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Insured Commercial Bank Income in 1977 445 NET RETURNS AND 10. Cash dividends declared on preferred and RETAINED EARNINGS common stock by insured commercial banks Per cent of net income Aggregate returns on average assets increased 1 basis point from 1976 (Table 9). By contrast, Banks, by size1 1974 1975 1976 1977 net returns on average assets at the major money With consolidated assets of— center banks were 4 basis points lower in 1977 Less than $100 million----- 28 30 27 26 than in 1976. Those banks experienced narrower $100 million-$l billion.... 46 46 45 37 $1 billion and over: net interest margins and lower noninterest in N M o o t n m ey o c n e e n y t c e e r. n .. t .. e .. r . . . . . . . . . . . . . . . . . . . . . . . 4 4 8 3 4 5 4 3 4 4 3 7 4 45 6 come than in 1976, both of which probably are 39 42 39 37 associated with the weaker loan demand that those banks faced during 1977.4 On the other 1 Comparability across size categories may be influenced by holding company affiliation, which is far more prevalent among big banks. hand, at banks with assets of less than $1 billion, net returns on average assets increased $1 billion, experienced substantial improvement 4 basis points during 1977. For the bulk of the in this measure, however, which has risen industry’s population, therefore, 1977 was a nearly to its 1974 level. At the major money year of profit gains. Banks reporting positive center banks, on the other hand, returns on profits before tax numbered 13,438 in 1977, up equity fell again for the third consecutive year. from 12,557 in 1976; those reporting losses fell Dividend payout ratios during 1977 fell at all to 959 in 1977 from 1,868 in 1976. the groups of banks shown in Table 10 except the major money center banks, which attempted 9. Profit rates of insured commercial banks to maintain dividends despite weaker earnings. The over-all result was an increase in net re Per cent tained income of $765 billion, two-thirds of Item 1973 1974 1975 1976 1977 which was accounted for by banks with assets of less than $1 billion (Table 11). Reversing Re $L tu 1e r s n s o th n a n a v $ e 1 r ag b e il li a o s n se t . s .. — .... A ... l . l .. .. 1 . _ .. _ ... . . 7 92 5 . .9 7 1 2 . . 6 83 9 ..8760 . .7 9 1 0 the unusual situation in 1976, retained earnings billion or more........................ .61 .57 .57 .57 .56 Not money center..................... .62 .58 .59 .60 .62 again accounted for about three-fourths of the Money center............................. .60 .56 .56 .54 .50 Return on average equity^All2__ 12.9 12.6 11.8 11.6 11.8 increase in equity capital during 1977. $L1e N s b s o i t l t l h i m o a n n o n $ o e 1 r y m b c i o e ll r n i e o t 3 n e 3 r .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1 22 3. .. 2 50 1 1 1 2 1 2 . . . 8 7 5 11 1 12 1. .. 3 52 1 1 1 0 1 1 . . . 6 6 6 11 1 11 2 .. . 32 2 Money center............................. 13.2 14.2 13.8 12.3 11.4 11. Sources of increase in total equity capital at all insured commercial banks 1 Net income as a per cent of average of beginning- and end-period fully consolidated assets net of loan-loss reserves. Millions of dollars 2 Average of beginning- and end-period equity capital, defined narrowly to exclude loan-loss reserves and subordinated debt. 3 Size categories are based upon fully consolidated assets. Retained income Net retained Net increase as per cent of income1 in equity capital increase in equity Returns on average equity, an important in Year capital fluence on the cost of equity capital, rose Total Large Total Large Total Large slightly for the industry as a whole, although banks 2 banks 2 banks2 those returns remained well below levels in 1972........ 3,438 1,190 4,579 1,612 75 74 1974 and earlier years. Large, not money center 1973........ 4,131 1,491 5,455 1,849 76 81 1974........ 4,307 1,666 5,631 1,977 76 84 banks, as well as banks with assets of less than 1975........ 4,224 1,690 5,526 2,396 76 71 1976........ 4,834 1,909 7,254 3,371 67 57 1977........ 5,599 2,157 7,094 2,939 79 73 4 During 1977 fully consolidated loan portfolios grew 1 Net income less cash dividends declared on preferred and common 13 per cent at money center banks, 14 per cent at other stock. banks with assets of at least $1 billion, 16 per cent 2 Banks with fully consolidated assets o f $ 1 billion or more. at banks with assets between $100 million and $1 Note.—In 1976, equity capital was affected by one-time accounting billion, and 19 per cent at banks with assets less than changes in the treatment of loan-loss and valuation reserves. The data shown above for 1976 have been adjusted to correct for that defini $100 million. tional change. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

446 Federal Reserve Bulletin □ June 1978 A.l Report of income for all insured commercial banks Amounts shown in millions of dollars Item 1970 1971 1972 1973 1974 1975 1976 1977 Operating income—Total........................................................................ 34,574 36,204 40,065 52,794 67,872 66,285 80,388 90,069 Interest on: Loans................................................................................................... 22,859 22,954 25,498 35,213 46,942 43,197 51,471 58,811 Balances with banks......................................................................... n.a. n.a. n.a. n.a. n.a. n.a. 4,459 4,860 Federal funds sold and securities purchased under resale agreement................................................................................... 1,004 870 1,023 ■' 2,474 3,695 2,283 1,979 2,471 Securities (excluding trading accounts)— Total interest income..................................................................... 6,523 7,660 8,329 9,138 10,344 12,201 14,333 15,140 U.S. Treasury securities............................................................... 3,069 3,384 3,376 3,436 3,414 4,415 5,952 6,369 U.S. Government agencies and corporations......................... 686 914 1,144 1,469 2,014 2,343 2,410 2,466 2,617 3,124 3,490 3,861 4,-449 4,911 5,116 5,338 151 238 319 372 467 532 750 858 Dividends on stock....................................................................... 0) 0) (!) 0) 0) •0) 105 109 Trust department.................................................................................. 1,132 1,258 1,366 1,460 1,506 1,600 1,795 1,980 Direct lease financing........................................................................... n.a. n.a. n.a. n.a. n.a. n.a. 534 699 Service charges on deposits................................................................. 1,174 1,226 1,256 1,320 1,450 1,547 1,629 1,797 Other changes, fees, etc...................................................................... 839 981 1,079 1,247 1,405 1,647 2,175 2,404 Other operating income....................................................................... 1,043 1,256 U512 1,942 2,530 3,811 2,011 1,903 On trading account (net)................................................................. 348 344 257 341 430 508 717 420 695 312 1,255 1,601 2,100 3,303 1,205 1,350 Equity in return of unconsolidated subsidiaries......................... n.a. n.a. n.a. n.a. n.a. n.a. 89 133 Operating expenses—Total..................................................................... 27,465 29 ,.511 32,836 44,113 58,645 57,313 70,466 78,484 Salaries, wages, and employee benefits............................................ 7,683 8,355 9,040 10,076 11,526 12,624 14,686 16,276 Interest on: Time and savings deposits.............................................................. 10,444 12,168 13,781 19,747 21,111 26,147 34,894 38,701 Interest on time CD’s of $100,000 or more issued by domes tic offices................................................................................ n.a. n.a. n.a. n.a. n.a. n.a. 7,083 6,732 Interest on deposits in foreign offices...................................... n.a. n.a. n.a. n.a. n.a. n.a. 8,745 10,216 Interest on other deposits........................................................... n.a. n.a. n.a. n.a. n.a. n.a. 19,066 21,753 Federal funds purchased and securities sold under repurchase agreements............................................................................. 1,396 1,093 1,425 3,883 5,970 3,313 3,305 4,536 464 139 115 499 912 374 665 816 104 142 212 253 280 292 343 391 Occupancy expense............................................................................... 1,547 1,721 1,915 2,141 2,424 2,739 3,247 3,587 Less rental income............................................................................ 299 318 340 367 383 427 494 551 Net....................................................................................................... 1,249 1,403 1,575 1,774 2,041 2,312 2,752 3,036 905 1,014 1,083 1,196 1,355 1,525 1,712 1,923 695 860 964 1,253 2,271 3,578 3,650 3,244 4,525 4,337 4,640 5,432 6,514 7,149 8,456 9,561 Minority interest in consolidated subsidiaries........................... 1 1 29 24 Other................................................................................................... 4,525 4,337 4,639 5,431 6,514 7,149 8,427 9,537 Income before taxes and securities gains or losses............................ 7,109 6,693 7,229 8,681 9,227 8,973 9,922 11,585 Applicable income taxes...................................................................... 2,173 1,688 1,708 2,120 2,084 1,790 2,287 2,829 Income before securities gains or losses.......................................... 4,936 5,005 5,522 6,560 7,143 7,182 7,635 8,756 Net securities gains or losses (—) after taxes................................ -105 210 90 -27 -87 35 190 95 Extraordinary charges (—) or credits after taxes......................... -13 -1 18 22 12 32 24 47 Net income.................................................................................................................. 4,818 5,213 5,630 6,555 7,068 7,249 7,849 8,898 Cash dividends declared.......................................................................... 2,036 2,227 2,191 2,423 2,760 3,025 3,029 3,299 Memo: Number of banks.................................................................................. 13,502 13,602 13,721 13,964 14,216 14,372 14,397 14,397 1 Included in income from other bonds, notes, and debentures, n.a. not available. NOTES ON THE COMPARABILITY OF COMMERCIAL BANK INCOME DATA BEFORE 1976 Certain important definitions in the Report of Income and Dividends reflects primarily Eurodollar redeposits and is believed to be con were changed in 1976, impairing comparability with prior years. The siderably larger in 1976 than in earlier years. Most of “interest on most important is the degree of consolidation. Although net income balances with banks” is accounted for by the largest banks and by after taxes in all of the year shown reflects fully consolidated opera those that operate abroad via subsidiaries or branches. tions, in 1975 and earlier years net income from foreign branches and Several other noteworthy changes were made in the Report of subsidiaries was added as a single entry as part of “all other income.” Income and Dividends. Income on securities other than those issued Beginning with 1976, the statement is fully consolidated so that all of by governments is broken down in 1976 between interest income on the components—such as interest revenue, interest expense, and so obligations issued by nongovernmental units and dividend income on—include the gross revenues and expenses of foreign branches and earned on Federal Reserve and other stock. More detail was reported subsidiaries. This change is pertinent only to the 145 commercial on interest paid on deposits in 1976; interest paid on large time cer banks that operated foreign branches or subsidiaries during 1976, tificates of deposit issued by domestic offices, interest on foreign de none of which had consolidated assets below $100 million. posits, and interest paid on other domestic time and savings deposits Another change affects “other” income. In 1976, “interest on bal are now set out separately. Additionally, income from direct lease ances with banks” was set out separately for the first time. This item financing is now shown. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Insured Commercial Bank Income in 1977 447 A.2 Report of income for member commercial banks Amounts shown in millions of dollars Item 1970 1971 1972 1973 1974 1975 1976 1977 Operating income—Total......................................................................... 27,902 28,665 31,344 41,616 53,837 51,368 63,639 70,514 Interest on: Loans................................................................................................... 18,698 18,315 20,053 28,266 38,063 33,749 40,901 46,060 Balances with banks......................................................................... n.a. n.a. n.a. n.a. n.a. n.a. 4,263 4,671 Federal funds sold and securities purchased under resale agreement.................................................................................... 781 676 794 1,847 2,724 1,716 1,511 1,918 Securities (excluding trading accounts)— Total interest income..................................................................... 4,832 5,661 6,087 6,532 7,237 8,559 10,111 10,584 U.S. Treasury securities............................................................... 2,209 2,434 2,412 2,393 2,343 3,166 4,248 4,478 U.S. Government agencies and corporations......................... 415 578 731 943 1,268 1,463 1,475 1,509 States and political subdivisions................................................ 2,090 2,467 2,710 2,928 3,300 3,576 3,686 3,794 Other bonds, notes, and debentures......................................... 118 182 234 268 326 354 612 712 Dividends on stock....................................................................... 0) 0) 0) 0) 0) 0) 90 91 Trust department.................................................................................. 1,073 1,180 1,269 1,344 1,379 1,457 1,625 1,776 Direct lease financing........................................................................... n.a. n.a. n.a. n.a. n.a. n.a. 508 664 Service charges on deposits................................................................. 867 895 905 940 1,023 1,086 1,122 1,206 Other changes, fees, etc....................................................................... 682 796 864 998 1,152 1,359 1,808 1,967 Other operating income....................................................................... 970 1,130 1,372 1,789 2,261 3,442 1,789 1,662 On trading account (net)................................................................ 346 340 254 338 425 497 696 407 Other.................................................................................................... 624 800 1,118 1,451 1,836 2,945 1,009 1,124 Equity in return of unconsolidated subsidiaries......................... n.a. n.a. n.a. n.a. n.a. n.a. 86 131 Operating expenses—Total...................................................................... 22,184 23,342 25,648 35,037 46,815 44,410 55,924 61,706 Salaries, wages, and employee benefits............................................ 6,154 6,638 7,096 7,808 8,834 9,624 11,301 12,395 Interest on: Time and savings deposits............................................................... 8,189 9,426 10,518 15,382 21,812 19,800 27,745 30,363 Interest on time CD’s of $100,000 or more issued by domesn.a. n.a. n.a. n.a. n.a. n.a. 5,895 5,461 Interest on deposits in foreign offices. .................................... n.a. n.a. n.a. n.a. n.a. n.a. 8,672 10,124 Interest on other deposits........................................................... n.a. n.a. n.a. n.a. n.a. n.a. 13,178 14,778 Federal funds purchased and securities sold under repurchase agreements.............................................................................. 1,365 1,073 1,387 3,765 5,714 3,151 3,150 4,322 Other borrowed money................................................................... 444 127 103 473 871 336 638 790 Capital notes and debentures......................................................... 90 123 184 204 217 228 273 303 Occupancy expense................................................................................ 1,275 1,408 1,556 1,724 1,929 2,155 2,564 2,804 Less rental income..................................................................... 263 278 296 316 325 363 418 459 Net........................................................................................................ 1,012 1,130 1,260 1,408 1,603 1,792 2,146 2,345 Furniture and equipment.................................................................... 722 797 848 924 1,037 1,154 1,305 1,456 Provision for loan losses..................................................................... 534 682 768 994 1,858 3,050 3,042 2,633 Other operating expenses.................................................................... 3,674 3,346 3,484 4,079 4,870 5,275 6,323 7,100 Minority interest in consolidated subsidiaries........................... 28 22 Other.................................................................................................... 6,295 7,078 Income before taxes and securities gains or losses............................ 5,718 5,322 5,696 6,679 7,022 6,958 7,715 8,807 Applicable income taxes..................................................................... 1,774 1,348 1,356 1,653 1,591 1,453 1,929 2,311 Income before securities gains or losses.......................................... 3,942 3,974 4,340 5,025 5,431 5,505 5,786 6,496 Net securities gains or losses (—) after taxes................................ -107 144 47 -30 -69 17 111 40 Extraordinary charges (—) or credits after taxes......................... -15 -3 14 15 3 23 17 38 Net income................................................................................................. 3,821 4,116 4,401 5,011 5,365 5,546 5,914 6,576 1,753 1,907 1,840 2,019 2,271 2,476 2,451 2,640 Memo: 5,767 5,727 5,704 5,735 5,780 5,787 5,758 5,668 i Included in income from other bonds, notes, and debentures, n.a. not available. TECHNICAL NOTE 1 I=jrA(t)dt In order to calculate the rates of return presented in this article, 0 it was assumed that the value of the portfolios under consid These two equations may then be solved for r in terms of eration always grew at a constant percentage rate throughout total interest and year-beginning and year-end asset values. the year. Mathematically, if we let A(t) represent the value Finally, the rate may be converted into a simple interest of the assets at time t, where t is the fraction of the year rate (that is, by using annual rather than continuous com that has elapsed, this assumption implies that: pounding). The resulting formula, which is used in the article, may be written: A(t) = A(0)[^i% A(0) I If interest is compounded continuously at rate r, total interest .= [A(1)1 A(1)-A(0) _j is given by: A(0) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

448 Treasury and Federal Reserve Foreign Exchange Operations: Interim Report This interim report, covering the period Febru Despite these actions, market psychology re ary through April 1978, is the eleventh of a mained extremely bearish toward the dollar. series providing information on Treasury and Abroad, economic growth continued to fall System foreign exchange operations to supple short of official expectations, holding out little ment the regular series of semiannual reports promise of an early reduction in the U.S. trade that are usually issued each March and Sep and current-account deficits through a demandtember. It was prepared by Alan R. Holmes, induced expansion in our exports. In the United Manager, System Open Market Account, and States, the administration’s energy bill, de Executive Vice President in charge of the signed to curb the rise of oil imports over time, Foreign Function of the Federal Reserve Bank remained bottled up in the Congress. Moreover, of New York, and Scott E. Pardee, Deputy both a prolonged coal strike and the fierce winter Manager for Foreign Operations of the System weather had raised uncertainties about the near- Open Market Account and Vice President in term outlook for the domestic economy and the the Foreign Function of the Federal Reserve trade balance. And of growing concern to the Bank of New York. market, the pace of inflation was quickening in the United States even as price increases in other In late 1977 and early 1978, the U.S. dollar major countries continued to moderate. came under generalized selling pressure in in These concerns underlay the heavy selling creasingly disorderly exchange market condi pressure on the dollar that re-emerged toward tions. Among the steps taken by the U.S. au thorities to counter the disorder, the foreign 1. Federal Reserve reciprocal currency exchange trading desk of the Federal Reserve arrangements System had shifted in early January to a more In millions of dollars open and forceful intervention approach utiliz Institution Amount of facility, ing the resources of both the Federal Reserve Apr. 30, 1978 and the U.S. Treasury. These operations, in Austrian National Bank............................. 250 coordination with the intervention by the trading 1,000 Bank of Canada........................................... 2,000 desks of foreign central banks, helped to restore National Bank of Denmark....................... 250 3,000 a sense of two-way risk to the market, and dollar Bank of France............................................. 2,000 rates settled somewhat above their earlier lows. German Federal Bank................................ 4,000* Bank of Italy................................................. 3,000 On January 31, swap drawings in German marks Bank of Japan............................................... 2,000 Bank of Mexico............................................ 360 on the German Federal Bank had reached Netherlands Bank........................................ 500 $1,251.2 million equivalent by the Federal Re Bank of Norway........................................... 250 Bank of Sweden............................................ 300 serve and $407.4 million equivalent by the U.S. Swiss National Bank.................................... 1,400 Treasury. The Federal Reserve had also drawn Bank for International Settlements: Swiss francs/dollars.............................. 600 $18.9 million equivalent of Swiss francs under Other authorized European curren cies/dollars .................................... 1,250 the swap arrangement with the Swiss National Total............................................... 22,160 Bank in order to finance intervention in that currency. * Increased by $2 billion effective March 13, 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 449 2. Federal Reserve System transactions under U.S. economy showed signs of renewed vigor. reciprocal currency arrangements Following his confirmation as Chairman of the In millions of dollars equivalent; drawings, or repayments (—) Board of Governors, G. William Miller argued that in view of the economy’s underlying German Swiss Swap commitments Federal National Total strength the focus of economic policy should Bank Bank be shifted toward curbing inflation. Moreover, both President Carter and Chancellor Schmidt Jan. 31, 1978................. 1,251.2 18.9 1,270.1 Feb. 1-Apr. 30, 1978.. / 592.6' 50.1 642.8\ indicated that new consultations on economic 1-136.1 -136.1/ Apr. 30, 1978................. 1,707.8 69.0 1,776.8 and financial policy were under way between the two governments. With this sense of move Note.—Figures may not add to totals because of rounding. Data are on a transaction-date basis. ment on the policy front, some bidding for dollars emerged. mid-February. As the markets again became On March 13, following their discussions, the unsettled, U.S. authorities together with those U.S. and German authorities issued a joint of other major countries continued to intervene statement. Among the elements of agreement, forcefully. The Federal Reserve Bank of New both sides reaffirmed that continuing forceful York operated on 10 trading days between Feb action would be taken to counter disorderly ruary 10 and 28, selling a total of $714.5 million conditions in the exchange markets and that equivalent of marks. These sales were split close cooperation to that purpose would be evenly between the Federal Reserve and the maintained. The swap line between the Federal Treasury and were financed by drawing on their Reserve and the German Federal Bank was respective swap lines with the German Federal doubled to $4 billion. Moreover, the U.S. Bank. The Federal Reserve also sold a further Treasury announced that it was prepared to sell $50.1 million of Swiss francs, financed by $730 million equivalent of Special Drawing drawings on its swap line with the Swiss Na Rights (SDR’s) to Germany and if necessary to tional Bank. draw on its reserve position at the International By late February the dollar had declined gen Monetary Fund to acquire currencies that might erally, falling as much as 5 per cent against the be needed for intervention. Some dealers had German mark and 9 per cent against the Swiss anticipated more far-reaching provisions, how franc. The Swiss authorities then imposed harsh ever, and immediately following release of the new exchange controls, which went so far as statement the dollar came under a heavy burst to induce actual liquidations of nonresident in of selling pressure. On that day and the next, vestments in their country. With the exchange the Federal Reserve Bank of New York, in rate for the German mark approaching $0.50 coordination with the German Federal Bank, (2.00 marks to the dollar), some traders feared again intervened forcibly, selling a further $372 that a clear breach of that level would lead to million equivalent of marks financed through the broader use of exchange controls or of equal swap drawings by the System and the protectionist measures to contain the flow out Treasury. Once the initial reaction passed, of dollars. To the extent that such measures however, the market came into better balance. might trigger a snapback in dollar rates, some dealers were hesitant to take on new short posi tions at those levels, and a few moved to cover 3. Federal Reserve System repayments under short positions taken earlier. Consequently, al special swap arrangement with the Swiss though the mark rate rose briefly above $0.50 National Bank in early March, it soon settled back without In millions of dollars equivalent; issues, or redemptions (—) intervention by the Federal Reserve. Commitments, Jan. 31, 1978........................................................ 470.1 During March some of the market’s more Redemptions, Feb. 1-Apr. 30, 1978........................................... —88.2 Commitments, Apr. 30, 1978....................................................... 381.9 basic concerns began to ease. Once the coal strike was settled and the weather improved, the Note.—Data are on a transaction-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

450 Federal Reserve Bulletin □ June 1978 Toward the end of the month the dollar briefly 5. U.S. Treasury securities, foreign currency came under pressure following announcement series, issued to the Swiss National Bank of a record $4.5 billion U.S. trade deficit for In millions of dollars equivalent; issues, or redemptions (—) February and in the backwash of heavy flows into the Japanese yen. The New York Federal Commitments, Jan. 31, 1978........................................................ 1,118.0 Repayments, Feb. 1-Apr. 30, 1978............................................. —123.4 Reserve Bank intervened on 2 days, selling a Commitments, Apr. 30, 1978....................................................... 994.6 total of $120.2 million of marks. Of that total Note.—Data are on a transaction-date basis. $98.7 million equivalent was financed by equal drawings by the System and the Treasury on to sell gold in a series of monthly public auc swap lines with the German Federal Bank, and tions beginning in May was also well received. the rest came from balances. The swap drawings In all, by the end of April the dollar had moved raised the combined mark indebtedness of the well away from its lows against most major U.S. authorities to a peak of $2,844 million currencies, rising by 4 per cent against the equivalent, of which $1,844 million equivalent German mark. was drawn by the Federal Reserve and $1,000 With the markets generally more orderly and million equivalent was by the Treasury. the dollar now more resilient to selling pres In April further policy developments in the sures, central bank intervention tapered off. The United States helped to generate a better tone Federal Reserve Bank of New York intervened for the dollar. President Carter announced a on only one more occasion in April, selling $3.9 series of proposals against inflation and pressed million equivalent of marks out of balances on the Congress to move ahead on energy legisla April 27. Otherwise, the Federal Reserve and tion. For its part, the Congress scrapped some the Treasury purchased mark balances from legislative items that were considered particu correspondents and in the market to begin to larly inflationary and intensified its efforts liquidate swap debt. By April 30 the Federal toward a compromise on the energy bill. Also, Reserve had repaid $136.1 million of drawings, as data on the monetary aggregates came in very reducing the amount outstanding to $1,707.8 strong, the Federal Reserve shifted to a less million equivalent, and the Treasury had repaid accommodative stance in the domestic money $88.9 million equivalent, cutting its debt to market, leading to a firming of interest rates. $911.1 million of marks. Both the exchange market and the U.S. stock In addition, the Federal Reserve and the U.S. market reacted favorably to these changes. The Treasury continued with the program agreed to announcement by the Treasury of its intention in October 1976 for an orderly repayment of pre-August 1971 franc-denominated liabilities still outstanding with the Swiss National Bank. 4. Drawings and repayments by foreign central The Federal Reserve liquidated $88.2 million banks and the BIS under reciprocal currency equivalent of special swap debt with the Swiss arrangements central bank, leaving $381.9 million equivalent In millions of dollars; drawings, or repayments (—) of indebtedness still outstanding as of April 30. Feb. 1 These repayments were financed with francs Outstanding through Outstanding Banks drawing on Jan. 31, Apr. 30, Apr. 30, purchased directly from the Swiss National System 1978 1978 1978 Bank, mainly against dollars, but also against BIS (against German marks and French francs. The U.S. Treasury’s marlfs^ 1 ..... 147.0 ! 148.01 {-295.0/ Exchange Stabilization Fund used Swiss francs purchased directly from the Swiss central bank Total ............. 147.0 / 1 -2 1 9 4 5 8 . .0 0 1 / to repay $123.4 million equivalent of francdenominated securities, leaving $994.6 million 1 BIS drawings and repayments of dollars against European cur rencies other than Swiss francs to meet temporary cash requirements. equivalent of these obligations still outstanding Note.—Data are on a value-date basis. as of April 30. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 451 ★ ★ ★ change market operations in recent years have continued to yield net profits, intervention by From time to time in public discussions and the U.S. authorities has been conducted with academic literature, reference has been made to the objective of countering disorderly conditions foreign exchange profits and losses of the Fed in the exchange market, not of aiming for prof eral Reserve and the U.S. Treasury. The Federal its. Indeed the experience has been that in the Reserve reports its realized net foreign exchange first instance, when the dollar is declining in profits each year as part of its annual statement a one-way market, swap debt mounts, and the of earnings and expenses. The Exchange Stabi U.S. authorities face possible losses on out lization Fund, which handles the foreign ex standing swap contracts. But once the market change operations of the U.S. Treasury, reports settles down and positions in the market are its net earnings on a quarterly basis in the U.S. unwound, the dollar rates rise, providing the Treasury Bulletin. The data shown in Table 6 opportunity for the U.S. authorities to cover recapitulate figures on realized gains and losses their debt at a reduced loss or even a profit. on an annual basis from 1961, when the U.S. As a matter of policy, however, U.S. authorities authorities resumed foreign exchange opera have chosen to repay debt as quickly as market tions. The figures do not include interest earn conditions permit so as to maintain the short ings on foreign currencies. term nature of the swap facilities, rather than For the period 1961-70 a single figure is to wait for profits. The swap repayments in late given for each institution, reflecting profits or April were at a loss, which is reflected in the losses arising from operations undertaken at the figures for January through April 1978. time. For 1971 to date the figures on current With respect to the net losses on foreign operations are shown separately from those on currency debt outstanding as of August 15, liquidations of foreign currency debts out 1971, it must, be remembered that the debt was standing as of August 15, 1971, when the incurred under a regime in which officially held United States suspended convertibility of the dollars were convertible into gold held by the U.S. dollar into gold. Although current ex U.S. Treasury. These financing techniques were 6. Net profits, and losses (—) on U.S. Treasury and Federal Reserve foreign exchange operations Millions of dollars Net profits, and losses (—) Net profits, and losses (—) Net profits, and losses (—) on liquidations of foreign currency related to current operations debts outstanding as of Aug. 15, 1971 Year Year Federal Exchange Federal Exchange Federal Exchange Reserve Stabilization Reserve Stabilization Reserve Stabilization Fund Fund Fund 1961....................... .2 1971..................... 3.7 3.7 - 11.9 14.1 1962....................... .3 1.5 1972..................... 1.4 — 54.5 -160.3* 1963....................... .3 .9 1973..................... 1.3 - 47.5 -231.5* 1964....................... .1 - .1 1974.:................. 4.1 - 37.7 - 11.6* 1965....................... 1.0 3.5 1975..................... 8.0 -250.2f — 1* 1966....................... 1.4 3.*2 1976..................... 6.2 - 34.0 - 13.8 1967....................... 1.3 1.5 1977..................... 4.6 -148.2 -113.0 1968....................... 8.1 2.2 1969....................... 6.4 - 1.0 Total................. 29.3 3.7 -583.9 -516.2 1970....................... 3.0 -20.7 Jan.-Apr. 1978.. - 8.1 - 2.8 - 77.5 -107.5 Total.................. 21.9 - 8.8 * Indicated net losses reflect revaluations of foreign currency liabili- Note.—Totals may not add because of rounding. The net profits ties to take account of the two dollar devaluations, except for $84.5 and losses for the Federal Reserve are on a calendar-year basis. These million in 1972 and $61.6 million in 1973 which were realized on re- figures may differ slightly from data reported in the Federal Reserve payments of debts. Board Annual Reports in which net profits and losses realized in the f Of which $250.0 million reflects revaluations of foreign currency last days of some years were reflected in the income statement for the liabilities to take account of the two devaluations of the dollar. following year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

452 Federal Reserve Bulletin □ June 1978 among the many adopted by major countries to debt has been repaid by a variety of means, but reduce the use of gold while providing the in fulfilling the contractual responsibility on holder of the debt with protection against ex exchange risk, the U.S. authorities have ab change risk. After the suspension of dollar con sorbed the losses set forth in Table 6. To the vertibility in 1971, the dollar was formally de extent that the U.S. gold stock was in fact valued twice, in 1972 and 1973, and was floated conserved by the original operations, the in in 1973. crease in the value of that gold at current market As recounted in this series of reports on prices would be well in excess of the losses Treasury and Federal Reserve operations, the actually taken. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

453 Statements to Congress Statement by Philip E. Coldwell, Member, Bureau of the Mint, the costs of printing and Board of Governors of the Federal Reserve shipping new currency are paid by the Federal System, before the Subcommittee on Historic Reserve System. Preservation and Coinage of the Committee on The Federal Reserve spent $48 million for Banking, Finance and Urban Affairs, U.S. the printing of new currency in fiscal year 1977. House of Representatives, May 17, 1978. This cost represents roughly 7 per cent of the total operating costs of the Federal Reserve I am pleased to present the views of the Board System. Of that $48 million, $28 million was of Governors of the Federal Reserve System on spent to print nearly 2 billion $1 notes. Thus, H.R. 12444, a bill to change the size, weight, if all these $1 notes were replaced by coins, and design of the $1 coin, as well as other the Federal Reserve would realize savings of purposes. The Federal Reserve believes that a $28 million in printing costs. new $1 coin should be issued if it will result Of course, one must consider the cost of in a reduced demand for the $1 note. As I will producing the coins in determining the true discuss in greater detail, a circulating $1 coin savings to the Government. The costs of pro would result in significant cost savings to the ducing the new coin will be slightly higher than Federal Reserve, potentially exceeding $30 the costs of printing a note—roughly 3 cents million each year. And, because Federal Re for the coin and 1.8 cents for the note. Even serve earnings in excess of costs are almost all so, because the new coin is expected to last so returned to the Treasury, these Federal Reserve much longer than the $1 note, we would still savings would be passed on to the Government. anticipate significant savings to the Govern However, I also wish to stress the importance ment. of taking whatever steps are necessary to ensure Most new $ 1 notes are used to replace wornthat the proposed new coin circulates freely, and out notes. On the average, a new $1 note only reduces the demand for $1 notes. lasts for 18 months before it is worn out and Since 1920 the Federal Reserve has borne a destroyed. On the other hand, the new $1 coin major responsibility for the exchange of cur is expected to last for 15 years or more, a greater rency and coin. In accordance with the Treasury life expectancy by a factor of ten. Thus, while Operating Circular 55, the Federal Reserve it costs $28 million annually to maintain a Banks supply commercial banks with currency circulation pool of 2.4 billion $1 notes, replac and coin upon request and also absorb excess ing each note every 18 months, it would only currency and coin from commercial banks. cost $5 million annually to maintain the same Currency and coin in circulation flows from size pool of dollar coins—a savings to the commercial banks to Federal Reserve Banks, Government of $23 million each year. If coins where it is verified and sorted. Reusable cur only replaced half the $1 notes, the savings in rency and coin is returned to the ordering production costs would still amount to $11 mil banks, while mutilated or wornout currency is lion. destroyed. Demand in excess of the fit money In addition to the savings in printing costs, returned is met by shipment of new currency the Federal Reserve would also realize savings and new coin obtained from the Bureau of in lower handling costs for the coin, compared Engraving and Printing and the Bureau of the with the costs of handling notes. Currency is Mint. While the costs of minting and shipping difficult to sort and verify, and the process for new coin to the Reserve Banks are paid by the destroying unfit currency is particularly cum Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

454 Federal Reserve Bulletin □ June 1978 bersome and costly. Unfit notes are cut longitu notes. These include a marketing program, a dinally, then the upper and lower halves are coordinated retail industry utilization effort, and destroyed under separate controls. Our staff a financial institutions program to encourage use estimates the cost for processing 1,000 new of the new coin. We hope that the public will coins at $.51 compared with $2.19 for process accept and utilize the dollar coin and that the ing 1,000 notes, including destruction costs. It financial institutions and coin vending industry is estimated that each dollar note is processed will effectively encourage this usage. If the by the Federal Reserve an average of 1.13 times voluntary programs do not achieve acceptable per year. Thus, if dollar coins replaced half the circulation increases within a year of introduc dollar notes, and if each coin were processed tion, then the program must be reconsidered. one time per year, the Federal Reserve would Our experience with the $2 bill would indi save an additional $2 million, annually, in cur cate that the retailing community will be the rency processing costs. Like the savings in key to whether the new coin can circulate freely, production costs, those savings would grow as without controlling production of $1 notes. If the volume of currency and coin increases. retailers use the coin in making change, the coin The introduction of the proposed new coin will circulate. Moreover, our $2 bill experience might also impact the Federal Reserve in ways suggests that retailers can be persuaded to use that we cannot quantify at this time. For ex the new coin, particularly if the coin is advan ample, the impact on shipping costs is unclear. tageous to their operations and if that advantage Coin weighs more than currency but should not is properly communicated. circulate through the Reserve Banks as often, Compared with the $1 note, the new coin due to its longer life. And, the as yet unknown would appear to offer several advantages to circulation patterns for the new coin could affect retailers. Coins do not stick together nor do they Reserve Bank requirements for vault space, with fold. Consequently, the new $1 coin should a corresponding impact on our building pro facilitate change-making. Perhaps more impor grams. While we have no precise estimates, we tant, the new coin should be employable in the doubt that these effects would materially in cashier machines that automatically dispense the crease or decrease the estimated potential sav coin portion of a customer’s change. These ings from a new, circulating coin. machines are now effectively limited to However, all these projected savings are dispensing amounts of less than $1. With a contingent upon the new dollar coin circulating usable $1 coin, this limit would be raised, and and replacing dollar notes. If the proposed new the effectiveness of the machines should be coin is produced but fails to circulate, or circu increased significantly. lates without reducing the pool of dollar notes, We believe it is vitally important that these additional costs rather than savings will be in potential advantages be investigated and fully curred by the Federal Reserve with a consequent communicated to the retailing community if the reduction in payments to the Treasury. And our proposed new coin is to succeed. If the proposed recent experience with the reintroduction of the legislation is enacted, we would strongly urge $2 note indicates that circulation of the proposed the Treasury Department to undertake such a new coin is not automatically ensured. program and will offer the cooperation and Several steps could be taken to aid the circu assistance of the Federal Reserve System in lation of the new coin and thus replace dollar carrying out the effort. □ Statement by Henry C. Wallich, Member, I am pleased to present before this distinguished Board of Governors of the Federal Reserve committee my personal views on the subject of System, before the Committee on Banking, tax-based incomes policies (TIP). Among the Housing and Urban Affairs, U.S. Senate, May several versions of TIP that have been under 22, 1978. discussion, my testimony will focus on the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 455 approach colloquially referred to as the “stick tion, however, means sure recession sooner or approach,” on which Professor Sidney Wein- later. The cost of letting inflation run, therefore, traub of the University of Pennsylvania and I is higher than even a costly form of restraining have collaborated since 1971. The stick version it. of TIP seeks to restrain inflation by imposing TIP, moreover, should not be viewed as an a tax on employers granting excessive wage outright alternative to monetary and fiscal re increases. There is no interference with the straint. In 1971 wage and price controls were forces of the market: employers who, for some viewed as such an alternative, and fiscal and reason, wish to raise wages substantially, can monetary policy accordingly turned expansive. do so; TIP, therefore, in no way involves wage I do not beliewe that TIP could offset the conse and price controls. quences of excessively expansive monetary and Various other forms of TIP have been pro fiscal policies! Some restraint by use of these posed, especially the “carrot” approach, which traditional todls will continue to be needed. rewards employers and employees for main Nevertheless, an appropriate combination of taining moderation in wage increases. A few TIP and the standard tools of fiscal and monetary comments on the differences between the two policy offers great promise for the longer run, approaches will be made later in this testimony. once the present inflation has been wound down. I would like to stress, however, that what counts TIP, continuously employed, would exert con at this time is the general principle rather than tinuous restraint on wages and prices. This the specifics. What needs to be examined now means that fiscal and monetary policies could is whether any form of TIP can contribute to be somewhat more expansionary once rea restraining inflation, rather than whether one or sonable price stability had been restored. TIP the other version may be preferable. would tend to reduce the “noninflationary rate If other well-functioning weapons against in of employment.” Whatever the level of unem flation were readily available, there would be ployment consistent with reasonable price sta no need to discuss TIP. It is because the ortho bility (or a constant rate of inflation), the re dox methods work slowly that I am led to straints imposed by TIP would tend to make believe that a device such as TIP, despite its it somewhat lower. Fuller utilization of re obvious inconveniences, deserves consideration sources and larger output would thus become at this time. possible. The payoff to a successful effort to Fiscal and monetary policy, the orthodox wind down inflation would thus become very weapons against inflation, so far have not been large over time. successful in winding it down. This does not mean that they would be without effect in the long run. Nor do I believe that the cost of DISTINCTIVE FEATURES OF applying them, measured against realistic alter CARROT AND STICK APPROACH natives, would be so high as is sometimes believed. The alternative to successfully com Both approaches rest on the well-documented bating inflation is not a constant rate of inflation. fact that prices follow wages. Numerous re We do not have the choice between doing searchers have arrived at that conclusion. At the something about inflation and leaving it alone. same time, of course, prices influence wages, Left alone, it will accelerate. This tendency although the relationship is less close. There are results from the fact that inflation increases the other cost factors that often are claimed to be degree of uncertainty with which all participants responsible for inflation—high profits, high in in the market must cope. Thus business, labor, terest rates, monopolistic practices, high prices borrowers, and lenders will all tend to inject of food, of oil, and the depreciation of the mounting insurance premiums into their wage, dollar. While at times each of these does exert price, and interest rate behavior to guard against an effect, the main factor governing prices nev the contingency of higher inflation. Inflation ertheless is wages. With about 75 per cent of itself tends to generate accelerating inflation national income representing compensation of unless effectively restrained. Accelerating infla labor, it could not be otherwise. All other ele Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

456 Federal Reserve Bulletin □ June 1978 ments, although at times possibly significant, shifting the burden to consumers. It would have are bound to be small by comparison. There the disadvantage, on the other hand, of uneven fore, restraint of wages means restraint of impact as between capital intensive and labor prices. Labor does not lose from wage restraint. intensive firms. Also, it would not be applicable Whatever it gives up in the form of higher wage to firms with losses, although such firms are increases, it can expect to get back in the form perhaps less likely to grant excessive wage of lower price increases. increases. The difficulty of applying an incomes Such unchanging real wage gains as wages tax penalty to unincorporated businesses, non and prices decelerate is all that the stick ap profit institutions, and governments, would not proach offers. The carrot approach offers that, weigh heavily if TIP is applied only to a limited plus the benefits from a tax bonus. The stick group of large corporations. approach operates by shifting the balance of Disallowance of an excess wage increase for bargaining power between management and corporate tax purposes would be a second op labor. The carrot approach breaks into the tion. It has the advantage of simplicity and of wage-price cycle by providing a tax bonus for having been on the statute books on prior occa wage earners—and possibly price setters—con sions. Its main disadvantage is greater shiftaditional on wage and price restraint. bility. There are further differences inherent in the A payroll tax offers a third option. Against two approaches. One difference is implicit in the advantage of simplicity of administration the fact that adherence to a carrot scheme can stands the fact that it appears to penalize labor be made voluntary but also would probably have when the purpose of the tax is to exert pressure to be made universally accessible. The stick on management. approach would have to be mandatory but could be limited to a group of the largest firms. An other difference would result if the carrot ap THE GUIDELINE proach were so formulated as to require meeting a wage guideline accurately on penalty of losing The setting of a guideline for nonexcessive wage the carrot. The stick approach proposes the increases is not so critical a decision within the penalty to be scaled to the degree of overshoot TIP framework as is sometimes argued. The ing of the guideline. Finally there is the fact consequences of a relatively high guideline can that thanks to its voluntary character and avail be compensated for by more severe penalties ability of a reward, the carrot approach should for overshooting. The likelihood that a relatively be more readily acceptable, while the stick low guideline will be frequently overshot can approach avoids a revenue loss and may even be compensated for by a more moderate penalty. yield additional revenues. The concern that a guideline will become the minimum rather than the maximum should be largely allayed by the favorable effects of a guideline on wage setting in smaller firms, un FORM OF TAX UNDER incorporated businesses, and other employers STICK APPROACH 1 that probably would not be covered. The guide A penalty in the form of an increase in the line should embody the well-known principle corporate income tax rate, equal to some mul that nationwide rather than industry- or firmtiple of the excess of a wage increase over a wide productivity gains are the proper standard guideline, is one of several options. It would for wage increases. The guideline would be the have the advantage of relative difficulty of sum of this long-term nationwide productivity trend and an amount, such as perhaps one-half of the going rate of inflation, that would allow 1 These and many other technical aspects are exam ined by Richard E. Slitor in a report, “Tax-Based for the fact that inflation must be wound down Incomes Policy: Technical and Administrative gradually rather than overnight. At the present Aspects,” prepared for the Board of Governors of the time, this sum might be 5.5 per cent, reflecting Federal Reserve System and available on request to Governor Wallich. 2 per cent for productivity and 3.5 per cent for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 457 inflation. The guideline would have to be reset which the wage increase must be computed periodically, perhaps annually, at lower levels clearly must be the parent corporation, rather ideally, until wage increases equal productivity than particular subsidiaries or plants. This gains. means that a number of bargaining units may If prices follow wages, as can be expected, be involved, with different wage settlements. labor would not suffer from accepting a moder The fact that in such a situation management ate guideline even if, at the original rate of would be impelled by TIP to resist all wage inflation, this guideline seemed to leave no room increase demands, both high and low, is not for real wage increases. As inflation decelerates, a disadvantage, however. Wage restraint/to the real wage gains will be restored to their normal extent possible, should be applied with equal level, that is, on average equal to average pro strength at all margins. ductivity gains. COVERAGE COSTING THE WAGE INCREASE Conceptually, TIP can be applied to all em ployers, including unincorporated businesses, To establish the tax consequences of overshoot nonprofit institutions, and governments. Penal ing the wage guideline, exact costing of a bar ties other than the corporate income tax would, gaining agreement, including all types of of course, have to be employed for some of fringes, is necessary. This requires measuring these. In practice, limiting applicability to the the total increase in compensation, including largest 1,000 or 2,000 firms seems preferable pensions, medical benefits, cost-of-living ad from an administrative point of view. The larg justments, improvements in working conditions, est 1,000 firms alone cover about 26 per cent and others. It also becomes necessary to deter of all nongovernmental payroll employees. mine the increase per employee, or per hour They also are the pattern setters for wages so worked, or per hour worked in each differently long as the economy is not overheating. The paid employee category. In all probability, the existence of a guideline should help uncovered best approach would be an index of increases employers restrain the demands confronting covering all employee categories, weighted by them. hours worked. Narrow coverage would reduce a number of For both types of calculation—total increase troublesome administrative problems. Among in compensation, and the per cent increase for these are problems of new firms, and of merging a given firm—there are well established prece or splitting firms. dents. The Internal Revenue Service (IRS) con One possible defect is inherent in narrower tinually has to deal with the question of what coverage. The closeness of the relation of prices constitutes compensation and what does not. and wages may diminish if coverage is incom From the experience of the Council on Wage plete. A loosening of this linkage could, of and Price Stability and before it that of the Pay course, occur in special circumstances. A man Board, which administered wage controls dur ner of dealing with it is outlined in the next ing Phase Two, the problems involved in cost section. ing out a percentage increase are familiar. They are not simple, but they would yield to careful writing of regulations. The task would be made RESTRAINING AN easier if the number of firms to be covered is INCREASE IN PROFITS limited. It would be eased also by the fact that small differences between taxpayers and the IRS In terms of nationwide averages, prices move would have only small consequences in terms with wages. Under some circumstances, the link of the penalty to be assessed under a graduated may loosen. Some of these instances are not penalty scheme. capable of being remedied. For instance, a de If a surcharge on the corporate income tax cline in productivity, a rise in oil prices, and is employed as the tax “stick,” the unit for the consequences of a drop in the dollar, are Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

458 Federal Reserve Bulletin □ June 1978 “real” phenomena that affect the availability thereby avoiding the familiar drawbacks of an of goods. They are bound to affect real wages. excess profits tax geared to the profits of partic This is not the case, however, of a loosening ular enterprises. Given the close historical link of the linkage of wages and prices that is re between wages and prices, this “corporate sec flected in a change in profit margins. In the tor excess profits tax” probably would rarely, unlikely event that deceleration of wages should if ever, be triggered. But its existence would fail to be followed by deceleration of prices serve as a protection against an adverse shift without any of the factors noted above being in the distribution of income. present, profit margins would widen. The share of profits in GNP, in that event, would rise as a consequence of wage restraint. REVENUES This contingency could be guarded against by changing the corporate profits tax rate in such Neither the penalty tax on excess wage increases a way as to restore the after-tax share of profits nor the “corporate sector excess profits tax” are to its previous level. In order to eliminate the intended to raise revenue although they may do influence of purely cyclical factors, some so. Any revenue that does accrue could be benchmark for the profit share based on histori employed to reduce income taxes. The amounts cal relationships might be established. A tax raised by the penalty tax depend, of course, on designed to hold profits down to this share could the level at which the guideline would be set be regarded as an “excess profits tax” on the and on the penalty rate on overshooting these profits of the entire corporate sector. It would guidelines. The objectives in setting rates should fall on corporations with high and low earnings. not be the raising of revenues but, rather, the It would probably have a very moderate impact, optimal functioning of TIP. □ Statement by G. William Miller, Chairman, the Board’s current assessment of the condition Board of Governors of the Federal Reserve of the banking system. In the second part of System, and Philip E. Coldwell, Member, our testimony Governor Coldwell will review Board of Governors, before the Committee on in greater detail recent trends in the principal Banking, Housing and Urban Affairs, U.S. indexes of bank soundness. Senate, May 25, 1978. Perhaps the factor that has resulted in the most far-reaching changes to the banking envi Governor Coldwell and I appreciate the oppor ronment has been the rapid development of a tunity to appear before this committee today to more interdependent worldwide economic sys testify on the condition of the U.S. banking tem. This modern-day phenomenon was brought system. Before commencing our testimony, I about by improvements in communications and want to emphasize the support of the Board of transportation and by the uneven distribution of Governors of the Federal Reserve System for resources among countries. Responding to the these annual hearings. The Board believes that opportunities afforded by the global economy, the impact of our banking system on our econ American banks have substantially expanded omy is too important to go without periodic their service offerings and have increased review and hopes that hearings of this kind will greatly the number of locations at which these add to the public’s understanding of the banking services are provided. system and will enable all of us to view specific Accelerating demands for new banking serv problems in a better perspective. ices can have both positive and negative impli The Board’s testimony today will be in two cations for bank soundness. On the plus side, parts. In the first part I will discuss several they can open up important new profit opportu fundamental changes taking place in the banking nities. For example, some American banks that environment and will present, in general terms, blazed the trail in international banking have Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 459 found this area to be particularly profitable and to maintain them. Banks have responded by now derive a substantial amount of their current doing both. earnings from this source. Moreover, develop Finally, during the 1970’s, banks also have ing new products and serving additional geo had to operate in a much less hospitable eco graphic areas enable banks to diversify their nomic environment than during the two previous operations, thereby reducing risk. decades. This was most dramatically demon On the other hand, serving new product and strated by the deep recession in 1974—75 when geographic markets can present problems. Such banks experienced large loan losses and had to expansion requires bankers to acquire new skills contend with the only significant erosion of and to assimilate a great deal more information. public confidence in banks in several decades. It also requires bankers to cope with new types However, the banking system did weather the of risks. For example, the expansion of U.S. problems of the mid-1970’s, and since then banks abroad has required management to deal bank managements have become more conserv with such forms of risks as country risk and ative in their philosophy and operations. Yet, foreign exchange risk. given the key role that banks must play in A second major change in the banking envi financing our economy, there are obvious limi ronment in recent years is that banking has tations in the adjustments that managements can become considerably more competitive. This make. Consequently, if the domestic and inter trend is evident almost everywhere we look. We national economy in the future should continue see the large money-center banks opening loan to exhibit the degree of instability of the 1970’s, production offices throughout the Nation and we must expect that some banks will experience competing against the large regional banks for occasional problems. business loans. We see banking organizations, Having discussed some of the recent funda through the holding company structure, ex mental changes in the environment in which panding throughout much of the Nation to serve banks operate, I would like to turn to the local mortgage and consumer lending markets. Board’s over-all assessment of the current con We also see large U.S. banks competing more dition of the banking system. During last year’s and more with large foreign banks in the major testimony, Chairman Burns stated that the con financial centers abroad. And, finally, we have dition of the banking system had improved seen foreign banks enter the United States, during 1976.1 am happy to report that—by most sometimes on a more favorable basis, and win traditional measures—this improvement contin a significant portion of the business loan market. ued during 1977 and into early 1978. Moreover, In addition to this increasing competition in the Board’s judgment, the banking system within commercial banking, we are witnessing today is in good condition. a gradual homogenizing of the entire financial Probably the most important factor account sector. Little by little, savings and loan associa ing for the improvement in banking in the last tions, mutual savings banks, and credit unions year or so has been the continued expansion of are becoming more like banks as limiting legis the economy. Last year, real gross national lation is removed and new ways to avoid re product rose almost 5 per cent, after rising 6 strictive barriers are found. To a lesser extent, per cent the previous year. This steady expan banks are also experiencing increased competi sion in the economy clearly played a role in tion from other types of financial institutions and the decline in bank failures in 1977 to only six. even from some firms outside the financial sec But the improvement in the condition of the tor. banking system has been due to more than a This constantly increasing competitive envi healthier economy. In the past several years ronment is certainly desirable for bank custom bankers have demonstrated a more conservative ers. But for banks, increased competition may approach to lending, capital, and liquidity than exert downward pressure on profit margins. they had exhibited during the early 1970’s. With profit margins falling, banks in recent Moreover, bankers have been diligent in trying years have had the option of accepting these to work out the large amount of loans that lower margins or taking greater risks in order became troublesome during the recent reces Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

460 Federal Reserve Bulletin □ June 1978 sion. Finally, I believe that bank supervisors can Mr. Chairman, I would first like to review claim some credit for the improvements in recent trends in the principal indexes of bank banking. During the last few years they have soundness. These indexes include bank asset used a variety of measures to persuade individ quality, liquidity, capital, and earnings. In our ual banks to strengthen their financial condition judgment, an understanding of trends in these and to avoid unwarranted expansion. indexes is crucial in evaluating the current con So far I have painted a rather positive picture dition of the banking system and formulating of recent trends in the condition of the banking bank supervisory policy. system. However, I want to emphasize that The quality of bank assets is reflected by the problems and challenges still remain. The num volume of assets classified by bank examiners ber of problem banks is still large by historical and by the volume of nonearning assets being standards and the volume of troubled loans in carried by banks. During 1977 the amount of bank portfolios is still uncomfortably high. classified assets of insured banks declined by These and other problems will continue to re about 10 per cent, after more than tripling quire the close attention of both bankers and between 1973 and 1975. Moreover, the amount bank supervisors. of assets classified by examiners as doubtful and Another important challenge is posed by the loss—the two most serious classifications— continuing erosion of membership in the Federal declined by about 20 per cent. Banks with assets Reserve System. Over the past 5 years, 254 exceeding $5 billion experienced a slightly banks have left the System, and the proportion greater relative decline in classified assets than of total bank deposits held by member banks did the rest of the banking system. However, has dropped from 77 per cent to 72 per cent. these large banks still have a much higher level The increased willingness of banks to drop of classified assets relative to their capital than their membership in the Federal Reserve System do other banks. has a simple cause. It is just too costly to be Other measures of bank asset quality also a member. Member banks are required to hold have shown marked improvement. Available a significantly larger proportion of their assets data indicate that nonperforming assets (which as nonearning cash reserves than are other banks include nonaccruing loans, renegotiated loans, and savings institutions. And in this period of and real estate acquired in foreclosure) fell inflation and increased competition between roughly 15 per cent last year—despite a 13 per banks and other institutions in providing pay cent rise in total bank assets. ments services, the burden of membership is The major asset problem still facing banks particularly severe. is troubled real estate loans. Many of these loans Fair competition among member banks and were made during the real estate boom of the other depositary and credit institutions requires early 1970’s to finance projects that became at that this membership burden be eliminated. If least temporarily difficult to market. Many it is not, we can expect a continued, probably banks have been forced to carry large amounts an accelerated, erosion of membership in the of these loans on a nonearning basis, thereby Federal Reserve. This threatens to weaken our depressing their earnings. During 1977 and financial system, as more and more of the Na early 1978 the demand for these real estate tion’s payments and credit transactions are. han projects continued to pick up, and as projects dled outside the safe channels of the Federal were sold off, the quality of bank real estate Reserve, as fewer and fewer banks have imme portfolios improved. This progress, however, diate access to Federal Reserve Bank credit has been slow, and still more time and im facilities, as a national presence in bank super provement in certain segments of the real estate visory and regulatory functions becomes in sector will be required before these loans are creasingly diluted, and as implementation of worked down to a more reasonable level. monetary policy becomes more difficult. At present, the banking system appears to be I have now completed my general remarks. in a satisfactory liquidity position, partly due Governor Coldwell will now present the balance to a sizable build-up in U.S. Government se of the Board’s testimony. curities during 1975 and 1976. Last year, how Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 461 ever, bank liquidity decreased. First, banks sig sions for loan losses declined about 11 per cent, nificantly increased their reliance on relatively reflecting an even sharper drop in actual net loan volatile liabilities such as large time deposits charge-offs. Third, the amount of loans on and Federal funds. In addition, banks slightly which interest was not accruing was reduced reduced their holdings of securities with ma significantly. turities of less than 1 year. It should be pointed out to the committee that From the end of World War II through 1974, the favorable earnings presented by the banking bank capital ratios declined almost steadily. data are based on generally accepted accounting Moreover, this decline picked up momentum principles that do not take adequate account of during the early 1970’s when rapid asset inflation. As you know, inflation erodes nominal growth, particularly abroad, far outdistanced the monetary values, including bank capital, assets, growth of capital. It was during this period that and liabilities. the capital ratios of some of the Nation’s major The one major factor that hindered earnings banks declined to what we regard as undesirably last year was narrower spreads between yields low levels. on earning assets and the cost of funds. For Since 1974, however, bank capital ratios example, the spread between the prime rate, generally have improved—rising sharply in which banks charge their best domestic custom 1975, climbing somewhat more in 1976, before ers, and the rate that banks pay on their large declining moderately last year. A primary factor certificates of deposit averaged 1.3 percentage in last year’s decline was the rapid, 13 per cent points during 1977, compared with 1.7 percent growth in bank assets. age points during the previous year. Banks also In recent years banks have relied principally experienced some reduction in spreads on their on retained earnings to build up their capital. foreign business during 1977. These reductions In the aggregate, banks typically retain about in spreads, both here and abroad, are evidence 60 per cent of their net income. Recently, most of increasing competition among financial insti external financing of banks has been supplied tutions. by bank holding companies, which now own During the first quarter of this year, banks almost all of the Nation’s largest banks. These continued their strong earnings performance in holding companies in turn have resorted largely nominal terms. While complete data are not yet to long-term debt issues to obtain funds. available, net income appears to have increased One reason for their heavy reliance on long by about 20 per cent over the first quarter of term debt, at least since 1974, is that the market 1977. Declining loan-loss provisions and a re value of bank holding company stock has been duction in nonperforming assets again ac depressed. Even today, the stocks of many of counted for part of the improvement. But the Nation’s largest holding companies are sell foreign exchange operations also contributed ing at only six to eight times earnings, and many strongly to increased profits for some large also sell well below book value. These unfav banks. orable market conditions have made it very Having briefly reviewed the principal indexes costly for these organizations to add to their of bank soundness, I would now like to turn equity capital through the sale of common stock. to several potential problem areas that have As an alternative, several large holding compa recently received considerable public attention. nies have recently resorted to issuing preferred The first area is the agricultural sector, where stock. net income from farm operations last year was Another key factor in determining the condi about one-third below the prosperous years of tion of the banking system is bank earnings. 1973-74. This decline has been due both to Last year, earnings were impressive, with net escalating costs of production and to declines income of insured banks up 13 per cent over in commodity prices. In contrast to declining the 1976 level. Several factors were primarily income, farm debt has risen by about 60 per responsible for this performance. The first was cent since 1974. the rapid growth in earning assets, with loans These unfavorable financial trends have made alone up more than 15 per cent. Second, provi it difficult for some farmers to service their debt. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

462 Federal Reserve Bulletin □ June 1978 As a result, some farm banks have experienced a sizable part, of the bonds’ principal value. slower loan repayments and increased requests Unlike a business firm, which may not survive for loan extensions. So far, however, farm a default, a governmental entity will continue banks have not experienced a serious deterio to exist, it will still have tax revenue, and the ration in the quality of their, loan portfolios. default will have to be cured in some manner Moreover, while the loan-to-asset ratios of so that the unit can regain its financial standing. many of these banks are significantly higher than I would now like to turn away from these normal, these banks generally have not encoun domestic problem areas and move to the inter tered serious liquidity problems. In sum, most national activities of our banks. As you will farm banks are now in satisfactory condition and remember, a considerable amount of attention should continue to prosper, assuming that the was given to this sector of operations in last recent squeeze on farm profits does not continue year’s testimony. That review focused on the for an extended time. elements that contributed to the substantial ex Another area of concern is the financial con pansion of the role of U.S. banks in interna dition of New York City. As we all remember, tional lending both from offices here and through the near-default of New York City in 1975, offices abroad. In the context of that review, following the severe recession and the failure some concern was expressed about the rapidity of several large banks, sent shock waves with which international loan portfolios were throughout the financial community. Since 1975 being expanded and the enlarged risk exposure New York has made considerable progress of our banks. toward putting its financial house in order. International lending by U.S. banks again However, it has not been able to regain access increased substantially in 1977. However, data to capital markets, and since 1975 it has had indicate a slowing in the growth rate of that to rely on the Federal Government for financial lending compared with the previous year’s. support in the form of seasonal loans. Continu Total foreign assets at domestic offices and ation of some form of Federal aid beyond this foreign branches of U.S. banks increased about June is now being considered by the Congress. 14 per cent in 1977, about half the average In order to determine the exposure of U.S. growth rate for the three preceding years. The banks to a possible default by New York City slower rate of growth was most marked in on its obligations, in early 1978 the three Fed lending in major financial centers and to non-oil eral bank supervisory agencies completed a sur developing countries. A number of countries to vey of the ownership of New York securities which U.S. banks have traditionally been large by commercial banks. The obligations covered lenders reduced their demands for international included those issued by New York City, by credits as the result of measures taken in those New York State, by New York State agencies, countries to restore a greater measure of internal and by the Municipal Assistance Corporation. financial stability and a better balance in their Briefly, the early 1978 survey indicated that external payments. 306 banks held New York securities in excess U.S. banks also appear to have been more of 20 per cent of equity capital. New York City cautious in their international lending during obligations held by these 306 banks totaled $554 1977 than in prior years. This is a welcome and million while Municipal Assistance Corporation salutary development. As was emphasized a obligations amounted to $1.7 billion. In sum, year ago, U.S. banks have a major continuing while the number of banks with large holdings role in international lending and financing. Also, of New York City-related securities has declined as long as the present substantial imbalances in substantially since an earlier survey in late 1975, world payments persist, there will be a sizable it still remains sizable. financing role for the multinational banking In analyzing the potential impact of a default system in which U.S. banks play such an im on banks that hold New York City securities, portant part. In this environment, it remains it is important to recognize that a default on essential that U.S. banks in their international an obligation by a State, municipality, or related credit activities exercise high standards of agency need not lead to a loss of all, or even banking prudence. To do so entails maintaining Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 463 suitable diversification of their international loan about external borrowings and external indebt portfolios. It also calls for the banks to obtain edness of the main borrowing countries. full information about the capabilities of indi While country risk is a proper subject for vidual foreign borrowers and of foreign country concern, perspective must be maintained on the borrowers to service external indebtedness. country exposures of U.S. banks. Actual de In the last year U.S. bank supervisory au faults by countries on their external debts, pub thorities have made considerable progress in lic or private, have been rare in recent experi adding to the information available on the ex ence. The risks to the banks, therefore, are less ternal lending of U.S. banks. A new compre in terms of ultimate collectibility of credits than hensive report—jointly developed by the Fed in terms of liquidity and income resulting from eral Reserve, the Comptroller of the Currency, possible failure of countries to service properly and the Federal Deposit Insurance Corpora their external borrowings. tion—now periodically obtains information While the recent, slower pace of international from the major banks about the distribution by lending by U.S. banks and the apparent height country of their international loan portfolios ened sense of caution in that lending are healthy with breakdowns by broad category of customer developments, there are still several areas of and by maturities. This information is structured concern. First, a few countries to which U.S. to provide a better assessment of the country banks have made loans are having serious eco risks in the banks’ international loan portfolios. nomic and financial problems and are having As such, it allows the banking agencies to be difficulty in servicing their external debts more watchful about these risks in individual promptly. Second, some U.S. banks have a banks. rather sizable exposure in individual countries Aggregate data from the first country expo relative to their capital and reserves. Finally, sure survey, which was conducted in June 1977, interest rate spreads on some recent international was released early this year. This survey in loans have narrowed and maturities have cluded all U.S. banks with total assets exceed lengthened to an extent that the return to banks ing $1 billion. These banks reported having, in may not be commensurate with the risks in the aggregate, $164 billion in claims on for volved. This development is somewhat worri eigners that were denominated in currency other some because international earnings now com than that of the foreign country. They also had prise a substantial portion of the total earnings an additional $45 billion in local currency of our largest banks and because earnings re claims that were largely funded by local depos main the principal source for strengthening their its. Seventy per cent of these $209 billion of capital positions. claims were on, or were guaranteed by, resi Before concluding this testimony, I would dents of developed countries, usually Group of like to inform the committee as to what the Ten countries. Federal Reserve has done in the last year to The survey also showed that banks had $46 improve our policies and procedures for super billion of credit outstanding to non-oil produc vising State member banks and bank holding ing less developed countries (LDC’s) and East companies. Some of these changes have resulted ern European countries. This amounted to about from problems that had surfaced in recent years. 6.5 per cent of the total assets of these banks. In November 1977 the Board approved an ex In December of last year the second survey panded program for the inspection of large bank of the foreign lending of U.S. banks was con holding companies. The two essential elements ducted, and the results should be available of the program are an increased frequency of shortly. This survey will furnish valuable infor inspections and the standardization of the mation to the banks in their own efforts to inspection report. assess, control, and monitor their international All bank holding companies with consoli lending. In addition to the survey results, coop dated assets in excess of $300 million will now erative efforts among central banks and interna be inspected annually—unless nonbanking ac tional institutions are continuing to add to the tivity and parent company debt are considered information available to commercial banks minimal, in which case inspections will con Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

464 Federal Reserve Bulletin □ June 1978 tinue to be conducted once every 3 years. The Interagency Supervisory Committee in March impact of the increased frequency of inspections 1977. This committee, which is an adjunct of will be approximately to double the number of the Interagency Coordinating Committee, con large holding companies inspected on an annual sists of the senior supervisory officials of the basis and to increase the percentage of total Federal Deposit Insurance Corporation, Office holding company assets inspected annually from of the Comptroller of the Currency, Federal about 45 per cent in 1976 to 85 per cent when Home Loan Bank Board, National Credit Union the program is fully operational. Administration, and Board of Governors of the The standardization of the report form is Federal Reserve System. The purpose of the expected to provide a variety of benefits, in committee, which meets monthly, is to review cluding the framework for a comprehensive supervisory issues and practices and to develop review of nonbank assets and holding company wherever possible uniform policies and proce debt levels, greater consistency, an increase in dures. the on-site efficiency of the inspection process, During its first year of operation, the com the capacity for centralized training of inspec mittee inaugurated the uniform credit program tion personnel, and the ability to allocate per in which a team of examiners from the three sonnel more efficiently among the Reserve Dis agencies annually reviews loans in excess of $20 tricts. million that are shared by two or more banks. During the past year the Board, in conjunc Such review eliminates the need for a separate tion with the Reserve Banks, has implemented analysis of the loan at each participating bank a bank surveillance system that aids in the and leads to consistent treatment by examiners. identification of actual and potential financial Second, agreement among the agencies has problems of banks. In addition, several new been reached on the definition of a concentra bank holding company surveillance capabilities tion of credit. This agreement will insure a con were developed to enhance existing screening sistent treatment of credit concentration by techniques, data collection systems, and analyt the three agencies in future years. Third, staff ical reports. Recently, resources have been de of the three agencies have agreed on the prin voted to improving supervisory reports used in ciples of a uniform system for rating all the surveillance process, to streamlining the banks, and each agency is currently testing the reports so as to reduce the reporting burden on system. respondents, and to expediting the use of the In closing, Mr. Chairman, I would like to data. restate the central thesis of our testimony—that I want to emphasize that 1977 saw further while continued vigilance is still necessary, the accomplishments in interagency cooperation condition of the banking system is now good and standardization of procedures. Central to the and, by most measures, is better than it was success of this effort was the formation of the at the time of last year’s hearings. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

465 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON APRIL 18, 1978 Domestic Policy Directive The information reviewed at this meeting suggested that growth in real output of goods and services had been small in the first quarter of 1978, owing in part to the unusually severe weather and the lengthy strike in coal mining, but that economic activity was rebounding in the latter part of the period. Staff projections suggested that the first-quarter shortfall in growth from the rate expected earlier would be about made up in the current quarter and that over the year ahead output would grow at a moderate pace. The rise in average prices—as measured by the fixed-weighted price index for gross domestic business product—appeared to have stepped up considerably in the first quarter from the annual rate of 5.4 per cent estimated for the fourth quarter of 1977, reflecting for the most part reduced supplies of meats and increases in payroll taxes and in minimum wages at the beginning of the year. The staff’s latest projections of the rise in prices, which were somewhat higher than those made 4 weeks earlier, suggested that the rate over the year ahead would remain well above that in the fourth quarter of 1977. It was also anticipated that the unemployment rate would move downward gradually over the period. In the first quarter, according to the latest staff estimates, growth in real GNP had slowed much more than had been anticipated a month earlier—mainly because an expected improvement in net exports of goods and services apparently had failed to develop but also because adverse weather had impeded residential, business, and public construction more than had been thought previously. It was still estimated that consumer expenditures for goods in real terms, after having grown rapidly in the fourth quarter of 1977, had declined in the first quarter of 1978. Altogether, final sales Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

466 Federal Reserve Bulletin □ June 1976 in real terms had slowed much more than growth in output, and the rate of business inventory accumulation had picked up from the sharply reduced pace in the preceding quarter. The staff projections suggested that consumer spending for goods in real terms and both private and public construction would rebound in the second quarter, that the rate of inventory accumula tion would increase somewhat further, and that net exports of goods and services would improve moderately. It was anticipated that in the remaining two quarters of the year real consumption expend itures and real business fixed investment would expand moderately but that the foreign trade position would change little and that residential construction would begin to edge down in response to the less favorable mortgage market conditions that had been devel oping recently. In March the index of industrial production increased 1.4 per cent, following a rise of 0.3 per cent in February and a decline of 0.8 per cent in January. Thus, the index for March was about 1 per cent above that for December, although the average for the first quarter of 1978 was about the same as that for the fourth quarter of 1977. Nonfarm payroll employment rose sharply further in March, and gains were widespread among industry groups. In manufacturing, the increase was sizable for the fourth successive month, and the average workweek recovered to the November-December level. The unemployment rate edged up 0.1 of a percentage point to 6.2 per cent, as the civilian labor force expanded substantially after having been unchanged in February. Total retail sales in February, according to revised estimates, had recovered much more of the January drop than had been reported earlier, and they expanded substantially further in March. Nevertheless, total sales were about the same in the first quarter as in the fourth quarter of 1977. Unit sales of new automobiles, domestic and foreign combined, rose sharply in March, carrying the first-quarter total up to the level of each of the two preceding quarters. The index of average hourly earnings for private nonfarm pro duction workers rose at an annual rate of about 9 per cent from December to March, compared with a rate of about 8 per cent over the preceding 3 months. The acceleration in the first quarter Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 467 resulted in large part from the increase in minimum wages at the beginning of the year. The wholesale price index for all commodities rose 1 per cent in March, the same as in February, reflecting further large increases in prices of farm products and foods. In February the consumer price index for all urban consumers had continued to advance at a faster pace than in the second half of 1977, owing to large increases in retail prices of foods and in rates for natural gas and electricity. The U.S. foreign trade deficit increased significantly in February, as the value of imports rose sharply while the value of exports changed little. After the trade statistics had been announced on March 31, the trade-weighted value of the dollar declined nearly 1 per cent. In the week preceding this meeting, however, the dollar recovered to about the same level as that 4 weeks earlier. The rate of expansion in total credit at U.S. commercial banks during March was close to that in February. Growth in loans, particularly business loans and real estate loans, accelerated. At the same time banks reduced their holdings of Treasury securi ties—resuming the pattern of net liquidation of investments that had been interrupted by substantial acquisitions of Treasury securi ties in February. Over the first quarter, total bank credit grew at an annual rate of about IOV2 per cent, compared with 8V2 per cent in the second half of 1977. Business loans (net of bankers accept ances) increased in March at an annual rate of 23 per cent, approaching the rapid pace recorded in the first half of 1974. Outstanding commercial paper of nonfinancial businesses rose sharply in March, almost offsetting the sizable decreases in the preceding 2 months. Public utilities accounted in large part for both the rise in March and the earlier declines. The narrowly defined money supply (M-l), which had declined in February, rose moderately in March, and in the first quarter—on a quarterly-average basis—it expanded at an annual rate of 5 per cent. From the first quarter of 1977 to the first quarter of 1978, M-l grew about 7lA per cent. Inflows to banks of time and savings deposits other than negotia ble CD’s and inflows of deposits to nonbank thrift institutions remained slow in March, and growth rates for M-2 and M-3 were near the reduced rates in February. From the first quarter of 1977 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

468 Federal Reserve Bulletin □ June 1978 to the first quarter of 1978, M-2 and M-3 grew about 8V2 and IOV2 per cent, respectively. At its March meeting the Committee had decided that during the March-April period growth in M-l and M-2 within ranges of 4 to 8 and 5lh to 9 per cent, respectively, would be appropriate. It had judged that these growth rates were likely to be associated with a weekly-average Federal funds rate of about 63A per cent. The Committee had agreed that if growth rates in the aggregates over the 2-month period appeared to be deviating significantly from the midpoints of the indicated ranges, the operational objective for the weekly-average Federal funds rate should be modified in an orderly fashion within a range of 6V2 to 7 per cent. The members also agreed, however, that a reduction in the rate below 6% per cent would not be sought until the Committee had had an opportu nity for further consultation. Projections made on the basis of data that had become available in the days immediately following the March meeting suggested that over the March-April period both M-l and M-2 would grow at rates that were high within their specified ranges. The figures were regarded as especially tentative, however, since the strength was concentrated in the part of the period for which growth rates were projected. Consequently, the Manager of the System Open Market Account continued to seek a Federal funds rate of about 63A per cent. Data becoming available later in the inter-meeting period suggested more moderate rates of growth in the monetary aggregates, and the weekly-average funds rate remained close to 63A per cent throughout the period. Market interest rates in general were subjected to upward pres sure during much of the inter-meeting period, apparently because of investor concerns about the deterioration in the balance of U.S. foreign trade, the acceleration of the rise in prices, and the possi bility of a surge in monetary growth in April. Most interest rates—especially longer-term rates—increased somewhat on bal ance over the period. Recently, however, Treasury bill rates had declined, and on the day before this meeting the 3-month bill rate was somewhat below its level just before the March meeting. Treasury borrowing remained relatively strong during the inter meeting period. In addition to issuing $6.0 billion of short-term, cash-management bills, the Treasury raised $300 million of new Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 469 money in its regular weekly bill auctions and more than $3 billion through sales of 2- and 5-year notes. The Treasury also announced that on April 19, the day after this meeting, it would auction about $2.2 billion of 2-year notes to refund the same amount of publicly held notes maturing on April 30. The Treasury was expected to announce the terms of its mid-May refunding on April 26. Mortgage lending in March apparently picked up somewhat from the reduced pace of January and February, but in the first quarter as a whole the volume was below the peak reached in the fourth quarter of 1977. In February, the latest month for which data were available, mortgage commitment activity at nonbank thrift institu tions weakened further as these institutions continued to experience reduced inflows of deposits. Average interest rates on new com mitments for conventional home loans at savings and loan associa tions edged up further during the inter-meeting period to a level about 35 basis points above that in late December. Yields in the secondary markets for mortgages also continued upward, rising to a level 40 to 50 basis points higher than in late December. In the Committee’s discussion of the economic situation, most members indicated little or no disagreement with the staff projection of moderate growth in real GNP over the year ahead, following the current rebound from the slow pace estimated for the first quarter. However, several members expressed the view that growth would be stronger in the current quarter than had been projected. Of these members, two believed that growth would then slow significantly in the second half of 1978. Concerning the current rebound in growth, one member thought that it could be considerably greater than had been projected, owing to the dynamics of the process of income creation, and that such additional strength at the current stage of the business expansion could have adverse consequences. In any case, he saw grounds for concern in the way the economic situation might be developing. One of the members who thought that the near-term strength in activity would give way to very slow growth in the second half of the year believed that residential construction, and perhaps also consumer spending, would be weaker in that period than had been projected. At the same time, he expected the country’s foreign trade position to be stronger than had been projected. The second member who anticipated a marked slowing of growth later in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

470 Federal Reserve Bulletin □ June 1978 year felt that such a development would not be undesirable; he shared the opinion of another member that the unemployment rate was approaching the level where unused labor resources of many kinds might be limited. A third member expressed disagreement with that view of the unemployment situation. He suggested that it was not widely held and that any tendency for the unemployment rate to stabilize near its current level was likely to lead to some sort of stimulative governmental policy measures. One member commented that output could continue to grow at a moderate pace without generating unusual pressures because some slack still existed in the utilization of industrial capacity and of the labor force. With respect to the latter, he pointed out that a large number of persons in public service jobs created under Federal programs were available for other types of employment, even though they were not counted among the unemployed. He also noted that business fixed investment in real terms had not yet recovered to its previous high and that the inventory situation was favorable. Nevertheless, in his view, growth in over-all output might be held down if inflationary expectations led to increases in interest rates—thereby adversely affecting residential con struction and business fixed investment—and if the international economic situation proved to have an adverse influence on the domestic economy. Committee members in general were deeply concerned about price prospects. Views were expressed to the effect that people in both the public and private sectors appeared as yet not to be making the sorts of difficult decisions required to reduce the pace of the rise in prices; that expectations of a high rate of inflation seemed to be growing and, as a result, actions of businessmen and consumers might tend to make their expectations self-fulfilling; that the rate of increase in wage rates might well accelerate if prices rose at the projected rate or if the labor contract recently negotiated in the coal industry were viewed as a pattern-setter; and that individual efforts to profit from inflation could lead to some speculative activity. The comment was also made that in the past several weeks the public’s attention increasingly had been focused on the problem of inflation. It was noted that the current rise in prices was more rapid than the rate that had been projected early in 1977. Questions were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 471 raised as to whether the recent acceleration of the rise was attrib utable primarily to special factors affecting foods and to the depre ciation of the dollar in foreign exchange markets or whether it reflected more general influences, such as the pressures that fre quently emerge in the latter phase of a business upswing or the effect of the rate of monetary growth during 1977. As at other recent meetings, the observation was made that monetary policy could be no more than one element in an effective program to fight inflation. At this meeting the Committee reviewed its 12-month ranges for growth in the monetary aggregates. At its meeting in February 1978 the Committee had specified the following ranges for growth over the period from the fourth quarter of 1977 to the fourth quarter of 1978: M-l, 4 to 6V2 per cent; M-2, 6V2 to 9 per cent; and M-3, IV2 to 10 per cent. The associated range for growth in commercial bank credit was 7 to 10 per cent. The ranges being considered at this meeting were for the period from the first quarter of 1978 to the first quarter of 1979. In the Committee’s discussion of the appropriate ranges, the members were unanimous in favoring retention of the existing range for M-l. It was suggested that it might be desirable, for technical reasons, to reduce the ranges for M-2 and M-3—or the range for M-3 alone. However, that suggestion had little support; most of the members advocated retaining the existing ranges for all of these aggregates. In recognition of the Committee’s continuing objective to move gradually toward longer-run rates of monetary expansion consistent with general price stability, several members expressed the view that it was more important at this time to pursue measures that would hold monetary growth within the existing ranges than it was to make further reductions in the ranges themselves. In this con nection, it was pointed out that since the fourth quarter of 1976 the rate of growth of M-l had exceeded the 6V2 per cent upper limit of the longer-run range in every quarter except the one just ended. In view of that record, it was suggested, the Committee could most effectively demonstrate its adherence to its longer-run objective and lend support to the administration’s anti-inflation program by succeeding in holding monetary growth within the existing range. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

472 Federal Reserve Bulletin □ June 1978 The point was stressed that retention of the existing ranges for the year ahead should be interpreted as constituting a tighter monetary posture than had been contemplated when the ranges were adopted in February 1978. It was observed that since then the prospective rate of inflation had increased—which implied, other things being equal, that nominal GNP and the associated transac tions demand for money would expand more rapidly than had been anticipated at that time. It was recognized that such an implication could form the basis of an argument for raising the 12-month range for M-l, or at least its upper limit. It was suggested, however, that the ultimate conclusion of such an argument was a monetary policy that always accommodated the existing rate of inflation and that could be expected to lead to still higher rates of inflation and still more rapid monetary growth. In the discussion of the longer-run ranges for M-2 and M-3, it was observed that inflows of time and savings deposits to commercial banks and to nonbank thrift institutions might continue to be impeded by the margin by which market interest rates exceeded the Regulation Q ceiling rates on deposits other than large-denomination CD’s. It was suggested, therefore, that a re duction in the range for M-3, and perhaps in the ranges for both M-2 and M-3, might be viewed as consistent with a retention of the existing range for M -l. In opposition to this view, it was noted that commercial banks would probably continue to expand sub stantially the outstanding volume of large-denomination CD’s not subject to rate ceilings and that the nonbank thrift institutions also were becoming more aggressive in selling such instruments. It was recognized, moreover, that the probability of attaining growth rates for M-2 and M-3 within the existing ranges over the coming year could be influenced by an increase in the Regulation Q ceilings on deposit rates. At the conclusion of its discussion the Committee decided to retain the existing ranges for the monetary aggregates. Thus, the ranges for the period from the first quarter of 1978 to the first quarter of 1979 were 4 to 6^ per cent for M-l, to 9 per cent for M-2, and IV2 to 10 per cent for M-3. The associated range for growth in commercial bank credit was set at IV2 to 10V2 per cent. It was agreed that the longer-run ranges, as well as the particular aggregates for which such ranges were specified, would Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 473 be subject to review and modification at subsequent meetings. It was also understood that short-run factors might cause growth rates from month to month to fall outside the ranges anticipated for the year ahead. The Committee adopted the following ranges for rates of growth in monetary aggregates for the period from the first quarter of 1978 to the first quarter of 1979: M-l, 4 to 6V2 per cent; M-2, 6V2 to 9 per cent; and M-3, IV2 to 10 per cent. The associated range for bank credit is IV2 to \0l/2 per cent. Votes for this action: Messrs. Miller, Volcker, Baughman, Coldwell, Eastburn, Gardner, Jackson, Partee, Wallich, Willes, and Winn. Votes against this action: None. In considering the language of the domestic policy directive to be adopted at this meeting, Committee members agreed that in the statement of the Committee’s general policy stance in the fourth paragraph more weight should be given to the objective of resisting inflationary pressures by citing that objective first. As revised, the statement said that “it is the policy of the Federal Open Market Committee to foster bank reserve and other financial conditions that will resist inflationary pressures while encouraging continued moderate economic expansion and contributing to a sustainable pattern of international transactions.” In the discussion of policy for the period immediately ahead, members of the Committee took account of the likelihood that the demand for money would expand significantly in association with the current rebound in economic activity and of the early indications that M-l was growing rapidly in April. All of the members agreed that operations designed to achieve firmer money market conditions needed to be undertaken promptly if M-l growth were to be held to a path reasonably consistent with the Committee’s longer-run range. At the same time the members felt that, pending additional evidence on the pace of monetary expansion, the degree of firming sought should be modest. Although members of the Committee were in general agreement on objectives for the period immediately ahead, they differed somewhat in their preferences for operating specifications. For the annual rate of growth in M-l over the April-May period, most Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

474 Federal Reserve Bulletin □ June 1978 members favored ranges of 4 to 8 per cent or 5 to 9 per cent, but a few expressed a preference for 5 Vi to 9Vi per cent. Two members advocated wider ranges because of the month-to-month volatility of the measure of monetary growth; one suggested a range of 4 to. 9 per cent, and the other a range of 2 to 8 per cent. For M-2 most members advocated ranges of 5x/i to 9Vi per cent or 6 to 10 per cent, but there was some sentiment for slightly lower ranges. All of the members favored directing open market operations during the coming inter-meeting period initially toward a Federal funds rate slightly above the current level of 63A per cent. Views differed somewhat with respect to the degree of leeway for opera tions during the inter-meeting period in the event that growth in the monetary aggregates appeared to be deviating significantly from the midpoints of the specified ranges. Most members favored a range for the weekly-average Federal funds rate extending from 63A to 7V4 or to 7Vi per cent, but there was some sentiment for a lower limit of 6V2 per cent. Those advocating a lower limit of 63A per cent suggested that any decline in the weekly-average funds rate from the current level would be inappropriate, particularly in view of recent developments in foreign exchange markets. At the same time several members suggested that if the Committee allowed for an increase in the funds rate of as much as % of a percentage point over the inter-meeting period by setting the upper limit of the range at 7Vi per cent, it should also reach an understanding that operations would not be directed toward achieving a rate above l lA per cent before the Committee had had an opportunity for further consultation. At the conclusion of the discussion the Committee decided that growth in M-1 and M-2 over the April-May period at annual rates within ranges of 4 to 8Vi per cent and 5Vi to 9Vi per cent, respectively, would be appropriate. It was understood that in assessing the behavior of these aggregates the Manager should continue to give approximately equal weight to the behavior of M-l and M-2. In the judgment of the Committee such growth rates were likely to be associated with a weekly-average Federal funds rate slightly above the current level of 63A per cent. The members agreed that if growth rates of the aggregates over the 2-month period appeared Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 475 to be deviating significantly from the midpoints of the indicated ranges, the operational objective for the weekly-average Federal funds rate should be modified in an orderly fashion within a range of 6% to IV2 per cent. It was also agreed, however, that an increase in the rate above l lA per cent would not be sought until the Committee had had an opportunity for further consultation. As customary, it was understood that the Chairman might call upon the Committee to consider the need for supplementary in structions before the next scheduled meeting if significant incon sistencies appeared to be developing among the Committee’s various objectives. The members also agreed that in the conduct of day-to-day operations, account should be taken of emerging financial market conditions, including the conditions in foreign exchange markets. 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 was small in the first quarter, owing in part to the unusually severe weather and the lengthy strike in coal mining, but that economic activity was rebounding in the latter part of the period. In March industrial production and nonfarm payroll employment increased sharply further. The unemployment rate edged up from 6.1 to 6.2 per cent, as the civilian labor force expanded substantially. Retail sales recovered much more in Febru ary than had been reported earlier, and sales rose considerably further in March. The pace of the rise in wholesale prices remained rapid, reflecting further large increases in farm products and pro cessed foods. The index of average hourly earnings accelerated in the first quarter, largely because of the increase in minimum wages at the beginning of the year. The trade-weighted value of the dollar against major foreign currencies declined sharply after the March 31 announcement of a very large increase in the U.S. foreign trade deficit for February. But over the past week the dollar has recovered to about its level of 4 weeks ago. M-l, which had declined in February, rose moderately in March. Inflows to banks of time and savings deposits other than negotiable CD’s and inflows to nonbank thrift institutions remained slow. Most market interest rates, especially longer-term rates, have increased somewhat on balance in recent weeks. In light of the foregoing developments, it is the policy of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

476 Federal Reserve Bulletin □ June 1978 Federal Open Market Committee to foster bank reserve and other financial conditions that will resist inflationary pressures while encouraging continued moderate economic expansion and contri buting to a sustainable pattern of international transactions. Growth of M-l, M-2, and M-3 within ranges of 4 to 6V2 per cent, 6V2 to 9 per cent, .and l l/2 to 10 per cent, respectively, from the first quarter of 1978 to the first quarter of 1979 appears to be consistent with these objectives. The associated range for bank credit is IV2 to IOV2 per cent. These ranges are subject to reconsideration at any time as conditions warrant. The Committee seeks to encourage near-term rates of growth in M-l and M-2 on a path believed to be reasonably consistent with the longer-run ranges for monetary aggregates cited in the preceding paragraph. Specifically, at present, it expects the annual growth rates over the April-May period to be within ranges of 4 to &V2 per cent for M-l and 5V2 to 91/2 per cent for M-2. In the judgment of the Committee such growth rates are likely to be associated with a weekly-average Federal funds rate slightly above the current level. If, giving approximately equal weight to M-l and M-2, it appears that growth rates over the 2-month period will deviate significantly from the midpoints of the indicated ranges, the operational objective for the Federal funds rate shall be modified in an orderly fashion within a range of 63A to IV2 per cent. In the conduct of day-to-day operations, account shall be taken of emerging financial market conditions, including the 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. Miller, Volcker, Baughman, Coldwell, Eastburn, Gardner, Jackson, Partee, Wallich, Willes, and Winn. Votes against this action: None. Subsequent to the meeting, on May 5, a telephone conference meeting was held to consult about System open market operations, pursuant to the decision at the April meeting that an increase in the Federal funds rate above 1XA per cent, within the specified range of 63A to 7V2 per cent, would not be sought until the Committee had had an opportunity for further consultation. The latest estimates had indicated that M-1 had grown at a very Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC All rapid pace in April. For the April-May period staff projections had suggested that the annual rate of growth in M-l would be well above the upper limit of the range of 4 to SVi per cent specified by the Committee in the next-to-last paragraph of the domestic policy directive issued at the meeting of April 18. Growth in M-2 for the 2-month period had been projected to be at about the upper limit of the Committee’s range of 5Vi to 9V2 per cent for that aggregate. During the preceding week the Federal funds rate had averaged about 1XA per cent, V2 of a percentage point above the level prevailing at the time of the April meeting. It was reported during the telephone conference that the Com merce Department’s preliminary estimates indicated that real GNP had declined at an annual rate of 0.6 per cent in the first quarter, a somewhat weaker performance than had been anticipated at the time of the April meeting, but that real GNP appeared to be rising more rapidly in the second quarter than the staff had projected at that time. The behavior of GNP in both quarters was importantly affected by temporary influences. The acceleration of growth of nominal GNP in the current quarter from the reduced pace in the first quarter appeared to be the main factor explaining the sharp acceleration of monetary growth in April. Other transitory forces—specifically, mobilization of cash by the public to make unusually large payments of Federal income taxes not withheld, somewhat slower processing of tax returns, and the upsurge in the volume of trading on the stock exchanges— might also have contributed to the April rate of monetary growth. In its discussion the Committee agreed that, while the firming in money market conditions that had been accomplished since the meeting of April 18 had clearly been appropriate, there was some question as to whether further firming at this point would be desirable. Specifically, the Committee concluded that it would be appropriate to await some further evidence on the economic outlook and some indication of the extent to which the April surge in M-1 would subside. At the conclusion of the discussion the Committee directed the Manager, until further instructed, to seek to maintain the weeklyaverage Federal funds rate at about l lA per cent, with any deviations tending to be in the direction of higher rather than lower funds rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

478 Federal Reserve Bulletin □ June 1978 On May 5, 1978, the Committee modified the domestic policy directive adopted at its meeting of April 18, 1978, to direct the Desk, until further instructed, to seek to maintain the weeklyaverage Federal funds rate at about the prevailing level of l lA per cent, with any deviations tending to be in the direction of higher rather than lower funds rates. Votes for this action: Messrs. Miller, Volcker, Baughman, Gardner, Jackson, Partee, Wallich, and Winn. Votes against this action: Messrs. Black and Willes. Absent and not voting: Messrs. Coldwell and Eastburn. (Mr. Black voted as alternate for Mr. Eastburn.) Messrs. Black and Willes dissented from this action because they preferred to make use of the full range that had been specified for the Federal funds rate. They believed that, given the accelerated pace of expansion in nominal GNP, growth of both M-l and M-2 would be subjected to persistent upward pressure throughout the rest of the second quarter and that a further upward adjustment in the funds rate at this time would be helpful in moderating such pressures and, like the firming that had already occurred, would be regarded as a positive step in resisting inflationary pressures. * * * * * 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

479 Law Department S tatu tes, regulations, interpretations, and d ecision s INTEREST ON DEPOSITS maintain deposits subject to negotiable orders of withdrawal where authorized by Federal law. The Board of Governors of the Federal Reserve System has amended its Regulation Q to permit banks that are members of the Federal Reserve The Board of Governors has amended its Regu System to arrange with their depositors for the lation Q to authorize member banks to offer to automatic transfer of funds from depositors’ sav depositors two new categories of time deposits. ings accounts to demand deposit and other ac Effective June 1, 1978, Section 217.7 is counts to cover checks drawn or to maintain a amended to read as follows: minimum balance. Effective November 1, 1978, Section Section 217.7— Maximum Rates of 217.5(c)(2) and (3) of Regulation Q is amended to read as follows: Interest Payable by Member Banks on Time and Savings Deposits Section 217.5— Withdrawal of Savings (b) TIME DEPOSITS OF LESS THAN $100,000. Deposits * * * * * (4) Member banks may pay interest on any time (c) MANNER OF PAYMENT OF SAVINGS DE deposit of $1,000 or more, with a maturity of eight POSITS years or more, at a rate not to exceed 13A per * * * * * cent.2 (2) Notwithstanding the provisions of subpara graph (1) of this paragraph, withdrawals may be (d) GOVERNMENTAL UNIT TIME DEPOSITS permitted by a member bank to be made automat OF LESS TH^N $100,000. Except as provided in ically or as a normal practice from a savings paragraphs (a) and (f), no member bank shall pay deposit that consists only of funds in which the interest on any time deposit which consists of entire beneficial interest is held by one or more funds deposited to the credit of, or in which the individuals through payment to the bank itself or entire beneficial interest is held by, the United through transfer of credit to a demand deposit or States, any State of the United States, or any other account pursuant to a written authorization county, municipality, or political subdivision from the depositor to make such payments or thereof, the District of Columbia, the Common transfers in order to cover checks or drafts drawn wealth of Puerto Rico, the Virgin Islands, Ameri upon the bank or to maintain a specified balance can Samoa, Guam, or political subdivision in or to make periodic transfers to such accounts. thereof, at a rate in excess of the highest of any In accordance with § 217.1(e)(2) of this Part, a of the permissible rates that can be paid on time member bank must reserve the right to require the deposits under $100,000 with maturities in excess depositor to give notice in writing of an intended of six months (26 weeks) by any Federally insured withdrawal not less than 30 days before such commercial bank, mutual savings bank or savings withdrawal is made. Such notice shall be promi and loan association.3 nently disclosed and specifically brought to the (e) INDIVIDUAL RETIREMENT ACCOUNT depositor’s attention at the time the automatic transfer service is authorized. A member bank may not require a depositor to authorize such automatic 2 *** transfers to be made from savings deposits. 3 The highest permissible rate is currently 8.00 per cent per (3) A member bank may permit depositors to annum (12 CFR 329.7 and 12 CFR 526.5). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

480 Federal Reserve Bulletin □ June 1978 AND KEOGH (H.R. 10) PLAN DEPOSITS OF LESS (e) REQUIREMENTS FOR CONTINUED INCLU THAN $100,000. Except as provided in paragraph SION ON LIST OF OTC MARGIN STOCKS. (a), a member bank may pay interest on any time * * * * * deposit with a maturity of three years or more that (2) Three or more dealers stand willing to, and consists of funds deposited to the credit of, or in do in fact, make a market in such stock and which the entire beneficial interest is-held by, an regularly submit bona fide bids and offers to an individual pursuant to an Individual Retirement automated quotations system for their own ac Account agreement or Keogh (H.R. 10) Plan es counts. tablished pursuant to 26 U.S.C. (I.R.C., 1954) §§ 408, 401, at a rate not in excess of the highest of any of the permissible rates that can be paid Part 220— Credit by Brokers and Dealers on time deposits under $100,000 with maturities in excess of six months (26 weeks) by any Feder Section 220.8— Supplement ally insured commercial bank, mutual savings bank, or savings and loan association.3 (h) REQUIREMENTS FOR INCLUSION ON LIST (f) VARIABLE RATE TIME DEPOSITS OF LESS OF OTC MARGIN STOCKS. THAN $100,000. Member banks may pay interest * * * * * on any nonnegotiable time deposit of $10,000 or (2) Four or more dealers stand willing to, and more, with a maturity of six months (26 weeks), do in fact, make a market in such stock and at a rate not to exceed the rate established (auction regularly submit bona fide bids and offers to an average on a discount basis) for United States automated quotations system for their own ac Treasury bills with maturities of six months issued counts. on or immediately prior to the date of deposit. * * * * * Rounding such rate to the next higher rate is not (i) REQUIREMENTS FOR CONTINUED INCLU permitted. SION ON LIST OF OTC MARGIN STOCKS. * * * * * (2) Three or more dealers stand willing to, and do in fact, make a market in such stock and regularly submit bona fide bids and offers to an MARGIN REGULATIONS automated quotations system for their own ac counts. The Board of Governors has amended its Regu lations G, T and U to require that dealers submit bona fide bids and offers for an OTC stock to an automated quotation system if they are to be Part 221— Credit by Banks for the Pur counted as market-makers in that stock for the pose of Purchasing or Carrying Margin purpose of qualifying for the Board’s List of OTC Stocks Margin Stocks. Effective June 15, 1978 Sections 207.5, 220.8, Section 221.4— Supplement and 221.4 are amended to read as follows: (d) REQUIREMENTS FOR INCLUSION ON LIST OF OTC MARGIN STOCKS. Part 207— Securities Credit by Persons * * * * * Other Than Banks, Brokers, or Dealers (2) Four or more dealers stand willing to, and Section 207.5— Supplement do in fact, make a market in such stock and regularly submit bona fide bids and offers to an automated quotations system for their own ac (d) REQUIREMENTS FOR INCLUSION ON LIST OF OTC MARGIN STOCKS. counts. * * * * * (e) (e) REQUIREMENTS FOR CONTINUED (2) Four or more dealers stand willing to, and INCLUSION ON LIST OF OTC MARGIN STOCKS. do in fact, make a market in such stock and * * * * * regularly submit bona fide bids and offers to an automated quotations system for their own ac (2) Three or more dealers stand willing to, and counts. do in fact, make a market in such stock and regularly submit bona fide bids and offers to an Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 481 automated quotations system for their own ac 5 with respect to consumer lease transactions as counts. defined in § 226.2(mm) of this Part. (2) A comparison of each requirement of State law with the corresponding requirement of Chapter 5, together with reasons to support the claim that TRUTH IN LENDING the requirements of State law are substantially similar to or provide greater protection and benefit The Board of Governors of the Federal Reserve to lessees than requirements of Chapter 5 with System has adopted a New Supplement VI to its respect to the class of consumer lease transactions. Regulation Z. It shall also demonstrate that any differences are not inconsistent with and do not result in a dimi Supplement VI to Regulation Z nution in the protection and benefit afforded lessees under Chapter 5 and state that there are no other Truth in Lending State laws which, due to their relation to the State (Sections 226.12 & 226.6(b)(3)-Supplement) law under consideration, should be considered by the Board in making its determination. (3) A copy of the full text of the laws of the Section I— Exemptions State which provide for enforcement of the State Procedures and criteria under which any State laws referred to in subparagraph (1) of this para may apply for exemption from the provisions of graph. Chapter 5 of the Truth in Lending Act pursuant (4) A comparison of the provisions of State law to paragraph (a) of § 226.12. with the provisions of Sections 108, 112, 130, (a) APPLICATION. Any State may make ap 131, 183(a), 183(b), 185(a) and 185(c) of the Act, plication to the Board, pursuant to the terms of together with reasons to support the claim that such Section I of this supplement and the Board’s Rules State laws provide for of Procedure (12 CFR 262), for a determination (i) Administrative enforcement of the State that under the laws of that State,1 consumer lease laws referred to in subparagraph (1) of this para transactions, as provided in Section 181(1) of the graph which is equivalent to the enforcement pro Act and § 226.2(mm) of this Part, within that State vided under Section 108 of the Act; are subject to requirements which are substantially (ii) Criminal liability for willful and knowing similar to those imposed under Chapter 5 of the violation of the State law with penalties substan Act 2 or which provide greater protection and tially similar to those prescribed under Section 112 benefit to lessees than those provided under Chap of the Act, except that more severe penalties may ter 5, and that there is adequate provision for be provided; enforcement of such requirements. Such applica (iii) Civil liability for failure to comply with tion shall be made by letter addressed to the Board the requirements of the State law, including class signed by the Governor, the Attorney General, or action liability, which is substantially similar to any official of the State having responsibilities that provided under Sections 130, 131, 185(b) under the State laws which are applicable to the except that more severe penalties may be provided; relevant class of transactions. (iv) In leases where the lessee’s liability at the (b) SUPPORTING DOCUMENTS. The applica end of the lease term is based on the estimated tion shall be accompanied by value of the leased property, a limitation on the (1) A copy of the full text of the laws of the lessee’s liability at the end of the least term sub State which are claimed by the applicant to impose stantially similar to that provided by paragraph (a) requirements substantially similar to those im of Section 183 of the Act, except that a stricter posed under Chapter 5 or to provide greater pro limitation may be provided; tection and benefit to lessees than does Chapter (v) A provision prescribing that all penalties and other charges for delinquency, default or early 1Any reference to State law in Supplement VI includes a termination specified in the lease must be reas reference to any regulations which implement State law and onable substantially similar to that provided in formal interpretations thereof by a court of competent juris paragraph (b) of Section 183 of the Act, except diction or a duly authorized agency of that State. 2Any reference in Supplement VI to Chapter 5 of the Act that a stricter provision may be provided; or any section thereof includes a reference to the implementing (vi) A statute of limitations that prescribes a provisions of this Part and the Board’s formal interpretations thereof. period in which to institute civil actions of sub Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

482 Federal Reserve Bulletin □ June 1978 stantially similar duration as that provided under gent) prohibitions as are provided by Chapter 5; paragraph (c) of Section 185 of the Act, except (v) Lessees need comply with no obligations or that a longer period may be provided. responsibilities which are more costly or burden (5) A statement identifying the office designated some as a condition of exercising any of the rights or to be designated to administer the State laws or gaining the benefits and protections in the State referred to in subparagraph (1) of this paragraph, law which correspond to those afforded by Chapter together with complete information regarding the 5, than those obligations or responsibilities im fiscal arrangements for administrative enforcement posed upon lessees in Chapter 5; (including the amount of funds available or to be (vi) Substantially similar or more favorable provided), the number and qualifications of per rights and protections are provided to lessees under sonnel engaged therein, and a. description of the conditions substantially similar to or more favor procedures under which such State laws are to be able (to lessees) than those afforded by Chapter administratively enforced, including administra 5. tive enforcement with respect to Federally-char (2) In determining whether the provisions for tered lessors.3 The foregoing statement should enforcement of the State law referred to in para include reasons to support the claim that there is graph (b)(1) are adequate, consideration will be adequate provision for enforcement of such State given to the extent to which, under the laws of laws. the State, provision is made for (c) CRITERIA FOR DETERMINATION. The (i) Administrative enforcement, including nec Board will consider the following criteria along essary facilities, personnel and funding; with any other relevant information in making a (ii) Criminal liability for willful and knowing determination whether the laws of a State impose violation with penalties substantially similar to requirements substantially similar to or provide those prescribed under Section 112, except that greater protection and benefit to lessees than under more severe criminal penalties may be prescribed. Chapter 5, and whether there is adequate provision (iii) Civil liability for failure to comply with for enforcement of such laws: the provisions of the State law substantially similar (1) In order for provisions of State law to be to that provided under Sections 130, 131 and substantially similar to or provide greater protec 185(b), except that more severe civil liability pen tion and benefit to lessees than the provisions of alties may be prescribed; Chapter 5, the provisions of State law 4 shall (iv) In leases where the lessee’s liability at the require that: end of the lease term is based on the estimated (i) Definitions and rules of construction import value of the leased property, a limitation on the the same meaning and have the same application lessee’s liability at the end of the lease term as those prescribed under § 226.2 of this Part; substantially similar to that provided in Section (ii) Lessors make all of the applicable disclo 183(a), and a provision requiring that penalties be sures required by this Part and within the same reasonable substantially similar to that provided (or more stringent) time periods as are prescribed in Section 183(b), except that stricter standards by this Part; on end-term liability and penalty provisions may (iii) Lessors abide by obligations substantially be prescribed; similar to those prescribed by Chapter 5, under (v) A statute of limitations with respect to civil conditions substantially similar to (or more strin liability of substantially similar duration to that gent than those prescribed in Chapter 5; provided under Section 185(c), except that a (iv) Lessors abide by the same (or more strin longer duration may be provided. (d) PUBLIC NOTICE OF FILING AND PRO POSED RULE MAKING. Following initial re 3 Transactions within a State in which a Federally-chartered institution is a lessor shall not be subject to the exemption, view of an application filed in accordance with and such Federally-chartered lessors shall remain subject to the requirements of paragraphs (a) and (b) of the requirements of the Act and administrative enforcement Section I, notice of such filing and proposed rule by the appropriate Federal authority under Section 108, unless it is established to the satisfaction of the Board that appropriate making will be published by the Board in the arrangements have been made with such Federal authorities Federal Register, and a copy of such application to assure effective enforcement of the requirements of State laws with respect to such lessors. will be made available for examination by inter 4This paragraph is not to be construed as indicating that ested persons during business hours at the Board the Board would consider adversely any additional require and at the Federal Reserve Bank of each Federal ments of State law which are not inconsistent with the purpose of the Act or the requirements imposed under Chapter 5. Reserve District in which any part of the State Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 483 of the applicant is situated. A reasonable period if at any time it determines that the State law does of time will be allowed from the date of such not, in fact, impose requirements which are sub publication for the Board to receive written com stantially similar to or provide greater protection ments from interested persons with respect to that and benefit to lessees than those imposed under application. Chapter 5, or that there is not, in fact, adequate (e) EXEMPTION FROM REQUIREMENTS OF provision for enforcement. CHAPTER 5. If the Board determines that under (2) Before revoking any State exemption, the the law of a State consumer lease transactions are Board will notify the appropriate State official of subject to requirements which are substantially the facts or conduct which in the opinion of the similar to or which provide greater protection and Board warrants such revocation and shall afford benefit to lessees than those imposed under Chap that State such opportunity as the Board deems ter 5 and that there is adequate provision for appropriate to demonstrate or achieve compliance. enforcement, the Board will exempt such class of (3) If, after having been afforded the opportu transactions in that State from the requirements nity to demonstrate or achieve compliance, the of Chapter 5 in the following manner and subject Board determines that the State has not done so, to the following conditions: notice of the Board’s intention to revoke such (1) Notice of the exemption will be published exemption shall be published as a notice of pro in the Federal Register, and the Board will furnish posed rule making in the Federal Register. A a copy of such notice to the official who made period of time will be allowed from the date of application for such exemption and to each Federal such publication for the Board to receive written authority responsible for administrative enforce comments from interested persons. ment of the requirements of Chapter 5. (4) In the event of revocation of such exemp (2) The appropriate official of any State which tion, notice of such revocation shall be published receives an exemption shall inform the Board by the Board in the Federal Register, and a copy within 30 days of the occurrence of any change of such notice shall also be furnished to the ap in its related law (including regulations). The propriate State official and to the Federal authori report of any such change shall contain the full ties responsible for enforcement of requirements text of that change together with statements setting of Chapter 5, and the class of transactions affected forth the information and opinions with respect to within that State shall then be subject to the that change as specified in subparagraphs (2) and requirements of Chapter 5, to administrative en (4) of paragraph (b). The official who has received forcement as provided under Section 108, to an exemption shall file with the Board from time criminal liability as provided under Section 112, to time such reports as the Board may require. and to civil liability as provided under Sections (3) The Board will inform the official of any 130, 131 and 185(b). subsequent amendments to Chapter 5 (including the implementing provisions of this Part and the Section II— Preemption Board’s formal interpretations) which might call for amendment of State law, regulations or formal Procedures and criteria under which any State interpretations thereof. may apply for a determination that a State law (f) ADVERSE DETERMINATION. (1) If the is not inconsistent with and not preempted by a Board denies the application for exemption, it will provision of Chapter 5 of the Act pursuant to notify the appropriate State official of the facts § 226.6(b)(3) of this Part. upon which its decision is based and shall afford (a) APPLICATION. Any State may make ap that State a reasonable opportunity to demonstrate plication to the Board pursuant to the terms of or achieve compliance. Section II of this supplement and the Board’s (2) If, after giving the State an opportunity to Rules of Procedure (12 CFR 262), for a determi demonstrate or achieve compliance, the Board nation that a law of such State is consistent 5 with finds that it still cannot grant the exemption, the a provision of Chapter 5 of the Act, because such Board will publish in the Federal Register a notice State law provides greater protection and benefit of its decision and will furnish a copy of such to lessees than does the provision of Chapter 5, notice to the official who made application for such exemption. 5 For purposes of this supplement, the terms “consistent” (g) REVOCATION OF EXEMPTION. (1) The and “not inconsistent” shall convey the same meaning and Board reserves the right to revoke any exemption shall involve the same evidentiary showing. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

484 Federal Reserve Bulletin □ June 1978 that such law is consistent with a provision of law is inconsistent with a provision of Chapter 5. Chapter 5 for any other reason, or for a determi In order for provisions of State law to be deter nation of any issues not clearly covered by mined to be consistent with a provision of Chapter § 226.6(b) with regard to the relationship of the 5, the provisions of State law 6 shall, to the extent Federal law to the State law. Such application shall relevant to the determination, require that: be made by letter addressed to the Board signed (1) Definitions and rules of construction import by the Governor, Attorney General or any official the same meaning and have the same application of the State having responsibilities under the State as those prescribed by this Part; law put forward for consideration. (2) Lessors make all of the applicable disclo (b) SUPPORTING DOCUMENTS. The applica sures required by the corresponding provision of tion shall be accompanied by Chapter 5 and this Part, and within the same (or (1) A copy of the full text of the laws of the more stringent) time periods as those prescribed State which are claimed by the applicant to be by this Part; consistent with a provision of Chapter 5 or whose (3) Lessors abide by obligations substantially relationship (with regard to consistency or incon similar to those prescribed by a provision of sistency) to a provision of Chapter 5 is claimed Chapter 5 under conditions substantially similar by the applicant to be not clearly covered by the (or more stringent) to those in Chapter 5; standards and criteria for comparison set forth in (4) Lessors abide by the same (or more strin § 226.6(b) of this Part. gent) prohibitions as are provided by Chapter 5; (2) A comparison of each requirement of the (5) Lessees need comply with no obligations or State law with the corresponding requirement of responsibilities which are more costly or burden Chapter 5, with reasons to support the claim that some as a condition of exercising any of the rights the State law is consistent with a provision of or gaining the benefits and protections provided Chapter 5 or that the relationship (with regard to in the State law, which correspond to those af consistency or inconsistency) between the State forded by Chapter 5, than those obligations or law and Chapter 5 is not clearly covered by the responsibilities imposed on lessees in Chapter 5; standards and criteria set forth in § 226.6(b) of (6) Lessees are to have rights and protections this Part. substantially similar to or more favorable than (3) A copy of the full text of any provisions those provided by the corresponding provisions of of State law corresponding to Sections 112, 130, Chapter 5 under conditions and within time periods 131, 183(a), 183(b), 185(b), and 185(c) (if appli which are substantially similar to or more favor cable), together with reasons for the applicant’s able (to lessees) than those prescribed by Chapter claim that such State provisions are not inconsis 5.7 tent (because they provide greater protection and (d) PUBLIC NOTICE OF FILING AND PRO benefit to lessees or for other reasons) with the POSED RULE MAKING. In connection with any Act. application which has been filed in accordance (4) A statement that there are no State laws with the requirements of paragraphs (a) and (b) (including administrative or judicial interpreta of Section II of this supplement, notice of such tions) other than those submitted to the Board filing and proposed rule making will be published which have any bearing on whether or not the State by the Board in the Federal Register, and a copy law is consistent with a provision of Chapter 5. of such application will be made available for (5) A statement identifying the office designated examination by interested persons during business or to be designated to administer the State laws hours at the Board and at the Federal Reserve Bank referred to in subparagraph (1) of this paragraph. of each Federal Reserve District in which any part If no such administrative office exists, then a statement identifying the office to which the Board 6This paragraph is not to be construed as indicating that can address any correspondence regarding the re the Board would consider adversely any additional require ments of State law which are not inconsistent with the purposes quest for such determination shall accompany the of the Act or the requirements imposed under Chapter 5. application. 7A State may make a showing that in certain limited readily (c) CRITERIA FOR DETERMINATION. The identifiable circumstances a law which may otherwise be in consistent with a provision of Chapter 5 is not inconsistent Board will consider the following criteria along under the criteria set forth in paragraph (c) of Section II of with any other relevant information, in addition this supplement. The Board may determine such State law to to the criteria set forth in § 226.6(b) of this Part, be consistent only under those circumstances but will make no such determination if doing so would mislead or confuse in making a determination of whether or not State lessees. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 485 of the State of the applicant is situated. A period it will publish in the Federal Register a notice of time will be allowed from the date of such of its decision with respect to such application and publication for the Board to receive written com will furnish a copy of such notice to the official ments from interested persons with respect to that who made application for the determination. application. (g) REVERSAL OF DETERMINATION. (1) The (e) DETERMINATION THAT A STATE LAW IS Board reserves the right to reverse any deter CONSISTENT WITH CHAPTER 5. If the Board mination made under Section II of this supplement determines on the basis of the information before to the effect that a State law is consistent with it that the law of a State is consistent with a a provision of Chapter 5 because of subsequently provision of Chapter 5, notice of such determi discovered facts, a change in the State or Federal nation shall be published in the following manner law (by amendment or administrative or judicial and shall be subject to the following conditions: interpretation or otherwise) or for any other reason (1) Notice of the determination will be pub bearing on the coverage or impact of the State lished in the Federal Register, and the Board will or Federal law. furnish a copy of such notice to the official who (2) Before reversing any such determination, made application for such exemption and to each the Board will notify the appropriate State official Federal authority responsible for administrative of the facts or conduct which, in the opinion of enforcement of the requirements of Chapter 5. the Board, warrants such reversal and shall afford (2) The appropriate official of any State which that State such opportunity as the Board deems receives such a determination shall inform the appropriate under the circumstances to demon Board within 30 days of the occurrence of any strate that the determination should not be re change in its related law (or regulations). The versed. report of any such change shall contain copies of (3) If, after having been afforded the opportu the full text of the law, as changed, together with nity to demonstrate that its law is consistent with statements setting forth the information and opin a provision of Chapter 5, the Board determines ions with respect to that change as specified in that the State has not done so, notice of the Board’s subparagraphs (2) and (4) of paragraph (b) of intention to reverse such determination shall be Section II. The appropriate official of any State published as a notice of proposed rule making in which has received such a determination shall file the Federal Register. A reasonable period of time with the Board from time to time such reports as will be allowed from the date of such publication the Board may require. for the Board to receive written comments from (3) The Board will inform the appropriate offi interested persons. cial of any State which receives such a determi (4) In the event of reversal of such determi nation of any subsequent amendments to Chapter nation, notice shall be published by the Board in 5 (including the implementing provisions of this the Federal Register, and a copy of such notice Part and the Board’s formal interpretations) which shall also be furnished to the appropriate State might call for amendment of State law, regulations official and to the Federal authorities responsible or formal interpretations. for enforcement of the requirements of Chapter (f) ADVERSE DETERMINATION. (1) If, after 5, and the State law affected shall then be consid publication of notice in the Federal Register ered inconsistent with and preempted by Chapter as provided under paragraph (d), the Board finds 5 within the meaning of Section 186(a). that such State law is inconsistent with a provision RULES REGARDING of Chapter 5, it will notify the appropriate State DELEGATION OF AUTHORITY official of the facts upon which such finding is based and shall afford that State official a reas The Board of Governors has amended its rules onable opportunity to demonstrate further that such regarding delegation of authority to delegate to the State law is not inconsistent with the corre Director of the Division of Consumer Affairs the sponding provisions of Chapter 5, if such State authority to grant (but not deny or revoke) exemp official desires to do so. tions to States from the requirements of Chapter (2) If, after having afforded the State official 5 of the Truth in Lending Act when State law such further opportunity to demonstrate that the imposes substantially similar requirements or pro State law is consistent with a provision of Chapter vides greater protection and benefit to the con 5, the Board finds that the State law is inconsistent, sumer. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

486 Federal Reserve Bulletin □ June 1978 Effective May 17, 1978 Section 265.2(h)(2) is the Federal Reserve System, all evidence of com amended to read as follows: pliance with the requirements imposed under this * * * * * Part, dating from July 1, 1969, other than adver (2) Pursuant to Sections 123, 171(b) and 186(b) tising requirements under § 226.10, shall be re of the Truth in Lending Act (15 U.S.C. §§ 1633, tained until 1666(j) and 1667(e)) and the Board’s Regulation (A) the administrative authority for that creditor Z, 12 CFR Part 226.12, to grant, but not deny or lessor completes one examination for compli or revoke, exemptions to States from the require ance with the requirements imposed under this Part ments of subsequent to adoption of a statement of enforce (i) Chapter 2 (15 U.S.C. §§ 1631-1644), ment policy,63 and where State law imposes substantially similar re (B) a period of not less than 2 years has elapsed quirements and there is adequate provision for from the date that disclosure was required to be enforcement, made. (ii) Chapter 4(15 U.S.C. § 1666), where State (3) Each creditor or lessor shall, when directed law imposes substantially similar requirements or by the appropriate administrative enforcement au gives greater protection to the consumer and there thority designated in section 108 of the Act, permit is adequate provision for enforcement, and that authority or its duly authorized representative (iii) Chapter 5 (15 U.S.C. § 1667), where State to inspect its relevant records and evidence of law imposes substantially similar requirements or compliance with this Part. gives greater protection and benefit to the con 2. Footnote 6a to § 226.7(a)(4) is redesignated sumer, and there is adequate provision for en footnote 6b. forcement. INTERPRETATION OF REGULATION A TRUTH IN LENDING GOODS HELD BY PERSONS EMPLOYED BY The Board of Governors has amended its Regu OWNER. The Board has been asked to review an lation Z to modify the record retention require Interpretation it issued in 1933 concerning the ments of § 226.6(i) as to those creditors and les eligibility for rediscount by a Federal Reserve sors under the jurisdiction of the Comptroller of Bank of bankers’ acceptances issued against field the Currency, the Federal Deposit Insurance Cor warehouse receipts where the custodian of the poration, the Federal Home Loan Bank Board, the goods is a present or former employee of the Federal Reserve Board and the National Credit borrower, [f 1445 Published Interpretations, 1933 Union Administration. Bulletin 188] The Board determined at that time Effective May 30, 1978 Section 226.6 is that the acceptances were not eligible because: amended to read as follows. such receipts do not comply with the re 1. Section 226.6—General Disclosure Re quirement of section 13 of the Federal Re quirements serve Act that a banker’s acceptance be “secured at the time of acceptance by a (i) PRESERVATION AND INSPECTION OF EVI warehouse receipt or other such document DENCE OF COMPLIANCE. conveying or securing title covering readily (1) Evidence of compliance with the require marketable staples,” nor with the require ments imposed under this Part, other than adver ment of section XI of the Board’s Regulation tising requirements under § 226.10, shall be pre A that it be “secured at the time of accept served by the creditor or lessor for a period of ance by a warehouse, terminal, or other not less than 2 years after the date such disclosure similar receipt, conveying security title to is required to be made. such staples, issued by a party independent (2) With respect to a creditor or lessor subject of the customer.” to the administrative enforcement jurisdiction of The requirement that the receipt be “issued by the Comptroller of the Currency, Board of Direc a party independent of the customer” was deleted tors of the Federal Deposit Insurance Corporation, from Regulation A in 1973, and thus the primary Federal Home Loan Bank Board (acting directly or through the Federal Savings and Loan Insurance Corporation), Administrator of the National Credit 6a “Statement of enforcement policy” refers to a final state ment based on the Joint Notice of Proposed Statement of Union Administration or Board of Governors of Enforcement Policy published at 42 Fed. Reg. 55786 (1977). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 487 issue for the Board’s consideration is whether a procedure tends to insure that he will not be field warehouse receipt is a document “securing impermissibly controlled by his former (or some title” to readily marketable staples. times present) employer, the borrower, even While bankers’ acceptances secured by field though he may look to the borrower for reemploy warehouse receipts are rarely offered for redis ment at some future time. A prudent lender will, count or as collateral for an advance, the issue of course, carefully review the field warehousing of “eligibility” is still significant. If an ineligible operation to ensure that stated procedures are acceptance is discounted and then sold by a mem satisfactory and that they are actually being fol ber bank, the proceeds are deemed to be “depos lowed. The lender may also wish to review the its” under section 204.1(f) of Regulation D and field warehousing company’s fidelity bonds and are subject to reserve requirements. legal liability insurance policies to ensure that they In reviewing this matter, the Board has taken provide satisfactory protection to the lender. into consideration the changes that have occurred If the warehousing operation is not conducted in commercial law and practice since 1933. Mod properly, however, and the manager remains under ern commercial law, embodied in the Uniform the control of the borrower, the security interest Commercial Code, refers to “perfecting security may be lost. Consequently, the lender may wish interests” rather than “securing title” to goods. to require a written security agreement and the The Board believes that if, under State law, the filing of a financing statement to insure that the issuance of a field warehouse receipt provides the lender will have a perfected security interest even lender with a perfected security interest in the if it is later determined that the field warehousing goods, the receipt should be regarded as a docu operation was not properly conducted. It should ment “securing title” to goods for the purposes be noted, however, that the Federal Reserve Act of § 13 of the Federal Reserve Act. It should be clearly requires that the bankers’ acceptance be noted, however, that the mere existence of a secured by a warehouse receipt in order to satisfy perfected security interest alone is not sufficient; the requirements of eligibility, and a written secu the Act requires that the acceptance be secured rity agreement and a filed financing statement, by a warehouse receipt or its equivalent. while desirable, cannot serve as a substitute for Under the U.C.C., evidence of an agreement a warehouse receipt. between the secured party and the debtor must This Interpretation is based on facts that have exist before a security interest can attach. [U.C.C. been presented in regard to field warehousing § 9-202] This agreement may be evidenced by: operations conducted by established, professional (1) a written security agreement signed by the field warehouse companies, and it does not neces debtor, or (2) the collateral being placed in the sarily apply to all field warehousing operations. possession of the secured party or his agent Thus K 1430 and If 1440 of the Published Inter [U.C.C. § 9-203]. Generally, a security interest pretations [1918 Bulletin 31 and 1918 Bulletin is perfected by the filing of a financing statement. 862] maintain their validity with regard to cor [U.C.C. § 9-302] However, if the collateral is in porations formed for the purpose of conducting the possession of a bailee, then perfection can be limited field warehousing operations. Furthermore, achieved by: (1) having warehouse receipts issued the prohibition contained in K 1435 Published In in the name of the secured party; (2) notifying terpretations [1918 Bulletin 634] that “the bor the bailee of the secured party’s interest; or (3) rower shall not have access to the premises and having a financing statement filed. [U.C.C. § 9- shall exercise no control over the goods stored” 304(3)] retains its validity, except that access for inspec If the field warehousing operation is properly tion purposes is still permitted under U 1450 [1926 conducted, a security interest in the goods is Bulletin 666]. The purpose for the acceptance perfected when a warehouse receipt is issued in transaction must be proper and cannot be for the name of the secured party (the lending bank). speculation [U 1400, 1919 Bulletin 858] or for Therefore, warehouse receipts issued pursuant to the purpose of furnishing working capitol [U 1405, a bona fide field warehousing operation satisfy the 1922 Bulletin 52]. legal requirements of section 13 of the Federal This interpretation supersedes only the previous Reserve Act. Moreover, in a properly conducted H 1445 of the Published Interpretations [1933 field warehousing operation, the warehouse man Bulletin 188], and is not intended to affect any ager will be trained, bonded, supervised and au other Board Interpretation regarding field ware dited by the field warehousing company. This housing. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

488 Federal Reserve Bulletin □ June 1978 BANK HOLDING COMPANY AND BANK MERGER ORDERS ISSUED BY THE BOARD OF GOVERNORS Orders Under Section 3 become a foreign bank holding company within of Bank Holding Company Act the meaning of section 225.4(g)(1) of the Board’s Regulation Y (12 C.F.R. § 225.4(g)(1)). Banamex, a wholly-owned subsidiary of Banco, Banco Nacional De Mexico, S.A., is a non-operating corporation with Ammex as its Mexico City, Mexico only subsidiary. Ammex, a wholly-owned subsid Banamex Holding Company, iary of Banamex, also is a non-operating corpora Los Angeles, California tion and has no subsidiaries. Banamex and Ammex Ammex Holding Company, both were recently organized for the purpose of Los Angeles, California becoming domestic bank holding companies and Order Approving facilitating Banco’s acquisition of a bank in Cali Formation of Bank Holding Companies fornia. Bank, the eleventh largest commercial bank Banco Nacional de Mexico, S.A., Mexico City, located in the San Jose Metropolitan Banking Mexico (“Banco”), Banamex Holding Company, market,2 held as of September 30, 1977, deposits Los Angeles, California (“Banamex”) and of approximately $64.7 million, representing 1.7 Ammex Holding Company, Los Angeles, Califor per cent of the total deposits in commercial banks nia (“Ammex”), have applied for the Board’s in that market. Applicants do not now operate in approval under section 3(a)(1) of the Bank Holding the relevant market and it does not appear that Company Act (12 U.S.C. § 1842(a)(1)) of forma any existing competition would be eliminated as tion of bank holding companies by acquiring 80 a result of the proposal. While it appears that per cent or more of the voting shares of Commu Applicants could enter the relevant market de nity Bank of San Jose, San Jose, California novo, in view of Bank’s size and market position, (“Bank”). Ammex is a subsidiary of Banamex, as well as the fact that the market is highly which is in turn a subsidiary of Banco. Ammex competitive, consummation of this proposal would is to acquire these shares of Bank directly, and have no significant effect on potential competition. Banamex and Banco would acquire the Bank Accordingly, the Board concludes that competitive shares indirectly through Ammex. considerations are consistent with approval of Notice of the applications, affording opportunity these applications. for interested persons to submit comments and The financial and managerial resources and fu views, has been given in accordance with section ture prospects of Applicants and Bank are regarded 3(b) of the Act. The time for filing comments and as satisfactory. Therefore, considerations relating views has expired, and the Board has considered to banking factors are consistent with approval of the applications and all comments received in light the applications. Applicants will provide Bank of the factors set forth in section 3(c) of the Act with expertise and resources in the area of inter (12 U.S.C. § 1842(c)). national commerce, an area of particular impor Banco is the largest commercial bank in Mex tance within the relevant market since the recent ico, holding deposits of approximately $2.1 bil establishment in Santa Clara County of Foreign lion.1 Banco has 500 bank offices in Mexico, two Trade Zone No. 18. Accordingly, considerations agency offices in the United States, four overseas relating to the convenience and needs of the com representative offices, and an interest in a merchant munity to be served are consistent with approval. bank in London. Apart from its agencies in the It is the Board’s judgment, therefore, that the United States, Banco engaged in no direct or proposed acquisition would be in the public inter indirect business activities in the United States est and that the applications should be approved. other than international banking transactions inci On the basis of the record, the applications are dental to its foreign operations. Upon consumma approved for the reasons summarized above. The tion of the proposed transaction, Banco would ---------------------- 2 The relevant market is approximated by Santa Clara 1 All banking data are as of December 31, 1976, unless County, except for the communities of Gilroy and Morgan otherwise indicated. Hill. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 489 transaction shall not be made before the thirtieth turing of Bank’s ownership from individuals to a calendar day following the effective date of this corporation owned by the same individuals. How Order, or later than three months after the effective ever, in order to analyze the competitive effects date of this Order unless such period is extended of the subject proposal, it is necessary to consider for good cause by the Board, or by the Federal that principals of Applicant are also principals of Reserve Bank of San Francisco pursuant to dele another bank and its parent bank holding company gated authority. located in the Custer County banking market.3 By order of the Board of Governors, effective That bank, The First National Bank of Custer City, May 19, 1978. Custer City, Oklahoma (“Custer City Bank”), holds deposits of $7.6 million, representing 7.0 Voting for this action: Chairman Miller and Gover per cent of the market’s total deposits, and ranks nors Gardner, Wallich, Coldwell, Jackson, and Partee. as the seventh largest bank in the market.4 Some (Signed) Theodore E. Allison, existing competition was eliminated when Bank [seal] Secretary of the Board. was acquired by Applicant’s principals in June, 1976. However, Bank and Custer City Bank hold First Thomas Ban Corp, only 14.6 per cent of the market’s total deposits. After acquisition of Bank, six unaffiliated banking Thomas, Oklahoma alternatives would remain in the market. While Order Approving approval of the subject proposal would further Formation of Bank Holding Company solidify the existing relationship between Bank and First Thomas Ban Corp, Thomas, Oklahoma, the affiliated bank and reduce the likelihood that Bank would become an independent competitor in has applied for prior approval under section 3(a)(1) of the Bank Holding Company Act (12 U.S.C. the future, it appears that consummation of this § 1842(a)(1)) and section 225.3(a) of Regulation proposal would not result in any significant adverse effects upon competition in any relevant area. Y (12 C.F.R. § 225.3(a)) to become a bank hold ing company through the acquisition of 80 per cent Thus, competitive considerations are consistent with approval. or more, less directors’ qualifying shares, of the voting shares of The First National Bank of The financial and managerial resources and fu Thomas, Thomas, Oklahoma (“Bank”). ture prospects of Applicant are dependent upon Notice of the application, affording opportunity Bank.5 Applicant projects a 12-year amortization for interested persons to submit comments and period for its acquisition debt and it appears that views has been given in accordance with section Applicant will have the necessary financial flexi 3(b) of the Act (43 Fed. Reg. 12086 (1978)). The time for filing comments and views has expired, 3 Principals of Applicant are also principals of Guaranty Bank and Trust Company, Oklahoma City, Oklahoma. There and the application and all comments received does not appear to be any meaningful competition between have been considered in light of the factors set this bank, which is located outside the Custer County banking forth in section 3(c) of the Act (12 U.S.C. market, and Bank. 4 In assessing the competitive effects of a proposal.involving § 1842(c)). the restructuring of a bank’s ownership into corporate form, Applicant is a nonoperating corporation organ the Board takes into consideration the competitive effects of ized for the purpose of becoming a bank holding the transaction whereby common share ownership was estab lished between the subject bank and one or more banks in company through the acquisition of Bank. Bank the same market. See the Board’s Order of May 11, 1977, holds deposits of $8.2 million, representing .07 denying the application to become a bank holding company by Mahaska Investment Company, Oskaloosa, Iowa (63 Fed per cent of the total deposits in commercial banks eral Reserve Bulletin 579 (1977)), the Board’s Order of No in Oklahoma.1 Upon acquisition of Bank, Appli vember 18, 1977, denying the application to become a bank cant would control the 282nd largest bank in holding company by Citizens Bancorp, Inc., Hartford City, Indiana (63 Federal Reserve Bulletin 1083 (1977)), and the Oklahoma. Board’s Order of March 27, 1978, denying the application Bank, which controls 7.6 per cent of the depos to become a bank holding company by Midwest Bancorp, Inc., Gardner, Illinois (64 Federal Reserve Bulletin 317 (1978)). its in the Custer County banking market, is the 5 Where principals of an Applicant are engaged in establish sixth largest of eight banks operating in the mar ing a chain of one-bank holding companies, the Board has ket.2 The subject proposal represents a restruc- indicated that it is appropriate to analyze such organizations by the standards normally applied to multi-bank holding com panies. See Board’s Order dated June 14, 1976, denying the, 1 All banking data are as of June 30, 1977. application of Nebraska Banco, Inc., Ord, Nebraska, to be 2 The Custer County banking market is approximated by come a bank holding company (62 Federal Reserve Bulletin Custer County, Oklahoma. 638 (1976)). 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490 Federal Reserve Bulletin □ June 1978 bility to meet its annual debt servicing requirement Regulation Y, to be permissible for bank holding and to maintain an adequate capital position for companies subject to Board approval of individual Bank. The financial and managerial resources of proposals in accordance with the procedures of Applicant and Bank and the affiliated banks are § 225.4(b) of Regulation Y. considered satisfactory, and the future prospects Notice of the applications, affording opportunity of each appear favorable. Accordingly, consid for interested persons to submit comments and erations relating to banking factors are consistent views, has been given in accordance with §§3 with approval of the application. and 4 of the Act (43 Fed. Reg. 8037 (1978)). The Although consummation of the proposal would time for filing comments and views has expired, effect no changes in the banking services offered and the applications and comments received have by Bank, considerations relating to the conven been considered in light of the factors set forth ience and needs of the community to be served in § 3(c) of the Act (12 U.S.C. § 1842(c)) and are also consistent with approval. It has been the considerations specified in § 4(c)(8) of the Act determined that consummation of the transaction (12 U.S.C. § 1843(c)(8)). would be in the public interest and that the appli Applicant is a corporation organized under the cation should be approved. laws of Iowa in 1965 for the purpose of holding On the basis of the record, the application is stock of Bank. Bank is the 296th largest of 598 approved for the reasons summarized above. The banking organizations in Iowa, holding one-tenth transaction shall not be consummated (a) before of one per cent of total deposits in commercial the thirtieth day following the effective date of this banks in the State.1 Order or (b) later than three months after the Bank holds deposits of approximately $13.6 effective date of this Order, unless such period million, representing 2.3 per cent of total deposits is extended for good cause by the Board of Gov in commercial banks in the Cedar Rapids banking ernors or by the Federal Reserve Bank of Kansas market, and is the ninth largest of 20 banks in City, pursuant to delegated authority. that market.2 The subject proposal involves a re By order of the Secretary of the Board, acting structuring of Bank’s ownership from individuals pursuant to delegated authority from the Board of to a corporation owned by those same individuals. Governors, effective May 30, 1978. In addition to their interest in Bank,3 Applicant’s principals hold significant voting share interest in (Signed) Griffith L. Garwood, another bank that is located 10 miles east of an [seal] Deputy Secretary of the Board. office of Bank and competes in the Cedar Rapids banking market.4 The bank, The Exchange State Bank, Springville, Iowa (“Exchange Bank”), JEFCO, Inc., holds deposits of approximately $4.9 million rep Cedar Rapids, Iowa Order Approving Formation of a Bank Holding 1 All banking data are as of June 30, 1977. Company and Performance of Leasing Activities 2 The Cedar Rapids banking market is the relevant market, and is approximated by all of Linn County, Iowa, plus Jeffer JEFCO, Inc., Cedar Rapids, Iowa (“Appli son township in adjacent Johnson County, Iowa. 3 One of Applicant’s principals is also associated with cant”), has applied for the Board’s approval under Farmers State Bank, Martelle, Iowa, and with two bank hold § 3(a)(1) of the Bank Holding Company Act (12 ing companies, Lesernal Corporation, Anamosa, Iowa, which U.S.C. § 1842(a)(1)) to become a bank holding controls Onslow Savings Bank, Onslow, Iowa. However, it does not appear from the record that any significant competition company through the acquisition of approximately currently exists between these other banks, on the one hand, 55.2 per cent of the voting shares of City National and Bank, on the other. 4 In assessing the competitive effects of a proposal involving Bank of Cedar Rapids, Cedar Rapids„ Iowa the restructuring of a bank’s ownership into corporate form, (“Bank”), thus bringing Applicant’s total owner the Board takes into consideration the competitive effects of ship of Bank to more than 80 per cent of the voting the transaction whereby common share ownership was estab lished between the subject bank and one or more banks in shares of Bank. Simultaneously, Applicant applied the same market. See the Board’s Order of May 11, 1977, for the Board’s permission under § 4(c)(8) of the denying the application to become a bank holding company Act (12 U.S.C. § 1843(c)(8)) and § 225.4(b)(2) by Mahaska Investment Company, Oskaloosa, Iowa (63 Fed. Res. Bull. 519 (1977)), the Board’s Order of November 18, of the Board’s Regulation Y to continue to engage 1977, denying the application to become a bank holding in the leasing of equipment and vehicles used in company by Citizens Bancorp, Inc., Hartford City, Indiana (63 Fed. Res. Bull. 1083 (1977)), and the Board’s Order of the operation of banks. Such activities have been March 27, 1978, denying the application to become a bank determined by the Board, in § 225.4(a)(6)(a) of holding company by Midwest Bancorp, Inc., Gardner, Illinois. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 491 resenting eight-tenths of one per cent of the total In connection with the application to become deposits in commercial banks in the market and a bank holding company, Applicant has also ap ranks as the 16th largest bank in the relevant plied, pursuant to § 225.4(a)(6)(a) of the Board’s market. Together, the two banks controlled by Regulation Y, to continue to engage in the leasing Applicant’s principals hold aggregate deposits of of equipment and vehicles used in the operation approximately $18.5 million, representing only of banks, which leasing business Applicant con 3.1 per cent of the total deposits in the market. ducts as LTD Leasing Company (“LTD”). The The aggregate deposits held by the two banks are leasing transactions are negotiated solely with slightly less than the deposits held by the market’s Bank and its affiliated banks and serve as the seventh largest bank. Moreover, there are 18 banks functional equivalent of extensions of credit to the remaining in the market that serve as alternative lessees. The property is leased on a nonoperating sources of banking services. In view of the relative basis, yielding a return that compensates LTD for sizes of Bank and Exchange Bank, and of their its full investment in the equipment, plus the cost market shares, as well as the number of other of financing the equipment over the term of the competitive alternatives present in the market, the lease. The term of the leases is generally less than Board concludes that consummation of the subject seven years and the leasing activities otherwise proposal would have only slightly adverse effects appear to be in compliance with § 225.4(a)(6)(a) upon competition, and, as discussed below, it is of Regulation Y. the Board’s view that such adverse effects are Applicant’s performance of the proposed leasing clearly outweighed by considerations relating to activities would ensure continuation of gains in the convenience and needs of the community to the efficiency of the operations of Bank and its be served. affiliated banks. It does not appear that Applicant’s The financial and managerial resources and fu engaging in the above-described activities would ture prospects of Applicant are dependent upon have any significant adverse effect on existing or those of Bank. Applicant proposes to service the potential competition. Furthermore, there is no debt it will incur as a result of the proposed evidence in the record indicating that consumma transaction over a period of approximately 12 tion of the proposal would result in any undue years. Applicant appears to have the necessary concentration of resources, unfair competition, financial flexibility to retire its acquisition debt conflicts of interests, unsound banking practices over a reasonable period of time while maintaining or other adverse effects on the public interest. an adequate capital position for Bank. The mana Based on the foregoing and other considerations gerial resources of Applicant and Bank are con reflected in the record, the Board determines, in sidered satisfactory and the future prospects for accordance with the provisions of section 4(c)(8) each appear favorable. The four banks and two of the Act, that consummation of this proposal bank holding companies with which Applicant is can reasonably be expected to produce benefits to affiliated appear to be in satisfactory condition. the public that outweigh possible adverse effects Accordingly, considerations relating to banking and that the application to continue to engage in factors are consistent with approval of the appli certain leasing activities should be approved. cation under section 3(a)(1) of the Act. Accordingly, the applications are approved for Upon approval of the application to become a the reasons summarized above. The acquisition of bank holding company, Applicant proposes to shares of Bank shall not be made (a) before the update Bank’s physical facilities, and improve the thirtieth calendar day following the effective date services offered to Bank’s customers by expanding of this Order, or (b) later than three months after Bank’s trust services and real estate mortgage the effective date of this Order, unless such period lending. In addition, Applicant intends to extend is extended for good cause by the Board or by banking hours. These convenience and needs fac the Federal Reserve Bank of Chicago pursuant to tors are sufficient to outweigh clearly any slightly delegated authority. The determination as to Ap adverse competitive effects that might result from plicant’s leasing activities is subject to the condi consummation of the proposal. Based upon the tions set forth in section 225.4(c) of Regulation foregoing and other considerations reflected in the Y and to the Board’s authority to require reports record, it is the Board’s judgment that the pro by, and make examinations of, bank holding posed acquisition is in the public interest and that companies and their subsidiaries and to require the application to become a bank holding company such modification or termination of the activities should be approved. of a bank holding company or any of its subsidi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

492 Federal Reserve Bulletin □ June 1978 aries as the Board finds necessary to assure com and revenues are located and derived outside the pliance with the provisions and purposes of the United States. Such companies do not engage, Act and the Board’s regulations and orders issued directly or indirectly, in the business of un thereunder, or to prevent evasion thereof. derwriting, selling or distributing securities in the By order of the Board of Governors, effective United States. Upon consummation of the pro May 4, 1978. posed transaction, Applicant would become a foreign bank holding company within the meaning Voting for this action: Chairman Miller and Gover of section 225.4(g)(1) of the Board’s Regulation nors Gardner, Wallich, and Partee. Absent and not voting: Governors Coldwell and Jackson. Y (12 C.F.R. § 225.4(g)(1)), and its continued holding of its present investments would be per (Signed) Griffith L. Garwood, missible under section 225.4(g)(2) of that Regula [seal] Deputy Secretary of the Board. tion (12 C.F.R. § 225.4(g)(2)). Bank, a proposed new bank, will operate in the Los Angeles-Orange County metropolitan banking market. Since Bank is a proposed new bank, The Kyowa Bank, LTD., consummation of the proposal will neither elimi Tokyo, Japan nate existing competition nor increase the concen tration of banking resources in any relevant area. Order Approving Accordingly, the Board concludes that competitive Formation of Bank Holding Company considerations are consistent with approval of the The Kyowa Bank, Ltd., Tokyo, Japan, has application. applied for the Board’s approval under section The financial and managerial resources and fu 3(a)(1) of the Bank Holding Company Act (12 ture prospects of Applicant and Bank are regarded U.S.C § 1842(a)(1)) of formation of a bank hold as satisfactory. Therefore, considerations relating ing company by acquiring 100 per cent (less to banking factors are consistent with approval of directors’ qualifying shares) of the voting shares the application. Bank will provide an additional of Kyowa Bank of California (“Bank”), Los source of international banking services in the Los Angeles, California. Angeles area. Accordingly, considerations relating Notice of the application, affording opportunity to the convenience and needs of the community for interested persons to submit views and recom to be served are consistent with approval. It is mendations, has been given in accordance with the Board’s judgment, therefore, that the proposed section 3(b) of the Act (12 U.S.C. § 1842(b)). acquisition would be in the public interest and that The time for filing views and recommendations the application should be approved. has expired, and the Board has considered the On the basis of the record, the application is application and all comments received in light of approved for the reasons summarized above. The the factors set forth in section 3(c) of the Act (12 transaction shall not be made before the thirtieth U.S.C. § 1842(c)). calendar day following the effective date of this Applicant is the 17th largest commercial bank Order or later than three months after that date, in Japan and the 63rd largest commercial bank in and Bank shall be opened for business not later the world, holding deposits of $12.6 billion.1 than six months after the effective date of this Applicant has 226 bank offices in Japan, one Order. The last two periods described in this branch, one agency, and one representative office paragraph may be extended for good cause by the in the United States, one overseas branch and four Board, or by the Federal Reserve Bank of San overseas representative offices, and a subsidiary Francisco pursuant to delegated authority. in Hong Kong. In addition, Applicant owns or By order of the Board of Governors, effective controls, directly or indirectly, more than five per May 26, 1978. cent of the voting shares of various Japanese industrial and commercial companies. Some of Voting for this action: Chairman Miller and Gover these companies or their subsidiaries have offices nors Wallich, Jackson, and Partee. Absent and not in the United States. These companies are not voting: Governors Gardner and Coldwell. subsidiaries of Applicant, however, and in each case more than half of their consolidated assets (Signed) Griffith L. Garwood, 1 All banking data are as of December 31, 1976. [seal] Deputy Secretary of the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 493 National Bancshares Corporation of Texas, Texas. Furthermore, there is no evidence in the San Antonio, Texas record to indicate that Applicant’s proposal is an attempt to pre-empt a site for a bank before there Order Approving Acquisition of Bank is a need for one. National Bancshares Corporation of Texas, San The Board has received comments in opposition Antonio, Texas, a bank holding company within to the subject proposal from Protestant, a bank the meaning of the Bank Holding Company Act, located approximately five miles from the pro has applied for the Board’s approval under section posed location of Bank. Protestant alleges that 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to Applicant is seeking to gain control of the “mili acquire 100 per cent of the voting shares (less tary new account market” in the San Antonio area. directors’ qualifying shares) of Northwest Bank of Protestant’s opposition is based upon the facts that Commerce, National Association, San Antonio, (1) Applicant has banking facilities at two military Texas (“Bank”), a proposed new bank. bases within the San Antonio banking market, and Notice of the application, affording opportunity (2) the proposed location of Bank is in an area for interested persons to submit comments and wherein many military personnel reside. views, has been given in accordance with section The Board has examined the materials submitted 3(b) of the Act. The time for filing comments and by Protestant and, on the basis of all of the facts views has expired, and the application and all of record, concludes that the proposed acquisition comments received, including those submitted by does not represent an attempt by Applicant to Kelly Field National Bank, San Antonio, Texas monopolize any portion of the San Antonio bank (“Protestant”), have been considered in light of ing market and that consummation of the proposed the factors set forth in section 3(c) of the Act. transaction would not have any significant adverse Applicant, the twelfth largest banking organi effects on competition in any relevant area. Bank zation in Texas, controls five banks with aggregate is to be located about five miles from the nearest deposits of approximately $600 million, repre military facility and up to twenty-three miles from senting 1.12 per cent of the total deposits in the most distant military facility in the San Antonio commercial banks in the State.1 Bank is to be banking market. As the only bank in its immediate located in the northwest portion of the city of San area, Bank can be expected to draw its customers Antonio. Within the San Antonio banking market, from the general population in this rapidly growing Applicant controls three banks with aggregate de area. In this regard, it appears that rapid growth posits of $530.3 million, representing 16.9 per of this area is not attributable to an increase in cent of market deposits, and ranks as the second the military population since the number of mili largest of 46 banking organizations located in the tary personnel stationed at bases in the San An market.2 Under Texas law, Applicant is prohibited tonio market has decreased 17.2 per cent from from establishing branches of its subsidiary 1970 to 1977, while the population of the banking banks.3 Consequently, Applicant proposes to ex market as a whole increased 11.6 per cent during pand its banking operations in San Antonio by this period. Moreover, Applicant has indicated that acquiring Bank. Since Bank is a proposed new Bank will offer predominantly consumer and bank, no existing competition between Bank and commercial oriented banking services rather than Applicant’s other subsidiaries would be eliminated services aimed exclusively at military customers. by consummation of the subject proposal, nor In view of the foregoing and other facts of record, would Bank’s acquisition by Applicant cause any the Board concludes that competitive consid immediate increase in the concentration of banking erations are consistent with approval of the appli resources in the relevant market or the State of cation. The financial and managerial considerations and 1 All banking data are as of June 30, 1977, and reflect bank future prospects of Applicant and its subsidiary holding company formations and acquisitions as of April 30, banks are regarded as generally satisfactory. Bank, 1978. as a proposed new bank, has no financial or 2 The San Antonio banking market is approximated by the San Antonio SMSA. operating history; however, its future prospects as 3 Such State law prohibitions against branching do not, under a subsidiary of Applicant appear favorable. Thus, certain circumstances, apply to branches on military installa tions. (See State of Texas v. National Bank of Commerce of considerations relating to banking factors are con San Antonio, Texas, 290 F. 2d 229 (5th Cir. 1961)). Conse sistent with approval. quently, several banks in San Antonio, including Protestant’s Bank would serve as an additional full-service and one of Applicant’s subsidiary banks, operate offices on military facilities in the San Antonio area. banking alternative in a portion of San Antonio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

494 Federal Reserve Bulletin □ June 1978 that is rapidly expanding and is not currently testamentary trusts established by the will of Mr. served by any other bank. Applicant anticipates Robert B. Chiperfield. On November 18, 1977, that Bank will be active in making installment, Subsidiary Bank received as trustee 1.9 per cent commercial and industrial, and real estate loans. (1,900 shares) of the outstanding voting shares of Therefore, the Board concludes that considerations Bank pursuant to a testamentary trust established relating to the convenience and needs of the com by the will of Mr. Ralph Stevens. These three munity to be served weigh in favor of approval trusts give Subsidiary Bank sole voting authority of the application. over shares representing 5.9 per cent of Bank On the basis of all of the evidence in the record, stock, and Subsidiary Bank holds in a fiduciary the Board concludes that all of the relevant factors capacity an additional 1.1 per cent of the voting that the Board must consider are consistent with shares of Bank acquired prior to 1970. Approval approval, and that consummation of the proposed of the application would allow Subsidiary Bank, transaction would be in the public interest. and thereby Applicant, to continue to exercise sole The application is approved for the reasons voting authority for 7 per cent of the voting shares summarized above. The transaction shall not be of Bank until the expiration on August 29, 1980, made (a) before the thirtieth calendar day follow of the Robert B. Chiperfield f.b.o. Virginia Larsen ing the effective date of this Order or (b) later Trust, and sole voting authority for 5 per cent of than three months after the effective date of this the voting shares of Bank thereafter. Order, unless such period is extended for good Subsidiary Bank, with deposits of $281.7 mil cause by the Board, or by the Federal Reserve lion is the 16th largest commercial bank in Illinois Bank of Dallas pursuant to delegated authority. controlling approximately 0.43 per cent of total By order of the Board of Governors, effective deposits in commercial banks in Illinois.1 Subsidi May 17, 1978. ary Bank is the largest of ten commercial banks in the city of Peoria and the largest commercial Voting for this action: Chairman Miller and Gover bank in Peoria County. It controls 24.4 per cent nors Gardner, Wallich, Coldwell, Jackson, and Partee. of deposits in commercial banks in the Peoria (Signed) Cathy E. Minehan, banking market. [seal] Assistant Secretary of the Board. Bank holds deposits of $56.3 million and is the largest of three banks in the city of Canton and the largest of thirteen banks in Fulton County. Commercial National Corporation, Bank controls 33.3 per cent of deposits in com Peoria, Illinois mercial banks in the banking market approximated Order Approving Retention of Bank Shares by the eastern half of Fulton County. Commercial National Corporation, Peoria, Illi The two banks are located in separate, though nois, a bank holding company within the meaning adjacent, banking markets. Subsidiary Bank of the Bank Holding Company Act, has applied derives about 8.2 per cent of its total deposits, for the Board’s approval under § 3(a)(3) of the that percentage representing mostly correspondent Act (12 U.S.C. § 1842(a)(3)) to retain, through balances, and about 0.3 per cent of its loan volume its subsidiary, Commercial National Bank of from Bank’s service area. Bank derives an insig Peoria, Peoria, Illinois (“Subsidiary Bank”), 7 nificant amount of its deposits and loans from per cent of the outstanding voting shares of The Subsidiary Bank’s service area. Subsidiary Bank National Bank of Canton, Canton, Illinois is located about 30 road miles northeast of Bank, (“Bank”). and there are numerous intervening alternative Notice of the application, affording opportunity sources of banking services. Under current Illinois for interested persons to submit comments and law, neither bank can operate a branch in the views, has been given in accordance with § 3(b) other’s market, or form or become a subsidiary of the Act. The time for filing comments and views of a multibank holding company. Approval of the has expired, and the Board has considered the application to hold seven per cent of Bank until application and all comments received in light of August 29, 1980, and five per cent thereafter will the factors set forth in § 3(c) of the Act (12 U.S.C. not eliminate significant existing or potential com § 1842(c)). petition. On November 15, 1972, Subsidiary Bank re The financial and managerial resources and fuceived as trustee 4 per cent (4,068 shares) of the outstanding voting shares of Bank pursuant to two 1 All banking data are as of June 30, 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 495 ture prospects of Applicant, Subsidiary Bank, and and the Board has considered the application and Bank are satisfactory. Accordingly, banking fac all comments received, in light of the public inter tors are consistent with approval. There is no est factors set forth in § 4(c)(8) of the Act (12 indication that the convenience and needs of the U.S.C. § 1843(c)(8)). community to be served are not currently being Applicant, the fourth largest banking organi met. Although there will be no immediate increase zation in New York State, controls six banking in the services offered by Bank, convenience and subsidiaries and has consolidated assets of $30.9 needs considerations are consistent with approval. billion.1 Galbreath ($39.3 million in assets) en Therefore, it is the Board’s judgment that the gages in a general mortgage banking business retention of the shares of Bank would be in the through 13 offices in Ohio, Michigan, Pennsyl public interest and that the application should be vania, Indiana, South Carolina, Tennessee, Geor approved. gia, and Texas. Galbreath has a mortgage servic On the basis of the record, the application is ing portfolio of $852 million and ranks as the 45th approved for the reasons summarized above. largest mortgage banking firm in the United By order of the Board of Governors, effective States.2 Company ($1.9 million in assets as of May 2, 1978. September 30, 1977) currently services a mortgage portfolio of approximately $102 million from a Voting for this action: Chairman Miller and Gover single office in Houston, Texas. Company was at nors Gardner, Wallich, Coldwell, Jackson, and Partee. one time fairly active in originating mortgage loans (Signed) G riffith L. G arwood, on commercial property; however, it now restricts [seal] Deputy Secretary of the Board. its activities to originating and servicing residential mortgages. In view of the number and size of mortgage banking firms located in the Houston market,3 Company does not have a significant Orders Under Section 4 presence in that market. Although Galbreath is of Bank Holding Company Act represented in the Houston market, its Houston office was not opened until late 1977 and the Chemical New York Corporation, amount of competition that would be eliminated New York, New York upon consummation of this proposal is not viewed as significant. Moreover, Company’s acquisition Order Approving by Applicant may enhance competition in the Acquisition of Citizens Mortgage Company relevant market by increasing Company’s ability Chemical New York Corporation, New York, to compete. Accordingly, the Board finds that New York (“Applicant”), a bank holding com Applicant’s acquisition of Company would not pany within the meaning of the Bank Holding have any significant adverse effect upon competi Company Act (“Act”), has applied for the tion. Board’s approval, under § 4(c)(8) of the Act (12 As a result of this proposal, Company’s cus U.S.C. § 1843(c)(8)) and § 225.4(b)(2) of the tomers will be offered a greater variety of loans Board’s Regulation Y (12 C.F.R. § 225.4(b)(2)), than currently offered by Company. In addition, to acquire, through its wholly-owned subsidiary, the acquisition of Company will ensure the con The Galbreath Mortgage Company, Columbus, tinued provision of mortgage banking services Ohio (“Galbreath”), the mortgage servicing port from Company’s present location. Furthermore, folio of Citizens Mortgage Company, Houston, there is no evidence in the record indicating that Texas (“Company”), and to engage in mortgage consummation of this proposal would result in any banking activities from Company’s existing office. undue concentration of resources, conflicts of in The activities of originating and servicing mort terests, unsound banking practices, or any other gage loans have been determined by the Board adverse effects upon the public interest. to be closely related to banking (12 C.F.R. Based upon the foregoing and other consid §§ 225.4(a)(1) and (3)). erations reflected in the record, the Board has Notice of the application, affording opportunity for interested persons to submit comments and 1 Unless otherwise indicated, all data are as of December views on the public interest factors, has been duly 31, 1977. 2 As of June 30, 1977. published (43 Federal Register 8035 (1978)). The 3 The relevant market is approximated by the Houston Rand time for filing comments and views has expired, McNally Metro Area. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

496 Federal Reserve Bulletin □ June 1978 determined that the balance of the public interest section 4(c)(8) of the Act (12 U.S.C. factors the Board is required to consider under § 1843(c)(8)). § 4(c)(8) is favorable. Accordingly, the applica Applicant, the fourth largest banking organi tion is hereby approved. This determination is zation in New York State, controls six subsidiary subject to the conditions set forth in § 225.4(c) banks with aggregate domestic deposits of $13.1 of Regulation Y and to the Board’s authority to billion.1 Applicant also controls nonbanking sub require such modification or termination of the sidiaries that engage principally in consumer fi activities of a holding company or any of its nance, mortgage banking, leasing, construction subsidiaries as the Board finds necessary to assure lending, and investment advisory activities. compliance with the provisions and purposes of Investment, with total assets of $450,000 as of the Act and the Board’s regulations and orders December 31, 1977, operates from a main office issued thereunder, or to prevent evasion thereof. in Chicago and a branch in Orchard Lake, Michi The transaction shall be made not later than gan. Investment engages in providing investment three months after the effective date of this Order, advisory and investment management services and unless such period is extended for good cause by is a registered investment adviser. Its principal the Board or by the Federal Reserve Bank of New activity is the management of investment portfo York, pursuant to delegated authority. lios for individuals, corporations, charitable orga By order of the Board of Governors, effective nizations, and employee benefit trusts on a contin May 4, 1978. uing basis. In conjunction with its portfolio in vestment advisory and management services, In Voting for this action: Chairman Miller and Gover vestment also furnishes general economic infor nors Gardner, Wallich and Partee. Absent and not voting: Governors Coldwell and Jackson. mation and advice and conducts investment re search. (Signed) G riffith L. Garwood, As of August, 1977, Investment administered [seal] Deputy Secretary of the Board. 164 accounts with assets of approximately $289 million. Investment primarily serves Illinois, Chemical New York Corporation, Michigan, Kentucky, Missouri, Kansas, and In New York, New York diana, from which it obtains about 89 per cent of its revenues. On the basis of asset portfolios, Order Approving Acquisition of there are 41 larger investment management firms Investment and Capital Management Corp. headquartered in the region, and Investment com petes as well with numerous small firms there and Chemical New York Corporation, New York, with commercial banks, trust companies, and in New York, a bank holding company within the surance companies, and holds significantly less meaning of the Bank Holding Company Act, has than 1 per cent of the aggregate assets managed applied for the Board’s approval, under section by companies engaged in investment advisory ac 4(c)(8) of the Act and section 225.4(b)(2) of the tivities in the area. Board’s Regulation Y, to acquire all of the voting All of Applicant’s subsidiary banks engage in shares of Investment Capital and Management investment advisory activities through their re Corp. (“Investment”), Chicago, Illinois, a com spective trust departments; however, only Chemi pany that serves as an investment adviser, provid cal Bank, New York, New York, Applicant’s lead ing portfolio investment advisory and management bank, obtains any investment advisory or manage services, furnishing general economic information ment business from Investment’s market. Al and advice, and conducting investment research. though the volume of business that Chemical Bank Such activities have been determined by the Board derives from the contiguous six States served by to be closely related to banking (12 CFR Investment exceeds that of Investment, the pro § 225.4(a)(4) and (5)). posed acquisition would not eliminate any signifi Notice of the application, affording opportunity cant competition. Chemical Bank does not actively for interested persons to submit comments and solicit personal investment advisory and mangeviews on the public interest factors has been duly ment accounts from Investment’s market, but has published (43 Fed. Reg. 12086). The time for a small amount of such business derived from filing comments and views has expired, and the relationships established in the New York area. Board has considered all comments received in the light of the public interest factors set forth in banking data are as of December 31, 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 497 Applicant’s nonbank subsidiary engaged in in By order of the Board of Governors effective vestment advisory services, Van Deventer and May 26, 1978. Hoch, Glendale, California, serves a separate market and derives no business from Investment’s Voting for this action: Chairman Miller and Gover nors Wallich, Jackson and Partee. Absent and not vot market. In addition, Investment does not obtain ing: Governors Gardner and Coldwell. a significant amount of business from the area served by Van Deventer and Hoch or Applicant’s (Signed) G riffith L. Garwood, bank subsidiaries. In view of the foregoing, there [seal] Deputy Secretary of the Board. does not appear to be any significant existing competition between Investment and Applicant or Equitable Bancorporation any of its subsidiaries. Baltimore, Maryland Although there is the possibility of future com petition developing between Applicant and Invest Order Approving Retention of ment and although Applicant possesses the re Offices of Equitable Financial Corporation sources and the capability to expand de novo into Investment’s market, the elimination of future Equitable Bancorporation, Baltimore, Mary competition is not considered to be significant in land, a bank holding company within the meaning light of the large number of existing competitors of the Bank Holding Company Act, has applied in the market and Investment’s small market share. for the Board’s approval, under section 4(c)(8) of Accordingly, the Board concludes that competitive the Act (12 U.S.C. § 1843(c)(8)) and considerations are consistent with approval of the § 225.4(b)(2) of the Board’s Regulation Y (12 application. C.F.R. § 225.4(b)(2)), to retain indirectly eight It is anticipated that Investment’s affiliation with offices of Equitable Financial Corporation, Luth Applicant should result in increased operational erville, Maryland (“Equitable Financial”), a efficiencies and enable Investment to improve the wholly-owned subsidiary of Applicant. The offices quality and depth of its investment advisory serv that Applicant has applied to retain have been ices and to compete more effectively with the large engaged soley in making second mortgage loans.1 organizations in the market. Furthermore, there is Applicant has applied to also engage, through no evidence in the record indicating that Appli these offices, in the activities of factoring, con cant’s acquisition of Investment would result in sumer finance and the servicing of loans and other any undue concentration of resources, unfair com extensions of credit for any person. These activi petition, conflicts of interests, or unsound banking ties have been determined by the Board to be practices. closely related to banking (12 C.F.R. Based upon the foregoing and other consid §§ 225.4(a)(1) and (3)). The offices are located erations reflected in the record, the Board has in Lutherville, Rockville, Camp Springs, and Glen determined, in accordance with the provisions of Burnie, Maryland; Greensboro and Raleigh, North section 4(c)(8) of the Act, that consummation of Carolina; Wilmington, Delaware; and McLean, this proposal can reasonably be expected to pro Virginia. duce benefits to the public that outweigh possible Notice of the application, affording opportunity adverse effects. Accordingly, the application is for interested persons to submit comments and hereby approved. This determination is subject to views on the public interest factors, has been duly the conditions set forth in section 225.4(c) of published (43 Federal Register 1129). The time Regulation Y and to the Board’s authority to for filing comments and views has expired, and require such modification or termination of the the Board has considered the application and all activities of a holding company or any of its comments received in the light of the public inter subsidiaries as the Board finds necessary to assure est factors set forth in § 4(c)(8) of the Act (12 compliance with the provisions and purposes of U.S.C. § 1843(c)(8)). the Act and the Board’s regulations and orders Applicant is the second largest banking organi issued thereunder, or to prevent evasion thereof. zation in Maryland and controls five banks with The transaction shall be made no later than three aggregate deposits of $1.4 billion, representing months after the effective date of this Order, unless 14.0 per cent of the total deposits in commercial such period is extended for good cause by the ^pon being advised that prior Board approval was required Board or by the Federal Reserve Bank of New but was not secured, Applicant promptly converted the subject York, pursuant to authority hereby delegated. offices to loan production offices. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

498 Federal Reserve Bulletin □ June 1978 banks in the State.2 Equitable Financial ($4.8 Equitable Financial opened these offices. With million in assets as of year-end 1977) is engaged respect to present competitive effects, in light of in the mortgages, deeds of trust or other security the relative size of each office in each relevant interests on property that is subject to one or more market area and in view of the number of compet prior encumbrances. itors engaged in the activity of second mortgage In January 1974, Applicant was authorized by lending in those market areas, it does not appear the Federal Reserve Bank of Richmond, acting that approval of Applicant’s retention of these pursuant to delegated authority, to establish Equi offices would have any significant adverse effects table Financial as a subsidiary for the purpose of on existing or potential competition. As to the engaging de novo in those activities that are the other proposed nonbanking activities of Equitable subject of the instant application.3 Notice of this Financial, the Board finds that there would simi proposal was published as required by section larly be no significant adverse effects on existing 225.4(b)(1) of the Board’s Regulation Y (12 or potential competition. Retention of these of C.F.R. § 225.4(b)(1)), and it was indicated that fices, on the other hand, would provide benefits such activities would be conducted in Baltimore, to the public by assuring a continued and addi Maryland. Subsequently, from January 1976 until tional source for second mortgage loans, factoring, May 1977, Applicant opened the subject eight and consumer finance services in the areas served offices of Equitable Financial de novo without prior by the subject offices. Moreover, there is no evi Board approval.4 By this application, Applicant dence in the record indicating that retention would seeks to bring the operation of these offices into result in any undue concentration of resources, conformance with the requirements of law. unfair competition, conflicts of interests, unsound In acting on an application pursuant to § 4(c)(8) banking practices or other adverse effects on the of the Act to retain offices engaged in activities public interest. that are permissible for bank holding companies, As indicated above, the subject application is in situations where the necessary prior Board ap an after-the-fact request for Board approval to proval was not obtained for such offices or activi engage in activities at locations that were com ties, the Board applies the same standards that it menced in violation of the Board’s Regulation Y. applies in acting upon an application to establish Upon examination of all the facts and circum such offices and commence such activities initially. stances surrounding the establishment by Equitable In addition, the Board analyzes the competitive Financial of its offices without prior Board ap effects of such proposals as of the time that the proval , it appears that the violations do not warrant offices were established or the activity com denial of this application. In acting upon the ap menced. plication, the Board has taken into consideration The facts of record indicate that the de novo the fact that Applicant has taken steps to conform establishment of the eight offices added additional its operations to the Act and the Board’s Regula locations and competitors in the relevant markets tion Y by filing the subject application. In addition, and eliminated no significant amount of existing Applicant’s management has adopted a definitive competition.5 Thus, it appears there were no sig program to prevent violations from occurring in nificant adverse competitive effects at the time the future, and the Board expects that such actions will assist Applicant in preventing a recurrence of 2A11 data are as of June 30, 1977, unless otherwise indicated. similar violations. In consideration of the above 3 The facts of record indicate that despite such authorization, and other information in the record evidencing Equitable Financial has confined its activities to making sec Applicant’s intention to comply with the require ondary mortgage loans. 4 Section 4 of the Act and section 225.4(a) of the Board’s ments of the Act and the Board’s Regulation Y, Regulation Y prohibit a bank holding company from engaging the Board has determined that the circumstances in any nonbanking activity without the Board’s prior approval. of the above violations do not warrant denial of In addition, section 225.4(c)(2) of the Board’s Regulation Y specifically states that after the Board approves an application, the application. “the activities involved shall not be . . . provided at any Based upon the foregoing and other consid location other than those described in the notice published with respect to such determination ...” Accordingly, it is the erations reflected in the record, the Board has Board’s judgment that Applicant, by engaging in the subject determined that the balance of the public interest activities without prior Board approval at locations other than factors the Board is required to consider under Baltimore, Maryland, violated the Act and the Board’s Regu lation Y. § 4(c)(8) is favorable. Accordingly, the applica 5 The two principal market areas served by these offices tion is hereby approved. This determination is are approximated by the Washington, D.C., SMSA and the subject to the conditions set forth in § 225.4(c) Baltimore, Maryland, SMSA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 499 of Regulation Y and to the Board’s authority to cured extensions of credit made at the present require such modification or termination of the offices of FCC. Such activities have been deter activities of a holding company or any of its mined by the Board to be closely related to bank subsidiaries as the Board finds necessary to assure ing (12 CFR § 225.4(a)(1), (3), and (9)). compliance with the provisions and purposes of Notice of the application, affording opportunity the Act and the Board’s regulations and orders for interested persons to submit comments on the issued thereunder, or to prevent evasion thereof. public interest factors, has been published (42 By order of the Board of Governors, effective Federal Register 54875 (1977). The time for filing May 3, 1978. comments has expired, and the Board has consid ered the application and all comments received, Voting for this action: Chairman Miller and Gover including the request for a hearing submitted by nors Gardner, Wallich and Partee. Absent and not voting: Governors Coldwell and Jackson. Georgia Legal Services Program, Inc., Columbus, Georgia (“Protestant”), in light of the public (Signed) C athy E. M inehan, interest factors set forth in section 4(c)(8) of the [seal] Assistant Secretary of the Board. BHC Act. Applicant is the third largest banking organi zation in the State of New York and fourth largest Manufacturers Hanover Corporation, banking organization in the nation. Its four do New York, New York mestic bank subsidiaries, including Applicant’s Order Approving Acquisition of First Credit Cor lead bank, Manufacturers Hanover Trust Com poration and First Credit Corporation of Georgia pany, New York, New York, hold aggregate do mestic deposits of approximately $19.6 billion and Manufacturers Hanover Corporation, New operate a total of 306 offices throughout New York York, New York, a bank holding company within State.2 In addition to Ritter and Ritter Life, Appli the meaning of the Bank Holding Company Act cant controls several other nonbanking subsidi (“BHC Act”), has applied for the Board’s ap aries; these companies engage in leasing and proval under section 4(c)(8) of the Act (12 U.S.C. mortgage banking activities. § 1843(c)(8)) and section 225.4(b)(2) of the Ritter is a consumer finance company with total Board’s Regulation Y (12 CFR § 225.4(b)(2)), to assets of approximately $126 million. Ritter acquire substantially all of the assets of First Credit operates more than 125 offices, variously located Corporation, Whiteville, North Carolina in Indiana, Kentucky, Connecticut, New Jersey, (“FCC”), and First Credit Corporation of Geor West Virginia, Virginia, Pennsylvania, and North gia, Fayetteville, Georgia (“FCCG”). Applicant Carolina. Although it primarily engages in the proposes to acquire such assets through its wholly activity of making direct loans to consumers, at owned subsidiary, Ritter Financial Corporation, some of its offices Ritter also engages in the Wyncote, Pennsylvania (“Ritter”), and thereafter activities of making mortgage loans, servicing engage in the activities of making, acquiring and loans or other extensions of credit, sales financing, servicing, for its own account or for the account and acting as agent or broker in the sale of credit of others, loans or other extensions of credit as life and credit accident and health insurance. In would be made by a finance company; and acting addition, Ritter, through Ritter Life, engages in as agent or broker for the sale of credit life and the activity of acting as reinsurer of credit life and credit accident and health insurance directly re credit accident and health insurance sold at offices lated to extensions of credit at each of the present of Ritter in New Jersey, Pennsylvania, Virginia, offices of FCC and FCCG.1 Applicant also pro West Virginia, and North Carolina. poses to act as agent or broker in the sale of FCC, with assets of approximately $3.2 million, nonfiling insurance that is directly related to se engages in the activities of making consumer loans and acting as agent in the sale of credit-related 1 Applicant, through its wholly owned, indirect subsidiary, insurance. FCC engages in these activities at five Ritter Life Insurance Company (“Ritter Life”), also proposes offices in North Carolina.3 Two of Ritter’s offices to engage in the activity of acting as reinsurer of credit life are located within markets where two of FCC’s and credit accident and health insurance sold in connection with loans made by Ritter in North Carolina. Applicant pres ently engages in this activity at existing offices of Ritter in North Carolina, pursuant to the Board’s Order of May 3, 1977, 2A11 data are as of December 31, 1977. approving the application of Applicant to retain offices of Ritter 3 The offices are located in Wilmington, Shallotte, Aber and recommence reinsurance activities. deen, Wallace, and Sanford. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

500 Federal Reserve Bulletin □ June 1978 offices operate. The Ritter office in Burgaw com considers the subject proposal to be a foothold petes for business with the FCC office in Wallace.4 entry in the State of Georgia, which would provide In addition, both Ritter and FCC have an office a basis for further de novo expansion of Appli located in the city of Sanford.5 Thus, consumma cant’s consumer finance activities. Furthermore, as tion of the subject proposal would eliminate some discussed in greater detail below, consummation existing competition within the markets served by of Applicant’s proposal could have a positive the Wallace and Sanford offices of FCC. However, effect on competition in the future by having a in view of the relatively small market share held more aggressive successor to FCC and FCCG in by FCC in each of the relevant markets and the the marketplace. numerous other commercial banks, consumer fi As part of the subject transaction, Applicant nance companies and credit unions competing for proposes to offer loans at the present offices of consumer loans in these markets, it appears that FCC at rates of interest that are less than those the amount of existing competition that would be currently charged for loans at such offices. In eliminated as a result of consummation of this addition, Applicant proposes to offer, through proposal would not be significant. Ritter does not Ritter Life, credit life and credit accident and have any offices located within the market areas health insurance at premium rates below the statu served by the three other FCC offices, nor does tory maximum for loans made at the present of Ritter appear to derive any substantial business fices of FCC. No such reductions are proposed from these markets. Although Applicant appears for loans or insurance to be offered in Georgia. to possess the financial and managerial capabilities FCC and FCCG are currently owned by United to enter these markets de novo, such possibility Carolina Bankshares Corporation, Whiteville, appears unlikely within the foreseeable future due, North Carolina (“UCB”), which, Applicant as in part, to the current policies of the North Caro serts, is reluctant to commit the additional finan lina Banking Department regarding new consumer cial or managerial resources necessary to expand finance offices. Moreover, in view of FCC’s mar the range of services offered by FCC or FCCG. ket share of consumer loans in each of these three In this regard, it is noted that FCCG has closed markets, the loss of such potential competition is three of its offices since it was acquired by UCB viewed as extremely slight. in 1974. Applicant, on the other hand, asserts that FCCG, with assets of approximately $2.5 mil because of its financial resources and managerial lion, engages in the activities of making consumer expertise it would expand the volume and size of loans and mortgage loans, sales financing, and loans that would be made at the present offices acting as agent in the sale of credit-related insur of FCC and FCCG. Applicant further states that ance. It engages in such activities at six offices its proposal will result in greater efficiency and in Georgia.6 Ritter does not operate any offices convenience for customers because of Ritter’s on in Georgia or derive any substantial business from line computer capabilities, as well as product di the market areas served by the FCCG offices. versification and expansion. For example, Appli Thus, Applicant’s acquisition of FCCG would not cant plans to offer sales financing at offices of FCC, eliminate any existing competition. To the extent which services are not currently available at these that Applicant possesses the ability to expand de offices. Applicant also states that it would utilize novo, consummation of this proposal would elim FCCG as a basis for future de novo expansion, inate some potential competition. However, the which, because of Ritter’s financial and managerial Board regards any such loss as de minimus in view resources, would provide a positive effect on of the fact that Applicant would not gain a sub competition in Georgia by introducing an aggres stantial share of the consumer loan business in any sive competitor willing to commit the financial and of the markets served by FCCG and in view of managerial resources to expand consumer finance the size and number of other competitors already activities in the State. operating in these markets. Because of the size Based on all of the facts of record, the Board of FCCG and the location of its offices, the Board concludes that consummation of the subject pro posal would result in benefits to the public, and 4 Burgaw is located 14 miles away from Wallace. The that these benefits are sufficient to outweigh any relevant market for this area is approximated by all of Duplin and Pender Counties, North Carolina. adverse effects on competition that may also result 5 The relevant market for Sanford is approximated by all from consummation of the proposal. Moreover, of Lee and Hartnett Counties, North Carolina. there is no evidence in the record to indicate that 6 The FCCG offices are located in La Grange, Butler, Thomaston, Manchester, Jonesboro, and Fayetteville. the proposed transaction would lead to any undue Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 501 concentration of resources, conflicts of interests, should reduce the rate of interest it would charge unsound banking practices, or any other adverse for loans made in Georgia to provide a public effects upon the public interest. benefit to consumers. In response to the published notice of Appli In order to be entitled to a hearing on the cant’s proposal, the Board has received comments application, Protestant must establish its standing in opposition and a request for a formal hearing by demonstrating that it would suffer “injury in on the subject application from Protestant, a non fact” as a result of the challenged action.9 In profit organization engaged in the representation regard to the question of standing, the Secretary of low-income consumers located throughout most of the Board requested Protestant to specifically of Georgia. Protestant opposes and requests a address the question of how consummation of this hearing only with respect to that portion of the proposal would adversely affect Protestant. In re subject proposal concerning the acquisition of the sponse, Protestant stated that it had standing to assets of FCCG. challenge the subject application for two reasons. Protestant’s opposition to Applicant’s proposal First, Protestant represents “the indigent popula to act as agent in the sale of credit-related insur tion of most of the State of Georgia, which popu ance is predicated upon Protestant’s belief that: lation includes a large number of persons who are (1) certain types of credit life and credit health unable to obtain credit from any source other than and accident insurance are of no benefit to the industrial loan companies.” Second, Protestant consumer; (2) the premiums to be charged for such asserts that it represents a particular, although insurance are unreasonably high in comparison to unnamed, client and is assisting that client with loss experience and premiums permissible in other credit problems. One of the ways Protestant has states;7 and (3) Applicant may condition, or “tie- chosen to assist this client is “to force FCCG or in,” the granting of a loan upon the purchase of Ritter to lower its cost of credit significantly.” credit-related insurance. As a condition to ap The Supreme Court has stated that “injury in proval of the subject application, Protestant urges fact” can not be established by “a mere ‘interest the Board to prohibit Applicant from engaging in in a problem,’ no matter how long standing the the sale of: interest and no matter how qualified the [petitioner] (a) level term credit life insurance; is in evaluating the problem.”10 An organization’s (b) credit insurance as a precondition of making abstract concern with a subject does not not sub a loan; stitute for the requisite concrete injury in fact.11 (c) joint credit life insurance; Furthermore, an organization can establish stand (d) three-day retroactive credit accident and ing only as a representative of its members who health insurance in connection with loans over have been injured in fact and who could have $100; and brought suit in their own right.12 (e) credit life and credit accident and health In the subject case, Protestant does not allege insurance at rates proposed by Applicant. that any specific injury to itself, or the individual Protestant opposes Applicant’s proposal to make it represents, would result from consummation of consumer loans because Protestant views the in Applicant’s proposal. Protestant’s complaint in terest rates for these loans as being unreasonably volves dissatisfaction with interest rates and insur high in comparison to those permissible in other ance premiums that may be charged in connection states.8 Thus, Protestant asserts that Applicant with consumer loans under Georgia law. In the 7 Insurance that may be sold in connection with loans made 9 Association of Data Processing Service Organizations v. in Georgia by a company, such as FCCG or Ritter, is regulated Camp, 397 U.S. 150 (1970); Sierra Club v. Morton, 405 U.S. by the Industrial Loan Act of Georgia; and premiums that may 727 (1972); Warth v. Seldin, 422 U.S. 490 (1975); Simon be charged for such insurance are determined by the Controller v. Eastern Kentucky Welfare Rights Organization, 426 U.S. General of the State of Georgia (Code of Georgia, ch. 25, 26 (1976). The foregoing decisions concern the question of §§ 306 and 315). Specific premiums for such insurance are standing before federal courts. However, standing principles set forth in Chapter 120-1-11 of the Rules and Regulations enunciated in those cases are applicable to the question of of the Georgia Industrial Loan Department. standing before administrative agencies. In Martin-Trigona v. 8 Loans that may be made in Georgia by a company, such Federal Reserve Board, 509 F. 2d 363, 366 (1975), the Court as FCCG or Ritter, are regulated by the Industrial Loan Act of Appeals for the District of Columbia concluded that the of Georgia. In general, loans made under this statute may be test for determining standing, i.e., injury in fact, applies “both made for amounts up to $3,000, with maturities of up to 36 to standing before this Court and standing before an adminis months. Interest may be charged on such loans at the rate trative agency.” of 8 per cent per year on the face amount of the note evidencing 10 Sierra Club v. Morton, 405 U.S. 727, 739 (1972). the loan, with fees of an additional 8 per cent on the first 11 Simon, supra, at 40. $600 and 4 per cent on the excess, p/us a maintenance fee 12 Warth v. Seldin, 422 U.S. at 511; see also Simon, supra, of $2.00 per month. (See Code of Georgia, ch. 25 § 315.) at 40. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

502 Federal Reserve Bulletin □ June 1978 Board’s view, neither Protestant, nor the individ posed activity by the applicant “can reasonably ual it represents, would be injured by consumma be expected to produce benefits to the public, such tion of the proposal now before the Board. The as greater convenience, increased competition, or offices of FCCG are presently operated by UCB. gains in efficiency, that outweigh possible adverse Under Applicant’s control, those offices would effects, such as undue concentration of resources, continue to offer the same, or improved, services decreased or unfair competition, conflicts of inter at the same charges. Even if the Board were to ests, or unsound banking practices.” deny the subject application, Protestant’s com Protestant does not allege that any of the adverse plaint, and that of those it represents, would not effects enumerated in the statute, or any other be redressed. adverse effects, would result from consummation Protestant alleges only that the status quo will of the subject proposal. Nor does Protestant be maintained, which Protestant finds unsatis dispute Applicant’s public benefit allegations. factory. Almost by its own admission, Protestant’s Rather, Protestant alleges only that the interest interest in this case is that of a concerned by rates and insurance premiums that Applicant stander. Protestant seeks a hearing in this matter would charge customers are unreasonably high and in order to press its particular views concerning do not constitute a sufficient public benefit. Appli the statutes and regulations that are properly the cant does not dispute the allegation that permissi province of the State of Georgia. The written ble interest rates for loans and premiums for credit views of Protestant as an “interested person” are life and credit accident and health insurance may welcome, but that does not imply a right to pre be high in Georgia. Nor does Applicant claim that cipitate a formal hearing in the absence of a interest rates or insurance premiums it would showing of injury in fact. Protestant has failed to charge are a public benefit of its proposal.14 make the necessary showing of injury in this case The issue the Board must determine is whether and, therefore, is not entitled to a hearing under the subject proposal can reasonably be expected section 4(c)(8) of the BHC Act. to produce public benefits that outweigh any pos Apart from the question of standing, Protestant sible adverse effects. This is a balancing test, is not entitled to a hearing unless it raises material which mandates that the Board consider all factors, issues of fact that are in dispute by the relevant not just particular factors. In this regard, it must parties.13 The Secretary of the Board requested be emphasized that neither the BHC Act nor the Protestant to specifically detail the issues of fact Board’s regulations specifically require the Board involved in the subject case. In response, Protes to consider interest rates or insurance premium tant states that a formal hearing is necessary to charges in acting on an application involving the determine: subject activities. Moreover, the Board does not (1) Whether Applicant’s proposed charges for need to determine that such charges are necessarily credit life and credit accident insurance constitute a benefit in order to determine that the balance an expected public benefit, and, if so, is the of the public interest factors weighs in favor of projected benefit sufficient to satisfy the balancing approval of an application. This is particularly true test set forth in section 4(c)(8) of the BHC Act; in the subject case, where Applicant does not claim (2) Whether Applicant is justified in not ex proposed interest rates or insurance premiums as tending the proposed rate reduction for the present public benefits for the services it would offer in offices of FCC to the offices it will operate in Georgia. Georgia; and whether a greater reduction should In its submissions, Protestant states “there is be required to establish a public benefit; and a possibility that Applicant is compelling custom (3) The sufficiency of Applicant’s plans to dis ers to purchase credit insurance.” No direct evi continue FCCG’s practice of effectively coercing dence has been submitted by Protestant 15 in sup customers into purchasing credit insurance. In order for the Board to approve an application 14 In its application, Applicant states that, at some future under section 4(c)(8) of the BHC Act, the Board date, it would propose to engage in the activity of acting as must determine that the performance of the pro- reinsurer for credit life and credit accident and health insurance in Georgia, and at such time Applicant would propose to offer such insurance at premiums less than the statutory maximum. However, the subject application does not involve such a proposal. 13 Independent Bankers Association of Georgia v. Board 15 Protestant asserts that the percentage of loans granted that of Governors of the Federal Reserve System, 516 F. 2d 1206, also have credit insurance is prima facie evidence in support 1219-1220 (D.C. Cir. 1975). of the allegations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 503 port of this allegation. Such “tie-in” arrangements credit life insurance because insurance is not are specifically prohibited by section 106 of the needed for a nonworking spouse in order to guar BHC Act and section 225.4(c) of Regulation Y. antee repayment of the loan in the event of the Applicant, in its application, specifically stated death of the borrower. In this regard, Applicant that the operations of its subsidiaries are in com proposes to offer such insurance only on those pliance with the prohibitions against “tie-in” ar loans for which the spouse is a co-signer or co rangements and that Applicant will instruct any maker and is, thereby, obligated for payment of officials of FCCG that it may employ following the loan. consummation of the proposal of such prohibi Finally, Protestant requests the Board to exam tions. Federal Reserve System inspection reports ine the ability of Applicant to comply with com of UCB, FCC, FCCG, Applicant and Ritter reveal mitments made to the Board. In support of this no violations of the “tie-in” prohibitions. In the request, Protestant alleges that Applicant sold Board’s view, there is no basis to hold a hearing credit-related insurance in Connecticut at the on this issue in the face of such a bare, unsup maximum statutory rate, which Protestant asserts ported generalization. violates Applicant’s commitment to offer such The question of “tie-in” arrangements is not insurance at rates lower than the statutory maxi a question of fact in the subject application. If mum. Applicant made such a commitment in its Protestant, or any of the individuals it purports proposals to engage in reinsurance activities in to represent, have been injured in any way as a certain states.18 However, Applicant did not pro result of violations of the “tie-in” prohibitions, pose to engage in reinsurance activities in Con those persons may sue in the appropriate United necticut and, therefore, is not obligated to offer States District Court for injunctive relief, i.e. to credit-related insurance at reduced premiums in restrain and prevent such violations, as well as that state. Furthermore, it appears that Applicant for treble damages.16 is in compliance with other commitments made In summary, the Board concludes that no mate to the Board. rial issues of fact are in dispute by the relevant Therefore, having considered all of the material parties and, therefore, there is no requirement that submitted by Protestant, the Board concludes that the Board hold a hearing. Applicant’s sole purpose Protestant is not entitled to a hearing on the subject in requesting a hearing is to elicit and present application, nor does it otherwise appear in the evidence in support of its own view that the State public interest for the Board to hold a hearing in of Georgia permits unreasonably high interest rates this matter. Protestant’s request for a hearing on and insurance premium charges. In such circum the proposal to acquire FCCG is hereby denied. stance, no purpose would be served by holding Furthermore, the Board finds that the merits of a hearing on these questions. Protestant’s comments in opposition to this pro Protestant requests the Board to impose certain posal do not justify the Board taking any other restrictions with regard to Applicant selling action on Protestant’s requests. credit-related insurance. Protestant urges the Based upon the foregoing and other consid Board to prohibit Applicant from selling level term erations reflected in the record, the Board has credit life insurance. In this regard, the Board has determined that the balance of the public interest previously determined that such insurance is not factors the Board is required to consider under directly related to extensions of credit.17 However, section 4(c)(8) is favorable. Accordingly, the ap Applicant does not propose to offer such insur plication is hereby approved. This determination ance. Accordingly, this matter is not at issue in is subject to the conditions set forth in section the subject application. Protestant also urges the 225.4(c) of Regulation Y and to the Board’s au Board to prohibit Applicant from selling joint thority to require such modification or termination of the activities of a holding company or any of its subsidiaries as the Board finds necessary to 16 Sections 106(c) and (e) of the BHC Act (12 U.S.C. §§ 1973 and 1975). In addition, the Board has authority to assure compliance with the provisions and pur institute appropriate action to remedy any violation of law by poses of the Act and the Board’s regulations and a bank holding company or any of its nonbanking subsidiaries. See 12 U.S.C. § 1818(b)(3). 17 See the Board’s Order, dated May 29, 1973, approving 18 See the Board’s Order dated December 10, 1974, approv the application of Fidelity Corporation of Pennsylvania, Rose- ing the application of Applicant to acquire Ritter (61 Federal mont, Pennsylvania, to acquire Local Finance Corporation, Reserve Bulletin 42 (1975)); and the Board’s Order dated Providence, Rhode Island (59 Federal Reserve Bulletin 472, May 3, 1977, approving the application of Applicant to retain 473-474 (1973). offices of Ritter and recommence reinsurance activities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

504 Federal Reserve Bulletin □ June 1978 orders issued thereunder, or to prevent evasion Notice of the applications, affording opportunity thereof. for interested persons to submit comments and The transaction shall be made not later than views on the public interest factors, has been duly three months after the effective date of this Order, published (43 Federal Register 9653). The time unless such period is extended for good cause by for filing comments and views has expired, and the Board or by the Federal Reserve Bank of New the Board has considered the applications and all York, pursuant to authority hereby delegated. comments received in light of the public interest By order of the Board of Governors, effective factors set forth in section 4(c)(8) of the Act.2 May 1, 1978. Applicant, a one-bank holding company, be came a bank holding company as a result of the Voting for this action: Chairman Miller and Gover 1970 Amendments to the Act by virtue of its nors Gardner, Wallich, Coldwell, Jackson, and Partee. control of North Carolina National Bank, Char (Signed) G riffith L. G arw ood, lotte, North Carolina (“Bank”). Applicant ac [seal] Deputy Secretary of the Board. quired all of the outstanding shares of TranSouth in July, 1969. Pursuant to the provisions of section 4 of the Act, Applicant has until December 31, NCNB Corporation, 1980, to divest its interest in TranSouth or, in the Charlotte, North Carolina alternative, to apply and secure the Board’s ap proval to retain such interest.3 Order Denying Retention Applicant is the second largest banking organi of TranSouth Financial Corporation zation in North Carolina by virtue of its control NCNB Corporation, Charlotte, North Carolina, of Bank, which has deposits of $2.6 billion, rep a bank holding company within the meaning of the Bank Holding Company Act, has applied for the Board’s approval under section 4(c)(8) of the 2 On May 9, 1978, the Board received a letter from the United States Department of Justice that contains findings that Act (12 U.S.C. § 1843(c)(8)) and section are consistent with the Board’s findings with regard to the 225.4(b)(2) of the Board’s Regulation Y (12 anticompetitive effects of the proposed retention and recom C.F.R. § 225.4(b)(2)) to retain all of the voting mends denial of the application. However, the action reflected herein was taken without significant reliance on the opinion shares of TranSouth Financial Corporation (for and recommendation of the Department of Justice. merly Stephenson Finance Company), and its 3 Section 4 of the Act provides, inter alia, that nonbanking subsidiary TranSouth Mortgage Corporation (for activities acquired between June 30, 1968, and December 31, 1970, by a company which becomes a bank holding company merly Associated Underwriters, Inc.), both of as a result of the 1970 Amendments may not be retained beyond Florence, South Carolina (together referred to as December 31, 1980, without Board approval. Notwithstanding, Applicant has asserted that the shares of TranSouth may be “TranSouth”).1 TranSouth directly engages pri retained by Applicant on the basis of section 4(c)(5) of the marily in making direct consumer installment Act, which provides an exemption for retention of shares which loans, secured and unsecured, to individuals, pur are eligible for investment by national banking associations under the provisions of section 5136 of the Revised Statutes. chasing consumer installment sales finance con However, at the time that Applicant acquired TranSouth in tracts, purchasing recreational lot notes, extending 1969, Applicant was not a bank holding company under the direct loans to dealers for the financing of inven Act and did not rely on section 4(c)(5) to make the acquisition. Furthermore, if Applicant had been a bank holding company tory (floor planning) and working capital purposes, in 1969, it could not have relied on the exemption in section and purchasing personal property lease contracts. 4(c)(5) of the Act to acquire the shares of TranSouth since TranSouth operated consumer finance offices in three states and TranSouth also acts as agent for the sale of credit would not have been a permissible investment for a national life and credit accident and health insurance and bank. Moreover, if Applicant were to acquire the shares of physical damage insurance, all of which are di TranSouth today, section 225.4(e) of Regulation Y would preclude the applicability of section 4(c)(5) of the Act to such rectly related to extensions of credit by TranSouth. acquisition inasmuch as the shares of TranSouth are not of Each of the above activities has been determined the kind that are explicitly eligible by Federal statute for by the Board to be closely related to banking (12 investment by a national bank. Finally, the Board notes that since 1971, in its Registration Statement, Annual Reports and C.F.R.§ 225.4(a)(1), (6) and (9)). other filings with the Board, Applicant has not previously asserted reliance on section 4(c)(5) as its authority to hold the shares of TranSouth. Thus, it appears that Applicant’s assertion 1 In separate applications, Applicant has also applied to of the applicability of section 4(c)(5) at this time is merely retain its indirect interest in three other TranSouth subsidiaries, an afterthought designed to avoid regulatory inquiry into Ap Superior Life Insurance Company, Superior Insurance Com plicant’s retention of the shares of TranSouth. Accordingly, pany and Superior Claim Service, all of Florence, South the Board believes Applicant’s assertion of the applicability Carolina. The Board’s disposition of these applications will of section 4(c)(5) of the Act to the shares of TranSouth is be treated separately. without merit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 505 resenting 17.2 per cent of the total deposits in the Board has previously determined that con commercial banks in the State.4 In addition to sumer finance companies compete with commer engaging in consumer finance and related insur cial banks in the area of personal loans.8 At the ance activities through TranSouth, Applicant en time of its acquisition by Applicant in July 1969, gages through subsidiaries in a variety of non TranSouth had receivables of $42.6 million and banking activities, including mortgage banking, operated 65 consumer finance offices in three factoring, providing trust services, and acting as States, of which 33 were located in the State of an investment advisor. North Carolina. As of December 31, 1968, ap TranSouth is the 35th largest finance company proximately 63 per cent of the receivables derived in the United States.5 It operates 94 loan offices from TranSouth’s North Carolina offices repre in five States, of which 44 are located in North sented direct installment loans to individuals. Bank Carolina. On December 31, 1977 TranSouth had is also engaged in making direct installment loans assets of $169 million and total finance receivables to individuals, and in 1969 it operated 79 banking of $155.5 million. offices throughout North Carolina. Bank had of In order to approve an application under section fices in five markets where TranSouth had offices, 4(c)(8) of the Act, the Board must determine and from the record it appears that in each of these whether the activities of the company to be ac five markets both TranSouth and Bank held a quired or retained are “so closely related to bank significant amount of the outstanding direct in ing or managing or controlling banks as to be a stallment loans. Thus, the acquisition of Tran proper incident thereto.” Where, as here, the South by Applicant eliminated a significant amount activities of a nonbank company have been deter of existing competition in each of the five markets mined by regulation to be closely related to bank where both Bank and TranSouth had offices.9 ing, the Board is required to consider whether a In addition to the elimination of existing com bank holding company’s acquisition of that com petition between Bank and TranSouth, the facts pany “can reasonably be expected to produce of record indicate that this acquisition also resulted benefits to the public, such as greater convenience, in elimination of potential competition. When it increased competition, or gains in efficiency, that was acquired by Applicant, TranSouth had offices outweigh possible adverse effects, such as undue in 21 additional North Carolina counties, where, concentration of resources, decreased or unfair under North Carolina law, Bank could have estab competition, conflicts of interest, or unsound lished banking offices. Since its acquisition by banking practices.” This statutory test requires a Applicant, TranSouth has, through acquisition of positive showing by an applicant that the public going concerns, as well as de novo establishment benefits of its proposal outweigh the possible ad of offices, increased its number of offices from 60 verse effects.6 The Board regards the standards to 95, including the addition of 11 offices in North under section 4(c)(8) of the Act for retention of Carolina, an increase in North Carolina of 33 per shares to be the same as the standards for proposed cent. Likewise, Bank has substantially expanded acquisitions. its banking operations, and now has 163 banking The relevant product market to be considered offices throughout North Carolina, an increase of in evaluating the competitive effects of this pro more than 100 per cent. As a result of this expan posal is the making of personal cash loans,7 and sion, both Bank and TranSouth have offices in 12 additional North Carolina counties. It appears that 4 All banking data are as of December 31, 1977. Applicant’s dual expansion policy has enabled it 5 American Banker, May 27, 1977. 6 Applicant contends that the Board in this case should apply to obtain a significant aggregate amount of the a somewhat different standard, particularly with regard to outstanding direct installment loans in each of the competitive effects. However, the standard described above additional 12 markets where both Bank and Tranis derived from the statute and has been consistently applied in numerous orders by the Board on applications under section 4 of the Act. Inasmuch as Applicant has offered no compelling evidence in support of a reevaluation by the Board of the 8 See the Board’s Order dated August 3, 1973 denying the long-standing and consistent application of the standard, the application of Bankers Trust Corporation, New York, New Board rejects Applicant’s argument. York, to acquire Public Loan Company, Binghamton, New 7 Since TranSouth is also engaged in other types of consumer York, 59 Federal Reserve Bulletin 694 (1973). lending, Applicant contends that the product market should 9 The Board notes that at the time of acquisition neither include several other types of loans and other lenders. The Applicant nor its subsidiaries was engaged in making personal Board has also examined Applicant’s data submitted in support cash loans in any of the markets outside of North Carolina of its claim in this regard, and the Board has determined that in which TranSouth had offices. Furthermore, at the present its conclusion with respect to competitive effects would be time, no subsidiary of Applicant other than TranSouth engages unchanged. in the making of such loans outside of North Carolina. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

506 Federal Reserve Bulletin □ June 1978 South now have offices. The magnitude of Appli of these offices represented acquisitions of the cant’s expansion in North Carolina since 1969 assets of existing offices, and therefore, did not clearly demonstrates that Applicant had sufficient provide an additional competitor in the markets financial and managerial resources to enter de novo where each office is located. the 21 counties then served by TranSouth, and Based upon the foregoing and other consid such de novo entry would have been more con erations reflected in the record, the Board has ductive to competition in those markets. Further determined that the balance of the public interest more, Applicant’s subsequent expansion demon factors the Board is required to consider under strates an inclination toward such expansion. section 4(c)(8) is not favorable. Accordingly, the TranSouth now has offices in 18 counties where applications are denied.11 Bank could establish banking offices. Accordingly, By order of the Board of Governors, effective the Board views the effects of the acquisition of May 11, 1978. TranSouth by Applicant on both existing and po Voting for this action: Chairman Miller and Gover tential competition as adverse and believes that nors Gardner, Coldwell, Jackson and Partee. Absent and those factors weigh against approval of this appli not voting: Governor Wallich. cation. As stated above, Applicant must bear the burden 11 The Board’s conclusions regarding the adverse effects of of showing that the benefits to the public that have the proposed retention are based upon the facts presently resulted or will result from the acquisition out contained in the record. This action is taken without prejudice to any decision by Applicant to submit a proposal modified weigh in the public interest the adverse effects. to address the findings of the Board regarding the adverse Toward this end, Applicant has offered statistical competitive effects and the unfavorable balance of public evidence suggesting that since its affiliation with interest factors concerning this proposal. Applicant, TranSouth has incurred lower interest (Signed) C athy E. M inehan, expenses, had higher rates of return, had lower [seal] Assistant Secretary of the Board loan losses, and had a higher growth rate, than selected independent consumer finance companies. However, the few firms used in the comparison were not selected at random, and are generally NCNB Corporation, smaller than TranSouth, and no comparison of Charlotte, North Carolina these factors was made with respect to TranSouth Order Concerning Retention alone, both before and after acquisition. Finally, of Superior Insurance Company the Board has indicated that where it finds that and Superior Claim Service an acquisition has resulted in a serious adverse effect by virtue of the elimination of a potential NCNB Corporation, Charlotte, North Carolina, entrant, a showing that the applicant has made a a bank holding company within the meaning of strong company stronger is insufficient to outweigh the Bank Holding Company Act, has applied for the adverse effect.10 In this connection, the Board the Board’s approval, under § 4(c)(8) of the Act notes that Applicant does not demonstrate that any (12 U.S.C. § 1843(c)(8)) and § 225.4(b)(2) of the of the benefits accruing to TranSouth by virtue of Board’s Regulation Y (12 CFR 225.4(b)(2)), to its affiliation with Applicant have been passed on retain its indirect subsidiaries, Superior Insurance to TranSouth’s individual borrowers in the form Company (“SIC”) and Superior Claim Service of benefits such as lower interest rates, longer (“SCS”), both of Florence, North Carolina. These maturities, larger loans or improved services. On companies engage, respectively, in the activities the contrary, it appears from Applicant’s statistical of underwriting property and casualty insurance evidence that the average size of TranSouth’s related to extensions of credit by Applicant’s af direct installment loans is nearly 20 per cent below filiates and adjusting insurance claims and ap the average for the independent finance companies. praising and valuing property in connection Finally, while the increase in the number of Tran therewith. While such activities have not been South’s offices by 35 may be viewed as benefitting determined by the Board to be closely related to the public convenience, the Board notes that 19 banking, Applicant has proposed that notice of opportunity for hearing regarding the activities be published in the Federal Register. 10 See Board’s Order dated March 14, 1978, denying the Section 225.4(a) of Regulation Y, (12 CFR application of Citycorp, New York, New York to retain Ad vance Mortgage Corporation, Southfield, Michigan. 225.4(A)) provides that a bank holding company Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 507 may file an application to engage in activities, court’s guidelines to determine whether there is other than those determined to be permissible for a reasonable basis for finding them closely related bank holding companies, if it is of the opinion to banking. The court stated that a finding that that the proposed activity in the circumstances an activity is closely related could be made where surrounding a particular case is closely related to it is demonstrated that banks generally have in fact banking or managing or controlling banks. The provided the proposed services, or that banks regulation further provides that the Board will generally provide services that are operationally publish in the Federal Register a notice of oppor or functionally so similar to the proposed services tunity for hearing regarding the proposed activity as to equip them particularly well to provide the only if it believes that there is a reasonable basis proposed service, or that banks generally provide for the bank holding company’s opinion. services that are so integrally related to the pro Applicant acquired SIC in July 1969, and has posed service as to require their provision in a been engaged since that time in the underwriting specialized form.3 activity.1 Since the Board has not found this ac On the basis of information submitted by Ap tivity to be closely related to banking, Applicant plicant, the Board concludes that Applicant did as a proponent of the activity is required to dem not demonstrate there is a reasonable basis for the onstrate in accordance with section 225.4(a) of the opinion that the proposed activity met any of these Board’s Regulation Y that there is a reasonable three court recognized tests. Accordingly, the basis for its opinion that these activities are closely Board finds that Applicant has failed to meet its related to banking. burden of demonstrating that there is a reasonable Applicant contends that underwriting property basis for its opinion that the activity is closely and casualty insurance directly related to exten related to banking or managing and controlling sions of credit by Applicant’s affiliates is closely banks. related to banking. It bases its contention on the Based upon the foregoing and the other facts Board’s determination that selling such insurance of record, the Board concludes that in the circum as agent is permissible for bank holding compa stances presented in this case there is no reasonable nies, as well as the fact that the Board has found basis for believing the proposed activity is closely that both selling and underwriting credit life and related to banking or managing or controlling credit accident and health insurance related to banks and therefore a Federal Register notice of extensions of credit by the bank holding company opportunity for hearing in this matter should not system is closely related to banking. Applicant and will not be published.4 concludes, without providing evidence, that there By Order of the Board of Governors, effective is no substantive difference between the activities May 10, 1978. of underwriting credit-related property and casu alty insurance and underwriting credit life and Voting for this action: Chairman Miller and Gover credit accident and health insurance. nors Gardner, Coldwell, and Partee. Voting against this In the circumstances presented, the Board con action: Governor Jackson. Absent and not voting: Gov cludes that Applicant has failed to present suffi ernor Wallich. cient evidence to warrant a finding that there is a reasonable basis for the opinion that the activity (Signed) Theodore E. Allison, is closely related to banking. In determining [seal] Secretary of the Board. whether there is a reasonable basis for Applicant’s opinion, the Board has looked to recent court decisions. A federal circuit court has set forth guidelines for determining whether an activity is 3 516 F.2d at 1737. These guidelines are cited, for example, in Association of Bank Travel Bureaus, Inc. v. Board of closely related to banking,2 and recently the Board Governors of the Federal Reserve System, No. 76-1186 (7th has analyzed proposed activities in terms of the Cir. Jan. 12, 1978), and Alabama Association of Insurance Agents v. Board of Governors of the Federal Reserve System, 533 F.2d 224,241 (5th Cir. 1976), rehearing denied 558 F.2d 729 (1977), cert, denied 46 U.S.L.W. 3539 (Feb. 27, 1978). 1 Section 4 of the Act provides, inter alia, that nonbanking 4 In its application to retain SCS, Applicant stated that SCS’s activities acquired between June 30, 1968, and December 31, activity of claims adjusting and valuing and appraising property 1970, by a company which becomes a bank holding company is incidental to the underwriting activity of SIC. Since the as a result of the 1970 Amendments may not be retained beyond Board has found that there is no reasonable basis for believing December 31, 1980, without Board approval. this latter activity is closely related to banking, there would 2 National Courier Association v. Board of Governors of be no reasonable basis for SCS’s activities being closely related the Federal Reserve System, 516 F.2d 1229 (D.C. Cir. 1975). to banking. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

508 Federal Reserve Bulletin □ June 1978 Philadelphia National Corporation, family residential mortgage loans. Since its for Philadelphia, Pennsylvania mation in 1968, Company has operated under an agreement with Applicant to originate residential Order Approving Acquisition of Colonial mortgage loans exclusively for sale to Applicant’s Mortgage Service Company Associates, Inc. subsidiaries. Applicant is currently engaged in mortgage Philadelphia National Corporation, Phila banking through several wholly-owned direct and delphia, Pennsylvania, a bank holding company indirect subsidiaries known collectively as the within the meaning of the Bank Holding Company “Colonial Group,” based in Philadelphia, Penn Act, has applied for the Board’s approval, under sylvania. Through the Colonial Group, Applicant § 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and engages in originating and servicing, for its own § 225.4(b)(2) of the Board’s Regulation Y (12 account and the account of others, 1-4 family CFR § 225.4(b)(2)), to acquire Colonial Mortgage residential mortgage loans, multi-family and com Service Company Associates, Inc., Kensington, mercial mortgage loans, and construction loans, Maryland (“Company”), a company that engages primarily in Pennsylvania, New Jersey, Delaware, in the activities of mortgage banking, including Georgia, Ohio and California. Applicant does not originating conventional and guaranteed residen have an office located in any markets in which tial mortgage loans for the account of others. Such Company competes, and does not compete with activities have been determined by the Board to Company for the origination of 1-4 family resi be closely related to banking (12 CFR dential mortgages in either the Baltimore and § 225.4(a)(1)). Norfolk markets. While Applicant originated Notice of the application, affording opportunity $135,500 in residential mortgage loans in the for interested persons to submit comments and Washington, D.C., market during 1976, the record views on the public interest factors, has been duly indicates that approximately 61 organizations published (43 Federal Register 4285). The time originate 1-4 family residential mortgage loans in for filing comments and views has expired, and the Washington, D.C., market and that during the Board has considered the application and all 1976 a total of $1,400 million of such loans were comments received in the light of the public inter originated. There is no significant competition est factors set forth in § 4(c)(8) of the Act (12 between Company and Applicant’s Colonial U.S.C. § 1843(c)(8)). Group, and it appears unlikely that any significant Applicant, the fourth largest banking organi competition would develop between them in the zation in Pennsylvania, controls Philadelphia Na future, particularly in light of the nature of the tional Bank, with deposits of $2,300 million, relationship existing between Company and Ap representing 4.9 per cent of the total deposits in plicant. Thus, approval of the proposed acquisition commercial banks in Pennsylvania.1 Applicant would have no adverse effects on existing compe also engages through subsidiaries in a variety of tition in the Washington, D.C., market or potential nonbanking activities, including factoring and competition in the Baltimore or Norfolk markets.3 commercial finance, mortgage banking, real and Following consummation of the proposed ac personal property leasing, consumer finance, in quisition, Applicant would assist Company in ex surance agency, and insurance underwriting. panding the types of mortgage loans it offers to Company operates five offices for the origination its customers in Maryland and Virginia to include of 1-4 family residential mortgage loans, three of commercial mortgage loans and construction which are located in the Washington, D.C., resi loans. In addition, Applicant intends to install data dential mortgage market, one is located in the processing and transmission equipment at Com Baltimore, Maryland, market and one is located pany’s offices, thereby enabling Company to serve in the Norfolk, Virginia, market.2 In 1976, Com pany originated a total of $119.1 million in 1-4 3 In the course of evaluating the application, a letter was received by the Board protesting the use of the name “Colo 1 All banking data are as of June 30, 1977, unless otherwise nial” in the Norfolk, Virginia, market by Applicant and stated. Company. The protestant is also engaged in the mortgage 2 The Washington, D.C. residential mortgage market con banking business in the Norfolk market under the name “Co sists of the Washington SMSA. The Baltimore, Maryland, lonial.” However, from the record, it appears that Applicant market consists of the Baltimore SMSA. The Norfolk, Vir first registered the name “Colonial” in Virginia in 1968, while ginia, market consists of the cities of Norfolk, Virginia Beach, the protestant registered its use of that name in 1970. Accord Portsmouth, Chesapeake and Suffolk in Virginia and Currituck ingly, based on these facts, the use of the name “Colonial” County in North Carolina. by Applicant is not viewed as an unfair competitive practice. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 509 its customers more efficiently. On this basis, the Determinations Under Section 2(g)(3) Board concludes that the benefits to the public that of Bank Holding Company Act can reasonably be expected to result from the acquisition of Company by Applicant are sufficient First Commerce Corporation, to outweigh any adverse effects on competition New Orleans, Louisiana that may result from the proposal.4 Furthermore, there is no evidence in the record to indicate that Order Granting Determination consummation of the proposed transaction would Under the Bank Holding Company Act result in undue concentration of resources, unfair First Commerce Corporation (“Commerce”), competition, conflicts of interests, unsound bank New Orleans, Louisiana, a bank holding company ing practices or other effects that would be adverse within the meaning of the Bank Holding Company to the public interest. Act of 1956, as amended, has requested a deter Based upon the foregoing and other consid mination under section 2(g)(3) of the Act (12 erations reflected in the record, the Board has U.S.C. § 1841(g)(3)), that Commerce is not in determined that the balance of the public interest fact capable directly or indirectly of controlling factors the Board is required to consider under Albert Prevot (“Prevot”), an individual residing § 4(c)(8) is favorable. Accordingly, the applica in McAllen, Texas, in connection with a sale to tion is hereby approved. This determination is Prevot by Commerce’s subsidiary bank, First Na subject to the conditions set forth in § 225.4(c) tional Bank of Commerce (“First NBC”), New of Regulation Y and to the Board’s authority to Orleans, Louisiana, of approximately 53 per cent require such modification or termination of the of the outstanding voting shares of Planters Trust activities of a holding company or any of its and Savings Bank (“Planters”), Opelousas, Loui subsidiaries as the Board finds necessary to assure siana, notwithstanding the fact that Prevot is in compliance with the provisions and purposes of debted to First NBC. the Act and the Board’s regulations and orders Under section 2(g)(3) of the Act shares trans issued thereunder, or to prevent evasion thereof. ferred after January 1, 1966, by any bank holding The transaction shall be made not later than company to a transferee that is indebted to the three months after the effective date of this Order, transferor are deemed to be indirectly owned or unless such period is extended for good cause by controlled by the transferor unless the Board, after the Board or by the Federal Reserve Bank of opportunity for hearing, determines that the trans Philadelphia. feror is not in fact capable of controlling the By order of the Board of Governors, effective transferee. Although the shares of Planters sold May 3, 1978. to Prevot were owned and transferred by First NBC, a determination respecting Commerce is necessary because under section 2(g)(1) of the Act, Voting for this action: Chairman Miller and Gover Commerce is deemed to own indirectly shares nors Wallich and Partee. Present and abstaining: Gov owned by its subsidiary bank. Notice of an oppor ernor Gardner. Absent and not voting: Governors Coldtunity for hearing regarding Commerce’s request well and Jackson. was published March 22, 1977 (42 Fed. Reg. 15465). The time provided for requesting a hearing (Signed) C athy E. M inehan, has expired, and none has been requested. Com [seal] Assistant Secretary of the Board. merce has submitted to the Board evidence to support its contention that it, directly or through its subsidiary, First NBC, is not in fact capable of controlling Prevot, and the Board has received no contradictory evidence. Based upon the evi 4 In purchasing the stock of Company, Applicant has entered dence of record in this matter, it is hereby deter into an agreement with Company’s principal that he will not engage in a business similar to that of Company in any area mined that Commerce is not in fact capable of where Company has offices for a period of eight years from controlling Prevot. the acquisition of Company. Applicant has also entered into The record reflects that the sale of Planters agreement to employ Company’s principal for a period of eight years. While the term of the noncompetition provision is shares by First NBC was negotiated at arm’s somewhat long in duration, it is not regarded as unreasonable, length; that Prevot had no previous relationship particularly in light of the fact that is is co-extensive with the or affiliation with Commerce or First NBC; and term of the employment agreement between Applicant and Company’s principal. that all management and director interlocks be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

510 Federal Reserve Bulletin □ June 1978 tween First NBC and Planters have terminated. 1976, that its proposed divestiture of all of the It further appears that Prevot purchased the shares 102,895 voting shares of Southgate State Bank and of Planters as an investment for his own account Trust Company, Prairie Village, Kansas and not as a nominee or representative of any other (“Bank”), currently held by Serco, through the party; that Prevot has sufficient personal resources pro rata distribution of such shares to the sole to enable him to resist an attempt-to control him shareholder of Serco, is necessary or appropriate or influence his management of Planters; and that to effectuate the policies of the Bank Holding the terms governing the debt relationship between Company Act (12 U.S.C. § 1841 et seq.) (“BHC Prevot and First NBC are generally limited to those Act”). reasonably required, in accordance with sound and In connection with this request, the following accepted banking practices, to protect First NBC’s information is deemed relevant for the purpose of security. With respect to that debt relationship, a issuing the requested certification: 1 procedure has been established to insure that 1. Serco is a corporation organized under the should it become necessary for First NBC to laws of the State of Missouri on June 20, 1924. reacquire shares of Planters as a result of a default 2. Serco began acquiring shares of Bank on by Prevot, First NBC will effect a complete and March 3, 1958. By June 30, 1968, Serco had timely disposition of those shares. Finally, Com acquired 7,872 shares, representing 23.4 per cent merce and First NBC have undertaken not to of the outstanding voting shares, of Bank. Subse attempt to exercise control over Prevot or Planters, quently, Serco made additional acquisitions of and Prevot has undertaken to report any such Bank shares and Bank declared dividends in the attempt to the Federal Reserve Bank of Atlanta. form of its own shares, such that on July 7 and Accordingly, it is ordered, that the request of December 31, 1970, Serco owned and controlled Commerce for a determination pursuant to section 10,014 shares, representing 25.04 per cent of the 2(g)(3) is granted. This determination is based on outstanding voting shares, of Bank. On several representations made to the Board by Commerce occasions since December 31, 1970, Bank has and Prevot. In the event that the Board should issued new shares and declared dividends in the hereafter determine that facts material to this de form of its own shares. Thus, Serco currently owns termination are otherwise than as represented, or and controls 102,895 shares, representing 20.58 that Commerce or Prevot has failed to disclose per cent of the outstanding voting shares, of to the Board other material facts, this determi Bank.2 nation may be revoked, and any change in the 3. Serco became a bank holding company on facts and circumstances relied upon by the Board December 31, 1970, as a result of the enactment in making this determination could result in the of the 1970 Amendments to the BHC Act, by Board reconsidering the determination made virtue of its direct ownership and control at that herein. time of more than 25 per cent of the outstanding By order of the Board of Governors, acting voting shares of Bank, and it registered as such through its General Counsel, pursuant to delegated with the Board on July 19, 1972. Serco would authority (12 C.F.R. § 265.2(b)(1)), effective May 3, 1978. 1 This information derives from Serco’s communications (Signed) Theodore E. Allison, with the Board concerning its request for this certification, Serco’s registration statement filed with the Board pursuant [seal] Secretary of the Board. to the BHC Act, and other records of the Board. 2 Under section 1101(c) of the Code, property acquired after July 7, 1970, generally does not qualify for the tax benefits of section 1101(b) of the Code when distributed by an other Prior Certification Pursuant to the wise qualified bank holding company. However, where such property was acquired by a qualified bank holding company Bank Holding Company Tax Act of 1976 in a transaction in which gain was not recognized under section 305(a) of the Code, then section 1 101(b) is applicable. Serco Serco Investment Company, has indicated that all of the 92,881 shares of Bank acquired Prairie Village, Kansas by Serco between July 7, 1970, and the present date were acquired in transactions in which gain was not recognized under Serco Investment Company, Prairie Village, section 305(a) of the Code. Accordingly, even though such shares were acquired after July 7, 1970, those shares would Kansas (“Serco”), has requested a prior certifi nevertheless qualify as property eligible for the tax benefits cation pursuant to section 1101(b) of the Internal provided in section 1101(b) of the Code, by virtue of section 1101(c), if those shares of Bank were, in fact, received in Revenue Code (“Code”), as amended by section transactions in which gain was not recognized under section 2(a) of the Bank Holding Company Tax Act of 305(a) of the Code. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 511 have been a bank holding company on July 7, B. the 102,895 shares of Bank that Serco pro 1970, if the BHC Act Amendments had been in poses to distribute are all or part of the property effect on such date, by virtue of its direct owner by reason of which Serco controls (within the ship and control on that date of more than 25 per meaning of section 2(a) of the BHC Act) a bank cent of the outstanding voting shares of Bank. or a bank holding company; and 4. Serco has, continuously since its registration C. the distribution of such shares is necessary as a bank holding company, remained subject to or appropriate to effectuate the policies of the BHC the BHC Act and has conducted its affairs as a Act. bank holding company. Serco has continued to file This certification is based upon the repre with the Board all reports required of it under the sentations made to the Board by Serco and upon BHC Act. the facts set forth above. In the event that the 5. Serco holds property acquired by it on or Board should hereafter determine that the facts before July 7, 1970, the disposition of which material to this certification are otherwise than as would be necessary or appropriate to effectuate represented by Serco or that Serco has failed to section 4 of the BHC Act if Serco were to continue disclose to the Board other material facts, the to be a bank holding company beyond December Board may revoke this certification. 31, 1980, which property is “prohibited property” By order of the Board of Governors, acting within the meaning of section 1103(c) of the Code. through its General Counsel pursuant to delegated On the basis of the foregoing information, it authority (12 CFR § 265.2(b)(3)), effective May is hereby certified that: 30, 1978. A. Serco is a qualified bank holding corporation within the meaning of section 1103(b) of the Code, (Signed) G riffith L. Garwood, and satisfies the requirements of that section; [seal] Deputy Secretary of the Board. ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By the Board of Governors During May 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) Everest Bancshares, Inc., The Union State Bank of 5/10/78 Everest, Kansas Everest, Everest, Kansas First City Bancorporation of West Ten National Bank, 5/16/78 Texas, Inc., Houston, Texas El Paso, Texas First Security Corporation, First Security State Bank 5/05/78 Salt Lake City, Utah of Ogden, Ogden, Utah Franklin Bancgroup & Co., Benton Community Bank, 5/12/78 St. Louis, Missouri Benton, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

512 Federal Reserve Bulletin □ June 1978 Section 3—Continued Board action (effective Applicant Bank(s) date) Hawkeye Bancorporation, The National Bank of 5/04/78 Des Moines, Iowa Washington, Washington, Iowa Santa Fe Trail Banc Shares, The Haskell County State 5/15/78 Inc., Hutchinson, Kansas Bank, Sublette, Kansas Tri County Investment Co., The Security State Bank of 5/10/78 Pine Island, Minnesota Pine Island, Pine Island Minnesota Union Bancgroup & Co., The First National Bank of 5/26/78 St. Louis, Missouri Cobden, Cobden, Illinois Section 4 Non Banking Company Effective Applicant Bank(s) or activity date Midland Capital Co., Midland Mortgage Co., 5/30/78 Oklahoma City, Oklahoma City, Oklahoma Oklahoma By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies of the orders are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant Bank(s) Bank date Chemical Financial National Bank of Chicago 5/23/78 Corporation, Marshall, Marshall, Midland, Michigan Michigan Empire Bancorp, Inc., The Bank of Otterville, Kansas City 5/12/78 Kansas City, Otterville, Missouri Missouri F & M National Cor The Stonewall Jackson Richmond 5/10/78 poration, Winchester, Bank and Trust Virginia Company, Mount Jackson, Virginia Fidelity Union Burlington County New York 5/24/78 Bancorporation, Trust Company, Newark, New Jersey Moorestown, New Jersey Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 513 Section 3—Continued Board action (effective Applicant Bank(s) date) Pacesetter Financial The Brighton State Chicago 5/02/78 Corporation, Grand Bank, Brighton, Rapids, Michigan Michigan ORDERS APPROVED UNDER BANK MERGER ACT Reserve Effective Applicant Bank(s) Bank date Apple Capital Bank, The Stonewall Jackson Richmond 5/10/78 Mount Jackson, Bank and Trust Company, Virginia Mount Jackson, Virginia Southern Bank and The Bank of Chesterfield, Richmond 5/31/78 Trust Company, Chesterfield County, Richmond, Virginia Virginia Section 4 Nonbanking Company R e serve Effecti ve Applicant Bank(s) (or activity) Bank date Chemical New York Reinsurance of Credit New York 5/18/78 Corporation, New Life, Accident and York, New York Health Insurance Pending cases involving the Board of Governors are listed on the following page Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

514 Federal Reserve Bulletin □ June 1978 PENDING CASES INVOLVING THE BOARD OF GOVERNORS* Ellis Banking Corporation v. Board of Governors, Plaza Bank of West Port v. Board of Governors, filed May 1978, U.S.C.A. for the Fifth Circuit. filed September 1977, U.S.C.A. for the Eighth United States League of Savings Associations v. Circuit. Board of Governors, filed May 1978, U.S.D.C. BankAmerica Corporation v. Board of Gover for the District of Columbia. nors, filed May 1977, U.S.D.C. for the North Hawkeye Bancorporation v. Board of Governors, ern District of California. filed April 1978, U.S.C.A. for the Eighth Cir BankAmerica Corporation v. Board of Gover cuit. nors, filed May 1977, U.S.C.A. for the Ninth Dakota Bankshares, Inc. v. Board of Governors, Circuit. filed April 1978, U.S.C.A. for the Eighth Cir Central Wisconsin Bankshares, Inc. v. Board of cuit. Governors, filed June 1976, U.S.C.A. for the Citicorp v. Board of Governors, filed March 1978, Seventh Circuit. U.S.C.A. for the Second Circuit. Memphis Trust Company v. Board of Governors, Security Bancorp and Security National Bank v. filed February 1976, U.S.D.C. for the Western Board of Governors, filed March 1978, District of Tennessee. U.S.C.A. for the Ninth Circuit. First Lincolnwood Corporation v. Board of Gov Michigan National Corporation v. Board of Gov ernors, filed February 1976, U.S.C.A. for the ernors, filed January 1978, U.S.C.A. for the Seventh Circuit. Sixth Circuit. Roberts Farms, Inc. v. Comptroller of the Cur Wisconsin Bankers Association v. Board of Gov rency, et. al., filed November 1976, U.S.D.C. ernors, filed January 1978, U.S.C.A. for the for the Southern District of California. District of Columbia. Florida Association of Insurance Agents, Inc. v. Gelfand v. Board of Governors, filed December Board of Governors, and National Association 1977, U.S.C.A. for the Fifth Circuit. of Insurance Agents, Inc. v. Board of Gover Vickars-Henry Corp. v. Board of Governors, filed nors, filed August 1975, actions consolidated December 1977, U.S.C.A. for the Ninth Cir in U.S.C.A. for the Fifth Circuit. cuit. David R. Merrill, et. al. v. Federal Open Market Emch v. The United States of America, et. al., Committee of the Federal Reserve System, filed filed November 1977, U.S.D.C. for the Eastern May 1975, U.S.D.C. for the District of Colum District of Wisconsin. bia. Corbin v. Federal Reserve Bank of New York, Bankers Trust New York Corporation v. Board Board of Governors, et. al., filed October 1977, of Governors, filed May 1973, U.S.C.A. for U.S.D.C. for the Southern District of New the Second Circuit. York. Central Bank v. Board of Governors, filed Oc tober 1977, U.S.C.A. for the District of Co lumbia. Investment Company Institute v. Board of Gover *This list of pending cases does not include suits against nors, filed September 1977, U.S.C.A. for the the Federal Reserve Banks in which the Board of Governors District of Columbia. is not named a party. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

515 Announcements COUNTRY EXPOSURE cross-currency claims on residents of less-devel LENDING SURVEY oped countries that are not oil exporters amounted to about $47 billion, or some 24 per cent of the The results of a survey of foreign lending by large total. U.S. banks as of December 31, 1977, were made In addition, the banks reported $49 billion in public on June 8, 1978, by the Office of the local currency claims that were held by their Comptroller of the Currency, the Federal Deposit offices in foreign countries on residents of the Insurance Corporation, and the Board of Gover country in which the office was located. An ex nors of the Federal Reserve System. ample would be claims in marks on German resi The data are compiled from semiannual reports dents held by the German branch of the reporting that were begun on an experimental basis by the U.S. bank. To a large extent, these local currency bank regulatory agencies in June 1977 and that claims were matched by $40 billion in local cur have since been made permanent. The survey is rency liabilities due to local residents. Approxi intended to increase the information available to mately 73 per cent of these claims were on resi the public on foreign lending by U.S. banks on dents of Switzerland and the G-10 countries. a country-by-country basis. The data for the survey for year-end 1977 cover claims on foreign residents held at all domestic Maturities and foreign offices of 124 U.S. banking organi About two-thirds of the reported cross-border and zations with significant foreign banking opera cross-currency claims had a maturity of less than tions.1 1 year. Only $12 billion in claims had a maturity in excess of 5 years. Short-term claims were Types of Loans especially prominent in the G-10 countries and the offshore banking centers where, combined, $85 The information gathered in the survey concen billion of $107 billion in claims matured in less trated on data concerning lending from a bank’s than 1 year. This heavy concentration of short offices in one country to residents of another term claims reflects the large volume of interbank country, or lending in a currency other than that lending in these countries. Most such placements of the borrower. These are known as cross-border of deposits are for very short periods. or cross-currency loans. For most other groups of countries, short-term Cross-border and cross-currency loans are those claims accounted for about one-half of total most closely associated with country risk; such claims, although the proportion varied signifi claims totaled $194 billion on the reporting date. cantly among individual countries. About 43 per cent of such foreign lending was accounted for by claims on residents of Switzer land and the Group of Ten (G-10) developed Type of Borrower countries. Another 22 per cent represented loans With regard to type of customer, business with to residents of “other developed countries” and other banks accounted for the largest amount, “offshore banking centers.” 2 Cross-border and equaling $96 billion. This was followed by lending in the private nonbank sector totaling $60 billion 1 The data referred to in this announcement are avail and loans to the public sector amounting to $38 able in tabular form on request from Publications Serv billion. This last category includes foreign central ices, Division of Administrative Services, Board of governments, their political subdivisions and Governors of the Federal Reserve System, Washington, agencies, foreign central banks, and commercial D.C. 20551. 2 Countries in which multinational banks conduct a nonbank enterprises owned by government. This large international money market business. distribution varied significantly from country to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

516 Federal Reserve Bulletin □ June 1978 country. Here also, most of the claims on banks Use of th e D ata— Comparison were on those located in the G-10 countries and w ith June 1977 Survey the offshore banking centers. The December 1977 survey is not fully comparable with the survey conducted in June 1977 for which Guarantees data were released on January 16, 1978: A slightly different reporting panel was used for the De Information was gathered on the cross-border and cember survey, adjustments were made to the form cross-currency claims that are guaranteed by resi and its instructions, and certain deviations from the dents of another country. Claims are reallocated instructions that had been permitted in the June from the country of residence of the borrower to version of the form were not permitted in December. another country in two major ways. First, claims Total claims as of December were about $30 on a bank branch located in one country, but billion larger than in June. However, the largest whose head office is located in another country, increase, $20 billion, was in claims on banks in are allocated to the country of the head office. the offshore banking centers and G-10 countries. Since a branch is legally a part of the parent, It is believed that a large portion of this increase claims on a branch are treated as being guaranteed is due to better reporting. In June several banks by the head office. Second, claims on a borrower had reported bank claims on a net basis after in one country that are formally guaranteed by a guarantees rather than reporting gross amounts resident of another country are allocated to the initially. Some of the growth in this particular item latter country. These reallocations are thought to may also be due to the fact that the June report provide a better approximation of country expo included only bank placements in this category, sure in the banks’ portfolios than the unadjusted while the December report included other claims figures. on banks as well. Most of the shifts are accounted for by the The change in reported amounts in other areas transfer of claims on branches (and, where was more moderate and is probably more indica guaranteed, subsidiaries) of banks to their head tive of real growth in lending to these areas. For offices—$36 billion out of a total of $46 billion example, claims on less-developed countries that in claims guaranteed by residents of other coun are not oil exporters, after adjustments for guaran tries. In general, the reallocations primarily af tees, showed an increase of about $3.5 billion, fected the offshore banking centers and some of from $41.5 billion3 to $45 billion. the developed countries. For example, claims on the offshore banking centers decreased from $24 billion to $8 billion, and claims on the United Kingdom decreased from $31 billion to $18 bil lion. OVERSEAS BRANCHES OF For most less-developed countries, a relatively MEMBER BANKS: small portion of claims is externally guaranteed. Assets and Liabilities The total shown for claims on foreigners by country of guarantor is about $174 billion or $20 Combined assets of the overseas branches of billion less than the total for claims by country member banks increased by $34.0 billion, or 17.6 of borrower. This results from U.S. residents per cent, during 1977, to a total of $227.9 billion, guaranteeing about $28 billion in claims on foreign the Board of Governors announced on June 7, residents and foreigners guaranteeing about $8 1978. Excluding claims on other foreign branches billion of claims on U.S. residents. of the same bank, combined assets were $205.0 billion at the end of December, still a 17.6 per cent increase from the prior year-end figure. Commitments to Provide Branches located in the financial centers of the Funds for Foreigners United Kingdom and of the Caribbean accounted for 65 per cent of total foreign branch assets and The survey also provided information on contin represented 58 per cent of the $34 billion increase gent claims on foreigners. The banks were asked to report such contingent claims only when the 3 Includes amounts for “Other Latin America,” bank had a legal obligation to provide funds. The “Other Africa,” “Other Middle East,” and “Other amounts reported total $52 billion, 75 per cent of Asia/Pacific” that were not included in the total in June which was in the private sector, including banks. but are in the December data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 517 Assets and liabilities of overseas branches of member banks, end of year, 1976 and 1977 In millions of dollars, unless otherwise indicated United Bahama Near U.S. Kingdom Continental and Latin Far East overseas Item and Europe Cayman America East and areas and Total Ireland Islands Africa trust territories 1976 1977 1976 1977 1976 1977 1976 1977 1976 1977 1976 1977 1976 1977 1976 1977 ASSETS Cash ...................... 35,667 37,422 12,617 14,400 17,200 19,172 1,184 1,452 3,551 4,918 1,031 2,187 86 331 71,337 79,882 Loans ..................... 19,891 24,812 9,383 12,125 34,855 40,529 5,293 6,232 15,635 19,255 2,440 3,598 2,404 2,584 89,901 109,135 Due from head offices and U.S. branches . 2,177 3,508 138 69 186 274 114 148 444 316 79 46 82 67 3,220 4,431 Due from other overseas branches of own bank ....... 12,520 13,983 3,188 3,464 843 2,640 72 127 2,354 1,906 307 742 165 51 19,449 22,913 Other ....................... 2,585 3,001 1,963 2,418 1,638 1,934 654 745 2,719 2,731 150 257 234 423 9,943 11,508 Total ............... 72,840 82,726 27,289 32,475 54,720 64,549 7,320 8,705 24,703 29,126 4,007 6,831 2,971 3,457 193,850 227,868 LIABILITIES Deposits: Demand ............... 2,983 4,453 2,268 2,313 361 804 1,194 1,131 1,886 2,047 724 1,121 594 618 10,010 12,487 Time ................... 66,406 72,081 21,087 25,029 32,837 40,567 3,466 4,319 9,771 11,470 2,421 4,121 1,988 2,227 137,975 159,814 Due to head offices and U.S. branches . 964 1,508 578 720 13,899 17,207 748 336 517 486 17 163 290 269 17,013 20,690 Due from other overseas branches of own bank ....... 458 2,386 1,252 2,286 6,643 4,889 1,244 2,072 8,743 10,716 717 1,264 11 26 19,068 23,639 Other ....................... 2,029 2,298 2,104 2,126 979 1,083 669 845 3,787 4,407 129 161 88 316 9,784 11,238 Total ............... 72,840 82,726 27,289 32,475 54,720 64,549 7,320 8,705 24,703 29,126 4,007 6,831 2,971 3,457 193,850 227,868 Number of branches .. 62 61 111 110 129 132 202 1-99 131 138 38 42 58 48 731 730 Note.—Data are from Board of Governors of the Federal Reserve System. Details may not add to totals due to rounding. during 1977. The relatively large increase in assets supervision of the Board of Governors of the in the Near East and Africa (70 per cent) reflected Federal Reserve System, the Comptroller of the mostly the growth of Bahrain as an international Currency, the Federal Deposit Insurance Corpora financial center. tion, the Federal Home Loan Bank Board, and At year-end 1977 there were 730 branches in the National Credit Union Administration. operation in foreign countries and overseas terri Last October these agencies jointly proposed a tories, reflecting a net decrease of one branch uniform statement of enforcement policy that during the year. A distribution of these branches would call for reimbursement to consumers for by geographic areas is provided in the table. certain violations of Regulation Z. Such reim These data, which are derived from reports of bursement may extend to violations that occurred condition filed at the end of the year with the more than 2 years before discovery. Before adop Comptroller of the Currency and the Federal Re tion of the new amendment, for which Consumer’s serve System, differ in certain respects from other Union petitioned the Board, Regulation Z had statistical reports covering aspects of overseas called for retention of credit transaction records branch operations. The assets and liabilities shown for no more than 2 years. are denominated in U.S. dollars as well as in The Board’s action is intended to avoid possible various foreign currencies. destruction of records, under the 2-year record retention rule, that might show violations subject to reimbursement. The amendment requires that creditors and les REGULATION Z: Amendment sors subject to the five Federal regulators retain The Board of Governors has amended its Regula credit transaction records until— tion Z (Truth in Lending) to require certain lenders 1. The agencies have taken final action on the to retain for more than 2 years all records of credit proposed uniform statement of enforcement pol transactions in their possession. icy, and The amendment was effective on May 22, 1978. 2. One examination under those guidelines has It applies to all creditors and lessors under the been completed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

518 Federal Reserve Bulletin □ June 1978 REDUCTION OF STATISTICAL COMMERCIAL BANK LOANS AND REPORTING INVESTMENTS: Revisions in Series The Board of Governors on June 2, 1978, ap The seasonally adjusted series for bank credit and proved two actions reducing the burden on com its major components, published regularly in the mercial banks of statistical reporting to the Board. Bulletin (page A-15), have been revised to take The Board discontinued the annual collection account of changes in seasonal factors and of of data from all of the Nation’s 14,683 banks on adjustments to benchmarks for the latest available their outstanding loans to customers other than call report data, December 31, 1977. Revisions dealers made for the purpose of buying or carrying in seasonal factors affect the seasonally adjusted securities (Form U-4A). It also discontinued data from 1971 to date, with principal changes monthly collection of data on such loans from a in the more recent years. The benchmark revisions sample of 72 banks (Form U-4M). The Board affect data that are not seasonally adjusted for July found that these reports had little value since such 1977 through April 1978. bank credit did not vary much from year to year Monthly data from 1959 to date are available and other sources of relevant information are now from the Banking Section of the Board’s Division available. of Research and Statistics. The Board further reduced bank statistical re porting by reducing from 12 to 4 times a year the reporting by some 240 member banks on CONSUMER ADVISORY COUNCIL interest rates charged on various types of consumer MEETING loans (FR 835b). These reports (now designated FR 2835) will be based on data for August, No The Board of Governors announced that its Con vember, February, and May. The final monthly sumer Advisory Council met at the Board’s offices report—for June 1978—is scheduled to be pub May 31 and June 1. lished in July. The Council advises the Board on the exercise This consumer finance rate report was initiated of its responsibilities in the consumer credit field. in 1971 in response to a request from the Presi The agenda, chosen by the Council, included dent’s Committee on Interest and Dividends (no discussion of the following topics: longer in existence) as a means of monitoring • Enforcement of consumer credit laws. consumer interest rates at banks. Recently the • Possible content of a regulation to imple Board has collected the data from a volunteer ment the Community Reinvestment Act, which is sample of member banks—including most of the designed to encourage financial institutions to help Nation’s 150 largest banks—and has published meet the credit needs of their communities. these data monthly as statistical release 411 (for • Exercise of the Board’s responsibilities merly G.10). The report provides data for use in under the Federal Trade Commission Improvement evaluating trends in consumer loan interest rates Act, which in part prohibits unfair, deceptive, or in relation to general credit flows. Consumer fi abusive practices by banks. nance rate data for individual reporting banks are furnished upon request. In order to provide the public with the informa PROPOSED ACTIONS tion in this report on consumer interest rates and to preserve the analytical base of the report while The Board of Governors has proposed for com minimizing the burden of statistical reporting by ment an amendment to an interpretation of Regu banks, the Board— lation Z (Truth in Lending) that would facilitate 1. Reduced the frequency of the report from the computation of the annual percentage rate for once a month to once every 3 months; graduated payment mortgages. The Board re 2. Released from the reporting panel six banks quested comment by June 26. with less than $70 million in assets; and The Board of Governors has also invited com 3. Combined into one item separate reports on ment on a part of its Regulation Y (Bank Holding “other” loans for consumer goods and on personal Companies) authorizing bank holding companies expenditures. to act as general insurance agents in towns with The revision will reduce reporting by about a population of less than 5,000. The Board asked one-third. for comment by June 23. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 519 In addition, the Board has issued for comment REGULATION Q: Ruling a proposed policy statement on tax transactions between State member banks and their parent The Board of Governors has announced that member banks will be permitted to pay up to 8 holding companies. The Board requested comment per cent interest on all individual retirement and by June 23. Keogh accounts beginning June 1. The Board had announced on May 11 that the ceiling rate of interest on IRA and Keogh accounts CHANGES IN BOARD STAFF would be raised to 8 per cent on June 1 only for funds deposited on or after that date'. The existing The Board of Governors has announced the pro ceiling rate of 13A per cent was to continue to motion of Lorin S. Meeder to Assistant Director apply to IRA and Keogh deposits made before in the Division of Federal Reserve Bank Opera then. tions, effective May 22, 1978. Since that time the Board has received numerous Prior to joining the Board’s staff in 1973, Mr. comments indicating that a “split” rate for IRA Meeder was Assistant Vice President and Assistant and Keogh accounts would cause substantial and Manager of the Denver Branch of the Federal costly operational problems for member banks Reserve Bank of Kansas City. He holds both a with no offsetting benefits to either consumers or B.S. and an M.S. from the University of Denver. the banks. The Board has also announced the temporary In view of these problems, the Board will permit appointment of John M. Wallace, Assistant Vice payment of the higher 8 per cent rate, effective President of the Federal Reserve Bank of Atlanta, June 1, for both new and outstanding time deposits as Assistant Secretary of the Board, effective about held in IRA and Keogh accounts. August 1. The Board said its action should not be regarded Mr. Wallace will replace Ms. Cathy Minehan, as a precedent for any possible future changes in who will return to her duties at the Federal Reserve ceiling rates on outstanding IRA/Keogh accounts. Bank of New York. ANNUAL REPORT: Publication SYSTEM MEMBERSHIP: Admission of State Banks The Sixty-Fourth Annual Report of the Board of Governors of the Federal Reserve System, cover The following banks were admitted to membership ing operations for the calendar year 1977, is in the Federal Reserve System during the period April available for distribution. Copies may be obtained 16, 1978, through June 15, 1978: upon request to Publications Services, Division of Colorado Administrative Services, Board of Governors of Denver .....................................International Bank the Federal Reserve System, Washington, D.C. Minnesota 20551. Minnetonka ...............Ridgedale State Bank of Minnetonka Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

520 Industrial Production Released for publication June 15 Large increases occurred in production of durable goods materials, such as steel and equipment parts, Industrial production increased an estimated 0.6 and in energy materials. A more moderate increase per cent in May to 143.7 per cent of the 1967 was recorded in output of nondurable materials, average. This advance followed 2 months of ex reflecting gains for containers, textiles, and paper. ceptional increases—revised to 1.4 per cent in April and to 1.2 per cent in March, both of which Seasonally adjusted, ratio scale, 1967=100 included rebound effects from the weather- and strike-reduced production in early 1978. More than half of the May increase was in output of materi als. Auto and truck production declined after sub stantial increases in the three preceding months but remained at a high level. Moderate increases occurred in output of most other products. Indus trial production in May was almost 5 per cent higher than a year earlier. Output of total consumer goods was unchanged in May, despite moderate increases in production of home goods and nondurable consumer goods. Auto and utility vehicle production was reduced, as auto assemblies declined 4 per cent to an annual rate of 9.4 million units; production schedules had earlier been stepped up to recoup output lost in the first quarter. Output of business equipment advanced 0.6 per cent further in May, reflecting widespread increases for industrial, commercial, and transit equipment. F.R. indexes, seasonally adjusted. Latest figures: May. Auto sales and Output of materials rose sharply again in May. stocks include imports. 1967 == 100* Percentage change from preceding month to— Percentage change Industrial production 1978 1977 1978 5/77 to Apr.p Maye Dec. Jan. Feb. Mar. Apr. May 5/78 Total ..................................... 142.9 143.7 .3 -.6 .3 1.2 1.4 .6 4.9 Products, total .......................... 142.8 143.1 .6 -1:3 .8 1.4 .9 .2 4.8 Final products ....................... 140.0 140.2 .4 -2.0 1.1 1.7 .9 .1 4.1 Consumer goods ............... 147.3 147.3 .4 -2.7 1.4 1.5 .9 .0 2.9 Durable ........................ 161.8 160.3 .4 -6.0 3.2 4.2 2.7 -.9 5.3 Nondurable .................... 141.6 142.3 .4 -1.3 .6 .4 .1 .5 2.0 Business equipment ......... 159.0 159.9 .3 -.9 1.0 2.1 1.0 .6 7.4 Intermediate products ........... 152.6 153.5 1.3 .8 -.1 .3 .5 .6 7.0 Construction supplies ........ 148.8 149.5 1.2 .6 -.4 -.1 .3 .5 7.8 Materials .................................... 143.1 144.6 -.1 .3 -.4 1.0 2.2 1.0 4.9 *Seasonally adjusted. 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 insured institutions acceptances outstanding A10 Margin requirements A26 Prime rate charged by banks on A11 Federal Reserve open market short-term business loans 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 A30 Federal fiscal and financing operations A13 Bank debits and deposit turnover A31 U.S. Budget receipts and outlays A14 Money stock measures and components A32 Federal debt subject to statutory A15 Aggregate reserves and deposits of limitation member banks A32 Gross public debt of U.S. Treasury— A15 Loans and investments of all Types and ownership commercial banks A33 U.S. Government marketable securities—Ownership, by maturity Commercial Bank Assets and Liabilities A34 U.S. Government securities dealers— A16 Last-Wednesday-of-month series Transactions, positions, and financing A17 Call-date series A35 Federal and Federally sponsored credit A18 Detailed balance sheet, June 30, 1977 agencies—Debt outstanding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A2 Federal Reserve Bulletin □ June 1978 Securities Markets and INTERNATIONAL STATISTICS Corporate Finance A54 U.S. international transactions— A36 New security issues—State and local Summary governments and corporations A55 U.S. foreign trade A37 Open-end investment companies—Net A55 U.S. reserve assets sales and asset position A56 Selected U.S. liabilities to foreigners A37 Corporate profits and their distribution and to foreign official institutions A38 Nonfinancial corporations—Assets and liabilities Reported by Banks in the United States: A38 Business expenditures on new plant and equipment A57 Short-term liabilities to foreigners A39 Domestic finance companies—Assets A59 Long-term liabilities to foreigners and liabilities; business credit A60 Short-term claims on foreigners A61 Long-term claims on foreigners Real Estate A62 Foreign branches of U.S. banks— A40 Mortgage markets Balance sheet data A41 Mortgage debt outstanding Securities Holdings and Transactions Consumer Instalment Credit A64 Marketable U.S. Treasury bonds and A42 Total outstanding and net change notes—Foreign holdings and A43 Extensions and liquidations transactions A64 Foreign official assets held at F.R. banks Flow of Funds A65 Foreign transactions in securities A44 Funds raised in U.S. credit markets A45 Direct and indirect sources of funds to Reported by Nonbanking Concerns in credit markets the United States: DOMESTIC NONFINANCIAL STATISTICS A66 Short-term liabilities to and claims on foreigners A46 Nonfinancial business activity— A67 Long-term liabilities to and claims on Selected measures foreigners A46 Output, capacity, and capacity utilization Interest and Exchange Rates A47 Labor force, employment, and unemployment A68 Discount rates of foreign central banks A48 Industrial production—Indexes and A68 Foreign short-term interest rates gross value A68 Foreign exchange rates A50 Housing and construction A51 Consumer and wholesale prices A69 GUIDE TO TABULAR PRESENTATION A52 Gross national product and income AND STATISTICAL RELEASES A53 Personal income and saving Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Statistics A3 1.10 MONETARY AGGREGATES AND INTEREST RATES 1977 1978 1977 1978 Item Q2 Q3 Q4 Ql Dec. Jan. Feb. Mar. Apr. Monetary and credit aggregates (annual rates of change, seasonally adjusted in per cent)12 Member bank reserves 1 Total........................................................................ 2.9 7.3 6.1 8.5 5.9 15.2 10.9 r—8.6 9.4 2 Required.................................................................. 3.5 6.8 6.3 8.3 8.0 12.7 11.8 r-7.3 11.1 3 Nonborrowed.......................................................... 1.8 1.7 3.5 14.5 16.1 18.3 13.7 -6.2 1.9 Concepts of money 1 4 M-l.......................................................................... 8.1 8.1 7.2 5.0 7.2 9.6 -1.1 3.5 18.7 5 M-2.......................................................................... 9.0 9.9 8.0 6.4 5.7 8.9 4.4 5.3 11.1 6 M-3.......................................................................... 10.2 11.9 10.6 7.4 7.6 r8.8 5.5 r6.2 9.6 Time and savings deposits Commercial banks: 7 Total.................................................................... 8.3 10.3 13.0 13.1 10.9 12.3 13.7 11.4 8.1 8 Other than large CD’s........................................ 9.7 11.2 8.5 7.5 4.6 8.4 8.4 6.5 5.7 9 Thrift institutions 2................................................. 11.9 15.0 14.4 '8.9 M0.5 r8.7 6.9 r7.7 7.1 10 Total loans and investments at commercial banks 3 13.3 9.8 9.3 8.5 -0.7 12.1 10.1 9.1 21.5 1977 1978 1978 Q2 Q3 Q4 Ql Jan. Feb. Mar. Apr. May Interest rates (levels, per cent per annum) Short-term rates 5.16 5.82 6.51 6.76 6.70 6.78 6.79 6.89 7.36 12 Federal Reserve discount 5...."........................................ 5.25 5.42 5.93 6.46 6.37 6.50 6.50 6.50 6.84 13 Treasury bills (3-month market yield) 6........................... 4.84 5.50 6.11 6.39 6.44 6.45 6.29 6.29 6.41 14 Commercial paper (90- to 119-day) 7.............................. 5.15 5.74 6.56 6.76 6.75 6.76 6.75 6.82 7.06 Long-term rates Bonds: 15 U.S. Govt. 8..................................................................... 7.68 7.60 7.78 8.19 8.14 8.22 8.21 8.32 8.44 16 State and local government 9........................................ 5.70 5.59 5.57 5.65 5.71 5.62 5.61 5.80 6.03 17 Aaa utility (new issue) *o.............................................. 8.21 8.09 8.27 8.70 8.68 8.69 8.71 8.90 8.95 18 Conventional mortgages 11............................................... 8.95 9.00 9.05 9.23 9.15 9.25 9.30 9.40 9.60 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. II 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 □ June 1978 1.11 FACTORS AFFECTING MEMBER BANK RESERVES Millions of dollars Monthly averages of daily Weekly averages of daily figures for weeks endingfigures Factors 1978 1978 Mar. Apr. May** Apr. 19 Apr. 26 May 3 May 10 May 17 May 24? May 31 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding... 114,848 116,784 119,705 116,440 118,477 121,240 122,933 119,885 117,216 116,819 2 U.S. Govt, securities1........................ 99,573 101,345 103,143 101.451 102,452 103,800 104,891 103,141 102.374 101,685 3 Bought outright........................ 98,436 100,851 102,431 101.451 102,228 102,844 103,509 101,951 102.374 101,623 4 Held under repurchase agree ment ...................................... 1,137 494 712 224 956 1,382 1,190 62 5 Federal agency securities............... 8,217 8,013 8,171 7.929 7,967 8,160 8,400 8,442 7.895 7,899 6 Bought outright........................ 7,948 7,929 7,907 7.929 7,929 7,929 7,929 7,900 7.895 7,895 7 Held under repurchase agree ment ...................................... 269 84 264 38 231 471 542 4 8 Acceptances................................. 279 137 204 31 250 376 411 39 9 Loans........................................... 344 539 1,227 238 809 1,664 1,688 866 701 1,399 10 Float............................................. 4,261 3,997 4,221 4,085 4,222 4,198 4,271 4,366 3,998 3,355 11 Other Federal Reserve assets 2,174 2,753 2,739 2,in 2,997 3,168 3,307 2,658 2,247 2,442 12 Gold stock....................................... 11,718 11,718 11,718 11,718 11,718 11,718 11,718 11,718 11,718 11,718 13 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 14 Treasury currency outstanding. 11,460 11,496 11,538 11,497 11,512 11,503 11,532 11,537 11,540 11,553 ABSORBING RESERVE FUNDS 15 Currency in circulation................... 102,017 103,256 104,389 103,555 103,251 103,401 104,144 104,515 104,368 104,818 16 Treasury cash holdings................... 394 391 383 390 388 383 383 382 382 386 Deposits, other than member bank reserves with F.R. Banks: 17 Treasury....................................... 4,705 5,001 6,514 3,412 6,321 8,118 10,358 6,589 4,412 3,291 18 Foreign......................................... 303 345 341 333 339 471 436 283 253 348 19 Other2.......................................... 740 738 639 701 772 730 641 615 603 638 20 Other F.R. liabilities and capital... 3,962 3,741 3,954 3,724 3,794 4,008 3,883 3,882 3,946 4,110 21 Member bank reserves with F.R. Banks.......................................... 27,155 27,776 27,992 28,790 28,093 28,600 27,589 28,124 27,760 27,751 End-of-month figures Wednesday figures 1978 1978 Mar. Apr. May? Apr. 19 Apr. 26 May 3 May 10 May 17 May 24® May 31^ SUPPLYING RESERVE FUNDS 22 Reserve Bank credit outstanding 115,932 119,782 118,644 118,064 121,535 126,520 122,867 116,577 119,503 118,644 23 U.S. Govt, securities1.................... 101,577 103,500 102,826 101,168 103,923 105,356 104,881 99.319 103.535 102,826 24 Bought outright........................ 99,890 102,768 102,395 101,168 102,357 102,514 102,467 99.319 103.535 102,395 25 Held under repurchase agree ment ....................................... 1,687 732 431 1,566 2,842 2,414 431 26 Federal agency securities............... 8,193 8,064 7,921 7.929 8,192 8,793 8,918 7.895 7.895 7,921 27 Bought outright........................ 7,929 7,929 7,895 7.929 7,929 7,929 7,929 7.895 7.895 7,895 28 Held under repurchase agree ment ....................................... 264 135 26 263 864 989 26 29 Acceptances.................................. 770 290 274 216 464 638 274 30 Loans........................................... 332 1,750 1,167 556 1,764 2,836 1,187 1,422 764 1,167 31 Float.............................................. 2,732 3,017 3,870 5,529 4,457 5,919 4,330 5,805 4,996 3,870 32 Other Federal Reserve assets 2,328 3,161 2,586 2,882 2,983 3,152 2,913 2,136 2,313 2,586 33 Gold stock....................................... 11,718 11,718 11,718 11,718 11,718 11,718 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. 11,441 11,482 11,557 11,497 11,516 11,520 11,532 11,539 11,543 11,557 ABSORBING RESERVE FUNDS 36 Currency in circulation.................. 102,392 103,114 105,468 103,649 103,520 103,969 104,704 104,694 104,675 105,468 37 Treasury cash holdings................... 393 376 368 388 386 385 387 386 378 368 Deposits, other than member bank reserves with F.R. Banks: 38 Treasury...................................... 4,705 7,177 2,398 6,625 8,729 10,247 7,931 4,505 4,558 2,398 39 Foreign......................................... 352 481 454 249 460 468 584 232 219 454 40 Other2.......................................... 740 684 660 709 796 712 685 577 619 660 41 Other F.R. liabilities and capital.., 3,860 4,080 4,235 3,760 3,879 3,632 3,821 3,805 4,021 4,235 42 Member bank reserves with F.R. Banks........................................... 27,900 28,321 29,586 27,149 28,250 31,595 29,256 26,886 29,544 29,586 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. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May** All member banks Reserves: 1 At F.R. Banks................. 26,430 26,152 26,933 26,783 27,057 28,129 27,337 27,155 27,776 27,992 2 Currency and coin.......... 8,548 8,887 8,820 8,932 9,351 9,980 9,320 8,992 9,028 9,153 3 Total held i...................... 35,136 35,156 35,860 35,782 36,471 38,185 36,738 36,231 36,880 37,219 4 Required....................... 34,964 34,965 35,521 35,647 36,297 37,880 36,605 35,925 36,816 36,877 5 Excess1......................... 172 191 339 135 174 305 133 306 64 342 Borrowings at F.R. Banks:2 6 Total................................. 62 634 1,319 840 558 481 405 344 539 1,227 7 Seasonal........................... 12 112 114 83 54 32 52 47 43 93 Large banks in New York City 8 Reserves held............................... 6,520 6,025 6,175 6,181 6,244 6,804 6,563 6,276 6,247 6,305 9 Required........................... 6,602 6,022 6,120 6,175 6,279 6,775 6,584 6,193 6,320 6,236 10 Excess............................... -82 3 55 6 -35 29 -21 83 -73 69 11 Borrowings2......................... 15 75 133 132 48 77 12 21 61 113 Large banks in Chicago 1 13 2 Re R se e r q v u es ir h ed e . l . d .. . . .. . . . . . .. . . . . . .. . . . . . . . .. . . . . . .. . . . . . . . .. . . . . . .. . . . . 1 1 , , 6 64 3 1 2 1 1 , , 6 6 5 34 5 1 1 , , 6 65 6 6 6 1 1 , ,6 6 0 0 9 7 1 1 , , 5 61 9 3 3 1 1 , , 7 6 3 84 3 1 1 , , 6 63 2 3 3 1 1 , , 6 6 2 20 9 1 1 , , 6 6 7 86 0 1 1 , , 6 6 8 69 4 14 Excess............................... -9 21 10 -2 -20 49 -10 9 -16 15 15 Borrowings2......................... 4 12 24 23 26 14 11 11 19 Other large banks 1 1 6 7 Re R se e r q v u es ir h ed el .. d .. .. . . . . . . . .. . . . . . .. . . . . . . . .. . . . . . .. . . . . . .. . . . . . . . .. . . . . 1 1 3 3 , ,0 1 5 1 3 7 1 1 3 3 , ,3 3 5 6 5 2 1 1 3 3 , , 7 5 1 9 1 8 1 1 3 3 , ,6 6 0 0 2 7 1 1 3 3, , 9 9 3 9 1 3 1 1 4 4 , , 4 50 8 4 7 1 1 3 3, , 8 8 6 6 1 7 1 1 3 3 , , 7 6 2 6 9 2 1 1 4 4 , , 1 0 3 77 5 1 1 4 4 , , 0 0 3 73 5 18 Excess............................... 64 7 113 5 62 -17 6 67 58 -38 19 Borrowings2......................... 14 183 681 355 243 164 150 92 249 502 All other banks 20 Reserves held............................... 13,867 14,114 14,308 14,387 14,641 15,161 14,685 14,597 14,828 14,964 21 Required........................... 13,668 13,954 14,147 14,261 14,474 14,917 14,527 14,450 14,733 14,899 22 Excess............................... 199 160 161 126 167 244 158 147 95 65 23 Borrowings2......................... 29 364 481 330 241 226 243 220 218 593 Weekly averages of daily figures for weeks ending— 1978 Mar. 29 Apr. 5 Apr. 12 Apr. 19 Apr. 26 May 3 May 10 May 17 May 24^ May 31? All member banks Reserves: At F.R. Banks................... 27,539 27,552 26,471 28,790 28,093 28,600 27,589 28,124 27,760 27,751 Currency and coin............ 8,842 8,935 9,356 8,874 8,794 9,247 9,515 9,192 8,641 9,214 Total held1......................... 36,463 36,566 35,904 37,740 36,963 37,923 37,183 37,395 36,471 37,038 Required......................... 36,215 36,291 35,916 37,435 37,020 37,608 37,000 37,389 36,234 36,551 Excess1........................... 248 275 -12 305 -57 315 183 6 237 487 Borrowings at F.R. Banks:2 Total................................... 385 304 171 238 809 1,664 1,688 866 701 1,399 Seasonal............................. 52 45 37 35 49 61 74 93 104 114 Large banks in New York City 31 Reserves held......................... 6,258 6,220 6,168 6,654 6,210 6,393 6,184 6,530 6,084 6,192 32 Required............................. 6,199 6,241 6,114 6,700 6,173 6,370 6,157 6,596 5,972 6,161 33 Excess................................. 59 -21 54 -46 37 23 27 -66 112 31 34 Borrowings2........................... 59 301 150 37 214 Large banks in Chicago 35 Reserves held.............. 1,712 1,683 1,638 1,787 1,633 1,706 1,685 1,747 1,608 1,590 36 Required................. 1,648 1,660 1,650 1,785 1,631 1,702 1,656 1,754 1,613 1,638 37 Excess..................... 64 23 -12 2 2 4 29 -7 -5 -48 38 Borrowings2............... 41 1 81 9 Other large banks 39 Reserves held... 13,845■ 13,956 13,620 14,500 14,015 14,530 14,208 14,152 13,991 13,766 40 Required....... 13,830 13,827 13,766 14,293 14,173 14,391 14,179 14,201 13,835 13,953 41 Excess............ 15 129 -146 207 -158 139 29 -49 156 -187 42 Borrowings2.... 128 79 55 62 521 714 828 327 186 537 All other banks 43 Reserves held. 14,648 14,707 14,478 14,799 15,105 15,294 15,106 14,966 14,827 14,923 44 Required... 14,538 14,563 14,386 14,657 15,043 15,145 15,008 14,838 14,814 14,799 45 Excess........ 110 144 92 142 62 149 98 128 13 124 46 Borrowings2.. 257 225 116 135 228 568 701 502 515 648 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 □ June 1978 1.13 FEDERAL FUNDS TRANSACTIONS Money Market Banks Millions of dollars, except as noted 1978, week ending— Type April 5 April 12 April 19 April 26 May 3 May 10 May 17 May 24 May 31 Total, 46 banks Basic reserve position 1 Excess reserves1.............................. 282 36 107 -24 73 153 -17 166 231 Less: 2 Borrowings at F.R. Banks........ 16 7 41 300 517 373 255 10 580 3 ' Net interbank Federal funds transactions.......................... 17,322 22,855 20,233 17,699 15,412 16,842 16,017 15,489 13,660 Equals : Net surplus, or deficit (—): 4 Amount....................................... -17,056 -22,826 -20,167 -18,023 -15,856 -17,062 -16,290 -15,333 -14,009 5 Per cent of average required reserves......................................... 112.0 150.2 124.4 117.0 100.5 110.9 102.2 102.6 91.8 Interbank Federal funds transactions Gross transactions: Purchases.................................... 25,649 29,580 27,442 24,398 23,201 23,772 23,281 22,940 22,915 Sales............................................ 8,327 6,726 7,209 6,699 7,789 6,931 7.264 7,451 9,256 Two-way transactions2................. 6,011 5,734 5,547 5,310 5,900 5,124 5.264 4,914 6,090 Net transactions: Purchases of net buying banks.. 19,638 23,846 21,895 19,088 17,300 18,649 18,018 18,026 16,825 Sales of net selling banks........... 2,316 992 1,662 1,389 1,888 1,807 2,001 2,538 3,166 Related transactions with U.S. Govt, securities dealers 11 Loans to dealers3.................. 3,360 4,095 3,508 3,371 3,047 2,834 3,510 4,064 4,220 12 Borrowing from dealers4... 2,428 2,014 2,049 2,575 2,776 3,493 3,189 2,881 1,782 13 Net loans............................... 932 2,081 1,458 796 272 -659 321 1,183 2,438 8 banks in New York City Basic reserve position 14 Excess reserves1............................. 16 72 8 37 32 72 -29 91 -121 Less: 15 Borrowings at F.R. Banks........ 59 258 107 37 214 16 Net interbank Federal funds transactions......................... 6,399 8,296 6,343 5,334 3,415 4,849 4,291 3,693 3,387 Equals: Net surplus, or deficit (—): 17 Amount....................................... -6,383 -8,224 -6,336 -5,356 -3,641 -4,884 -4,357 -3,602 -3,480 18 Per cent of average required reserves......................................... 112.5 148.2 103.8 95.6 62.9 87.6 72.9 67.1 62.5 Interbank Federal funds transactions Gross transactions: Purchases.................................... 7,360 8,993 7,585 6,132 5,010 5,895 5,389 4,826 4,778 Sales............................................ 961 698 1,242 798 1,595 1.047 1.098 1.133 1.391 Two-way transactions2.................. 953 698 673 798 1,556 1.047 1.099 1.133 1.391 Net transactions: Purchases of net buying banks.. 6,408 8,296 6,912 5,334 3,454 4,849 4,290 3,693 3,387 Sales of net selling banks.......... 8 569 39 Related transactions with U.S. Govt, securities dealers 24 Loans to dealers3................. 1,920 2,831 2,345 2,032 1,858 1,548 1,781 2,414 2,421 25 Borrowing from dealers4... 1,198 1,419 1,496 1,514 1,488 1,699 1,864 2,043 746 26 Net loans............................... 722 1,412 848 518 370 -152 -84 372 1,675 38 banks outside New York City Basic reserve position 27 Excess reserves1............................... 266 -36 100 -61 41 81 11 74 110 Less: 28 Borrowings at F.R. Banks.......... 16 7 41 241 259 266 218 10 366 29 Net interbank Federal funds transactions........................... 10,923 14,559 13,890 12,356 11,997 11,993 11,727 11,796 10,273 Equals: Net surplus, or deficit (—): 30 Amount........................................ -10,673 -14,602 -13,831 -12,667 -12,215 -12,179 -11,933 -11,731 -10,529 31 Per cent of average required reserves............................................ 111.6 151.4 136.9 129.2 122.4 124.2 119.7 122.5 108.6 Interbank Federal funds transactions Gross transactions: 32 Purchases...................................... 18,289 20,587 19,857 18,266 18,191 17,877 17,892 18,114 18,138 33 Sales.............................................. 7,366 6,028 5,967 5,901 6,194 5,884 6,166 6,319 7,865 34 Two-way transactions2................... 5,058 5,037 4,874 4,512 4,344 4,077 4,165 3,781 4,699 Net transactions: 35 Purchases of net buying banks... 13,231 15,550 14,983 13,755 13,846 13,800 13,727 14,333 13,438 36 Sales of net selling banks............ 2,308 992 1,093 1,389 1,849 1,807 2,001 2,538 3,166 Related transactions with U.S. Govt, securities dealers 37 Loans to dealers3............................. 1,439 1,264 1,163 1,339 1,189 1,286 1,729 1,650 1,798 38 Borrowing from dealers4................. 1,229 596 553 1,061 1,288 1,793 1,325 838 1,036 39 Net loans.......................................... 210 668 610 278 -98 -507 405 811 763 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 April 5 April 12 April 19 April 26 May 3 May 10 May 17 May 24 May 31 5 banks in City of Chicago Basic reserve position 40 Excess reserves1.......................... 61 1 3 6 36 17 15 16 41 Le B ss o : rrowings at F.R. Banks... 41 71 42 Net interbank Federal funds transactions..................... 5,658 6,815 6,425 5,654 5,075 5,389 5,479 5,446 5,830 Equals: Net surplus, or deficit (—): 43 Amount................................. -5,597 -6,814 -6,464 -5,651 -5,140 -5,353 -5,462 -5,431 -5,814 44 Per cent of average required reserves.......................... 361.0 442.5 386.6 371.6 323.2 346.7 332.4 360.8 379.4 Interbank Federal funds transactions Gross transactions: 45 Purchases.................................... 6,705 7,541 7,332 6,729 6,238 6,475 6,848 6,550 7,126 46 Sales............................................ 1,047 726 907 1,075 1,163 1,086 1,369 1,104 1,296 47 Two-way transactions2.................. 1,047 726 907 1,075 1,163 1,086 1,369 1,103 1,295 Net transactions: 48 Purchases of net buying banks.. 5,658 6,815 6,425 5,654 5,076 5,389 5,479 5,446 5,831 49 Sales of net selling banks Related transactions with U.S. Govt, securities dealers 50 Loans to dealers3................. 499 393 285 193 185 245 456 452 488 51 Borrowing from dealers4... 159 58 61 220 446 583 310 141 75 52 Net loans............................... 339 336 224 -27 -262 -338 146 311 414 33 other banks Basic reserve position 53 Excess reserves1......................... 206 -37 98 -64 35 45 -6 59 93 54 Le B ss o : rrowings at F.R. Banks... 16 7 241 188 266 218 10 366 55 Net interbank Federal funds transactions..................... 5,265 7,744 7,465 6,711 6,921 6,604 6,248 6,350 4,442 Equals: Net surplus, or deficit (—): 56 Amount....................................... -5,075 -7,788 -7,367 -7,016 -7,075 -6,825 -6,472 -6,301 -4,715 57 Per cent of average required reserves................................ 63.4 96.1 87.4 84.7 84.3 82.6 77.7 78.0 57.7 Interbank Federal funds transactions Gr P o u ss rc t h r a a s n e s s a . c .. t . i . o .. n .. s .. : ......................... 11,584 13,046 12,525 11,537 11,953 11,402 11,045 11,565 11,012 Sales............................................. 6,319 5,302 5,060 4,826 5,031 4,798 4,797 5,215 6,569 Two-way transactions2.................. 4,011 4,311 r3,967 3,436 3,182 2,991 2,796 2,678 3,404 Net transactions: Purchases of net buying banks.. 7,573 8,736 8,558 8,101 8,771 8,411 8,249 8,887 7,608 Sales of net selling banks.......... 2,308 992 1,093 1,389 1,849 1,807 2,001 2,538 3,166 Related transactions with U.S. Govt, securities dealers 63 Loans to dealers3........................... 941 871 878 1,147 1,005 1,041 1,274 1,198 1,310 64 Borrowing from dealers4.............. 1,070 538 492 841 841 1,210 1,015 698 961 Np.t Innns .......______ -129 333 386 305 163 -169 258 500 349 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 □ June 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 S<:c. 10(b) 2 under Sec. 13, last par.4 Federal Reserve Under Secs. 13 and 13a1 Bank Regular rate Special rate 3 Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous 5/31/78 date rate 5/31/78 date rate 5/31/78 date rate 5/31/78 date rate Boston.................. 7 5/12/78 6% 7% 5/12/78 7 8 5/12/78 7% 10 5/12/78 9% New York............ 7 5/11/78 6% 7% 5/11/78 7 8 5/11/78 7% 10 5/11/78 9% Philadelphia.......... 7 5/11/78 6% 7% 5/11/78 7 8 5/11/78 7% 10 5/11/78 9% Cleveland.............. 7 5/11/78 6% 7% 5/11/78 7 8 5/11/78 7% 10 5/11/78 9% Richmond............ 7 5/11/78 6% 7% 5/11/78 7 8 5/11/78 7% 10 5/11/78 9% Atlanta................. 7 5/11/78 6% 7% 5/11/78 7 8 5/11/78 7% 10 5/11/78 9% Chicago................ 7 5/11/78 6% 7% 5/11/78 7 8 5/11/78 7% 10 5/11/78 9% St. Louis............... 7 5/11/78 6% 7% 5/11/78 7 8 5/11/78 m 10 5/11/78 9% Minneapolis.......... 7 5/11/78 6% 7% 5/11/78 7 8 5/11/78 7% 10 5/11/78 9% Kansas City.......... 7 5/11/78 6% 7% 5/11/78 7 8 5/11/78 7% 10 5/11/78 9% Dallas................... 7 5/12/78 6% 7% 5/12/78 7 8 5/12/78 7% 10 5/12/78 9% San Francisco.... 7 5/11/78 6% 7% 5/11/78 7 8 5/11/78 7% 10 5/11/78 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% 5% 1973—Apr. 23.................. 5%-5% 5% 1975—Mar. 10.................. 6i/4-6*/4 614 May 4.................. 534 5y4 14.................. 6V4 6V4 1971—Jan. 8................... 5^-5% 5V4 11.................. 6 May 16.................. 6-614 6 15................... 5% 514 18.................. 6 23.................. 6 19................... 5 -514 51/4 June 11.................. 6-6% 6% 22................... 5 -5^ 5 15.................. 6 % 6% 1976 Jan. 19................ 5%-6 5% 29................... 5 5 July 2.................. 7 7 23.................. 5% 5% Feb. 13................... 4^-5 5 Aug. 14.................. 7-7% 7% Nov. 22................. 5V4-5% 514 19................... 4V4 434 23.................. 7% 7% 26.................. 51/4 514 July 16................... 4^-5 5 23................... 5 5 1974—Apr. 25................. 7%-8 8 1977—Aug. 30.................. 51,4-53,4 514 Nov 11................... 4%-5 5 30................. 8 ?8a 31.................. 514-53,4 534 19................... 4% J4%S Dec. 9................. m -s Sept. 2................. 534 534 Dec. 13................... 4%-4% 16.................. 7% Oct. 26................. 6 6 17.................... 4%-4% 24.................... 4% 4% 1975—Jan. 6................. 7V4-7% 7% 1978—Jan. 9................. 6-6% 6% 10................. m -m 714 20................. 6% 6% 1973—Jan. 15.................. 5 5 24................. 7V4 7tf May 11................. 6%- 7 Feb. 26.................. 5-5% 5% Feb. 5.................. 6v4-m 6% 12................. 7 7 Mar. 2.................. 5% 5% 7................. 6V4 6% In effect May 31, 1978.... 7 7 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(eX2) 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 May 31, 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 Vl 12/30/76 10 2/13/75 10-100............................................................................................. uy4 12/30/76 12 2/13/75 100-400........................................................................................... 12 Va 12/30/76 13 2/13/75 16# 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 3/2/67 *2% 1/8/76 3 3/16/67 4 years or more...................................................................... 41 10/30/75 3 3/16/67 Over 5, maturing in— 30-179 days............................................................................. 6 12/12/74 5 10/1/70 180 days to 4 years................................................................ 4 2 iA 1/8/76 3 12/12/74 4 years or more...................................................................... 41 10/30/75 3 12/12/74 Legal limits, May 31, 1978 Net demand: Reserve city banks Other banks......... Time......................... 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 □ June 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 May 31,1978 Previous maximum In effect May 31,1978 Previous maximum Per cent Effective Per cent Effective Per cent Effective Per cent Effective date date date date 1 Savings........................................................ 5 7/1/73 4 Vi 1/21/70 5 Va (6) 5 (7) 2 Negotiable orders of withdrawal (NOW) accounts1........................................ 5 1/1/74 5 1/1/74 Time (multiple- and single-maturity unless otherwise indicated):2 30-89 days: 4 3 S M in u g lt l i e p - l m e- a m tu a r t i u ty ri . t . y ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) 5 7/1/73 I 5 9 1 / / 2 2 6 1 / / 6 7 6 0 } (8) (8) 90 days to 1 year: 5 6 S M in u g lt l i e p -m le a -m tu a r t i u ty ri . t .. y .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . } SV4 7/1/73 5 ( f 9 7 / / 2 2 6 0 / / 6 6 6 6 } 3 534 (6) 5 Va 1 /21/70 7 8 2 1 t t o o 2 2 V y i e a y r e s a 3 rs .. 3 .. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . J 6 7/1/73 J I 5 5 % Vi 1 1 / / 2 2 1 1 / / 7 7 0 0 } 6 Vi (6) { r/4 1 1/ / 2 2 1 1 / / 7 7 0 0 9 2Vi to 4 years3..................................... 6% 7/1/73 5% 1/21/70 6Va (6) 6 1/21/70 10 4 to 6 years4........................................... 7% 11/1/73 (9) m 11/1/73 (9) 11 6 years or more4..................................... m 12/23/74 IVa 11/1/73 m 12/23/74 m 11/1/73 12 Governmental units (all maturities).... m 12/23/74 7Vi 11/27/74 m 12/23/74 7Vi 11/27/74 13 Individual retirement accounts and Keogh (H.R. 10) plans 5.............. m 7/6/77 (8) IVa 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 • July 1, 1973, for mutual savings banks; July 6, 1973, for savings and posits in denominations of $100,000 or more were suspended in midloan associations. 1973. For information regarding previous interest rate ceilings on all 7 Oct. 1, 1966, for mutual savings banks; Jan. 21, 1970, for savings and types of accounts, see earlier issues of the Federal Reserve Bulletin, loan associations. the Federal Home Loan Bank Board Journal, and the Annual Report 8 No separate account category. of the Federal Deposit Insurance Corporation. 1.161 MARGIN REQUIREMENTS Per cent of market value; effective dates shown. Type of security on sale Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 1 Margin stocks....................................................... 70 80 65 55 65 50 2 Convertible bonds................................................ 50 60 50 50 50 50 3 Short sales............................................................. 70 80 65 55 65 50 Note.—Regulations G, T, and U of the Federal Reserve Board of difference between the market value (100 per cent) and the maximum Governors, prescribed in accordance with the Securities Exchange Act of loan value. The term “margin stocks” is defined in the corresponding 1934, limit the amount of credit to purchase and carry margin stocks regulation. that may be extended on securities as collateral by prescribing a maximum Regulation G and special margin requirements for bonds convertible loan value, which is a specified percentage of the market value of the into stocks were adopted by the Board of Governors effective Mar. 11, collateral at the time the credit is extended. Margin requirements are the 1968. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A ll 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1977 1978 Type of transaction 1975 1976 1977 Oct. Nov. Dec. Jan. Feb. Mar. Apr. U.S. GOVT. SECURITIES Outright transactions (excl. matched salepurchase transactions) Treasury bills: 1 Gross purchases. 11,562 14,343 13,738 3,109 696 379 748 1,670 2 Gross sales.......... 5,599 8,462 7,241 1,877 436 311 1,323 1,974 50 3 Redemptions 2 6,431 2 5,017 2,136 300 1,100 31 Others within 1 year:1 Gross purchases.................., 3,886 472 3,017 99 56 288 100 Gross sales............................ Exchange, or maturity shift. -4 792 4.499 -45 1,352 623 —511 -653 261 -292 Redemptions........................ 3,549 2.500 2,500 1 to 5 years: 8 Gross purchases................... 2 3,284 2 3,202 2,833 628 311 813 235 9 Gross sales............................ 177 10 Exchange, or maturity shift. 3,854 -2,588 -6,649 45 -1,267 -623 511 1,109 -261 292 5 to 10 years: 11 Gross purchases................... 1,510 1,048 758 166 89 370 191 12 Gross sales............................ 13 Exchange, or maturity shift. -4,697 1,572 584 -325 -906 Over 10 years: 14 Gross purchases................... 1,070 642 553 108 100 147 145 15 Gross sales............................. 16 Exchange, or maturity shift. 848 ’“225' i ] 565 240 450 All maturities:1 17 Gross purchases. 221,313 219,707 20,898 4,110 1,252 379 2,367 2,341 18 Gross sales.......... 5,599 8,639 7,241 1,877 436 311 1,323 1,974 50 19 Redemptions 2 9,980 25,017 4,636 2,500 300 1,100 31 Matched sale-purchase transactions 20 Gross sales.................................... 151,205 196,078 425,214 48,204 56,899 32,320 54,859 40,128 44,976 42,262 21 Gross purchases............................ 152,132 196,579 423,841 44,772 57,477 35,001 51,016 44,270 44,129 42,799 Repurchase agreements 22 Gross purchases 140,311 232,891 178,683 9,578 6,472 18,071 10,229 16.057 13,155 8,044 23 Gross sales................. 139,538 230,355 180,535 11,889 4,433 18,208 12,130 16.057 11,468 8,999 24 Net change in U.S. Govt, securities.......... 7,434 9,087 5,798 -10,118 1,880 6,342 -5,815 1,447 3,127 1,923 FEDERAL AGENCY OBLIGATIONS Outright transactions: 25 Gross purchases......................................... 1,616 891 1,433 707 26 Gross sales.................................................. 27 Redemptions.............................................. 246 169 223 32 22 53 Repurchase agreements: 28 Gross purchases......................................... 15,179 10,520 13,811 741 615 2,712 1,680 1.966 2,638 1,282 29 Gross sales.................................................. 15,566 10,360 13,638 1,051 484 2,392 2,131 1.966 2,374 1,410 BANKERS ACCEPTANCES 30 Outright transactions, net................ 163 -545 -196 -4 31 Repurchase agreements, net............ -35 410 159 -478 248 705 -954 770 -480 32 Net change in total System Account. 8,539 9,833 7,143 -10,910 2,260 8,042 -7,220 1,425 4,107 1,315 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. in exchange for maturing bills. In 1976 there was a similar transaction Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics □ June 1978 1.18 FEDERAL RESERVE BANKS Condition and F.R. Note Statements Millions of dollars Wednesday End of month Account 1978 1978 May 3 May 10 May 17 May 24p May 31^ Mar. Apr. MayP Consolidated condition statement ASSETS 1 11,718 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 3 311 303 296 296 291 323 324 291 Loans: 4 Member bank borrowings................................. 2,836 1,187 1,422 764 1,167 332 1,750 1,167 5 Other................................................................... Acceptances: 6 7 464 638 274 770 290 274 Federal agency obligations: 8 Bought outright.................................................. 7,929 7,929 7,895 7,895 7,895 7,929 7,929 7,895 q 864 989 26 264 135 26 U.S. Govt, securities Bought outright: 10 Bills.................................................................. 40,311 40,264 36,597 40,813 39,673 38,358 40,565 39,673 11 12 13 52,5i6 52,510 52,055 52,055 52,055 51,984 52,5i6 52,055 14 9,693 9,693 10,667 10,667 10,667 9,548 9,693 10,667 15 102,514 102,467 99,319 103,535 102,395 99,890 102,768 102,395 16 2,842 2,414 431 1,687 732 431 17 105,356 104,881 99,319 103,535 102,826 101,577 103,500 102,826 18 117,449 115,624 108,636 112,194 112,188 110,872 113,604 112,188 19 12,861 10,303 12,839 10,963 11,305 8,354 9,206 11,305 20 387 387 388 388 388 385 387 388 Other assets: 21 104 74 65 62 121 80 54 121 22 2,661 2,452 1,683 1,863 2,077 1,863 2,720 2,077 23 146,741 142,111 136,875 138,734 139,338 134,845 139,263 139,338 LIABILITIES 24 93,145 93,861 93,836 93,806 94,570 91,666 92,331 94,570 Deposits: 25 Member bank reserves....................................... 31,595 29,256 26,886 29,544 29,586 27,900 28,321 29,586 26 U.S. Treasury—General account..................... 10,247 7,931 4,505 4,558 2,398 4,705 7,177 2,398 27 468 584 232 219 454 352 481 454 28 Other2................................................................. 712 685 577 619 660 740 684 660 29 43,022 38,456 32,200 34,940 33,098 33,697 36,663 33,098 30 6,942 5,973 7,034 5,967 7,435 5,622 6,189 7,435 31 Other liabilities and accrued dividends................ 1,463 1,507 1,348 1,436 1,514 1,234 1,420 1,514 32 144,572 139,797 134,418 136,149 136,617 132,219 136,603 136,617 CAPITAL ACCOUNTS 33 1,049 1,050 1,051 1,053 1,053 1,047 1,050 1,053 34 1,029 1,029 1,029 1,029 1,029 1,029 1.029 1,029 35 91 235 377 503 639 550 581 639 36 146,741 142,111 136,875 138,734 139,338 134,845 139,263 139,338 37 Memo: Marketable U.S. Govt, securities held in custody for foreign and inti, account............. 85,185 85,264 85,770 85,112 84,854 88,965 85,141 84,854 Federal Reserve note statement 38 104,242 104,390 104,617 104,849 105,008 103,427 104,164 105,008 Collateral held against notes outstanding: 39 Gold certificate account..................................... 11,717 11,717 11,717 11,717 11,718 11,718 11,717 11,718 40 Special Drawing Rights certificate account.... 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 41 Eligible paper..................................................... 2,354 1,136 1,390 725 1,107 309 1,580 1,107 42 88,921 90,287 90,260 91,157 90,933 90,150 89,617 90,933 43 Total collateral........................................................ 104,242 104,390 104,617 104,849 105,008 103,427 104,164 105,008 1 Includes securities loaned—fully guaranteed by U.S. Govt, securities 2 includes certain deposits of domestic nonmember banks and foreignpledged with F.R. Banks—and excludes (if any) securities sold and owned banking institutions voluntarily held with member banks and scheduled to be bought back under matched sale-purchase transactions. redeposited in full with F.R. Banks. 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 1978 May 3 May 10 May 17 May 24 May 31 Mar. 31 Apr. 30 May 31 1 2,836 1,186 1,419 764 1,167 331 1,751 1,167 2 2,805 1,132 1,405 743 1,120 315 1,731 1,120 3 31 54 14 21 47 16 20 47 A 01 Have tn 1 vmp.................................................. 464 638 274 770 290 274 6 464 638 274 770 290 274 7 16 days to 90 days........................................... ft 01 Have tn 1 vear.................................................. 105,356 104,881 99,319 103,535 102,826 101,577 103,500 102,826 10 Within 15 days1................................................... 8,054 7,659 3,434 4,638 2,956 4,642 3,710 2,956 11 17,895 17,562 16,368 20,338 20,129 19,400 21,381 20,129 12 31,462 31,716 29,160 28,203 29,416 30,454 30,757 29,416 13 29,904 29,903 29,719 29,718 29,687 29,376 29,611 29,687 14 10,132 10,132 11,760 11,760 11,760 9,941 10,132 11,760 15 7,909 7,909 8,878 8,878 8,878 7,764 7,909 8,878 16 Federal agency obligations....................................... 8,793 8,918 7,895 7,895 7,921 8,193 8,064 7,921 17 Within 15 days1................................................... 898 1,053 75 75 168 305 189 168 18 271 241 200 200 105 233 231 105 19 1,162 1,162 1,158 1,158 1,347 1,110 1,152 1,347 20 Over 1 year to 5 years......................................... 3,961 3,961 3,961 3,961 3,817 4,044 3,991 3,817 21 Over 5 years to 10 years...................................... 1,644 1,644 1,654 1,654 1,637 1,624 1,644 1,637 22 Over 10 years........................................................ 857 857 847 847 847 877 857 847 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 Dec. Jan. Feb.r Mar. Apr. Debits to demand deposits 2 (seasonally adjusted) 1 All commercial banks.............. 22,937.8 25,028.5 29,180.4 36,427.2 36.923.3 36,357.7 36,883.0 39,131.1 2 Major New York City banks.. 8,434.8 9,670.7 11.467.2 14,651.4 14,432.0 13,480.2 13,701.6 15,231.8 3 Other banks............................... 14,503.0 15,357.8 17.713.2 21,775.8 22.491.3 22,877.5 23,181.3 23,899.3 Debits to savings deposits 3 (not seasonally adjusted) 4 All customers............................. 353.8 392.6 323.9 r382.8 430.0 5 Business 1................................... 49.5 48.7 40.2 r49.8 47.5 6 Others..................................... 304.3 343.8 283.7 333.0 382.5 Demand deposit turnover 2 (seasonally adjusted) 7 All commercial banks................ 99.0 105.3 116.8 131.0 131.5 130.2 132.7 137.0 8 Major New York City banks.. 321.6 356.9 411.6 539.9 512.2 496.3 521.5 551.7 9 Other banks............................... 70.6 72.9 79.8 86.8 89.0 90.7 92.1 92.6 Savings deposit turnover 3 (not seasonally adjusted) 10 All customers............................. 1.6 1.8 1.5 1.7 1.9 11 Business 1................................... 4.6 4.7 3.9 4.8 4.6 12 Others........................................ 1.5 1.7 1.4 1.6 1.8 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 □ June 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. Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted MEASURES1 1 M-l....................................... r282.9 294.5 312.6 336.7 334.7 336.7 339.4 339.1 340.1 345.4 2 M-2....................................... r612.2 664.1 739.6 807.6 803.8 807.6 813.6 816.6 820.2 827.8 3 M-3....................................... 981.2 1,091.8 1,235.6 rl ,374.2 1,365.5 rl,374.2 1,384.3 1,390.6 rl,397.8 1,409.0 4 M-4....................................... r701.2 745.4 802.3 881.6 874.6 881.6 889.9 896.0 902.2 911.3 5 M-5....................................... 1,070.3 1,173.2 1,298.3 1,448.2 1,436.4 rl,448.2 1,460.6 1,469.9 *•1,479.9 1,492.4 COMPONENTS 6 Currency............................... 67.8 73.7 80.7 88.5 87.7 88.5 89.3 90.0 90.6 91.2 Commercial bank deposits: 7 Demand............................ 215.1 220.8 231.9 248.2 247.0 248.2 250.1 249.1 249.5 254.3 8 Time and savings.............. 418.3 450.9 489.7 544.9 540.0 544.9 550.5 556.8 562.1 565.9 9 Negotiable CD’s2........ 89.0 81.3 62.7 74.0 70.9 74.0 76.3 79.4 82.0 83.4 10 Other............................. 329.3 369.6 427.0 470.9 469.1 470.9 474.2 477.5 480.1 482.4 11 Nonbank thrift institutions3 369.1 427.8 496.0 r566.6 561.7 r566.6 r570.7 r574.0 r511.1 581.1 Not seasonally adjusted MEASURES i 12 M-l...................................................... '291.3 303.2 321.7 346.4 336.8 346.4 345.2 333.3 335.4 347.8 13 M-2...................................................... 617.5 669.3 744.8 813.0 801.2 813.0 818.3 >'811.4 818.7 834.1 14 M-3...................................................... 983.8 1,094.3 1,237.5 1,375.5 1,358.5 1,375.5 *•1,386.6 rl,383.5 *•1,397.8 1,418.7 15 M-4...................................................... *•708.0 752.8 809.1 888.9 872.8 888.9 894.6 888.3 899.0 915.5 16 M-5...................................................... *•1,074.3 1,177.7 1,301.8 1,451.5 1,430.1 *■1,451.5 *■1,463.0 *•1,460.4 rl,478.1 1,500.1 COMPONENTS 17 Currency............................................. 69.0 75.1 82.1 90.0 88.4 90.0 88.6 88.9 89.9 91.0 Commercial bank deposits: 18 Demand........................................... 222.2 228.1 239.5 256.4 248.4 256.4 256.6 244.4 245.5 256.8 19 Member....................................... 159.7 162.1 168.5 176.3 170.3 176.3 175.9 167.4 168.5 175.7 20 Domestic nonmember................ 58.5 62.6 67.5 75.8 73.8 75.8 76.3 72.8 73.0 76.9 21 Time and savings............................. 416.7 449.6 487.4 542.5 536.0 542.5 549.4 555.0 563.6 567.7 22 Negotiable CD’s2....................... 90.5 83.5 64.3 75.9 71.6 75.9 16 A 76.9 80.2 81.4 23 Other........................................... 326.3 366.2 423.1 466.6 464.4 466.6 473.0 478.1 483.4 486.3 24 Nonbank thrift institutions3.............. 366.3 424.9 492.7 562.5 557.3 562.5 r568.4 r572.1 *•579.1 584.6 25 U.S. Govt, deposits (all commercial banks).......................................... 4.9 4.1 4.4 5.1 3.5 5.1 4.2 4.2 4.6 4.8 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 April 1978 Bulletin, pp. process of collection and F.R. float; (2) foreign demand balances at F.R. 338 and 339. 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 at 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. of one large bank. Reductions in other items were: “Total loans,” $1.0 2 Loans sold are those sold outright to a bank’s own foreign branches, billion (of which $0.6 billion was in “Commercial and industrial loans”), nonconsolidated nonbank affiliates of the bank, the bank’s holding and “Other securities,” $0.5 billion. In late November “Commercial and company (if not a bank), and nonconsolidated nonbank subsidiaries of industrial loans” were increased by $0.1 billion as a result of loan re the holding company. Prior to Aug. 28, 1974, the institutions included classifications at another large bank. had been defined somewhat differently, and the reporting panel of banks 4 Reclassification of loans reduced these loans by about $1.2 billion was also different. On the new basis, both “Total loans” and “Com as of Mar. 31, 1976. mercial and industrial loans” were reduced by about $100 million. 5 Reclassification of loans at one large bank reduced these loans by 3 Data beginning June 30, 1974, include one large mutual savings about $200 million as of Dec. 31, 1977. bank that merged with a nonmember commercial bank. As of that date there were increases of about $500 million in loans, $100 million in Note.—Data are for last Wednesday of month except for June 30 “Other” securities, and $600 million in “Total loans and investments.” and Dec. 31; data are partly or wholly estimated except when June 30 As of Oct. 31, 1974, “Total loans and investments” of all commercial and Dec. 31 are call dates. banks were reduced by $1.5 billion in connection with the liquidation 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 1974 1975 1976 Dec. Dec. Dec. Aug. Sept. Oct. Nov. Dec. Feb. Mar. Apr. Seasonally adjusted 1 Reserves1.................................................... 36.57 34.68 34.93 35.50 35.52 35.81 35.96 36.14 36.60 36.93 36.67 36.95 2 Nonborrowed........................................... 35.84 34.55 34.89 34.44 34.89 34.50 35.10 35.57 36.12 36.53 36.34 36.40 3 Required................................................... 36.31 34.42 34.29 35.30 35.3,1 35.60 35.71 35.95 36.33 36.69 36.47 36.81 4 Deposits subject to reserve requirements2. 486.1 504.6 528.9 550.5 553.0 558.5 564.4 569.1 575.7 577.8 582.2 586.1 5 Time and savings..................................... 322.1 337.1 354.3 370.8 373.0 377.1 383.5 387.0 390.5 395.4 399.2 400.7 Demand: 6 Private................................................... 160.6 164.5 171.4 176.5 176.7 178.3 178.0 178.5 182.1 179.5 179.6 182.0 7 U.S. Govt............................................. 3.3 2.9 3.2 3.2 3.3 3.1 3.0 3.6 3.1 3.0 3.4 3.3 Not seasonally adjusted 8 Deposits subject to reserve requirements2.. 491.8 510.9 534.8 548.3 552.1 558.2 562.1 575.3 581.3 572.5 579.4 588.6 321.7 337.2 353.6 371.7 373.0 377.5 380.7 386.4 390.3 393.2 399.3 401.2 Demand: 10 Private................................................... 166.6 170.7 177.9 174.1 175.2 178.0 178.7 185.1 187.9 176.1 176.6 183.8 11 U.S. Govt............................................. 3.4 3.1 3.3 2.5 3.8 2.7 2.6 3.8 3.1 3.1 3.5 3.6 i Series reflects actual reserve requirement percentages with no adjust 2 Includes total time and savings deposits and net demand deposits as ment to eliminate the effect of changes in Regulations D and M. There defined by Regulation D. Private demand deposits include all demand are breaks in series because of changes in reserve requirements effective deposits except those due to the U.S. Govt., less cash items in process of Dec. 12,1974; Feb. 13, May 22, and Oct. 30,1975; Jan. 8, and Dec. 30,1976. collection and demand balances due from domestic commercial banks. In addition, effective Jan. 1, 1976, statewide branching in New York was instituted. The subsequent merger of a number of banks raised Note.—Back data and estimates of the impact on required reserves required reserves because of higher reserve requirements on aggregate and changes in reserve requirements are shown in Table 14 of the Board’s deposits at these banks. Annual Statistical Digest, 1971-1975. 1.23 LOANS AND INVESTMENTS All Commercial Banks Billions of dollars; last Wednesday of month except for June 30 and Dec. 31 1977 1978 1974 1975 1976 Dec. 31 Dec. 31 Dec. 31 Category 3 Nov. 30 Dec. 31 Jan. 25 Feb. 22 Mar. 29 Apr. 26 May 31 p P p p V Seasonally adjusted 1Loans and investments1......................................... 690.4 721.1 784.4 866.2 870.6 880.6 886.6 892.2 906.0 917.9 2 Including loans sold outright2.......................... 695.2 725.5 788.2 870.9 875.5 885.4 891.2 896.7 910.5 922.4 Loans: 3 Total.................................................................... 500.2 496.9 538.9 611.6 617.0 624.9 628.2 636.5 646.3 657.9 4 Including loans sold outright2...................... 505.0 501.3 542.7 616.3 621.9 629.7 632.8 641.0 650.8 662.4 5 Commercial and industrial............................... 183.3 176.0 4179.5 200.2 5201.6 203.9 206.1 210.3 213.3 219.2 6 Including loans sold outright2............................ 186.0 178.5 4181.9 202.8 5204.4 206.4 208.4 212.5 215.6 221.5 Investments: 7 U.S. Treasury..................................................... 50.4 79.4 97.3 96.3 95.6 96.3 99.0 95.6 97.6 97.1 8 Other................................................................... 139.8 144.8 148.2 158.3 158.0 159.4 159.4 160.1 162.1 162.9 Not seasonally adjusted 9 Loans and investments1......................................... 705.6 737.0 801.6 869.3 888.9 876.1 878.4 889.7 904.9 917.0 10 Including loans sold outright2......................... 710.4 741.4 805.4 874.0 893.8 880.8 883.0 894.2 909.4 921.5 Loans: 11 Total1.................................................................. 510.7 507.4 550.2 612.1 629.9 619.3 620.3 631.6 642.3 657.1 12 Including loans sold outright2...................... 515.5 511.8 554.0 616.8 634.8 624.1 624.9 636.1 646.8 661.6 13 Commercial and industrial.............................. 186.8 179.3 4182.9 200.2 5205.0 201.7 204.2 210.0 213.8 219.2 14 Including loans sold outright2..................... 189.5 181.8 4185.3 202.8 5207.8 204.2 206.5 212.2 216.1 221.5 Investments: 15 U.S. Treasury..................................................... 54.5 84.1 102.5 98.5 100.2 97.9 99.6 98.6 99.6 96.6 16 Other................................................................... 140.5 145.5 148.9 158.8 158.8 158.8 158.5 159.6 163.1 163.4 For notes see bottom of opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics □ June 1978 1.24 COMMERCIAL BANK ASSETS AND LIABILITIES Last-Wednesday-of-Month Series Billions of dollars except for number of banks 1976 19773 19783 Account Dec. 3 Aug. Sept. Oct. Nov. Dec. Jan.P Feb.* Mar.p Apr.p May.P All commercial 1 Loans and investments............... 846.4 887.4 892.3 898.9 916.5 939.1 921.6 926.0 936.0 947.7 967.4 2 Loans, gross........................... 594.9 632.5 637.4 643.4 659.3 680.1 664.9 668.0 677.8 685.0 707.4 Investments: 3 U.S. Treasury securities.. 102.5 99.7 98.8 98.2 98.5 100.2 97.9 99.6 98.6 99.6 96.6 4 Other................................... 148.9 155.3 156.1 157.3 158.8 158.8 158.8 158.5 159.6 163.1 163.4 5 Cash assets................................. 136.1 135.5 128.6 129.3 138.6 168.7 126.9 145.2 131.5 134.1 162.7 6 Currency and coin................. 12.1 13.6 13.9 13.8 14.6 13.9 14.0 13.8 14.3 14.1 14.3 7 Reserves with F.R. Banks... 26.1 28.2 30.0 28.3 26.3 29.3 26.6 31.0 30.2 27.6 30.3 8 Balances with banks............... 49.6 45.3 42.7 44.4 46.8 59.0 42.4 46.9 44.1 44.7 53.3 9 Cash items in process of collection.. 48.4 48.3 42.1 42.8 50.9 66.4 43.9 53.5 43.0 47.6 64.7 10 Total assets/total liabilities and 1,030.7 1,080.4 1,077.8 1,085.2 1,119.3 1,166.0 1,113.7 1,136.4 1,136.7 1,151.2 1,199.5 11 Deposits.................................... 838.2 859.0 854.1 861.5 887.2 939.4 883.6 899.7 896.2 910.3 946.1 Demand: 12 45.4 39.5 37.1 37.4 41.7 51.7 37.1 42.6 37.4 38.8 50.7 13 U.S. Govt.......................... 3.0 2.5 8.1 3.6 4.8 7.3 4.5 5.8 4.8 6.1 3.2 14 Other................................... 288.4 285.3 272.9 280.0 294.0 323.9 284.2 288.6 280.2 292.0 310.6 Time: 15 9.2 8.1 8.5 8.6 9.0 9.8 9.1 8.7 9.0 9.0 9.4 16 Other................................... 492.2 523.6 527.6 531.9 537.8 546.6 548.8 554*0 564.8 564.4 572.2 17 Borrowings................................. 80.2 94.2 95.6 95.6 99.4 96.2 99.9 103.7 105.7 104.5 111.4 18 78.1 79.7 80.1 80.7 81.6 85.8 82.4 82.8 83.3 83.7 84.6 19 Memo: Number of banks......... 14,671 14,713 14,724 14,718 14,718 14,707 14,703 14,682 14,689 14,697 14,697 Member 20 620.5 637.9 640.8 645.2 658.6 675.5 659.5 661.8 668.6 676.8 693.8 21 Loans, gross........................... 442.9 459.9 463.0 467.1 479.0 494.9 481.8 483.1 490.5 495.3 514.3 Investments: 22 U.S. Treasury securities... 74.6 70.5 69.6 68.9 69.2 70.4 67.7 69.2 68.2 68.8 66.9 23 Other................................... 103.1 107.5 108.3 109.3 110.3 110.1 110.0 109.5 109.9 112.7 112.7 24 Cash assets, total....................... 108.9 108.6 103.1 102.3 110.6 134.4 102.2 117.2 104.8 106.5 130.7 25 Currency and coin................. 9.1 10.0 10.2 10.2 10.8 10.4 10.4 10.2 10.6 10.5 10.6 26 Reserves with F.R. Banks... 26.0 28.2 30.0 28.3 26.3 29.3 26.6 31.0 30.2 27.6 30.3 27 Balances with banks.............. 27.4 24.0 22.5 22.8 24.7 30.8 23.0 24.6 22.9 22.7 28.1 28 Cash items in process of collection.. 46.5 46.4 40.4 41.0 48.9 63.9 42.2 51.4 41.2 45.7 61.7 29 Total assets/total liabilities and capital1................................... 772.9 796.3 793.2 796.5 823.9 861.8 818.0 835.3 833.2 843.3 884.7 30 618.7 622.2 617.0 620.9 641.8 683.5 636.8 649.2 645.1 655.1 686.7 Demand: 31 42.4 36.6 34.3 34.6 38.7 48.0 34.4 39.5 34.7 36.0 47.5 32 U.S. Govt........................... 2.1 1.7 6.4 2.6 3.6 5.4 3.4 4.4 3.7 4.5 2.2 33 Other................................... 215.5 211.0 200.3 205.3 216.4 239.4 208.4 211.8 205.1 213.4 229.1 Time: 34 Interbank............................ 7.2 6.0 6.3 6.5 6.8 7.8 7.1 6.7 7.0 6.9 7.3 35 Other................................... 351.5 366.9 369.6 372.0 376.2 382.9 383.5 386.9 394.7 394.3 400.5 36 Borrowings................................. 71.7 82.5 84.0 83.8 87.8 84.9 88.0 90.8 91.8 91.1 96.9 37 58.6 59.9 60.2 60.6 61.2 63.7 61.8 62.1 62.4 62.7 63.3 38 Memo: Number of banks........ 5,759 5,676 5,692 5,686 5,680 5,669 5,659 5,659 5,654 5,645 5,645 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 1976 1977 1976 1977 Account June 30 Dec. 31 June 30 Dec. 31 June 30 Dec. 31 *• June 30 Dec. 31 Total insured National (all insured) 1 Loans and investments, gross................................ 773,701 r827,696 *•854,734 914,783 443,959 476,610 488,240 523,000 Loans: 2 Gross............................................................... 539,021 *•578,734 *■601,112 657,513 315,628 340,691 351,311 384,722 3 Net................................................................... 520,976 *•560,076 *■581,134 636,323 305,280 329,971 339,955 372,702 Investments: 4 U.S. Treasury securities................................. 90,947 *•101,461 *•200,568 99,333 49,688 55,727 *•153,345 52,244 5 Other................................................................ 143,731 *•147,500 *•53,053 157,937 78,642 80,191 *•-16,416 86,033 6 Cash assets.............................................................. 124,072 *•129,562 *•130,726 159,264 75,488 76,072 74,641 92,050 7 Total assets/total liabilities1................................... 942,519 *1,003,969 *1,040,945 1,129,711 548,702 583,304 599,743 651,360 8 776,957 *•825,003 *•847,372 922,664 444,251 469,377 476,381 520,167 Demand: 9 U.S. Govt........................................................ 4,622 *•3,022 2,817 7,310 2,858 1,676 1,632 4,172 10 Interbank........................................................ 37,502 *•44,064 44,965 49,849 20,329 23,149 22,876 25,646 11 Other................................................................ 265,671 *■285,200 284,544 319,873 152,383 163,346 161,358 181,821 Time: 12 Interbank........................................................ 9.406 *•8,248 7,721 8,731 5,532 4,907 4,599 5,730 13 Other............................................................... 459,753 *■484,467 *•507,324 536,899 263,147 276,296 285,915 302,795 14 Borrowings.............................................................. 63,828 *•75,291 *•81,137 89,332 45,187 54,421 57,283 63,218 15 68,988 *72,061 75,503 79,084 39,501 41,319 43,142 44,994 16 Memo: Number of banks..................................... 14,373 14,397 14,425 14,397 4,747 4,735 4,701 4,654 State member (all insured) Insured nonmember 17 Loans and investments, gross................................. 136,915 144,000 144,597 152,518 192,825 207,085 r221,896 239,265 Loans: 18 Gross............................................................... 98,889 102,277 *•102,117 110,247 124,503 135,766 *•147,684 162,543 19 Net................................................................... 96,037 99,474 *•99,173 107,210 119,658 130,630 *•142,006 156,411 Investments: 20 U.S. Treasury securities................................. 16,323 18,849 19,296 18,179 24,934 26,884 *•27,926 28,909 21 Other................................................................ 21,702 *•22,874 *•23,183 24,091 43,387 44,434 *•46,285 47,812 22 Cash assets.............................................................. 30,422 32,859 35,918 42,305 18,161 20,631 *■20,166 24,908 23 Total assets/total liabilities..................................... 179,649 189,578 *"195,452 210,441 214,167 231,086 *■245,749 267,910 24 142,061 149,491 *•152,472 163,443 190,644 206,134 218,519 239,053 Demand: 25 U.S. Govt....................................................... 869 429 371 1,241 894 917 813 1,896 26 Interbank........................................................ 15,833 19,295 20,568 22,353 1,339 1,619 1,520 1,849 27 Other................................................................ 49,659 52,204 *•52,570 57,605 63,629 69,648 70,615 80,445 Time: 28 Interbank........................................................ 3,074 2,384 2,134 2,026 799 956 988 973 29 Other............................................................... 72,624 75,178 *■76,827 80,216 123,980 132,993 144,581 153,887 30 Borrowings.............................................................. 15,300 17,310 *■19,697 21,729 3,339 3,559 4,155 4,384 31 Total capital accounts............................................. 12,791 13,199 13,441 14,184 16,696 17,542 18,919 19,905 32 Memo: Number of banks..................................... 1,029 1,023 1,019 1,014 8,597 8,639 8,705 8,729 Noninsured nonmember Total nonmember 33 Loans and investments, gross................................. 15,905 18,819 22,940 24,415 208,730 225,904 *•244,837 263,681 Loans: 34 Gross............................................................... 13,209 16,336 20,865 22,686 137,712 152,103 *■168,549 185,230 35 Net................................................................... 13,092 16,209 20,679 22,484 132,751 146,840 *•162,685 178,896 Investments: 36 U.S. Treasury securities................................. 472 1,054 993 879 25,407 27,938 *•28,919 29,788 37 Other................................................................ 2,223 1,428 1,081 849 45,610 45,863 *•47,367 48,662 38 Cash assets.............................................................. 4,362 6,496 8,330 9,458 22,524 27,127 *•28,496 34,367 39 Total assets/total liabilities..................................... 21,271 26,790 33,390 36,433 235,439 257,877 r279,139 304,343 40 11,735 13,325 14,658 16,844 202,380 219,460 233,177 255,898 Demand: 41 U.S. Govt........................................................ 4 4 8 10 899 921 822 1,907 42 Interbank........................................................ 1,006 1,277 1,504 1,868 2,346 2,896 3,025 3,718 43 Other................................................................ 2,555 3,236 3,588 4,073 66,184 72,884 74,203 84,518 Time: 44 Interbank........................................................ 1,292 1,041 1,164 1,089 2,092 1,997 2,152 2,063 45 Other................................................................ 6,876 7,766 8,392 9,802 130,857 140,760 152,974 163,690 46 3,372 4,842 7,056 6,908 6,711 8,401 11,212 11,293 47 Total capital accounts............................................ 663 818 893 917 17,359 18,360 *19,812 20,823 48 Memo: Number of banks..................................... 270 275 293 310 8,867 8,914 8,998 9,039 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 □ June 1978 1.26 COMMERCIAL BANK ASSETS AND LIABILITIES Detailed Balance Sheet, December 31, 1977 Asset and liability items are shown in millions of dollars. Member banks All Insured Non Asset account commercialcommercial Large banks member banks banks banks1 Total All other New York City of Other City Chicago large2 1Cash bank balances, items in process.................... 168,723 159,264 134,355 39,317 5,664 48,457 40,918 34,368 2 Currency and coin................................................ 13,925 13,916 10,379 1.004 231 3,551 5,592 3,546 3 Reserves with F.R. Banks................................... 29,338 29,338 29,338 5,073 1,476 11,549 11,240 * 4 Demand balances with banks in United States. 44,654 39,075 22,984 8,925 387 3,530 10,142 21,671 5 Other balances with banks in United States___ 7,050 5,722 3,264 407 14 1,075 1,768 3,786 6 Balances with banks in foreign countries.......... 7,324 4,932 4,526 786 169 2,146 1,424 2,798 7 Cash items in process of collection.................... 66,432 66,281 63,866 23,123 3,387 26,605 10,751 2,566 8 Total securities held—Book value........................... 257,353 255,660 179,183 21,786 8,487 57,684 91,227 78,170 9 U.S. Treasury........................................................ 100,213 99,333 70,424 10,959 3,458 23,017 32,990 29,789 10 Other U.S. Govt, agencies................................... 36,689 36,389 23,049 1,639 928 6,458 14,025 13,639 11 States and political subdivisions......................... 113,834 113,587 81,386 8,829 3,811 26,912 41,835 32,447 12 All other securities................................................ 6,520 6,254 4,259 360 290 1,271 2,338 2,261 n Unclassified total.................................................. 98 97 64 * 26 38 34 14 Trading-account securities.................................... 6,404 6,403 6,266 2,938 838 2,261 230 138 15 U.S. Treasury.................................................... 3,871 3,871 3,859 2,204 487 1,110 58 11 16 Other U.S. Govt, agencies............................... 629 629 625 220 72 283 50 3 17 States and political subdivisions..................... 1,211 1,211 1,191 392 151 565 83 19 18 All other trading acct. securities..................... 597 597 526 121 129 276 1 71 19 98 97 64 * 26 38 34 20 Bank investment portfolios................................... 250,949 249,257 172,917 18,848 7,648 55,423 90,997 78,032 21 U.S. Treasury.................................................... 96,342 95,463 66,565 8,755 2,971 21,906 32,933 29,777 22 Other U.S. Govt, agencies............................... 36,060 35,760 22,424 1,418 856 6,175 13,975 13,636 23 States and political subdivisions..................... 112,623 112,377 80,195 8,437 3,660 26,347 41,751 32,428 24 All other portfolio securities........................... 5,923 5,657 3,733 238 162 995 2,337 2,190 25 F.R. stock and corporate stock.............................. 1,647 1,610 1,366 305 103 502 456 281 26 Federal funds sold and securities resale agreement.. 53,854 49,690 38,889 3,359 1,354 20,136 14,040 14,964 27 Commercial banks............................................... 44,988 41,177 30,701 1,315 1,180 15,328 12,877 14,287 28 Brokers and dealers............................................. 5,451 5,443 5,232 1,186 122 2,947 977 220 29 Others................................................................... 3,415 3,069 2,957 859 52 1,861 186 458 626,347 607,824 456,080 78,064 23,869 169,778 184,368 170,266 31 14,619 14,564 9,801 602 97 3,171 5,930 4,818 32 Reserves for loan loss............................... 6,773 6,626 5,257 1,197 312 1,977 1,772 1,517 33 604,955 586,634 441,023 76,266 23,461 164,630 176,666 163,932 Other loans, gross, by category 34 177,172 176,916 122,044 9,482 2,360 44,851 65,351 55,128 35 Construction and land development............... 20,724 20,709 15,640 2,206 492 7,569 5,373 5,084 36 Secured by farmland........................................ 7,750 7,731 3,330 19 8 335 2,968 4,420 37 Secured by residential...................................... 100,996 100,847 70,852 4,668 1,263 26,393 38,528 30,144 38 1- to 4-family residences............................... 96,102 95,961 67,318 4,133 1,159 25,099 36,926 28,785 39 FHA-insured or VA-guaranteed.............. 7,657 7,601 6,612 564 51 3.514 2,483 1,045 40 Conventional............................................. 88,445 88,361 60,705 3,569 1,108 21,585 34,443 27,740 41 Multifamily residences.................................. 4,894 4,886 3,535 536 104 1,294 1,601 1,359 42 FHA-insured............................................. 408 401 336 129 23 99 85 72 43 Conventional............................................ 4,486 4,485 3,199 407 81 1,195 1,517 1,287 44 Secured by other properties............................. 47,701 47,630 32,221 2,588 596 10,555 18,482 15,480 45 43,663 36,703 34,585 12,292 4,242 15,035 3,016 9,079 46 To REIT’s and mortgage companies.............. 9,050 9,036 8,684 2,547 923 4,520 694 366 47 5,200 3,149 2,500 838 111 1,324 228 2.700 48 To banks in foreign countries......................... 11,408 7,244 6,995 3,254 348 2,783 610 4,414 49 To other depository institutions..................... 1,935 1,747 1,595 224 31 1,044 295 340 50 To other financial institutions......................... 16,069 15,527 14,811 5,428 2,829 5,365 1,189 1,258 51 Loans to security brokers and dealers............... 13,060 12,781 12,440 7,760 1,791 2,561 328 620 52 Other loans to purch./carry securities................ 4,350 4,329 3,596 440 349 1,815 992 754 53 Loans to farmers—except real estate................. 25,730 25,704 14,183 169 149 3,365 10,500 11,548 54 Commercial and industrial loans....................... 205,014 195,455 158,823 38,763 11,613 61,462 46,985 46,191 55 Loans to individuals............................................ 140,392 140,273 97,074 6,479 2,159 34,723 53,714 43,317 56 112,439 112,370 77,717 4,804 1,380 28,330 43,203 34,722 57 Passenger automobiles................................. 49,586 49,571 31,708 893 156 9,362 21,297 17,878 58 Residential-repair/modernize....................... 7,283 7,283 4,846 296 67 1,768 2,715 2,437 59 Credit cards and related plans.................... 18,375 18,367 16,187 2,119 975 8,840 4,253 2,188 60 Charge-account credit cards.................... 14,608 14,608 13,064 1,419 935 7,319 3,391 1,544 61 Check and revolving credit plans............ 3,767 3,758 3,123 700 40 1,521 861 644 62 Other retail consumer goods....................... 17,449 17,443 11,871 367 55 4,383 7,067 5,578 63 9,125 9,125 6,401 176 22 2,343 3,860 2,724 64 8,324 8,319 5,471 191 33 2,039 3,207 2,853 65 Other instalment loans................................. 19,745 19,706 13,105 1,129 127 3,977 7,872 6,641 66 27,953 27,903 19,357 1,675 778 6,393 10,511 8,596 67 All other loans...................................................... 16,965 15,661 13,335 2,678 1,207 5,967 3,482 3,630 917,808 893,594 660,461 101,716 33,405 242,951 282,389 257,347 69 Direct lease financing.............................................. 5,807 5,807 5,458 1,002 139 3,379 937 349 70 Fixed assets—Buildings, furniture, real estate 21,359 21,241 15,817 2,308 762 5,941 6,807 5,541 71 Investment in unconsolidated subsidiaries............. 2,972 2,958 2,918 1,397 245 1,185 91 54 72 Customer acceptances outstanding......................... 12,549 11,486 11,018 5,141 750 4,817 310 1,532 73 Other assets.............................................................. 36,928 35,362 31,775 13,166 1,021 13,103 4,485 5,153 1,166,146 1,129,712 861,803 164,045 41,986 319,834 335,937 304,344 For notes see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A19 1.26 Continued Member banks1 All Insured Non Liability or capital account commercialcommercial Large banks member banks banks banks1 Total All other New York City of Other 2 City Chicago large 75 Demand deposits.................................................... 382,987 377,034 292,842 68,192 11,825 104,931 107,895 90,145 1,646 1,382 1,203 564 3 276 361 443 77 Other individuals, partnerships, and corpora tions............................................................. 286,551 285,167 213,875 34,768 8,481 82,096 88,530 72,676 78 U.S. Govt........................................................... 7,322 7,311 5,415 600 173 2,085 2,557 1,907 79 States and political subdivisions....................... 19,026 18,948 12,922 702 247 3,824 8,149 6,104 80 Foreign governments, central banks, etc.......... 2,228 1,724 1,684 1,379 34 239 32 544 81 Commercial banks in United States................. 41,394 40,535 39,097 19,760 2,293 12,170 4,873 2,298 8,678 7,932 7,700 6,306 219 1,031 143 978 83 Certified and officers’ checks, etc..................... 16,141 14,034 10,946 4,112 376 3,209 3,249 5,195 337,137 326,837 238,124 35,766 13,922 85,562 102,874 99,013 85 Accumulated for personal loan payments........ 100 100 78 1 77 23 86 Mutual savings banks........................................ 334 319 310 120 84 84 21 24 87 Other individuals, partnerships, and corpora tions............................................................. 262,918 256,880 185,763 26,922 10,417 64,962 83,462 77,155 88 U.S. Govt........................................................... 820 820 681 37 30 390 225 139 89 States and political subdivisions....................... 52,396 52,123 35,922 1,679 1,038 15,307 17,898 16,474 90 Foreign governments, central banks, etc.......... 11,088 8,189 7,927 4,666 1,456 1,756 49 3,161 91 Commercial banks in United States................. 7,419 6,789 6,002 1,580 822 2,830 770 1,417 92 Banks in foreign countries................................. 2,061 1,617 1,442 762 76 232 371 620 93 Savings deposits...................................................... 219,386 218,793 152,645 11,070 2,945 55,225 83,405 66,741 94 Individuals and nonprofit organizations.......... 203,790 203,232 141,948 10,276 2,768 51,442 77,463 61,842 95 Corporations and other profit organizations.. 10,723 10,705 7,540 542 168 3,128 3,703 3,183 96 U.S. Government............................................... 58 58 48 4 18 27 10 97 States and political subdivisions....................... 4,786 4,770 3,083 234 9 629 2,211 1,703 98 Allother............................................................. 29 29 26 14 * 8 3 4 99 Total deposits......................................................... 939,509 922,665 683,611 115,027 28,692 245,718 294,174 255,898 100 Federal funds purchased and securities sold under agreements to repurchase............................... 86,171 82,772 78,691 21,219 8,385 38,034 11,054 7,480 101 Commercial banks............................................. 46,893 44,242 42,640 8,837 6,137 22,569 5,096 4,253 7,772 7,759 7,384 1,364 1,029 4,035 956 388 103 Others................................................................. 31,507 30,772 28,667 11,018 1,218 11,430 5,002 2,839 104 Other liabilities for borrowed money3................. 10,070 6,560 6,257 2,597 111 2,646 902 3,813 105 Mortgage indebtedness 3........................................ 1,021 1,014 747 203 16 317 212 274 106 Bank acceptances outstanding.............................. 13,146 12,078 11,610 5,716 754 4,828 312 1,537 30,452 19,827 17,231 5,919 1,148 6,481 3,684 13,220 108 Total liabilities....................................................... 1,080,370 1,044,917 798,148 150,681 39,105 298,024 310,337 282,222 109 Subordinated notes and debentures..................... 5,774 5,711 4,475 1,110 81 2,013 1,271 1,299 110 Equity capital......................................................... 80,002 79,084 59,179 12,254 2,800 19,797 24,328 20,823 111 Preferred stock • . . ............................. 85 79 32 2 30 53 112 Common stock................................................... 17,276 17,177 12,503 2,645 570 3,895 5,394 4,773 113 Surplus................................................................ 31,495 30,994 22,570 4,517 1,404 7,951 8,697 8,925 114 Undivided profits............................................... 29,327 29,084 22,840 4,959 773 7,569 9,539 6,487 115 Other capital reserves........................................ 1,820 1,750 1,234 132 53 380 669 586 116 Total liabilities and equity capital................................ 1,166,146 1,129,712 861,802 164,045 41,986 319,834 335,937 304,344 117 D M e e m m a o n i d t e d m ep s o : sits adjusted4................................... 267,839 262,907 184,465 24,709 5,973 64,070 89,712 83,374 Average for last 15 or 30 days: 118 Cash and due from bank................................... 146,725 139,805 119,239 33,743 5,401 44,467 35,627 27,486 119 Federal funds sold and securities purchased under agreements to resell......................... 55,860 50,507 39,035 4,308 1,666 18,803 14,259 16,825 120 Total loans.......................................................... 620,399 601,938 438,957 75,204 23,171 163,726 176,856 181,442 121 Time deposits of $100,000 or more.................. 161,461 153,976 126,665 30,220 11,333 52,845 32,268 34,796 122 Total deposits..................................................... 901,295 884,377 651,801 104,506 26,934 234,120 286,242 249,494 123 Federal funds purchased and securities sold * under agreements to repurchase............... 93,688 89,925 85,687 23,974 9,971 39,994 11,748 8,001 124 Otjier liabilities for borrowed money............... 10,736 6,930 6,572 2,885 150 2,889 648 4,165 125 Standby letters of credit outstanding................... 16,889 16,008 15,100 8,759 1,130 4,165 1,046 1,788 126 Tim6 deposits of $100,000 or more...................... 165,793 158,867 130,705 30,344 11,606 55,555 33,200 35,088 127 Certificates of deposit........................................ 139,596 134,850 110,418 25,951 9,885 46,062 28,520 29,177 128 Other time deposits............................................ 26,198 24,016 20,287 4,393 1,721 9,493 4,680 5,911 14,707 14,397 5,668 12 9 153 5,494 9,039 1 Member hanks exclude and nonmember banks include 11 noninsured commercial interbank and U.S. Govt., less cash items reported as in trust companies that are members of the Federal Reserve System, and process of collection. member banks exclude 2 national banks outside the continental United States. Note.—Data include consolidated reports, including figures for all 2 Data for one large national bank have been estimated. bank-premises subsidiaries and other significant majority-owned do 3 Note for Dec. 31, 1977, reporting only, national banks reported mestic subsidiaries. Securities are reported on a gross basis before deduc capitalized lease balances under “Other liabilities for borrowed money” tions of valuation reserves. Holdings by type of security will be reported while State member and nonmember banks reported these balances as soon as they become available. under “Mortgage indebtedness.” Back data in lesser detail were shown in previous Bulletins. Details 4 Demand deposits adjusted are demand deposits other than domestic 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 □ June 1978 1.27 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1978 Account Apr. 5 Apr. 12 Apr. 19 Apr. 26 May 3* May 10*> May 17» May 24p May 31^ 1 Total loans and investments.................................. 459,338 455,098 460,972 453,174 456,314 456,152 459,618 456,724 467,187 Loans: 2 Federal funds sold1............................................ 30,143 25,933 28,076 23,590 24,822 24,861 27,310 25,122 30,475 3 To commercial banks................................... 21,292 19,363 21,556 17,829 19,265 19,062 19,670 18,821 24,053 To brokers and dealers involving— 4 U.S. Treasury securities........................... 4,944 3,703 3,856 3,017 2,717 2,965 4,575 3,534 3,390 5 Other securities.......................................... 691 647 662 658 607 547 585 603 496 6 To others....................................................... 3,216 2,220 2,002 2,086 2,233 2,287 2,480 2,164 2,536 7 Other, gross....................................................... 326,445 325,344 327,749 326,523 328,888 328,735 331,396 331,077 335,479 8 Commercial and industrial........................... 129,564 130,027 130,731 130,611 131,654 132,147 132,339 132,431 134,546 9 Agricultural................................................... 4,740 4,746 4,777 4,820 4,856 4,906 4,944 4,994 5,005 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities........................ 2,363 1,558 2,000 1,354 1,060 1,038 1,769 1,338 1,257 11 Other securities...................................... 9,176 8,905 9,446 8,499 8,701 7,980 8,422 8,324 8,217 To others: 12 U.S. Treasury securities........................ 101 101 100 101 101 103 101 99 105 13 Other securities...................................... 2,584 2,583 2,597 2,613 2,619 2,633 2,618 2,646 2,695 To nonbank financial institutions: 14 Personal and sales finance cos., etc......... 7,685 7,566 7,524 7,606 7,897 7,726 7,993 7,599 7,935 15 Other.......................................................... 15,282 15,156 15,055 15,016 15,034 15,083 15,126 14,899 15,086 16 Real estate..................................................... 76,937 77,239 77,562 77,600 77,946 78,241 78,647 78,940 79,106 To commercial banks: 17 Domestic.................................................... 2,098 1,969 1,956 2,088 2,194 1,961 2,015 2,245 2,402 18 Foreign...................................................... 6,244 5,998 5,717 5,614 5,611 5,705 5,791 5,816 6,322 19 Consumer instalment.................................... 47,382 47,558 47,845 48,166 48,327 48,395 48,576 48,889 49,184 20 Foreign govts., official institutions, etc........ 1,686 1,630 1,594 1,639 1,541 1,562 1,558 1,538 1,565 21 All other loans.............................................. 20,603 20,308 20,845 20,796 21,347 21,255 21,497 21,319 22,054 22 Less: Loan loss reserve and unearned income on loans.......................................... 9,587 9,676 9,746 9,764 9,813 9,893 9,971 10,054 10,038 23 Other loans, net................................................. 316,858 315,668 318,003 316,759 319,075 318,842 321,425 321,023 325,441 Investments: 24 U.S. Treasury securities.................................... 46,405 46,698 46,071 44,510 44,335 44,265 43,342 43,113 43,432 25 Bills................................................................ 7,743 1,126 7,385 5,654 4,811 4,879 4,121 4,615 4,920 Notes and bonds, by maturity: 26 Within 1 year............................................ 8,310 8,476 8,433 8,438 8,475 8,443 7,760 7,752 7,563 27 1 to 5 years................................................ 25,746 25,556 25,505 25,615 26,297 26,163 25,929 25,669 25,943 28 After 5 years.............................................. 4,606 4,940 4,748 4,803 4,752 4,780 4,926 5,077 5,006 65,932 66,799 68,822 68,315 68,082 68,184 67,541 67,466 67,839 Obligations of States and political subdivisions: 30 Tax warrants, short-term notes, and bills..................................................... 6,533 6,818 8,401 8,123 1,949 1,813 7,233 7,110 7,023 31 All other..................................................... 43,424 43,773 44,325 44,383 44,313 44,548 44,441 44,477 44,604 Other bonds, corporate stocks, and securities: 32 Certificates of participation2.................... 2,738 2,739 2,815 2,802 2,864 2,873 2,864 2,873 2,888 33 All other, including corporate stocks---- 13,237 13,409 13,281 13,007 12,956 12,890 13,003 13,006 13,324 34 Cash items in process of collection..................... 46,461 42,153 42,055 41,602 45,419 41,634 44,172 39,931 54,966 35 Reserves with F.R. Banks.................................... 18,499 19,737 20,459 20,223 23,809 22,398 19,513 22,301 22,825 36 Currency and coin................................................ 5,659 6,285 6,314 6,456 5,830 6,174 6,235 6,517 6,530 37 Balances with domestic banks............................. 15,290 13,204 14,043 13,532 14,011 14,546 13,916 13,759 17,607 38 Investments in subsidiaries not consolidated.... 3,109 3,142 3,132 3,173 3,187 3,173 3,182 3,160 3,194 39 Other assets........................................................... 66,497 66,617 64,248 64,049 63,995 64,212 62,486 61,994 64,547 614,853 606,236 611,223 602,209 612,565 608,289 609,122 604,386 636,856 Deposits: 41 Demand deposits................................................ 193,949 185,761 189,474 184,136 188,146 181,401 183,770 177,638 205,367 42 Individuals, partnerships, and corps............ 135,717 136,758 135,814 132,643 133,580 128,823 133,641 129,085 143,913 43 States and political subdivisions................... 5,738 5,161 5,743 6,090 6,510 5,928 5,748 5,503 6,080 44 U.S. Govt...................................................... 3,281 1,783 4,662 2,814 3,714 2,121 1,643 1,198 1,305 Domestic interbank: 45 Commercial................................................ 29,496 25,450 27,114 25,912 26,886 27,931 26,939 25,733 35,743 1,057 893 872 853 998 828 778 758 891 Foreign: 47 Governments, official institutions, etc. 1,652 1,629 1,198 1,382 1,167 1,029 993 1,137 1,640 6,568 6,391 6,537 6,874 6,568 6,905 6,628 6,905 7,783 10,440 7,090 7,534 7,568 8,723 7,836 7,400 7,319 8,012 50 Time and savings deposits3............................... 259,556 259,080 258,866 260,080 261,462 262,787 263,278 265,714 265,208 51 Savings4......................................................... 94,494 94,057 93,351 93,148 93,199 93,248 93,382 93,475 93,391 52 Time: 165,062 165,023 165,515 166,932 168,263 169,539 169,896 172,239 171,811 53 Individuals, partnerships, and corps.---- 125,898 125,884 125,747 126,747 128,299 129,148 129,735 131,652 131,698 54 States and political subdivisions............... 24,648 24,804 25,363 25,650 25,503 25,746 25,699 26,002 25,702 55 Domestic interbank.................................. 5,218 5,143 5,201 5,319 5,458 5,657 5,611 5,743 5,692 56 Foreign govts., official institutions, etc... 7,841 7,690 7,618 7,555 7,375 7,310 7,304 7,326 7,202 57 Federal funds purchased, etc.5............................ 81,651 81,389 82,974 76,564 79,294 81,445 77,710 77,425 82,339 Borrowings from: 29 68 435 1,450 2,345 691 1,024 242 660 5,812 5,783 5,673 5,952 5,914 5,698 6,170 6,255 6,144 60 Other liabilities, etc.6........................................... 28,469 28,648 28,412 28,454 29,640 30,485 31,490 31,295 31,198 61 Total equity capital and subordinated notes/debentures7......................................... 45,387 45,507 45,389 45,573 45,764 45,782 45,680 45,817 45,940 1 Includes securities purchased under agreements to resell. 5 Includes securities sold under agreements to repurchase. 2 Federal agencies only. 6 Includes minority interest in consolidated subsidiaries and deferred 3 Includes time deposits of U.S. Govt, and of foreign banks, which are tax portion of reserves for loans. not shown separately. 7 Includes reserves for securities and contingency portion of reserves 4 For amounts of these deposits by ownership categories, see Table 1.30. for loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A21 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1978 Account Apr. 5 Apri 12 Apr. 19 Apr. 26 May 3p May 10^ May 17^ May 2Ap May 31^ 1 Total loans and investments. 94,070 93,178 94,706 92,394 92,099 91,859 93,456 92,567 96,108 Loans: Federal funds sold1............................ 4,427 4,560 4,388 5,028 5,101 5,114 5,404 5,235 6,240 To commercial banks.................... 2,080 2,652 1,859 2,801 3,025 2,771 3,016 3,039 3,717 To brokers and dealers involving- U.S. treasury securities............. 1,231 1,480 2,119 1,751 1,535 1,693 1,893 1,683 1,666 Other securities........................... 4 1 1 1 1 13 12 13 13 To others........................................ 1,112 427 409 475 540 637 483 500 844 Other gross........................................................ 70,334 68,706 69,236 67,846 68,105 67,693 69,251 68,671 70,830 Commercial and industrial.......................... 34,552 34,508 34,391 33,951 34,277 34,284 34,463 34,472 35,705 Agricultural................................................... 164 156 155 157 158 171 179 191 188 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities........................ 2,200 1,388 1,729 1,189 873 875 1,521 1,205 1,141 11 Other securities...................................... A,111 4,562 4,873 4,467 4,314 4,069 4,395 4,330 4,226 To others: 12 U.S. Treasury securities........................ 25 25 25 25 26 25 25 25 25 13 Other securities...................................... 342 344 355 356 348 351 352 352 354 To nonbank financial institutions: 14 Personal and sales finance cos., etc.......... 2,513 2,387 2,415 2,501 2,748 2,612 2,787 2,528 2,691 15 Other.......................................................... 4,895 4,869 4,851 4,801 4,750 4,786 4,755 4,685 4,744 16 Real estate..................................................... 8,986 8,976 8,982 8,998 9,008 9,017 9,025 9,066 9,014 To commercial banks: 17 Domestic.................................................... 669 571 589 637 738 638 635 749 872 18 Foreign...................................................... 2,765 2,645 2,461 2,456 2,385 2,442 2,563 2,503 2,848 19 Consumer instalment.................................... 4,345 4,355 4,394 4,409 4,418 4,434 4,457 4,475 4,485 20 Foreign govts, official institutions, etc......... 323 289 223 294 217 239 230 244 249 21 All other loans.............................................. 3,778 3,631 3,793 3,605 3,845 3,750 3,864 3,846 4,288 22 Less : Loan loss reserve and unearned income on loans................................................ 1,645 1,685 1,686 1,686 1,697 1,712 1,728 1,762 1,754 23 Other loans, net................................................. 68,689 67,021 67,550 66,160 66,408 65,981 67,523 66,909 69,076 Investments : U.S. Treasury securities.................................... 11,106 11,481 11,240 10,178 9,596 9,742 9,572 9,621 9,856 Bills................................................................ 2,251 2,497 2,522 1,682 1,156 1,512 1,280 1,416 1,592 Notes and bonds, by maturity: Within 1 year............................................ 1,199 1,239 1,206 1,178 1,188 1,241 1,158 1,116 1,089 1 to 5 years................................................ 6,569 6,468 6,446 6,350 6,403 6,171 6,166 5,912 6,024 After 5 years.............................................. 1,087 1,277 1,066 968 849 818 968 1,177 1,151 Other securities.................................................. 9,848 10,116 11,528 11,028 10,994 11,022 10,957 10,802 10,936 Obligations of States and political subdivisions: Tax warrants, short-term notes, and bills. 745 940 2,238 1,967 1,840 1,779 1,604 1,513 1,508 All other.................................................... 6,996 7,07 4 7,271 7,208 7,254 7,233 7,250 7,123 7,173 Other bonds, corporate stocks, and securities: 32 Certificates of participation 2.................... 425 425 449 452 468 468 488 451 451 33 All other, including corporate stocks---- 1,682 1,677 1,570 1,401 1,432 1,542 1,615 1,715 1,804 34 Cash items in process of collection................... 16,670 13,100 13,032 14,144 14,286 14,902 13,877 12,892 18,791 35 Reserves with F.R. Banks.................................. 4,154 5,023 5,454 3,755 6,524 5,345 4,639 5,959 8,025 36 Currency and coin.............................................. 955 972 960 952 898 929 916 930 950 37 Balances with domestic banks.......................... 8,037 6,413 6,894 6,719 6,793 7,598 7,179 6,785 9,008 38 Investments in subsidiaries not consolidated... 1,591 1,602 1,613 1,619 1,625 1,628 1,635 1,627 1,641 39 Other assets......................................................... 27,228 26,841 25,766 25,198 25,342 25,243 23,783 23,991 25,803 40 Total assets/total liabilities. 152,705 147,129 148,425 144,781 147,567 147,504 145,485 144,751 160,326 Deposits: Demand deposits.............................................. 55,996 50,091 50,971 51,109 52,048 51,393 49,882 49,066 63,243 Individuals, partnerships, and corps.......... 27,645 27,610 26,662 27,403 21,Ail 26,024 26,960 26,231 31,909 States and political subdivisions................ 442 451 478 518 552 428 524 564 533 U.S. Govt...................................................... 656 342 784 581 667 380 142 132 146 Domestic interbank: Commercial............................................. 14,084 11,809 13,081 12,313 12,610 14,150 12,618 12,190 19,130 Mutual savings........................................ 586 473 445 446 517 426 396 389 483 Foreign: Governments, official institutions, etc... 1,401 1,416 999 1,151 925 830 779 917 1,407 Commercial banks.................................. 5,040 4,887 5,038 5,230 4,875 5,262 5,085 5,206 5,963 Certified and officers’ checks..................... 6,142 3,103 3,484 3,467 4,490 3,893 3,378 3,437 3,672 Time and savings deposits3............................. 45,289 45.416 45,641 45,702 46,190 46,267 46,213 46,831 46,566 Savings4....................................................... 10,012 10,000 9,947 9,934 9,965 9,943 9,990 9,975 9,908 Time............................................................. 35,277 35.416 35,694 35,768 36,225 36,324 36,223 36,856 36,658 Individuals, partnerships and corps....... 26,859 26,949 27,230 27,338 27,789 27,820 27,790 28,215 28,083 States and political subdivisions............ 1,690 1,672 1,724 1,744 1,765 1,791 1,880 1,880 1,871 Domestic interbank................................. 1,444 1,496 1,543 1,572 1,734 1,804 1,799 2,362 1,869 Foreign govts., official institutions, etc.. 4,600 4,583 4,392 4,295 4,130 4,100 4,067 4,129 4,125 57 Federal funds purchased, etc. 5........................... 23,335 23,472 23,780 19,485 19,842 20,854 19,463 19,312 21,264 Borrowings from: 58 F.R. Banks........................................................ 410 695 262 59 Others................................................................ 2,893 2,943 2,910 2,836 2,918 2,761 2,928 2,946 2,823 60 Other liabilities, etc. 6........................................... 12,262 12,248 12,179 12,284 12,870 13,203 13,702 13,562 13,355 61 Total equity capital and subordinated notes/ debentures7.................................................... 12,930 12,959 12,944 12,955 13,004 13,026 13,035 13,034 13,075 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. # _ i t 1 7 Includes reserves for securities and contingency portion of reserves 4 For amounts of these deposits by ownership categories, see Table 1.30. for loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Financial Statistics □ June 1978 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS OUTSIDE NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1978 Account Apr. 5 Apr. 12 Apr. 19 Apr. 26 May 3* May 10* May 17* May 24* May 31* 1 Total loans and investments.................................. 365,268 361,920 366,266 360,780 364,215 364,293 366,162 364,157 371,079 Loans: 2 Federal funds sold1............................................ 25,716 21,373 23,688 18,562 19,721 19,747 21,906 19,887 24,235 3 To commercial banks................................... 19,212 16,711 19,697 15,028 16,240 16,291 16,654 15,782 20,336 To brokers and dealers involving— 4 U.S. treasury securities............................. 3,713 2,223 1,737 1,266 1,182 1,272 2,682 1,851 1,724 5 Other securities.......................................... 687 646 661 657 606 534 573 590 483 6 To others....................................................... 2,104 1,793 1,593 1,611 1,693 1,650 1,997 1,664 1,692 7 Other, gross....................................................... 256,111 256,638 258,513 258,677 260,783 261,042 262,145 262,406 264,649 8 Commercial and industrial........................... 95,012 95,519 96,340 96,660 97,377 97,863 97,876 97,959 98,841 9 Agricultural................................................... 4,576 4,590 4,622 4,663 4,698 4,735 4,765 4,803 4,817 For purchasing or carrying securities: To brokers and dealers: 10 U.S. treasury securities......................... 163 170 271 165 187 163 248 133 116 11 Other securities...................................... 4,399 4,343 4,573 4,032 4,387 3,911 4,021 3,994 3,991 To others: 12 U.S. Treasury securities........................ 76 76 75 76 75 78 76 74 80 13 Other securities...................................... 2,242 2,239 2,242 2,257 2,271 2,282 2,266 2,294 2,341 To nonbank financial institutions: 14 Personal and sales finance cos., etc.......... 5,172 5,179 5,109 5,105 5,149 5,114 5,206 5,071 5,244 15 Other.......................................................... 10,387 10,287 10,204 10,215 10,284 10,297 10,371 10,214 10,342 16 Real estate..................................................... 67,951 68,263 68,580 68,602 68,938 69,224 69,622 69,874 70,092 To commercial banks: 17 Domestic.................................................... 1,429 1,398 1,367 1,451 1,456 1,323 1,380 1,496 1,530 18 Foreign...................................................... 3,479 3,353 3,256 3,158 3,226 3,263 3,228 3,313 3,474 19 Consumer instalment.................................... 43,037 43,203 43,451 43,757 43,909 43,961 44,119 44,414 44,699 20 Foreign govts., official institutions, etc........ 1,363 1,341 1,371 1,345 1,324 1,323 1,328 1,294 1,316 21 All other loans.............................................. 16,825 16,677 17,052 17,191 17,502 17,505 17,633 17,473 17,766 22 Less: Loan reserve and unearned income on loans........................................................ 7,942 7,991 8,060 8,078 8,116 8,181 8,243 8,292 8,284 23 Other loans, net................................................. 248,169 248,647 250,453 250,599 252,667 252,861 253,902 254,114 256,365 Investments: 24 U.S. Treasury securities.................................... 35,299 35,217 34,831 34,332 34,739 34,523 33,770 33,492 33,576 25 Bills................................................................ 5,492 5,229 4,863 3,972 3,655 3,367 3,447 3,199 3,328 Notes and bonds, by maturity: 26 Within 1 year............................................ 7,111 7,237 7,227 7,260 7,287 7,202 6,602 6,636 6,474 27 1 to 5 years................................................ 19,177 19,088 19,059 19,265 19,894 19,992 19,763 19,757 19,919 28 After 5 years.............................................. 3,519 3,663 3,682 3,835 3,903 3,962 3,958 3,900 3,855 29 Other securities.................................................. 56,084 56,683 57,294 57,287 57,088 57,162 56,584 56,664 56,903 Obligations of States and political sub divisions : 30 Tax warrants, short-term notes, and bills. 5,788 5,938 6,163 6,156 6,109 6,094 5,629 5,591 5,515 31 Allother.................................................... 36,428 36,699 37,054 37,175 37,059 37,315 37,191 37,354 37,431 Other bonds, corporate stocks, and securities: 32 Certificates of participation2.................... 2,313 2,314 2,366 2,350 2,396 2,405 2,376 2,422 2,437 33 All other, including corporate stocks.... 11,555 11,732 11,711 11,606 11,524 11,348 11,388 11,291 11,520 34 Cash items in process of collection..................... 29,791 29,053 29,023 27,458 31,133 26,732 30,295 27,039 36,175 14,345 14,714 15,005 16,468 17,285 17,053 14,874 16,342 14,800 4,704 5,313 5,354 5,504 4,932 5,245 5,319 5,587 5,580 37 Balances with domestic banks............................. 7,253 6,791 7,149 6,813 7,218 6,948 6,737 6,974 8,599 38 Investments in subsidiaries not consolidated.... 1,518 1,540 1,519 1,554 1,562 1,545 1,547 1,533 1,553 39,269 39,776 38,482 38,851 38,653 38,969 38,703 38,003 38,744 462,148 459,107 462,798 457,428 464,998 460,785 463,637 459,635 476,530 Deposits: 41 Demand deposits................................................ 137,953 135,670 138,503 133,027 136,098 130,008 133,888 128,572 142,124 42 Individuals, partnerships, and corps............ 108,072 109,148 109,152 105,240 106,168 102,799 106,681 102,854 112,004 43 States and political subdivisions.................. 5,296 5,316 5,265 5,572 5,958 5,500 5,224 4,939 5,547 44 U.S. Govt...................................................... 2,625 1,441 3,878 2,233 3,047 1,741 1,501 1,066 1,159 Domestic interbank: 45 Commercial............................................... 15,412 13,641 14,033 13,599 14,276 13,781 14,321 13,543 16,613 471 420 427 407 481 402 382 369 408 Foreign: 47 Governments, official institutions, etc.... 251 213 199 231 242 199 214 220 233 48 Commercial banks.................................... 1,528 1,504 1,499 1,644 1,693 1,643 1,543 1,699 1,820 49 Certified and officers’ checks....................... 4,298 3,987 4,050 4,101 4,233 3,943 4,022 3,882 4,340 50 Time and savings deposits .......... 214,267 213,664 213,225 214,378 215,272 216,520 217,065 218,883 218,642 84,482 84,057 83,404 83,214 83,234 83,305 83,392 83,500 83,489 52 Time ....................... 129,785 129,607 129,821 131,164 132,038 133,215 133,673 135,383 135,153 53 Individuals, partnerships, and corps........ 99,039 98,935 98,517 99,409 100,510 101,328 101,945 103,437 103,615 54 States and political subdivisions.............. 22,958 23,132 23,639 23,906 23,738 23,955 23,819 24,122 23,831 5 5 5 6 D Fo o r m ei e g s n ti c g o i v n t t s e . r , b o a f n fi k ci . a .. l . . i .. n .. s . t . i .. t . u .. t . i . o .. n .. s .. , . . e .. t .. c .. . . . . . 3 3, , 2 7 4 7 1 4 3 3, ,6 10 47 7 3 3 , ,2 65 2 8 6 3 3 , , 7 2 4 6 7 0 3 3, , 2 7 4 2 5 4 3 3 , , 8 2 5 1 3 0 3 3 , , 8 23 1 7 2 3 3 , , 3 1 8 9 1 7 3 3 , , 0 8 7 2 7 3 58,316 57,917 59,194 57,079 59,452 60,591 58,247 58,113 61,075 Borrowings from: 29 68 435 1,040 1,650 691 762 242 660 59 Others................................................................ 2,919 2,840 2,763 3,116 2,996 2,937 3,242 3,309 3,321 16,207 16,400 16,233 16,170 16,770 17,282 17,788 17,733 17,843 61 Total equity capital and subordinated 32,457 32,54832,445 32,618 32,760 32,756 32,645 32,783 32,865 1 Includes securities purchased under agreements to resell. 5 Includes securities sold under agreements to repurchase. 2 Federal agencies only. 6 Includes minority interest in consolidated subsidiaries and deferred 3 Includes time deposits of U.S. Govt, and of foreign banks, which tax portion of reserves for loans. are not shown separately. 7 Includes reserves for securities and contingency portion of reserves 4 For amounts of these deposits by ownership categories, see Table 1.30. for loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A23 1.30 LARGE WEEKLY REPORTING COMMERCIAL BANKS Balance Sheet Memoranda Millions of dollars, Wednesday figures 1978 Account Apr. 5 Apri 12 Apr. 19 Apr. 26 May 3* May 10? May 17* May 24* May 31* Total loans (gross) and investments adjusted1 1 Large Banks.................................................... 445,535 443,442 447,206 443,021 444,668 445,022 447,904 445,712 450,770 2 New York City banks................................. 92,966 91,640 93,944 90,642 90,033 90,162 91,533 90,541 93,273 3 Banks outside New York City................... 352,569 351,802 353,262 352,379 354,635 354,860 356,371 355,171 357,497 Total loans (gross), adjusted 4 Large banks..................................................... 333,198 329,945 332,313 330,196 332,251 332,573 337,021 335,133 339,499 5 New York City banks................................. 72,012 70,043 71,176 69,436 69,443 69,398 71,004 70,118 72,481 6 Banks outside New York City.................... 261,186 259,902 261,137 260,760 262,808 263,175 266,017 265,015 267,018 Demand deposits, adjusted2 7 Large Banks.................................................... 114,711 116,375 115,643 113,808 112,127 109,715 111,016 110,776 113,353 8 New York City banks................................. 24,586 24,840 24,074 24,071 24,485 21,961 23,245 23,852 25.176 9 Banks outside New York City................... 90,125 91,535 91,569 89,737 87,642 87,754 87,771 86,924 88.177 Large negotiable time CD’s included in time and savings deposits3 Total: 10 Large banks......................................................... 80,977 81,059 80,756 81,864 82,990 84,003 84,498 86,476 86,007 11 New York City............................................ 24,504 24,633 24,822 24,896 25,229 25,358 .25,313 26,007 25,672 12 Banks outside New York City................... 56,473 56,426 55,934 56,968 57,761 58,645 59,185 60,469 60,335 Issued to IPC’s: 13 Large banks..................................................... 55,884 56,180 55,836 56,738 58,034 58,702 59,066 60,795 60,646 14 New York City Banks................................ 17,444 17,576 17,855 17,992 18,292 18,372 18,263 18,723 18,457 15 Banks outside New York City................... 38,440 38,604 37,981 38,746 39,742 40,330 40,803 42,072 42,189 Issued to others: 16 Large banks....................................................... 25,093 24,879 24,920 25,126 24,956 25,301 25,432 25,681 25,361 17 New York City banks.................................. 7,060 7,057 6,967 6,904 6,937 6,986 7,050 7,284 7,215 18 Banks outside New York City................... 18,033 17,822 17,953 18,222 18,019 18,315 18,382 18,397 18,146 All other large time deposits4 Total: 19 Large banks......................................................... 31,290 31,497 32,050 32,329 32,544 32,822 32,652 33,044 32,920 20 New York City banks.................................. 5,828 5,906 5,970 5,977 6,102 6,171 6,141 6,176 6,229 21 Banks outside New York City..................... 25,462 25,591 26,080 26,352 26,442 26,651 26,511 26,868 26,691 Issued to IPC’s: 22 Large banks...................................................... 17,979 18,019 17,983 18,072 18,329 18,505 18,696 18,893 18,936 23 New York City banks.................................. 4,625 4,648 4,642 A,621 4,757 4,807 4,910 4,965 5,013 24 Banks outside New York City..................... 13,354 13,371 13,341 13,445 13,572 13,698 13,786 13,928 13,923 Issued to others: 25 Large banks...................................................... 13,311 13,478 14,067 14,257 14,215 14,317 13,956 14,151 13,984 26 New York City banks.................................. 1,203 1,258 1,328 1,350 1,345 1,364 1,231 1,211 1,216 27 Banks outside New York City..................... 12,108 12,220 12,739 12,907 12,870 12,953 12,725 12,940 12,768 Savings deposits, by ownership category Individuals and nonprofit organizations: 28 Large banks...................................................... 88,087 87,707 86,947 86,755 86,836 86,881 86,970 87,045 86,965 29 New York City banks................................. 9,316 9,300 9,214 9,193 9,202 9,194 9,199 9,194 9,171 30 Banks outside New York City..................... 78,771 78,407 77,733 77,562 77,634 77,687 77,771 77,851 77,794 Partnerships and corporations for profit:5 31 Large banks...................................................... 4,976 4,942 4,900 4,926 4,909 4,962 4,967 5,036 5,113 32 New York City banks................................. 485 478 470 473 473 476 480 485 486 33 Banks outside New York City................... 4,491 4,464 4,430 4,453 4,436 4,486 4,487 4,551 A,621 Domestic governmental units: 3 3 5 4 La N rg e e w b Y an o k r s k . .. C .. i . t .. y .. . b .. a .. n .. k .. s .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,4 2 0 0 5 0 1,3 2 7 0 5 5 1,4 2 7 5 7 2 1,4 2 3 5 8 4 1,4 2 1 6 8 9 1,3 2 7 6 9 0 1,4 2 1 9 9 5 1,3 2 6 81 8 1,3 2 0 4 1 4 36 Banks outside New York City................... 1,205 1,170 1,225 1,184 1,149 1,119 1,124 1,087 1,057 All other:6 3 3 7 8 La N rg e e w b Y an o k r s k . .. C .. i . t .. y .. . b .. a .. n .. k ... s . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1 6 1 3 1 3 7 2 11 7 2 1 9 4 3 21 6 2 1 6 3 2 1 6 6 2 1 6 5 1 1 8 39 Banks outside New Yotk City................... 15 16 16 15 15 13 10 11 11 Gross liabilities of banks to their foreign branches 4 4 1 0 La N rg e e w b Y an o k r s k . .. C .. i . t .. y .. . b .. a .. n .. k ... s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2, , 1 1 9 4 5 5 4 2, , 2 2 5 0 3 2 4 2, , 4 4 3 4 5 4 2 4, ,2 32 9 1 0 2 4 , , 5 9 3 8 5 0 2 4 , , 2 3 6 2 5 4 2 4 , , 4 6 3 1 8 8 2 4 , , 1 2 5 0 8 0 4 2, , 7 8 8 1 5 9 42 Banks outside New York City................... 1,950 1,949 2,009 2,031 2,445 2,059 2,180 2,042 2,034 Loans sold outright to selected institutions by all large banks7 43 Commercial and industrials........................... 2,163 2,214 2,219 2,254 2,273 2,193 2,176 2,191 2,251 44 Real estates...................................................... 237 245 242 246 246 246 249 251 342 45 All others........................................................ 2,040 1,996 1,991 1,991 1,944 1,951 1,955 1,928 1,926 1 Exclusive of loans and Federal funds transactions with domestic 5 Other than commercial banks. commercial banks. . . . • , 6 Domestic and foreign commercial banks, and official international 2 All demand deposits except U.S. Govt, and domestic commercial organizations. banks, less cash items in process of collection. .cinftnnft/w 7 To bank’s own foreign branches, nonconsolidated nonbank af 3 Certificates of deposit (CD s) issued m denominations ol $100,000 or filiates of the bank, the bank’s holding company (if not a bank), and nonconsolidated nonbank subsidiaries of the holding company. m VAll other time deposits issued in denominations of $100,000 or more 8 Data revised beginning July 7, 1977, due to reclassifications at one not included in large negotiable (CD’s). large bank. 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A24 Domestic Financial Statistics □ June 1978 1.31 LARGE WEEKLY REPORTING COMMERCIAL BANKS Commercial and Industrial Loans Millions of dollars Outstanding Net change during— Industry classification 1978 1977 1978 1978 May 3 May 10* May 17* May 24* May 31* Q4 Ql Mar. Apr. May* Total loans classified2 1 Total.................................................... 106,897 107,393 107,537 107,554 109,464 4,395 2,768 2,481 1,053 3,643 Durable goods manufacturing: 2,859 2,858 2,859 2,876 2,894 256 4 68 43 97 3 Machinery....................................... 5,367 5,414 5,446 5,406 5,454 -4 667 276 39 181 4 Transportation equipment............. 2,679 2,687 2,685 2,674 2,714 -89 426 168 -89 80 5 Other fabricated metal products... 2,493 2,521 2,523 2,497 2,475 -26 323 193 182 21 6 Other durable goods....................... 3,739 3,875 3,799 3,778 3,794 -231 32 145 82 179 Nondurable goods manufacturing: 7 Food, liquor, and tobacco............. 3,821 3,795 3,898 3,871 4,125 324 73 76 12 260 8 Textiles, apparel, and leather........ 3,778 3,854 3,885 3,876 3,913 -663 215 231 120 221 9 Petroleum refining........................... 2,487 2,472 2,476 2,540 2,588 235 -470 -181 89 21 3,618 3,599 3,476 3,398 3,477 -37 571 270 58 4 11 Other nondurable goods................ 2,191 2,205 2,213 2,236 2,249 74 -36 -33 -21 64 12 Mining, including crude petroleum 9,899 9,903 10,010 10,089 10,157 537 757 395 335 296 Trade: 13 Commodity dealers......................... 2,252 2,231 2,179 2,107 2,521 502 425 78 -71 341 14 Other wholesale.............................. 8,801 8,775 8,749 8,776 8,794 439 1,187 487 208 100 15 Retail............................................... 7,983 8,050 8,096 8,222 8,214 -235 661 297 215 373 5,287 5,323 5,314 5,325 5,326 17 617 326 -349 73 17 Communication.................................. 1,665 1,628 1,613 1,602 1,677 115 33 -96 149 112 18 Other public utilities........................... 5,119 5,108 5,040 5,098 4,992 290 -359 -375 64 -43 19 Construction....................................... 4,833 4,878 4,977 5,021 5,377 -31 161 170 142 601 20 Services................................................ 12,776 12,894 12,873 13,017 13,085 286 1,005 263 356 425 21 All other domestic loans................... 7,845 7,931 7,965 7,694 7,812 419 -891 -174 368 -6 22 Bankers acceptances........................... 2,810 2,781 2,863 2,881 3,119 2,455 -2,531 -114 -783 212 23 Foreign commercial and industrial 4,595 4,611 4,598 4,570 4,707 -238 -102 11 -96 31 Memo Items: 24 Commercial paper included in total 97 -75 -27 -5 -7 -27 25 Total commercial and industrial loans of all large weekly re porting banks.............................. 131,654 132,147 132,339 132,431 134,546 5,622 2,961 3,195 1,807 3,935 1978 1977 1978 1978 Jan. 25 Feb. 22 Mar. 29 Apr. 26 May 31* Q4 Ql Mar. April May* “Term” loans classified3 26 Total.................................................... 48,215 48,818 49,369 50,156 51,205 352 2,743 551 787 1,049 Durable goods manufacturing: 1,559 1,564 1,579 1,671 1,736 120 33 15 92 65 28 Machinery...................................... 2,403 2,473 2,529 2,542 2,622 -51 243 56 13 80 1,432 1,466 1,489 1,449 1,460 -112 172 23 -40 11 30 Other fabricated metal products... 882 877 902 963 968 59 68 25 61 5 31 Other durable goods....................... 1,630 1,602 1,572 1,603 1,625 -76 -126 -30 31 22 Nondurable goods manufacturing: 32 Food, liquor, and tobacco............. 1,436 1,492 1,522 1,649 1,676 98 24 30 127 27 33 Textiles, apparel, and leather........ 973 983 1,038 1,083 1,097 -96 -20 55 45 14 34 Petroleum refining.......................... 2,136 2,000 1,873 1,850 1,962 271 -395 -127 -23 112 35 Chemicals and rubber..................... 1,926 2,017 2,116 2,147 2,229 -18 389 99 31 82 36 Other nondurable goods................ 1,198 1,182 1,169 1,093 1,093 53 22 -13 —76 37 Mining, including crude petroleum and natural gas........................... 6,569 6,811 7,084 7,443 7,604 217 583 273 359 161 Trade: 38 Commodity dealers......................... 294 262 254 244 254 42 18 -8 -10 10 39 Other wholesale.............................. 1,874 1,928 1,993 2,080 2,141 125 328 65 87 61 40 Retail............................................... 2,476 2,539 2,554 2,703 2,855 48 106 15 149 152 41 Transportation.................................... 3,726 3,747 3,885 3,627 3,702 -141 401 138 -258 75 901 908 924 965 980 54 84 16 41 15 3,802 3,855 3,822 3,723 3,770 -36 556 -33 -99 47 44 Construction....................................... 2,002 1,973 2,066 2,085 2,101 -21 76 93 19 16 45 Services................................................ 5,746 5,807 5,880 6,040 6,300 85 514 73 160 260 46 All other domestic loans.................... 2,627 2,750 2,457 2,576 2,526 184 -269 -293 119 -50 47 Foreign commercial and industrial loans............................................ 2,623 2,582 2,661 2,620 2,504 -453 -64 79 -41 -116 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 1978 1973 1974 1975 Dec. Dec. Dec. Sept. Dec. Mar. June Sept. Dec. Mar. 1 All holders, IPC..................................................... 220.1 225.0 236.9 236.1 250.1 242.3 253.8 252.7 274.4 262.5 2 Financial business.................................................. 19.1 19.0 20.1 19.7 22.3 21.6 25.9 23.7 25.0 24.5 116.2 118.8 125.1 122.6 130.2 125.1 129.2 128.5 142.9 131.5 70.1 73.3 78.0 80.0 82.6 81.6 84.1 86.2 91.0 91.8 2.4 2.3 2.4 2.3 2.7 2.4 2.5 2.5 2.5 2.4 12.4 11.7 11.3 11.5 12.4 11.6 12.2 11.8 12.9 12.3 At weekly reporting banks 1977 1978 1974 1975 1976 Dec. Dec. Dec. Oct. Nov. Dec. Jan. Feb. Mar. Apr. 7 All holders, IPC..................................................... 119.7 124.4 128.5 131.4 133.0 139.1 137.1 132.5 131.9 135.6 14.8 15.6 17.5 18.0 17.9 18.5 18.3 18.1 18.2 17.9 66.9 69.9 69.7 72.1 72.2 76.3 73.8 70.7 68.9 70.9 29.0 29.9 31.7 32.4 33.4 34.6 35.2 34.4 35.4 37.6 2.2 2.3 2.6 2.3 2.5 2.4 2.4 2.4 2.3 2.2 6.8 6.6 7.1 6.7 7.0 7.4 7.4 6.9 7.0 7.0 Note.—Figures include cash items in process of collection. Estimates of banks. Types of depositors in each category are described in the June 1971 gross deposits are based on reports supplied by a 'sample of commercial Bulletin, p. 466. 1.33 COMMERCIAL PAPER AND BANKERS ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1977 1978 1975 1976 1977 Instrument Dec. Dec. Dec. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Commercial paper (seasonally adjusted) 1All issuers................................................................ 48,459 53,025 65,112 62,724 62,753 65,112 65,488 65,477 67,354 70,183 Financial companies:1 Dealer-placed paper:2 2 Total................................................................ 6,202 7,250 8,871 8,540 8,497 8,871 9,018 8,918 8,889 9,670 3 Bank-related.................................................... 1,762 1,900 2,132 1,961 1,980 2,132 2,035 1,997 1,993 2,078 Directly-placed paper:3 4 Total................................................................ 31,374 32,500 40,399 38,803 38,954 40,399 41,586 42,137 42,781 44,220 5 Bank-related.................................................... 6,892 5,959 7,003 7,012 6,567 7,003 7,109 7,616 8,031 7,889 6 Nonfinancial companies4...................................... 10,883 13,275 15,842 15,381 15,302 15,842 14,884 14,422 15,684 16,293 Dollar acceptances (not seasonally adjusted) 7 Total........................................................................ 18,727 22,523 25,654 23,908 24,088 25,654 25,252 25,411 26,181 26,256 Held by: 8 Accepting banks.................................................. 7,333 10,442 10,434 8,673 8,952 10,434 7,785 7,513 7,375 7,091 9 Own bills......................................................... 5,899 8,769 8,915 7,248 7,702 8,915 6,772 6,583 6,375 6,117 10 Bills bought.................................................... 1,435 1,673 1,519 1,424 1,251 1,519 1,013 931 1,000 974 F.R. Banks: 11 Own account.................................................. 1,126 991 954 248 954 1 12 Foreign correspondents................................. 293 375 362 422 392 362 371 456 522 550 13 Others.................................................................. 9,975 10,715 13,904 14,813 14,495 13,904 17,096 17,442 18,283 18,614 Based on: 14 Imports into United States............................... 3,726 4,992 6,532 5,886 5,973 6,532 6,637 6,842 6,979 7,108 15 Exports from United States.............................. 4,001 4,818 5,895 5,584 5,803 5,895 5,840 5,739 6,034 6,216 16 All other.............................................................. 11,000 12,713 13,227 12,438 12,312 13,227 12,774 13,026 13,168 12,932 1 Institutions engaged primarily in activities such as, but not limited to, 3 As reported by financial companies that place their paper directly commercial, savings, and mortgage banking; sales, personal, and mortgage with investors. financing; factoring, finance leasing, and other business lending; insurance 4 Includes public utilities and firms engaged primarily in activities such underwriting; and other investment activities. as communications, construction, manufacturing, mining, wholesale and 2 Includes all financial company paper sold by dealers in the open retail trade, transportation, and services. market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Financial Statistics □ June 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—Aug. 2............. 7 1977_Aug. 22............ 1976—Oct....................... >•6.77 1977—Aug...................... 6.83 Nov...................... 6.50 Sept...................... 7.13 Oct. 4............. 6% Sept. 16............ 71/4 Dec...................... 6.35 Oct....................... 7.52 Nov...................... 7.75 Nov. 1............. 6% Oct. 7............. 7% 1977—Jan....................... 6.25 Dec....................... 7.75 Oct. 24............. m Feb...................... 6.25 Dec. 13............. 6% Mar..................... 6.25 1978—Jan....................... 7.93 1978—Jan. 10............ 8 Apr...................... 6.25 Feb....................... 8.00 1977—May 13............. 61/2 May..................... 6.41 Mar...................... 8.00 31............. 6V4 May 5........... 000 0 June..................... 6.75 Apr...................... 8.00 May 26........... July...................... 6.75 May..................... 8.27 1.35 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, Feb. 6-11, 1978 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)...................... 7,401,695 1,095,609 689,553 729,562 1,984,349 530,499 2,372,123 2 Number of loans............................................................. 200,127 154,809 20,931 11,570 11,080 859 878 3 Weighted-average maturity (months) |.......................... 3.1 3.2 3.3 2.6 3.0 2.8 3.1 4 Weighted-average interest rate (per cent per annum).. 8.95 9.65 9.44 9.26 9.03 8.78 8.34 5 Interquartile range i................................................... 8.24-9.60 8.77-10.47 8.50-10.01 8.50-10.00 8.27-9.84 8.24-9.25 8.00-8.75 Percentage of amount of loans: 6 With floating rate........................................................ 51.5 34.9 40.8 40.6 60.3 46.9 59.3 7 Made under commitment.......................................... 37.9 14.9 20.3 25.9 38.0 59.1 52.7 Long-term commercial and industrial loans 8 Amount of loans (thousands of dollars)....................... 1,311,928 361,327 420,109 69,872 460,620 9 Number of loans............................................................ 31,161 28,547 2,364 105 144 10 Weighted-average maturity (months)............................ 40.0 28.6 39.0 45.5 49.1 11 Weighted-average interest rate (per cent per annum).. 9.19 9.54 9.37 8.87 8.81 12 Interquartile range i................................................... 8.50-9.92 8.50-10.47 9.00-9.92 8.00-9.61 8.00-9.20 Percentage of amount of loans: 13 With floating rate........................................................ 42.3 15.6 30.2 72.4 69.6 14 Made under commitment........................................... 54.7 18.6 74.1 53.5 65.6 Construction and land development loans 15 Amount of loans (thousands of dollars)....................... 803,264 82,792 126,435 222,919 127,991 112,423 16 Number of loans............................................................ 20,791 13,375 3,737 2,901 637 141 17 Weighted-average maturity (months)............................ 10.6 6.5 20.5 3.2 10.6 13.8 18 Weighted-average interest rate (per cent per annum).. 9.69 9.67 9.62 9.33 9.70 10.07 19 Interquartile range *................................................... 9.00-10.34 9.20-10.34 9.20-9.92 8.36-10.00 9.17-10.29 9.27-10.78 Percentage of amount of loans: 20 With floating rate........................................................ 38.7 18.4 11.3 8.0 53.8 80.2 21 Secured by real estate................................................. 92.1 85.7 87.3 97.3 87.8 94.3 22 Made under commitment.......................................... 42.8 56.3 17.8 27.3 65.6 53.4 23 Type of construction: 1-to 4-family....................... 38.7 61.6 54.6 55.1 31.7 11.5 24 Multifamily........................... 6.4 5.8 2.1 2.2 12.0 9.6 25 Nonresidential...................... 54.9 32.6 43.3 42.7 56.3 78.9 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)....................... 796,500 162,130 168,848 135,149 83,650 117,118 129,604 27 Number of loans............................................................ 64,797 46,784 11,355 4,219 1,224 942 272 28 Weighted-average maturity (months)........................... 10.0 7.8 11.3 13.0 9.0 10.9 8.4 29 Weighted-average interest rate (per cent per annum).. 9.16 9.13 9.16 9.11 9.26 9.22 9.15 30 Interquartile range 1.................................................. 8.75-9.50 8.68-9.40 8.68-9.50 8.75-9.46 9.00-9.50 8.91-9.38 8.50-9.69 By purpose of loan: 31 Feeder livestock...................................................... 9.17 9.09 8.97 8.89 9.39 9.31 9.77 32 Other livestock........................................................ 9.07 9.07 9.37 8.73 9.53 9.12 8.92 33 Other current operating expenses.......................... 9.14 9.03 9.26 9.24 9.17 9.15 9.06 34 Farm machinery and equipment........................... 9.31 9.40 9.35 9.47 9.44 (2) (2) 35 Other........................................................................ 9.16 9.29 9.01 9.20 9.27 9.43 8.96 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 All 1.36 INTEREST RATES Money and Capital Markets Averages, per cent per annum 1978 1978, week ending— Instrument 1975 1976 1977 Feb. Mar. Apr. May May 6 May 13 May 20 May 27 June 3 Money market rates 1 Federal funds 1................... 5.82 5.05 5.54 6.78 6.79 6.89 7.36 7.27 7.32 7.34 7.43 7.36 Prime commercial paper 2 90- to 119-day. 6.26 5.24 5.54 6.76 6.75 6.82 7.06 6.94 6.99 7.11 7.15 7.28 4- to 6-month.. 6.33 5.35 5.60 6.80 6.80 6.86 7.11 6.99 7.05 7.15 7.21 7.31 4 Finance company paper, directly placed, 3- to 6-month 3.................................. 6.16 5.22 5.49 6.74 6.73 6.74 6.98 6.83 6.94 7.02 7.09 7.23 5 Prime bankers acceptances, 90-day 4. .. 6.30 5.19 5.59 6.82 6.79 6.92 7.32 7.18 7.27 7.35 7.45 7.48 Large negotiable certificates of deposit 6 3-month, secondary market 5............. 6.43 5.26 5.58 6.89 6.85 7.04 7.42 7.24 7.27 7.45 7.48 7.52 7 3-month, primary market 6............... 5.15 5.52 6.77 6.75 r6.85 7.24 7.05 7.14 7.20 7.40 7.40 8 Euro-dollar deposits, 3-month 7 . 6.97 5.57 6.05 7.28 7.27 7.38 7.82 7.63 7.73 7.84 7.86 8.03 U.S. Govt, securities Bills: 8 Market yields: 9 3-month................... 5.80 4.98 5.27 6.45 6.29 6.29 6.41 6.38 6.37 6.32 6.51 6.62 10 6-month................... 6.11 5.26 5.53 6.74 6.63 6.73 7.02 6.90 6.99 7.03 7.13 7.14 11 1-year....................... 6.30 5.52 5.71 6.86 6.82 6.96 7.28 7.16 7.25 7.32 7.38 7.37 Rates on new issue:9 12 3-month................... 5.838 4.989 5.265 6.457 6.319 6.306 6.430 6.460 6.464 6.318 6.476 6.658 13 6-month................... 6.122 5.266 5.510 6.740 6.644 6.700 7.019 6.935 6.986 7.014 7.141 7.160 Constant maturities:10 14 1-year......................... 6.76 5.88 6.09 7.34 7.31 7.45 7.82 7.68 7.78 7.86 7.93 7.92 Capital market rates Government notes and bonds U.S. Treasury Constant maturities:10 15 2-year........................... 6.45 7.57 7.58 7.74 8.01 7.92 7.99 8.01 8.09 8.11 16 3-year........................... 7.49 6.77 6.69 7.67 7.70 7.85 8.07 7.99 8.06 8.07 8.15 8.19 17 5-year........................... 7.77 7.18 6.99 7.83 7.86 7.98 8.18 8.09 8.17 8.17 8.24 8.27 18 7-year........................... 7.90 7.42 7.23 7.94 7.95 8.06 8.25 8.16 8.25 8.26 8.30 8.34 19 10-year......................... 7.99 7.61 7.42 8.03 8.04 8.15 8.35 8.28 8.35 8.35 8.39 8.41 20 20-year......................... 8.19 7.86 7.67 8.22 8.21 8.32 8.44 8.40 8.44 8.44 8.47 8.49 21 30-year......................... 8.25 8.23 8.34 8.43 8.40 8.44 8.42 8.46 8.49 Notes and bonds maturing in - 22 3 to 5 years........................... 7.55 6.94 6.85 7.76 7.76 7.90 8.10 8.02 8.09 8.10 8.16 8.19 23 Over 10 years (long-term)... 6.98 6.78 7.06 7.60 7.63 7.74 7.87 7.82 7.87 7.87 7.90 7.91 State and local: Moody’s series:12 24 Aaa........................ 6.42 5.66 5.20 5.24 5.11 5.41 5.57 5.45 5.55 5.55 5.75 5.75 25 Baa......................... 7.62 7.49 6.12 5.82 5.85 5.88 6.14 6.10 6.05 6.10 6.30 6.30 26 Bond Buyer series 13. 7.05 6.64 5.68 5.62 5.61 5.80 6.03 5.98 5.99 5.98 6.16 6.19 Corporate bonds Seasoned issues 14 All industries......... 9.57 9.01 8.43 8.78 8.80 8.88 9.02 8.95 8.99 9.02 9.07 9.12 By rating groups: Aaa.................... 8.83 8.43 8.02 8.47 8.47 8.56 8.69 8.62 8.65 8.69 8.76 8.79 Aa...................... 9.17 8.75 8.24 8.65 8.66 8.73 8.84 8.79 8.83 8.85 8.87 8.94 A........................ 9.65 9.09 8.49 8.79 8.83 8.93 9.05 9.00 9.01 9.04 9.11 9.15 Baa.................... 10.61 9.75 8.97 9.20 9.22 9.32 9.49 9.41 9.46 9.50 9.54 9.60 Aaa utility bonds:15 32 New issue..................... 9.40 8.48 8.19 8.69 8.71 8.90 8.95 8.87 8.95 9.02 33 Recently offered issues. 9.41 8.49 8.19 8.67 8.67 8.85 8.98 8.90 8.92 8.98 9.10 9.05 Dividend/price ratio 34 Preferred stocks. 8.38 7.97 7.60 7.99 8.07 8.06 8.11 7.97 8.12 8.13 8.17 8.14 35 Common stocks. 4.31 3.77 4.56 5.49 5.68 5.42 5.20 5.23 5.25 5.07 5.21 5.22 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 Rates are recorded in the week in which bills are issued. by five dealers. Previously, most representative rate quoted by those 10 Yields on the more actively traded issues adjusted to constant dealers. maturities by the U.S. Treasury, based on daily closing bid prices. 3 Averages of the most representative daily offering rates published by 11 Unweighted averages for all outstanding notes and bonds in maturity finance companies for varying maturities in this range. ranges shown, based on daily closing bid prices. “Long-term” includes 4 Beginning Aug. 15, 1974, the rate is the average of the midpoint of all bonds neither due nor callable in less than 10 years, including a num the range of daily dealer closing rates offered for domestic issues; prior ber of very low yielding “flower” bonds. data are averages of the most representative daily offering rate quoted by 12 General obligations only, based on figures for Thursday, from dealers. Moody’s Investors Service. 5 Weekly figures (week ending Wednesday) are 7-day averages of the 13 Twenty issues of mixed quality. daily midpoints as determined from the range of offering rates; monthly 14 Averages of daily figures from Moody’s Investors Service. figures are averages of total days in the month. Beginning April 5, 1978, 15 Compilation of the Board of Governors of the Federal Reserve weekly figures are simple averages of offering rates. System. 6 Posted rates, which are the annual interest rates most often quoted Issues included are long-term (20 years or more). New-issue yields are on new offerings of negotiable CD’s in denominations of $100,000 or based on quotations on date of offering; those on recently offered issues more by large New York City banks. Rates prior to 1976 not available. (included only for first 4 weeks after termination of underwriter price Weekly figures are for Wednesday dates. restrictions), on Friday close-of-business quotations. 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A28 Domestic Financial Statistics □ June 1978 1.37 STOCK MARKET Selected Statistics 1977 1978 Indicator 1975 1976 1977 Nov. Dec. Jan. Feb. Mar. Apr. May 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 51.87 51.83 49.89 49.41 49.50 51.75 54.49 2 51.88 60.44 57.84 55.62 55.55 53.45 52.80 52.77 55.48 59.14 3 30.73 39.57 41.07 39.30 39.75 39.15 38.90 38.95 41.19 44.21 4 Utility................................................................. 31.45 36.97 40.91 40.33 40.36 39.09 39.02 39.26 39.69 39.47 5 46.62 52.94 55.23 54.04 53.85 50.91 50.60 51.44 55.04 57.95 6 Standard & Poor’s Corporation (1941-43 = 10)1.. 85.17 102.01 98.18 94.28 93.82 90.28 88.98 88.82 92.71 97.41 7 American Stock Exchange (Aug. 31,1973 = 100). 83.15 101.63 116.18 117.80 124.88 121.73 123.35 126.11 133.67 142.26 Volume of trading (thousands of shares)2 8 New York Stock Exchange............................... 18,568 21,189 20,936 23,557 21,475 20,388 19,400 22,617 34,780 35,261 9 American Stock Exchange................................ 2,150 2,565 2,514 2,061 3,008 2,254 2,300 2,940 4,151 4,869 Customer financing (end-of-period balances, in millions of dollars) 10 Regulated margin credit at brokers/dealers and banks3............................................ 6,500 9,011 10,866 10,680 10,866 10,690 10,901 11,027 11,424 11 Brokers, total................................................ 5,540 8,166 9,993 9,859 9,993 9,839 10,024 10,172 10,510 12 Margin stock4.......................................... 5,390 7,960 9,740 9,610 9,740 9,590 9,780 9,920 10,260 13 Convertible bonds.................................... 147 204 250 246 250 246 242 250 248 14 Subscription issues................................... 3 2 3 3 3 3 2 2 2 15 Banks, total.................................................. 960 845 873 822 873 851 877 855 914 16 Margin stocks........................................... 909 800 827 778 827 809 838 824 882 17 Convertible bonds.................................... 36 30 30 28 30 27 25 24 25 18 Subscription issues................................... 15 15 16 16 16 15 14 7 7 19 Unregulated nonmargin stock credit at banks5 2,281 '2,283 2,568 2,604 2,568 2,565 2,544 2,544 2,560 Memo: Free credit balances at brokers6 20 ! Margin-account............................................ 475 585 640 630 640 660 635 630 715 21 Cash-account................................................ 1,525 1,855 2,060 1,845 2,060 1,925 1,875 rl,795 2,170 Margin-account debt at brokers (percentage distribution, end of period) 22 Total........................................ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 By equity class (in per cent):7 23 Under 40.............................. 24.0 12.0 18.0 17.0 19.0 25.0 25.0 21.0 15.0 24 40-49.................................... 28.8 23.0 36.0 33.0 34.0 34.0 34.0, 33.0 35.0 25 50-59.................................... 22.3 35.0 23.0 26.0 24.0 20.0 20.0 24.0 24.0 26 60-69.................................... 11.6 15.0 11.0 12.0 11.0 10.0 10.0 11.0 13.0 27 70-79.................................... 6.9 8.7 6.0 7.0 7.0 6.0 6.0 6.0 7.0 28 80 or more........................... 5.3 6.0 5.0 5.0 5.0 5.0 5.0 5.0 6.0 Special miscellaneous-account balances at brokers (end of period) 29 Total balances (millions of dollars)«... 7,290 8,776 9,910 9,710 9,910 9,880 10,150 10,190 Distribution by equity status (per cent) 30 Net credit status................................. 43.8 41.3 43.4 41.8 43.4 42.4 42.0 42.6 Debit status, equity of— 31 60 per cent or more........................ 40.8 47.8 44.9 45.5 44.9 43.6 43.0 43.7 32 Less than 60 per cent..................... 15.4 10.9 11.7 12.7 11.7 14.0 14.0 13.5 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 5%-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 on lines 23-28. 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 Account Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr.p Savings and loan associations 1 Assets......................................... 295,545 338,233 391,907 440,101 444,383 450,563 455,644 459,282 464,279 469,726 475,320 480,968 2 Mortgages............................ 249,301 278,590 323,005 361,582 366,838 371,714 376,468 381,216 384,235 387,644 392,479 397,291 3 Cash and investment securities1......................... 23,251 30,853 35,724 41,069 39,709 40,642 40,522 39,197 40,356 41,646 41,870 41,947 4 Other.................................... 22,993 28,790 33,178 37,450 37,836 38,207 38,654 38,869 39,688 40,436 40,971 41,730 5 Liabilities and net worth. 295,545 338,233 391,907 440,101 444,383 450,563 455,644 459,282 464,279 469,726 475,320 480,968 6 Savings capital..................... 242,974 285,743 335,912 371,247 377,208 379,604 381,333 386,875 389,620 391,917 399,070 399,588 7 Borrowed money.................. 24,780 20,634 19,083 r22,021 r22,912 r24,199 r25,540 r27,796 r27,899 *■28,666 29,274 31,906 8 FHLBB............................ 21,508 17,524 15,708 r16,250 r16,900 r17,539 r18,275 19,945 r20,129 r20,602 21,030 22,653 9 Other................................ 3,272 3,110 3,375 5,771 6,012 6,660 7,265 7,851 7,770 8,064 8,244 9,253 10 Loans in process.................. 3,244 5,128 6,840 9,662 9,741 9,856 9,924 9,932 9,849 9,924 10,435 10,987 11 Other.................................... 6,105 6,949 8,074 r13,058 r10,184 r12,233 r13,846 r9,498 'll,471 '13,456 10,511 12,122 12 Net worth2........................... 18,442 19,779 21,998 24,113 24,338 24,671 25,001 25,181 25,440 25,763 26,030 26,365 13 Memo: Mortgage loan com mitments outstanding3. 7,454 10,673 14,826 21,901 21,631 21,555 21,270 19,886 19,534 20,625 22,320 23,443 Mutual savings banks 14 Assets. 109,550 121,056 134,812 143,815 144,666 145,651 146,346 147,287 148,511 149,528 150,962 Loans: 15 Mortgage................. 74,891 77,221 81,630 85,419 86,079 86,769 87,333 88,195 88,905 89,247 89,800 16 Other........................ 3,812 4,023 5,183 7,119 6,878 7,115 7,241 6,210 6,803 7,398 7,782 Securities: 17 U.S. Govt................. 2,555 4,740 5,840 6,019 6,192 6,101 6,071 5,895 5,785 5,737 5,677 18 State and local goverr 930 1,545 2,417 2,762 2,777 2,808 2,809 2,828 2,886 2,808 2,850 19 Corporate and other4. 22,550 27,992 33,793 36,878 36,927 37,073 37,221 37,918 38,360 38,605 38,964 20 Cash............................. 2,167 2,330 2,355 1,857 1,992 2,011 1,887 2,401 1,889 1,838 1,990 21 Other assets................. 2,645 3,205 3,593 3,760 3,821 3,773 3,783 3,839 3,882 3,895 3,899 22 Liabilities. 109,550 121,056 134,812 143,815 144,666 145,651 146,346 147,287 148,511 149,528 150,962 23 Deposits................................ 98,701 109,873 122,877 130,381 131,688 132,250 132,537 134,017 134,771 135,200 136,997 24 Regular: 5......................... 98,221 109,291 121,961 129,030 130,230 130,913 131,319 132,744 133,370 133,846 135,558 25 Ordinary savings.......... 64,286 69,653 74,535 77,163 77,640 77,503 77,460 78,005 77,754 77,837 78,783 26 Time and other............ 33,935 39,639 47,426 51,867 52,590 53,410 53,859 54,739 55,616 56,009 56,775 27 Other................................. 480 582 916 1,351 1,458 1,337 1,208 1,272 1,401 1,354 1,439 28 Other liabilities................... 2,888 2,755 2,884 3,779 3,254 3,632 3,938 3,292 3,676 4,155 3,735 29 General reserve accounts---- 7,961 8,428 9,052 9,654 9,723 9,769 9,882 9,978 10,064 10,174 10,230 30 Memo: Mortgage loan com- 2,040 1,803 2,439 4,198 4,254 4,423 4,458 4,066 3,998 4,027 4,185 Life insurance companies 31 Assets. 263,349 289,304 321,552 338,964 341,382 343,738 347,182 350,506 352,914 355,068 Securities: Government........ 10,900 13,758 17,942 19,174 19,515 19,519 19,681 19,508 19,579 19,677 United States7. 3,372 4,736 5,368 5,831 5,883 5,810 5,993 5,693 5,717 5,748 State and local. 3,667 4,508 5,594 5,881 5,994 5,979 5,967 6,016 6,009 6,073 Foreign 8............. 3,861 4,514 6,980 7,462 7,638 7,730 7,721 7,799 7,853 7,856 Business.............. 119,637 135,317 157,246 169,747 170,606 172,005 174,109 175,204 177,134 178,718 Bonds.............. 97,717 107,256 122,984 136,752 138,046 139,909 141,354 142,095 145,244 147,202 Stocks.............. 21,920 28,061 34,262 32,995 32,560 32,096 32,755 33,109 31,890 31,516 39 Mortgages. . 86,234 89,167 91,552 93,326 94,070 94,684 95,110 96,765 97,171 97,475 40 Real estate.. 8,331 9,621 10,476 10,926 10,930 11,024 11,113 11,201 11,252 11,318 41 Policy loans. 22,862 24,467 25,834 26,946 27,087 27,220 27,355 27,508 27,628 27,762 42 Other assets. 15,385 16,971 18,502 18,845 19,174 19,286 19,814 20,320 20,150 20,118 Credit unions 43 Total assets/liabilities and capital......................... . 31,948 38,037 45,225 50,904 52,136 52,412 53,141 54,084 53,982 54,989 56,703 56,827 44 Federal........................... . 16,715 20,209 24,396 27,632 28,384 28,463 28,954 29,574 29,579 30,236 31,274 31,255 45 State............................... . 15,233 17,828 20,829 23,272 23,752 23,949 24,187 24,510 24,403 24,753 25,429 25,572 46 Loans outstanding.............. 24,432 28,169 34,384 39,711 40,573 40,865 41,427 42,055 41,876 42,331 43,379 44,133 47 Federal........................... , 12,730 14,869 18,311 21,194 21,692 21,814 22,224 22,1X1 22,590 22,865 23,555 23,919 48 State............................... . 11,702 13,300 16,073 18,517 18,881 19,051 19,203 19,338 19,286 19,466 19,824 20,214 49 Savings............................... 27,518 33,013 39,173 43,982 45,103 45,441 45,977 46,832 47,317 48,093 49,706 49,931 50 Federal (shares)............. . 14,370 17,530 21,130 24,080 24,775 24,945 25,303 25,849 26,076 26,569 27,514 27,592 51 State (shares and deposits),. 13,148 15,483 18,043 19,902 20,328 20,496 20,674 20,983 21,241 21,524 22,192 22,339 For notes see bottom of page A30. 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A30 Domestic Financial Statistics □ June 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 1978 1976 Sept. 1977 1976) H2 HI Feb. Mar. Apr. U.S. Budget 1 Receipts 1........................................ 299,197 81,687 356,861 157,868 189,410 175,787 26,795 24,879 42,342 2 Outlays *,2,3................................... 365,643 94,657 401,902 193,629 199,482 216,747 33,787 40,004 35,724 3 Surplus, or deficit ( —).................. -66,446 -12,970 -45,041 -35,761 -10,072 -40,961 -6,992 -15,125 6,618 4 Trust funds.................................. 2,409 -1,952 7,833 -4,621 7,332 4,293 2,850 -1,147 -990 5 Federal funds 4............................ -68,855 -11,018 -52,874 -31,140 -17,405 -45,254 -9,843 -13,978 7,608 Off-budget entities surplus, or deficit (—) 6 Federal Financing Bank outlays... -5,915 -2,575 -8,415 -5,176 -2,075 -6,663 -1,084 -1,149 -671 7 Other 2, s.......................................... -1,355 793 -269 3,809 -2,086 428 -209 -16 102 U.S. Budget plus off-budget, in cluding Federal Financing Bank 8 Surplus, or deficit (—).................... -73,716 -14,752 -53,725 -37,125 -14,233 -47,196 -8,285 -16,290 6,049 Financed by: 9 Borrowing from the public 3. . . 82,922 18,027 53,516 35,457 16,480 40,284 5,108 9,656 -2,263 10 Cash and monetary assets (de crease, or increase (—))___ -7,796 -2,899 -2,238 2,153 -4,666 4,317 5,171 993 -3,345 11 Other 6........................................ -1,396 -373 2,440 -485 2,420 2,597 -1,993 5,640 -442 Memo items : 12 Treasury operating balance (level, end of period).................................... 14,836 17,418 19,104 11,670 16,255 12,274 7,391 6,407 9,281 13 F.R. Banks..................................... 11,975 13,299 15,740 10,393 15,183 7,114 3,615 4,705 7,177 14 Tax and loan accounts.................. 2,854 4,119 3,364 1,277 1,072 5,160 3,776 1,702 2,104 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 adjustment. 3 Export-Import Bank certificates of beneficial interest (effective July 7 Excludes the gold balance but includes deposits in certain commercial 1,1975) and loans to the Private Export Funding Corp. (PEFCO), a wholly depositories that have been converted from a time deposit to a demand owned subsidiary of the Export-Import Bank, are treated as debt rather deposit basis to permit greater flexibility in Treasury cash management. than asset sales. 4 Half years calculated as a residual of total surplus/deficit and trust Source.—“Monthly Treasury Statement of Receipts and Outlays of fund surplus/deficit. the U.S. Government,” Treasury Bulletin, and U.S. Budget, Fiscal Year 5 Includes Pension Benefit Guaranty Corp.; Postal Service Fund, Rural 1978. NOTES TO TABLE 1.38 1 Holdings of stock of the Federal home loan banks are included in Even when revised, data for current and preceding year are subject to “other assets.” further revision. 2 Includes net undistributed income, which is accrued by most, but not Mutual savings banks: Estimates of National Association of Mutual all, associations. Savings Banks for all savings banks in the United States. Data are re 3 Excludes figures for loans in process, which are shown as a liability. ported on a gross-of-valuation-reserves basis. 4 Includes securities of foreign governments and international organiza Life insurance companies: Estimates of the Institute of Life Insurance tions and nonguaranteed issues of U.S. Govt, agencies. for all life insurance companies in the United States. Annual figures are 5 Excludes checking, club, and school accounts. annual-statement asset values, with bonds carried on an amortized basis 6 Commitments outstanding (including loans in process) of banks in and stocks at year-end market value. Adjustments for interest due and New York State as reported to the Savings Banks Assn. of the State of accrued and for differences between market and book values are not New York. made on each item separately but are included, in total, in “other assets.” 7 Direct and guaranteed obligations. Excludes Federal agency issues Credit unions: Estimates by the National Credit Union Administration not guaranteed, which are shown in this table under “business” securities. for a group of Federal and State-chartered credit unions that account for 8 Issues of foreign governments and their subdivisions and bonds of the about 30 per cent of credit union assets. Figures are preliminary and International Bank for Reconstruction and Development. revised annually to incorporate recent benchmark data. Note.—Savings and loan associations: Estimates by the FHLBB for all associations in the United States. Data are based on monthly reports of Federally insured associations and annual reports of other associations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.40 U.S. BUDGET RECEIPTS AND OUTLAYS Millions of dollars Calendar year Transition Fiscal quarter Fiscal Source or type year (July- year 1976 1977 1978 1976 Sept. 1977 1976) H2 HI H2 Feb. Mar. Apr. Receipts 1 All sources 1........................................ 299,197 81,687 356,861 157,868 189,410 175,787 26,795 24,879 42,343 2 Individual income taxes, net.............. 130,794 38,715 156,725 75,899 77,948 82,877 10,620 5,258 18,833 3 Withheld......................................... 123,408 32,949 144,820 68,023 73,303 75,480 12,811 14,469 13,095 4 Presidential Election Campaign Fund....................................... 34 1 37 1 37 1 6 9 10 5 Nonwithheld................................... 35,528 6,809 42,062 8,426 32,959 9,397 905 2,537 13,611 6 Refunds 1........................................ 28,175 1,043 30,194 1,541 28,350 2,001 3,102 11,756 7,883 7 Corporation income taxes: 8 Gross receipts................................. 46,783 9,808 60,057 20,706 37,133 25,121 1,521 8,682 9,342 9 Refunds.......................................... 5,374 1,348 5,164 2,886 2,324 2,819 508 659 492 10 Social insurance taxes and contribu tions, net..................................... 92,714 25,760 108,683 47,596 58,099 52,347 12,427 8,560 11,828 11 Payroll employment taxes and contributions 2....................... 76,391 21,534 88,196 40,427 45,242 44,384 10,479 7,616 7,495 12 Self-employment taxes and contributions 3....................... 3,518 269 4,014 286 3,687 316 266 322 2,492 13 Unemployment insurance.............. 8,054 2,698 11,312 4,379 6,575 4,936 1,192 144 1,393 14 Other net receipts 4....................... 4,752 1,259 5,162 2,504 2,595 2,711 490 478 448 15 Excise taxes........................................ 16,963 4,473 17,548 8,910 8,432 9,284 1,259 1,395 1,368 16 4,074 1,212 5,150 2,361 2,519 2,848 441 603 545 17 Estate and gift................................... 5,216 1,455 7,327 2,943 4,332 2,837 434 462 296 18 Miscellaneous receipts 5.................... 8,026 1,612 6,536 3,236 3,269 3,292 602 577 622 Outlays9 19 All types 1,6.................................... 365,643 94,657 401,902 193,629 199,482 216,747 33,787 40,004 35,724 20 National defense.............................. 89,430 22,307 97,501 45,002 48,721 50,873 8*676 10,701 8,492 21 International affairs 6..................... 5,567 2,180 4,831 3,028 2,522 2,896 -110 -795 1,259 22 General science, space, and technology................................ 4,370 1,161 4,677 2,377 2,108 2,318 392 433 379 23 Energy.............................................. 3,127 794 4,172 319 542 165 24 Natural resources and environment, 8,124 2,532 10,000 641 841 771 25 Agriculture....................................... 2,502 584 5,526 2,019 2,628 5,All -57 680 23 26 Commerce and housing credit........ 3,795 1,391 -31 -626 52 -22 27 Transportation................................. 13,438 3,306 14,636 1,076 991 1,153 28 Community and regional development............................. 4,709 1,340 6,283 3,192 3,149 4,924 773 1,461 771 29 Education, training, employment, and social services................... 18,737 5,162 20,985 9,083 9,775 10,800 2,058 2,214 1,913 30 Health.............................................. 33,448 8,720 38,785 19,329 18,654 19,422 3,635 3,895 3,589 31 Income security 1............................ 126,598 32,710 137,004 65,367 69,917 71,047 12,073 13,109 11,551 32 Veterans benefits and services........ 18,432 3,962 18,038 8,542 9,382 9,864 1,529 2,662 567 33 Administration of justice................ 3,320 859 3,600 1,839 1,783 1,723 326 290 34C 34 General government........................ 2,927 878 3,357 1,734 1,587 1,749 355 374 131 35 General-purpose fiscal assistance... 7,235 2,092 9,499 4,729 4,333 4,926 52 43 2,05C 36 Interest 7.......................................... 34,589 7,246 38,092 18,409 18,927 19,962 3,353 3,091 3,295 37 Undistributed offsetting receipts 7,8 -14,704 -2,567 -15,053 -7,869 -6,803 -8,506 -677 -581 -703 1 Effective June 1977, earned income credit payments in excess of an Receipts” reflect the accounting conversion for the interest on special individual’s tax liability, formerly treated as outlays, are classified as in issues for U.S. Govt, accounts from an accrual basis to a cash basis. come tax refunds retroactive to January 1976. 8 Consists of interest received by trust funds, rents and royalties on 2 Old-age, disability and hospital insurance, and Railroad Retirement the Outer Continental Shelf, and U.S. Govt, contributions for em accounts. ployee retirement. 3 Old-age, disability, and hospital insurance. 9 For some types of outlays the categories are new or represent re 4 Supplementary medical insurance premiums, Federal employee re groupings; data for these categories are from the Budget of the United tirement contributions, and Civil Service retirement and disability fund. States Government, Fiscal Year 1979; data are not available for half years 5 Deposits of earnings by F.R. Banks and other miscellaneous receipts. or for months prior to February 1978. « Outlay totals reflect the reclassification of the Export-Import Bank Two categories have been renamed: “Law enforcement and justice” from off-budget status to unified budget status. Export-Import Bank has become “Administration of justice” and “Revenue sharing and certificates of beneficial interest (effective July 1, 1975) and loans to the general purpose fiscal assistance” has become “General purpose fiscal Private Export Funding Corp. (PEFCO), a wholly owned subsidiary of assistance.” the Export-Import Bank, are treated as debt rather than asset sales. In addition, for some categories the table includes revisions in figures 7 Effective September 1976, “Interest” and “Undistributed Offsetting published earlier. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Financial Statistics □ June 1978 1.41 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1975 1976 1977 1978 Item June 30 Dec. 31 June 30 Sept. 30 Dec. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding..................... 544.1 587.6 631.9 2 646.4 665.5 685.2 709.1 729.2 747.8 2 Public debt securities........................... 533.7 576.6 620.4 634.7 653.5 674.4 698.8 718.9 738.0 3 Held by public................................. 387.9 437.3 470.8 488.6 506.4 523.2 543.4 564.1 585.2 4 Held by agencies............................. 145.3 139.3 149.6 146.1 147.1 151.2 155.5 154.8 152.7 5 Agency securities.................................. 10.9 10.9 11.5 11.6 12.0 10.8 10.3 10.2 9.9 6 Held by public................................. 9.0 8.9 9.5 29.7 10.0 9.0 8.5 8.4 8.1 7 Held by agencies............................. 1.9 2.0 2.0 1.9 1.9 1.8 1.8 1.8 1.8 8 Debt subject to statutory limit............ 534.2 577.8 621.6 635.8 654.7 675.6 700.0 720.1 737.7 9 Public debt securities........................... 532.6 576.0 619.8 634.1 652.9 673.8 698.2 718.3 736.0 10 Other debt i.......................................... 1.6 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.8 11 Memo: Statutory debt limit............... 577.0 595.0 636.0 636.0 682.0 700.0 700.0 752.0 752.0 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 1978 Type and holder 1974 1975 1976 1977 Jan. Feb. Mar. Apr. May 1 Total gross public debt......................................... 492.7 576.6 653.5 718.9 721.6 729.8 738.0 736.6 741.6 By type: 2 Interest-bearing debt............................................. 491.6 575.7 652.5 715.2 720.6 728.5 736.9 733.1 740.6 3 282.9 363.2 421.3 459.9 466.8 470.8 478.3 472.2 473.7 4 Bills................................................................ 119.7 157.5 164.0 161.1 161.2 161.8 165.7 159.6 159.4 5 Notes............................................................. 129.8 167.1 216.7 251.8 257.1 258.5 262.2 262.2 261.6 6 33.4 38.6 40.6 47.0 48.5 50.5 50.4 50.4 52.7 7 Nonmarketable1................................................ 208.7 212.5 231.2 255.3 253.8 257.7 258.7 260.9 266.9 8 Convertible bonds2....................................... 2.3 2.3 2.3 2.2 2.2 2.2 2.2 2.2 2.2 9 State and local govt, series........................... .6 1.2 4.5 13.9 14.8 15.4 16.4 17.6 18.6 10 Foreign issues3.............................................. 22.8 21.6 22.3 22.2 22.8 22.6 23.6 23.4 22.4 11 Savings bonds and notes.............................. 63.8 67.9 72.3 77.0 77 A 77.8 78.2 78.6 79.0 12 119.1 119.4 129.7 139.8 136.4 139.4 138.0 138.8 144.4 1.1 1.0 1.1 3.7 1.0 1.3 1.0 3.5 1.0 By holder:5 14 U.S. Govt, agencies and trust funds............... 138.2 145.3 149.6 ’•154.8 151.5 154.2 152.7 15 F.R. Banks........................................................ 80.5 84.7 94.4 *•102.5 97.0 r98.5 101.7 16 Private investors................................................ 271.0 349.4 409.5 461.3 473.1 477.1 483.7 17 Commercial banks........................................ 55.6 85.1 103.8 102.4 102.2 103.5 102. 3 18 Mutual savings banks................................... 2.5 4.5 5.7 6.0 5.9 5.9 5^8 19 Insurance companies.................................... 6.2 9.5 12.5 *•15.5 15.3 15.3 15.0 20 Other corporations....................................... 11.0 20.2 26.5 22.2 22.9 21.8 20.4 21 State and local governments........................ 29.2 34.2 41.6 55.1 56.4 58.3 60.3 Individuals: 22 Savings bonds............................................ 63.4 67.3 72.0 76.7 77.1 77.6 78.0 23 Other securities.......................................... 21.5 24.0 28.8 28.6 29.0 29.1 28.9 24 Foreign and international6........................... 58.8 66.5 78.1 109.6 112.5 r115.4 122.9 25 Other miscellaneous investors7.................... 22.8 38.0 40.5 r45.1 51.7 *•50.4 50.2 1 Includes (not shown separately): Securities issued to the Rural 6 Consists of the investments of foreign balances and international Electrification Administration and to State and local governments, de accounts in the United States. Beginning with July 1974, the figures exclude positary bonds, retirement plan bonds, and individual retirement bonds. non-interest-bearing notes issued to the International Monetary Fund. 2 These nonmarketable bonds, also known as Investment Series B 7 Includes savings and loan associations, nonprofit institutions, cor Bonds, may be exchanged (or converted) at the owner’s option for 1% porate pension trust funds, dealers and brokers, certain Govt, deposit per cent, 5-year marketable Treasury notes. Convertible bonds that have accounts, and Govt.-sponsored agencies. been so exchanged are removed from this category and recorded in the notes category above. Note.—Gross public debt excludes guaranteed agency securities and, 3 Nonmarketable foreign government dollar-denominated and foreign beginning in July 1974, includes Federal Financing Bank security issues. currency denominated series. Data by type of security from Monthly Statement of the Public Debt of 4 Held almost entirely by U.S. Govt, agencies and trust funds. the United States (U.S. Treasury Dept.); data by holder from Treasury 5 Data for F.R. Banks and U.S. Govt, agencies and trust funds are Bulletin. actual holdings; data for other groups are Treasury estimates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A33 1.43 U.S. GOVERNMENT MARKETABLE SECURITIES Ownership, by maturity Par value; millions of dollars, end of period 1978 1978 Type of holder 1976 1977 1976 1977 Mar. Apr. Mar. Apr. All maturities 1 to 5 years 1All holders............................................................................... 421,276 459,927 478,252 472,193 141,132 151,264 167,661 165,671 2 U.S. Govt, agencies and trust funds..................................... 16,485 14,420 13,982 13,977 6,141 4,788 4,774 4,772 3 F. R. Banks............................................................................. 96,971 101,191 101,576 103,072 31,249 27,012 30,386 30,015 4 Private investors....................................................................... 307,820 344,315 362,693 355,144 103,742 119,464 132,581 130,884 5 Commercial banks.............................................................. 78,262 75,363 73,852 73,207 40,005 38,691 41,251 41,553 6 4,072 4,379 4,200 4,109 2,010 2,112 2,243 2,237 7 10,284 12,378 11,902 11,832 3,885 4,729 5,063 5,168 8 Nonfinancial corporations.................................................. 14,193 9,474 8,197 7,309 2,618 3,183 3,537 3,311 9 Savings and loan associations............................................ 4,576 4,817 5,014 4,786 2,360 2,368 2,495 2,586 10 12,252 15,495 16,564 15,848 2,543 3,875 4,911 4,769 11 All others............................................................................. 184,182 222,409 242,963 238,053 50,321 64,505 72,991 71,269 Total, within 1 year 5 to 10 years 12 All holders................................................................................ 211,035 230,691 232,997 226,401 43,045 45,328 41,554 44,121 13 U.S. Govt, agencies and trust funds..................................... 2,012 1,906 1,163 1,159 2,879 2,129 2,129 2,129 14 F. R. Banks............................................................................. 51,569 56,702 53,360 54,970 9,148 10,404 10,010 10,175 15 Private investors....................................................................... 157,454 172,084 178,474 170,272 31,018 32,795 29,414 31,816 16 31,213 29,411 25,237 23,078 6,218 6,162 5,957 6,998 17 Mutual savings banks......................................................... 1,214 1,400 1,162 1,057 567 584 507 533 18 Insurance companies........................................................... 2,191 2,398 1,905 1,665 2,546 3,204 2,909 2,966 19 Nonfinancial corporations.................................................. 11,009 5,770 4,168 3,511 370 307 267 300 20 1,984 2,236 2,267 1,981 155 143 171 148 21 6,' 622 7,917 7,587 6,830 1,465 1,283 1,253 1,219 22 103,220 122,885 136,148 132,151 19,637 21,112 18,350 19,652 Bills, within 1 year 10 to 20 years 23 All holders............................................................................... 163,992 161,081 165,652 159,640 11,865 12,906 14,325 14,298 24 U.S. Govt, agencies and trust funds..................................... 449 32 2 2 3,102 3,102 3,102 3,102 25 F. R. Banks............................................................................. 41,279 42,004 38,809 40,688 1,363 1,510 1,588 1,624 26 Private investors...................................................................... 122,264 119,035 126,842 118,950 7,400 8,295 9,635 9,571 27 Commercial banks.............................................................. 17,303 11,996 9,236 6,938 339 456 611 699 28 454 484 327 269 139 137 135 137 29 1,463 1,187 900 730 1,114 1,245 1,163 1,165 30 Nonfinancial corporations.................................................. 9,939 4,329 2,628 2,078 142 133 148 126 31 1,266 806 889 676 64 54 63 56 32 5,556 6,092 5,414 4,639 718 890 1,296 1,276 33 All others............................................................................. 86,282 94,152 107,448 103,621 4,884 5,380 6,217 6,112 Other, within 1 year Over 20 years 34 All holders............................................................................... 47,043 69,610 67,344 66,671 14,200 19,738 21,715 21,701 35 U.S. Govt, agencies and trust funds..................................... 1,563 1,874 1,161 1,158 2,350 2,495 2,814 2,813 10,290 14,698 14,551 14,282 3,642 5,564 6,233 6,287 37 Private investors....................................................................... 35,190 53,039 51,632 51,321 8,208 11,679 12,669 12,601 38 Commercial banks.............................................................. 13,910 15,482 16,001 16,139 421 518 191 880 39 Mutual savings banks......................................................... 760 916 835 788 143 146 152 145 40 728 1,211 1,005 936 548 802 862 868 41 Nonfinancial corporations.................................................. 1,070 1,441 1,540 1,433 55 81 76 61 42 Savings and loan associations............................................ 718 1,430 1,378 1,305 13 16 17 15 43 State and local governments.............................................. 1,066 3,875 2,173 2,191 904 1,530 1,516 1,763 44 16,938 28,733 28,700 28,530 6,120 8,526 9,248 8,868 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) 495 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 Apr. 30, 1978; (1) 5,483 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 □ June 1978 1.44 U.S. GOVERNMENT SECURITIES DEALERS Transactions Par value; averages of daily figures, in millions of dollars 1978 1978, week ending Wednesday— Item 1975 1976 1977 Feb. Mar. April Mar. 29 Apr. 5 Apr. 12 Apr. 19 Apr. 26 May 3 1 U.S. Govt, securities......... 6,027 10,449 10,838 10,200 10,620 11,163 12,186 12,968 9,566 12,481 11,067 10,762 By maturity: 2 Bills................................. 3,889 6,676 6,746 5,835 6,678 6,947 7,187 8,600 6,095 7,740 6,458 6,503 3 Other within 1 year.... 223 210 237 317 345 465 249 377 503 576 447 383 4 1-5 years........................ 1,414 2,317 2,318 2,240 1,923 1,921 2,531 1,984 1,292 1,725 2,630 1,798 5 5-10 years...................... 363 1,019 1,148 1,169 1,027 1,107 1,507 1,337 972 1,530 908 1,340 6 Over 10 years................ 138 229 388 640 648 724 712 669 705 910 624 736 By type of customer: 7 U.S. Govt, securities dealers.................... 885 1,360 1,267 1,509 1,320 1,346 1,402 1,666 1,325 1,462 1,186 1,152 8 U.S. Govt, securities brokers................... 1,750 3,407 3,709 2,962 3,324 3,882 4,029 4,119 3,073 4,400 4,088 3,811 9 Commercial banks........ 1,451 2,426 2,295 2,069 2,134 2,157 2,553 2,413 1,783 2,407 2,210 2,023 10 All others1..................... 1,941 3,257 3,567 3,661 3,842 3,777 4,202 4,770 3,385 4,212 3,583 3,775 11 Federal agency securities.. 1,043 1,548 693 1,668 1,847 1,603 1,862 1,732 1,208 2,215 1,681 1,218 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 1978 1978, week ending Wednesday— Item 1975 1976 1977 Feb. Mar. April Mar. 8 Mar. 15 Mar. 22 Mar. 29 Apr. 5 Apr. 12 Positions2 1 U.S. Govt, securities............. 5,884 7,592 5,172 4,845 3,519 3,063 4,244 '3,909 3,174 2,554 4,418 3,808 2 Bills.................................... 4,297 6,290 4,772 3,351 2,773 3,249 2,923 '3,018 2,725 2,168 4,416 4,118 3 Other within 1 year.......... 265 188 99 68 226 239 193 221 283 266 222 206 4 1-5 years........................... 886 515 60 792 460 -139 975 597 161 142 -150 -254 5 5-10 years......................... 300 402 92 387 67 -166 133 53 29 15 7 -223 136 198 149 248 -7 -121 21 20 -24 -36 -77 -40 7 Federal agency securities.... 943 729 693 622 794 749 801 '865 769 783 630 591 Sources of financing3 8 All sources............................. 6,666 8,715 9,877 9,695 9,586 9,099 9,366 10,431 9,973 9,144 8,663 9,733 Commercial banks: 9 New York City................. 1,621 1,896 1,313 533 111 698 1,010 1,189 1,048 213 -34 939 10 Outside New York City... 1,466 1,660 1,987 2,377 2,067 2,106 2,005 2,522 1,949 1,822 2,061 2,323 11 Corporations1....................... 842 1,479 2,358 2,299 2,406 2,190 2,334 2,565 2,280 2,554 2,429 2,507 12 All others............................. 2,738 3,681 4,170 4,485 4,335 4,105 4,018 4,156 4,696 4,555 4,207 3,964 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 1978 Agency 1974 1975 1976 Oct. Nov. Dec. Jan. Feb. Mar. 1 Federal and Federally sponsored agencies........... 89,381 97,680 103,325 109,046 109,427 110,409 111,520 112,945 114,371 12,719 19,046 21,896 23,143 23,257 23,245 23,293 23,284 23,695 3 Defense Department1....................................... 1,312 1,220 1,113 1,006 991 983 91A 963 954 2,893 7,188 7,801 9,246 9,246 9,156 9,156 9,156 9,416 440 564 575 583 585 581 599 602 607 6 Government National Mortgage Association participation certificates5......................... 4,280 4,200 4,120 3,768 3,768 3,743 3,743 3,743 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 5,785 5,905 6,015 6,045 6,045 6,195 9 United States Railway Association6................ 3 209 104 324 331 336 345 344 349 76,662 78,634 81,429 85,903 86,170 87,164 88,227 89,661 90,676 11 Federal home loan banks................................. 21,890 18,900 16,811 17,325 17,867 18,345 18,692 19,893 20,007 12 Federal Home Loan Mortgage Corporation.. 1,551 1,550 1,690 1,686 1,686 1,686 1,768 1,768 1,768 13 Federal National Mortgage Association........ 28,167 29,963 30,565 31,572 31,333 31,890 32,024 32,553 33,350 14 Federal land banks........................................... 12,653 15,000 17,127 19,118 19,118 19,118 19,498 19,350 19,350 15 Federal intermediate credit banks................... 8,589 9,254 10,494 11,623 11,421 11,174 11,103 10,958 10,881 16 Banks for cooperatives..................................... 3,589 3,655 4,330 4,052 4,208 4,434 4,625 4,622 4,728 17 Student Loan Marketing Association7............ 220 310 410 525 535 515 515 515 590 18 Other.................................................................. 3 2 2 2 2 2 2 2 2 Memo items : 19 Federal Financing Bank debt6,8........................... 4,474 17,154 28,711 36,722 37,095 38,580 39,522 40,605 42,169 Lending to Federal and Federally sponsored agencies: 20 Export-Import Bank3....................................... 4,595 5,208 5,924 5,924 5,834 5,834 5,834 6,094 1,52010 Po2s,t7a4l 8Servic2e6,1.8..1............2..,.1..8..1...........2..,.1..8..1..........2,181 5002,181 2,181 22 Student Loan Marketing Association7........... 220 310 410 525 535 515 515 515 590 23 Tennessee Valley Authority............................. 895 1,840 3,110 3,960 4,080 4,190 4,220 4,220 4,370 24 United States Railway Association6............... 3 209 104 324 331 336 345 344 349 Other lending:9 25 Farmers Home Administration....................... 2,500 7,000 10,750 15,295 15,295 16,095 16,760 17,545 18,050 26 Rural Electrification Administration................. 566 1,415 2,467 2,535 2,647 2,809 2,947 3,124 27 Other.................................................................. 356 1,134 4,966 6,046 6,214 6,782 6,858 7,019 7,411 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 Qff-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 □ June 1978 1.47 NEW SECURITY ISSUES of State and Local Governments Millions of dollars 1977 1978 Type of issue or issuer, 1975 1976 1977 or use Oct. Nov. Dec. Jan.r Feb.r Mar. 1All issues, new and refunding i.............................................. 30,607 35,313 46,769 3,816 3,338 3,655 3,288 2,728 4,538 By type of issue: 2 General obligation............................................................. 16,020 18,040 18,042 1,521 982 1,372 1,875 1,018 1,408 3 Revenue.............................................................................. 14,511 17,140 28,655 2,286 2,350 2,274 1,413 1,710 3,130 4 Housing Assistance Administration 2.................................... 5 U.S. Govt, loans................................................................ 76 133 72 9 6 9 By type of issuer: 6 7,438 7,054 6,354 837 299 517 833 311 449 7 Special district and statutory authority........................... 12,441 15,304 21,717 1,607 1,592 1,846 1,124 1,264 2,534 8 Municipalities, counties, townships, school districts.... 10,660 12,845 18,623 1,363 1,441 1,283 1,331 1,152 1,553 9 Issues for new capital, total.................................................. 29,495 32,108 36,189 3,082 2,514 2,343 2,907 1,990 3,023 By use of proceeds: 10 4,689 4,900 5,076 352 381 348 560 414 345 11 2,208 2,586 2,951 327 113 184 224 57 273 12 7,209 9,594 8,119 402 474 525 484 365 933 13 Social welfare..................................................................... 4,392 6,566 8,274 1,069 691 659 855 509 680 14 Industrial aid..................................................................... 445 483 4,676 455 589 282 245 315 316 15 Other purposes................................................................... 10,552 7,979 7,093 477 266 345 539 330 476 1 Par amounts of long-term issues based on date of sale. Source.—Public Securities Association. 2 Only bonds sold pursuant to the 1949 Housing Act, which are secured by contract requiring the Housing Assistance Administration to make annual contributions to the local authority. 1.48 NEW SECURITY ISSUES of Corporations Millions of dollars 1977 1978 Type of issue or issuer, 1975 1976 1977 or use Sept. Oct. Nov. Dec. Jan. Feb. 1 All issues 1.............................................................................. 53,619 53,488 54,205 4,177 4,221 5,331 6,531 3,013 2,657 2 Bonds...................................................................................... 42,756 42,380 42,193 3,477 3,093 3,411 5,362 2,380 2,131 By type of offering: 3 Public.................................................................................. 32,583 26,453 24,186 1,908 2,114 2,211 1,542 1,382 1,464 4 Private placement............................................................... 10,172 15,927 18,007 1,569 979 1,200 3,820 998 667 By industry group: 5 Manufacturing. ................................................................ 16,980 13,264 12,510 795 648 726 2,375 268 716 2,750 4,372 5,887 672 571 546 753 280 87 3,439 4,387 2,033 138 120 178 345 123 1|01 8 Public utility....................................................................... 9,658 8,297 8,261 1,023 854 851 476 284 205 9 Communication................................................................. 3,464 2,787 3,059 319 8 288 189 519 9 10 Real estate and financial.................................................... 6,469 9,274 10,438 530 892 821 1,223 907 1,012 10,863 11,108 12,013 700 1,128 1,920 1,169 633 526 By type: 12 Preferred............................................................................. 3,458 2,803 3,878 421 304 364 473 171 138 13 Common............................................................................ 7,405 8,305 8,135 279 824 1,556 696 462 388 By industry group: 14 Manufacturing................................................................... 1,670 2,237 1,265 38 83 56 166 5 15 Commercial and miscellaneous........................................ 1,470 1,183 1,838 86 325 122 124 138 91 16 Transportation................................................................... 1 24 418 40 50 17 Public utility ...................................................................... 6,235 6,121 6,058 478 583 878 604 360 260 18 Communication................................................................. 1,002 776 1,379 3 725 110 25 19 Real estate and financial................................................... 488 771 1,054 55 137 88 165 130 150 1 Figures, which represent gross proceeds of issues maturing in more companies other than closed-end, intracorporate transactions, and sales to than 1 year, sold for cash in the United States, are principal amount or foreigners, number of units multiplied by offering price. Excludes offerings of less than $100,000, secondary offerings, undefined or exempted issues as Source.—Securities and Exchange Commission, defined in the Securities Act of 1933, employee stock plans, investment Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Corporate Finance A37 1.49 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position Millions of dollars 1977 1978 Item 1976 1977 Oct. Nov. Dec. Jan. Feb. Mar. Apr. INVESTMENT COMPANIES excluding money market funds 1 Sales of own shares1........................................ 4,226 6,401 542 511 557 638 451 613 625 2 Redemptions of own shares2.......................... 6,802 6,027 519 430 562 465 348 459 580 3 Net sales............................................................ -2,496 357 23 81 5 173 103 154 45 4 Assets3.............................................................. 47,537 45,049 43,435 45,050 45,049 43,000 42,747 '44,052 46,594 5 Cash position4.............................................. 2,747 3,274 3,481 3,487 3,274 3,608 4,258 4,331 4,592 6 Other............................................................. 44,790 41,775 39,954 41,563 41,775 39,392 38,489 39,721 42,002 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. 1.50 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1976 1977 Account 1975 1976 1977 Q2 Q3 Q4 Ql Q2 Q3 Q4 1 Profits before tax..................................................... 123.5 156.9 171.7 159.2 159.9 154.8 161.7 174.0 172.8 178.3 2 Profits tax liability................................................... 50.2 64.7 69.2 66.1 65.9 63.9 64.4 69.7 69.3 73.3 3 Profits after tax........................................................ 73.3 92.2 102.5 93.1 94.0 90.9 97.3 104.3 103.5 105.0 4 Dividends................................................................. 32.4 35.8 41.2 35.0 36.0 38.4 38.5 40.3 42.3 43.6 5 Undistributed profits............................................... 40.9 56.4 61.3 58.1 58.0 52.5 58.8 64.0 61.2 61.4 6 Capital consumption allowances............................. 89.5 97.2 104.7 95.9 98.2 100.4 102.0 103.5 105.8 107.6 7 Net cash flow........................................................... 130.4 153.6 166.0 154.0 156.2 152.9 160.8 167.5 167.0 169.0 Source.—Survey of Current Business (U.S. Dept, of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Financial Statistics □ June 1978 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 23.9 26.4 27.3 24.1 24.1 4 243.4 269.6 293.2 298.2 321.8 328.5 328.2 346.6 361.4 379.1 5 U.S. Govt, i.................................................... 3.4 3.5 3.5 3.6 3.7 4.3 4.3 4.7 4.8 5.3 6 Other............................................................... 240.0 266.1 289.7 294.6 318.1 324.2 323.9 342.0 356.6 373.8 7 Inventories......................................................... 215.2 246.7 288.0 285.8 295.6 302.1 315.4 322.1 332.5 343.1 8 Other.................................................................. 48.1 54.4 56.6 60.0 63.9 66.3 69.8 74.3 78.8 84.5 9 352.2 401.0 450.6 457.5 475.9 484.1 499.9 516.6 532.0 556.3 10 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 1978 Industry 1976 1977 Q3 Q4 Ql Q2 Q3 Q4 Ql Q22 1 All industries.......................................................... 120.15 135.72 122.55 125.22 130.16 134.24 140.38 138.11 146.25 149.16 Manufacturing 2 Durable goods industries................................... 23.57 27.75 24.59 25.50 26.30 27.26 29.23 28.19 29.81 31.01 3 Nondurable goods industries........................... 28.70 32.33 30.20 28.93 30.13 32.19 33.79 33.22 33.18 34.81 Nonmanufacturing 4 Mining................................................................ 4.00 4.49 4.21 4.13 4.24 4.49 4.74 4.50 5.24 5.13 Transportation: 5 Railroad......................................................... 2.51 2.82 2.69 2.63 2.71 2.57 3.20 2.80 3.38 3.37 6 Air................................................................... 1.29 1.63 1.12 1.41 1.62 1.43 1.69 1.76 2.42 2.04 7 Other............................................................... 3.60 2.55 3.44 3.49 2.96 2.96 1.96 2.32 2.32 2.22 Public utilities: 8 Electric............................................................ 18.77 21.57 18.22 19.49 21.19 21.14 21.90 22.05 23.70 23.99 9 Gas and other................................................ 3.45 4.21 3.45 3.96 4.16 4.16 4.32 4.18 4.99 4.63 1 11 0 C C o om 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 3 . . 9 2 9 8 2 1 2 5 . . 9 4 5 3 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 2 1 3 5 . . 2 8 7 2 } 41.21 41.94 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 1977 1978 Account 1972 1973 1974 1975 1976 Ql Q2 Q3 Q4 Ql ASSETS Accounts receivable, gross 1 Consumer............................................................ 31.9 35.4 36.1 36.0 38.6 39.2 40.7 42.3 44.0 44.5 2 Business.............................................................. 27.4 32.3 37.2 39.3 44.7 47.5 50.4 50.6 55.2 57.6 3 Total................................................................ 59.3 67.7 73.3 75.3 83.4 86.7 91.2 92.9 99.2 102.1 4 Less: Reserves for unearned income and losses 7.4 8.4 9.0 9.4 10.5 10.6 11.1 11.7 12.7 12.8 5 Accounts receivable, net....................................... 51.9 59.3 64.2 65.9 72.9 76.1 80.1 81.2 86.5 89.3 6 Cash and bank deposits........................................ 2.8 2.6 3.0 2.9 2.6 2.7 2.5 2.5 2.6 2.2 7 Securities................................................................ .9 .8 .4 1.0 1.1 1.0 1.2 1.8 .9 1.2 8 All other................................................................. 10.0 10.6 12.0 11.8 12.6 13.0 13.7 14.2 14.3 15.0 9 Total assets............................................................. 65.6 73.2 79.6 81.6 89.2 92.8 97.5 99.6 104.3 107.7 LIABILITIES 10 Bank loans.............................................................. 5.6 7.2 9.7 8.0 6.3 6.1 5.7 5.4 5.9 5.8 11 Commercial paper.................................................. 17.3 19.7 20.7 22.2 23.7 24.8 27.5 25.7 29.6 29.9 Debt: 12 Short-term, n.e.c................................................. 4.3 4.6 4.9 4.5 5.4 4.5 5.5 5.4 6.2 5.3 13 Long-term, n.e.c................................................. 22.7 24.6 26.5 27.6 32.3 34.0 35.0 34.8 36.0 38.0 14 Other................................................................... 4.8 5.6 5.5 6.8 8.1 9.5 9.4 13.7 11.5 12.9 15 Capital, surplus, and undivided profits................ 10.9 11.5 12.4 12.5 13.4 13.9 14.4 14.6 15.1 15.7 16 Total liabilities and capital.................................... 65.6 73.2 79.6 81.6 89.2 92.8 97.5 99.6 104.3 107.7 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 Mar. 31, 1978 1978 1978 19781 Jan. Feb. Mar. Jan. Feb. Mar. Jan. Feb. Mar. 1 Total................................................................. 57,620 777 461 810 12,707 13,468 14,318 11,930 13,007 13,508 2 Retail automotive (commercial vehicles)....... 12,415 161 161 159 1,023 1,038 1,076 862 877 917 3 Wholesale automotive..................................... 12,956 285 86 273 5,141 5,436 5,951 4,856 5,350 5,678 4 Retail paper on business, industrial, and farm equipment........................................ 14,177 311 72 -112 1,004 1,258 981 693 1,186 1,093 5 Loans on commercial accounts receivable... 3,971 -35 75 73 2,411 2,508 2,915 2,446 2,433 2,842 6 Factored commercial accounts receivable.... 2,300 -7 -2 34 1,591 1,694 1,666 1,598 1,696 1,632 7 All other business credit................................. 11,801 62 69 383 1,537 1,534 1,729 1,475 1,465 1,346 i Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Financial Statistics □ June 1978 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1977 1978 Item 1975 1976 1977 Nov. Dec. Jan. Feb. Mar. Apr. 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 56.4 57.7 58.8 61.6 2 Amount of loan (thous. dollars)............. 33.3 35.9 40.5 42.0 42.6 43.5 45.1 3 Loan/price ratio (per cent)...................... 74.7 74.2 76.3 76.5 75.5 75.5 76.1 4 Maturity (years)....................................... 26.8 27.2 27.9 28.2 28.0 27.4 28.4 5 Fees and charges (per cent of loan amount)2. 1.54 1.44 1.33 1.38 1.32 1.37 1.44 6 Contract rate (per cent per annum)..... 8.75 8.76 8.80 8.85 8.87 9.03 9.07 Yield (per cent per annum): 7 FHLBB series3......................................... 9.01 8.99 9.01 9.07 9.09 9.26 9.30 8 HUD series4............................................ 9.10 8.99 8.95 9.05 9.10 9.30 9.40 SECONDARY MARKETS Yields (per cent per annum) on— 9 FHA mortgages (HUD series)5............. 9.19 8.82 7.96 8.78 8.91 9.11 9.29 9.29 10 GNMA securities6................................... 8.52 8.17 8.04 8.19 8.29 8.56 8.60 8.71 FNMA auctions:7 11 Government-underwritten loans........ 9.26 8.99 8.73 8.85 8.94 9.17 9.31 9.35 9.44 12 Conventional loans............................. 9.37 9.11 8.98 9.16 9.19 9.32 9.49 9.61 9.72 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 13 Total................................................................... 31,824 32,904 34,370 34,192 34,370 34,756 35,408 36,030 36,702 14 FHA-insured.................................................. 19,732 18,916 18,457 18,535 18,457 18,500 18,664 18,759 19,792 15 VA-guaranteed.............................................. 9,573 9,212 9,315 9,267 9,315 9,398 9,599 9,727 9,905 2,519 4,776 6,597 6,389 6,597 6,858 7,146 7,543 7,846 Mortgage transactions (during period) 17 Purchases........................................................... 4,263 3,606 4,780 352 497 636 879 891 937 18 Sales................................................................... 2 86 67 5 4 Mortgage commitments:8 19 Contracted (during period)............................. 6,106 6,247 9,729 975 1,333 1,810 1,942 1,563 2,119 20 Outstanding (end of period)............................. 4,126 3,398 4,698 4,192 4,698 5,781 6,851 7,445 8,486 Auction of 4-month commitments to buy— Government-underwritten loans: 21 Offered 9... ?.................................................. 7,042.6 4,929.8 7,974.1 105.2 1,184.5 1,779.8 1,199.1 523.7 909.3 3,848.3 2,787.2 4,846.2 152.7 794.0 970.9 623.1 334.9 529.2 Conventional loans: 23 Offered 9.......................................................... 1,401.3 2,595.7 5,675.2 537.6 591.6 949.9 1,214.1 823.5 974.2 765.0 1,879.2 3,917.8 386.3 359.4 449.6 566.0 512.5 578.1 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)10 25 Total................................................................... 4,987 4,269 3,276 3,266 3,276 3,163 3,044 3,372 3,092 26 FHA/VA........................................................ 1,824 1,618 1,395 1,406 1,395 1,382 1,381 1,388 1,373 27 Conventional.................................................. 3,163 2,651 1,881 1,860 1,881 1,782 1,663 1,985 1,719 Mortgage transactions (during period) 28 Purchases........................................................... 1,716 1,175 3,900 576 489 401 363 344 356 29 Sales................................................................... 1,020 1,396 4,131 677 477 503 470 120 466 Mortgage commitments:11 30 Contracted (during period)............................. 982 1,477 5,546 574 361 367 363 593 512 31 Outstanding (end of period)............................. 111 333 1,063 1,233 1,063 961 1,021 1,233 1,346 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 1978 Type of holder, and type of property 1973 1974 1975 1976 Q2 Q3 Q4 Ql* 1 682,321 742,512 801,537 889,327 948,826 985,607 1,021,169 1,048,380 ? 1- to 4-family........................................ 416,211 449,371 490,761 556,557 600,262 627,770 652,405 671,050 3 Multifamily............................................ 93,132 99,976 100,601 104,516 107,094 108,957 111,286 113,137 4 Commercial........................................... 131,725 146,877 159,298 171,223 179,578 184,815 191,593 195,899 5 Farm...................................................... 41,253 46,288 50,877 57,031 61,892 64,080 65,885 68,294 505,400 542,560 581,193 647,650 690,340 717,365 742,763 761,276 7 119,068 132,105 136,186 151,326 162,778 170,378 176,678 181,178 8 67,998 74,758 77,018 86,234 93,393 97,746 101,361 103,942 9 6,932 7,619 5,915 8,082 8,003 8,383 8,692 8,914 10 38,696 43,679 46,882 50,289 54,038 56,565 58,657 60,151 11 5,442 6,049 6,371 6,721 7,344 7,684 7,968 8,171 12 Mutual savings banks............................ 73,230 74,920 77,249 81,639 84,076 86,079 88,104 89,687 13 48,811 49,213 50,025 53,089 55,000 56,313 57,637 58,673 14 12,343 12,923 13,792 14,177 14,602 14,952 15,304 15,579 15 Commercial....................................... 12,012 12,722 13,373 14,313 14,422 14,762 15,110 15,381 16 Farm.................................................. 64 62 59 60 52 52 53 54 17 Savings and loan associations................ 231,733 249,301 278,590 323,130 350,632 366,838 381,216 392,438 18 1- to 4-family..................................... 187,078 200,987 223,903 260,895 284,433 298,459 310,729 319,876 19 22,779 23,808 25,547 28,436 30,505 31,585 32,518 33,475 20 21,876 24,506 29,140 33,799 35,694 36,794 37,969 39,087 21 81,369 86,234 89,168 91,555 92,854 94,070 96,765 97,973 22 1- to 4-family..................................... 20,426 19,026 17,590 16,088 15,418 15,022 14,727 14,427 23 Multifamily........................................ 18,451 19,625 19,629 19,178 18,891 18,831 18,807 18,857 24 Commercial....................................... 36,496 41,256 45,196 48,864 50,405 51,742 54,388 55,546 25 5,996 6,327 6,753 7,425 8,140 8,475 8,843 9,143 26 Federal and related agencies.................... 46,721 58,320 66,891 66,753 68,338 69,068 70,006 71,849 27 Government National Mortgage Assn... 4,029 4,846 7,438 4,241 3,912 3,599 3,660 3,342 28 1,455 2,248 4,728 1,970 1,654 1,522 1,548 1,414 29 Multifamily........................................ 2,574 2,598 2,710 2,271 2,258 2,077 2,112 1,928 30 Farmers Home Admin........................... 1,366 1,432 1,109 1,064 1,043 1,292 1,353 1,413 31 1- to 4-family.................................... 743 759 208 454 410 548 626 654 32 29 167 215 218 97 192 275 287 33 218 156 190 72 126 142 149 156 34 Farm.................................................. 376 350 496 320 410 410 303 316 35 Federal Housing and Veterans Admin... 3,476 4,015 4,970 5,150 5,259 5,130 5,212 5,212 36 1- to 4-family..................................... 2,013 2,009 1,990 1,676 1,711 1,566 1,627 1,578 37 Multifamily....................................... 1,463 2,006 2,980 3,474 3,548 3,564 3,585 3,634 38 Federal National Mortgage Assn.......... 24,175 29,578 31,824 32,904 33,918 34,148 34,369 36,029 39 1- to 4-family..................................... 20,370 23,778 25,813 26,934 27,933 28,178 28,504 30,208 40 3,805 5,800 6,011 5,970 5,985 5,970 5,865 5,821 41 Federal land banks............................ 11,071 13,863 16,563 19,125 20,818 21,523 22,136 22,925 42 123 406 549 601 628 649 670 691 43 10,948 13,457 16,014 18,524 20,190 20,874 21,466 22,234 44 Federal Home Loan Mortgage Corp.... 2,604 4,586 4,987 4,269 3,388 3,376 3,276 2,928 45 1- to 4-family..................................... 2,446 4,217 4,588 3,889 2,901 2,818 2,738 2,441 46 158 369 399 380 487 558 538 481 18,040 23,799 34,138 49,801 58,748 64,667 70,289 73,557 48 Government National Mortgage Assn... 7,890 11,769 18,257 30,572 36,573 41,089 44,896 46,357 49 1- to 4-family..................................... 7,561 11,249 17,538 29,583 35,467 39,865 43,555 44,906 50 Multifamily........................................ 329 520 719 989 1,106 1,224 1,341 1,451 51 Federal Home Loan Mortgage Corp... 766 757 1,598 2,671 4,460 5,332 6,610 7,917 52 1- to 4-family..................................... 617 608 1,349 2,282 3,938 4,(42 5,621 6,733 53 Multifamily........................................ 149 149 249 389 522 690 989 1,184 54 9,384 11,273 14,283 16,558 17,715 18,426 18,783 19,283 55 5,458 6,782 9,194 10,219 10,814 11,127 11,379 11,700 56 138 116 295 532 111 768 759 780 57 Commercial....................................... 1,124 1,473 1,948 2,440 2,680 2,824 2,945 3,024 58 2,664 2,902 2,846 3,367 3,444 3,527 3,682 3,779 59 Individuals and others3............................. 112,160 117,833 119,315 125,123 131,400 134,507 138,111 141,698 60 1- to 4-family..................................... 51 ,112 53,331 56,268 62,643 66,592 69,315 71,665 73,801 61 Multifamily........................................ 23,982 24,276 22,140 20,420 20,313 20,163 20,501 20,746 62 Commercial....................................... 21,303 23,085 22,569 21,446 22,213 21,986 22,375 22,554 63 15,763 17,141 18,338 20,614 22,312 23,043 23,570 24,597 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 □ June 1978 1.55 CONSUMER INSTALMENT CREDIT Total Outstanding, and Net Change Millions of dollars 1977 1978 Holder, and type of credit 1975 1976 1977 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Amounts outstanding (end of period) 1 Total..................................................... 164,955 185,489 216,572 209,141 212,074 216,572 215,925 216,297 219,203 222,131 .By holder: 2 78,667 89,511 105,291 102,504 103,469 105,291 105,466 105,663 107,166 109,336 3 35,994 38,639 44,015 42,704 43,322 44,015 43,970 44,107 44,486 45,182 4 25,666 30,546 37,036 35,993 36,488 37,036 36,851 37,217 38,185 38,750 5 18,002 19,052 21,082 18,961 19,629 21,082 20,525 20,060 19,920 19,941 6 6,626 7,741 9,149 8,978 9,166 9,149 9,114 9,250 9,446 9,528 By type of credit: 7 55,879 66,116 79,352 77,845 78,757 79,352 79,376 79,984 81,666 83,490 8 31,553 37,984 46,119 45,399 45,845 46,119 46,247 46,547 47,534 48,731 9 18,353 21,176 25,370 24,972 25,228 25,370 25,476 25,696 26,327 27,049 to 13,200 16,808 20,749 20,427 20,616 20,749 20,771 20,851 21,207 21,682 11 11,155 12,489 14,263 13,998 14,205 14,263 14,260 14,374 14,577 14,921 12 12,741 15,163 18,385 17,867 18,113 18,385 18,293 18,475 18,955 19,239 13 430 480 585 581 594 585 576 588 600 599 14 Mobile homes................................... 14,423 14,572 15,014 14,929 14,999 15,014 14,978 14,973 15,062 15,156 15 Commercial banks...................... 8,649 8,734 8,862 8,839 8,856 8,862 8,819 8,807 8,845 8,876 16 Finance companies..................... 3,451 3,273 3,109 3,116 3,123 3,109 3,115 3,098 3,085 3,095 17 Home improvement.......................... 9,405 10,990 12,952 12,703 12,879 12,952 12,904 12,968 13,162 13,375 18 Commercial banks...................... 4,965 5,554 6,473 6,377 6,447 6,473 6,445 6,436 6,479 6,598 Revolving credit: 19 Bank credit cards........................ 9,501 11,351 14,262 12,829 13,096 14,262 14,369 14,174 14,142 14,345 20 Bank check credit....................... 2,810 3,041 3,724 3,551 3,601 3,724 3,776 3,822 3,844 3,856 21 72,937 79,418 91,269 87,283 88,743 91,269 90,522 90,376 91,327 92,515 22 Commercial banks, total............ 21,188 22,847 25,850 25,510 25,626 25,850 25,809 25,877 26,322 26,930 23 Personal loans......................... 14,629 15,669 17,740 17,452 17,555 17,740 17,708 17,769 18,002 18,383 24 Finance companies, total............ 21,238 22,749 26,498 25,448 25,850 26,498 26,452 26,489 26,675 27,012 25 Personal loans......................... 17,263 18,554 21,302 20,498 20,852 21,302 21,248 21,283 21,416 21,700 26 Credit unions............................... 10,754 12,799 15,518 15,081 15,289 15,518 15,440 15,594 15,999 16,232 27 Retailers.................................... 18,002 19,052 21,082 18,961 19,629 21,082 20,525 20,060 19,920 19,941 28 Others.......................................... 1,755 1,971 2,321 2,283 2,350 2,321 2,296 2,356 2,411 2,400 Net change (during period)3 29 7,504 20,533 31,090 2,626 2,853 2,736 2,424 2,661 4,068 3,719 By holder: 30 Commercial banks.......................... 2,821 10,845 15,779 1,315 1,384 1,611 1,115 1,280 2,021 2,001 31 Finance companies......................... -90 2,644 5,376 487 543 500 460 418 662 781 32 Credit unions............................................. 3,771 4,880 6,490 469 566 641 495 603 836 699 33 Retailers i........................................ 69 1,050 2,032 280 184 -12 309 202 367 129 34 Others 2............................................ 933 1,115 1,413 75 111 -3 44 158 182 109 By type of credit: 35 3,007 10,238 13,235 850 1,241 1,297 1,185 1,104 1,522 1,728 36 Commercial banks...................... 559 6,431 8,135 587 725 835 637 599 882 989 37 Indirect..................................... -334 2,823 4,194 295 444 486 407 389 564 603 38 Direct....................................... 894 3,608 3,941 292 281 349 230 210 318 386 39 Finance companies..................... 532 1,334 1,774 52 242 127 247 201 238 375 40 Credit unions............................... 1,872 2,422 3,222 222 263 328 244 300 406 343 41 Other............................................ 44 50 105 -11 10 7 56 4 -4 21 42 Mobile homes................................... -195 150 441 44 74 76 52 23 108 95 43 Commercial banks...................... -323 85 128 15 23 60 2 2 46 28 44 Finance companies..................... -73 -177 -164 -11 4 -8 36 -9 2 11 45 881 1,585 1,967 201 211 173 105 171 217 212 46 Commercial banks...................... 271 588 920 115 99 110 70 69 74 111 Revolving credit: 47 Bank credit cards........................ 1,220 1,850 2,911 287 243 250 160 285 448 311 48 Bank check credit....................... 14 231 683 57 27 46 65 87 120 56 49 All other.......................................... 2,577 6,479 11,853 1,188 1,057 895 857 991 1,653 1,317 50 Commercial banks, total............ 1,080 1,659 3,003 254 267 310 180 238 451 506 51 Personal loans......................... 858 1,040 2,070 142 183 235 81 167 263 333 52 Finance companies, total............ -348 1,509 3,749 448 293 378 177 223 419 387 53 Personal loans......................... 279 1,290 2,748 353 235 254 162 183 309 307 54 Credit unions............................... 1,580 2,045 2,719 204 252 252 205 252 358 301 55 69 1,050 2,032 280 184 -12 309 202 367 129 56 Others.......................................... 196 217 350 2 61 -33 -15 76 58 -6 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 1977 1978 Holder, and type of credit 1975 1976 1977 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Extensions 3 1 164,169 193,328 225,645 19,787 19,680 20,138 19,586 20,179 21,595 22,117 By holder: 2 Commercial banks.......................... 77,312 94,220 110,777 9,802 9,688 10,226 9,625 9,905 10,608 11,120 3 31,173 36,028 41,770 3,653 3,602 3,743 3,575 3,691 3,914 4,226 4 24,096 28,587 33,592 2,858 2,920 3,093 2,820 3,028 3,309 3,267 5 27,049 29,188 33,202 2,961 2,857 2,647 3,102 2,976 3,148 2,955 6 4,539 5,305 6,303 512 612 428 464 579 616 549 By type of credit: 7 51,413 62,988 72,888 6,083 6,330 6,721 6,263 6,400 6,822 7,248 8 Commercial banks...................... 28,573 36,585 42,570 3,642 3,717 3,941 3,650 3,100 3,924 4,212 9 Indirect..................................... 15,766 19,882 22,904 1,976 2,076 2,153 2,026 2,065 2,173 2,347 10 12,807 16,704 19,666 1,666 1,641 1,788 1,624 1,635 1,751 1,865 11 Finance companies..................... 9,674 11,209 12,635 989 1,097 1,143 1,088 1,080 1,173 1,314 12 Credit unions............................... 12,683 14,675 17,041 1,414 1,458 1,581 1,421 1,565 1,679 1,654 13 483 518 642 38 58 55 105 55 46 68 14 Mobile homes.................................. 4,323 4,841 5,244 457 464 460 449 406 502 508 15 Commercial banks...................... 2,622 3,071 3,153 270 280 300 250 236 284 219 16 Finance companies..................... 764 690 r651 61 54 60 101 62 74 85 17 Home improvement......................... 5,556 6,736 8,066 718 761 722 618 710 770 753 18 Commercial banks...................... 2,722 3,245 3,968 373 370 384 327 338 352 382 Revolving credit: 19 Bank credit cards........................ 20,428 25,862 31,761 2,973 2,828 2,973 2,948 3,143 3,231 3,255 20 Bank check credit....................... 4,024 4,783 5,886 487 492 531 556 535 608 646 21 All other.......................................... 78,425 88,117 *101,801 9,067 8,804 8,731 8,751 8,985 9,662 9,707 22 Commercial banks, total............ 18,944 20,673 23,439 2,056 2,001 2,096 1,893 1,953 2,209 2,346 23 Personal loans......................... 13,386 14,480 16,828 1,463 1,434 1,518 1,338 1,405 1,537 1,669 24 Finance companies, total........... 20,657 24,087 r28,396 2,596 2,441 2,530 2,380 2,541 2,659 2,814 25 Personal loans......................... 16,944 19,579 '22,348 2,044 1,914 1,975 1,851 1,989 2,105 2,226 26 Credit unions............................... 10,134 12,340 14,604 1,282 1,285 1,326 1,236 1,288 1,429 1,431 27 27,049 29,188 33,202 2,961 2,857 2,647 3,102 2,976 3,148 2,955 28 1,642 1,830 2,160 172 221 131 138 227 217 161 Liquidations3 29 Total.................................................... 156,665 172,795 '194,555 17,160 16,826 17,402 17,162 17,518 17,527 18,398 By holder: 30 Commercial banks.......................... 74,491 83,376 94,998 8,487 8,305 8,615 8,509 8,625 8,587 9,119 31 Finance companies......................... 31,263 33,384 '36,394 3,166 3,059 3,244 3,114 3,273 3,252 3,445 32 20,325 23,707 27,103 2,389 2,354 2,452 2,325 2,425 2,473 2,568 33 26,980 28,138 31,170 2,681 2,673 2,659 2,793 2,774 2,781 2,826 34 3,606 4,191 4,890 437 435 432 420 421 434 440 By type of credit: 35 48,406 52,750 '59,652 5,234 5,089 5,424 5,078 5,296 5,300 5,520 36 Commercial banks...................... 28,014 30,154 34,435 3,055 2,991 3,106 3,013 3,101 3,042 3,223 37 16,101 17,059 18,710 1,681 1,632 1,667 1,619 1,676 1,609 1,744 38 11,913 13,095 15,726 1,374 1,360 1,439 1,394 1,425 1,433 1,479 39 Finance companies..................... 9,142 9,875 10,819 937 855 1,017 841 879 935 939 40 Credit unions............................... 10,811 12,253 13,819 1,193 1,195 1,253 1,177 1,265 1,273 1,311 41 Others.......................................... 439 468 536 49 48 48 48 51 50 47 42 4,517 4,691 *4,802 413 390 384 398 383 394 413 43 2,944 2,986 3,025 255 257 240 248 234 238 251 44 837 867 806 72 50 68 65 71 72 14 45 4,675 5,151 6,098 517 550 549 514 539 553 541 46 Commercial banks...................... 2,451 2,657 3,048 257 212 274 257 269 278 211 Revolving credit: 47 Bank credit cards........................ 19,208 24,012 28,851 2,687 2,585 2,723 2,788 2,858 2,783 2,944 48 Bank check credit....................... 4,010 4,552 5,202 430 466 485 491 448 488 590 49 75,849 81,638 89,948 7,880 7,747 7,836 7,894 7,994 8,009 8,390 50 17,864 19,014 20,436 1,802 1,734 1,786 1,713 1,715 1,758 1,840 51 Personal loans......................... 12,528 13,439 14,757 1,321 1,250 1,284 1,258 1,238 1,274 1,336 52 21,005 22,578 '24,647 2,148 2,148 2,152 2,203 2,318 2,240 2,427 53 16,665 18,289 '19,600 1,692 1,678 1,722 1,688 1,806 1,796 1,919 54 Credit unions............................... 8,554 10,295 11,884 1,078 1,033 1,075 1,031 1,036 1,071 1,130 55 26,980 28,138 31,170 2,681 2,673 2,659 2,793 2,774 2,781 2,826 56 1,446 1,613 1,811 170 159 165 153 151 159 167 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 □ June 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 1Total funds raised.............................................. 189.6 205.6 268.3 340.5 180.8 230.4 254.5 282.1 300.8 380.2 1 2 Excluding equities........................................... 185.8 195.5 257.8 336.4 170.3 220.8 241.1 274.4 297.6 375.1 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 Public debt securities................................. 12.0 85.8 69.1 57.6 80.4 91.3 73.0 65.3 40.9 74.4 4 5 Agency issues and mortgages.................... -.2 -.4 -.1 -.9 -.8 -.1 .1 -.3 -.6 -1.2 5 6 All other nonfinancial sectors......................... 177.8 120.2 199.2 283.7 101.1 139.2 181.4 217.1 260.5 307.0 6 7 Corporate equities..................................... 3.8 10.0 10.5 4.1 10.5 9.6 13.3 7.6 3.2 5.1 7 8 Debt instruments....................................... 174.0 110.1 188.8 279.6 90.7 129.6 168.0 209.5 257.3 301.9 8 9 Private domestic nonfinancial sectors........ 162.4 107.0 179.0 272.5 93.1 120.9 166.2 191.7 256.6 288.4 9 10 Corporate equities.................................. 4.1 9.9 10.5 3.7 10.3 9.5 13.3 7.7 2.5 4.9 10 11 Debt instruments..................................... 158.3 97.1 168.4 268.8 82.8 111.4 152.9 184.0 254.0 283.5 11 12 Debt capital instruments..................... 98.7 95.8 122.7 179.6 93.8 97.8 111.7 133.7 159.4 199.8 12 13 State and local obligations............ 17.1 13.6 15.1 27.7 12.3 14.9 14.7 15.5 27.7 27.7 13 14 Corporate bonds............................. 19.7 27.2 22.8 21.0 33.4 21.1 20.4 25.3 13.8 28.1 14 Mortgages: 15 34.8 39.5 63.6 94.9 33.4 45.6 57.1 70.2 85.6 104.3 15 16 6.9 * 1.6 6.9 .4 -.4 .6 2.6 5.3 8.4 16 17 Commercial................................. 15.1 11.0 13.4 20.3 9.4 12.6 13.9 12.9 17.9 22.6 17 18 5.0 4.6 6.1 8.8 5.1 4.0 5.0 7.3 9.0 8.7 18 19 59.6 1.3 45.7 89.2 -11.0 13.6 41.2 50.3 94.7 83.7 19 20 Consumer credit............................. 10.2 9.4 23.6 35.0 2.2 16.6 22.9 24.2 35.6 34.5 20 21 29.1 -14.5 3.7 31.0 -20.9 -8.2 -.3 7.8 37.4 24.7 21 22 Open market paper......................... 6.6 -2.6 4.0 3.6 -1.4 -3.8 6.4 1.6 5.7 1.5 22 23 Other............................................... 13.7 9.0 14.4 19.5 9.0 9.0 12.2 16.7 15.9 23.1 23 24 162.4 107.0 179.0 272.5 93.1 120.9 166.2 191.7 256.6 288.4 24 25 State and local governments............. 16.2 11.2 14.6 24.4 10.0 12.3 13.0 16.3 21.2 27.7 25 26 Households......................................... 49.2 48.6 89.8 138.1 37.3 59.9 83.9 95.6 129.7 146.5 26 27 Farm.................................................... 7.9 8.7 11.0 14.7 8.7 8.8 10.6 11.6 16.6 12.8 27 28 Nonfarm noncorporate...................... 7.4 2.0 5.2 11.9 -1.1 5.1 2.7 7.6 11.8 12.0 28 29 Corporate............................................ 81.8 36.6 58.3 83.4 38.3 34.8 56.1 60.5 77.3 89.5 29 30 Foreign............... ....................................... 15.4 13.2 20.3 11.2 8.0 18.3 15.2 25.4 3.9 18.6 30 31 -.2 .1 * .4 .1 .1 * -.1 .6 .2 31 32 Debt instruments..................................... 15.7 13.0 20.3 10.8 7.9 18.2 15.1 25.5 3.3 18.4 32 33 Bonds.................................................. 2.1 6.2 8.4 5.0 5.7 6.8 7.3 9.5 4.3 5.6 33 34 Bank loans n.e.c.................................. 4.7 3.7 6.7 1.1 -.4 7.8 3.4 10.0 -5.8 7.9 34 35 Open market paper............................. 7.3 .3 1.9 1.9 -.8 1.4 1.5 2.4 - 1.6 2.1 35 36 U.S. Govt, loans................................. 1.6 2.8 3.3 3.0 3.4 2.2 2.9 3.6 3.1 2.8 36 Financial sectors 37 Total funds raised.............................................. 39.4 14.0 28.6 64.5 15.1 12.8 27.8 29.4 66.8 62.1 37 By instrument: 38 U.S. Govt, related.......................................... 23.1 13.5 18.6 26.3 14.5 12.6 18.6 18.6 25.7 26.9 38 39 Sponsored credit agency securities............ 16.6 2.3 3.3 7.0 1.9 2.8 4.5 2.1 10.1 3.8 39 40 Mortgage pool securities........................... 5.8 10.3 15.7 20.5 11.5 9.2 14.2 17.2 17.9 23.1 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 38.2 .6 .2 9.1 10.8 41.2 35.2 42 43 .3 * .7 . 1 .1 -.1 -.7 2.2 -.3 .5 43 44 Debt instruments......................................... 16.0 .4 9.2 38.1 .6 .3 9.8 8.6 41.5 34.7 44 45 2.1 2.9 5.8 9.0 2.3 3.5 7.0 4.5 9.7 8.2 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 Bank loans n.e.c...................................... 4.6 -3.6 -3.7 -.2 -4.7 -2.5 -3.0 -4.4 -2.7 2.4 47 48 Open market paper and Rp’s............... 3.9 2.8 7.1 21.9 8.2 -2.6 6.1 8.1 27.9 15.8 48 49 Loans from FHLB’s............................... 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 5.8 3.0 3.4 4.5 1.4 7.8 3.8 50 51 Mortgage pools.............................................. 5.8 10.3 15.7 20.5 11.5 9.2 14.2 17.2 17.9 23.1 51 52 16.3 .4 10.0 38.2 .6 .2 9.1 10.8 41.2 35.2 52 53 Commercial banks..................................... -1.1 1.7 7.4 11.8 5.7 -2.3 9.0 5.9 15.9 7.7 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 12.7 55 56 Other insurance companies....................... .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 16.2 -1.4 2.4 5.7 7.1 16.7 15.6 57 58 REIT’s........................................................ .6 -2.0 -2.8 -2.7 -2.0 -1.9 -2.5 -3.0 -2.8 -2.6 58 59 Open-end investment companies.............. -.7 -.1 -1.0 -1.3 .7 -.9 -2.5 .5 -1.4 -1.1 59 60 Money market funds................................. 2.4 1.3 -.3 .1 2.6 * -.7 .2 -.5 .8 60 All sectors 61 Total funds raised, by instrument...................... 229.0 219.5 296.8 405.0 195.9 243.2 282.2 311.4 367.6 442.4 61 62 -.7 -.1 -1.0 -1.3 .7 -.9 -2.5 .5 -1.4 -1.1 62 63 4.8 10.2 12.2 5.5 9.8 10.5 15.1 9.3 4.3 6.7 63 64 Debt instruments............................................. 224.9 209.5 285.6 400.7 185.4 233.6 269.6 301.6 364.8 436.7 64 65 U.S. Govt, securities.................................. 34.3 98.2 88.1 84.3 93.1 103.2 91.9 84.3 68.4 100.2 65 66 State and local obligations........................ 17.1 13.6 15.1 27.7 12.3 14.9 14.7 15.5 27.7 27.7 66 67 Corporate and foreign bonds.................... 23.9 36.3 37.0 34.9 41.3 31.3 34.7 39.3 27.8 42.0 67 68 Mortgages................................................... 60.5 57.2 86.8 133.9 49.5 65.0 77.9 95.7 120.8 147.0 68 69 10.2 9.4 23.6 35.0 2.2 16.6 22.9 24.2 35.6 34.5 69 70 38.4 -14.4 6.7 32.0 -25.9 -2.9 .1 13.4 28.9 35.0 70 71 Open market paper and Rp’s................... 17.8 .5 13.0 27.3 6.1 -5.0 14.0 12.0 35.2 19.4 71 72 Other loans................................................. 22.7 8.7 15.3 25.6 6.9 10.5 13.4 17.2 20.2 31.0 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 nonfinancial sectors.................................... 185.8 195.5 257.8 336.4 170.3 220.8 241.1 274.4 297.6 375.1 1 By public agencies and foreign: 2 Total net advances.............................................. 52.7 44.3 54.6 85.7 55.0 33.6 53.2 56.0 73.6 97.9 2 3 U.S. Govt, securities..................................... 11.9 22.5 26.8 40.2 33.4 11.6 27.1 26.5 30.6 49.8 3 4 Residential mortgages................................... 14.7 16.2 12.8 20.4 16.9 15.5 12.1 13.5 20.1 20.8 4 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 20.8 11.3 7.8 15.6 18.3 19.5 22.1 6 Totals advanced, by sector 7 U.S. Govt........................................................ 9.8 15.1 8.9 12.1 15.9 14.3 6.4 11.4 6.1 18.2 7 8 Sponsored credit agencies............................. 25.6 14.5 20.6 26.9 16.5 12.6 20.7 20.6 27.5 26.4 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 39.5 15.0 -2.7 11.6 18.8 28.5 50.6 10 11 Agency borrowing not included in line 1........ 23.1 13.5 18.6 26.3 14.5 12.6 18.6 18.6 25.7 26.9 11 Private domestic funds advanced 12 Total net advances.............................................. 156.1 164.8 221.8 276.9 129.8 199.7 206.6 237.0 249.7 304.2 12 22.4 75.7 61.3 44.1 59.7 91.6 64.8 57.8 37.9 50.4 13 14 State and local obligations............................ 17.1 13.6 15.1 27.7 12.3 14.9 14.7 15.5 27.7 27.7 14 15 Corporate and foreign bonds....................... 20.9 32.8 30.3 22.3 38.8 26.8 26.8 33.9 15.1 29.5 15 16 Residential mortgages................................... 26.9 23.2 52.4 81.3 16.7 29.6 45.5 59.2 70.7 91.8 16 17 Other mortgages and loans........................... 75.4 15.6 60.8 105.9 -4.3 35.5 53.2 68.3 101.7 110.0 17 18 Less: FHLB advances................................... 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 financial institutions.................................... 126.3 119.9 187.2 249.0 99.8 140.0 167.6 206.8 235.5 262.5 19 20 Commercial banking..................................... 64.6 27.6 58.0 85.5 14.4 40.7 44.5 71.5 80.6 90.5 20 21 Savings institutions........................................ 26.9 52.0 71.7 85.8 48.5 55.4 71.8 71.7 83.9 87.7 21 22 Insurance and pension funds........................ 30.0 41.5 47.6 60.8 38.3 44.7 47.8 47.3 57.7 63.9 22 23 Other finance.................................................. 4.7 -1.1 9.9 16.8 -1.4 -.7 3.4 16.3 13.3 20.3 23 24 Sources of funds.................................................. 126.3 119.9 187.2 249.0 99.8 140.0 167.6 206.8 235.5 262.5 24 25 Private domestic deposits.............................. 69.4 90.9 122.8 134.8 90.3 91.5 106.1 139.5 120.9 148.7 25 26 Credit market borrowing............................... 16.0 .4 9.2 38.1 .6 .3 9.8 8.6 41.5 34.7 26 40.9 28.6 55.1 76.1 9.0 48.2 51.7 58.7 73.1 79.1 27 28 Foreign funds............................................. 14.5 -.4 3.1 3.4 -5.6 4.8 -2.6 8.8 -3.1 9.8 28 29 Treasury balances...................................... -5.1 -1.7 -.1 4.3 -3.5 .1 2.9 -3.1 -1.1 9.7 29 30 Insurance and pension reserves................ 26.0 29.0 35.8 50.1 26.4 31.5 35.1 36.5 47.2 53.0 30 5.4 1.7 16.4 18.4 -8.3 11.7 16.2 16.6 30.2 6.6 31 Private domestic nonfinancial investors 32 Direct lending in credit markets........................ 45.9 45.3 43.8 66.0 30.6 60.0 48.8 38.8 55.7 76.4 32 18.2 22.2 19.4 22.0 6.0 38.4 22.6 16.1 10.9 33.0 33 10.0 6.3 4.7 8.2 7.2 5.5 3.9 5.5 6.5 9.9 34 4.7 8.2 4.0 1.5 10.8 5.6 4.9 3.1 2.0 1.0 35 36 Commercial paper......................................... 4.8 3.1 4.0 18.1 1.5 4.7 6.7 1.3 20.0 16.1 36 37 Other............................................................ 8.2 5.5 11.8 16.3 5.1 6.0 10.8 12.8 16.2 16.4 37 38 Deposits and currency........................................ 75.7 97.1 130.1 143.1 96.0 98.2 111.0 149.3 125.1 161.0 38 39 Time and savings accounts............................. 66.7 84.8 113.0 121.4 73.0 96.5 98.3 127.6 105.2 137.5 39 18.8 -14.0 -14.2 9.5 -27.8 -.2 -18.0 -10.4 -4.4 23.4 40 26.1 39.4 58.1 42.2 39.3 39.4 50.2 66.0 42.2 42.3 41 42 At savings institutions............................... 21.8 59.4 69.1 69.6 61.5 57.4 66.1 72.1 67.4 71.9 42 8.9 12.3 17.2 21.7 23.0 1.7 12.7 21.6 19.9 23.5 43 44 Demand deposits....................................... 2.6 6.1 9.9 13.4 17.3 -5.0 7.8 11.9 15.7 11.2 44 45 Currency..................................................... 6.3 6.2 7.3 8.3 5.7 6.7 4.9 9.8 4.3 12.3 45 46 Total of credit market instruments, deposits 121.5 142.4 174.0 209.1 126.6 158.2 159.8 188.1 180.8 237.4 46 47 Public support rate (in per cent)................... 28.4 22.7 21.2 25.5 32.3 15.2 22.1 20.4 24.7 26.1 47 48 Private financial intermediation (in per cent) 80.9 72.8 84.4 89.9 76.9 70.1 81.1 87.3 94.3 86.3 48 49 Total foreign funds........................................ 25.7 5.8 18.3 42.9 9.4 2.1 9.0 27.6 25.4 60.4 49 Memo : Corporate equities not included above 4.1 10.0 11.2 4.2 10.5 9.5 12.6 9.8 2.8 5.6 50 -.7 -.1 -1.0 -1.3 .7 -.9 -2.5 .5 -1.4 -1.1 51 52 Other equities................................................. 4.8 10.2 12.2 5.5 9.8 10.5 15.1 9.3 4.3 6.7 52 53 Acquisitions by financial institutions............... 5.8 9.4 12.3 5.9 10.7 8.1 12.6 12.0 4.6 7.3 53 54 Other net purchases.......................................... -1.6 .6 -1.1 -1.7 -.2 1.4 * -2.2 -1.7 -1.7 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 □ June 1978 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1977 1978 Measure 1975 1976 1977 Oct. Nov. Dec. Jan. Feb. Mar. Apr.* Maye 1 Industrial production.................................................. 117.8 129.8 137.0 138.9 139.3 139.7 138.8 139.2 140.9 142.9 143.7 Market groupings: 2 Products, total.................................................... 119.3 129.3 137.1 138.9 139.5 140.3 138.5 139.6 141.5 142.8 143.1 3 Final, total...................................................... 118.2 127.2 134.9 136.5 137.0 137.6 134.9 136.4 138.7 140.0 140.2 4 Consumer goods......................................... 124.0 136.2 143.4 144.9 145.2 145.8 141.8 '143.8 146.0 147.3 147.3 5 Equipment.................................................. 110.2 114.6 123.2 125.0 125.8 126.2 125.4 '126.2 129.0 130.1 130.6 6 Intermediate.................................................... 123.1 137.2 145.1 147.8 148.4 150.4 151.6 '151.4 151.9 152.6 153.5 7 Materials............................................................. 115.5 130.6 136.9 138.9 139.0 138.8 139.2 138.6 140.0 143.1 144.6 Industry groupings: 8 Manufacturing.................................................... 116.3 129.5 137.1 139.4 139.9 140.5 138.7 '139.4 141.4 143.0 143.8 Capacity utilization (per cent)1 in— 9 Manufacturing........................................................ 73.6 80.2 82.4 82.9 82.9 83.0 81.7 '81.9 82.7 83.4 83.6 10 Industrial materials industries............................. 73.6 80.4 81.9 82.4 82.3 81.9 81.9 '81.3 82.0 83.6 84.2 11 Construction contracts2......................................................... 162.3 190.2 253.0 244.0 258.0 299.0 270.0 266.0 254.0 270.0 12 Nonagricultural employment, total3.................................. 117.0 120.6 124.7 125.9 126.4 126.7 127.1 127.6 128.4 129.3 129.6 13 Goods-producing, total......................................... 97.1 100.3 104.1 105.0 105.4 105.4 105.7 106.3 107.2 108.9 109.1 14 Manufacturing, total.......................................... 94.3 97.5 100.6 101.1 101.4 102.2 102.7 103.2 103.7 103.9 104.1 15 Manufacturing, production-worker.................. 91.3 95.2 98.3 98.8 99.1 100.0 100.7 101.3 101.7 102.0 102.0 16 Service-producing.................................................. 127.8 131.7 136.0 137.3 137.9 138.3 138.8 139.3 140.0 140.5 140.8 17 Personal income, total4.............................................. 200.0 220.7 245.1 252.8 255.7 259.0 259.4 260.9 264.4 267.8 270.2 18 Wages and salary disbursements........................... 188.5 208.6 231.5 239.1 240.9 242.2 244.7 246.8 251.2 255.3 256.8 19 Manufacturing........................................................ 157.3 177.7 199.3 205.3 206.9 209.7 211.3 214.5 219.5 221.0 222.1 20 Fiisnosflhle nprsnnal inrnmp___________________ 199.2 217.8 239.0 245.3 263.3 21 Retail sales5............................................................... 184.6 203.5 224.4 232.2 235.3 237.1 228.8 235.6 239.5 244.1 243.7 Prices:6 22 Consumer7............................................................. 161.2 170.5 181.6 184.5 185.4 186.1 187.2 188.4 189.8 191.5 23 Wholesale............................................................... 174.9 183.0 194.2 196.3 197.0 198.2 199.9 202.0 203.8 206.4 207.9 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 1978 1977 1978 1977 1978 Series Q2 Q3 Q4 Ql' Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql' Output (1967 = 100) Capacity (per cent of 1967 output) Utilization rate (per cent) 1 Manufacturing.............................................. 136.9 138.7 139.9 139.8 165.6 167.1 168.7 170.3 82.7 83.0 82.9 82.1 2 Primary processing................................... 146.3 147.3 148.2 148.2 171.8 173.5 175.1 176.8 85.1 84.9 84.6 83.9 3 Advanced processing............................... 132.0 129.3 135.6 135.4 162.2 163.8 165.3 166.9 81.4 81.9 82.0 81.1 137.7 138.1 138.9 139.3 166.6 167.8 168.9 170.4 82.6 82.3 82.2 81.7 5 Durable goods.......................................... 135.1 136.0 137.7 138.0 170.3 171.6 172.8 174.0 79.4 79.2 79.6 79.3 6 Basic metal........................................... 116.4 109.4 109.4 110.5 145.1 145.3 145.5 145.8 80.2 75.3 75.2 75.8 7 Nondurable goods................................... 154.6 154.4 155.0 157.9 177.2 178.8 180.4 182.3 87.2 86.3 85.9 86.6 8 Textile, paper, and chemical............... 159.9 159.2 159.5 163.0 185.4 187.1 188.9 190.8 86.3 85.1 84.5 85.4 9 Textile............................................... 110.9 112.3 117.9 115.2 141.9 142.5 143.0 143.5 78.1 78.8 82.4 80.3 10 Paper................................................. 134.3 135.1 132.3 136.5 150.1 151.3 152.5 153.6 89.5 89.3 86.7 88.9 11 Chemical........................................... 191.8 189.5 188.9 194.8 218.7 221.2 223.6 226.6 87.7 85.7 84.5 86.0 12 Energy...................................................... 122.6 123.4 121.9 119.3 144.7 145.2 145.7 147.2 84.8 85.0 83.7 81.0 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 1977 Nov. Dec. Jan. Feb. Mar. Apr. May* Household survey data 1 Noninstitutional population1.............. 153,449 156,048 158,559 159,522 159,736 159,937 160,128 160,313 160,504 160,713 2 Labor force (including Armed Forces)1....................................... 94,793 96,917 99,534 101,009 101,048 101,228 101,217 101,536 101,902 102,374 92,613 94,773 97,401 98,877 98,919 99,107 99,093 99,414 99,784 100,261 Employment: 4 Nonagricultural industries2........ 81,403 84,188 87,302 88,857 89,286 89,527 89,761 89,956 90,526 90,877 5 Agriculture................................... 3,380 3,297 3,244 3,357 3,323 3,354 3,242 3,310 3,275 3,235 Unemployment: 6 7,830 7,288 6,855 6,663 6,310 6,226 6,090 6,148 5,983 6,149 7 Rate (per cent of civilian labor 8.5 7.7 7.0 6.7 6.4 6.3 6.1 <5.2 6.0 6.1 8 Not in labor force............................... 58,655 59,130 59,025 58,512 58,688 58,709 58,911 58,776 58,602 58,340 Establishment survey data 9 Nonagricultural payroll employment3 17,051 79,443 82,142 83,245 83,429 83,719 84,046 '84,555 85,170 85,345 10 Manufacturing................................ 18,347 18,956 19,555 19,715 19,868 19,972 20,075 '20,164 20,209 20,235 11 Mining............................................. 745 783 831 863 711 705 24,733 *■24,945 25,331 25,382 12 Contract construction..................... 3,512 3,594 3,845 3,950 3,947 3,916 711 '728 896 902 13 Transportation and public utilities. 4,498 4,509 4,589 4,634 4,652 4,628 4,651 '4,672 4,708 4,706 14 Trade................................................ 17,000 17,694 18,291 18,512 18,610 18,744 18,744 '18,849 18,876 18,933 15 Finance............................................ 4,223 4,316 4,508 4,597 4,611 4,630 4,647 '4,670 4,687 4,711 16 14,006 14,644 15,333 15,608 15,663 15,693 15,791 '15,875 15,954 15,991 17 14,720 14,948 15,190 15,366 15,367 15,431 15,480 '15,544 15,614 15,622 1 Persons 16 years of age and over. Monthly figures, which are based 3 Data include all full- and part-time employees who worked during, on sample data, relate to the calendar week that contains the 12th day; or received pay for, the pay period that includes the 12th day of the annual data are averages of monthly figures. By definition, seasonality month, and exclude proprietors, self-employed persons, domestic servants, does not exist in population figures. Based on data from Employment unpaid family workers, and members of the Armed Forces. Data are and Earnings (U.S. Dept, of Labor). adjusted to the February 1977 benchmark. Based on data from Employ- 2 Includes self-employed, unpaid family, and domestic service workers. ment and Earnings (U.S. Dept, of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics □ June 1978 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value Monthly data are seasonally adjusted. 1967 1977 1978 Grouping pro 1977 por aver tion age Mar. Apr. May Oct. Nov. Dec. Jan. Feb.r Mar. Apr^ Maye Index (1967 == 100) MAJOR MARKET 1Total index.............................................................. 100.00 137.1 135.3 136.1 137.0 138.9 139.3 139.7 138.8 139.2 140.9 142.9 143.7 2 Products.................................................................. 60.71 137.1 135.1 135.8 136.5 138.9 139.5 140.3 138.5 139.6 141.5 142.8 143.1 3 Final products...................................................... 47.82 134.9 133.3 134.1 134.7 136.5 137.0 137.6 134.9 136.4 138.7 140.0 140.2 4 Consumer goods............................................. 27.68 143.4 142.9 142.9 143.1 144.9 145.2 145.8 141.8 143.8 146.0 147.3 147.3 5 Equipment...................................................... 20.14 123.2 120.0 122.1 123.2 125.0 125.8 126.2 125.4 126.2 129.0 130.1 130.6 6 Intermediate products........................................ 12.89 145.1 141.8 142.3 143.5 147.8 148.4 150.4 151.6 151.4 151.9 152.6 153.5 7 Materials................................................................. 39.29 136.9 135.5 136.5 137.8 138.9 139.0 138.8 139.2 138.6 140.0 143.1 144.6 Consumer goods 8 Durable consumer goods..................................... 7.89 153.1 152.4 151.5 152.2 156.8 155.2 155.8 146.5 151.2 157.6 161.8 160.3 9 Automotive products..................................... 2.83 174.2 178.3 173.9 172.8 179.4 173.6 172.4 157.5 162.8 175.9 184.1 178.3 10 Autos and utility vehicles........................... 2.03 169.2 176.1 171.2 167.4 176.1 167.6 165.5 145.5 153.9 171.0 183.0 174.0 11 Autos........................................................ 1.90 148.4 155.8 150.6 148.5 154.3 147.5 143.6 127.4 131.5 149.7 159.1 151.4 12 Auto parts and allied goods...................... .80 186.8 184.1 181.3 186.6 187.6 188.7 190.4 187.8 185.3 188.5 187.2 189.0 13 Home goods.................................................... 5.06 141.3 137.9 138.8 140.6 144.2 145.0 146.6 140.3 144.6 147.3 149.2 150.2 14 Appliances, A/C, and TV........................... 1.40 127.3 124.1 126.4 131.0 128.6 131.4 132.8 116.1 133.3 135.5 142.1 142.8 15 Appliances and TV................................. 1.33 HO. 5 126.5 129.9 134.8 131.6 133.0 134.6 117.4 135.7 137.9 144.7 16 Carpeting and furniture............................. 1.07 152.2 144.6 145.0 147.3 160.5 160.0 161.5 159.1 160.2 159.3 158.2 17 Misc. home goods....................................... 2.59 144.3 142.7 143.0 143.1 145.8 146.3 147.7 145.9 144.3 148.7 149.2 150.0 18 Nondurable consumer goods............................... 19.79 139.6 139.1 139.4 139.5 140.1 141.2 141.8 139.9 140.8 141.4 141.6 142.3 19 Clothing.......................................................... 4.29 175.2 123.9 124.4 125.5 128.0 126.4 126.9 118.3 121.1 122.8 20 Consumer staples............................................ 15.50 143.6 143.3 143.6 143.4 143.5 145.3 145.9 145.9 146.3 146! 5 148.4 146.8 ?1 Consumer foods and tobacco................... 8.33 135.5 136.0 136.1 135.0 135.2 136.7 137.9 136.5 138.3 138.8 139.1 22 Nonfood staples.......................................... 7.17 152.9 151.8 152.5 153.2 153.4 155.1 155.2 156.6 155.8 155.5 155.1 155.7 23 Consumer chemical products................. 2.63 180.5 175.9 178.1 180.8 183.7 186.9 186.5 187.4 184.3 182.1 183.5 24 Consumer paper products..................... 1.92 117.1 117.4 116.6 118.4 117.6 118.5 119.8 121.4 118.8 119.4 118.0 25 Consumer energy products.................... 2.62 151.4 152.8 153.0 150.8 149.1 149.9 149.7 151.5 154.5 155.2 153.8 26 Residential utilities............................. 1.45 159.0 157.4 158.5 157.1 155.8 155.6 158.5 161.7 167.6 166.9 Equipment 27 Business equipment.............................................. 12.63 149.2 144.8 147.1 148.9 152.6 153.5 154.0 152.6 154.2 157.4 159.0 159.9 28 Industrial equipment...................................... 6.77 138.5 134.4 136.3 138.4 141.8 142.6 143.0 144.3 144.6 146.9 148.1 149.1 29 Building and mining equipment................ 1.44 202.5 197.9 200.5 205.3 205.7 206.7 208.3 211.1 214.9 221.7 225.1 226.2 30 Manufacturing equipment......................... 3.85 113.9 109.0 112.0 112.8 118.5 118.7 118.2 118.8 117.7 118.3 119.2 120.0 31 Power equipment........................................ 1.47 140.2 138.3 136.7 139.9 139.8 142.1 143.7 146.1 145.8 148.8 148.1 149.4 32 Commercial transit, farm equipment............ 5.86 161.6 156.9 159.5 161.2 165.1 165.9 166.9 162.2 165.5 169.4 171.7 172.1 33 Commerical equipment.............................. 3.26 191.6 186.1 189.7 191.1 195.4 197.4 198.8 198.5 200.9 202.0 204.3 204.9 34 Transit equipment....................................... 1.93 117.8 113.0 115.2 116.5 122.3 118.9 121.1 111.1 115.9 126.1 129.3 129.7 35 Farm equipment......................................... .67 142.3 141.8 141.0 144.4 142.1 147.8 144.5 131.4 134.8 137.0 134.3 36 Defense and space equipment............................. 7.51 79.6 78.5 79.9 80.0 78.9 79.3 79.5 79.7 79.2 81.5 81.5 81.5 Intermediate products 37 Construction supplies......................................... 6.42 140.8 136.4 137.2 138.7 144.9 146.5 148.3 149.2 148.6 148.4 148.8 149.5 38 Business supplies................................................ 6.47 149.5 147.3 147.5 148.4 150.5 150.1 152.6 153.8 154.2 155.4 156.5 39 Commercial energy products......................... 1.14 164.6 163.6 164.6 165.8 163.0 160.9 165.6 165.5 165.6 166.3 168.6 Materials 40 Durable goods materials..................................... 20.35 134.5 131.9 133.8 135.2 137.1 137.2 138.7 138.2 137.0 138.7 141.9 143.5 41 Durable consumer parts................................. 4.58 132.0 126.8 129.4 132.0 135.4 136.5 135.7 133.0 131.1 133.4 136.9 137.9 42 Equipment parts............................................. 5.44 143.1 137.8 140.7 141.7 147.6 147.2 149.2 148.7 146.6 151.3 153.1 155.0 43 Durable materials n.e.c.................................. 10.34 131.1 131.1 132.2 133.2 132.4 132.3 134.3 134.9 134.6 134.5 138.2 140.2 44 Basic metal materials................................. 5.57 110.9 113.6 115.0 117.8 110.0 107.9 110.3 110.2 111.0 110.4 116.2 45 Nondurable goods materials............................... 10.47 153.5 153.3 153.7 155.4 154.4 155.4 155.3 155.0 158.5 160.3 161.5 162.3 46 Textile, paper, and chem. mat....................... 7.62 158.3 158.4 159.0 160.7 160.0 159.3 159.3 160.7 162.8 165.4 166.6 167.1 47 Textile materials.......................................... 1.85 113.0 113.2 111.8 111.8 118.5 117.8 117.3 114.9 115.8 114.9 115.9 48 Paper materials........................................... 1.62 133.5 133.9 132.2 136.2 134.4 132.2 130.2 135.0 136.8 137.8 139.2 49 Chemical materials..................................... 4.15 188.2 188.0 190.6 192.2 188.5 188.6 189.5 191.4 194.2 198.8 199.8 50 Containers, nondurable................................. 1.70 150.9 148.9 148.5 152.3 148.9 156.7 154.4 150.4 158.7 158.1 160.5 51 Nondurable materials n.e c........................... 1.14 125.3 126.1 125.6 123.1 125.4 128.5 129.9 123.6 128.9 129.3 130.1 52 Energy materials................................................ 8.48 122.4 121.8 121.3 122.3 124.0 123.0 118.7 122.2 117.7 118.0 123.2 125.1 53 Primary energy............................................... 4.65 107.3 107.0 106.0 106.6 112.2 111.6 103.0 105.2 101.0 105.6 114.5 54 Converted fuel materials................................ 3.82 140.7 139.9 140.1 141.4 138.4 136.9 137.7 142.8 138.0 133.1 133.9 Supplementary groups 55 Home goods and clothing................................. 9.35 133.9 131.5 132.2 133.6 136.8 136.5 137.5 130.2 133.8 136.1 137.8 138.9 56 Energy, total....................................................... 12.23 132.5 132.3 132.1 132.5 133.0 132.3 129.7 132.5 130.0 130.5 134.0 135.6 57 Products.......................................................... 3.76 155.4 156.0 156.5 155.3 153.3 153.2 154.5 155.8 157.9 158.6 158.4 58 Materials.......................................................... 8.48 122.4 121.8 121.3 122.3 124.0 123.0 118.7 122.2 117.7 118.0 123.2 125.1 For Note see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Output A49 2.13 Continued 1967 1977 1978 Grouping SIC pro 1977 code por aver tion age Mar. Apr. May Oct. Nov. Dec. Jan. Feb.' Mar. Apr.* Maye Index (1967 = 100) MAJOR INDUSTRY 1 Mining and utilities. 12.05 136.2 136.6 135.7 137.1 135.8 135.5 133.9 137.4 137.7 138.8 142.2 142.6 2 Mining................. 6.36 117.8 120.6 119.2 119.5 119.6 118.8 113.4 115.0 114.4 120.2 126.8 127.1 3 Utilities................ 5.69 156.5 154.8 154.0 156.7 154.0 154.2 156.7 162.3 163.5 159.6 159.2 159.9 4 Electric............. 3.88 175.5 175.8 170.4 175.4 173.6 173.3 175.9 183.6 184.3 179.1 5 Manufacturing. 87.95 137.1 135.1 135.8 137.1 139.4 139.9 140.5 138.7 139.4 141.4 143.0 143.8 6 Nondurable., 35.97 148.1 147.0 147.0 148.5 149.6 150.1 150.9 149.8 150.6 151.5 152.6 153.2 7 Durable 51.98 129.5 126.8 128.0 129.3 132.4 132.7 133.4 131.1 131.5 134.4 136.4 137.2 Mining 8 Metal mining.................... 10 .51 105.4 133.8 126.1 120.5 80.0 84.8 104.3 121.4 119.9 127.6 122.1 9 Coal................................... 11,12 .69 118.0 124.1 118.4 122.4 141.4 140.6 74.6 54.8 56.5 78.4 129.7 132.9 10 Oil and gas extraction___ 13 4.40 118.0 117.5 117.5 118.3 119.4 117.8 118.4 121.1 120.4 124.5 126.8 126.8 11 Stone and earth minerals. 14 .75 124.9 126.1 124.0 123.0 128.1 127.2 126.5 130.0 129.1 128.2 126.8 Nondurable manufactures 12 Foods................................. 20 8.75 137.9 138.7 138.0 138.3 137.3 139.4 140.4 139.3 140.8 141.2 142.2 13 Tobacco products............ 21 .67 114.3 104.3 112.1 105.2 113.8 117.5 120.6 113.4 117.7 115.3 14 Textile mill products........ 22 2.68 137.1 134.4 134.6 136.0 142.4 141.6 143.7 137.1 136.4 136.1 137.0 15 Apparel products............. 23 3.31 124.2 122.2 121.4 123.5 129.0 125.1 125.8 118.6 121.1 122.8 16 Paper and products.......... 26 3.21 137.4 135.5 136.3 139.5 137.9 137.8 138.6 139.9 143.9 144.9 146.1 147.0 17 Printing and publishing....... 27 4.72 124.7 124.8 123.4 124.4 125.7 126.2 127.5 129.9 128.3 129.1 128.5 129.0 18 Chemicals and products 28 7.74 180.7 180.0 180.6 182.8 182.3 183.1 183.0 184.4 183.7 184.9 186.0 19 Petroleum products............. 29 1.79 141.0 143.3 143.4 142.4 141.4 140.5 139.3 139.7 139.0 141.2 141.8 i42.9 20 Rubber & plastic products. 30 2.24 232.2 225.6 226.0 232.4 236.3 238.5 240.1 238.7 240.0 242.7 247.0 21 Leather and products.......... 31 .86 75.3 73.8 74.7 76.2 77.0 78.1 77.3 74.5 73.0 70.9 71.9 Durable manufactures 22 Ordnance, pvt. & govt.... 19,91 3.64 73.9 72.8 74.6 74.4 74.4 74.1 73.8 72.3 71.2 72.9 72.5 72.9 23 Lumber and products..... 24 1.64 133.4 132.1 130.6 133.0 135.7 137.5 138.1 138.5 135.5 136.5 136.4 24 Furniture and fixtures........ 25 1.37 140.9 135.1 135.4 137.5 146.6 146.0 146.6 146.4 150.1 149.5 149.0 25 Clay, glass, stone products. 32 2.74 146.1 143.7 145.0 145.0 148.0 152.8 152.1 152.2 152.6 154.2 155.6 26 Primary metals................... 33 6.57 110.2 108.3 112.2 117.1 113.5 111.2 111.0 107.4 106.2 106.5 113.0 116.4 27 Iron and steel................. 331,2 4.21 103.4 97.9 103.9 111.0 107.7 104.3 103.8 99.5 96.3 96.7 106.9 28 Fabricated metal products. 34 5.93 130.9 127.5 127.6 128.2 133.8 135.8 136.4 136.9 136.9 138.1 139.3 140.1 29 Nonelectrical machinery... 35 9.15 144.8 139.8 142.9 142.6 148.9 149.7 151.7 150.1 150.1 151.5 152.3 153.2 30 Electrical machinery.......... 36 8.05 141.9 137.6 139.6 141.8 144.2 146.0 147.3 144.0 146.4 149.5 151.6 152.8 31 Transportation equipment.................... 37 9.27 121.1 120.5 119.8 120.3 124.3 122.0 122.2 116.2 118.4 126.5 130.1 128.8 32 Motor vehicles & parts..................... 371 4.50 159.7 161.2 158.1 157.7 168.4 163.0 161.8 146.6 153.1 165.1 171.6 167.7 33 Aerospace & misc. tr. eq.................. 372-9 4.77 84.7 82.3 83.8 85.2 82.8 83.3 84.9 87.6 85.8 90.1 91.0 92.2 34 Instruments............................................ 38 2.11 159.1 156.9 157.8 157.4 162.2 163.1 164.7 163.4 163.5 167.9 168.6 169.0 35 Miscellaneous mfrs................................ 39 1.51 149.1 147.4 145.6 148.0 151.0 151.8 152.5 153.0 151.8 153.7 153.9 154.9 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products, total............ . 1507.4 583.9 578.2 578.3 582.2 591.3 591.3 594.7 582.0 591.2 601.6 606.7 609.2 37 Final products.......... i390.9 452.1 449.0 448.5 451.0 457.8 457.3 458.7 445.1 454.4 463.8 467.6 468.5 38 Consumer goods. 1277.5 317.5 316.8 316.1 316.3 319.5 320.0 320.4 311.2 318.6 322.0 324.8 324.7 39 Equipment........... , 1113.4 134.6 132.1 132.6 134.6 138.1 137.3 138.2 133.9 135.8 141.9 142.7 143.5 40 Intermediate products. , U16.6 131.9 129.1 130.1 131.4 133.8 134.1 135.9 136.7 137.0 138.0 139.1 140.3 1 1972 dollars. separately. For description and historical data, see Industrial Production— 1976 Revision (Board of Governors of the Federal Reserve System: Note.—Published groupings include some series and subtotals not shown Washington, D.C.), Dec. 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics □ June 1978 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates. Exceptions noted. 1977 1978 Item 1975 1976 1977 Oct. Nov. Dec. Jan. Feb.' Mar.' Apr. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized....................... 927 1,296 18,133 '1,781 '1,822 '1,778 ' 1,526 1,534 1,647 1,752 2 1-family.................................... 669 894 12,265 '1,186 '1,218 '1,188 '1,032 957 1,037 1,160 3 2-or-more-family..................... 278 402 5,861 '595 '604 '590 '494 577 610 592 A Started......................................... 1,160 ' 1,538 1,^86 2,139 2,096 2,203 1,548 1,569 2,060 2,189 5 1-family................................... 892 1,163 1,451 1,532 1,544 1,574 1,156 1,103 1,444 1,502 6 2-or-more-family..................... 268 377 535 607 552 629 392 466 616 687 7 Under construction, end of period 1,003 1,147 1,442 1,189 1,211 1,249 1,263 1,261 1,268 8 1-family..............•.................... 531 655 829 729 746 770 786 787 781 9 2-or-more-family..................... All 492 613 460 466 479 478 475 486 10 Completed.................................... 1,297 1,362 1,652 1,665 1,769 1,641 '1,759 1,692 1,815 11 1-family................................... 866 1,026 1,254 1,249 1,280 1,299 '1,300 1,235 1,381 12 2-or-more-family..................... 430 336 398 416 489 342 '463 457 434 13 Mobile homes shipped................ 213 '246 '277 319 318 324 322 269 284 274 Merchant builder activity in 1-family units: 14 Number sold............................... 544 639 819 870 819 857 '813 111 804 816 15 Number for sale, end of period i. 383 433 407 398 401 403 '405 407 406 412 Price (thous. of dollars)2 Median: 16 Units sold............................ 39.3 44.2 48.9 51.4 51.8 52.9 '52.3 53.2 53.3 53.5 17 Units for sale....................... 38.9 41.6 48.2 46.7 46.7 Al .1 48.2 Average: 18 Units sold............................ 42.5 48.1 54.4 57.2 57.8 57.6 58.5 59.4 60.3 EXISTING UNITS (1-family) 19 Number sold............................... 2,452 3,002 3,572 '3,780 '3,980 '4,030 3,780 3,460 3,770 3,880 Price of units sold (thous. of dollars):2 20 Median.................................... 35.3 38.1 42.9 44.0 44.5 44.2 45.5 46.3 46.5 48.2 21 Average................................... 39.0 42.2 47.9 48.2 48.5 48.3 50.3 51.3 51.1 53.6 Va]lue of new <c onstructio n 4 (millions <af dollars) CONSTRUCTION 22 Total put in place................................. 134,293 147,481 170,685 174,409 176,734 171,252 178,069 185,794 192,126 23 Private........................................... 93,624 109,499 133,652 136,710 137,464 140,468 137,312 143,597 149,499 151,720 24 Residential................................. 46,472 60,519 81,067 83,022 84,005 87,246 81,111 86,918 89,983 90,781 25 Nonresidential, total................ 47,152 48,980 52,585 53,688 53,459 53,222 56,201 56,679 59,516 '60,939 Buildings: 26 Industrial........................... 8,017 7,182 7,182 7,579 7,716 7,132 7,484 7,563 9,308 9,604 27 Commercial....................... 12,804 12,757 14,604 15,846 15,404 14,627 14,986 15,043 16,206 17,581 28 Other.................................. 5,585 6,155 6,226 6,337 6,437 6,200 6,065 5,806 6,198 6,863 29 Public utilities and other___ 20,746 22,886 24,573 23,926 23,902 25,263 27,666 28,267 27,804 26,891 30 Public............................................ 40,669 37,982 37,033 37,699 35,641 36,266 '33,940 34,472 36,295 40,407 31 Military...................................... 1,392 1,508 1,478 1,381 1,286 1,370 rl,412 1,474 1,426 1,482 32 Highway.................................... 10,861 9,756 9,170 9,507 8,281 7,877 '7,253 6,718 7,354 33 Conservation and development 3,256 3,722 3,765 3,141 3,464 3,851 '3,986 3,198 3,949 34 Others.................................................... 25,160 22,996 22,620 23,670 22,610 23,168 '21,289 22,362 23,566 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 Beginning Jan. 1977 Highway imputations are included in Other. factured Housing Institute and seasonally adjusted by the Census Bureau, 4 Value of new construction data in recent periods may not be strictly and (b) sales and prices of existing units, which are published by the comparable with data in prior periods due to changes by the Bureau of National Association of Realtors. All back and current figures are avail the Census in its estimating techniques. For a description of these changes able from originating agency. Permit authorizations are for 14,000 see Construction Reports (C-30-76-5), issued by the Bureau in July 1976. 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 PRODUCER 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 1978 1977 1978 April 1977 1978 1978 Apr. Apr. (1967 June Sept. Dec. Mar. Dec. Jan. Feb. Mar. Apr. = lOO)2 Consumer prices 3 1 All items........................................................ 6.8 6.6 7.8 4.5 4.9 9.3 .4 .8 .6 .8 .9 191.5 2 Commodities................................................. 6.3 5.9 6.7 2.5 4.9 9.3 .5 .9 .5 .8 .9 183.5 3 Food.......................................................... 6.5 8.7 11.5 1.9 4.2 16.4 .4 1.3 1.2 1.3 1.9 207.5 4 Commodities less food............................. 6.1 4.7 4.2 2.7 5.4 6.1 .5 .7 .2 .6 .5 171.3 5 Durable................................................. 6.8 4.7 3.5 1.5 5.2 8.7 .5 1.0 .7 .5 .5 169.9 6 Nondurable.......................................... 5.6 4.3 4.7 3.4 5.1 3.1 .3 .4 -.3 .6 .5 171.8 7 Services......................................................... 7.6 8.0 9.4 7.6 4.9 9.1 .4 .6 .7 .8 .9 206.5 8 Rent.......................................................... 5.9 6.5 6.2 6.7 6.3 6.2 .5 .6 .4 .6 .7 161.5 9 Services less rent....................................... 7.8 8.2 9.9 8.0 4.8 9.6 .4 .6 .8 .9 .9 214.6 Other groupings: 10 All items less food................................... 6.8 6.4 6.8 5.3 5.0 8.1 .4 .8 .5 .7 .7 187.4 11 All items less food and energy............... 6.4 6.4 6.9 5.1 5.3 8.0 .5 .9 .4 .7 .7 184.9 12 Homeownership....................................... 6.4 9.7 10.4 8.5 7.1 12.2 .7 1.0 .7 1.2 1.1 220.4 Producer prices, formerly Wholesale prices 13 Finished goods............................................. 5.8 7.0 6.4 2.9 7.2 9.4 .4 .7 1.0 .6 1.3 191.4 14 Consumer.................................................. 5.7 6.9 6.2 1.8 5.4 10.5 .3 .8 1.1 .5 1.6 189.7 15 Foods................................................ 3.6 8.5 4.3 -2.3 7.4 21.0 .4 1.1 2.9 .8 1.9 204.6 16 Excluding foods................................... 7.0 5.9 7.8 4.0 4.7 5.1 .4 .6 .2 .5 1.3 180.4 17 Capital Equiptment................................. 6.0 7.6 6.8 6.0 10.9 6.9 .7 .5 .5 .6 .6 195.4 18 Materials...................................................... 8.1 5.6 1.2 .4 8.3 14.2 .5 1.1 1.3 .9 .9 217.1 19 Intermediate1............................................ 7.2 6.2 5.5 7.1 4.2 9.0 .5 .9 .8 .5 .5 213.1 Crude: 20 Nonfood................................................ 18.9 4.8 -8.1 -5.3 20.1 15.7 2.1 1.2 1.0 1.5 .9 281.4 21 Food...................................................... 4.7 5.3 -16.6 -19.6 27.6 43.6 .6 2.8 4.7 1.8 3.7 216.3 1 Excludes intermediate materials for food manufacturing and manu- 3 Beginning Jan. 1978 figures for consumer prices are those for all urban factured animal feeds. consumers. 2 Not seasonally adjusted. Source.—Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics □ June 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 1978 Account 1975 1976 1977 Q4 Ql Q2 Q3 Q4 Ql Gross national product 1 Total........................................................ 1,528.8 1,706.5 1,889.6 1,755.4 1,810.8 1,869.9 1,915.9 1,961.8 1,993.4 By source: 2 Personal consumption expenditures... 980.4 1,094.0 1,211.2 1,139.0 1,172.4 1,194.0 1,218.9 1,259.5 1,281.9 3 Durable goods............................... 132.9 158.9 179.8 166.3 177.0 178.6 177.6 186.0 183.2 4 Nondurable goods......................... 409.3 442.7 480.7 458.8 466.6 474.4 481.8 499.9 503.9 5 Services........................................... 438.2 492.3 550.7 513.9 528.8 541.1 559.5 573.7 594.8 6 Gross private domestic investment 189.1 243.3 294.2 243.4 271.8 294.9 303.6 306.7 319.5 7 Fixed investment........................... 200.6 230.0 276.1 244.3 258.0 273.2 280.0 293.2 299.8 8 Nonresidential............................. 149.1 161.9 185.1 167.6 177.0 182.4 187.5 193.5 199.7 9 Structures............................ 52.9 55.8 61.5 57.0 57.9 61.0 62.6 64.5 66.0 10 Producers’ durable equipment 96.3 106.1 123.6 110.6 119.2 121.4 124.9 129.0 133.6 11 Residential structures................ 51.5 68.0 91.0 76.7 81.0 90.8 92.5 99.7 100.1 12 Nonfarm................................. 49.5 65.7 88.4 74.3 78.5 88.2 89.9 97.1 97.3 13 Change in business inventories... -11.5 13.3 18.2 -.9 13.8 21.7 23.6 13.5 19.7 14 Nonfarm..................................... -15.1 14.9 17.1 1.4 14.1 22.4 23.1 9.0 18.9 15 Net exports of goods and services.... 20.4 7.8 -10.9 3.0 -8.2 —9.7 -7.5 -18.2 -24.6 16 Exports........................................... 147.3 162.9 174.7 168.5 170.4 178.1 179.9 170.6 180.3 17 Imports........................................... 126.9 155.1 185.6 165.6 178.6 187.7 187.4 188.8 204.8 18 Govt, purchases of goods and services, 338.9 361.4 395.0 370.0 374.9 390.6 400.9 413.8 416.6 19 Federal............................................ 123.3 130.1 145.4 134.2 136.3 143.6 148.1 153.8 152.7 20 State and local............................... 215.6 231.2 249.6 235.8 238.5 247.0 252.9 260.0 263.9 By major type of product: 21 Final sales, total................................. 1,540.3 1,693.1 1,871.4 1,756.3 1,797.0 1,848.2 1,892.2 1,948.2 1,973.7 22 Goods.............................................. 686.2 764.2 834.7 774.7 805.9 827.1 843.5 862.5 863.8 23 Durable goods........................... 258.2 303.4 341.3 312.6 334.4 341.0 342.3 347.6 348.8 24 Nondurable............................... 428.0 460.9 493.4 r463.6 471.5 486.1 501.2 514.9 515.0 25 Services........................................... 699.2 782.0 867.4 813.8 833.7 855.3 881.6 898.8 929.8 26 Structures....................................... 143.5 160.2 187.5 166.9 171.2 187.5 190.7 200.4 199.8 27 Change in business inventories........ -11.5 13.3 18.2 -.9 13.8 21.7 23.6 13.5 19.7 28 Durable goods............................... -9.2 4.1 9.1 .6 7.8 11.5 10.3 6.8 14.3 29 Nondurable goods......................... -2.2 9.3 9.1 r —1.6 6.0 10.2 13.4 6.8 5.5 30 Memo: Total GNP in 1972 dollars... 1,202.1 1,274.7 1,337.3 1,287.4 1,311.0 1,330.7 1,347.4 1,360.2 1,358.8 National income 31 1,217.0 1,364.1 1,520.5 1,402.1 1,450.2 1,505.7 1,540.5 1,585.7 1,609.9 930.3 1,036.3 1,156.3 1,074.2 1,109.9 1,144.7 1,167.4 1,203.3 1,243.5 33 Wages and salaries............................................ 805.7 891.8 990.0 923.2 951.3 980.9 998.9 1,029.1 1,058.4 34 Government and Government enterprises.. 175.4 187.2 199.9 192.5 194.8 197.2 200.6 206.9 209.9 35 Other.............................................................. 630.3 704.6 790.1 730.7 756.4 783.6 798.3 822.2 848.5 36 Supplement to wages and salaries..................... 124.6 144.5 166.3 150.9 158.6 163.8 168.5 174.3 185.1 37 Employer contributions for social insurance................................................ 59.8 68.6 77.7 70.9 75.4 11A 78.2 80.2 87.4 38 Other labor income....................................... 64.9 75.9 88.6 80.0 83.2 86.7 90.3 94.0 97.8 86.0 88.0 98.2 88.7 95.1 97.0 95.5 105.0 103.1 40 Business and professional1............................... 62.8 69.4 78.5 72.0 74.3 77.3 80.0 82.4 82.9 41 Farm1................................................................ 23.2 18.6 19.7 16.6 20.7 19.7 15.5 22.7 20.2 42 Rental income of persons2................................... 22.3 23.3 25.3 24.1 24.5 24.9 25.5 26.4 26.9 43 Corporate profits1................................................ 99.3 128.1 139.9 123.1 125.4 140.2 149.0 144.8 126.8 44 Profits before tax3............................................ 123.5 156.9 171.7 154.8 161.7 174.0 172.8 178.3 172.2 45 Inventory valuation adjustment....................... -12.0 -14.1 -14.6 -16.9 -20.6 -17.8 -5.9 -14.1 -24.8 46 Capital consumption adjustment..................... -12.2 -14.7 -17.2 -14.8 -15.6 -15.9 -17.9 -19.4 -20.6 47 Net interest............................................................ 79.1 88.4 100.9 92.0 95.3 98.9 103.1 106.1 109.6 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 1978 1975 1976 1977 Account Q4 Ql Q2 Q3 Q4 Ql Personal income and saving 1 Total personal income. 1.253.4 1.382.7 1.536.7 1.432.2 1.476.8 1.517.2 1.549.8 1.603.0 1.638.8 2 Wage and salary disbursements....................... 805.7 891.8 990.0 923.2 951.3 980.9 998.9 1.029.1 1,058.4 3 Commodity-producing industries.............. 275.0 308.4 346.4 317.7 328.9 345.4 351.0 360.2 370.3 4 Manufacturing........................................ 211.0 238.2 267.3 245.1 255.4 265.9 270.0 278.0 288.3 5 Distributive industries................................. 195.4 217.1 242.8 226.4 234.5 240.5 244.4 251.8 260.5 6 Service industries........................................ 159.9 179.0 200.9 186.7 193.0 197.7 202.8 210.2 217.7 7 Government and government enterprises., 175.4 187.2 199.9 192.5 194.8 197.2 200.6 206.9 209.9 8 Other labor income........................................ 64.9 75.9 88.6 80.0 83.2 86.7 90.3 94.0 97.8 9 Proprietors' income1............. 86.0 88.0 98.2 88.7 95.1 97.0 95.5 105.0 103.1 10 Business and professional1 62.8 69.4 78.5 72.0 74.3 77.3 80.0 82.4 82.9 11 Farm1................................ 23.2 18.6 19.7 16.6 20.7 19.7 15.5 22.7 20.2 12 Rental income of persons2. 22.3 23.3 25.3 24.1 24.5 24.9 25.5 26.4 26.9 13 Dividends............................ 32.4 35.8 41.2 38.4 38.5 40.3 42.3 43.6 43.8 14 Personal interest income... 115.6 130.3 147.8 136.4 140.3 145.4 150.3 155.2 160.5 15 Transfer payments......................................... 176.8 192.8 206.9 198.0 203.5 203.0 208.7 212.6 215.9 16 Old-age survivors, disability, and health insurance benefits............................... 81.4 92.9 105.0 98.4 99.9 101.8 108.5 110.0 111.6 17 Less: Personal contributions for social insurance........................................... 50.4 55.2 61.3 56.6 59.6 60.8 61.7 62.9 67.5 18 Equals: Personal income.............................. 1.253.4 1.382.7 1.536.7 1.432.2 1.476.8 1.517.2 1.549.8 1,603.0 1.638.8 19 Less: Personal tax and nontax payments.... 169.0 196.9 227.5 209.5 224.4 224.8 226.1 234.7 236.7 20 Equals: Disposable personal income.......... 1.084.4 1.185.8 1,309.2 1,222.6 1,252.4 1,292.5 1.323.8 1,368.3 1,402.1 21 Less: Personal outlays............................... 1,004.2 1.119.9 1,241.9 1.166.3 1,201.0 1,223.9 1,250.5 1.292.2 1.315.9 22 Equals: Personal saving............................... 80.2 65.9 67.3 56.3 51.4 68.5 73.3 76.1 86.2 Memo items : Per capita (1972 dollars): 23 Gross national product..................... 5.629 5,924 6,167 5,966 6,064 6,143 6,206 6,254 6,236 24 Personal consumption expenditures. 3.629 3,817 3,971 3,892 3,934 3,943 3,963 4,045 4,027 25 Disposable personal income............. 4,014 4,137 4,293 4,177 4,202 4,268 4,305 4,394 4,405 26 Saving rate (per cent)............................ 7.4 5.6 5.1 4.6 4.1 5.3 5.5 5.6 6.1 Gross saving 27 Gross private saving.............................................. 259.4 272.5 293.9 261.6 262.9 292.1 310.5 309.9 310.8 28 Personal saving.................................................. 80.2 65.9 67.3 56.3 51.4 68.5 73.3 76.1 86.2 29 Undistributed corporate profits1..................... 16.7 27.6 29.5 20.8 22.5 30.3 37 A 27.9 13.8 30 Corporate inventory valuation adjustment.... -12.0 -14.1 -14.6 -16.9 -20.6 -17.8 -5.9 -14.1 -24.8 Capital consumption allowances: 31 Corporate....................................................... 101.7 111.8 121.9 115.2 117.6 119.4 123.7 127.0 130.1 32 Noncorporate................................................ 60.8 67.2 75.1 69.2 71.4 73.8 76.2 78.9 80.7 33 Wage accruals less disbursements................... 34 Government surplus, or deficit (—), national income and product accounts......................... -64.3 -35.6 -20.3 -29.4 -11.5 -14.9 -26.0 -28.9 -22.0 35 Federal............................................................... -70.2 -54.0 -49.5 -55.9 -38.8 -40.3 -58.9 -60.0 -55.7 36 State and local.................................................. 5.9 18.4 29.2 26.5 27.3 25.4 32.9 31.1 33.7 37 Capital grants received by the United States, net.................................................................. 38 Investment.............................................................. 201.0 242.5 273.3 237.5 254.7 276.1 285.4 277.2 282.0 39 Gross private domestic..................................... 189.1 243.3 294.2 243.3 271.8 294.9 303.6 306.7 319.5 40 Net foreign........................................................ 11.8 -.9 -20.9 -5.9 -17.1 -18.8 -18.2 -29.5 -37.5 41 Statistical discrepancy.......................................... 5.9 5.5 -.2 5.3 3.3 -1.2 .9 -3.9 -6.7 1 With inventory valuation and capital consumption adjustments. Source.—Survey of Current Business (U.S. Dept, of Commerce). 2 With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics □ June 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 1975 1976 1977 Q3 Q4 Ql Q2 Q3 Q4 1 Merchandise exports................. 107,088 114,694 120,472 29,603 29,711 29,457 30,655 30,870 29,490 2 Merchandise imports................. 98,043 124,014 151,713 32,411 33,305 36,606 38,309 38,429 38,369 3 Merchandise trade balance 2. 9,045 -9,320 -31,241 -2,808 -3,594 -7,149 -7,654 -7,559 -8,879 4 Military transactions, net.......... -876 366 1,432 235 235 514 309 559 50 5 Investment income, net.............. 5,954 9,808 11,935 2,667 2,424 3,187 3,439 3,166 2,143 6 Other service transactions, net.. 2,042 2,743 2,460 781 598 330 546 845 740 7 Balance on goods and services 3. 16,164 3,596 -15,414 875 -337 -3,118 -3,360 -2,989 -5,946 8 Remittances, pensions, and other transfers....................... -1,719 -1,878 -2,008 -461 -473 -526 -492 -510 -480 9 U.S. Govt, grants (excluding military)............................... -2,893 -3,146 -2,787 -1,475 -572 -637 -723 -824 -604 10 Balance on current account.................................................. 11,552 -1,427 -20,209 -1,061 -1,382 -4,281 -4,575 -4,323 -7,030 11 Not seasonally adjusted..................................................... -3,809 303 -3,404 -4,667 -6,844 -5,294 12 Change in U.S. Govt, assets, other than official reserve assets, net (increase, — )................................................. -3,463 -4,213 -3,666 -1,405 -1,142 -909 -825 -1,169 -763 13 Change in U.S. official reserve assets (increase, —)............. -607 -2,530 -231 -407 228 -388 151 14 Gold.................................................................................... -118 -58 -60 15 Special Drawing Rights (SDR’s)...................................... -66 -78 -121 -18 -29 -83 -9 -29 16 Reserve position in International Monetary Fund (IMF). -466 -2,212 -294 -716 -461 -389 -80 133 42 17 Foreign currencies............................................................. -75 -240 302 327 718 59 169 27 47 18 Change in U.S. private assets abroad (increase, —).......... -27,478 -36,216 -22,162 -6,597 -13,108 1,627 -9,464 -3,405 -10,921 19 Bank-reported claims........................................................ -13,532 -20,904 -11,694 -3,372 -9,148 3,446 -4,553 -1,709 -8,878 20 Long-term..................................................................... -2,357 -2,124 -741 -978 -480 -306 23 -445 -13 21 Short-term..................................................................... -11,175 -18,780 -10,953 -2,394 -8,668 3,752 -4,576 -1,264 -8,865 22 Nonbank-reported claims.................................................. -1,447 -1,986 -96 723 -967 -722 -1,129 1,518 237 23 Long-term..................................................................... -432 10 350 66 -10 45 68 240 -3 24 Short-term..................................................................... -1,015 -1,996 -446 657 -957 -767 -1,197 1,278 240 25 U.S. purchase of foreign securities, net......................... -6,235 -8,730 -5,362 -2,743 -2,171 -692 -1,784 -2,156 -731 26 U.S. direct investments abroad, net............................... -6,264 -4,596 -5,009 -1,205 -822 -404 -1,998 -1,058 -1,549 27 Change in foreign official assets in the United States (in crease-f-)..................................................................... 6,960 17,945 37,419 3,070 6,977 5,719 7,908 8,249 15,542 28 U.S. Treasury securities................................................... 4,408 9,333 30,091 1,260 3,909 5,149 5,124 6,950 12,868 29 Other U.S. Govt, obligations.......................................... 905 566 2,310 66 116 100 609 627 974 30 Other U.S. Govt, liabilities 4.......................................... 1,701 4,938 1,874 1,819 852 712 456 321 385 31 Other U.S. liabilities reported by U.S. banks............... -2,158 893 1,126 -599 1,769 -420 752 -150 944 32 Other foreign official assets 5.......................................... 2,104 2,215 2,018 524 331 178 967 501 372 33 Change in foreign private assets in the United States (in crease, -(-)..................................................................... 7,376 16,575 11,842 5,131 5,102 -3,209 5,873 5,671 3,508 34 U.S. bank-reported liabilities............................................. 628 10,982 6,751 1,774 5,008 -5,298 6,344 2,656 3,049 35 Long-term....................................................................... -280 175 366 75 221 47 105 194 20 36 Short-term....................................................................... 908 10,807 6,385 1,699 4,787 -5,345 6,239 2,462 3,029 37 U.S. nonbank-reported liabilities....................................... 240 -616 2 —297 -242 -374 -405 629 152 38 Long-term....................................................................... 334 -947 -448 -241 -311 -229 -183 56 -92 39 Short-term....................................................................... -94 331 450 -56 69 -145 -222 573 244 40 Foreign private purchases of U.S. Treasury securities, net............................................................................... 2,590 2,783 628 3,026 -88 1,047 -1,370 1,250 -299 41 Foreign purchases of other U.S. securities, net............... 2,503 1,250 2,934 68 21 879 736 516 803 42 Foreign direct investments in the United States, net 1,414 2,176 1,527 561 403 537 568 619 -197 43 Allocation of SDR’s.............................................................. 44 Discrepancy............................................................................. 5.660 9.866 -2,993 1,268 3,325 1,440 1,077 -5,173 —337 45 Owing to seasonal adjustments........................................ -2,622 1,780 652 -90 -2,388 1,826 46 Statistical discrepancy in recorded data before seasonal adjustment...................................................................... 5.660 9.866 -2,993 3,890 1,545 788 1,167 -2,785 -2,163 Memo items:................................................................................................ Changes in official assets: 47 U.S. official reserve assets (increase, —).......................... -607 -2,530 -231 -407 228 -388 6 151 48 Foreign official assets in the United States (increase, -(-). 5,259 13,007 35,545 1,251 6,125 5,007 7,452 7,928 15,157 49 Changes in Organization of Petroleum Exporting Coun tries (OPEC) official assets in the United States (part of line 27 above)........................................................... 7,092 9,324 6,758 1,774 805 3,249 1,073 1,438 998 50 Transfers under military grant programs (excluded from lines 1, 4, and 9 above).................................................. 2,217 386 195 156 94 46 27 32 90 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 r Oct. Nov. Dec. Jan. Feb. Mar. April 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments......................................... 107,130 114,802 121,181 9,375 9,475 11,007 10,014 9,922 10,912 11,635 2 GENERAL IMPORTS including merchandise for immediate con sumption plus entries into bonded warehouses....................................... 96,115 120,678 147,671 12,996 11,833 13,123 *•12,381 >•14,440 >■13,699 14,496 3 Trade balance...................................... 11,014 -5,876 -26,490 -3,621 -2,358 -2,116 >•-2,367 r—4,518 >•-2,787 -2,861 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. Effective January 1978, major changes were made in reported separately in the “service account”). On the import side, the coverage, reporting, and compiling procedures. Data for 1977 reflect largest single adjustment is the addition of imports into the Virgin Islands these changes. However, the quarterly intemational-accounts-basis data (largely oil for a refinery on St. Croix), which are not included in Census in Table 3.10 will not incorporate the 1977 revisions until June. The latter statistics. data 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 Nov. Dec. Jan. Feb. Mar. Apr. May 1 Total.................................................... 15,883 16,226 18,747 19,155 '19,312 19,454 19,373 19,192 18,842 318,966 2 Gold stock, including Exchange Stabilization Fundi................. 11,652 11,599 11,598 11,658 11,719 11,718 11,718 11,718 11,718 11,718 3 Special Drawing Rights2................... 2,374 2,335 2,395 2,548 2,629 2,629 2,671 2,693 2,669 32,760 4 Reserve position in International Monetary Fund............................... 1,852 2,212 4,434 4,933 '4,946 4,934 4,966 4,701 4,388 34,347 5 Convertible foreign currencies.......... 5 80 320 16 18 173 18 80 67 141 1 Gold held under earmark at F.R. Banks for foreign and international SDR based on a weighted average of exchange rates for the currencies accounts is not'included in the gold stock of the United States; see Table of 16 member countries. The U.S. SDR holdings and reserve position in 3.24. the IMF also are valued on this basis beginning July 1974. At valuation 2 Includes allocations by the International Monetary Fund (IMF) of used prior to July 1974 (SDR1 = $1.20635) total U.S. reserve assets SDR’s as follows: $867 million on Jan. 1, 1970; $717 million on Jan. 1, at end of May amounted to $18,763; SDR holdings, $2,729, and reserve 1971; and $710 million on Jan. 1, 1972; plus net transactions in SDR’s. position in IMF, $4,175. 3 Beginning July 1974, the IMF adopted a technique for valuing the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics □ June 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 Oct.' Nov.' Dec.r Jan. Feb. Mar.* Apr.* 1 Total.................................................... 119,164 126,552 151,356 178,927 184,740 192,321 194,021 197,276 207,214 208,512 2 Foreign countries................................. 115,842 120,929 142,873 171,531 177,108 184,676 186,320 189,682 199,270 200,775 3 Official institutions1............................ 76,823 80,712 91,975 117,042 123,147 126,032 129,782 132,688 140,608 137,412 4 Short-term, reported by banks in the United States.2................. 53,079 49,530 53,619 59,835 62,234 64,527 66,514 70,508 77,594 76,176 U.S. Treasury bonds and notes: 5 Marketable 3................................ 5,059 6,671 11,788 28,633 31,519 32,116 33,830 33,554 34,528 32,838 6 Nonmarketable4......................... 16,339 19,976 20,648 20,351 20,462 20,443 20,473 19,602 19,513 19,444 7 Other readily marketable liabilities5............................. 2,346 4,535 5,920 8,223 8,932 8,946 8,965 9,024 8,973 8,954 Commercial banks abroad: 8 Short-term, reported by banks in the United States2,6................ 30,106 29,516 37,329 38,760 37,982 42,534 40,329 40,720 42,349 47,098 9 Other foreigners................................... 8,913 10,701 13,569 15,729 15,979 16,110 16,209 16,274 16,313 16,265 10 Short-term, reported by banks in the United States2.................. 8,415 10,000 12,592 14,038 14,211 14,325 14,391 14,348 14,366 14,291 11 Marketable U.S. Treasury bonds 498 701 977 1,691 1,768 1,758 1,818 1,926 1,947 1,974 12 Nonmonetary international and regional organization8.................. 3,322 5,623 8,483 7,396 7,632 7,645 7,701 7,594 7,944 7,737 13 Short-term, reported by banks in the United States2.................. 3,171 5,292 5,450 3,396 3,257 2,899 3,248 2,693 3,189 2,887 14 Marketable U.S. Treasury bonds and notes 3............................... 151 331 3,033 | 4,000 4,375 4,746 4,453 4,901 4,755 4,850 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 1978 1977 Area 1974 1975 1976 Oct. Nov.' Dec. Jan. Feb. Mar.* Apr.* 1 Total.................................................... 76,823 80,712 91,975- '117,042 123,147 '126,032 129,782 132,688 140,608 137,412 2 Western Europe 1........................... 44,328 45,701 45,882 65,039 68,167 70,707 72,557 74,401 76,238 73,876 3 Canada............................................ 3,662 3,132 3,406 1,863 1,919 2,334 2,078 1,389 1,633 2,447 4 Latin American republics............... 4,419 4,450 4,906 4,269 4,858 4,633 4,562 5,145 5,757 5,583 5 Asia.................................................. 18,627 22,551 34,108 '42,685 45,435 45,676 48,084 49,164 54,197 52,512 6 Africa.............................................. 3,160 2,983 1,893 2,027 1,792 1,742 1,706 1,899 1,756 1,873 7 Other countries 2............................ 2,627 1,895 1,780 1,159 976 '940 795 690 1,027 1,121 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 Oct. Nov.r Dec. Jan. Feb. Mar.* Apr.* 1 All foreigners, excluding the International Monetary Fund............................................... 94,771 94,338 108,990 *■116,029 117,684 *124,311 124,482 128,270 137,498 140,452 2 Payable in dollars............................................... 94,004 93,781 108,266 rl 15,265 116,838 *723,500 123,765 127,497 136,639 139,393 Deposits: 3 Demand...................................................... 14,051 13,564 16,803 16,895 16,476 *■18,996 17,377 17,675 17,163 18,625 4 Time1.......................................................... 9,907 10,267 11,347 11,515 11,372 11,521 11,518 12,038 11,274 11,498 5 U.S. Treasury bills and certificates2............. 35,662 37,414 40,744 r44,667 47,098 48,906 51,094 54,233 61,071 59,009 6 Other short-term liabilities3.......................... 34,384 32,535 39,372 *•42,188 41,893 *•44,076 43,776 43,551 47,131 50,261 7 Payable in foreign currencies............................. 766 558 724 764 846 812 717 772 859 1,058 8 Nonmonetary international and regional organizations4................................................. 3,171 5,293 5,450 3,396 3,258 2,899 3,248 2,693 3,190 2,887 9 Payable in dollars............................................... 3,171 5,284 5,445 3,376 2,237 2,889 3,237 2,684 3,186 2,885 Deposits: 10 Demand...................................................... 139 139 290 173 173 231 186 180 245 268 11 111 148 205 104 142 139 129 120 109 122 12 U.S. Treasury bills and certificates.............. 497 2,554 2,701 802 767 706 959 1,111 1,317 892 13 Other short-term liabilities5.......................... 2,424 2,443 2,250 2,261 2,155 1,813 1,963 1,274 1,514 1,603 14 Payable in foreign currencies............................. 8 5 20 20 11 11 9 4 2 15 Official institutions, banks, and other foreigners.. 91,600 89,046 103,540 *112,633 114,427 *121,412 121,234 125,576 134,309 137,565 16 Payable in dollars............................................... 90,834 88,496 102,821 rlll,889 113,601 *• 120,611 120,528 124,813 133,453 136,509 Deposits: 17 Demand...................................................... 13,912 13,426 16,513 16,722 16,303 *■18,765 17,191 17,495 16,917 18,357 18 Time1.......................................................... 9,796 10,119 11,142 11,375 11,229 11,382 11,390 11,919 11,165 11,376 19 U.S. Treasury bills and certificates2............. 35,165 34,860 38,042 *•43,865 46,331 48,200 50,135 53,122 59,754 58,118 20 Other short-term liabilities3.......................... 31,960 30,092 37,123 *•39,926 39,738 *•42,263 41,813 42,277 45,617 48,658 21 Payable in foreign currencies............................. 766 549 719 744 826 801 706 763 855 1,056 53,079 49,530 53,619 59,835 62,234 64,527 66,514 70,508 77,594 76,176 23 Payable in dollars............................................... 52,952 49,530 53,619 59,835 62,234 64,527 66,514 70,508 77,594 76,176 Deposits: 24 Demand...................................................... 2,951 2,644 3,394 2,990 2,557 3,528 2,673 2,782 2,804 3,532 25 Time1.......................................................... 4,167 3,423 2,321 1,903 1,848 1,797 1,788 2,570 1,777 1,802 26 U.S. Treasury bills and certificates2............. 34,656 34,199 37,725 *■43,392 45,817 47,820 49,752 52,689 59,302 57,626 27 Other short-term liabilities5.......................... 11,178 9,264 10,179 *■11,550 12,013 11,382 12,301 12,468 13,711 13,215 28 Pavahle in foreien currencies............................. 127 29 Banks and other foreigners.................................... 48,520 39,515 49,921 r52,798 52,193 r56,885 54,721 55,068 56,714 61,389 30 Payable in dollars............................................... 37,881 38,966 49,202 *•52,054 51,367 *•56,084 54,014 54,304 55,859 60,333 31 Banks7............................................................ 29,467 28,966 36,610 *•38,016 37,156 *•41,732 39,622 39,957 41,493 46,042 Deposits: 32 Demand.................................................. 8,231 7,534 9,104 9,677 9,666 10,933 10,274 10,570 10,113 10,852 33 Time1...................................................... 1,885 1,873 2,297 1,858 1,805 2,040 1,995 1,823 1,734 1,771 34 U.S. Treasury bills and certificates........... 232 335 119 127 141 141 152 165 161 205 35 Other short-term liabilities3...................... 19,119 19,224 25,089 *■26,354 25,543 *•28,619 27,202 27,399 29,485 33,215 36 Other foreigners............................................. 8,414 10,000 12,592 14,037 14,211 *•14,352 14,392 14,348 14,366 14,290 Deposits: 37 Demand.................................................. 2,729 3,248 4,015 4,055 4,080 *■4,304 4,245 4,143 4,000 3,973 38 Time1...................................................... 3,744 4,823 6,524 7,614 7,576 7,546 7,606 7,526 7,654 7,802 39 U.S. Treasury bills and certificates........... 277 325 198 346 373 240 231 268 291 287 40 1,664 1,604 1,854 2,022 2,182 *■2,263 2,310 2,411 2,421 2,229 41 Payable in foreign currencies............................. 639 549 719 744 826 801 706 763 855 1,056 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 □ June 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 Oct. Nov. Dec. Jan. Feb. Mar.* Apr.* 1 94,771 94,338 108,990 '116,029 '117,684 '124,311 124,482 128,270 137,498 140,452 2 Foreign countries.................................................... 91,600 89,046 103,540 '112,633 '114,427 '121,412 121,234 125,576 134,309 137,565 3 48,813 43,988 46,938 '52,912 '.54,373 '60,058 59,407 60,798 63,706 63,185 4 607 754 348 410 375 319 302 302 420 326 5 2,506 2,898 2,275 2,736 2,662 2,547 2,680 2,796 3,041 3,386 6 Denmark......................................................... 369 332 363 1,250 1,264 771 1,045 1,051 1,046 1,065 7 266 391 422 232 263 330 302 315 363 429 8 4,287 7,733 4,875 5,006 4,683 5,248 5,141 4,660 5,026 5,480 9 9,429 4,357 5,965 5,280 5,580 7,030 8,599 10,366 11,313 10,896 10 248 284 403 648 643 603 538 547 570 563 11 2,577 1,072 3,206 6,320 6,778 6,862 6,207 5,952 5,637 5,959 12 3,234 3,411 3,007 3,088 2,996 2,876 2,951 3,050 3,139 3,011 13 Norway........................................................... 1,040 996 785 1,023 641 949 988 890 1,212 1,466 14 310 195 239 191 266 273 205 188 174 165 15 382 426 561 730 650 615 703 646 714 663 16 Sweden............................................................ 1,138 2,286 1,693 2,734 3,136 2,718 2,718 2,832 2,817 3,188 17 10,139 8,514 9,458 9,757 9,884 12,390 12,106 12,748 13,617 13,198 18 152 118 166 106 118 130 187 171 115 249 19 United Kingdom............................................ 7,584 6,886 10,004 '11,092 12,119 14,035 12,484 11,858 12,211 10,953 20 183 126 188 130 171 232 219 195 138 192 21 Other Western Europe1................................. 4,073 2,970 2,672 1,948 1,910 1,799 1,781 1,960 1,894 1,736 22 U.S.S.R........................................................... 82 40 51 68 66 99 68 98 72 65 23 Other Eastern Europe................................... 206 200 255 162 167 234 184 173 191 196 24 Canada................................................................ 3,520 3,076 4,784 4,913 '4,701 '4,695 5,351 4,788 4,595 5,997 25 11,754 14,942 19,026 '22,357 '.22,434 '23,578 23,149 24,167 25,223 28,797 26 Argentina........................................................ 886 1,147 1,538 2,421 2,594 1,466 1,796 1,978 1,860 1,934 27 Bahamas.......................................................... 1,054 1,827 2,750 3,769 '3,422 3,534 3,082 3,689 4,132 6,931 28 Brazil.............................................................. 1,034 1,227 1,432 1,055 935 1,389 1,106 970 1,320 1,432 29 Chile............................................................... 276 317 335 340 322 359 386 411 415 393 30 Colombia........................................................ 305 417 1,017 1,182 1,152 1,213 1,218 1,199 1,282 1,338 31 7 6 6 6 6 6 6 7 8 6 32 1,770 2,066 2,848 2,741 2,850 2,802 2,906 3,002 2,706 2,901 33 Panama........................................................... 510 1,099 1,140 946 986 2,302 2,170 2,101 2,113 2,225 34 Peru................................................................. 272 244 257 259 235 286 264 266 261 304 35 165 172 245 226 258 242 229 279 227 224 36 3,413 3,289 3,095 3,212 3,780 2,913 3,001 3,231 3,422 3,246 37 Other Latin American republics................... 1,316 1,494 2,081 2,199 2,140 2,473 2,369 2,493 2,813 2,434 38 Netherlands Antilles2.................................... 158 129 140 156 184 '178 187 185 189 189 39 Other Latin America..................................... 589 1,507 2,142 '3,843 '3,571 '4,414 4,428 4,357 4,476 5,241 40 21,130 21,539 28,472 28,165 28,948 '.29,234 29,697 32,159 36,868 35,298 41 China, People’s Republic of (Mainland).... 50 123 47 48 52 53 54 48 56 58 42 China, Republic of (Taiwan)................. 818 1,025 989 899 926 1,012 1,040 994 1,014 1,218 43 530 623 892 993 971 1,091 1,033 1,118 1,171 1,049 44 261 126 648 886 980 975 1,025 1,011 957 949 45 Indonesia........................................................ 1,221 369 340 905 739 406 892 502 487 647 46 389 386 391 465 490 558 460 453 484 507 47 Japan............................................................... 10,931 10,218 14,380 13,272 14,835 14,634 14,507 17,044 21,755 20,115 48 Korea.............................................................. 384 390 437 596 572 601 605 737 681 753 49 747 698 627 630 603 696 668 616 643 630 50 Thailand.......................................................... 333 252 275 271 251 262 256 307 314 259 51 Middle East oil-exporting countries3........... 4,623 6,461 8,073 7,933 7,365 '7,694 7,978 8,142 8,010 7,792 52 845 867 1,372 1,267 1,164 1,252 1,178 1,187 1,295 1,324 53 3,551 3,373 2,300 2,786 2,560 2,532 2,503 2,643 2,466 2,709 54 Egypt............................................................... 103 343 333 393 331 404 346 357 341 457 55 Morocco......................................................... 38 68 88 61 31 66 100 79 51 32 56 130 169 143 232 240 175 192 252 185 175 57 84 63 35 33 30 39 41 50 45 45 58 Oil-exporting countries4................................ 2,814 2,239 1,116 1,403 1,214 1,154 1,178 1,264 1,225 1,396 59 Other............................................................... 383 491 585 664 715 694 645 640 618 603 60 Other countries................................................... 2,831 2,128 2,019 1,500 1,411 1,314 1,128 1,022 1,452 1,578 61 2,742 2,014 1,911 1,348 1,269 1,154 937 875 1,243 1,287 62 All other.......................................................... 89 114 108 152 152 161 190 147 208 291 63 Nonmonetary international and regional 3,171 5,293 5,450 3,396 3,258 2,899 3,248 2,693 3,190 2,887 64 International...................................................... 2,900 5,064 5,091 3,079 2,922 2,636 2,998 2,435 2,966 2,602 65 202 187 136 134 128 98 79 70 60 112 66 Other regional5.................................................. 69 42 223 183 208 165 171 189 163 173 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 Dec. Apr. Dec. Apr. Dec. Dec. Apr. Dec. Apr. Dec. Other Western'Europe Other Asia 1 Cyprus....................... 38 69 58 62 25 Afghanistan................. 41 57 57 90 112 2 Iceland....................... 30 40 32 19 26 Bangladesh................... 54 44 54 55 51 3 Ireland, Republic of. 43 237 131 27 Burma.......................... 31 34 13 9 28 Cambodia.................... 4 3 4 12 Other Eastern Europe 29 Jordan.......................... 39 23 37 23 31 4 Bulgaria..................................... 19 14 34 30 Laos.............................. 2 2 1 3 1 5 Czechoslovakia.......................... 32 11 46 31 Lebanon....................... 117 132 140 133 143 6 German Democratic Republic. 17 3 15 32 Malaysia....................... 77 130 396 511 157 7 Hungary..................................... 13 11 17 33 Nepal........................... 28 34 33 35 49 8 Poland....................................... 66 74 65 34 Pakistan....................... 74 92 189 135 253 9 Rumania.........:......................... 44 29 51 35 Singapore..................... 256 344 280 300 295 36 Sri Lanka (Ceylon).... 13 10 23 27 26 Other Latin American republics 37 Vietnam....................... 62 66 66 50 59 10 Bolivia..................................... 110 117 133 135 157 11 Costa Rica............................... 124 134 146 170 175 Other Africa 12 Dominican Republic............... 169 170 275 280 326 38 Ethiopia (incl. Eritrea), 60 72 41 48 42 13 Ecuador................................... 120 150 319 311 329 39 Ghana.......................... 23 45 27 37 35 14 El Salvador............................. 171 212 178 214 227 40 Ivory Coast................. 18 17 10 26 65 15 Guatemala............................... 260 368 409 392 513 41 Kenya........................... 19 39 46 185 46 16 Haiti......................................... 38 48 47 68 57 42 Liberia......................... 53 63 77 95 82 17 Honduras................................. 99 137 137 210 152 43 Southern Rhodesia___ 1 1 1 1 1 18 Jamaica.................................... 41 59 35 43 32 44 Sudan........................... 12 17 22 30 30 19 Nicaragua................................ 133 158 120 133 165 45 Tanzania...................... 30 20 48 57 46 20 Paraguay................................. 43 50 49 60 59 46 Tunisia......................... 29 34 20 15 29 21 Surinam 2................................ 13 30 17 14 47 Uganda......................... 22 50 43 117 30 22 Trinidad and Tobago............. 131 44 167 85 202 48 Zambia......................... 78 14 35 55 22 Other Latin America: All Other 23 Bermuda................. 170 197 177 199 237 49 New Zealand................ 42 48 45 75 80 24 British West Indies., 1,311 2,284 1,874 2,4344,142 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 Oct. Nov. Dec. Jan. Feb. Mar.* Apr.* 1 Total........................................................................ 1,285 1,812 2,449 '2,564 '2,749 2,781 2,726 2,721 2,902 3,135 2 Nonmonetary international and regional 822 415 269 352 352 386 388 418 433 520 3 Foreign countries.................................................... 464 1,397 2,180 '2,212 '2,397 2,395 2,338 2,303 2,469 2,615 4 Official institutions, including central banks... 124 931 1,337 '1,074 '1,298 1,296 1,226 1,201 1,167 1,161 5 Banks, excluding central banks........................ 261 366 621 715 r723 716 719 705 749 862 6 79 100 222 422 376 384 393 397 553 592 Area or country: 7 Europe................................................................ 226 330 570 719 '720 696 701 679 835 956 8 Germany......................................................... 146 214 346 308 309 307 313 310 321 413 9 United Kingdom............................................ 59 66 124 205 200 180 176 177 199 200 10 Canada................................................................ 19 23 29 27 26 35 45 44 45 41 11 Latin America.................................................... 115 140 248 339 330 343 342 351 394 396 12 Middle East oil-exporting countries1............... 94 894 1,286 1,064 1,285 1,285 1,216 1,191 1,156 1,146 13 7 8 46 '38 '27 29 29 32 33 69 14 * * * 1 1 * * * * 1 15 Other Africa........................................................ 1 1 * 22 6 5 5 5 5 5 16 All other countries............................................. * * 1 2 1 1 * * * * 1 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, Note.—Lodg3ernf 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 □ June 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 Oct. Nov. Dec. Jan. Feb. Mar.* Apr.* 1 39,056 50,231 69,237 r73,866 *"74,999 *79,913 81,492 80,517 85,872 85,166 2 Foreign countries.................................................... 39,055 50,229 69,232 73,857 *•74,987 *79,903 81,482 80,515 85,863 85,165 6,255 8,987 12,220 r13,766 *•13,000 r15,446 14,594 14,780 16,207 15,538 4 21 15 44 75 52 52 95 98 72 81 5 384 352 662 782 751 793 897 787 812 819 6 46 49 85 126 107 130 140 127 121 85 7 122 128 139 111 106 101 104 108 115 129 8 France................................................................. 673 1,471 1,445 1,341 1,320 1,616 1,367 1,604 1,852 1,578 9 589 416 r511 r762 *•639 655 687 663 799 842 10 64 49 79 98 107 94 86 112 115 107 11 345 370 929 1,104 1,157 1,284 1,130 1,121 1,118 957 12 Netherlands........................................................ 348 300 304 r301 *•347 *•337 373 379 468 465 13 119 71 98 120 122 131 141 162 140 155 14 20 16 65 138 120 *•140 103 117 116 113 15 196 249 373 471 401 414 425 424 416 433 16 180 167 180 172 143 169 182 158 127 173 17 Switzerland......................................................... 335 237 485 681 r600 633 719 840 803 864 18 Turkey................................................................ 15 86 176 329 344 312 286 272 276 293 19 United Kingdom................................................ 2,580 4,718 6,277 r6,625 6,369 8,167 7,416 7,451 8,546 7,920 20 Yugoslavia.......................................................... 22 38 41 28 29 56 42 36 34 46 21 Other Western Europe....................................... 22 27 52 259 50 89 127 61 33 186 22 U.S.S.R............................................................... 46 103 99 82 81 100 112 90 77 69 23 Other Eastern Europe........................................ 131 127 r176 r161 *•155 173 162 170 168 221 24 2,776 2,817 3,049 3,626 3,803 r3,729 4,052 4,216 4,429 4,508 25 12,377 20,532 34,270 r36,789 *■38,182 r40,383 42,975 41,425 43,843 43,885 26 720 1,203 964 1,076 1,085 1,180 1,214 1,131 1,177 1,186 27 Bahamas............................................................. 3,405 7,570 15,336 '17,657 *•18,382 19,678 22,131 21,310 22,549 21,588 28 1,418 2,221 3,322 3,123 2,962 3,084 2,938 2,967 3,152 3,054 29 Chile................................................................... 290 360 387 435 443 507 507 502 502 539 30 Colombia............................................................ 713 689 586 570 554 573 548 541 480 470 31 Cuba................................................................... 14 13 13 10 15 10 14 4 3 3 32 Mexico................................................................ 1,972 2,802 3,432 *•3,266 3,201 *•2,985 2,993 2,791 2,851 2,616 33 Panama............................................................... 505 1,052 1,257 1,431 *•1,672 1,262 1,801 1,673 1,539 2,069 34 518 583 704 737 735 769 774 760 767 746 35 63 51 38 47 60 71 59 56 55 53 36 704 1,086 1,564 1,654 1,714 1,840 1,736 1,891 1,828 1,838 37 Other Latin American republics....................... 852 967 1,125 1,290 1,316 1,466 1,491 1,461 1,489 1,507 38 Netherlands Antilles1........................................ 62 49 40 r64 *•144 *•104 92 80 84 62 39 Other Latin America......................................... 1,142 1,885 5,503 5,426 5,898 6,854 6,678 6,259 7,369 8,154 40 16,226 16,057 17,672 r16,878 17,315 *■ 17,758 17,289 17,524 18,670 18,571 41 China, People’s Republic of (Mainland)........ 4 22 3 20 22 12 14 15 12 16 42 China, Republic of (Taiwan)............................ 500 736 991 *•1,327 1,275 1371 1,265 1,308 1,302 1,302 43 Hong Kong........................................................ 223 258 271 357 466 465 435 420 537 766 44 India................................................................... 14 21 41 48 54 35 47 54 80 42 45 Indonesia............................................................ 157 102 76 97 60 77 54 64 45 53 46 Israel................................................................... 255 491 551 348 347 441 368 362 351 312 47 Japan................................................................... 12,518 10,776 10,997 *•9,352 9,578 *•9,770 9,476 9,708 10,288 10,573 48 Korea.................................................................. 955 1,561 1,714 1,998 1,876 2,070 2,208 2,066 1,842 1,750 49 Philippines.......................................................... 372 384 559 489 508 470 476 528 554 549 50 Thailand.............................................................. 458 499 422 *•616 594 616 618 630 641 679 51 Middle East oil-exporting countries2............... 330 524 1,312 1,531 1,783 1,583 1,525 1,570 2,035 1,551 52 Other................................................................... 441 684 735 695 752 849 803 795 984 977 53 855 1,228 1,481 r1,832 1,749 1,728 1,757 1,768 1,827 1,801 54 Egypt................................................................... 111 101 127 155 130 114 122 111 103 81 55 Morocco............................................................. 18 9 13 44 31 30 48 34 29 33 56 South Africa....................................................... 329 545 763 r885 823 840 868 882 944 937 57 Zaire................................................................... 98 34 29 7 7 7 8 8 7 6 58 Oil-exporting countries3.................................... 115 231 253 378 358 321 312 360 318 350 59 Other................................................................... 185 308 296 362 399 416 400 373 426 394 60 Other countries....................................................... 565 609 540 966 939 861 814 802 887 862 61 Australia............................................................. 466 535 441 839 815 743 687 661 125 723 62 All other............................................................. 99 73 99 127 124 117 127 141 162 139 63 Nonmonetary international and regional organizations...................................................... * 1 5 9 12 9 10 2 9 1 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 Oct.r Nov. Dec. Jan. Feb. Mar.* Apr.* 1 39,056 50,231 69,237 73,866 *74,999 *79,913 81,492 80,517 85,872 85,166 2 Payable in dollars.................................................. 37,859 48,888 *67,552 71,889 r73,160 r77,811 79,361 78,447 83,744 83,088 3 Loans, total........................................................ 11,287 13,200 r18,215 18,286 r 17,758 r19,955 18,484 18,481 21,405 21,284 4 Official institutions, including central banks. 381 613 1,448 1,085 1,048 1,019 1,101 1,093 1,021 1,426 5 Banks, excluding central banks..................... 7,332 7,635 rll,174 11,552 *•11,375 *•12,981 11,517 11,732 14,481 14,066 6 All other, including nonmonetary interna tional and regional organizations............. 3,574 4,951 5,594 5,649 5,335 *•5,955 5,866 5,656 5,903 5,792 7 Collections outstanding..................................... 5,637 5,467 5,756 6,005 6,045 *■6,176 6,342 6,446 6,765 6,910 8 Acceptances made for accounts of foreigners... 11,237 11,147 12,358 13,768 13,462 14,212 13,592 13,689 13,892 13,783 9 Other claims1..................................................... 9,698 19,075 r31,222 33,829 r35,895 *•37,469 40,943 39,831 41,681 41,110 10 Payable in foreign currencies................................. 1,196 1,342 r1,685 1,978 r 1,838 2,101 2,131 2,070 2,129 2,078 11 Deposits with foreigners.................................... 669 656 >•1,103 900 r841 941 940 895 948 1,034 12 Foreign government securities, commercial and finance paper.......................................... 289 314 89 356 405 454 370 338 402 347 13 Other claims....................................................... 238 372 493 722 593 707 822 837 779 698 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 1978 1977 Type, and area or country 1974 1975 1976 Oct. Nov. Dec. Jan. Feb. Mar.* Apr.* 1 7,179 9,536 11,898 r12,641 *12,358 r12,649 12,754 12,840 12,960 13,031 By type: 2 Payable in dollars............................................... 7,099 9,419 11,750 r12,411 r12,110 *•12,394 12,513 12,593 12,705 12,788 3 Loans, total..................................................... 6,490 8,316 10,093 r10,683 *•10,425 *•10,676 10,822 10,865 11,093 11,051 4 Official institutions, including central banks 1,324 1,351 1,407 *•1,787 *•1,817 1,918 1,911 1,961 1,958 1,858 5 Banks, excluding central banks................. 929 1,567 2,232 *”2,409 2,289 2,385 2,405 2,383 2,467 2,530 6 All other, including nonmonetary interna tional and regional organizations......... 4,237 5,399 6,454 *•6,487 *•6,319 *•6,373 6,506 6,521 6,669 6,662 7 Other long-term claims..................................... 609 1,103 1,656 *•1,728 1,685 1,718 1,691 1,728 1,612 1,737 8 Payable in foreign currencies............................. 80 116 148 229 r248 254 240 247 254 243 By area or country: 9 Europe................................................................ 1,908 2,704 3,328 *•3,666 *•3,415 3,484 3,436 3,429 3,373 3,446 10 Canada................................................................ 501 555 637 461 424 434 425 414 407 419 11 Latin America.................................................... 2,614 3,468 4,856 5,542 *•5,578 5,ne 5,915 6,076 6,272 6,323 12 Asia..................................................................... 1,619 1,795 1,904 1,768 1,742 r 1,781 1,800 1,760 1,740 1,731 13 Japan............................................................... 258 296 382 339 320 317 337 291 304 305 14 Middle East oil-exporting countries i........... 384 220 146 173 154 *•186 193 211 196 205 15 Other Asia...................................................... 977 1,279 1,376 1,257 1,268 1,277 1,270 1,251 1,240 1,222 16 Africa.................................................................. 366 747 890 857 850 855 863 848 867 822 17 Oil-exporting countries2................................ 62 151 271 *•211 *•186 190 188 172 111 174 18 Other............................................................... 305 596 619 *•647 *•664 664 675 677 691 648 19 All other countries3........................................... 171 267 282 *•346 348 319 316 313 301 290 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

A62 International Statistics □ June 1978 3.22 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1977 1978 Asset account 1974 1975 1976 Sept. Oct. Nov. Dec.' Jan. Feb. Mar.* All foreign countries 1 151,905 176,493 219,420 '245,238 '247,451 '250,454 259,094 '259,009 256,885 263,468 2 6,900 6,743 7,889 11,914 8,233 r8,964 11,623 10,012 9,391 11,013 3 Parent bank................................. 4,464 3,665 4,323 8,231 4,535 5,238 7,806 5,932 5,410 6,698 4 Other............................................ 2,435 3,078 3,566 3,683 3,698 '3,726 3,818 4,080 3,981 4,315 5 Claims on foreigners....................... 138,712 163,391 204,486 '225,403 '.230,759 '232,972 238,850 '239,792 238,556 243,316 6 Other branches of parent bank.. 27,559 34,508 45,955 '52,086 '51,914 '54,631 55,112 55,359 54,196 55,554 7 Other banks................................. 60,283 69,206 83,765 87,746 91,871 89,213 91,883 '92,229 92,301 95,348 8 Official institutions..................... 4,077 5,792 10,613 14,193 14,456 14,854 14,634 '15,274 15,093 15,284 9 Nonbank foreigners.................... 46,793 53,886 64,153 '71,379 '72,517 '74,274 76,561 '76,931 76,967 77,130 10 Other assets..................................... 6,294 6,359 7,045 '7,921 8,459 '8,518 8,620 '9,206 8,937 9,139 11 Total payable in U.S. dollars............. 105,969 132,901 167,695 '188,352 '187,783 '188,593 193,933 '193,325 189,449 194,855 12 6,603 6,408 7,595 11,434 7,690 r8,393 11,049 9,390 8,630 10,320 13 Parent bank................................. 4,428 3,628 4,264 8,177 4,448 5,145 7,692 5,781 5,162 6,616 14 Other........................................ 2,175 2,780 3,332 3,257 3,243 '3,248 3,357 3,609 3,467 3,704 15 Claims on foreigners....................... 96,209 123,496 156,896 '173,381 ' 176,128 '176,080 178,896 '179,456 176,664 180,341 16 Other branches of parent bank.. 19,688 28,478 37,909 '42,984 '42,696 '44,087 44,256 43,924 42,658 43,502 17 Other banks................................. 45,067 55,319 66,331 68,790 71,592 68,925 70,786 '70,535 69,680 71,934 18 Official institutions..................... 3,289 4,864 9,022 12,705 12,779 12,887 12,632 '13,097 13,087 13,276 19 Nonbank foreigners.................... 28,164 34,835 43,634 '48,903 '49,061 '50,181 51,222 '51,901 51,238 51,628 20 Other assets..................................... 3,157 2,997 3,204 '3,536 '3,965 '4,120 3,988 '4,479 4,155 4,195 United Kingdom 21 69,804 74,883 81,466 88,033 90,154 88,748 90,933 90,789 89,626 90,162 22 Claims on United States................. 3,248 2,392 3,354 3,422 2,729 2,955 4,341 3,701 2,577 3,075 23 Parent bank................................. 2, All 1,449 2,376 2,556 1,789 2,123 3,518 2,928 1,775 2,274 24 Other............................................ 776 943 978 866 940 833 823 773 801 802 25 64,111 70,331 75,859 82,154 84,766 83,331 84,016 84,346 84,393 84,648 26 Other branches of parent bank.. 12,724 17,557 19,753 22,363 22,178 21,476 22,017 21,427 21,114 21,092 27 Other banks................................. 32,701 35,904 38,089 39,576 41,923 40,530 39,899 40,605 40,996 41,612 28 Official institutions..................... 788 881 1,274 1,955 2,052 2,145 2,206 2,303 2,100 2,192 29 Nonbank foreigners.................... 17,898 15,990 16,743 18,259 18,613 19,180 19,895 20,010 20,183 19,753 30 Other assets..................................... 2,445 2,159 2,253 2,458 2,659 2,462 2,576 2,742 2,656 2,439 31 Total payable in U.S. dollars............. 49,211 57,361 61,587 66,895 67,243 65,369 66,635 65,744 63,870 64,565 32 3,146 2,273 3,275 3,259 2,545 2,744 4,100 3,443 2,186 2,850 33 Parent bank................................. 2,468 1,445 2,374 2,511 1,748 2,062 3,431 2,815 1,558 2,236 34 Other............................................ 678 828 902 131 797 682 669 628 628 614 35 Claims on foreigners....................... 44,694 54,121 57,488 62,584 63,596 61,587 61,408 61,094 60,521 60,610 36 Other branches of parent bank.. 10,265 15,645 11,149 19,865 19,497 18,539 18,947 18,102 17,782 17,603 37 Other banks................................. 23,716 28,224 28,983 29,808 31,134 29,560 28,530 28,661 28,641 28,947 38 Official institutions..................... 610 648 846 1,555 1,595 1,639 1,669 1,770 1,640 1,710 39 Nonbank foreigners.................... 10,102 9,604 10,410 11,355 11,370 11,849 12,263 12,560 12,457 12,349 40 Other assets..................................... 1,372 967 824 1,052 1,103 1,038 1,126 1,208 1,163 1,104 Bahamas and Caymans 41 Total, all currencies............................ 31,733 45,203 66,774 78,430 75,962 76,769 79,052 '80,081 79,711 82,947 42 Claims on United States................. 2,464 3,229 3,508 7,455 4,687 5,259 5,782 4,994 5,837 6,761 43 Parent bank................................. 1,081 1,477 1,141 4,861 2,104 1,551 3,051 2,097 2,918 3,570 44 Other............................................ 1,383 1,752 2,361 t 2,595 2,583 2,707 2,731 2,897 2,919 3,191 45 Claims on foreigners........................ 28,453 41,040 62,048 69,680 69,685 69,839 71,671 r73,470 72,272 74,397 46 Other branches of parent bank.. 3,478 5,411 8,144 9,828 9,266 10,611 11,120 11,272 11,025 11,367 47 Other banks................................. 11,354 16,298 25,354 26,368 27,131 25,912 27,939 '28,810 28,179 29,602 48 Official institutions..................... 2,022 3,576 7,105 9,203 9,207 9,198 9,109 9,322 9,486 9,438 49 Nonbank foreigners.................... 11,599 15,756 21,445 24,281 24,082 24,119 23,503 '24,067 23,583 23,990 50 Other assets..................................... 815 933 1,217 1,294 1,589 1,670 1,599 '1,617 1,602 1,789 51 Total payable in U.S. dollars............. 28,726 41,887 62,705 72,932 70,415 71,728 73,987 '74,831 74,283 77,521 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overseas Branches A63 3.22 Continued 1977 1978 Liability account 1974 1975 1976 Sept. Oct. Nov. Dec. Jan. Feb. Mar.* All foreign countries 52 Total, all currencies, 151,905 176,493 219,420 >•245,238 '247,451 '250,454 '259,094 '259,009 256,885 263,468 53 To United States........................... 11,982 20,221 32,719 40,328 39,952 *42,315 *44,155 *46,136 45.811 50,860 54 Parent bank............................... 5,809 12,165 19,773 20,073 22,706 '24,780 '24,542 '28,637 26,999 27,650 55 Other.......................................... 6,173 8,057 12,946 20,255 17,246 17,535 19,613 '17,500 18.811 23,209 56 To foreigners................................. 132,990 149,815 179,954 *197,390 *199,197 *200,158 *206,579 *204,452 202,967 204,629 57 Other branches of parent bank. 26,941 34,111 44,370 *50,200 '50,324 '52,289 '53,244 51,882 50,883 52,090 58 Other banks............................... 65,675 72,259 83,880 91,124 89,542 '90,141 94,140 '90,744 90,843 90,564 59 Official institutions................... 20,185 22,773 25,829 28,014 29,888 28,667 28,110 28,677 28,850 28,018 60 Nonbank foreigners................. 20,189 20,672 25,877 >■28,052 '29,443 '29,061 '31,085 '33,149 32,390 33,957 61 Other liabilities............................. 6,933 6,456 6,747 >•7,520 '8,302 '7,981 '8,360 8,421 8,107 7,980 62 Total payable in U.S. dollars........... 107,890 135,907 173,071 '193,113 '192,995 '193,421 '198,741 '198,240 194,614 199,879 63 To United States........................... 11,437 19,503 31,932 39,403 38,915 *41,219 *42,882 *44,918 44,473 49,248 64 Parent bank............................... 5,641 11,939 19,559 19,759 22,398 '24,488 '24,213 28,333 26,688 27,321 65 Other.......................................... 5,795 7,564 12,373 19,644 16,517 16,731 18,669 '16,584 17,784 21,927 66 To foreigners................................. 92,503 112,879 137,612 *149,630 *149,687 *147,995 *151,363 *148,868 145,884 146,406 67 Other branches of parent bank. 19,330 28,217 37,098 >•41,961 '41,811 '43,105 '43,268 41,802 40,707 41,636 68 Other banks............................... 43,656 51,583 60,619 65,547 62,892 62,094 64,872 '61,571 60,754 60,359 69 Official institutions................... 17,444 19,982 22,878 24,695 26,366 25,113 23,972 24,546 24,453 23,593 70 Nonbank foreigners................. 12,072 13,097 17,017 >•17,428 '18,618 '17,684 '19,251 '20,949 19,970 20,818 71 Other liabilities............................. 3,951 3,526 3,527 '4,080 '4,393 '4,207 '4,496 4,454 4,258 4,224 United Kingdom 72 Total, all currencies, 69,804 74,883 81,466 88,033 90,154 88,748 90,933 90,789 89,626 90,162 73 To United States........................... 3,978 5,646 5,997 7,922 7,310 7,237 7,753 6,008 6,785 7,609 74 Parent bank............................... 510 2,122 1,198 1,425 1,364 1,375 1,451 1,253 1,550 1,646 75 Other.......................................... 3,468 3,523 A,798 6,496 5,946 5,862 6,302 4,755 5,236 5,962 76 To foreigners................................. 63,409 67,240 73,228 77,580 79,837 79,087 80,736 82,160 80,331 80,036 77 Other branches of parent bank. A,162 6,494 7,092 8,934 9,187 9,491 9,376 9,999 9,037 8,674 78 Other banks............................... 32,040 32,964 36,259 37,024 36,676 36,974 37,893 36,915 36,764 36,250 79 Official institutions................... 15,258 16,553 17,273 18,553 20,366 19,555 18,318 19,309 19,580 19,262 80 Nonbank foreigners................. 11,349 11,229 12,605 13,070 13,608 13,066 15,149 15,937 14,950 15,850 81 Other liabilities............................. 2,418 1,997 2,241 2,532 3,007 2,424 2,445 2,621 2,509 2,518 82 Total payable in U.S. dollars........... 49,666 57,820 63,174 67,689 68,594 66,289 67,573 66,619 65,021 65,477 83 3,744 5,415 5,849 7,622 7,004 7,012 7,480 5,737 6,479 7,250 84 484 2,083 1,182 1,363 1,288 1,339 1,416 1,222 1,524 1,598 85 Other......................................... 3,261 3,332 4,666 6,259 5,716 5,673 6,063 4,515 4,955 5,652 86 To foreigners................................ 44,594 51,447 56,372 58,962 60,304 58,285 58,977 59,671 57,386 57,045 87 Other branches of parent bank. 3,256 5,442 5,874 7,535 1,12 A 7,871 7,505 8,164 7,211 6,747 88 Other banks............................... 20,526 23,330 25,527 25,984 25,306 24,605 25,608 24,015 23,352 23,075 89 13,225 14,498 15,423 16,430 18,053 17,171 15,482 16,459 16,541 16,213 90 7,587 8,176 9,547 9,013 9,221 8,638 10,382 11,033 10,282 11,009 91 1,328 959 953 1,105 1,286 991 1,116 1,210 1,156 1,182 Bahamas and Caymans 92 Total, all currencies.......................... 31,733 45,203 66,11A 78,430 75,962 76,769 '79,052 '80,081 79,711 82,947 93 To United States........................... 4,815 11,147 22,721 28,741 28,442 30,641 *32,176 *35,795 35,082 38,380 94 Parent bank............................... 2,636 7,628 16,161 16,524 18,538 20,572 '20,956 24,713 23,374 23,854 95 Other.......................................... 2,180 3,520 6,560 12,218 9,905 10,069 '11,220 '11,082 11,708 14,526 96 To foreigners................................. 26,140 32,949 42,899 48,328 46,034 44,571 *45,292 *42,929 43,272 43,153 97 Other branches of parent bank. 7,702 10,569 13,801 13,756 13,844 13,308 '12,816 11,642 11,598 10,839 98 Other banks............................... 14,050 16,825 21,760 26,933 23,678 23,374 24,717 '22,264 22,840 23,380 99 Official institutions................... 2,377 3,308 3,573 3,184 3,357 3,053 3,000 3,183 3,207 3,060 100 Nonbank foreigners.................. 2,011 2,248 3,765 4,455 5,155 4,836 4,759 '5,840 5,628 5,874 101 Other liabilities............................. 778 1,106 1,154 1,361 1,485 1,557 '1,584 '1,357 1,358 1,414 102 Total payable in U.S. dollars........... 28,840 42,197 63,417 73,733 71,187 72,286 '74,463 '75,479 75,253 78,467 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics □ June 1978 3.23 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions Millions of dollars 1978 1977 1978 Country or area 1976 1977 Jan.- Apr.p Oct. Nov. Dec. Jan. Feb. Mar.p Apr.P Holdings (end of period) 4 1 Estimated total... 15,799 38,620 34,324 37,661 38,620 40,101 40,380 41,230 39,661 2 Foreign countries. 12,765 33,874 30,323 33,285 33,874 35,648 35,479 36,475 34,811 Europe.............................. 2,330 13,916 12,603 14,003 13,916 15,044 14,895 15,206 13,607 Belgium-Luxembourg.. 14 19 20 20 19 19 19 19 19 Germany....................... 764 3,168 2,165 2,742 3,168 3,373 3,494 3,816 3,820 Netherlands................. 288 911 821 911 911 930 954 1,029 1,079 Sweden......................... 191 100 125 100 100 125 125 155 175 Switzerland................... 261 477 474 476 All 391 401 400 443 9 United Kingdom.......... 485 8,888 8,640 9,419 8,888 9,839 9,513 9,418 7,737 10 Other Western Europe. 323 349 353 331 349 362 384 363 330 11 Eastern Europe............ 4 4 4 4 4 4 4 4 4 12 Canada. 256 288 294 293 288 285 250 251 253 13 Latin America............................... 313 551 519 533 551 543 587 551 535 14 Venezuela................................... 149 199 183 199 199 201 241 200 189 15 Other Latin America republics. 36 184 21 11 17 10 14 8 8 16 Netherlands Antilles 1.............. 118 170 158 167 170 162 162 162 162 17 Asia....... 9,323 18,745 16,611 18,104 18,745 19,413 19,378 20,120 20,070 18 Japan. 2,687 6,860 5,958 6,547 6,860 7,463 7,617 8,313 8,332 19 Africa........ 543 362 279 348 362 362 362 341 341 20 All other. * 11 18 5 11 2 7 6 6 21 Nonmonetary international and regional organizations..................................... 3,034 4,746 4,001 4,376 4,746 4,453 4,901 4,755 4,849 22 International.................... 2,906 4,646 3,900 4,276 4,646 4,358 4,781 4,640 4,740 23 Latin American regional. 128 100 100 100 100 95 120 115 110 Transactions (net purchases, or sales (—), during period) 24 Total..................... 8,096 22,823 1,041 3,257 3,337 959 1,481 278 851 -1,569 25 Foreign countries. 5,393 21,110 937 3,116 2,962 589 1,774 -169 996 -1,664 26 Official institutions. 4,958 20,328 722 3,052 2,885 598 1,714 -277 975 1,690 27 Other foreign.......... 435 782 215 65 76 -9 59 108 22 26 28 Nonmonetary international and regional organizations..................................... 2,704 1,713 104 141 376 370 -292 447 -145 94 Memo: Oil-exporting countries 29 Middle East 2.......................... 3,887 4,451 -127 284 869 324 56 -184 72 -72 30 Africa 3.................................... 221 -181 -20 69 13 -20 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 Nov. Dec. Jan. Feb. Mar. Apr. May 1 Deposits................................................................. 418 353 352 416 424 422 445 352 481 453 Assets held in custody: 2 U.S. Treasury securities1................................... 55,600 60,019 66,532 89,497 91,962 95,945 98,465 105,362 102,044 100,146 3 Earmarked gold2............................................... 16,838 16,745 16,414 15,872 15,988 15,726 15,735 15,727 15,686 15,667 1 Marketable U.S. Treasury bills, certificates of indebtedness, notes, Note.—Excludes deposits and U.S. Treasury securities held for inter and bonds; and nonmarketable U.S. Treasury securities payable in dollars national and regional organizations. Earmarked gold is gold held for and in foreign currencies. foreign and international accounts and is not included in the gold stock 2 The value of earmarked gold increased because of the changes in of the United States. par value of the U.S. dollar in May 1972 and in October 1973. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Investment transactions A65 3.25 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1978 1977 1978 Transactions, and area or country 1976 1977 A Ja p n r . .* - Oct. Nov. Dec. Jan. Feb. Mar.* Apr.* U.S. corporate securities Stocks 1 Foreign purchases.............................................. 18,227 14,155 5,126 973 1,282 1,235 1,024 825 1,413 1,864 2 Foreign sales...................................................... '15,475 11,479 3,743 752 899 945 909 762 921 1,151 3 Net purchases, or sales (—)............................... '2,753 2,676 1,383 222 383 290 115 63 492 713 4 Foreign countries................................................ '2,740 2,661 1,409 223 385 286 116 63 510 720 5 Europe............................................................ '336 1,006 898 109 200 156 30 41 319 508 6 France.......................................................... 256 40 133 27 1 -3 -12 -2 68 79 7 Germany..................................................... 68 291 255 37 64 58 45 33 52 125 8 Netherlands................................................ -199 22 -10 5 10 9 -4 -13 -9 16 9 Switzerland.................................................. -100 152 40 2 34 -3 -54 -16 n 103 10 United Kingdom........................................ '340 613 477 52 106 109 60 57 184 176 11 Canada............................................................ 324 65 -4 20 21 14 -19 -26 -3 44 12 Latin America................................................ '155 127 41 -4 27 15 -9 -4 17 37 13 Middle East1.................................................. 1,803 '1,390 422 93 128 100 107 48 170 97 14 Other Asia...................................................... 119 59 47 2 8 1 6 1 5 35 15 Africa.............................................................. 7 5 1 2 * * * 2 1 -1 16 Other countries.............................................. -4 8 2 2 2 * 1 1 * * 17 Nonmonetary international and regional organizations............................................... 13 15 -26 -1 -2 4 -1 i -19 -7 Bonds2 18 Foreign purchases.............................................. 5,529 '7,739 1,895 '931 743 354 459 524 600 312 19 Foreign sales....................................................... 4,322 '3,404 1,657 '281 226 267 377 348 621 311 20 Net purchases, or sales (—)............................... 1,207 '4,335 239 650 517 87 83 176 -21 1 21 Foreign countries................................................ 1,248 '4,239 235 650 507 41 101 131 * 3 22 Europe............................................................ 91 '2,006 -59 376 320 19 133 32 -163 -61 23 France.......................................................... 39 '-34 -2 * -5 -11 -4 1 5 -4 24 Germany..................................................... -49 59 37 5 4 9 1 7 19 10 25 Netherlands................................................ -29 72 -9 2 20 * 7 1 -20 3 26 Switzerland................................................. 158 '157 -41 -7 -7 -6 -7 3 -37 * 27 United Kingdom........................................ 23 '1,705 -29 329 324 28 125 22 -122 -54 28 Canada............................................................ 96 141 32 4 1 -1 7 7 5 13 29 Latin America................................................ 94 64 29 11 -1 3 11 6 11 1 30 Middle East1.................................................. 1,179 1,695 186 124 159 4 -59 75 137 33 31 Other Asia...................................................... -165 338 45 135 27 16 9 11 9 16 32 Africa.............................................................. -25 -6 -1 * * * * -1 * * 33 Other countries.............................................. -21 * 1 * * * * * * 1 34 Nonmonetary international and regional organizations............................................... -41 96 5 * 10 46 -18 45 -20 -2 Foreign securities 35 Stocks, net purchases, or sales ( —)...................... -323 ' — 410 473 106 34 59 103 113 114 143 36 Foreign purchases.............................................. 1,937 '2,255 1,276 247 214 291 255 280 337 404 37 Foreign sales....................................................... 2,259 '2,665 803 141 180 232 152 167 223 261 38 Bonds, net purchases, or sales (—)....................... '-8,740 '-5,034 -1,759 -281 -320 -330 -569 -176 -519 -495 39 Foreign purchases.............................................. 4,932 '8,052 3,179 786 593 885 691 522 797 1,169 40 Foreign sales...................................................... '13,672 '13,086 4,937 1,066 913 1,215 1,260 698 1,315 1,664 41 Net purchases, or sales ( —) of stocks and bonds.. '-9,063 '-5,444 -1,287 -175 -285 -271 -466 -64 -405 -352 42 Foreign countries.................................................... '-7,165 '-3,886 -1,135 -24 -308 -293 -473 17 -256 -423 43 Europe................................................................ ' — 850 '-1,125 415 -33 -260 108 98 95 116 106 44 Canada................................................................ -5,245 '-2,403 -1,434 45 9 -175 -446 -4 -177 -807 45 Latin America.................................................... '-3 -80 220 -170 -2 -68 -6 37 69 120 46 Asia..................................................................... -699 '-14 -347 136 -57 51 -114 -113 -270 150 47 Africa.................................................................. 48 2 5 -2 * 1 -2 « * 7 48 Other countries.................................................. -416 -267 7 1 2 -210 -3 2 6 2 » ■*» „ 49 Nonmonetary international and regional organizations................................................... -1,898 -1,557 -151 -151 23 22 7 -80 -148 70 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 □ June 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 Dec. Mar. June Sept. Dec.p Dec. Mar. June Sept. Dec.? Liabilities to foreigners Claims on foreigners 1 6,606 6,604 6,424 7,122 7,822 14,162 14,963 16,166 14,983 15,887 By type: 2 Payable in dollars............................................... 5,894 5,837 5,772 6,329 7,078 13,163 13,947 15,054 13,936 14,517 3 Payable in foreign currencies............................. 712 767 652 792 745 999 1,016 1,113 1,047 1,370 4 Deposits with banks abroad in reporter’s 442 431 448 414 620 5 557 585 665 632 750 By area or country: 6 Foreign countries.................................................... 6,398 6,412 6,254 6,968 7,611 14,161 14,961 16,165 14,981 15,885 7 Europe................................................................. 2,235 2,144 2,208 2,314 2,526 5,282 5,232 5,820 5,057 5,653 8 Austria............................................................ 10 9 10 12 21 21 23 26 24 24 9 Belgium-Luxembourg.................................... 169 177 138 119 107 162 170 218 232 218 10 Denmark......................................................... 7 15 14 16 14 56 48 40 44 56 11 Finland............................................................ 2 2 10 11 9 77 40 90 59 13 12 France............................................................. 200 163 157 171 236 438 436 413 430 513 13 Germany......................................................... 174 175 163 226 284 378 367 377 393 452 14 Greece............................................................. 48 80 73 78 85 51 90 86 52 41 15 Italy................................................................. 131 135 154 139 161 384 473 440 342 387 16 Netherlands.................................................... 141 168 205 176 230 166 172 182 161 166 17 Norway........................................................... 29 37 33 35 30 51 42 42 38 42 18 Portugal.......................................................... 13 23 20 12 11 40 35 30 34 69 19 40 52 68 74 77 369 325 322 307 387 20 Sweden............................................................ 34 36 36 41 28 90 93 92 91 118 21 Switzerland..................................................... 190 214 236 245 257 241 154 179 146 221 22 Turkey............................................................ 13 12 21 97 108 25 32 37 32 39 23 United Kingdom............................................ 883 698 730 736 733 2,446 2,475 3,027 2,469 2,674 24 Yugoslavia...................................................... 123 113 110 92 90 26 30 28 20 20 25 Other Western Europe................................... 7 6 6 9 9 20 18 15 15 25 26 U.S.S.R........................................................... 9 15 16 11 24 156 105 76 62 55 27 13 13 10 14 12 85 103 102 96 134 28 Canada................................................................ 400 427 448 454 503 2,458 2,426 2,573 2,501 2,612 29 Latin America.................................................... 1,040 1,121 1,020 1,027 1,189 3,582 4,408 4,938 4,535 4,333 30 Argentina........................................................ 44 42 50 50 42 44 46 51 53 53 31 Bahamas......................................................... 260 256 216 222 300 1,391 1,881 2,244 1,873 1,906 32 Brazil.............................................................. 72 49 37 76 49 682 535 457 414 517 33 Chile............................................................... 17 16 24 13 17 34 35 28 40 45 34 Colombia........................................................ 13 18 22 24 42 59 75 72 85 84 35 Cuba............................................................... * * * * * 1 1 1 * * 36 102 121 120 103 115 332 317 301 304 316 37 34 12 11 12 22 74 105 121 221 88 38 Peru................................................................. 25 24 21 13 15 42 32 28 30 33 39 4 4 3 4 3 5 6 5 5 5 40 Venezuela........................................................ 219 260 208 225 222 190 210 240 256 275 41 Other Latin American republics................... 141 148 141 122 126 276 237 237 257 280 42 Netherlands Antilles...................................... 10 11 17 9 25 9 14 8 8 12 43 100 160 151 154 210 441 914 1,146 987 718 44 2,040 2,057 1,890 2,492 2,737 2,276 2,316 2,315 2,388 2,746 45 China, People’s Republic of (Mainland).... 1 3 2 1 8 3 7 7 12 9 46 China, Republic of (Taiwan)........................ 110 113 138 152 156 197 130 131 139 157 47 Hong Kong.................................................... 40 42 27 25 40 96 107 93 73 98 48 India............................................................... 23 39 41 44 37 55 35 51 42 37 49 Indonesia........................................................ 98 94 80 60 60 179 206 184 185 378 50 Israel............................................................... 37 37 45 58 63 41 51 70 46 38 51 Japan.............................................................. 193 172 183 604 695 912 969 927 1,023 1,057 52 Korea.............................................................. 76 96 95 81 108 117 130 158 153 173 53 Philippines...................................................... 53 59 73 78 74 86 86 90 111 99 54 Thailand.......................................................... 24 19 11 17 17 22 27 22 24 23 55 Other Asia...................................................... 1,385 1,383 1,196 1,372 1,480 568 569 582 579 679 56 Africa.................................................................. 606 591 589 568 563 393 429 370 346 397 57 27 29 33 45 13 28 70 24 22 38 58 Morocco......................................................... 45 30 72 105 112 11 12 11 10 21 59 South Africa................................................... 54 33 27 29 20 87 80 69 75 75 60 Zaire............................................................... 36 39 39 48 46 21 19 17 19 15 61 Other Africa................................................... 444 460 418 341 372 247 248 248 221 248 62 Other countries................................................... 77 72 98 111 93 170 150 149 153 144 63 Australia......................................................... 59 53 78 93 75 105 114 110 113 110 64 All other......................................................... 19 19 20 18 18 65 36 40 41 34 65 Nonmonetary international and regional 208 192 170 154 212 1 2 1 1 1 Note.—Reported by exporters, importers, and industrial and com- Data exclude claims held through U.S. banks and intercompany accounts mercial concerns and other nonbanking institutions in the United States. 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 1978 Type and country 1973 1974 1975 1976 Oct. Nov. Dec. Jan. Feb. Mar.* 1 3,185 3,357 3,799 5,468 7,694 7,575 6,769 7,324 7,937 8,446 By type: 2 Payable in dollars.............................................. 2,641 2,660 3,042 4,788 6,972 6,652 5,804 6,310 6,947 7,290 3 Deposits.......................................................... 2,604 2,591 2,710 4,415 6,468 6,207 5,402 5,856 6,462 6,715 4 Short-term investments 1............................... 37 69 332 373 504 445 402 454 485 575 5 Payable in foreign currencies............................. 544 697 757 680 722 924 965 1,014 990 1,157 6 Deposits.......................................................... 431 429 511 373 374 489 552 561 541 647 7 Short-term investments 1............................... 113 268 246 302 348 435 413 453 449 510 By country: 8 United Kingdom................................................ 1,128 1,350 1,306 1,837 1,882 2,098 1,989 1,680 1,787 1,671 9 Canada................................................................ 775 967 1,156 1,539 1,956 1,863 1,706 2,108 2,228 2,386 10 Bahamas.............................................................. 597 391 546 1,264 2,383 2,086 1,781 2,217 2,507 2,791 11 Japan.................................................................. 336 398 343 113 150 220 139 197 258 375 12 All other............................................................. 349 252 446 715 1,323 1,308 1,154 1,122 1,157 1,223 1 Negotiable and other readily transferable foreign obligations payable Note.—Data represent the assets abroad of large nonbanking con on 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 Dec. Mar. June Sept. Dec.* Dec. Mar. June Sept. Dec.* Liabilities to foreigners Claims on foreigners 1 3,564 3,501 3,336 3,327 3,119 4,922 4,891 4,827 4,625 4,631 2 Europe................................................................... 2,723 2,653 2,497 2,555 2,385 851 844 827 754 742 3 Germany............................................................ 396 391 370 407 255 72 84 76 76 70 4 Netherlands....................................................... 277 272 262 272 288 156 154 147 81 82 5 Switzerland........................................................ 260 178 177 224 241 57 53 43 42 49 6 United Kingdom................................................ 1,418 1,386 1,273 1,251 1,229 238 204 219 215 204 7 Canada................................................................... 87 80 79 76 71 1,530 1,475 1,486 1,462 1,473 8 Latin America....................................................... 271 274 283 276 261 1,521 1,489 1,457 1,371 1,404 9 Bahamas............................................................. 163 163 167 159 156 36 34 34 36 40 10 Brazil.................................................................. 5 5 7 7 7 133 125 125 134 144 11 Chile................................................................... 1 1 1 1 1 248 210 208 201 203 12 Mexico.................................................................................. 18 23 26 30 30 195 180 178 187 176 13 Asia........................................................................ 423 432 408 358 338 775 817 833 809 797 14 Japan.................................................................. 397 413 386 319 305 77 96 111 94 66 15 Africa..................................................................... 2 2 3 3 2 187 199 158 165 157 16 All other i............................................................... 58 59 67 59 60 58 67 67 63 59 1 Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics □ June 1978 3.29 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Per cent per annum Rate on May 31, 1978 Rate on May 31, 1978 Rate on May 31, 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 7.0 Apr. 1978 Belgium........................... 5.5 Mar. 1978 11.5 Aug. 1977 1.0 Feb. 1978 Brazil............................... 28.0 May 1976 3.5 Mar. 1978 United Kingdom.......... 9.0 May 1978 Canada............................ 8.5 Apr. 1978 4.5 June 1942 5.0 Oct. 1970 Denmark.......................... 9.0 Mar. 1977 Netherlands.................. 4.0 Apr. 1978 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 Dec. Jan. Feb. Mar. Apr. May 1 Euro-dollars.......................................................... 7.02 5.58 6.03 7.12 7.32 7.28 7.27 7.38 7.82 2 United Kingdom.................................................. 10.63 11.35 8.07 6.76 6.23 6.82 6.72 7.47 9.17 3 Canada.................................................................. 8.00 9.39 7.47 7.20 7.08 7.14 7.44 8.14 8.01 4 Germany............................................................... 4.87 4.19 4.30 3.94 3.52 3.45 3.49 3.54 3.60 5 Switzerland............................................................ 3.01 1.45 2.56 2.20 .92 .50 .46 .40 1.18 6 Netherlands........................................................... 5.17 7.02 4.73 6.65 5.01 5.28 5.35 4.62 4.48 7 France................................................................... 7.91 8.65 9.20 9.88 9.25 10.45 9.86 8.35 8.21 8 Italy....................................................................... 10.37 16.32 14.26 11.38 10.99 0) 0) 11.75 11.80 9 Belgium................................................................. 6.63 10.25 6.95 7.75 8.29 6.75 6.41 5.55 5.71 10 Japan..................................................................... 11.64 7.70 6.22 5.75 5.33 5.25 4.86 4.50 4.50 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 Dec. Jan. Feb. Mar. Apr. May 1 Australia/dollar.................. 130.77 122.15 110.82 113.36 113.82 113.56 113.83 113.97 112.76 2 Austria/shilling................... 5.7467 5.5744 6.0494 6.4734 6.5698 6.6893 6.8221 6.8081 6.6031 3 Belgium/franc..................... 2.7253 2.5921 2.7911 2.9608 3.0425 3.0930 3.1589 3.1419 3.0463 4 Canada/dollar..................... 98.30 101.41 94.112 91.132 90.810 89.850 88.823 87.592 89.397 5 Denmark/krone.................. 17.437 16.546 16.658 16.833 17.324 17.610 17.839 17.807 17.535 6 Finland/markka................. 27.285 25.938 24.913 24.299 24.816 24.527 24.013 23.900 23.430 7 France/franc....................... 23.354 20.942 20.344 20.844 21.196 20.628 21.256 21.803 21.513 8 Germany/deutsche mark... 40.729 39.737 43.079 46.499 47.220 48.142 49.181 48.964 47.497 9 India/rupee......................... 11.926 11.148 11.406 11.712 12.195 12.331 12.185 11.815 11.653 10 Ireland/pound..................... 222.16 180.48 174.49 185.46 193.53 193.96 190.55 184.97 181.81 11 Italy/lira.............................. .15328 .12044 .11328 .11416 .11469 .11619 .11692 .11644 .11488 12 Japan/yen........................... .33705 .33741 .37342 .41491 .41481 .41603 .43148 .45084 .44215 13 Malaysia/ringgit................. 41.753 39.340 40.620 42.201 42.230 42.374 42.428 42.057 41.462 14 Mexico/peso....................... 8.0000 6.9161 4.4239 4.4059 4.3963 4.3972 4.3928 4.3945 4.3973 15 Netherlands/guilder........... 39.632 37.846 40.752 42.955 44.084 44.880 45.994 45.865 44.407 16 New Zealand/dollar........... 121.16 99.115 96.893 100.59 101.95 102.07 102.20 101.92 100.69 19.180 18.327 18.789 19.056 19.401 19.025 18.775 18.621 18.360 18 Portugal/escudo................. 3.9286 3.3159 2.6234 2.4755 2.4840 2.4806 2.4483 2.4075 2.2208 19 South Africa/rand.............. 136.47 114.85 114.99 115.04 115.02 115.05 115.05 115.05 115.01 20 Spain/peseta....................... 1.7424 1.4958 1.3287 1.2237 1.2397 1.2394 1.2497 1.2475 1.2317 21 Sri Lanka/rupee................. 14.385 11.908 11.964 6.2000 6.2167 6.4028 6.5000 6.4950 6.2945 22 Sweden/krona..................... 24.141 22.957 22.383 21.044 21.413 21.554 21.693 21.731 21.491 23 Switzerland/franc............... 38.743 40.013 41.714 48.168 50.353 52.422 52.693 52.511 50,892 24 United Kingdom/pound... 222.16 180.48 174.49 185.46 193.53 193.96 190.55 184.97 181.81 Memo: 25 United States/dollar 1........ 82.20 89.68 89.10 85.52 84.05 83.74 82.94 83.10 84.37 i Index of weighted-average exchange value of U.S. dollar against cur- Note.—Averages of certified noon buying rates in New York for cable rencies of other G-10 countries plus Switzerland. May 1970 parities = 100. transfers. Weights are 1972 global trade of each of the 10 countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 69 Guide to Tabular Presentation and Statistical Releases GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations p Preliminary SMSA’s Standard metropolitan statistical areas r Revised (Notation appears on column heading REIT’s Real estate investment trusts when more than half of figures in that * Amounts insignificant in terms of the partic column are changed.) ular unit (e.g., less than 500,000 when e Estimated the unit is millions) c Corrected (1) Zero, (2) no figure to be expected, or n.e.c. Not elsewhere classified (3) figure delayed or, (4) no change (when Rp’s Repurchase agreements figures are expected in percentages). IPC’s Individuals, partnerships, and corporations General Information Minus signs are used to indicate (1) a decrease, (2) obligations of the Treasury. “State and local govt.” a negative figure, or (3) an outflow. also includes municipalities, special districts, and other “U.S. Govt, securities” may include guaranteed political subdivisions. issues of U.S. Govt, agencies (the flow of funds figures In some of the tables details do not add to totals also include not fully guaranteed issues) as well as direct because of rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for individual releases ............................ June 1978 A-76 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 H enry C. W allich S tephen S. G ard n er, Vice Chairman Philip E. C oldw ell OFFICE OF BOARD MEMBERS OFFICE OF STAFF DIRECTOR FOR MONETARY POLICY Thomas J. O’C onnell, Counsel to the Chairman Joseph R. Coyne, Assistant to the Board Stephen H. A xilrod, Staff Director K enneth A. G uenther, Assistant to the Board A rthur L. Broida, Deputy Staff Director Sidney L. Jones, Assistant to the Board M urray A ltm ann, Assistant to the Board Jay Paul Brennem an, 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 Norm and R. V. B ernard, Special Assistant to the Joseph S. Sims, Special Assistant to the Board Board D onald J. W inn, Special Assistant to the Board DIVISION OF RESEARCH AND STATISTICS LEGAL DIVISION James L. K ichline, Director Joseph S. Zeisel, Deputy Director N eal L. Petersen, General Counsel Edw ard C. E ttin, Associate Director R obert E. M annion, Associate General Counsel John H. K alchbrenner, Associate Director A llen L. Raiken, Associate General Counsel John J. Mingo, Senior Research Division Officer C harles R. M cN eill, Assistant to the General E leanor J. Stockw ell, Senior Research Division Counsel Officer James R. W etzel, Senior Research Division Officer Robert A. Eisenbeis, Associate Research Division OFFICE OF THE SECRETARY Officer Jared J. E nzler, Associate Research Division Theodore E. A llison, Secretary Officer G riffith L. G arw ood, Deputy Secretary J. C ortland G. Peret, Associate Research *Cathy E. M inehan, Assistant Secretary Division Officer Richard H. Puckett, Associate Research Division Officer DIVISION OF CONSUMER AFFAIRS H elm ut F. W endel, Associate Research Division Officer Janet O. H art, Director N athaniel E. B utler, Associate Director James M. Brundy, Assistant Research Division Jerauld C. Kluckm an, Associate Director Officer Robert M. Fisher, Assistant Research Division Officer DIVISION OF BANKING Stephen P. T aylor, Assistant Research Division Officer SUPERVISION AND REGULATION Levon H. G arabedian, Assistant Director John E. Ryan, Director * Frederick C. Schadrack, Deputy Director DIVISION OF INTERNATIONAL FINANCE Frederick R. D ahl, Associate Director W illiam W. W iles, Associate Director Edwin M. Trum an, Director Jack M. Egertson, Assistant Director John E. Reynolds, Counselor Don E. K line, Assistant Director Robert F. Gem m ill, Associate Director Robert S. Plotkin, Assistant Director George B. H enry, Associate Director Thomas A. Sidman, Assistant Director C harles J. Siegman, Associate Director Sam uel H. T alley, Assistant Director Sam uel Pizer, Senior International Division W illiam T aylor, Assistant Director Officer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 and Official Staff Philip C. Jackson, Jr. J. Charles Partee OFFICE OF OFFICE OF STAFF DIRECTOR FOR STAFF DIRECTOR FOR MANAGEMENT FEDERAL RESERVE BANK ACTIVITIES John M. D enkler, Staff Director W illiam H. W allace, Staff Director Robert J. Law rence, Deputy Staff Director D onald E. A nderson, Assistant Director for DIVISION OF FEDERAL RESERVE Construction Management BANK EXAMINATIONS AND BUDGETS Joseph W. D aniels, Sr., Assistant Director and Director of Equal Employment Opportunity A lbert R. H am ilton, Director Gordon B. Grimwood, Assistant Director and Clyde H. Farnsw orth, Jr., Associate Director Program Director for Contingency Planning John F. Hoover, Assistant Director P. D. Ring, Assistant Director DIVISION OF DATA PROCESSING DIVISION OF C harles L. Ham pton, Director FEDERAL RESERVE BANK OPERATIONS Bruce M. B eardsley, Associate Director U yless D. Black, Assistant Director James R. K udlinski, Director G lenn L. Cummins, Assistant Director W alter A lthausen, Assistant Director Robert J. Zem el, Assistant Director Brian M. Carey, Assistant Director Harry A. G uinter, Assistant Director DIVISION OF PERSONNEL Lorin S. M eeder, Assistant Director David L. Shannon, Director John R. Weis, Assistant Director C harles W. W ood, Assistant Director OFFICE OF THE CONTROLLER John K akalec, Controller Edw ard T. M ulrenin, Assistant Controller DIVISION OF ADMINISTRATIVE SERVICES W alter W. Kreim ann, Director John L. G rizzard, Assistant Director John D. Sm ith, Assistant Director *On loan from the Federal Reserve Bank of New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Reserve Bulletin □ June 1978 FOMC and Advisory Councils FEDERAL OPEN MARKET COM MITTEE G. W illiam M iller, Chairman Paul A. V olcker, Vice Chairman Ernest T. Baughman Stephen S. Gardner Henry C. W allich Philip E. Coldwell Philip C. Jackson, Jr. Mark H. Willes David P. Eastburn J. Charles Partee W illis J. W inn 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. B ernard, Assistant Secretary Ira Kaminow, Associate Economist Thomas J. O’C onnell, General Counsel Peter M. Keir, Associate Economist Edw ard G. Guy, Deputy General Counsel James L. K ichline, Associate Economist R obert E. M annion, Assistant General Counsel John Paulus, Associate Economist Stephen H. A xilrod, Economist John E. Reynolds, Associate Economist Joseph Burns, Associate Economist Edwin M. Trum an, Associate Economist John M. Davis, Associate Economist Joseph S. Zeisel, Associate Economist A lan R. Holmes, M anager, System Open Market Account Peter D. S ternlight, Deputy M anager for Domestic Operations Scott E. Pardee, Deputy M anager for Foreign Operations FEDERAL ADVISORY COUNCIL G ilbert F. B radley, tw elfth federal reserve district, President J. W. M cLean, ten th federal reserve district, Vice President H enry S. W oodbridge, first district Frank A. Plummer, sixth district W alter B. Wriston, second district Edward Byron Smith, seventh district William B. Eagleson, 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, eleventh district H erbert V. Prochnow , Secretary W illiam J. Korsvik, Associate Secretary CONSUMER ADVISORY COUNCIL Leonor K. Sullivan, St. Louis, Missouri, Chairman W illiam D. W arren, Los Angeles, California, Vice Chairman Roland E. Brandel, San Francisco, California Richard F. Kerr, Cincinnati, Ohio Agnes H. Bryant, Detroit, Michigan Robert J. Klein, New York, New York John G. Bull, Fort Lauderdale, Florida Percy W. Loy, Portland, Oregon Robert V. Bullock, Frankfort, Kentucky R. C. Morgan, El Paso, Texas Linda M. Cohen, Washington, D.C. Reece A. Overcash, Jr., Dallas, Texas Robert R. Dockson, Los Angeles, California Raymond J. Saulnier, New York, New York Anne G. Draper, Washington, D.C. E. G. Schuhart, Dalhart, Texas Carl Felsenfeld, New York, New York Blair C. Shick, Cambridge, Massachusetts Jean A. Fox, Pittsburgh, Pennsylvania James E. Sutton, Dallas, Texas Marcia A. Hakala, Omaha, Nebraska Thomas R. Swan, Portland, Maine Joseph F. Holt III, Oxnard, California Anne Gary Taylor, Alexandria, Virginia Richard H. Holton, Berkeley, California Richard D. W agner, Simsbury, Connecticut Edna DeCoursey Johnson, Baltimore, Maryland 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. 20551. Where collectible at par in U.S. currency. (Stamps and a charge is indicated, remittance should accompany coupons are not accepted.) The Federal Reserve System—Purposes and Bank Credit-Card and Check-Credit Plans. 1968. Functions. 1974. 125 pp. 102 pp. $1.00 each; 10 or more to one address, Annual Report $.85 each. Federal Reserve Bulletin. Monthly. $20.00 per Survey of Changes in Family Finances. 1968. 321 year or $2.00 each in the United States, its posses pp. $1.00 each; 10 or more to one address, $.85 sions, Canada, and Mexico; 10 or more of same each. issue to one address, $18.00 per year or $1.75 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 issue. $1.25 each in the United States, its posses The Econometrics of Price Determination Con sions, Canada, and Mexico; 10 or more to one ference, October 30-31, 1970, Washington, D.C. 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. 44pp. $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 Measures of Security Credit. 12/70. Revised Measures of Manufacturing Capacity (Short pamphlets suitable for classroom use. Multiple Utilization. 10/71. copies available without charge.) Revision of Bank Credit Series. 12/71. Assets and Liabilities of Foreign Branches of The Equal Credit Opportunity Act and . . . Age U.S. Banks. 2/72. The Equal Credit Opportunity Act and . . . Bank Debits, Deposits, and Deposit Turnover— Credit Rights in Housing Revised Series. 7/72. The Equal Credit Opportunity Act and . . . Yields on Newly Issued Corporate Bonds. 9/72. Doctors, Lawyers, Small Retailers, and Recent Activities of Foreign Branches of U.S. Others Who May Provide Incidental Credit Banks. 10/72. The Equal Credit Opportunity Act and . Revision of Consumer Credit Statistics. 10/72. Women One-Bank Holding Companies Before the 1970 Fair Credit Billing Amendments. 12/72. A Guide to Federal Reserve Regulations Yields on Recently Offered Corporate Bonds. How to File A Consumer Credit Complaint 5/73. If You Borrow To Buy Stock Rates on Consumer Instalment Loans. 9/73. Truth in Leasing New Series for Large Manufacturing Corpora U.S. Currency tions. 10/73. What Truth in Lending Means to You U.S. Energy Supplies and Uses, Staff Economic STAFF ECONOMIC STUDIES Study by Clayton Gehman. 12/73. Inflation and Stagnation in Major Foreign In Studies and papers on economic and financial subjects dustrial Countries. 10/74. that are of general interest in the field of economic The Structure of Margin Credit. 4/75. research. New Statistical Series on Loan Commitments at Selected Large Commercial Banks. 4/75. Summaries Only Printed in the Bulletin Recent Trends in Federal Budget Policy. 7/75. (Limited supply of mimeographed copies of full text Recent Developments in International Financial available upon request for single copies.) Markets. 10/75. The Performance of Bank Holding Company- M INNIE: A Small V ersion of the Affiliated Finance Companies, by Stephen A. MIT-PENN-SSRC Econometric Model, Staff Rhoades and Gregory E. Boczar. Aug. 1977. 19 pp. Economic Study by Douglas Battenberg, Jared J. Greeley in Perspective, by Paul Schweitzer and Joshua Enzler, and Arthur M. Havenner. 11/75. Greene. Sept. 1977. 17 pp, An Assessment of Bank Holding Companies, Staff Structure and Performance Studies in Banking: A Economic Study by Robert J. Lawrence and Summary and Evaluation, by Stephen A. Samuel H. Talley. 1/76. Rhoades. Dec. 1977. 45 pp. Industrial Electric Power Use. 1/76. An Analysis of Federal Reserve Attrition Since Revision of Money Stock Measures. 2/76. 1960, by John T. Rose. Jan. 1978. 44 pp. Survey of Finance Companies, 1975. 3/76. Problems in Applying Discriminant Analysis in Revised Series for Member Bank Deposits and Credit Scoring Models, by Robert A. Eisenbeis. Aggregate Reserves. 4/76. Jan. 1978. 28 pp. Industrial Production— 1976 Revision. 6/76. Exte C r o n m a m l e r C c a ia p l it a B l a n F k i s n : a 1 n 9 c 77 in -8 g 1 , R b e y q G ui e r ra e l m d e A n . t s H a o n f - Federal Reserve Operations in Payment Mecha weck and John J. Mingo. Feb. 1978. 34 pp. nisms: A Summary. 6/76. Mortgage Borrowing Against Equity in Existing Recent Growth in Activities of U.S. Offices of Homes: Measurement, Generation, and Im Banks. 10/76. plications for Economic Activity, by David F. New Estimates of Capacity Utilization: Manu Seiders. May 1978. 42 pp. facturing and Materials. 11/76. Bank Holding Company Financial Developments Printed in Full in the Bulletin in 1976. 4/77. Staff Economic Studies shown in list below. Survey of Terms of Bank Lending—New Series. REPRINTS 5/77. The Commercial Paper Market. 6/77. (Except for Staff Papers, Staff Economic Studies, and Consumption and Fixed Investment in the Eco some leading articles, most of the articles reprinted do nomic Recovery Abroad. 10/77. not exceed 12 pages.) Recent Developments in U.S. International A Revised Index of Manufacturing Capacity, Transactions. 4/78. Staff Economic Study by Frank de Leeuw with Survey of Time and Savings Deposits at All Com Frank E. Hopkins and Michael D. Sherman. 11/66. mercial Banks, January 1978. 5/78. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Federal Reserve Bulletin n June 1978 ANTICIPATED SCHEDULE OF RELEASE DATES FOR PUBLIC PERIODIC RELEASES 1— BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM DATE OR PERIOD APPROXIMATE TO WHICH DATA WEEKLY RELEASES RELEASE DAY REFER Aggregate Reserves and Member Bank Deposits 502 (H.3) Tuesday Week ended previous Wednesday Applications and Reports Received or Acted on and All Other Actions Friday Week ended previous of the Board 501 (H.2) Saturday Assets and Liabilities of All Commercial Banks in the United Wednesday Wednesday, 2 weeks States 510 (H.8) earlier Changes in State Member Banks 615 (K.3) Tuesday Week ended previous Saturday Commercial and Industrial Loans Outstanding by Industry 514 (H.12)2 Wednesday Wednesday, 1 week earlier Deposits, Reserves, and Borrowings of Member Banks 509 (H.7) Wednesday Week ended 3 Wed nesdays earlier Factors Affecting Bank Reserves and Condition Statement of Federal Thursday Week ended previous Reserve Banks 503 (H.4.1) Wednesday Foreign Exchange Rates 512 (H.10) Monday Week ended previous Friday Money Stock Measures 508 (H.6) Thursday Week ended Wednes day of previous week Reserve Positions of Major Reserve City Banks 507 (H.5) Friday Week ended Wednes day of previous week Selected Interest Rates and Bond Prices 519 (H.15) Monday Week ended previous Saturday Weekly Condition Report of Large Commercial Banks in New York Thursday Previous Wednesday and Chicago 506 (H.4.3) Weekly Condition Report of Large Commercial Banks and Domestic Wednesday Wednesday, 1 week Subsidiaries 504 (H.4.2)3 earlier Weekly Summary of Banking and Credit Measures 511 (H.9) Thursday Week ended previous Wednesday; and week ended Wed nesday of previous week SEMIMONTHLY RELEASE Research Library—Recent Acquisitions 601 (J.2) 1st and 16th Period since last release of month MONTHLY RELEASES Assets and Liabilities of all Member Banks, by Districts 408 (G.7.1) 14th of month Last Wednesday of previous month Automobile Credit 428 (G.26) 6th working day 2nd month previous of month 1 Release dates are those anticipated or usually met. However, it should be noted that for some releases there is normally a certain variability because of reporting or processing procedures. Moreover, for all series unusual circumstances may, from time to time, result in a release date being later than anticipated. 2 On second Wednesday of month, contains monthly data release. 3 Contains revised H.4.3 data. Note.—The Board’s official mailing list is being computerized, and new three-digit identification codes have been assigned to each individual release. The new code, as well as the current symbol, will be used for several months; thereafter, only the new code will appear. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A ll MONTHLY RELEASES (cont.) DATE OR PERIOD APPROXIMATE TO WHICH DATA RELEASE DAY REFER Capacity Utilization: Manufacturing and Materials 402 (G.3) 17th of month Previous month Changes in Status of Banks and Branches 404 (G.4.5) 25th of month Previous month Consumer Instalment Credit 421 (G.19) 3rd working 2nd month previous day of month Debits and Deposit Turnover at Commercial Banks 406 (G.6) 25th of month Previous month Federal Reserve System Memorandum on Exchange Charges 628 (K.14) 5th of month Period since last release Finance Companies 422 (G.20) 5th working 2nd month previous day of month Foreign Exchange Rates 405 (G.5) 1st of month Previous month Industrial Production 414 (G.12.3) 15th of month Previous month Interest Rates on Selected Consumer Instalment Loans at Reporting 15th of month 2nd month previous Commercial Banks 411 (G.10) Loan Commitments at Selected Large Commercial Banks 423 (G.21) 20th of month 2nd month previous Maturity Distribution of Outstanding Negotiable Time Certificates of 24th of month Last Wednesday of Deposit 410 (G.9) previous month Monthly Report of Condition for U.S. Agencies, Branches and Domestic 15th of month 2nd month previous Banking Subsidiaries of Foreign Banks 412 (G.ll) Selected Interest Rates and Bond Prices 415 (G.13) 6th of month Previous month Summary of Equity Security Transactions 418 (G.16) Last week of Release date month Survey of Terms of Bank Lending 416 (G.14) 15th of month 3rd month previous QUARTERLY RELEASES Finance Rates and Other Terms on Selected Types of Consumer 25th of January, 2nd month previous Instalment Credit Extended by Major Finance Companies 120 (E. 10) April, July, October Flow of Funds: Seasonally adjusted and unadjusted 780 (Z.l) 15th of Febru Previous quarter ary, May, Volume and Composition of Individuals’ Saving August, (Flow of funds series) 118 (E.8) November Geographical Distribution of Assets and Liabilities of Major Foreign 15th of Previous quarter Branches of U.S. Banks 121 (E. 11) March, June, September, December Sales Revenue, Profits, and Dividends of Large Manufacturing Corpo 10th of March 2nd quarter previous rations 116 (E.6) July, Septem ber, December DATE OR PERIOD APPROXIMATE TO WHICH DATA SEMIANNUAL RELEASES RELEASE DAY REFER Assets and Liabilities of Commercial Banks, by Class of Bank May and No End of previous De 113 (E.3.4) vember cember and June Check Collection Services—Federal Reserve System 119 (E.9) February Previous six and July months Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Federal Reserve Bulletin □ June 1978 SEMIANNUAL RELEASES (cont.) DATE OR PERIOD APPROXIMATE TO WHICH DATA RELEASE DAY REFER List of OTC Margin Stocks 117 (E.7) June 30, De Release date cember 31 Assets, Liabilities, and Capital Accounts of Commercial and Mutual May and No End of previous De Savings Banks—Reports of Call (Joint Release of the Federal vember cember and June Deposit Insurance Corp., the Board of Governors of the Federal Reserve System, and Office of the Comptroller of the Currency. Published and distributed by FDIC.) ANNUAL RELEASES Aggregate Summaries of Annual Surveys of Security Credit Extension February End of previous June 101 (C.2) Member Bank Income 103 (C.4) End of May Previous year State Member Banks of Federal Reserve System and Nonmember 1st quarter of End of previous year Banks that Maintain Clearing Accounts with Federal Reserve year Banks 403 (G.4) (Supplements issued monthly) 15th of month Previous month Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 Index to Statistical Tables References are to pages A-3 through A-68 although the prefix “A” is omitted in this index ACCEPTANCES, bankers, 11, 25, 27 Demand deposits: Agricultural loans, commercial banks, 18, 20-22, 26 Adjusted, commercial banks, 13, 15, 19 Assets and liabilities (See also Foreigners): Banks, by classes, 16, 17, 19, 20-23 Banks, by classes, 16, 17, 18, 20-23, 29 Ownership by individuals, partnerships, and Domestic finance companies, 39 corporations, 25 Federal Reserve Banks, 12 Subject to reserve requirements, 15 Nonfinancial corporations, current, 38 Turnover, 13 Automobiles: Deposrits (Sf? 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 Discount rates at F.R. Banks (See Interest rates) (See also Foreigners) Discounts and advances by F.R. Banks (See Loans) Banks for cooperatives, 35 Dividends, corporate, 37 Bonds (See also U.S. Govt, securities): New issues, 36 EMPLOYMENT, 46, 47 Yields, 3 Euro-dollars, 27 Branch banks: 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 Receipts and outlays, 30, 31 loans) Treasury operating balance, 30 Federal Financing Bank, 30, 35 CAPACITY utilization, 46 Federal funds, 3, 6, 18, 20, 21, 22, 27, 30 Capital accounts: Federal home loan banks, 35 Banks, by classes, 16, 17, 19, 20 Federal Home Loan Mortgage Corp., 35, 40, 41 Federal Reserve Banks, 12 Federal Housing Administration, 35, 40, 41 Central banks, 68 Federal intermediate credit banks, 35 Certificates of deposit, 23, 27 Federal land banks, 35, 41 Commercial and industrial loans: Federal National Mortgage Assn., 35, 40, 41 Commercial banks, 15, 18, 23, 26 Federal Reserve Banks: Weekly reporting banks, 20, 21, 22, 23, 24 Condition statement, 12 Commercial banks: Discount rates (See Interest rates) Assets and liabilities, 3, 15-19, 20-23 U.S. Govt, securities held, 4, 12, 13, 32, 33 Business loans, 26 Federal Reserve credit, 4, 5, 12, 13 Commercial and industrial loans, 24, 26 Federal Reserve notes, 12 Consumer loans held, by type, 42, 43 Federally sponsored credit agencies, 35 Loans sold outright, 23 Finance companies: Number, by classes, 16, 17, 19 Assets and liabilities, 39 Real estate mortgages held, by type of holder and Business credit, 39 property, 41 Loans, 20, 21, 22, 42, 43 Commercial paper, 3, 24, 25, 27, 39 Paper, 25, 27 Condition statements (See Assets and liabilities) Financial institutions, loans to, 18, 20-22 Construction, 46, 50 Float, 4 Consumer instalment credit, 42, 43 Flow of funds, 44, 45 Consumer prices, 46, 51 Foreign: Consumption expenditures, 52, 53 Currency operations, 12 Corporations: Deposits in U.S. banks, 4, 12, 19, 20, 21, 22 Profits, taxes, and dividends, 37 Exchange rates, 68 Security issues, 36, 65 Trade, 55 Cost of living (See Consumer prices) Foreigners: Credit unions, 29, 42, 43 Claims on, 60, 61, 66, 67 Currency and coin, 5, 16, 18 Liabilities to, 23, 56-59, 64-67 Currency in circulation, 4, 14 Customer credit, stock market, 28 GOLD: Certificates, 12 Stock, 4, 55 DEBITS to deposit accounts, 13 Government National Mortgage Assn., 35, 40, 41 Debt (See specific types of debt or securities) Gross national product, 52, 53 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 Federal Reserve Bulletin o June 1978 HOUSING, new and existing units, 50 REAL estate loans: Banks, by classes, 18, 20-23, 29, 41 INCOME, personal and national, 46, 52, 53 Life insurance companies, 29 Industrial production, 46, 48 Mortgage terms, yields, and activity, 3, 40 Instalment loans, 42, 43 Type of holder and property mortgaged, 41 Insurance companies, 29, 32, 33, 41 Reserve position, basic, member banks, 6 Insured commercial banks, 17, 18, 19 Reserve requirements, member banks, 9 Interbank deposits, 16, 17, 20, 21, 22 Reserves: Interest rates: Commercial banks, 16, 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 SAVING: Time and savings deposits, maximum rates, 10 Flow of funds, 44, 45 International capital transactions of the United National income accounts, 53 States, 56-67 Savings and loan assns., 3, 10, 29, 33, 41, 44 International organizations, 56-61, 64-67 Savings deposits (S<^ Time deposits) Inventories, 52 Savings institutions, selected assets, 29 Investment companies, issues and assets, 37 Securities (See also U.S. Govt, securities): Investments (See also specific types of investments): Federal and Federally sponsored agencies, 35 Banks, by classes, 16, 17, 18, 20, 21, 22, 29 Foreign transactions, 65 Commercial banks, 3, 15, 16, 17, 18 New issues, 36 Federal Reserve Banks, 12, 13 Prices, 28 Life insurance companies, 29 Special Drawing Rights, 4, 12, 54, 55 Savings and loan assns., 29 State and local govts.: Deposits, 19, 20, 21, 22 LABOR force, 47 Holdings of U.S. Govt, securities, 32, 33 Life insurance companies (See Insurance companies) New security issues, 36 Loans (See also specific types of loans): Ownership of securities of, 18, 20, 21, 22, 29 Banks, by classes, 16, 17, 18, 20-23, 29 Yields of securities, 3 State member banks, 17 Commercial banks, 3, 15-18, 20-23, 24, 26 Federal Reserve Banks, 3, 4, 5, 8, 12, 13 Stock market, 28 Insurance companies, 29, 41 Stocks (See also Securities); Insured or guaranteed by U.S., 40, 41 New issues, 36 Savings and loan assns., 29 Prices, 28 TAX receipts, Federal, 31 MANUFACTURING: Time deposits, 3, 10, 13, \5, 16, 17, 19, 20, 21, Capacity utilization, 46 22, 23 Production, 46, 49 Trade, foreign, 55 Margin requirements, 10 Treasury currency, Treasury cash, 4 Member banks: Treasury deposits, 4, 12, 30 Assets and liabilities, by classes, 16, 17, 18 Treasury operating balance, 30 Borrowings at Federal Reserve Banks, 5, 12 Number, by classes, 16, 17, 19 UNEMPLOYMENT, 47 Reserve position, basic, 6 U.S. balance of payments, 54 Reserve requirements, 9 U.S. Govt, balances: Reserves and related items, 3, 4, 5, 15 Commercial bank holdings, 19, 20, 21, 22 Mining production, 49 Member bank holdings, 15 Mobile home shipments, 50 Treasury deposits at Reserve Banks, 4, 12, 30 Monetary aggregates, 3,15 U.S. Govt, securities: Money and capital market rates (See Interest rates) Bank holdings, 16, 17, 18, 20, 21, 22, 29, Money stock measures and components, 3, 14 32, 33 Mortgages (See Real estate loans) Dealer transactions, positions, and financing, 34 Mutual funds (See Investment companies) Federal Reserve Bank holdings, 4, 12, 13, 32, 33 Mutual savings banks, 3, 10, 20-22, 29, 32, 33, 41 Foreign and international holdings and transactions, 12, 32, 64 NATIONAL banks, 17, \9 Open market transactions, 11 National defense outlays, 31 Outstanding, by type of security, 32, 33 National income, 52 Ownership, 32, 33 Nonmember banks, 17, 18, 19 Rates in money and capital markets, 3, 27 Yields, 3 OPEN market transactions, 11 Utilities, production, 49 PERSONAL income, 53 VETERANS Administration, 40, 41 Prices: Consumer and wholesale, 46, 51 WEEKLY reporting banks, 20-24 Stock market, 28 Wholesale prices, 46 Prime rate, commercial banks, 26 Production, 46, 48 YIELDS (See Interest rates) Profits, corporate, 37 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A81 The Federal Reserve System B o u n d a rie s o f F ed eral R e serv e D istricts an d T h eir B ra n c h T errito ries Min neapolis Omaha* ( (v I Ycincinnati . / rvVCl‘sc0 Denver Kansas City I lOklahoma Cityj 's Angeles • ^ ^ (5)^^ J UJttleRock Birmingham^iantQ\. S Jackson1 Houston 1 ' t; . . \San Antonio February 1978 LEGEND — Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities ------- Boundaries of Federal Reserve Branch • Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Cite this document

APA

Federal Reserve (1978, May 31). Federal Reserve Bulletin, 1978-06. Bulletin, Federal Reserve. https://whenthefedspeaks.com/doc/bulletin_197806

BibTeX

@misc{wtfs_bulletin_197806,
  author = {Federal Reserve},
  title = {Federal Reserve Bulletin, 1978-06},
  year = {1978},
  month = {May},
  howpublished = {Bulletin, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bulletin_197806},
  note = {Retrieved via When the Fed Speaks corpus}
}